Ten Ways to Show a Lender Your Business is Bankable

Is your business bankable? How does a lender decide whether your business is bankable? With decades of experience, Coveted Financial Services knows what a Chicago area lender is looking for – and what makes Chicagoland business bankable. Here are ten ways to give any banker confidence that your business has a higher-than-average probability of success.

1. Plan Your Cash Flow – Most important to any lender is your ability to repay what you borrow. Be prepared to demonstrate that you know how to manage (and improve) your cash flow.

2. Run Lean – Lenders don’t want to see money spent on things that don’t contribute to moving the business forward. Show how you’ve cut waste and where you plan to cut more.

3. Show Credit Smarts – Establish trade credit so that the lender sees others trust you enough to extend terms for their services or material. Use a business credit card to build a good record.

4. Share the Risk – If the owner or equity team are strongly invested in the business, that sends a confident message to a lender. If the team is not all in, that sends a concerning message.

5. Borrow Enough – Operational funding is not the place to scrimp. Be realistic about how much it will take to execute your plans. Asking for enough now could be easier than asking again later.

6. Share Your Business Plan – Lenders want to see a full plan, with needs, risks, condition of the market, competitor analysis, qualifications of the management team and proforma results.

7. Bring a Strong Payment History – Nothing gives a lender more confidence than a strong track record for borrowing money, managing it well and repaying loans – in full and on time.

8. Educate the Banker – Financial professionals know a lot about business, but not necessarily every business. Explain your industry, your product and why you are positioned for success.

9. Explain the Use of Funds – To help the lender understand the opportunity, show exactly what the money will be used for, why it is needed in the amounts borrowed and on what timing.

10. Guarantees – Do you have collateral you can pledge? Can the owner or other investors sign a personal guarantee for the loan? The more you reduce the lender’s risk, the better you look.

Bankers know that past performance is the best predictor of future outcomes, so be prepared to show them what you have done, what you are doing now and what you plan to do next. Thomas Edison said, “Good fortune is what happens when opportunity meets with preparation.” The more prepared you are to answer these ten performance indicators, the more bankable you will be in the eyes of any lender.