.44 Caliber Commercial Loan Request — How to Tie it Together

Earlier today we were composing an LOI for one of our lending partners — a private equity group when two business partners walked in our offices. By the look on their faces you would have thought someone just shot their dog. We’ve seen the look before so we knew what was coming. They’d been turned down by four lenders. They asked us if we could get them financed and if so how soon they could get funds.

We have a lender that likes the potential of the type of project they have but looking through their loan request it only took us about 20-minutes to see what the problem had been. They still had several loose ends that need to be tied down before funding could be successfully completed.

This scenario is not uncommon. We all want the funds made available to us effective “yesterday”, don’t we? Sadly, that’s rarely possible regardless to how much or how little money you want. Sure, this borrower was only looking for a little over a half million dollars, but he hadn’t really thought things through.

Whether you are raising capital through institutional sources or a private placement, it can be a daunting task. Not only can it take an unsettling amount of time for management but, even for the most experienced, it can significantly increase your anxiety levels while running a business. While it is important to identify your best sources for financing, it is also critically important to focus on tying together all of the necessary components in the transaction.

Why? Because, when properly structured and executed, a good financing deal can lead to accelerated growth as well as increased profitability. However, when it is ill conceived or over-priced, the results can be disastrous.

Conditions change within the financial markets on a consistent basis. To access the funds you need, ask yourself, have I done everything possible to make sure the necessary revenue to service the debt will always be available over the term of the loan? Is there anything else you can do to ensure the loan proceeds provide the returns you want like contracting in advance for your raw material or feedstock? Did you get signed purchase contracts and service agreements from your customers? Have you got your insurance coverage ready to go as soon as the loan or investment is available?

Every day, we talk with developers and borrowers that claim they can’t get these things until they get financed. Yet, we see other developers and borrowers do it every day. And when you consider, it is VERY rare that one can get financed for more than a few thousand dollars without them in today’s lending environment, isn’t it worth the effort?

When venturing into such a dynamic arena with so much to gain, it is only good business sense to rely upon funding professionals with the experience and skill that can get you across the finish line.
If you need help, ask for it. Visit us tomorrow for another free commercial loan secret and be sure to subscribe to our RSS feed.

You can also contact us to ask questions and voice your concerns. Just pick up the phone and dial, CFIC Funding, Inc. today at 310-370-4871! Ask for David Young or Wayne Clinton. You can also visit http://www.cficfunding.com or mail david@cficfunding.com or wayne@cficfunding.com

Project Financing–Lenders Want to Finance Your Business

Did you know that there are lenders even in today’s market who are not only looking for businesses and projects to finance… they are actually eager to do so? So how do you position your company to be one of them? Keep reading.

Pull up a front row seat and listen in. Today we were talking with the Managing Director of the Private Equity Group we work with. He made the comment: “It’s very difficult to find developers that can do what they claim they can.” It was very similar to what the president of an Equipment Leasing firm said recently.

Think about that for a moment.

These legitimate and capable lenders are actively looking for more businesses and projects to finance. These are sources of capital that get loan and funding requests daily. Many are from sound business concerns with good ideas. But they’re not getting the necessary documentation to support the loan requests they receive. Consequently, they can’t fund as much business as they’d like.

What are they not getting that prevents them from funding the loan? It can be many things. It can be unsigned equipment orders, not getting the right permits and/or licenses, not providing signed purchase contracts or orders from your customers. Many times it comes down to not providing something as simple as a tax return. Often it’s not being clear with how you plan to use the loan proceeds.

If you want money to grow and develop your business, whether it’s $50,000 or $500 million, you have to forecast and plan each step of the way to make sure you have covered all eventualities. Make sure all your orders, contracts, quotes, permits and licenses are fully dated and signed before you send them to your lender or investor.

Be sure to provide a clear step-by-step description of how you see the transaction taking place. If your lender has already stated how it should go, say it again so the lender knows you understand. This is very important, as the lender will be more comfortable in working with a borrower that qualifies and understands his process and procedures.

Let there be no doubt, all lenders would love for the deal to come together and fund smoothly. Just like you. So, be thorough and make sure you give them what they need the first time.

If you need help, ask us for it. Visit us tomorrow for another free commercial loan secret and be sure to subscribe to our RSS feed.

You can also contact us to ask questions and voice your concerns. Just pick up the phone and dial, CFIC Funding, Inc. today at 310-421-7370! Ask for David Young or Wayne Clinton. You can also visit http://www.cficfunding.com or mail david@cficfunding.com or wayne@cficfunding.com

How To Get Your Loan Request Approved Faster

You want financing. You know that your business is a people business. One of the main objectives of a people business should be to make it easy to do business with you. So let’s help you make it easy for your lender to do business with you by approving and funding your loan request.

We review loan requests and new projects daily for a direct lender and a private equity group. Did you know that you can avoid the pet peeves that many underwriters have? A real thorn in the side of the underwriter’s and lender is when a developer or borrower will virtually hide how much capital they want to raise. We often get an executive summary’s or copy’s of a business plan and are expected to hunt through pages and pages of fluff and non-essential information to find out how much money they want to borrow.

Remember, we are in the finance business. We are NOT in your business or industry. We may look to support your industry or class of business, but we are in the business of providing growth capital in one form or another.

Consequently, on page one, you should always be sure to prominently state how much money you need to borrow to accomplish your goal and how long you want to pay it back.

If you know what type of loan structure(s) you want to utilize, please add that as well. For instance, if you want to secure the loan with real estate, inventory, equipment, receivables, stocks, bonds, etc. or any combination thereof, say so. This can help you save lots of time and make it easier for the underwriter to move your loan request along to approval. If you make it hard for the underwriter or lender to find the information they need, then you will find it far more difficult to get what you want.

Second, don’t try to tell the lender what kind of rate you want. By doing so before they are truly interested, you will probably find your loan request rejected. Do NOT kid yourself thinking you will qualify for the same rate as Microsoft or IBM. It’s highly unlikely you will. However, once you do have some documented interest from a lender in the form of an LOI or term sheet, that’s when you can discuss better interest rates.

Third, when you provide your projections in a proforma or financial model, most underwriters prefer to see them in an Excel spreadsheet format as it is far easier to track line items over several months or years. Often we’ll get a proforma or financial model in a PDF and end up having to tell the developer/borrower to convert it to an Excel format. This can add several days to the approval and funding process. But, with just a little forethought, you can easily avoid such a delay.

Remember, your lender and their underwriters, can be critically important to the growth of your business. But, at the end of the day, they are just human. Try to make it easy for them to understand your vision. Try to make it easy for them to do business with you.

If you need help, ask us for it. Visit us tomorrow for another free commercial loan secret and be sure to subscribe to our RSS feed.

You can also contact us to ask questions and voice your concerns. Just pick up the phone and dial, CFIC Funding, Inc. today at 310-421-7370! Ask for David Young or Wayne Clinton. You can also visit http://www.cficfunding.com or mail david@cficfunding.com or wayne@cficfunding.com