#042 The 12 steps on Reviewing Deals BEFORE They go to Investors/ Lenders?

Welcome back to another episode of the How To Raise Money podcast with your hosts Ray McLennan and Nigel Best. In this latest episode, Ray and Nigel go through the 12 step process that they go through when receiving an enquiry from a client looking to gain finance from an investor or lender. This is an essential checklist for anyone looking to raise money for their new project in whatever sector.   Key Takeaways   Have They Completed An Application Form? The Online application form can be found at RaisingAngelFinance.co.uk. This is a really simple, short application form which asks you for key information and a series of questions. There are certain things that we need to check and that’s what this form is for. Completing the form also shows a level of interest in taking your project seriously.   Is The Application In The Name Of A Limited Company? This means it’s a legal entity in its own right. At this stage it’s pointless just making a name up, intending to make a company later on. You still have to register this company as this will get checked.   Check Companies House Website. Are the filings up to date? On the Company House website in the UK, it will give you lots of information about the company in question: Is it live? Who is involved? Are there any outstanding filings associated with the company?   Is the company information on the form consistent with the public record? Are the people involved actually involved in the company? This is a credibility check. Checking that everything in the application is consistent with public records through a simple google search.   Do the figures add up? Ensuring that the numbers on the application form simply add-up, with regards to your costs and proposed margins. The fact that this is on the application means that people need to go away and check their own numbers. This is the basic information, a more detailed financial check is done later on. If the company is not going to make a minimum of 20% then you are going struggle to get any interest. Evidence of Experience, or Credibility? Do your developers have a track record of experience in the sector. If you don’t have that experience, then you will need to leverage someone else who does have that experience and get them involved in the project as part of your team.   Is The Return Offered A Reasonable One? Investors want to see a return on their money. They are looking at double digits return on their investment maybe 10%-15%. This all depends on who the lender is, however.   Is There A Clearly Defined Exit? Do you have a decent plan? Is there a single exit, a single buyer which is more risky or multi-exit model which is less risky. Investors want the exits to be swift clean and easily understood. The more exits you have the more options you have. Builders sometimes ask for 20% of the flats to then be converted into serviced accommodation, so they are getting an income straight away because 20% of your stock is going to be slow to sell.   Is The Security Offered Sufficient? How the charges are split between the different factions of finance within the deal is a key consideration, in the different stages of the process.   Personal Guarantee. If there is a personal guarantee, is it backed up with assets like other property or a business? This does not mean the family home however as that is more complicated, so be sure to back this up with some kind of separate assets.   Company Directors/Companies Check. Does anything interesting come up? Does a check on individuals bring up anything that would compromise or contradict the application. Some projects, like franchises, are more strict with your time. They want to know that you are not involved in other things as they want complete dedication to the franchise.   Finally, a letter is sent to the person sending the application to say that it has moved onto the next stage and been sent to the investor or lender whichever is most appropri