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Episode #10

Pitch a Lender In 4 Easy Steps

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Hey! I'm Jeri!

I'm a financial educator and speaker known for simplifying complex credit and funding strategies. I've helped thousands of individuals and small business owners get the credit they deserve.

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Summary

Getting business funding isn’t about filling out applications and hoping someone says yes.

If you want lenders to take your business seriously, you need to know how to present your business, target the right lenders, and create options before you accept an offer.

In this episode, Jeri breaks down a simple 4-step process for pitching lenders and approaching business funding like a financially savvy business owner.

You'll learn:

Why you should create a funding package before approaching lenders
Why getting approved isn't enough... and how to determine whether an offer actually makes financial sense
How to get lenders and investors to compete with each other to lend you money.

More Resources:

🎯 Take the Free Fundable Quiz: https://smartcreditcoach.com/quiz.html

🚀 Get Matched with a Smart Credit Certified Consultant: https://smartcreditcoach.com/help

🎙️ Explore more episodes: https://smartcreditcoach.com/podcast

🎓 First Steps to Fundable Workshop: https://www.smartcreditcoach.com/fstf

🎥 Fundable Life Webinar: https://www.smartcreditcoach.com/fundable

Transcript

[00:00:00] Welcome to the Smart Credit experience, the place where financial clarity, strategy and transformation begin. I'm your host, Jeri Toliver, CEO of Smart Credit Solutions and the creator of the Smart Credit method. Every week I break down the truth about credit, funding and building a financially abundant life and business. So if you're ready to learn what lenders actually look for, how to build a fundable business, and how to move forward with confidence and clarity, you're in the right place.

[00:00:30] If you needed $50,000 for your business today, could you actually explain to a lender why they should give it to you? And I don't mean I need money to grow or I need as much as I can get.

[00:00:44] Every single business owner needs money to grow.

[00:00:47] What I really mean is, could you sit down in front of a lender and clearly explain how much money you need, what you need the money for, what you're going to do with it, or what your business looks like financially and how this money is going to make you stronger and give you the ability to really compete in the marketplace. And so here's why I'm asking you this.

[00:01:11] Because if you can't do that, you're probably not ready to apply for funding. And because I do see entrepreneurs getting this wrong consistently, I want to help you change that today. Because most business owners, they treat business funding like they're buying a lottery ticket. You know, they, they fill out the application, they press submit, and then they just cross their fingers and hope that somebody says yes. But hope is not a strategy. And so when the answer is actually no, suddenly it's, you know, banks don't want to lend to the business, or I don't have perfect credit, or I just need to have some money to get the money, or, you know, business funding or business credit is a scam.

[00:01:55] It's none of that.

[00:01:56] Sometimes it's really simply just you weren't prepared, that's it. And so there's a really big difference between you applying for money and intentionally knowing how to pitch a lender.

[00:02:11] So in this episode, I'm going to give you a very four step process that you can use to approach business funding a lot more strategically because it's really time for you to get a plan and understand how to approach this the right way. So we are going to talk about how to create your funding package. I'm going to show you how to identify lenders, we're going to talk about how to present your business and then how to generate multiple offers so you can negotiate the best terms and deals. Now this is a strategy that I have personally used to secure over $800,000 from my business personally. So I do know that strategy works. But I do want to say step one, before you even start talking to lenders, you've got to start talking about yourself. So you've got to create what we call a funding package. Because one of the best, the biggest mistakes that entrepreneurs make is they start searching for money before they've taken the steps to get prepared for the money. So if you're out asking yourself, you know, you know, how can I get business loans with bad credit? Or if you're asking yourself, you know, how can I get startup loans or no doc loans, or how can I get easy business funding, those terms alone means that you're really approaching this from a space of desperation versus an actual strategy, and that's backwards.

[00:03:44] Before you start looking for any lenders or any investors, you want to create a package. A package, what we, what we call a funding package is basically the, the financial story of your business. Now, I tell our members all of the time that stories sell. This is stories that you're telling investors, stories that you're telling your clients, stories that you're telling just in business, you know, stories really do sell.

