Finance Blog Broadcast Financing
Broadcast Financing
Written by Larry Johnson Sunday, 25 October 2009 19:00
No, BFA is not financing the local radio station; were talking about a way some businesses approach their financing requirements. Since many businesses find the process of financing confusing, frustrating and mysterious, it comes as no surprise that they hold the mistaken belief that the more their case is out there the better chance there is for financing. But broadcasting a case often does more harm than good. Heres why.
The domestic and international business finance community is tightly knit. They know of cases brought forward to their competition. Knowing that a case is being worked on somewhere else means that lenders will often refuse to touch it. They reason that since business financiers are bombarded with so many projects why work on a case for which they have no exclusivity and no assurance of compensation.
However, once a lender has rejected a case, it becomes more difficult to place financing. If ultimately successful, the terms and conditions may be more stringent than would otherwise be the case. This is especially tragic if a good case has been inaccurately prepared, portrayed or presented to the wrong lender.
But asking the right questions initially can save time and money: has financing been attempted previously? If so, where has the project been? Knowing where the case has been submitted allows BFA or another broker to move more quickly to other lenders and effectively present the case so that the chance of financing is optimized.
It is far better to pick a professional firm in the first place and not to overly expose the project. If the project has attempted financing elsewhere, it is important to know where. In this way, time is gained for the client and they are less exposed and better able to preserve credibility.