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