[00:04:15] And so you've got to know, what is the financial story your business?

[00:04:20] If I handed your package to someone who knew nothing about your business, they should be able to understand what your business does, how it makes money, what the financial conditions look like, how much money you're literally asking for, and what you intend to do with the money.

[00:04:41] Now, depending on the lender and the type of financing, the documents they're going to request will be different.

[00:04:47] But you just need to know that they need more than just a simple request.

[00:04:54] So they're going to ask for things like your business formation docs, they're going to ask about your ein number, business licenses, do you have bank statements, tax returns, profit and loss statements, balance sheets, revenue projections, personal financial statements, a business plan, executive summaries, like all these things matter. And the thing is, you know, I don't want you to be waiting until the lender asks you for this stuff to figure it out. As the business owner, as the leader of the company, a part of your role is being proactive, anticipating problems before they become one.

[00:05:33] So if you anticipate that they're going to ask for documents, if you anticipate that they're going to require good credit, if you anticipate these things already, then you're going to need to take the steps first. So that when you go and ask for the money, you actually get it.

[00:05:50] You want to be able to walk in the bank clapping your hands. It's my money and I need it now. So don't make the lender's job hard. You want to make the job easy. So you should know your numbers before you ask for the money.

[00:06:02] Because, I mean, think about it. Imagine sitting literally in front of a lender, or imagine even sitting in front of investor and they ask you, how much revenue did your business generate last year? And you say, I don't know, maybe around $10,000.

[00:06:22] If they ask you, what's your profit margin?

[00:06:25] I don't know, what's that?

[00:06:29] You know, how much debt does the business have?

[00:06:32] Maybe you don't have any. Maybe you're not even sure.

[00:06:34] How much are you looking to borrow? The number one answer I get for that question is as much as I can get.

[00:06:43] Most popular answer that I get to that question.

[00:06:46] The problem with that is that it's not a strategy. And so I want you to stop saying that. I want you to stop saying as much as I can get. More money isn't going to make your business better. It's not going to solve your problems. In fact, it's going to help you uncover the problems even quicker, is going to help you discover what's really going on in the business. It's going to expose you faster. So if you have problems with, with overspending, you're going to do this in business. If you have a problem with leading, delegating, you're going to do the same thing in business. If you have a problem with being organized and being consistent, more money is not going to fix that. And those are the soft skills that you need to build a business anyway. So if you need money to invest into skills, to buy the books, to get into the courses, to hire the mentors, then these are the things that you need the money for. So calculate what does that really look like so that you can have a specific number.

[00:07:37] Because more money is not going to solve your problems. Trust me, every single dollar that you borrow needs to have something assigned to it.

[00:07:47] Every single dollar has a cost when you borrow it. So you need to know how much money you actually need and what that job is going to be. Right? What job is that money going to perform?

[00:07:59] So let's say that you determine that you need $50,000. Cool. Well, why?

[00:08:04] Maybe it's because you need 20k to go towards inventory. Maybe you need another 15k to go towards equipment. Maybe you need another 15k to go towards acquisition, customer acquisition, getting new clients, making more money, closing more deals.

[00:08:24] Now, I can understand what this money is supposed to help you accomplish, but don't just stop there.

[00:08:31] You want to go a little further. You want to ask yourself, what happens after you deploy this $50,000? Does that new equipment that you have, is that going to allow you to serve 30% of more customers?

[00:08:46] Does that inventory allow you to fulfill maybe a contract?

[00:08:52] Does the marketing investment create a predictable customer acquisition system?

[00:09:01] Basically, how long is it going to take for that 50k investment to pay for itself?

[00:09:10] See, funding should have a job before the money ever reaches your bank account. And so that's the difference between spending more money and deploying capital.

