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Raising Cash For Your Business
Hypothetical situation : A huge contract is available to you. The only
problem is that you would need to buy supplies, or machinery, or employ more staff
to fulful the contract. In short, your business cannot finance the contract's initial demands
from turnover.
You need to borrow money!
Assessing the need
Is the risk of borrowing money worth the contract's value? Is your customer going to pay on time?
Is punching above your weight the best option?
Assuming the answers to the above questions are positive, and you view the risk as a worthwhile one,
you need to request credit facilities over and above any you may already have. In general approaching
a bank for this type of finance will follow a similar pattern to that of financing a new business, except
you should already have a history with the bank. Do expect to be asked to provide projections, risk
assessments, and so on though. It is also extremely common to be asked to personally guarantee any finance
you obtain.
Bank managers are human though, and in general terms, if the manager can see you have done your homework
and can see that the finance will enable your business to grow, you are unlikely to be declined.
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