Approaching Lenders

When approaching any financial institution, you are effectively selling the merits of your business proposal. As in all sales, consider the needs of the other party. Some items to consider:

1. Ability to service the debt with sufficient surplus to cover contingencies (carry interest charges, eventually repay in full—cash flow forecast and projected income statement will show this)

2. Track record/integrity (personal credit history, management ability as demonstrated in your Business Plan, company results)

3. Your level of commitment (your equity in the business or cash investment in the particular asset being purchased)

4. Secondary source of repayment (this includes security in the event of default and other sources of income—discuss this subject with your lawyer before submitting your proposal)

5. Lead time (lender needs a reasonable time to assess your proposal—also, the loan may have to be referred to another level within the financial institution)

Don’t overdo it (be sensible with the amount of documentation you provide initially—for example, the Introductory Page, Summary and Financial Plan sections provide a good basic loan submission if the amount requested is small)

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