[00:09:19] So it's not you just saying, hey, I've got $50,000, what can I buy? Instead you're saying, if I get this $50,000, if I deploy this $50,000 in this space, what does it allow my business to produce? What are the results?

[00:09:36] That is a very different way of thinking about credit and money and funding your business than approaching it from a perspective of guessing games and desperation. Desperation doesn't get you funded.

[00:09:48] So I want you to think about that before you even approach any lenders or investors. Now step two, you need to make a list. Make a list and check it twice of lenders. You know, once you understand your position, what you're looking for, now we got to look at finding you the people.

[00:10:06] Now you got to notice the order, right? We didn't start with who's giving out some money today, who's giving out money, where are they at? No, you got to start with what does your business actually need? Because now we're going to look for a lender who fits the strategy instead of changing the strategy to fit whatever, you know, loan opportunities somebody is willing to give us.

[00:10:30] So it's a completely different position. This is where you want to actually create a list, create a list of 10 to 15 bankers.

[00:10:38] And it doesn't need to be, and it shouldn't be like random banks. You need to look at traditional banks, community banks, credit unions, CDFIs, SBA lenders, microloan programs, business credit cards, lines of credit, equipment, financing. There's so many products out here, it's crazy for your business. But what you want to know is that every lender is not looking for the same kind of borrower is the best way to describe it. You know, this is where, you know, people sometimes get themselves in trouble because they feel like, well, you know, my, my friend, my Friend over here, ABC company, they got approved.

[00:11:16] They, they got the, the credit card. Okay, but what does your credit look like? How much revenue is their business generating compared to yours? How long have they been in business? What industry are they in? What was their average bank balance?

[00:11:31] What did they apply for? What kind of product, lending product that they even apply for?

[00:11:35] How much did they ask for?

[00:11:37] See, until you know those details, you know, you just, you don't know. So somebody else's, you know, approvals, it doesn't mean that you can go there and get the same thing.

[00:11:48] You need to understand their criteria. What are they looking for?

[00:11:52] Do they work, do they even work with startups? Do they want you to be two.

[00:11:57] A certain amount of revenue on a monthly basis?

[00:12:03] Are they looking at your personal credit? Are they looking at business credit? Do they require you to have collateral?

[00:12:10] Do you need to use your personal credit, put up a personal guarantee? There's so many things to consider.

[00:12:17] And so, you know, one of the main questions that everybody should ask is, does this lender have the right product for what I'm trying to accomplish?

[00:12:30] Because think about it, if you need to get a, a piece of equipment that may cost you about, let's say $75,000, if you a, a 12 monon payment for working capital, that might not be a good idea to finance an asset that you're going to use for five years because higher type of risk payments, 12 month payments, capital loans, they're quite expensive.

[00:12:56] So the fact that someone will give you money doesn't mean that it's the right product for you. And so many business owners get taken advantage of out here. So many people get offered really crappy products and then they end up just taking them up on it because they're desperate. And then they look up three months from then and they realize they went through all the money, they didn't have a plan to pay it back. And now they have these, these daily and weekly payback terms and eventually they go bankrupt.

[00:13:25] And so this is why I teach y' all to don't chase approvals.

[00:13:30] We're just trying to build financially educated business owners. That's really what this is about. The goal isn't to say, hey, I gotta prove Jeri. Like that is one of the goals.

[00:13:42] But the main goal is to be more so, you know, what did you get approved for? What is the interest rate?

[00:13:52] What are the terms?

[00:13:53] What's the monthly or the weekly or the daily pay?

[00:13:57] What are the fees? Like, these are the questions you should be asking yourself. So we're not just looking for a yes, we're looking for the right yes.

[00:14:06] Because not every type of funding opportunity out here is created equal.

[00:14:12] Step three, you need to present your business to lenders. Now, sometimes people get a little choked up on this one.

[00:14:17] But when you do your homework, it makes this process so much easier. When you prepare a funding package, when you research the lender makes this so much easier. But you have to present your business. You've got to get it in front of people.

