Want a loan? Get ready to be investigated by a forensic accountant

The extraordinary caution being shown by business bankers has reached new levels, with some banks employing forensic accountants to investigate lenders.

The extraordinary caution being shown by business bankers has reached new levels, with some banks employing forensic accountants to investigate lenders.

While last week’s 1% cut of official interest rates is expected to provide some relief for business borrowers, banks remain extremely cautious and are subjecting new and existing borrowers to rigorous loan approval procedures.

PricewaterhouseCoopers’ partner Gregory Will told The Australian that pre-lending reviews that were once conducted by the bank’s own lending officers are now being performed by third parties, including forensic accountants from the big accounting firms.

To add insult to injury, the cost of these reviews is being passed on to the borrower in the form of higher lending costs.

Other accountants report that loans for reasonably small amount that would have previously been approved by a bank’s relationship manager now require multiple internal approvals.

“Our client needed $700,000 for a short-term cashflow problem,” the accountant says. “The bank told us it would take five weeks to approve – by that time the short-term problem would be over.”

Sue Prestney, principal of MGI Boyd Accountants, says she has not come across the use of accountants for pre-approval but says banks often involve accountants when a borrower requires funding for a large acquisition or deal.

But she says banks are tightening the screws on most business customers, almost regardless of their lending history.

“Certainly loan margins are increasing across the board, even for companies that are not being affected by the financial crisis.”

What hoops have you had to jump through to get money out of your bank? Do you have tips for other borrowers? Send your thoughts to feedback@smartcomapny.com.au.

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