A good way of reminding yourself how banks make lending decisions is to remember cocktails - specifically Campari and Ice...

C Character. Does your bank know your business? Or, if you are setting up a new business, then does your bank at least know you? Businesses can't be run in isolation from their owners. If you have an existing account with a Bank which you have run well over a number of years then it could improve your chances of getting a loan as they would know that you are a trustworthy character.

A Ability. Can you demonstrate that you have the ability to run this business? Do you have qualifications and experience? Can you manage the business? Do you know how to manage your finances, market your business and make sales? For existing businesses, have you run the business well in the past?

M Means. In financial terms what other means do you have - or not have? Are you stretched financially or have you got other assets?

P Purpose. What do you want to borrow the money for? Banks are reluctant to lend money to businesses so that the owners can draw big salaries! There needs to be a clear and beneficial business purpose for your loan application.

A Amount. How much are you asking to borrow? Is it enough? Is anyone else making a contribution to the cost? If the bank makes a loan to the business will they have a bigger investment in it than the owners?

R Repayment. How will the business make the repayments? Can it really afford them out of profits and will it generate enough cash to make the repayments regularly and on time?

I Insurance. This means what security can you offer? If everything went wrong how would the bank get its money back?

And then the bank will want to add the ICE:

I Interest. Interest rates will vary depending on several things. The current base rate, the security you can offer and also how good your business proposal is. The bank will want to calculate how much interest they could charge.

C Commission. Most banks will charge some sort of arrangement fee for setting up your borrowing facility.

E Extras. The bank might also take into consideration what else it might be able to sell you.