Helping companies that I believe in raise the financing they need to grow is, next to watching my kids do their best at school events and sports events, probably my favorite thing to do in the whole world. It’s especially gratifying when a smaller company doing great things is really ready to grow, but they don’t have the experience or the talent onboard to navigate the hair-trigger minefield of business financing. For most of the companies we help, their relationship with banks and lenders is based on fear, meekness, insecurity, and a lack of understanding that banks actually want to lend you money! The missing strand of financial DNA in most small companies seeking financing is experience. There’s no way anyone (or any company) can know what it’s like to borrow $1,000,000 until they have borrowed $1,000,000. And if no one on their staff has ever done it, they’re paralyzed … deer-in-the-headlights frozen.
A company I was helping recently wanted my services not for any new ideas I might bring to the table, but just the opposite … for my years of experience in working with banks and securing 7 figure financing in a professional manner that helped both lender and borrower. The bonus in this true story is the headline you see above. Because of my experience, my clients saved $20,000 in less time than it takes to drink a glass of wine. I can validate this because we were in a bar, celebrating, when it happened.
A small group of us were celebrating; my client and me, and two gentlemen from the bank that had just agreed to loan my client about $1,000,000 to grow the business. It had been a long process. It wasn’t the first bank that we had approached and there had been a lot of hurdles to clear and obstacles to surmount. But victory was ours. We had gotten the loan. But, even with the celebratory cocktail ordered, the bank was asking for more (after all, they were bankers!) They were asking my client for an additional review, or audit, of all my client company’s financials for the year prior to the fiscal year’s information which they had analyzed and approved for the loan. It was an unnecessary request. But my client didn’t know that. And it was an expensive request; a review on that scale costs anywhere from $20 to $40k depending on the complexity. But my client didn’t know that either. The bankers looked at my client. My client looked at me. And I looked back at the bankers and said, “Do you guys really need that information? Is it really going to change anything that’s already happened? And more importantly, is that how you want my client spending the money that you just loaned him? In other words, is that $20,000 or $40,000 expense going to help him turn the profit that you’re counting on?”
The wine came. The request was withdrawn. And my client saved $20,000 (at least) in 10 minutes. The moral of the story? If you don’t have experience working with banks, you’re not helping yourself or the bank, by going it alone.