Bankable means that a person, business, or project is financially strong and trustworthy enough to receive funding from a bank or investor. If something is bankable, it means that banks and investors see it as a good and safe investment.
Bankable is financial jargon that indicates that a business is sufficiently healthy to receive interest from lenders to loan. It’s a basic indicator of a company’s success. If a bank is willing to loan a business cash and/or support a business, then the risk of it failing or not paying is low. A bankable company has significant assets, profits, liquidity (cash), and collateral.
Businesses that are looking to start, manage or grow their offering will usually seek funding. Therefore, these owners will need to ensure that the enterprise is bankable, meaning in the best possible condition to increase its chances for funding approval.
Why Being Bankable is Important
Businesses that need funding to grow must show their bankability status. Banks and investors only give out their money to companies that have a low risk of failure. If a business is bankable, it can secure loans, attract investors, and expand more easily. Businesses struggle to obtain financial backing when they are not bankable.
A bankable enterprise is able to prove that it has a steady income that will make repayments possible, as well as management that can manage the finances and ensure the financial records are sound.
How to Improve Bankability
Businesses, along with solo entrepreneurs like freelancers, can enhance their bankability through the following measures:
Businesses should maintain precise financial records because this demonstrates both consistency and development prospects.
Paying off existing debt enhances business attractiveness to lenders.
A strong credit history report reassures banks or investors that you manage to pay their debts and bills promptly.
A well-designed business strategic plan focusing on business growth and profitability serves as a reassurance factor to potential investors.
There are several things to consider.
Financial health will be the primary focus of determining if your business is bankable. There are other things, such as collateral and the character of the person, behind the loan.
Financial Factorst Look for
Financial Factors to look for include the following:
- Are your cash flow positive, and can you service the debt?
- Do you have positive net working capital?
- Does your company have collateral?
- Do you have audited financial statements?
Characteristics of a Bankable Business or Project
A bankable business or project needs to fulfil specific requirements, which include:
- To qualify for bank support, a company must demonstrate solid financial performance together with steady cash flow and minimal debt.
- The bank needs a credit score examination to verify the loan repayment reliability of businesses and individuals.
- A business becomes bankable through an established plan that illustrates its future financial growth paths.
- A product or service needs strong market demand to ensure business revenue generation.
- A business with established leaders who demonstrate expertise attracts investors and banks because they trust its management team.
What to Include on your Bankable Business Plan
If you are working on a business plan and want to communicate that your business is bankable, you must include the following:
- Value Definition
- Needs Assessment
- Differentiation and Competitive Assessment
- Market Analysis
- Marketing Planning
- Sales and Promotional Strategy
- Organisation Design
- Financing needs
- Financial projections
- Risk analysis
Take time to understand what makes your business bankable and not. If your business is not currently qualifying in this self-assessment, identify what the steps are that you can tackle first according to the degree of difficulty.
In South Africa: South African lenders such as Lula and Genfin look for a bankable profile: steady turnover, a registered business, a business bank account and tax that is up to date with SARS.
