Your Best Chance To Impress

Just last week, we had 2 different loan requests delayed even though the lenders liked them at first glance.  Why were they delayed?  Because the borrowers didn’t provide enough detail in their financial models or proforma’s. All too many times we get loan requests that are rejected primarily because their financial models didn’t demonstrate that the borrower really knew what their regular expenses would be and/or properly illustrate how they were going to generate revenue to service the debt and remain solvent.

Understand that lenders and their underwriters rely on the financial models or proforma’s to provide a clear picture of the firm’s ability to generate revenue and meet their obligations.

Financial models and proforma’s need to be very detailed if you want your loan request funded. Some underwriters and lenders will review the proforma before any other document you give them. Here’s why; because the financial model or proforma will tell them if you have a good handle on the day-to-day requirements to be successful with your business or project.

Want a few tips in preparing your financial model or proforma? Provide the information in an Excel spreadsheet format as it makes it much easier to follow specific line items over the months and years. Always provide projections for, at least, the same period of time that you want to repay the loan or investment. Add line items for each and every source of revenue so there’s no mystery about your ability to repay the loan or investment. Again, be very detailed about your monthly and annual expenses.

Be sure to include repayment of your loan at the same interest rate being offered. If you’re not sure what that interest rate will be, go with a higher rate. If your project or business can cash flow positively at the higher rate, then the lender will take note and will be more likely to embrace your request.

Your CPA or accountant should be able to help you. But, if you’re not sure that your financial model or proforma is up to the task, ask us and we’ll be glad to give it a FREE review for 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

Don’t Overlook the Obvious — Share Your Vision to Get Funded

Earlier today I spoke with a very successful gentleman that specializes in financing dairies. We both had to agree that many more loan applications would be approved and funded if the borrower or developer did a better job with their documentation. So what’s the secret of getting deals funded? Funding gets approved based on the documentation… not based on conversation.

So when you’re ready to complete your application or send in your loan request, ask yourself: Have we included all the documents requested by the lender? If you cannot provide a specific document that was requested, explain in writing why not. If you’re business is too new, say so. If you haven’t got your tax returns back yet, say so. It doesn’t matter what the reason is, say so. Obviously, you always want to be tactful in how you say it, but say it.

Ask yourself: Have we been very thorough in describing what you want to accomplish? Can the lender or underwriter see the vision and embrace our request? This is accomplished by being thorough, but not too technical. Yes the entire point is to get the lender to embrace your vision. Have you told them why you are a safe applicant to lend to and/or partner to work with?

You also want your financial model or proforma to be clear and thorough as well. Cab you show the lender you understand your business and know how to make it grow? Have you shared realistic numbers with them? Don’t base your projections on the high end nor do you want to be too conservative either. If you do, you run the risk of looking like you don’t know how to run a successful business. That will likely get you a big red NO stamped on your application or loan request.

It is also very likely that you will need to share several prior years of tax returns and financials. Make sure they are legible and in order. If not, take the extra few hours necessary to make sure they can be easily read. Again, the easier you make it on the lender or underwriter, the better your chances.

As an example, we’ve had clients in the past that had very strong applications and loan packages, but didn’t qualify for the lender. On several occasions, the lender or I have referred these applicants to other lenders that were the right match so the applicant could get funded.

So please, don’t overlook the obvious. Be honest, be thorough. And feel free to ask if you need help.

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