[00:14:33] And this is where you're going to change your posture, right? You're going to sit up straight, you're going to say it with your chest, and you're not going to go out there desperate, saying, please, please give me some money. No, you're presenting them an opportunity to invest into your goals, your vision, your dream, and so give them something to support.

[00:14:54] You know, lenders are ultimately are in the business of lending money. That's what they get paid for. That's how they make money. They need qualified borrowers. So your job is to show them why you're qualified, why your business deserves consideration. You don't, you know, you should be able to explain your business very simply. What you do, who you serve. It should be very short, to the point, does your business make money? How long you been operating? Where is this thing going?

[00:15:20] What are you looking for from a lender? How do you see this relationship going? And so, you know, I, we actually teach in our First Steps to Fundable workshop, a script that a business owner can use to start that conversation.

[00:15:37] So if you're not really sure what to say or how to say it, to get lenders to basically be eating out the palm of your hands and giving you money, like blowing your phone down, chasing you down to give you some funds, you need to be at that workshop.

[00:15:51] You can head over to smartcreditcoach.com FSTF first steps to fundable FSTF because that'll show you really the first steps to getting funded. Funded the right way. What to say and how to say it. And so you don't need to be going in there begging lenders. You need to position your business to get the yes, you need to position your business where lenders are chasing you down, begging you to take their money. That's what you should be doing with your business. You don't have to lie, you don't have to hide. You don't have to hide anything. Even if your credit isn't good, even if you're in a not so good financial position, I promise you if you know your numbers, if you know your strengths, if you know your weaknesses, if you know what you're asking for and you know how the lender gonna get paid back, you can trust and believe you're gonna get more consistent and just better quality opportunities than the average business owner. Period. Okay? Step four.

[00:16:53] Generate those offers and negotiate, my friend.

[00:16:56] This is when you're gonna get out there, right? You've already made the. The list. You've already presented your business. Now it's time for you to wait, okay? Because you've already. You've already prepared. You've done the hard part.

[00:17:08] The goal here is to get at least three lenders to say yes.

[00:17:13] You want to create options for yourself, because what happens is, is people, they end up taking just anything because they apply for one lender and they don't create a space where they can negotiate for the best terms. So think about it this way. If you needed 50k, right? And lender A comes back, says, hey, I'll give you a $30,000 line of credit. Lender B says, I'm going to offer you a $50,000 term loan.

[00:17:44] C, lender C says, hey, I'm gonna give you a $40,000 business credit with 0% introductory for the first, let's say 18 months.

[00:17:55] Which one should you take?

[00:17:59] Now, see, I don't have an answer for that, to be honest. I don't know.

[00:18:02] And neither do you yet, right? Because you haven't looked at the terms.

[00:18:06] They're. You know, you don't know what the actual offer looks like. So, you know, this is where financial education actually matters.

[00:18:18] Because you. You need to compare everything. You need to compare the interest, the apr, the fees, the monthly payments, the paybacks. You need to. You need to compare all of it so that you can look and see, okay, how much of this financing actually matches what you're using the money for?

[00:18:38] Because like I said, the cheapest money is not always the best.

[00:18:42] So if the. If, even if you get a bigger approval, if the interest rate is crazy, I'm not going for it. I would rather take a smaller approval with better terms than a higher approval. That's just trash because you want to put your business in the best position to win, and you don't want to weigh your business down and steal cash flow from it trying to service debt.

[00:19:07] That's something that you really don't want to do.

[00:19:09] So your best option is to generate those offers and negotiate like your. The life depends on it. Because when you have three. When you've got three Options you can negotiate better, you can determine, hey, you know what, I like this fifty thousand dollar offer, but I also like this thirty thousand dollar offer with the terms, can we mix and you know, can we make something happen?

[00:19:31] Hey, can you match this?

[00:19:33] Can you lower this?

[00:19:35] Can you eliminate this?

[00:19:38] These are the benefits. Better terms, better rates, less restrictions, less fees.

