One Step Up in the Money Hunting Game

Looking for a small short-term loan? Actively seeking venture funding for a new project or acquisition? Strong preparation and careful planning can make the difference. It’s important to put your company in the tip top shape. Here’s a list of l0 things you can do before your seek funding too help improve your chances of obtaining a loan or investment capital.

  • Put your business plan in order. Most financing sources want to see a full-blown business plan. Write one if you haven’t done so already. If you have, review it to make sure it accurately and efficiently reflects the company’s current story. Is it easy for a potential investor to get a handle of your plan by skimming the plan? Have you effectively demonstrated your understanding of your product and your abilities to turn a profit? Is your Executive Summary strong? Do your financials show when and how you will reach long-term profitability? Did you honestly assess the market and your competition? Do you have any third-party data to back up your assumptions? Does your plan offer a clear path to repayment of the note or return on investment?
  • Get your paperwork in order. You are going to need specific documents and numbers. It’s important to have this information in order before you go through the loan process. It’s a good idea to meet with your CPA and other financial advisors to help get your house in order. Among the documents you’ll need are: * Accountant-prepared business financial statements (P&L, balance sheet) for the past three years and as far into the current year as feasible. The more detailed the better. * Business tax returns for the past three years. * Most recent federal tax returns for each principal owner. * Personal financial statements for each principal owner. * Organizational papers including articles of incorporation, dba papers, business licenses, etc. * Names and contact information for at least three credit references.
  • Be prepared to detail how you will use the money. You may want to include a pro forma that includes projected financial statements for the next 3-5 years. In the pro forma give a clear description of how you’ll use the proceeds and how you intend to pay the money back. Reality check. Venture Capitalists are going to want to secure a minimum 25% annual rate of return. Show how you’ll open new markets, introduce new products, improve efficiencies. Try to tailor your presentation to the needs of the funding source. If you are seeking debt financing you’ll want to stress your ability to repay the loan. If you are going the VC route you’ll want to emphasize a strong rate of return.
  • Be prepared to back up your ratios . Bankers tend to focus on business projections that are in line with industry averages which they may get from operating ratios published in the Annual Statement Studies from Robert Morris Associates. A red flag will go up if your projections fall beyond those ratios.
  • Check your credit. Credit Scoring is used by many banks to determine whether you qualify for a loan of not. Credit scoring looks at credit history to determine if you are a good risk or not. You can be assured your past payment records will be examined. And you may asked to guarantee a loan personally. Get a copy of your credit history by contacting the major credit bureaus- TRW/Experian, CBI Equifax, and Trans Union. Check it for accuracy and correct any possible mistakes before your start the loan process.
  • Incorporate. This can help. There is a certain recognized stature attached to corporate status. Investors and banks tend to feel more confident about your business when it is incorporated.
  • Register your business with Dun & Bradstreet . Get a DUNS number. It identifies your business and makes it easier for potential investors to look up.For further assistance in securing a loan or venture financing, writing a business plan or getting your “house” in order, contact John McGovern, CEO, Grimes, McGovern & Associates, (917) 881-6563


Grimes, McGovern & Associates provides expert advice during all phases of a transaction. Contact us today for a confidential consultation: John McGovern, CEO,, (212) 255-9700.


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