The last area that I'd like to address is what can business brokers do to ensure the highest possibility of the successful financing. From my experience, the issue of direct experience, as well as future plans for the business are paramount. The projections as well as the business plan are examined very closely.
It is my recommendation that you the business broker work with the prospective buyer in formulating the cash flow projections as well as the new business plan. By having the buyer understand the cash flow model, he or she will be able to answer all questions from the underwriter.
It is very important that they do not just copy sales from one month to the 12 months and keep revenues flat. They should examine their projected monthly billing and reflect that accordingly in the cash flow model.
The importance of the business plan cannot be understated. The lenders are thoroughly examining this document drawing out relevant experience to develop a comfort level, as well as to determine quality of the individual requesting the financing. Because I have seen the emphasis placed on business plans Lightning Commercial Funding has created a 25 page business template that we are consistently using for our clients.
As a gift to all of you I would be delighted to share this document with you. Please send us an e-mail at MTeam@loanforbiz.com and we will send you the business plan. Visit our site at loanforbiz.com.