Buying Your Own Business by Russell Robb

Author:Russell Robb
Language: eng
Format: epub
Tags: ebook
Publisher: F+W Media
Published: 2008-10-15T00:00:00+00:00

BANK LOAN SUMMARY

In summary, the critical issues in obtaining a bank loan are the following:

• Prepare a formal written business plan within which you propose to operate. Additionally, make a verbal presentation that is crisp and makes sense.

• State exactly how much money you need, why you need it, and how you will repay the loan.

• The key factor for the banker is to be convinced that your company has the ability to service the debt and repay it. A detailed cash flow analysis month by month is critical.

• In bankers’ jargon, the 6 Cs of credit are:

Character: The key to a long-term relationship

Cash flow: Ensures repayment

Capital: Necessary to run the business

Collateral: To cover any shortfall in the debt to equity

Condition: Lender’s tolerance of risk

Capacity: Ability to earn more money

• Do your research up front by knowing what bank is most apt to be interested in your industry and/or your company. For example, the Silicon Valley Bank, with twenty-seven U.S. offices in fourteen states and three international subsidiaries, specializes in emerging and rapidly growing technology and life science companies. Unlike most conventional banks, which shy away from black-box products or software companies, this billion-dollar bank embraces these companies. Over the last twenty years, the Silicon Valley Bank has loaned money to 30,000 companies including former startups such as Cisco Systems, Electronic Arts, Infinity, IDS Uniphase, etc.

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