This story appears in the
June 2001 issue of
Entrepreneur.
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Q: To fulfill a
contract my business just landed, I must buy new equipment. How can
I be sure I borrow enough money from the bank?
A: There are a lot
of things to consider when approaching the bank about an expansion
loan. And if you don't ask, you won't get. So add up all
the potential costs-such as closing costs, installation fees
charged by the vendor to put in the equipment, construction costs
to integrate the equipment into your plant, and working capital
needed to support the expansion prior to getting paid by the
customer and the like.
Work closely with your accountant to calculate the costs and
estimate the capital you need to grow your business. Take this
information to your lender, and ask him or her to help you
structure a loan that meets your cash-flow needs. Get as much as
you can upfront, because it's easier to get cash the first time
than to go back for a supplemental loan.
Doug Hood is founder and president of Rainmaker Capital Corp.
Send your questions and comments to doughood@rainmakercapitalcorp.com