When lenders discuss entrepreneurs, they refer to the more competent ones as “people who can sell a credit” which means persuade them to make a loan even though the potential loan might not meet the tests of a “good credit.” To “sell a credit” is to convince your lender of the merits of the loan and your company’s ability to repay it when it comes due – even though you have no (or inadequate) cash flow or assets to justify the loan. This is a high art, achievable only through practice.
The greatest art form in the money raising field is to be able to “sell a credit” for a financing opportunity that is not considered credit-worthy. That is to borrow money for a situation where the return of that money is uncertain. This is one of the primary challenges of entrepreneurship. It requires developing enhanced communication skills. It is vital because it could provide you with a badly needed cash injection to keep your telephone connected and your support staff in pizzas and soft drinks.
It’s important to understand that the inability of an entrepreneur to borrow money is never the failure of the financial community. There are thousands of lenders — all different. It’s simply a failure to “sell the credit.”