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Added for You - Financing Success
ISO 9000 is an enormously successful international quality management system set by the international standards organization. Apart from helping in designing a quality assurance system, ISO 9000 also imposes many liabilities and responsibilities on the part of business organizations.ISO certification can guard organizations against corporate vicarious liability. Vicarious liability refers to the legal responsibility (accountability) of an employer for the actions, crime or injury done by one of his employees in the course of discharging duties. Crimes that come under the purview of vicarious liability include fraud and theft, defamation, breach of confidence and data protection, and discrimination based on race
Asking for too much money.
Lenders want their ratios to be maintained especially the percentage of the collateral in relation the equity base of the business.
You may be able to get around this one with a little song-and-dance routine i.e. some restructuring of the proposal. Keep in mind that different lenders have different comfort zones; do not be anxious to lower the amount you really do need.
The business is too risky.
Lenders do have a 'no fund' list, businesses that they feel are too risky or objectionable.
This is difficult to overcome
The advent of the printing press has been a landmark event for mankind. The printing press has played a crucial role in communication, especially when other mediums of communications, such as telephone and television, were not developed. Moreover, the printing press has been a crucial structure for knowledge management and thus given an impetus to the growth of mankind.The concept of printing was first conceived and developed in China and Korea. Recently, a printed document of Buddhist scripture was discovered in Korea, which is supposed to be the oldest of all surviving print documents. However, though the concept was conceived by the eastern nations, the first mechanized printing press was invented by a German
A 'No' can provide a valuable learning experience, one that can lead to an eventual 'Yes'. There will be many a 'No' in your business life so get used to it ; continue to be the optimist (a requirement for any successful entrepreneur) you always were.
How to handle a 'No'.
Start off by not getting mad, defensive, or hurt. Make sure you do not get angry as you may have to deal with this lender in the future!
Do ask, politely, why your funding request was turned down: this is your chance to learn.
Hopefully they will give you specific reasons. Take notes and ask reasonable follow up questions i.e. make the most of this 'training'.
Listen very carefully and you might discover that the lender's concerns can be overcome. You may have the opportunity to adjust your proposal and get your funding.
It may be a big and resounding 'No', one without or with an insufficient explanation such as 'We are presently restricting our loans to certain sectors.'
A "No' without explanation can mean that there are fundamental problems with your business and/or the proposal. An unqualified 'No' will require you to analyze your proposal with a critical eye and may even require you to have an independent party review your proposal.
Here are some common issues that a banker or investor may or may not express to you.
Not enough owner equity.
This issue is unlikely to be 'hidden' and most lenders will point out that you do not have enough equity at stake. Why should they take the majority of the risk? Why are you not willing to invest more of your own cash and/or attach valuable property/assets to secure the loan?
There are many good reasons not to attach personal assets to secure funding especially jointly owned assets such as a home. Do not rush into placing your personal assets, especially your home, at risk. The lender will take your home if the loan defaults and the stress of such a seizure can ripe apart your family!
That said it is not unreasonable for a lender to request more than 'sweat equity' from you. If you are not willing to place a significant investment in your own business then why should any lender?
The business is not yet profitable.
Why would a bank or lender be interested in a business that is not producing a profit?
Why are you in a business that is not profitable?
There is a significant difference between not being profitable and not being able to meet operational and inventory expenses! Profit is the difference between the total revenue of a business and the total of all the business' expenses.
Industry specific averages do exist and bankers and investors will refer to them when they do their due diligence. There are many sources where industry information can be obtained the most recognized being Dun and Bradstreet.
Smaller businesses may not show a profit because the owner takes any surplus as personal income or they purchase business assets: surplus revenue turns into a operational expense.
The lender has every reason to be concerned about a businesses' profitability. They do want you to be profitable and they need to hear how funding will increase your profitability: make sure you do so in your funding proposal.
Asking for too much money.
Lenders want their ratios to be maintained especially the percentage of the collateral in relation the equity base of the business.
You may be able to get around this one with a little song-and-dance routine i.e. some restructuring of the proposal. Keep in mind that different lenders have different comfort zones; do not be anxious to lower the amount you really do need.
The business is too risky.
Lenders do have a 'no fund' list, businesses that they feel are too risky or objectionable.
