Back to Basics: Never Lie to Your Financing Company

I am always surprised when a company that claims to be well managed and have "huge" prospects, turns in a shoddy application. These companies are asking for substantial amounts of business financing. Yet, they submit applications that have typos and are missing documents. Sometimes is carelessness. Sometimes it's something else....

Last week, I got an application that was missing a balance sheet, a profit and loss and their receivables aging report. We requested 7 different documents. We got four. They missed three most important documents for our decision making process. They did this purposefully because their financials were not good. They though that maybe by not submitting them.....we would not notice in our due diligence.

We declined to provide purchase order financing and invoice factoring.

Not because their financials were bad (they were, but we could deal with that). But rather, because of how they went about the process. When we asked. They hemmed. They hawed. The came up with a million excuses, and only at the last minute did they admit their financials were not good and that they had lied to us. Their company was tanking and we were their last ditch effort.

Here is the kicker. If they had been upfront about the situation we probably would have financed them. We can be creative. As a factoring company, we are used to dealing with situations that are "less than optimal" (that is what factoring companies do).

We just don't like it when they hide things from us, give us false pretenses and paint a rosy picture... when the picture is bleak.

Here are some things to keep in mind if your company is looking to apply for business financing:

1. Have a conversation with the finance officer. Explain your situation. If your company has problems - be candid. We prefer to know about problems up front. That way we can structure an appropriate solution.

2. Fill out the application clearly. Poor penmanship does not help.

3. Submit all required documents.

4. If you are missing any documents, mention it, explain why, and then try to come up with an alternative.

5. Above all - don't lie or play games. That is the easiest way to get disqualified!