From The Co-Founders


Tips, Tactics & Strategic Insights and Commentary
from The ROI Co-Founders, Pat Johnson and Dick Outcalt
Outcalt & Johnson: Retail Strategists LLC; Retail Turnaround Experts

Help Bank Lenders Get to a "Yes"

In today's financial climate, how in the world can independent retailers (that's the 92% that are not publicly traded) get financing? 

In most cases banks are not lending (even as they run ads proclaiming their "support for small businesses.") Landlords aren't more lenient, nor are many vendors. Even mothers-in-law are asking tougher questions! 

So, what should a retail owner do? Just give up on the idea of getting financing? Or, worse, accept the cash offers from vendors, payment processors, or POS providers who take their "payments" right off the top of your daily sales?

Well, it is maddening, but The ROI recommends an easy exercise that may be of great help.

Remember, especially today, there is essentially no such thing as a bank loan to a privately-owned retail business as an entity of its own.

  • That is, a bank loan without the personal guarantees of the owner(s) is not available. It just is not happening.

And further, the personal financial statement and guarantee of the owner(s) must be supplied along with all the standard information - and financial statements - for the business.

So, start by going to the Retail Benchmarks on The ROI site, and check out the Benchmark ratios for your retail segment. (The banker will be quick to do this, btw.) 

Then, as you prepare your loan application (or are "reporting" to your current lender), here is our suggestion: 

  • combine the Balance Sheets for the business and the owner(s);
  • calculate the key ratios for the combined Balance Sheets.

That's right. Do the banker's work for them! And level the playing field!

Here's an example: 

  • The business, on its own, might have a 2.1 Debt-to-Worth ratio, and a 1.75 Current Ratio.
  • But when rolled together with the owner's personal Balance Sheet, the Debt-to-Worth ratio could drop to 0.8, and the Current Ratio rises to 3.2.  

A totally improved picture!

This is an easy way for you to analyze for yourself the financial implications of the loan you are requesting, and to "do justice" to the financial strength of your loan request.

Remember, banks put the Balance Sheets together anyway. We're just suggesting that you do it for them. 

Banks still want to loan money; that's how they make money!

By having the perspective of the Benchmark numbers for your particular segment, you are better able to show the banker that lending to you is a safe, defensible decision for them. 

For more information, see

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