28 Mar Making Your Case for a Business Loan
From afar, the commercial lending process may appear comical. On one side of the desk you have the lenders, who want to manage their risk by loaning money to only successful business owners. On the other side of the desk, you have the business owners — many of whom believe they cannot truly become successful until they get the money!
To avoid this disconnect, you have to approach business financing as a partnership rather than a provider-customer relationship. If you were going into business with someone, you would want to clearly understand his or her vision for your venture. It is the same with lenders.
What is the plan?
For example, say you are asking for money because your company is so far behind on vendor payments that it needs the working capital to catch up. In this scenario, you will need to make a case for how catching up on payments will allow you to get the raw materials needed to make a big push forward on sales.
Or, as another example, you need money to open a new location in a city nearby. Here, you will have to produce some solid market analysis that explains to the lender why your business stands a good chance of succeeding in a new locale.
How shall you put it?
Before you ask for a loan, devise a clear plan for what you want to do with the money and how you will repay it. You and your top managers should be able to verbally articulate your plan, of course. But craft a written statement as well.
The written statement does not need to be a 50-page proposal bound in embossed leather. It can be one page as long as it clearly describes your strategic challenge, your plan for overcoming it, and where and how the lender’s money plays into this solution.
Need some help?
The lending process can be daunting and, at times, frustrating. We can assist you in gathering and presenting the right financial information to secure the working capital you are looking for.