One of the main needs of any company is to have cash. That is, the economic resources necessary to be able to cover the different expenses that are derived from the economic activity of a company and, in the same way, to have the option to be able to invest in new assets.

It is clear, therefore, that having a financial plan that reduces risks, controlling that expenses are not increased and seeing that income is equaled or exceeded as planned, is key to giving confidence and having an orderly growth. This premise is applicable to both consolidated companies and entrepreneurs.

In this way, one of the most common requests from our clients is to obtain bank financing with the best possible conditions.

Before arranging meetings with the various banks, it is necessary to carry out an analysis of the current financial situation of the company and the forecasts for at least five years. By means of a detailed study, we will be able to evaluate what the needs are and how we should present the documentation to the different banking entities.

We have many clients who have a good financial situation, with reasonable forecasts but on the other hand the entities ask for personal guarantees or endorsements. When applying for bank financing, this is one of the big battles.

So, in order to avoid the partners having to personally guarantee or give too many guarantees, it would be interesting to think a little ‘out of the box’.

Banks, in general, understand that betting on a startup is risky and long term. However, sometimes we can give up some concessions in exchange for the financing on the conditions we want.

We have to assume that the client bank relationship is based on trust. On the other hand, any one of them always wants to get business from you.

Thus, for example, if our company is an e-commerce company, changing the virtual POS provider and implementing that of the bank to which we apply for the credit makes the operation more attractive for the latter. Another concession that is interesting in this sense, is to commit the employees of the startup or the company to open an account in that entity. These measures are welcome as they bring extra business to the bank and generate confidence.

In this line, another point to consider when presenting the documentation is to clearly structure what the funds will be spent on by establishing a concrete business plan for the activity for which we need the investment. By way of example, if we need cash flow to make the international jump to another country, we should provide, in addition to the documentation relating to the business and its financial status in general, a specific business plan that concisely explains how this international jump will be made, in which countries, with what timing, what objectives are set and what actions are taken, among other issues. This information, plus the metrics and future financial forecasts, will give the bank a clearer picture of the financial operation.

If we are willing to put ourselves in the bank’s shoes and think about what we can offer that will be convincing and generate confidence in the institution, we will have a better chance of being granted the credit we want without personal guarantees or with minimal guarantees, since, after all, the banking business is based on creating mutual trust.

To sum up, in order to obtain financing we need to be able to generate trust and bring business to the bank, specifying the reason for the credit and the future financial forecasts.

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