How to get bankers to love your agency (and lend you money)

Hey there,

Welcome back to the Agency Finance Letters. This one will be a 4 min read.

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In today’s edition, I’m sharing some insights from my time in banking.

Because as your agency scales, you will inevitably have to start dealing with banks…

• You might need a loan to fuel growth

• You’ll want to finance big projects or acquisitions

• You want better rates on your business accounts

• You might need a line of credit to fix a cash crunch

That’s why you need to be comfortable speaking with bankers.

If not, you’ll likely be laughed out of the room or simply ignored… not good

But let me let you in on a useful little framework to use when speaking with bankers.

It’s called the "5 C's of Credit”. 

We still used this to evaluate hundred-million-dollar loans.

Master this, and every banker will love you.

The 5 C's of Credit

1. Character

This isn't about your charming personality. It’s about integrity and being reliable.

• Do you pay bills on time?

• How's your personal credit score?

• Are you transparent about your finances?

Pro tip: Keep clean books. Nothing impresses a banker more than organised records.

2. Capacity

Does your agency have the “Capacity” to take on this loan and repay it? Highlight:

• Your cash flow (not just revenue)

• Debt-to-income ratio

• Profit margins

Key: Show steady, predictable cash flow. Retainer clients are your best friends here.

3. Capital

How much skin do you have in the game?

• What's your personal investment in the agency?

• Do you have reserves for tough times?

Remember: Banks want to see you're taking risks alongside them.

4. Conditions

This is about the bigger picture:

• How's the economy doing?

• What's happening in the agency world?

• Are you adapting to industry changes?

Tip: Show you're ahead of trends. Talk about how you're positioning for the future.

5. Collateral

What can you offer as a safety net?

• For agencies, this can be tricky as most have few assets

• It can be a strong cash buffer, receivables, or most likely, a personal guarantee.

Make sure you have good information to back up all these points, and you’ll impress them like nothing else.

One Main Lesson: Don’t make the mistake of focusing solely on your creative work and client list. 

Bankers want to know how they will get paid back.

That required a very different approach:

• Have clear financial projections

• Know your key metrics cold (think LTV, churn rate, client acquisition cost)

• Show a solid business plan, not just a portfolio

Most bankers these days aren’t like the Wall Street movies you’ve seen.

If you can help them justify to their bosses why your agency is a good partner, then you’ll find many more doors open up for you.

Keep building,

Joey

P.S. Struggling with your agency's finances? I'm offering a free CFO Call for the next 10 days. Reply “CFO” if you want in. First come, first served.