How To Raise Funds for Your Startup

The 4Cs of Commercial Lending





Advice on how to obtain a commercial loan for your venture by Venture Planning Associates






What you are selling the banker on, what exactly is involved in the business situation, such as the type of service, management expertise, and marketing strategies. Some industries are off limits or not currently supported by lending institutions. It is important that you know the current status of your industry.




Cash Flow

Prove that there is cash available to repay the loan.  Prepare a business plan that shows an equal balance of equity from principals, equity from outside investors and equity equivalents (build out allowances, supplier financing or flooring, etc.) in place.  Then have your business plan always have a coverage ratio for interest and principal of 1.3 or greater.





Banks aren't venture capitalists or equity participants.  However, some banks in Silicon Valley and other high tech areas will co-invest or lend money to startups if there is already a known venture capital company or other major investor.





What are the credentials of the parties requesting the loan? Do they have positive track records in this industry, do they have positive banking relationships in the community, and are they known quantities?


Venture Financing

Venture Financing Chain

Yin-Yang of Venture Financing





Dealing with Banks

Banks are businesses too.  They have stockholders to whom they must report and they are highly regulated by federal and state agencies. You must prepare a comprehensive documentation if you to obtain a commercial loan for your venture... More


Debt vs. Equity

What Banks Look For

Credit Rating

After the Loan