Perspective, according to Webster’s Dictionary, is “the interrelation in which a subject or its parts are mentally viewed; the capacity to view things in their true relations or relative importance.”

Where does the notion of perspective belong in a discussion about asset-based lending? At the very beginning because borrowers who require an asset-based lender to fund the credit they need must understand that such lenders aren’t bankers, and therefore they evaluate credit differently.

Essentially, they have a different perspective when looking at credit. And understanding that is important in evaluating financing alternatives.

A good asset-based lender will look for ways to say “yes” instead of reasons to say “no” when evaluating a company’s credit.

But let’s back up for a moment and look at how a business owner gets to an asset-based lender in the first place. More often than not, when a banker has a client whose loan is non-performing, and the business owner is going to be asked out of the bank, the banker will refer his or her client to an asset-based lender.

Also, many companies are ineligible for bank financing due to technical or strategic reasons; they simply no longer fit their historical lenders’ capital, debt or profit requirements, and have to look elsewhere for financing.

Some companies may have outgrown their bank because their needs have increased beyond the lending institution’s ability or willingness to extend credit. In addition, businesses with short operating histories usually do not qualify for expanding lines of credit as they have had little or no borrowing experience with banks.

There are many reasons why companies can’t obtain bank financing, and it’s at this point that their bankers, CPAs, attorneys or other business consultants often refer them to an asset-based capital specialist to secure the financing they need. This is also the point when the issue of perspective looms large because many borrowers expect to pay about the same interest rates banks charge and to receive the same advance rates.

But since asset-based lenders are assuming the risk banks can’t or won’t, they’re going to charge more for their money. The perspective borrowers need to adopt is that the availability of funds and how they can best be used is really their primary concern. Hopefully, the professionals referring their clients to the asset-based lender will help them keep these issues in their proper perspective.

Good lenders are able to place the issues in perspective as well. For example, when an asset-based lender audits a prospective client’s business and finds that the accounts receivable aren’t performing well, it’s easy to want to walk away from the deal.

However, taking other considerations into perspective, a dismal audit can oftentimes be overcome, and borrowers can be of great help in helping a lender decide to move forward with the loan request.

Lenders who are looking for ways to say yes and are serious about wanting to help companies succeed will often call a meeting to discuss what the audit revealed. How the borrower handles this meeting could very well determine their success in attaining financing.

Helping the lender look past the numbers and the company’s history, and concentrate on the company’s future plans and management’s ability to carry them out can guide further negotiations. Borrowers taking the following actions will be the most successful in overcoming lender objections and helping them ultimately fund the deal.

– Ask for a meeting agenda. The agenda will outline all of the issues the lender wants to discuss and will therefore provide a heads-up concerning problems spotted by the lender.

– Be prepared. Come to the meeting prepared to discuss all the agenda items. If that means bringing your CFO, accountant, or other experts to help make your case, then by all means do so.

– Have a clear plan. Even though the business may have had problems in the past, projections of a rosy forecast will not be enough to necessarily sway a lender in your favor. You’ll need to demonstrate exactly how you plan to get your business to the levels you’re projecting for the future.

You’ll need hard data to support your contentions. Realistic projections will help the lender get the sense that you know what you’re talking about.

– Be candid. The lender’s bound to ask a lot of questions, and it will be important that you not skirt any issues. If you don’t have an answer right then, be honest and say so. You can provide the lender with the needed information at a later date.

– Demonstrate strong leadership. Borrowers who can persuade lenders that they have the ability to do all of the things they say they’re going to do are more likely to see the lender try to work out the issues and move forward with the loan.

Perspective is a very important concept in asset-based lending. Not only can it mean the difference between a borrower being able to obtain asset-based financing, it could very well mean the difference between the ultimate success or failure of the business.

Evon G. Rosen is vice president and director of marketing for Celtic Capital Corp. She can be reached at [email protected].

Entrepreneur’s Notebook is a regular column contributed by EC2, The Annenberg Incubator Project, a center for multimedia and electronic communications at the University of Southern California. Contact James Klein at (213) 743-1759 with feedback and topic suggestions.