What Does Character Have to do with a Business Loan?

The seemingly never ending question for every entrepreneur or small business enterprise – where can one timely acquire the necessary venture funding under reasonable terms and conditions?

Almost universally omitted from both the question and related answers–if one does not have the requisite financial acumen the entire funding process will become nothing but a quagmire of predictable negative consequences. entire funding process will become nothing but a quagmire of predictable negative consequences.

THE FLIP SIDE OF THE COIN

Overlooked from most every business financing discussion regarding “character” is serious scrutiny regarding the funding source side of the equation. It never ceases to amaze how many entrepreneurs blindly leap for any conveniently perceived low- cost funding option without the slightest scrutiny for funding source character.

Be warned – costs are but one element for consideration if genuine success is desired.

Invariably, short-sighted thinking will become a lingering trap often waiting to eventually open up and devour.

Having the requisite financial acumen coupled with thorough investigation is the recommended prescription for otherwise preventable failure in desired outcomes.

Every entrepreneur should ask the following questions in every funding pursuit:

*Assuming a reasonable cost, is this financing really the “best overall option fit” for the enterprise?

*What is the real cost in this transaction? Find and calculate all fees in the transaction and their impacts.

*How do the terms and conditions either help or hinder proper meshing for enterprise profitability goals?

*Who and what is actually ruling this funding transaction? Marketing representative or agent/ conduit claims in the deal process are not reliable or trustworthy as contrasted with written terms/direct commitments offered/ received from the real decision makers.

*Time is money. For most entrepreneurs/ business owners the money was needed yesterday. Needless delays in getting either a yea or nay cannot only be critical but crippling where performance deadlines loom.

Every new contract or business development expansion usually requires instant capital infusions or intra investments to perform with potential consequent invoice and further delayed payment cycles for needed revenues receipt – the always proverbial cash flow mismatches. So how and where does one fund for those situations and still maintain all required margins and profitability?

*What happens when the real world intervenes with a few deep pot holes or twisting turns such as serious interruptions in cash flow, slow or extended pay receivables (especially in government contracting), or other adverse events/circumstances (internal or external)?

Words are one thing. In downside situations, a cooperative and accommodating capital source is a critical must for enterprise health and longevity – in one sense, far more valuable than the cost of funding itself.

Character is part and parcel for all businesses and financial success.

Character has a distinct duality – it applies to both sides of the funding process, applicant and capital source. Without the requisite financial acumen and ensuring all elements of character are in place for both sides of the funding process, business success can be expected to be highly unlikely at best. r

Woodrow D. Wollesen is a military veteran, recognized national small business financing expert, seasoned serial entrepreneur/business executive, and author of Ultimate Financing Guide. Visit www.navoba.com/UFG to get your copy of the Ultimate Financing Guide.

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