This is difficult to overcome
Companies that sell reinforcing steel bars (or concrete bars - also known as Rebar) have seen a boom in recent years. Many cities have seen a surge in residential and commercial real estate projects, which in turn has increased the demand for Rebar.Companies that sell, cut and bend Rebar have profited nicely from this growth – however, they have also faced a common problem in the industry. The problem is tight cash flow. Basically, they sell the Rebar to customers (e.g. builders, contractors) at good prices. These customers usually pay their invoices in 30 to 60 days. In the meantime, the Rebar company must wait to get paid while covering all supplier, payroll and rent expenses. Many times, this is not sustainab
It may be a big and resounding 'No', one without or with an insufficient explanation such as 'We are presently restricting our loans to certain sectors.'
A "No' without explanation can mean that there are fundamental problems with your business and/or the proposal. An unqualified 'No' will require you to analyze your proposal with a critical eye and may even require you to have an independent party review your proposal.
Here are some common issues that a banker or investor may or may not express to you.
Not enough owner equity.
This issue is unlikely to be 'hidden' and most lenders will point out that you do not have enough equity at stake. Why should they take the majority of the risk? Why are you not willing to invest more of your own cash and/or attach valuable property/assets to secure the loan?
There are many good reasons not to attach personal assets to secure funding especially jointly owned assets such as a home. Do not rush into placing your personal assets, especially your home, at risk. The lender will take your home if the loan defaults and the stress of such a seizure can ripe apart your family!
That said it is not unreasonable for a lender to request more than 'sweat equity' from you. If you are not willing to place a significant investment in your own business then why should any lender?
The business is not yet profitable.
Why would a bank or lender be interested in a business that is not producing a profit?
Why are you in a business that is not profitable?
There is a significant difference between not being profitable and not being able to meet operational and inventory expenses! Profit is the difference between the total revenue of a business and the total of all the business' expenses.
Industry specific averages do exist and bankers and investors will refer to them when they do their due diligence. There are many sources where industry information can be obtained the most recognized being Dun and Bradstreet.
Smaller businesses may not show a profit because the owner takes any surplus as personal income or they purchase business assets: surplus revenue turns into a operational expense.
The lender has every reason to be concerned about a businesses' profitability. They do want you to be profitable and they need to hear how funding will increase your profitability: make sure you do so in your funding proposal.
Asking for too much money.
Lenders want their ratios to be maintained especially the percentage of the collateral in relation the equity base of the business.
You may be able to get around this one with a little song-and-dance routine i.e. some restructuring of the proposal. Keep in mind that different lenders have different comfort zones; do not be anxious to lower the amount you really do need.
The business is too risky.
Lenders do have a 'no fund' list, businesses that they feel are too risky or objectionable.
This is difficult to overcome
In our previous installment on medical billing and the electronic transmission of claims, we briefly touched on multiple batches and why they're required when billing. In this installment, we're going to cover the batch trailer record and the individual fields it contains.The batch trailer record is the YA0 record and comes at the very end of the batch for a provider, immediately after the last XA0 record for the last patient in that batch. If this record falls out of sequence, the whole claim file for that batch will be rejected. In some cases, the carrier will reject all batches in the file.YA0 field 1, positions 1 - 3, is the record type. This needs to be filled in with YA0 otherwise the batch file
There are many good reasons not to attach personal assets to secure funding especially jointly owned assets such as a home. Do not rush into placing your personal assets, especially your home, at risk. The lender will take your home if the loan defaults and the stress of such a seizure can ripe apart your family!
That said it is not unreasonable for a lender to request more than 'sweat equity' from you. If you are not willing to place a significant investment in your own business then why should any lender?
The business is not yet profitable.
Why would a bank or lender be interested in a business that is not producing a profit?
Why are you in a business that is not profitable?
There is a significant difference between not being profitable and not being able to meet operational and inventory expenses! Profit is the difference between the total revenue of a business and the total of all the business' expenses.
Industry specific averages do exist and bankers and investors will refer to them when they do their due diligence. There are many sources where industry information can be obtained the most recognized being Dun and Bradstreet.
Smaller businesses may not show a profit because the owner takes any surplus as personal income or they purchase business assets: surplus revenue turns into a operational expense.
The lender has every reason to be concerned about a businesses' profitability. They do want you to be profitable and they need to hear how funding will increase your profitability: make sure you do so in your funding proposal.
