Borrowers often prepare for a private lender the way they prepared for the bank, with a thick binder of projections. We read the projections, but the decision turns on four things, and you can prepare for all of them.
1. Collateral
What secures the loan and what is it worth if we had to sell it? For real estate that means a current appraisal from an AACI-designated appraiser and a title search at the provincial land titles office. For equipment it means an orderly liquidation value, not the price you paid. For receivables it means the aged listing and the credit quality of your customers.
2. Cash flow
Can the business carry the interest for the term? We look at the last two years of statements, year-to-date internals and the next twelve months of cash flow. Interest-only structures reduce the monthly burden but do not remove it.
3. Character
Who are we lending to? Litigation searches, CRA status, PPSA registrations and a conversation with the owner tell us more than a credit score. An owner who explains a bad year clearly is a better risk than one who hides it.
4. The exit
How does the loan get repaid: sale, refinance with a bank, cash flow or a specific event? A loan with a clear exit gets a term sheet. A loan without one gets questions.
What to send
- Two years of financial statements and current internals
- Aged receivables and payables listings
- Collateral details: appraisals, equipment lists, rent rolls
- A summary of existing debt and security registered
- A short note on the purpose and the exit
Have a situation like this? Tell us about the deal and a principal will respond within two business days. Cascade lends to businesses only, in Canadian dollars, and every rate we quote is an annual rate.
