Sales are going great at the little company, but cash needs are growing out of Jim’s cash and ability to fund. He looks for external funding.
Jim reapproached his banker. He explained they had implemented several strategies that moved them into the black in the recent month. Bundling, increasing the average ticket price, and a focus on loyalty was moving the needle for the business. After a short meeting, the banker asked for a lot of financial information about the state of the business. Jim worked with his accountant to send over the paperwork. He was hoping for a “yes” answer granting the money this time.
The next day, the banker called Jim personally. “Your business is doing well. I’m excited about your progress. But, for us to provide the capital you need, we need collateral. You need to put up your house, property, or investments. I’m so happy that you’ve gotten to a profit last month, but the business doesn’t have collateral. I can’t take your unsold inventory. You’re a virtual company, so there’s no office or manufacturing equipment you’ve paid for to finance.”
Jim decides it’s time to call Mike J. again, but this time, he’s got a much better crisper story about getting to profitability.
Banker’s Decision (Don’t grant loan) Choice Removed Grant Loan
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