Import-Export Letters of credit

Whatever type of business finance you're looking for -- whether invoice factoring, purchase order finance, letters of credit, business or merchant cash advances, or even inventory finance --  there are a number of commonsense guidelines that will help you present well to the lender you need.

If you keep these rules in mind,  you'll be well prepared to present a credible face to the finance decision makers.

1.  Remember that you are not unique.  The funding company has seen plenty of people like you before.  It's their job to look at applicants.  So if they say they need something, they probably really do.  Why make things tough for the people who can give you what you want?  Just as you size up the people with whom you do business, so do they.

2.  Take the time to understand how you will probably look to the funder.  If you think about how you look from their point of view, you can begin to improve your presentation.   Almost everyone has problems of one sort or another.    What speaks most eloquently to the funder is how YOU are handling YOUR problems.  This is not to say that you will automatically get funded just for being straightforward.  But if your case is borderline, your attitude and preparation may well be the tipping point in your favor.

3.  Have a clear story and a clear idea of what you need.  Funding people appreciate applicants who know what they need and who can express it.  They don't want to help you tell your story, or imagine what you want to do.  The more precisely and clearly you communicate about your funding needs, the more easily funders can approve.  

4.  Remember that you need them worse than they need you.  It wasn't always that way.  The subprime mortgage fiasco was derived partly from mortgage lenders awash in cash who needed to write mortgages as fast as they could.  "They" needed someone, anyone, breathing to otherwise, who could apply for a mortgage. If we live to see another silly season like that, get money as fast as you can, and try to avoid being buried when things go bad.

5.  Learn what funders will accept and do what you can to shape your needs to match their comfort zone.  Different lenders have different styles.  If you can conform your needs to match what a lender wants to do, you'll be ahead of the game already.  Likewise, if you take the time to understand how a purchase order funder will operate, you will save yourself time when you want to get things done.

6.  Realize that even if the process is new to you, it's not new to them.  

7.  Be honest and be especially aware of what a finance company would consider important.   We had an experience several years ago where a mining company came to us seeking over $20 million to revive a dormant mine.  Two months of due diligence by a hedge fund later, we were one week from closing.  The fund analyst had one final mandatory call, wherein he asked the company owners if there was anything negative in their past that they wanted to disclose.   The owners said no, there was nothing to disclose.  When the background check turned up bankruptcy filings five years earlier by two of the company's owners, that was the end of the funding.   One executive explained to me later that he had forgotten about it and hadn't realized its importance.  The sad part (sad for us, considering the potential fee) is that this funding would have gone through if the bankruptcies had been properly disclosed.  Instead, the background check led the fund to believe that the owners' representations could not be completely trusted.  

8.  Don't wait until the last minute to seek funding.  There are generally two sorts of people who wait until the last minute.  One type doesn't realize how critical the finance component of the business is.  As a result, they regard it as an afterthought, and are surprised when the order they worked so hard to get vanishes because they weren't prepared to finance it.  The second type really has a business, and the door opens to a newer, larger piece of business.  If fortune smiles upon you in that way, maybe the finance gods will smile too.  We'll help if we can.

9.  Finance people want to lend.  True, they also don't want to wake up in the morning trying to figure out where their money went.  But certainly, you can bet that everyone is looking for good people and entrepreneurs to finance.   Be that good entrepreneur.

10.  The Golden Rule is also good business.  Do unto thy finance company as thou would have thy finance company do unto you.