Lender’s Perception IS Reality

Your Financial Acumen: A Lender’s Perception IS Reality

You spoke to your lender, and you liked what they said. So, you told the lender that you’ll send them all of your financial information soon.

Here’s a little lender secret: You may not know it, but this is the precise moment when a lender begins to start their invisible stopwatch on your process that will ultimately determine how a lender will perceive your financial acumen.

Here’s some valuable lender insight: All lenders have loan goals, and most lenders must report their call activities to the capital provider (their bosses) frequently. Lenders refer to this as their “deal flow” and any new prospective borrower conversations are added to their pipeline report as part of their deal flow for the lender’s bosses to review. It’s imperative that lenders show new prospect call activity to make their bosses happy.

With that said, the pipeline report is the reason why so many lenders often tell borrowers, “Yes, we should be able to get this done for you”, even if they know that there’s no chance of getting you approved for the requested capital. This is an unfortunate scenario that occurs more often than it should. But what happens if you do qualify for the financing, and the lender doesn’t perceive you to have a high level of financial acumen? In this case, you would be placed much lower on the lender’s priority list, and you may not receive the most favorable terms. Unfortunately, you would never know this to be an issue unless you take important steps to ensure the lender perceives you to have a high level of financial acumen. It is important to believe that you know what you’re doing, but it’s far more important that your capital provider believes this too.

Steps You Can Take to Maximize Your Financial Acumen Perception:

• Hire a professional debt advisor to help you prepare for and obtain the capital you need.

  • Avoid hiring a loan broker from Google at 3am

  • Hire a debit advisor who has 10+ years of commercial capital experience.

  • Hire a debt advisor who charges a retainer who will make you top priority.

• Have your tax returns, recent interim financials, and other financial reports ready to submit prior to talking with any lender.

• Do not tell the lender that you are ready to submit financials to them unless you are ready to submit them.

  • Follow through with what you say you will do within 24 hours.

• Be ready to answer difficult questions with reasonable answers.

  • Lenders pay close attention to how you answer difficult questions and judge you on your own knowledge of your company’s financials and processes.

***IMPORTANT***

• Do not work with more than one lender at a time.

  • Once a lender realizes you are trying to work multiple lenders against each other, you may not receive favorable terms.

• Most importantly, lenders are people. Do not treat them like a transaction!

Lenders’ perception of your financial acumen significantly impacts your capital request. Their pipeline report, though filled with unapproved cases, must display new activity. To secure favorable terms and priority, lenders should perceive you to have strong financial acumen. A professional debt advisor is essential to achieve this, prepare accurate financials, and respond properly to lenders’ questions. Avoid concurrent negotiations with multiple lenders and remember to treat them as individuals, not transactions. Ultimately, securing the best capital structure demands your financials match lenders’ standards. You can check out an earlier post about how important first impressions are to a lender.

Ultimately, you want to put your best foot forward when requesting capital and you want to receive the best capital structure, the best terms, best availability, and best rate you can possibly receive from a lender. We get it. But, how do you know you’ll receive the best of anything if your financials aren’t to a lender’s standards, or if you send the lender bits and pieces of what the lender requested six weeks ago? What if your financial information isn’t put together exactly how the lender wants to see it, forcing them to spend extra time helping you get the financials to their standard? Will you get the best capital structure then? Probably not.

This is why it’s important to hire a capital advisory firm like Green Zone Capital Advisors to help prepare you for the right capital request with the right capital providers. When you hire an advisory firm, you are essentially hiring the expertise of former lenders who understand what other lenders value so that you are aligned with the right capital provider who perceives you to have a high level of financial acumen. You will ultimately benefit from being high on the commercial lender’s priority list and you’ll have peace of mind knowing that you will receive favorable capital terms.

Want to know which types of companies we work with and the types of financing we help our clients obtain? Contact us to learn more.