Small Business

How to Make the Banks Do Your Bidding

Bankrolling your growth doesn't have to be a hassle. As these PROFIT 500 winners prove, if you learn what lenders are looking for and put in a bit of extra effort, you can secure the cash you need—no grovelling required

Written by Catherine McIntyre


Illustration: Sam Island

When husband and wife duo David and Stephanie Ciccarelli were rebranding their young voice talent firm in 2004—then called Interactive Voices—from a physical studio to an online marketplace, they found the perfect domain name: The URL carried with it six years of credibility and search power, with an organic influx of traffic that would allow the Ciccarellis to stop paying for online advertising. The cost: $30,000, which the Ciccarellis did not have.

David, the company’s CEO, prepared a spreadsheet detailing projected equipment expenses, printed out his 50-page business plan and made appointments with nine different banks. All nine rejected his request. One particularly blunt lender called the business “unbankable.”
It was a harsh lesson in the difficulties entrepreneurs often face when pursuing bank financing. It also galvanized the couple. “After that, we wanted to button up and run a real company,” David recalls. They incorporated the business, updated their forecasts, edited the mammoth business plan into something more digestible and finally got the $30,000 loan. has since convinced its bank to to loan it $50,000—followed by $100,000, $150,000 and $500,000—and, just this year, $2 million to help fund its expansion. It’s proven a safe bet: The company, which ranks No. 94 on the 2016 PROFIT 500 ranking of Canada’s Fastest-Growing Companies, has seen sales spike 798% in the past five years.

The experiences of the Ciccarellis and many of their PROFIT 500 peers show that money can come freely when you learn to work with—not against—your bank.

Give yourself choice

Family-run food manufacturer Stemmler’s Meats & Cheese (PROFIT 500: No. 485) began a major expansion last year at its Heidelberg, Ont., headquarters, which its startup-focused bank refused to back. Seeking not just a new lender but also the best deal possible, its owners decided to go in prepared, hiring an accountant and a consultant to conduct a feasibility study, detail the capital costs for expansion and calculate its projected profitability. “Banks want to know you’re not some pie-in-the-sky company,” says Terry Stemmler, who co-owns the business with his brothers, Kevin and Shawn. It took months, but that extra effort convinced all four banks the Stemmlers approached to offer loans, putting the company in the enviable position of being able to dictate its terms. In their case, that meant scratching two lenders that wanted personal guarantees and choosing one that put forward 20% more than the original request.

Ask ambitiously

About that 20% cushion: The Stemmlers have become big believers in getting more money than they need—even if they don’t plan to spend it. “It’s better to ask for more and then not use it,” says Terry Stemmler, adding that he and his brothers have created strict rules about when and how they can expend the extra cash. “It makes banks edgy if you keep going back for more money; it makes them wonder if you have the project under control.” Asking for more at the outset—experts recommend between 20% and 30%—is unlikely to be a deal breaker for an interested lender and will minimize emergency cap-in-hand requests.

Ask Often

Four years ago, Brendan Howe, CEO of Toronto managed IT services provider Techify (PROFIT 500: No. 340) had what he calls an “oh, shit!” moment. Howe had just bought out his business partner, spurring the company’s bank to cut its credit line in half—just as Techify hit a growth spurt and was desperate for cash to cover operating costs. “Not having the money when we needed it added significant stress,” he says.

Frustrated, Howe pulled the company’s account and moved to a new bank, with a new approach: Every year since, he has met with his banker to discuss Techify’s growth plan and to secure a loan—whether the company needs it or not. This has proven effective in easing the anxieties of both Howe and his banker. “Luckily, since that first incident, we haven’t really needed a big loan,” says Howe. “But I’ve learned that the best time to ask is when you don’t need it.”

Become buddies

Rounds of golf or lunchtime drinks might seem hopelessly dated, but face time remains a great way to convince your lender you’re a safe bet. Matthew Harding, president and CEO of Ottawa-based IT services provider the KTL Group (PROFIT 500: No. 219), either phones or visits his banking manager almost every day, sharing good news with proof and not-so-good news with a proactive explanation. “I want them to see me,” he explains. “I want them to know when I’m thriving.”

According to Alma Johns, president of Toronto’s Bench Capital Advisory, which helps small- and mid-sized businesses get financing, banks consider such candid behaviour a mark of good character (read: worthy of investment). “The moment you start hiding, they become suspicious.” And for Harding, the effort of constant communication is minor compared with the reward. “The more they understand you,” he says, “the more they get where you’re trying to go.”


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