Tag Archives: how

How a Financier Reads a Business Plan and Tips for Writing a Business Plan

June 10, 2020   Fast Loan

This article explains the importance of a business plan when seeking help from a financier. In addition it provides useful tips for writing a business plan.

A business plan has four main purposes.
1. To establish the viability of your business
2. To document your objectives and forecasts for the business
3. To benchmark and measure progress
4. To communicate your plans to outsiders – such as a financier

There are two types of financier, the lender and the investor that you may approach or who may be interested in your company venture.

The Lender i.e. a bank will be looking to see how you propose to handle potential risks that your company may encounter. Their main concern is regarding the security of the repayments for the money they have loaned you, and will therefore want to ensure that you will be managing the company’s risk wisely. As well as checking your credit rating a bank manager may ask you a number of questions in an interview which you will need to be able to answer, such as:

• Why do you need the amount requested?
• What will you do with it?
• How do you know it’s enough?
• How much less can the company survive on?
• What other sources of finance do you have or who else are you borrowing from?
• How are you going to pay it back?
• What collateral or guarantee do you have?

You need to ensure that these questions are already answered in your business plan as it is much harder to change the manager’s mind in your interview with them. The bank will look for collateral and cash flow within your plan.
Make sure you are not afraid to ask for the exact amount required, because if they lend you an amount that is not enough to get the business going and you need to ask the bank for more money, they may question how well you have planned your financial requirements. This could make them sceptical about lending you more.
Professional Investors accept risk, although they will try to limit their exposure to it. The questions they may be asking themselves while reading your business plan are:

• How much can I make? – They are usually looking to make around 30-50% annual compound growth on their investment
• How much can I lose? – What is the risk of losing their investment?
• How can I get my money back or out of the company?
• Who else is investing it this company?
So now you know why it is important to have a business plan when seeking investment from a financier, the article will give some useful tips for what to include in the business plan. The business plan should summarise the following points:

• The overall objectives of your company.
• Who your clients will be and their current buying behaviour.
• Who your suppliers are and how much bargaining power they have.
• Who your competitors are and how you will differentiate yourself from them.
• Who are the key personnel and what their core skills are.
• How the business will operate, including the assets needed to run it.
• How much finance is required; and contingencies should sales fail to meet the forecasted level.

To conclude, business plans are very useful for raising finance for a business. Even if you are lucky enough to be in a situation where you do not need to raise capital, preparing a plan will help focus your thoughts, check your calculations, help you monitor results and enable better communication of your ideas.

Read More

SBA Loans & Finance Consultants (Page 1 of 2)

May 30, 2020   Auto Loans

The United States Small Business Administration (SBA) is the government agency designed to assist entrepreneurs in America with the funding of their small businesses. The SBA includes an assortment of tools and programs for every phase of business from a start-up advice, legal advice for more complex business transaction, and of course the government guarantee loan program they are so well known for.

SBA Loan guarantee programs help small businesses obtain financing by lowering the risk to the lender. With these programs, the SBA sets the guidelines for the loans while the Lenders make the loans to the small businesses. SBA backs those loans with a guarantee that will eliminate some of the risk to the lenders.

Most people have heard of SBA loans, so this is no secret to reveal. However, many Finance Consultants who are pursuing commercial loans often overlook these transactions as potential targets for their marketing.

The Project Corporation is a commercial finance consulting firm with more than 20 years experience. We have worked with hundreds of other Consultants through the years, and one thing we see is that many Consultants chase deals that are associated with daydreamers, people that are financially broke, and businesses that are in desperate situations. It is very seldom these daydream, desperate type of deals will ever close. The Consultant will never earn a commission. On top of that, these bad deals absorb the valuable time of the Consultant. Time is a constraint for all of us. We all need to place a value on our time and understand that there are deals that we need to let go. Otherwise we will end up like the desperate people that are calling seeking daydream funding.

There are literally thousands of good deals that each Finance Consultant can pursue. By picking an industry that you have a background in, or an interest in (based on reasoning), you will have a market of thousands of prospects to contact. An example is hotels. There are thousands of potential hotel financing deals in the U.S. How many hotels are in your area, or your state? Most hotel chains require a location to meet certain criteria for their facilities. These hotels need to remodel, or update their facility over certain intervals. Others are building new locations, or simply need to refinance their current location. These are real deals, and not daydreamers looking for quick millions on a deal that will never get funded.

How many other industries are like hotels where there are thousands of deals? How many industries are you familiar with? If you break down those industries into different segments, how many prospects are there? How many would fit within an SBA loan program? When you focus on real deals and stay away from the daydreamers, you will have success.

Despite the industry you choose you need to develop a quick qualifying process. Remember your time has value, but time is a constraint, so you want to use your time wisely. A quick qualifying process does not mean that you will instantly be ready to announce funding terms. It means that you will have a comfort level with the prospect, that they have a real deal that you want to pursue, and the prospect is serious about obtaining funding. If they are not serious, or don’t supply the information you need for getting to your comfort level, then let them go. Remember there are thousands of good deals out there. Don’t get hung up with time wasting non-potential deals.

Read More
« Older posts