What do you do if lenders are not offering favorable loan terms to entrepreneurs?

Entering negotiations with lenders without a clear understanding of your financial needs is like sailing a ship without a compass. Knowing exactly how much you need to borrow, the repayment timeline that suits your business cycle, and the interest rates that won’t strain your cash flow is crucial. This knowledge not only strengthens your bargaining position but also ensures that you don’t agree to terms that could jeopardize your business’s future. Remember, in the world of finance, being well-informed is your best defense against unfavorable terms.

The power in your negotiations depends largely on how well you prepare for them. Of course, you need to know what your financial needs are and what terms you can accept. But just as important is the question of what would happen if you cannot reach an agreement in the negotiations. Is there an alternative to getting all or part of the money from friends or family? And also give yourself time. Because if you have to come to an agreement under time pressure, you will end up losing out.

The bank will want to know that you will be able to repay what you borrow and profit within the agreed timeframe. Therefore i will need to provide historical (where this is relevant) and projected financial information that demonstrates profitability and cash generation. Therefore before you apply, check the lender's criteria to determine if you're likely to .

When negotiating with a lender, it is always important to have an "ace up your sleeve". So what alternative offers are there on the credit market. Take your time to do this. Because the alternatives are not just lying on the street - this is hard research. And if you don't have any alternatives, then you are also better prepared and know that you better not let the conversation fall through.

We often assume that the lender's employee is more powerful in the negotiations than we are. This is because we are aware of our constraints, weaknesses and deadlines. Don't focus on your weaknesses, focus on your strengths. Because no one is offering exactly what you have to offer. Be aware of the uniqueness of your company. Only if you are convinced of this can you convince others that it would be foolish not to invest.

Don't hesitate to negotiate with lenders. If you believe you deserve better terms based on your business's financial performance or industry outlook, make your case and see if the lender is willing to reconsider their offer.

In order to assess the actual balance of power in negotiations, you need to ask yourself who has the most to lose if no agreement is reached. It is important to know the alternative you would have if the negotiations were to break down. So what are the best other options. And if there are no other good options, then this is also important: the negotiations had better not fail.

Consider the following alternatives: Funding your startup through personal savings or revenue from the business (It might be slower, but you retain full control and ownership). Crowdfunding Platforms like Kickstarter and Indiegogo allow entrepreneurs to raise funds from a large number of people, usually in exchange for product pre-orders or equity. Investors and Venture Capitalists (these are individuals or firms who invest in startups in exchange for equity, but it does mean giving up a portion of your company. Trade Credit (you might be able to negotiate better terms with your suppliers, such as longer payment terms or bulk discounts).

Why entrepreneurs didn't think about partnership instead of loans? I think this option can help some kind of entrepreneurs cases.