What We'll Do For You
An experienced team of financial and business consultants will review on your behalf the request you received to make a business loan and judge these important aspects:
- Confirm that the borrower is not "bankable" (can't borrow from a bank yet), and understand ALL of the reasons why not, and what is needed to remove those obstacles;
- Opine on whether all the core talents required of the proposed business seem available in the proposed ownership, management and its advisory board;
- Opine on whether the financial forecast is sufficient in detail and seems possible to execute and achieve,
specifically:
- Are its data inputs based on reality rather than rosy expectations or misinformation?
- Is the starting capital sufficient to avoid default and bankruptcy given a low-end forecast for revenue and profits?
- How will the amount of starting capital restrain growth (scalability)?
- Is the starting capital sufficient to fund the seasonal cash flow variance typical for a business in that sector?
- What should be your "alarms" of financial problems that lets you demand that management initiate remedies and report back to you on their improvements before it's too late?
- What targeted retained earnings, net worth, profitability and financial ratios are required for the business to obtain a bank loan to repay you, and still fund its business capital needs?
- Can the business generate a high enough return-on-capital to support the sales growth that will produce the financial condition required to become "bankable"?
- Given alternate scenarios to the financial forecast, what additional capital contributions may be required before the business becomes self-sustaining on its path to bankability?
- Predict when the business will attain "bankability" (your repayment source down the road) and set that as a repayment date.
- Research and advise what are current market investment returns or loan interest rates for similar business risks - to be sure you are adequately paid for the risks you will assume.
- Analyze the technical viability of the business plan to ensure that there are no hidden traps that would hold the business back.
- Evaluate the marketing plan to ensure it is practical, acheivable, and has the right group of people in-place to acheive the desired results.
- We will suggest an appropriate loan structure, see that your legal counsel creates perfected documentation, and advise you on limiting your involvement in the borrower's business to avoid losing collateral lien priority or incurring foreclosure and bankruptcy legal challenges such as recharacterization, preference, fraudulent conveyance, loan modification "novation", even potential personal liability under "RICO."
Going it alone
If you don't hire us, then please hire someone like us. Your relative or friend who came to you with their business plan was probably full of excitement and hope. They may expect from you kindness and support more than an honest critique. Small businesses today face severe economic and credit market headwinds that are too strong to let any but the best proposal backed by adequate capital and liquidity to succeed. These are dangerous and rapidly changing times for businesses of all sizes. You owe it to yourself to go in prepared and not risk the potential for losing a good friend or destroying a family relationship.