Post a new topic
    31 Replies Latest reply on Jun 6, 2008 10:18 AM by heretohelp

    Business growth loan

    criterion3000 Newbie
      Can anyone tell me what is most important to the banks when a company is looking to borrow for growth purposes? We are a family owned business that has been around over 30 years and we have never borrowed any money. Our product is very much in demand to the point where we just can't handle it anymore and end up turning away business. We need to grow but inorder to do so we will need to increase everything at once; a new or larger warehouse, more sales people, more equipment, more trucks and more workers. it would be very difficult to do one without the other. Any suggestions?
        • Re: Business growth loan
          Lighthouse24 Ranger

          You are talking about business expansion financing, and most lending institutions have a variety of programs and flexible options available. It is generally easier for an established business to get this type of loan -- one that will add productive capability (like facilities, equipment, and tools) -- than it is to get a loan to buy consumables (like supplies).

          The four most important things to the bank will be: 1) your business plan (complete with an executive summary that grabs their attention up front), 2) the names and resumes of your owners and key staff members, 3) a statement and forecast of your strategic competitive position within your market, and 4) an itemized listing of exactly how and when you will allocate and spend the money you are requesting (with quarterly cash flow projections).

          With your long history and what sounds like a bright future ahead, a well-presented request should get you the funds you need. Hope this helps. Best wishes!
          1 of 1 people found this helpful
            • Re: Business growth loan
              criterion3000 Newbie
              Thank you for your reply. Like many companies (I assume), we are great at doing what we do, we are not so good, mostly because we don't have the time, at completing things like business plans. Also, not many people are familiar with what we do. It is difficult to get bankers and others to understand why anyone would pay us as much as they do to install our flooring systems. I have contacted my local SCORE office and will be meeting with them after the holidays.
              Thanks again.
              • Re: Business growth loan
                criterion3000 Newbie

                In your post on Dec. 8, you mentioned that I should have an executive summary that "grabs attention". Do you have any suggestions on just how to do that? What would grab a banks attention the most; ROI, experience, market share?
                  • Re: Business growth loan
                    Lighthouse24 Ranger

                    A business plan is normally written for an "internal" audience to guide the efforts of the business owners and managers. The bank is an "external" audience, so the executive summary has translate the plan into a clear, yet brief and concise snapshot of your business operation that anyone can understand. In effect, it is to your loan request what a movie trailer is to a feature film. So it's not only WHAT you say in that one-page summary, but HOW you say it.

                    By "grabbing attention" I meant a banker has to look at the executive summary and be able to see in about eight seconds that you know what you're doing and that all the detailed answers to his/her questions regarding your business, your people, your customers, the loan, its use, its repayment, etc. are going to be well-documented and fully explained in the package somewhere. The executive summary doesn't get you the loan, but it does help ensure that someone actually READS your plan and LISTENS to your business case.

                    It appears from the dialogue in previous posts that you've already contacted and are working directly with other consultants on this. Any one of them should be able to guide you on the format and content details, and give you some winning executive summaries they've prepared for other clients as an example. Best wishes!
                • Re: Business growth loan
                  LUCKIEST Guide
                  Criterion, It is great that your business is doing so well and it is time to expand.
                  Lighthouse gave you great suggestions and you planning to visit SCORE is also a positive.
                  Just for your info, you can visit SCORE online (even today), find online counselors and not have
                  to wait until after the holidays.
                  Good luck, LUCKIEST
                  • Re: Business growth loan
                    Mark SLF Wayfarer
                    I talk with many businesses about this very same issue. Can you tell me if your product is sold to businesses or to consumers? Many companies that supply business find it extremely difficult to grow because their customers are taking 30 to 90 days to pay. When you enter a growth curve money is going out faster than comming in. There is an example of this very situation at http://www.spotlightfinancial.biz at the bottom of the page. If this is your situation than you may want to look at a line of credit tied to receivables or to invoice factoring as an option. This will enable you to have postitive cash flows.
                    The extra equipment you require could potentially be purchased via a leasing as many leasing companies only require the equipment itself as collateral.
                    Another option, depending on your industry, is something call purchase order financing. If you receive a very large order some funding companies will lend you money to get the job out the door based upon the purchase order you receive.

                    Hope this helps.
                      • Re: Business growth loan
                        criterion3000 Newbie
                        Thanks for the good info. Mark. I will look into it all.
                        • Re: Business growth loan
                          justice1 Newbie
                          Hi, I just learned about this site and was looking for some answers on expanding our business. Our business is exactly as you described as difficult to grow because customers take 30 -90 days to pay. I just learned about invoice factoring but am very leary and just need some advice. Thanks
                            • Re: Business growth loan
                              loan guy Wayfarer
                              Just check the repayment clause on the factoring company. email for more info. cory@walkerlender.com
                              • Re: Business growth loan
                                Mark SLF Wayfarer
                                Justice 1. I would love to help you out. There are pros and cons to factoring invoices and it is very good that you are leary. There are a lot of factoring companies that can hit you with a lot of hidden costs. Factoring invoices is becoming more and more popular, especially for companies that are trying to grow. I have an example of factoring at the bottom of my home page you can take a look at (http://www.spotlightfinancial.biz/)
                                Factoring is not a loan. You are selling your invoices at a discounted rate to a lender (factorer). This is why it is not your current credit situation that is important but rather the credit worthiness of your customers that are important. Used correctly, under the right contract with a factorer, you can choose freely what customers and or what invoices to factor. I would be leary of a company that wants you to factor all of your invoices. This solution will not provide you with flexibility and will end up costing you more. The draw back for factoring can be cost or some customers may not like being contacted by another company to collect for your invoices. Usually companies will inform their customers that they have outsourced their accounts receivable. If you have one person or more dedicated to accounts receviable you may be able to have that person combine jobs because instead of collecting they are simply faxing a copy of the invoice to a factorer. A factorer will can provide credit checks on new customers and may take on the risk of a customer not paying at all.
                                There is also some information that can be found at http://slfsmallbusinessloans.blogspot.com/.

