Three Things: Prepare for Credit Before You Need It

Most owners ask for a larger credit facility right when they need it. That’s usually too late.

1. Clean up how your story shows up on paper

Before you talk to a lender, your financials need to be consistent, timely, and easy to follow. That means accrual-based statements, clear normalization of one-offs, and a trailing 12-month view that ties out. If a banker has to “interpret” your numbers, you’ve already lost leverage.

2. Understand your borrowing base before they do

If your line is tied to receivables or inventory, know exactly what qualifies and what doesn’t. Aging matters. Concentration matters. Slow-moving inventory matters. Walk in with your own calculation of availability so you’re not reacting to theirs.

3. Pressure-test your covenants in advance

Don’t wait for the bank to tell you what your ratios will be. Model them yourself under a few realistic scenarios—seasonality, a delayed customer payment, or a temporary dip in earnings. You want to know where the edges are before you’re operating near them.

The takeaway: preparation isn’t about getting approved—it’s about negotiating from a position of control and building a capital structure that holds up when things get uneven.