What Lenders Look For In A Deal

There is a distinct difference between what a lender looksfor in a deal versus what an investor is interested in seeing. For the mostpart, the investor is interested in the idea. Does the concept have enoughjuice to propel it into the stratosphere? Because an investor knows they canchange the model, change the personnel, change location even change the name ofthe company if that is what it takes to make the plan a success.

A lender has no interest in the idea really. For instance,with invoice factoring, the collateral is tied to the accounts receivable sothe focus is in how the business operates. What kinds of decisions are theowners making now and in the past? If there is bankruptcy on record that speaksto poor decision making and the possibility of a borrower walking away fromtheir obligations. Does the borrower have solid financial documents, currentBalance Sheet and Profit Loss Statement that makes sense? Does the invoiceaging report have old over 90 day unpaid invoices? Are all taxes current andpaid? All of these questions speak to how the business is run. What the companyis actually doing is secondary to it having a good solid history of positive growth.

There is no substitution for smart decisions that lay theground work for an outside source of capital to provide the liquidity needed tohelp a business climb up the ladder.