How to Make Any Business Financeable (Part 3 of 4)

By now, you understand that cash flow is king and profitability is non-negotiable, but even with those fundamentals in place, many business owners still struggle to secure funding. So what’s missing? In this part, we’ll dive into how to package your business in a way that makes lenders, investors, or buyers want to give you money. It’s not just about needing cash – it’s about showing why you’re a good bet. We’ll break down what financial decision-makers are really looking for, and how to present your business so it checks all the right boxes.

There are four major factors that influence the decision of a potential lender as to whether or not to lend money to your company. Those factors are:  

• Cash Flow  

• Profitability/Financial Trends  

• Leverage/Overall Debt  

• Collateral  

The company’s overall debt has a big impact on a lender’s decision as well. The lender will evaluate how putting new debt on top of existing debt will affect the company. They will compare the debt structure to the equity of the company to make sure it is not out of line. They also like to see that the owners have some “skin in the game”. This doesn’t need to be cash you put into the business, it can also be profit you left in the business which is why a business should have a savings account of some sort.  A company with significant debt and little to no equity may not be viewed as having much staying power.  

Remember, your company may not have sufficient cash flow today to service the additional debt, but if you can demonstrate how the new business (created by the loan) will provide the additional cash flow needed, it can go a long way towards convincing a lender that the loan is worth the risk.

If you didn’t see the right solution this week, watch for the last part in the series or contact us for an immediate solution.