                                Hope this helps!
                                  • Re: Business growth loan
                                    justice1 Newbie
                                    Hey Mark SLF, thanks so much for the info. I've been checking our your web paige and it is exactly what we are going through. My question on factoring however, we have over 100 customers that we invoice each month. We have over 1,000, but either they are cash or only purchase once or twice throughout the year. So, how would credit checking for our customers work? We collect an average of 90% of our recievables, but it still usually takes 30-90 days to get paid. We have to buy our inventory cash up front, so with growth it really hits our cash flow. We have had so much growth in 06 and expecting double in 07, and now I'm am finding ourselves in that situation where we are having trouble keeping up with the bills and our company has always had a great reputation for paying our suppliers, so I'm worried about that. We are a family business, so payroll is easier but we still have to pay personal bills as well. I just don't know which route to take. My dad started this business in 1980, and it's always been tough to grow, but we have never had growth like this and we always had my brother in law's trust fund to bank roll us, but he left the business at the beginning of the year to do other things, and so we have been spinning around and around like crazy and I can see we have to act soon. I'm just trying to make the smartest decision.
                                      • Re: Business growth loan
                                        Mark SLF Wayfarer
                                        WOW! That is a lot of customers. If you don't mind me asking what type of business are you in? Credit checks may only be run on your largest customers or customers of yours that are typically paying greater than 60 Days. It is very doubtful that a factoring company will apply credit checks to every one of your customers. They may not do any credit checks if you accept recourse (if your customer does not pay you are held responsible). I find every situation runs a little different. It would be best to submitt your information to a factor and receive a no obligation quotation. That way you know what your exactly what you options are with no obligations. If you click on my profile and give me a call I would be very happy to help you.
                                        • Re: Business growth loan
                                          FactorGirl Wayfarer
                                          Hi,

                                          I will be happy to answer your questions on factoring via email or a phone call. Please check out my profile.

                                           

                                          A few words about me and my business:

                                           

                                          If your business needs money to grow or is currently experiencing cash flow difficulties, we can provide immediate cash. To qualify, all you need to do is sell products or services to creditworthy companies or the government. You can use your accounts receivable invoices, money that you're waiting 30-90 days to receive from your customers, to receive cash immediately. And we come through even when the banks say "no". All this without upfront costs and long-term contracts. We also love to work with start-up businesses! If your business could profit through immediate funding, call now: (407) 366-8676 and ask for Portia, or email me at portia@paragonfinancial.net
                                    • Re: Business growth loan
                                      loan guy Wayfarer
                                      So mark do these people lend on invoices also or just cc receivables.
                                        • Re: Business growth loan
                                          Mark SLF Wayfarer
                                          I know of two products available. One is true factoring and one is a hybrid between factoring and a line of credit. Both products represent the sale of a companies invoices, however the line of credit is more of an interest bearing product usually 2 to 3% above prime and can be seemless to a companies customers.
                                      • Re: Business growth loan
                                        loan guy Wayfarer
                                        Most banks look at assets and want to how much money your are making, I know it is a simple answer. I can assist you in both cases. Email me cory@walkerlender.com.
                                        • Re: Business growth loan
                                          businessplan Newbie

                                          Hello,
                                          A solid Business Plan is the key to sucess.
                                          If you need help,check our company.
                                          www.nextiq.com
                                          Thanks
                                          Mat
                                          • Re: Business growth loan
                                            MaxAdvance Wayfarer
                                            Hello,

                                            My name is Solly and i am a financial consultant at a company called MaxAdvance in New York city. We are currently helping several small businesses with our cash advance program. What we do is offer unsecured loans to be used for whatever you desire without collecting a collateral. We won't take compounding intrest, just one set factored rate wich means you can take as long as you need to pay it back without any penalties. CREDIT IS NOT AN ISSUE WITH US. All you need is a credit card terminal. Please feel free to contact me at any time at 1-866-629-4464 Ext:238.

                                            Take care and good luck,

                                            Solly Mizrahi
                                            MaxAdvance
                                            smizrahi@maxadvance.com
                                            • Re: Business growth loan
                                              designer Tracker
                                              Hello. I can add that a bank will want to know what you have as "collateral". The more you have in assets, property, value...the lower the risk to the bank and then easier to obtain credit risk approval. Every loan is written in great detail with the shareholders in mind and how the loan or business will benefit a community. That's how the business plan and projection come into play and it all pulls together as a "package". You have to have history, real-time and a future.
                                              • Re: Business growth loan
                                                Bridge Navigator
                                                Depending on the size of your company, we work with numerous Private Equity Groups in helping them identify investment candidates.

                                                Several of the groups pay all of our fees as they are looking for proprietary deal flow.

                                                A private equity investement may be an option for your company. Most PE groups look for growing, well run companies where management is looking to stay on board and help grow the comapny. They provide liquidty and access to capital for owners.

                                                Please contact me if you woudl like to discuss further.

                                                Greg Dupuis
                                                Bridge Ventures, LLC
                                                813-343-2214
                                                gdupuis@bridgeventuresllc.com
                                                www.bridgeventuresllc.com Report as inappropriate
                                                • Re: Business growth loan
                                                  heretohelp Newbie
                                                  Hi,

                                                  Please contact me at 781-341-0700. I can definitely discuss with you how you can meet your capital needs.

                                                  Best,
                                                  Tiffany