It’s a familiar story. You need a loan to expand your business, but your banker doesn’t see your vision. Bank lending criteria are notoriously rigid.
This very thing happened to James McGee, when he was hired to take over a struggling retirement community called The Oaks in South Carolina. Residents had started to notice that the property needed repairs.
When McGee took over, he was totally on board with making necessary improvements. Right away, he could see the budget was, well, lacking in funds.
After careful evaluation, McGee determined a bridge loan was the best solution, but the banks couldn’t seem to make the proposal fit into their lending formulas. They wanted to base their decision solely on financial statements, which didn’t tell the whole story.
McGee predicted that improvements to The Oaks would produce a series of business benefits, including:
Renewed interest in the property.
Increased cash flow.
And the new cash flow would allow The Oaks to pay off the bridge loan.
McGee ended up finding a small regional lender, who understood the business climate and specialized in projects like the one his business needed. The lender looked beyond the existing financial statements and checked out the “whole story,” which included the company’s marketing plan for attracting new residents.
McGee’s story provides a valuable lesson in how to respond to rigid bank lending criteria. Don’t let one lender’s rejection cause you to doubt your idea. Sharpen your sword, so to speak, and look for a lender who will consider the bigger picture of what you are trying to accomplish.
Some of the best business ideas don’t receive high grades from traditional lending formulas. Finding the right loan partner can make all the difference.