Asking for too much money.
Lenders want their ratios to be maintained especially the percentage of the collateral in relation the equity base of the business.
You may be able to get around this one with a little song-and-dance routine i.e. some restructuring of the proposal. Keep in mind that different lenders have different comfort zones; do not be anxious to lower the amount you really do need.
The business is too risky.
Lenders do have a 'no fund' list, businesses that they feel are too risky or objectionable.
This is difficult to overcome
Electronic fund transfers is an innovative technique used to transfer money between concerned parties. This is relatively secure and efficient system that supports electronic payments and collections via electronic signals transmitted by wire. Electronic fund transfers eliminate the physical exchange of money and provides prompt service. For these transactions to be valid, people need to follow EFT payment instructions.All across the world companies are selecting electronic funds transfers over other transaction tools. This advanced and technological process is thought to be efficient and cost-effective. However, it is compulsory for these corporations to provide EFT payment instructions to concerned financial i
Why are you in a business that is not profitable?
There is a significant difference between not being profitable and not being able to meet operational and inventory expenses! Profit is the difference between the total revenue of a business and the total of all the business' expenses.
Industry specific averages do exist and bankers and investors will refer to them when they do their due diligence. There are many sources where industry information can be obtained the most recognized being Dun and Bradstreet.
Smaller businesses may not show a profit because the owner takes any surplus as personal income or they purchase business assets: surplus revenue turns into a operational expense.
The lender has every reason to be concerned about a businesses' profitability. They do want you to be profitable and they need to hear how funding will increase your profitability: make sure you do so in your funding proposal.
Asking for too much money.
Lenders want their ratios to be maintained especially the percentage of the collateral in relation the equity base of the business.
You may be able to get around this one with a little song-and-dance routine i.e. some restructuring of the proposal. Keep in mind that different lenders have different comfort zones; do not be anxious to lower the amount you really do need.
The business is too risky.
Lenders do have a 'no fund' list, businesses that they feel are too risky or objectionable.
This is difficult to overcome
I know what you’re thinking: why should I put my money in a place I’ve never even heard of before? Even for those who do know something about Pakistan, courtesy of CNN (and sometimes the BBC) have seen pictures of violence – people burning effigies of President George Bush, rioting, army personnel swarming over so-called terrorist camps and, of course, not to forget, a whole lot of bloodshed. No wonder it is usually confused with other places like Iraq and Afghanistan, which are actually going through very bad times.But trust me, Pakistan is different. I know this sounds clich?d – AND you’ve probably heard it all a million times before – but the media portrays a lot of the Eastern world in a very negative light,
Asking for too much money.
Lenders want their ratios to be maintained especially the percentage of the collateral in relation the equity base of the business.
You may be able to get around this one with a little song-and-dance routine i.e. some restructuring of the proposal. Keep in mind that different lenders have different comfort zones; do not be anxious to lower the amount you really do need.
The business is too risky.
Lenders do have a 'no fund' list, businesses that they feel are too risky or objectionable.
This is difficult to overcome and usually requires you to try another lender, one who understands your industry and can evaluate the risks more objectively.
The business strategy is not valid.
How would a lender know if your business strategy is sound?
Experienced bankers and investors, especially those familiar with your industry, do have good 'intuition' and should be listened to. Inexperienced bankers and investors have many preconceived notions that really do not stand up to 'daylight'. The problem is to determine which category that your banker falls into.
If the former you should be willing to apply some 'brakes' to your business proposal and seek clarification before your proceed.
If the later just move along to the next institution.
Inadequate collateral.
Each lender will have their minimum requirements for collateral. Valuation of the collateral is based on what the lenders can achieve in a distress sale. While this type of valuation is highly annoying it is understandable: bankers 'sell' money and leave non-capital assets to a liquidator to sell.
You may be able to deal with this type of rejection by increasing the collateral available to the lender. Better still find a lender who understands your industry as they might be more objective about your business assets true market value.
Closing points.
Shop around and do not settle for the first offer.
Repeated failure to obtain funding clearly points to significant flaws in your proposal or business. Sometimes the only true solution is to cease operations before you get deeper into debt and waste more of your valuable time in a floundering business.
Alex G. Landels
Copyright 2001
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