How to Approach Your Lender When Buying or Growing Your Company
Category : General
If you are looking for funding to broaden your small business organically or through acquisitions, purchase another similar-sized or bigger business, or buy out a partner or co-owner, here are some actions to take to locate a loan provider. You have to discover a loan provider who is willing to provide you and/or your company with the financing and to determine equity sources that might be an excellent suitable for your small or medium organisation.
Approach the lender at each banks that you believe might offer a small business loan to your business. Ask for a meeting. In the conference ask the following 3 (3) things:
- Exactly what are the qualities of successful business, as you see it? Put another way, exactly what makes you choose to lend to a company? In responding to this concern, get the lender to go beyond stating things like “strong balance sheet, strong capital”, and so on
- Exactly what are the essential characteristic and skill sets of the leaders/ management group of these effective business?
- Who are a few of the equity sources of capital that these companies use or that support/invest in these companies?
- (Bonus offer concern) What do you view as the best pain points or issues for those companies that are on the edge of achieving success (as specified by the lender)?
If you and your firm match the characteristics and personality traits that the loan officer considers is exactly what makes for success, then you have actually most likely found your company banker. And, if that lender likes you and your company as a possible lending customer, then that lender will normally be willing to make the intro to the equity source. Now you don’t just have a within referral, however most likely a strong recommendation since the lender will know that an equity infusion might be needed to close the transaction.
It works both methods. If you already have a relationship with a private equity firm or equity capital firm, then ask to recommend a great lender. The lending institution they suggest will understand exactly what the endeavor capital/private equity firm funds, how they fund, and how they normally structure their equity participation contracts. (This structure might influence the loan files.).
Above all, when conference with the lenders, remember that you are interviewing them for the future. That’s the position you are taking. If you are in fact looking for a business to buy, refrain from mentioning that fact. If the banker asks, inform him or her that you are preparing, but not yet all set to purchase. Bankers like it when you prepare in advance. Likewise, the banker might have a company in his/her portfolio that you may like to purchase. As soon as you develop a relationship with the lender, she or he will be more comfortable speaking with you about business in their portfolio with business owners that wish to offer and making the introduction. Baur on WSJ, to that comfort level, the lender will be resistant and might seem like they are violating their client’s trust.