What do Investors Look For?
Before you start, keep these things in mind. It might help to gather these Items before your interview!
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Investors assess the business's cash flow, revenue, and profitability to ensure it can service the loan. A business with consistent, positive cash flow demonstrates reliability in meeting repayment obligations.
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Tangible assets such as real estate, equipment, or inventory provide security for the loan. Collateral gives investors confidence they can recover their funds in case of default.
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A clear, well-documented business plan with realistic goals, strategies, and financial projections helps investors understand the business's purpose and potential for success.
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Experienced and capable leadership reassures investors that the business can handle challenges and execute its strategy effectively.
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Investors prefer to see a specific and compelling use for the loan, such as expansion, equipment purchase, or operational improvements, with a clear connection to growth or profitability.
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A structured plan that outlines how the loan will be repaid, including the timeline and sources of repayment, shows that the business owner is proactive and reliable.
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Investors evaluate the business’s position in its industry, including its competitive advantages, market share, and potential for growth. A strong position reduces risk.
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A history of successful operations, creditworthiness, or previous borrowing and repayment performance indicates stability and reliability.
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Investors analyze potential risks, such as market volatility, regulatory challenges, or operational inefficiencies, and how the business plans to mitigate them.
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A clear exit strategy, such as refinancing, selling assets, or boosting revenue to repay the loan, provides reassurance of a well-thought-out repayment plan.
Specifics I find extremely helpful to know:
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Basic Numbers
What are your basic numbers? Gross income, Net operating expenses, Total debt, Monthly expenses … ect.
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Growth Plan
How will the funding help? Detail specific items the funding will be used for, and be ready to explain how that will add to your profits.
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Risks and Liabilities
What can go wrong? Understand your risks and how to articulate them. How do you plan on mitigating them?
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Competitive Advantage
Do you have a competitive advantage? What makes you different, unique or special? Do you a technical or unique advantage?
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Market Research
What technical data do you have? Do you have any data? Feasibility studies? Third party research? Industry insight?
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Massive Goals
Do you have a vision? What is your main, unique, massive, insightful, educated, passionate goal?