Borrowing for the business.
WHAT LENDERS ASSESS
Whether you can repay Whether there is security Your record The purpose
WHY REPAYMENT CAPACITY COMES FIRST
Lenders want interest, not your assets.
WHAT THEY TYPICALLY REQUIRE
Financial statements Bank statements Registration documents Tax clearance A business plan Security, frequently Personal guarantees
WHAT SECURITY MEANS
An asset the lender can take if you do not repay.
WHAT QUALIFIES
Property Equipment Receivables, in some arrangements Cash deposits
WHAT TO ESTABLISH ABOUT ANY FACILITY
The total cost The term The repayment schedule Fees, including arrangement and early repayment What triggers default What happens then
WHAT TO CALCULATE
Whether the business can service it in a poor period.
WHY A POOR PERIOD
Facilities are taken out in good ones.
WHAT TO BE CAUTIOUS OF
Short-term high-cost lending Rates quoted per day or week Anything requiring access to your phone or contacts
WHAT TO PREFER
Facilities matched to the purpose.
WHAT THAT MEANS
Long-term assets funded long-term; working capital funded short-term.
WHY
Funding a building with a short facility guarantees trouble.
WHAT TO KEEP
The agreement, and every payment record.
