Project financing: 3 basics to get you from dream to reality

To get project financing, you need to persuade a financial institution you can be trusted. Here are three basic pieces of advice to get you from dream to realitybefore you know it.
Obtaining project financing for a business is a milestone that's not always easy to get past. Even if the project is a passionate one for you, as an entrepreneur you should always remember that your financing application has to be based on the facts.

Don’t make the mistake of meeting with a bank’s loan officer if you aren’t well prepared. A new suit or polished shoes isn’t enough to get the project financing you want so much. Before making an appointment with a representative of a financial institution, take all the time necessary to create an attention-grabbing business plan. You can find several examples of business plans online or you can hire a professional to help you develop one.

1. Be concise. Draw up a comprehensive but lean business plan. A plan that’s a hundred pages long but that doesn’t say much won’t impress the people who count.

2. Be realistic. Don’t overestimate your strengths or underestimate your weaknesses. Do you foresee any difficulties? The financial institution will appreciate your objectivity.

3. Be transparent. Have you already experienced financial problems? Don’t try to hide them. You’ll increase your chances of obtaining your project financing if you play your cards with honesty and credibility.

Do you understand such terms as debt ratio, liquidity, inventory and working capital? It may be useful to learn the language of finance before meeting with a lender or investor. The goal isn’t to impress, but to be able to define the issues surrounding your project. Of course, you should never hesitate to ask questions in order to understand more clearly. To establish a trusting relationship, show yourself to be interested and open to receiving information, advice and recommendations.

Besides banks and credit unions, it's possible to obtain funding for your business through specialized financial institutions, such as commercial mortgage lenders and insurance companies. You can also contact equity financing associations. These investors are willing to lend money in exchange for shares in the company or a percentage of profits.

To convince anyone to lend you money or invest in your business, you have to demonstrate that your project is viable and that you are a trustworthy person. Want to increase your chances? Find a mentor and practice your pitch. If you can convince an experienced business person of the strength of your project, there’s a good chance that you could go from dream to reality before you know it.