Financing Without Desperation: Know How To Sell Your Small Biz

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When you’re on the prowl for financing, there are some tactics you ought to avoid.

At Direct Capital, we regularly hear from businesses who are looking for everything from equipment financing to working capital loans.* All of these businesses need money, but not all of them know how to get that across. It turns out that diving headfirst into the financing fray with no plan and no idea what you’re doing is akin to diving headfirst into a drained pool.

We want every small business to succeed and to thrive, so I’m going to pass along three handy tips for casting your business in a great light and lining up the financing you need.

  1. Don’t reek of desperation. When you’re going to get lending, you want to project confidence. Let the lender know that you’re on the cusp of significant growth, or at least stable. When you call up a bank and spin a tale of woe so tragic that Shakespeare is rolling over in his grave, it’s not going to go over well: What You’re Saying: “Well, I need this loan because my business is on the brink of insolvency and my dog left me and my wife ran away and I have this birthmark that used to look like Iowa but now looks like Texas…”
    What The Bank Hears: “I am a terrible loan candidate and will never be able to repay my money. Also, I really should get this birthmark checked out.”I’m not suggesting that you outright lie, but project confidence and be ready to answer questions about how you’ll pay the loan back.
  2. Know what you want. If you’re not just confident but also in decent shape, it’s a little easier to make your case. But you should always go with an outline of what you need. For example, if your excavator went to that big yellow metal scrapyard in the sky, you should be able to go to the lending institution of your choice and say “I need X dollars in equipment financing in order to purchase an excavator I plan to use to dig up the Ark of the Covenant.” The specificity will engender confidence in the lender and streamline the process for you, both of which are very good things indeed.
  3. Be honest. “But Dave,” you say, “you just told me to project confidence!” Yes, I did. But lying is still a bad, bad idea. There’s a difference between putting a cheerful face on your business and blatant falsehoods. What I’m talking about to an even greater extent is just being truthful with the details you provide. Lenders will find out if your business was started in 2010, even if you initially tell them you’ve been around since 1523. Frankly, all those little white lies accomplish is damaging your credibility and making the lender in question wonder what else you’re getting shifty eyes about.
  4. Spelling counts. This is more for the e-mail submits, but it’s important. Not everyone writes or speaks exceptionally well, but this goes with building a perception that you are a competent business owner with acumen and clear goals.Let me give you an example of something that might give a lender pause:You: Deer Sur or Madamm, I are applyating to get me some cash to the toon of $65,000 thousand dullards so I ken bye me a new fryer 4 frying stuff.If you winced reading that, you can imagine how a financial institution would feel. Do your best to  be clear, concise and not give the English language two black eyes. It can only help.
  5. Know who you’re applying to. “Five minutes of research can save you and (the lender) hours,” says Daryl Eames, who works closely with me here at Direct Capital. Truer words are rarely spoken on a Thursday afternoon on September 1, 2011.Know if the lender has the product you’re looking for. Know their reputation. Know how long they’ve been around, how long it takes to get financing from them and where they like to eat lunch. Okay, maybe not the last one. Also, be familiar with the products the lender offers. Direct Capital, for example, has a great knowledge center with eBooks on the types of financing we have available and why they might be a good fit for your business.

So there’s our sage advice. Based on your experience, do you have more to share?

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*Working capital not available in the following states: AK, DE, ND, VT

1 Comment

  1. Dear Mr. Choate,
    Good Morning ! Even though this is only the second article of Yours that I have ever read , it is obvious, that, You are ” Wise Beyond Your Years “, and have a wickedly good , sense of humor ! Bully ! Bully !
    Joseph Anthony Smith- President
    Northstat Financial Consultants, Inc.

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