Apply For Business Capital Or Business Loan

Apply For Business Capital Or Business Loan

Apply For Business Capital Or Business Loan – How To Do

 

Provide data so we are able to evaluate a business proposition
Almost every day, we at Asia Investment Services are approached for mediation, assistance or co-financing and/or finding business capital investors and business loans) – as most say promising – companies.
Strikingly, a large number of such contacts are unprepared and without providing the necessary basic information. It is believed that in such an unprofessional way we can achieve for them successful access to potential debt (business loans) and equity financiers (business capital investors). An absolute lack of familiarity with financing procedures and an overestimation of their own business position is undoubtedly the base here.
Furthermore, a frequently made mistake is to offer the finance request direct to many bankers, investors and brokers without a particular commitment, as a result of which the proposition becomes contaminated, and often the optimal return will not be achieved.

Read also
Some tips before contacting financiers
3 facts to adjust the investor financing perception / Asia equity market characteristics

Also note;
For start-ups; the success rate, due to the risk, is low
• a prerequisite is reinforcement of equity business capital
• there are many investment prospects available (angel investor contact/evaluate 40 propositions and venture capitalists over 400 for a single investment)
• only, about 0.6 to 0.9% of the seeking companies obtain an equity investment
• still 75% of these start-ups do fail
The “costs” of equity investments are high
• business capital investors do expect a typically 10x return on their business capital investment (normally period is 5 years), or a 25% to 35% each year (over the full investment period)

In short, before we accept an application, we must be convinced of the potential to obtain business capital or business loans; otherwise it is useless to spend time on this and approaching relationships with weak or unclear finance and investments proposals.
We would like to help, offer possibilities and solutions, and openness is the first requirement for this. Therefore, before we take mediation for financing or investment, we expect minimal the following (concise) information;

I Basic (concise) information at apply for our service (maximum 3 pages!)
• financing motives, use of funds (business loans, business capital)
• requested amount (business loans or business capital)
• company core product-service (purpose)
• sector
– we focus on B2B industry / technical sector; such as manufacturing, construction, engineering, energy, logistics and trade and do NOT serve sectors: information technology, internet of things, software and hospitality
• business life cycle
– start-up/launch (concept, pre-seed, seed, early stage, formative), growth/later stage, shake-out, maturity, decline
• problem and need of product/service
• solution of product/service
• unique market position
• market potential
• competition and alternatives:
• business model
• management team
• intellectual property
• business, governmental and legal regulations
• vision, 5 year goal
• establishment in year
• number of employees (FTE)
• business entity (legal form)
• basic financial figures
– invested business capital
– yearly revenue
– yearly profit
– balance sheet – assets
— fixed assets
— current assets
— liquid assets
– balance sheet – Liabilities
— tax liabilities
— other liabilities
— accounts payable
— provisions
— equity/business capital
• contractual obligations
• expansion potential (scalable)
• re-locatable options
II Mediation agreement (phase 2)
– as result from the assignment discussion and further consultation
• service agreement letter (we need, without we cannot represent a client/business)
• client expecting and conditions
• fee (monthly recurring, reimbursement of expenses, success commission)
• administration (exclusive or contingent/non-commitment)
• non-disclosure agreement (NDA) (confidentiality)
* Additional detailed information
III Financiers and investors do want to receive, these can be collected and provide in a next stage
• complete business plan, accredited by external consultants
• audited financials annual statement, last 3 years (balance sheet, profit and loss account)
• management accounts current year (monthly)
• financial projections for coming 5 years (cash flow, balance sheet, profit and loss account)
• sale/customers contracts (if available)
• list of major customers, suppliers and competitors,
• contractual obligations (costs)


Basic business capital investment criteria (equity investment)

A comment that we want to make upfront is that although you might think that you as the entrepreneur are decisive, business capital/equity investments is market. Equity investors first look at the market potential and then at the other criteria. Nevertheless, it is essential to know the assessment criteria.
Here is a brief overview;
• Relatives and friends (business capital investment criteria)
– strong, reliable personal relationships
• Business angels (business capital investment criteria)
– correspondence interests of an individual entrepreneur with a business angel.
– mutual respect and atmosphere of trust
– credible business plan assessment by the business angel
– market knowledge and commercial skills of the entrepreneur
– a proper management team
– fiscal incentives
– availability of an exit route, sale options of equity (shares)
– expected return on investment, profit and business capital gain
• Venture capital (business capital investment criteria)
– credibility of the business plan
– attractiveness of the sector
– presence of Intellectual property, patents, licenses and distinctiveness (create barriers for competition)
– the potential to grow rapidly in size and profitability
– proven track record (over the previous years)
– quality of the management
– decent exit strategy options
– ability to meet the financial preconditions (tough demands)

Basic debt/loan financing criteria (debt financing, business loan)
• Relatives and friends (business loan financing criteria)
– strong, reliable personal relationships (same as an relative investor)
• Banks (and other financial institutions) (business loan financing criteria)
– sufficient collateral or guarantees
– creditability rating
– positive cash flow
– company’s reputation and proven results
– ability to repay loans
– business plan quality
– quality of management
• Grants & public funding (business loan financing criteria)
– creating new jobs
– innovation
– stimulating a particular sector
– supporting a particular region
– provide opportunities for specific (minority) groups