It can be difficult for a young company to obtain financing because of the risk perceived by the financial institution or the investor. The same is true for any business, regardless of its stage of growth, if it has not optimized its cash conversion cycle. Why talk about financial arrangements? To maximize leverage; combine optimization of equity, debt and subsidies to give you the air you need for the coming months.
The financing of your company must cover each of the elements necessary for its operation: working capital, current expenses, expenses of investment projects, tools, equipment, buildings, patents, development of intellectual property, etc. You can establish your needs by means of a cash budget or by means of financial forecasts. Thus it is possible to predict in advance when cash will run out.
This will make it easier to align a particular project with a funding request; development of a new product, marketing of a new product, development of a new market, increase in production capacity are some examples.
Then, it is therefore necessary to detail the needs in connection with the request for financing. We must demonstrate what the funds that will be invested in the project will be used for.
On the one hand, we must indicate the expenses related to the project to be financed (salaries, fixed assets, equipment, inventories, marketing expenses, mission abroad) and on the other hand we must indicate the source of the funds used to finance the project; working capital, shareholder down payment, issue of share capital, a safe or a debenture, term loans, grant).
Finally, it will be necessary to demonstrate the company’s ability to make the reimbursements that will be requested.
We have developed financial modeling tools to create financial arrangements. We have carried out numerous mandates over the years and carry out a weekly watch on new government programs. Our team is made up of financial analysts and CFOs who will ask you the questions you need to properly structure your application to financial institutions and grant agencies.
Do you already have financial forecasts? We will be happy to read it and identify improvements related to your project. You will be well prepared to meet your banker!
We often hear the maxim “you have to get a loan when you have money”. In fact, what we mean is that if we are at risk of running out of money, it will be more difficult to convince the stakeholders of the financial arrangement. By having control of its cash flow, it will be possible to see in advance when the funds will run out. The more stakeholders involved in the assembly, the more time it will take, because each organization will have its information requests and its evaluation criteria.
To convince an investor, a banker or a granting agency, they must have confidence in you and your business model. A good business plan, a good knowledge of your financial situation, well-assembled financial forecasts aligned with your vision for the coming months will be assets.
It depends on several factors; is your business model clear? Are your accounts up to date? Have you ever prepared financial forecasts or a cash budget? What is the scale of your project? These are essential questions to be able to answer you.
No, that’s not how we work. We believe that the situation is rarely to the advantage of both parties at the same time.
We can support you for most of the preparation of the financial package, it remains that you are responsible for the request for financing and the underlying assumptions. Also, organizations always prefer to talk to the president of the company or key people in the organization. As they are the ones who are accountable for the results of the company, they want to establish a relationship of trust with them.