[00:19:44] Maybe sometimes they'll say no, but that's okay. You just gotta ask.

[00:19:50] Because instead of approaching it like simply a business transaction, you want to approach this as if you're creating relationships, right? Like you're creating new conversations.

[00:20:05] And so if one lender is your only option, then you don't have any leverage.

[00:20:10] And you need leverage when you want to get the best option. Just the bottom line.

[00:20:16] So if you're deciding whether or not to take a funding deal and you've got three lenders, three options, this is where you get the chance to decide, okay? It's a completely different positioning and so I could talk about this until I'm bull in the face, but I wanted to give you these four steps because understanding this changed my life.

[00:20:40] Understanding that I have the power changed my life for so long. I allowed my excuses to get in the way.

[00:20:50] You know, I'm black, I'm young, I come from the hood, nobody's gonna lend me money.

[00:20:56] Eight, eight hundred thousand dollars later.

[00:20:59] Give me a break.

[00:21:01] And so let's recap.

[00:21:04] If you are trying to get business funding, I, I just want you to stop thinking along the lines of, you know, where can I get it? I want you to really start thinking strategically. So remember, one, create the package. Create that funding package. Know your numbers, organize those, those documents, know how much you're asking for, and know what the money will do for you.

[00:21:26] Two, make your lender list. Don't apply randomly everywhere, okay? Identify the lenders, the products that actually match what you're looking to do, and go for it. Step three, right? Present your business. Know your story, know your numbers, know your strengths, your weaknesses, and communicate that clearly. Do it proactively.

[00:21:43] Make the lender's decision easy and then generate those offers and negotiate, okay?

[00:21:50] Don't, don't, don't get all emotionally attached is also another point I want to make because this is not personal, it's business.

[00:22:00] Your job as the leader of the company is to keep it well resourced and well capitalized.

[00:22:06] So go get the capital, go get the offers, compare the offers, read the terms, ask the right questions and negotiate.

[00:22:17] And just choose the one that's best for you and best for your business goals.

[00:22:21] Because at the end of the day, once you start positioning yourself so that money comes to you, you have no reason ever in life to chase it ever again.

[00:22:33] Funding your business will be the least of your worries once you really understand how to navigate this process the right way.

[00:22:42] And so if you listen to this episode and you thought, okay, Jerry, I understand the four steps, but I don't know what it should look like, right? Like what, what does it really look like to put it in action? Or maybe you're not really sure, like which lenders or which options fit your situation. Maybe not even. You don't even know what the options are in the first place.

[00:23:01] Well, I want you to know that you don't have to figure about yourself, okay? You don't have to figure this out all by yourself. You got a couple of options, okay? Here you can get matched with a Smart Credit certified consultant. We'll actually connect you with someone who can help you with evaluating where you are today. They'll help you identify the gaps that's kind of standing in the way of you in living your funnable life. And they'll help you develop a strategy for where you're trying to go.

[00:23:26] Because we just don't want to throw you, you know, at a lender and just hope that you get approved, right? We, we believe in our own philosophies. We believe that what we teach works and we want you to understand what you're doing and why you're doing it. And if you're not quite ready, right, for that one on one help yet, I do want to invite you to join us for our free Fundable Life webinar because we do believe that this is bigger than just business credit. We want you to live a fundable life. We want you to get bigger loans. We want you to be able to buy houses. We want you to be able to invest in your future. We want you to be able to live a life of true freedom, to transition from survival to stability.

[00:24:05] All right? And then from stability into that entrepreneurship and that business growth and then eventually just investing into that wealth building that most people truly want, but they just don't know how to get and, or sustain.

[00:24:18] And so the goal here is to help you build your life with having some fundable options. So get matched with a consultant or go ahead and register for our free Fundable Life webinar. That'll be at www.smartcreditcoach.com help to get matched and www.smartcreditcoach.Com.

[00:24:39] fundable for our free Fundable Life webinar. Thank you for joining me. My name is Jeri. I'll talk to you in the next episode.