Obtaining finance

Before assessing funding from a financial institution, try to access it via friends, family or “fools’.

• Simple presentation

In raising money for a small business, you need to make a quick, simple presentation to a lender.

You need to show:

• why the business is sound or why your idea will work;
• how much money you need;
• when the money will be paid back, and
• what security you can offer.

• Providing figures

If your business is operational, submit your latest annual and/or monthly income statement sheets. If your business is a sole proprietorship or a partnership, you may have to personally guarantee any loan. In that case, submit a statement showing your personal net worth (assets less liabilities). Also, you should provide a cash flow projection indicating when borrowings will be repaid.

• Playing the part

The financier’s opinion of your capability and trustworthiness will be a major factor in the bank’s (or any lending institution’s) loan decision. Appear relaxed and confident about your business prospects. If you are seeking funding for a relatively new business, include a résumé (list) of your previous accomplishments in your presentation package.

• Customising your presentation

Appeal to the needs of the person you are approaching for money. If you are seeking loan finance, emphasise the certainty of your ability to repay the loan – don’t emphasise prospects of unrealistic profits. Remember, debt financiers do not share in profits. Big talk about profits will make a debt financier view you only as a risk-taker or unrealistic dreamer.

On the other hand, if you are making presentations to equity (share) investors, you certainly want to emphasise your profit potential