Bring Your Lender
...Out of His Shell.
Whatever business you're doing, at some point you'll probably need to convince someone with money to lend you some of it. Getting that loan is about making it as easy as possible for a lender to say yes.
Traditional lenders are timid, fearful creatures, easily startled by iffy credit ratings and loud noises. Small businesses asking for cash fill their dreams with terrors and leave them shivering and sweating in their beds. In fact, more than half of all smaller businesses approaching them are rewarded with nothing more than a terrified squeak and a slammed door in the face.
When you're out looking for a financial boost, your first order of business should be to make yourself seem as non-threatening as possible. A cornered banker can bite if it feels endangered, so your approach should clearly show that you mean it no harm. Here are a few pointers on what they're looking for:
The first thing a lender's going to want to do is sniff you out, financially speaking. Don't be alarmed, it's just their way of getting to know you. They'll be looking at your credit history, and will be particularly interested in any missed payments or botched loans you've had in the past. You've got to be open about this right from the start. After all, it's the deadliest predators who try to mask their tracks.
A huge part of landing that loan is making sure the lender feels secure. You've got to demonstrate that you understand what repayments you'll have to make, and that you're able to make them. You've got to prepare to be stress-tested a bit here. Your cash flow might be put under the microscope, so make sure you've got records to show that you can survive the leaner seasons as well as the sunny ones.
If someone's going to lend you some money, it stands to reason that they'll ask you what you want it for. Don't expect a high-street bank to fund your eco-friendly plan for a hyperlaser that vaporises gold into ozone. Try them with a less mad-sciency idea first, like a light manufacturing project. You can always hit them with the hyperlaser idea next year, after they've warmed up to you a bit.
It seems like nonsense, but one of the best ways to show a lender you're safe to deal with is to already have some money behind you. Let them see you're prepared to shoulder a little risk yourself, and that you're not just looking to gamble with someone else's money. All they really need is some proof that you're taking your business as seriously as you want them to.
One of the keys to getting loans is showing your collateral. Lenders like to see that, even if everything else goes wrong, you've got something secure to tie their hopes to. Depending on your situation, that could mean property, capital equipment or other assets you could use to secure the loan. Again, if you're proving to them that you're prepared to protect and honour the investment you're asking for.
The important thing to remember about borrowing is that your first "no" doesn't have to be your final answer. If the traditional lenders are shying away, you've got a range of other options to look into. There are government-backed Start Up Loans you can apply for, or Business Angels you could approach. You could even abandon conventional lending schemes entirely and give crowdfunding a shot. For every route you could take, there are resources and guidance on offer to get you started.
So there you are - just a few quick ideas on making it easier for a lender to say yes to you. It may take several tries to get what you need, and you may not get it all in one place, but the right attitude and a solid business plan will definitely be a foot in that frequently slammed door. Good luck, get funded and keep listening out for more Voices from the RIFT...