Episode 13 // Five Crucial C's to Bedazzle Commercial Lenders

Championed by our friends at Community Futures Sunrise

Covid cornered many Founders into a cash-crunch, forcing them to take on more debt merely to survive. In fact, as many as 70% of Canadian small businesses had borrowed roughly $135 billion (aggregate value) by February 2020, according to the Canadian Federation of Independent Business.

Now, as the entrepreneurial ecosystem looks to stabilize itself, Founders may be looking to lenders to help start, stabilize or grow their business.

If you’ve been pondering the idea of accessing debt capital (aka a loan) but don’t know where to start, or how to get to 'yes', NTN Pro, Shannon Pestun, former banker turned Founder and CEO of Pestun Consulting, walks us through the need-to-know essentials in this episode of #TheGabLab.

Part 1 // Debt Financing: Balance Sheet, Meet Leverage

Debt financing is the process of entering into a contractual agreement with a Lender (usually banks or developmental lenders like Community Futures).

A sum of money (loan) is lent with the agreement that the principal amount will be repaid over a specific time frame. In most cases, interest and/or finance charges must also be paid in addition to the principal payments.

As Shannon explains, Lenders expect Founders to be able to articulate what the loan will be used for. Ideally, it’s to finance growth rather than repaying existing debt, FYI. Keep in mind, adding debt (any form of debt, including Covid emergency funds) to your balance sheet, especially when cash flow is tight, can skew your ratios and decrease the value of your business.

Did you know debt financing can be less expensive than equity investment? Brain boggled? Tune into learn more.

Tune in to Part 1, as Shannon breaks down the details of debt including how it may affect your balance sheet, your bottom line and your future fundraising efforts.

Part 2 // How to Bedazzle the Bankers [and other debt lenders]