Confused by all of the different types of lenders and investors? We’re not. Which one might be right for you? How many different types of finance are there? How many different types of lenders and investors are there? Where are they? Do you require different types of lenders on the same transaction? What do they want from you?
Let’s not kid anyone; raising funds for your business is no easy feat. It’s hard work even for an expert. The financial landscape has completely changed in the last five years and it’s continuing to change on a continuous basis. Access to business finance through traditional methods, for the vast majority of businesses, has ceased. The market is still in a tumultuous state and lenders are acting as such. Lenders and investors have always been interested in the perception of risk and business owners are traditionally unskilled at explaining what they do to mitigate and manage risk. So, are you the reason you face difficulty borrowing or attracting money, or the lenders? How do you know?
History indicates that business owners, without ill-intent, misrepresent who and what they are, what they’re asking for, and why. Innocently business owners understate the financial ability of the company because they don’t know how to present information the right way. Business owners typically show little understanding of how to meaningfully exhibit value that minimizes risk. Think of a teeter-totter: value on one end and risk at the other. When risk goes up value comes down. When risk goes down, the value shoots up. Controlling and presenting the perception of risk is critical to any business raising capital.
While we work only with our clients and their advisers, we still maintain a vast network of relationships with lenders and investors that crisscross the financial markets. Understand that financing terms are always relative to risk and competitive financing alternatives. Lending rates and the amount of money available is also impacted by how well the lender knows your business. So, how well does a lender or investor know your business?
Don’t blame the lender or investor if you’re left feeling that they just didn’t get your business. It’s your responsibility to help them understand.