Sales rule 101: understand your audience.  This rule could not be more valid when you prepare a loan package. 

One of the biggest mistakes that borrowers make is to think that lenders are like investors.  Loan officers and investors are two completely different animals. Loan officers manage risk while investors buy dreams. Entrepreneurs often pursue loans with the same zeal as they pitch an investor, dooming their chances from the start. Avoid their mistakes.

How to Pitch a Loan Officer

Loan officers want to know whether or not they will get their money back. You'll need to show them the following:

  • Financial discipline
  • Positive cash flow
  • Impressive tax returns
  • Current financial statements

Signs of fluff or dark spots in your financials are warning signs for loan officers that something is not quite right with your business and that lending to you could be a risky endeavor.  Lenders want to see forecasts and projections that are thoughtful, conservative, and obtainable.

How to Pitch an Investor

On the other hand, investors expect some level of fluff in your pitch. They want to see the following: 

  • The vision of the business
  • The earning potential
  • The possibility of an IPO or acquisition

Potential investors will be less concerned about financials and more interested in your vision and the opportunity to "go big."

The lesson here is to know your audience. If a loan officer catches you in an unsupported projection, you'll likely turn them off from lending to you unless you can back up your statements with actual numbers. On the flip side, poorly executed projections and a weak business plan can get you kicked out of an investor meeting before you settle in your seat.