Measures to Take Prior To Applying for a Loan

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For many companies, finding extra capital is a difficult process. If they don’t fit a lender’s criteria, they might not be able to secure a loan. Because working capital is essential to growth, Todd Kesselman, owner of Inventory Capital Group Inc., has advice on steps companies can take to improve their chances of finding financing.


“There are simple rules to make sure you get financing. I get calls every week for financing by Friday. That’s never a good idea. Make sure you give yourself enough time. Also, if there are things you can do to turn a loss into a profit you should do it because it’s much more finance-able.


“Get rid of bad customers. A lot of people kept customers who aren’t paying them or aren’t paying them on time. Also, don’t try to swim upstream. We do inventory so don’t come to us with an accounts receivable loan. The guy who does accounts receivable, don’t go to him with an inventory loan.


“Do your homework and find out what the person you’re approaching is willing to finance. Find out who finances other businesses in the same line as you. They’re probably good people to go to. Also, fill out the paperwork the way they want. Give the lender what they need and they’ll help you in return.


“In terms of what makes a business itself seem profitable, I like high margin. Margin being the difference between what you buy your goods for and what you sell them for. High margin gives you room to make up for a lot of mistakes. Most of our clients have better than 25-30 percent margin.


“I also like to know that a full set of personalities are available at the company. It’s great if there’s the big salesperson but I also want the detailed controller. If I came to the big salesperson for a report he wouldn’t know what to do. We spend a lot of time figuring out the personalities at the company. We make sure there’s also someone who loves doing reports.


“We do a lot of infomercial companies, which no bank would ever trust. For those, you really need the high margin and you need some sort of media that works. We also want people who understand their product and know how to manufacture. If they’re not manufacturing they need to have thoughts about how they’re handling their product control.”


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*Case Study is a new feature in which experts offer advice on the various challenges that small-business owners often encounter. If you face an issue or challenge you think applies to others as well, please contact the Business Journal at

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