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 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.
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.
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."
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:
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!
Any reproduction, in whole or in part, is strictly prohibited without the prior written consent of National Bank of Canada.
The articles and information on this website are protected by the copyright laws in effect in Canada or other countries, as applicable. The copyrights on the articles and information belong to the National Bank of Canada or other persons. Any reproduction, redistribution, electronic communication, including indirectly via a hyperlink, in whole or in part, of these articles and information and any other use thereof that is not explicitly authorized is prohibited without the prior written consent of the copyright owner.
The contents of this website must not be interpreted, considered or used as if it were financial, legal, fiscal, or other advice. National Bank and its partners in contents will not be liable for any damages that you may incur from such use.
This article is provided by National Bank, its subsidiaries and group entities for information purposes only, and creates no legal or contractual obligation for National Bank, its subsidiaries and group entities. The details of this service offering and the conditions herein are subject to change.
The hyperlinks in this article may redirect to external websites not administered by National Bank. The Bank cannot be held liable for the content of external websites or any damages caused by their use.
Views expressed in this article are those of the person being interviewed. They do not necessarily reflect the opinions of National Bank or its subsidiaries. For financial or business advice, please consult your National Bank advisor, financial planner or an industry professional (e.g., accountant, tax specialist or lawyer).