How to Get the Credit You Want

As an entrepreneur, how can you prepare yourself to go to a lender and to get the necessary line of credit and best terms?

Preparations

Before you meet with a lender, you will want to detail the investment, outline the risk, and prepare the budget. All of this information can be presented professionally in a binder.

The Investment

Before approaching a lender, you should outline what the loan or the line of credit would be used for. Once you have determined what you need the money for, you can estimate how much you need, the break-even point, and the expected return on investment. It is helpful to think of the loan in terms of investment, rather than expenditure.

The Risk

The lender is also concerned about risk. You can be transparent and prepared by creating a risk assessment that identifies risks in the company, their likelihood, and countermeasures. A few examples of risks include: loss of customers, bad debts, declining prices due to competition, quality problems, increases in cost, changes in regulation, or loss of key employees. The risk analysis helps build confidence in the entrepreneur’s ability to repay the loan and reduces what-ifs.

The Budget

Having your financials in order is a pre-requisite to getting a line of credit or loan. Make sure you have accurate historical financials and budget that accounts for how existing capital and potential investments will be used.

The Presentation

You will want to have a professional presentation. A binder with all your documentation is a great way to do this. Your binder should include the following:

Documents: Include incorporation documents, bylaws, and key agreements.
Profile: Detail what the company is about, key personal, & board members.
Products: Include product sheets, price lists, and market analysis.
Customers: Specify existing customers, anticipated growth, contracts & orders, etc.
Marketing: Include your marketing plan and any related materials (ex: brochures).
Organization: Detail ownership structure, organization chart, employee list, and job descriptions.
Risk Analysis: Outline the risk assessment and a SWOT Analysis.
Financing: Include your investment plan, cash flow budget, and long-term financing requirements.
Financials: Include your tax return and financial statements.
Budget: Detail your operating budget and liquidity budget.

Negotiation

When it comes to loans or credit, a number of things can be negotiated including the amount of the loan, the interest rate, administration dues,collateral for the loan, etc. One’s ability to negotiate can make a huge difference. To help better your odds, you should meet with at least two lenders and entertain your options. By doing your research and determining your options, you demonstrate that you are price aware and also cost-focused.

Getting Started with GrowthWheel

If you need help preparing, the first step is connecting with a GrowthWheel Advisor. Mark Johnson, the Executive Director of the Technology Innovation Center, is a Certified GrowthWheel® Business Advisor.

Once you have connected with an advisor, he/she will send you a 360 screening. After completing the screening, your GrowthWheel Advisor will recommend decision sheets to help guide decision making and create a 30-60-90 action plan that outlines the decisions and timeline.

Send us a message today to get started!