The question largely is which process do you follow?
This needs to be answered in a couple of different ways.
First, all business financing processes can be classified into one of two different categorizes.
Process #1 we will call the off the shelf business financing process while process #2 is a customized approach.
With process #1, the lending institution has a product or program that they provide on mass that has very specific requirements and a process to follow. The off the shelf process tends to be very rigid in terms of the requirements and therefore is not very pliable with respect to being able to adapt to an application that does not meet the stated requirements.
To get business financing from an off the shelf program, you may need to adjust or adapt your requirements to fit the lender. While this may seem counter intuitive to a business owner, the reality is that swimming against the current with these well defined programs will not likely get you anything but frustration and a lack of funding.
Process #2 is a customized business financing process.
Now this is where things get really interesting.
Customized processes are typically provided by private investors that will consider a wide range of debt, equity, and debt/equity scenarios.
The process for trying to arrange this type of financing will also typically involve some type of intermediary or front man for the money that brings deals forward to the private investing group.
This can be done through a formalized system like investment banking, hedge funds, or even IPO’s.
Every financing strategy that is pursued will have to be vetted through a chosen group of advisers which will likely include lawyers, accountants, business consultants, and even boards of directors.
The big challenge with the customized business financing approach for the borrower or applying entity is that the process costs money to pursue and the outcome is uncertain as the process will ultimately dictate the outcome.
This is also why most business owners spend most of their time working with process #1 in that the path to money is typically more clearly defined.
That being said, even though process #1 can provide a road map to money, there still is no guarantee that you will get the money you’re looking for if you follow it.
So regardless of whether you choose to pursue process #1 or process #2, the are no guarantees that one will be more successful than the other.
So getting business financing in place is more about increasing or maximizing the probability of success which will occur when you 1) select a process that is highly relevant to your requirements, and 2) stick with the process long enough to achieve the desired results.
In terms of point #1, it can take some work to figure out who’s process to follow and who you should be working with. There are all sorts of intermediaries making all sorts of claims out there and it can be difficult to choose a path that increases the probability of success just as its very easy to get sucked into the promises of a low probability gig that says all the right things, but is lacking in terms of substance and the ability to follow through.
In terms of point #2, because business financing in general takes time to complete and can be frustrating to complete, its easy to jump from one process to another without getting the desired benefit.
The goal in seeking business financing is not to secure optimal financing in my opinion, although that can be a secondary goal.
The primary goal is to secure financing that works within the time period you have to arrange it and then work to improve upon your balance sheet over time once you have capital in place to do the things you want to do in your business.
So selecting a solid and relevant business financing process and then sticking too it are going to be keys to getting the financing you are looking for.