You've put the finishing touches on your business model. Your business plan is ready to go. Next step: obtaining financing This is the make-or-break moment for many would-be entrepreneurs.
To help explain the process for obtaining financing, we sat down with Maxim Séguin, who worked as a Commercial Banking Manager at National Bank for six years and is now a Senior Advisor – SME Markets, Products, Businesses and International. In his current role, he helps develop client presentations for entrepreneurs like those he worked with for so many years.
He gave us an overview of the process for applying for bank financing and the areas you should pay attention to in order to boost your chances of obtaining financing.
The commercial banking account manager's role
The account manager could be considered as an intermediary between an entrepreneur and the bank's financial analyst.
The account manager's role is to evaluate the entrepreneur's file and help improve it in order to then "sell" the project to the financial analyst.
If an entrepreneur's business plan is challenged, he or she might think that it isn't good or that it doesn't have a lot of potential. But this isn't the case. "Our role is to ensure that all the elements of a project are in place. The more polished the plan, the easier it is to sell the project and get our client's financing approved," explained Maxim.
The bank's financial analyst will approve a loan if he or she deems the associated risk to be manageable. A detailed plan, based on concrete items, will demonstrate the seriousness of the entrepreneur and the potential of his or her business, and the risk will seem lower. That is why the account manager works beforehand with the entrepreneur to ensure that the plan is as solid as possible.
How the bank evaluates your file
The bank evaluates the entrepreneur, his or her business plan and the financial package being proposed.
"Does he or she have the experience and expertise to make the project a success? How well does the entrepreneur know his or her field? Is the entrepreneur passionate about what he or she does? Who are his or her partners? Does he or she have a solid team? Without even looking at the figures, it's important to gauge the person in front of us. After all, regardless of the figures, it's the entrepreneur who will lead the project to success or failure. A passionate and competent entrepreneur who is in control of the situation is very reassuring for a bank, especially when it sees that he or she is fully invested in the project and has spared no effort," explained Maxim.
The business plan:
Based on his experience helping numerous entrepreneurs successfully carry out their projects, he added: "It's important for the entrepreneur to have a solid grasp of the market and the competition, and that his or her business's unique features are well detailed. The plan must also clearly indicate the amount of financing requested of the bank and how that financing will be used.
Obviously, the commercial banking manager will play particular attention to the entrepreneur's financial forecasts. In addition to your estimated income and expenses, your financial situation will be evaluated. **"There are always unexpected expenses in business," said Maxim. "That's why the bank will evaluate the entrepreneur's ability to reinject cash into the business, i.e., whether or not he or she can reinvest if needed. As a lack of cashflow is one of the leading causes of failure for a business in the startup phase, our objective is to ensure that the entrepreneur has sufficient breathing room."
3 tips for a successful presentation
Over the years, Maxim has been on the receiving end of numerous business plan presentations by entrepreneurs. Based on these experiences, he offered three pieces of advice that could prove useful to you:
Know your plan like the back of your hand "It may seem obvious, but I've met with entrepreneurs who weren't aware of all of the aspects of their business plan. It's key for you to be prepared to answer any questions, whether they are qualitative or quantitative, regarding the role of officers, finances, marketing, the development plan, etc.
Know how to sell your project "Go straight to the point. Explain what need your business will fill, how you will make it profitable and who your clients will be. Above all, speak with passion. That's your biggest selling point. Nothing is more convincing than an entrepreneur who's convinced of his or her own idea."
Know how to sell yourself as an entrepreneur "Explain how you will be able to make your business successful. What experience and expertise do you have? Who is on your team, including employees, partners and suppliers? Demonstrate your expertise, your commitment and your networks."
Time to go for it You are now equipped to properly prepare your business plan presentation. Do you have any questions? Are you ready to get started? Either way, make an appointment with a National Bank expert, who will be pleased to answer your questions and offer you the right solutions to meet your needs.
Best of luck!
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