Sean Meyer

The Bankability Architect

[Sean Meyer @SmallBizSean]

I strongly believe the Statement of Cash Flows is the most important financial statement — yet most business owners overlook it entirely.

Instead, they focus on the income statement and balance sheet. Both are valuable, but neither always tells the full story.

Let's say you're reporting $500K in net income — solid numbers on the surface. But your cash on hand tells a different story.

The balance sheet shows near $0. Pull up the Statement of Cash Flows and you'll see why — accounts receivable are drastically higher than they should be.

That could mean a few things, including the financial weakness of the payer, meaning you may never actually collect. Suddenly, that $500K in net income looks a lot less impressive.

Most business owners don't provide these statements when seeking financing — either because they don't know what it is, or because they assume it'll hurt their chances. That's rarely the case.

A complete, well-presented financial package lets you tell the full story lenders need to hear. It also ensures you get placed into the right loan structure from the start — which matters more than most people realize.

Always lead with your best presentation. Gaps in your financials don't go unnoticed — they just go unexplained.

[Sean Meyer @SmallBizSean]

I love accountants — I have my Master's in Accounting, actually — but I also know they often get thrown into unfortunate spots.

Business owners hear "CPA" and assume they're a Swiss Army knife that can handle every financial need.

"Do my taxes."
"Handle my bookkeeping."
"Create financial projections that'll help me get a loan."

All reasonable asks — but here's the reality: a lot of these outcomes require skills that many CPAs simply don't have.

In my world, one of the biggest is sales.

Getting funding approved isn't just about the numbers. You need to understand how bankers think — and then sell them on why your deal is a good one. Without that ability, even a clean set of financials can fall flat.

And let's be honest, your standard accountant isn't built for that. They thrive behind a desk, crunching numbers and thinking in black and white — and in many situations, that's exactly what you need. Taxes, bookkeeping, compliance — that's their lane, and they own it.

But when it comes to securing financing, you need to understand where their strengths end. Misreading that line can cost you the outcome you're after.

It's easier said than done, but with a little insider knowledge, it becomes simpler to spot over time.

[Sean Meyer @SmallBizSean]

Here's the truth on personal guarantees for business loans:

Even though everybody hates them, in a lot of situations, they can actually be a smart move for your business.

The best way to think about it is as a risk mitigation tool.

Banks know that if you're personally on the hook, you'll do everything in your power to keep the business afloat.

On top of that, if you have significant personal assets, a guarantee can help marginal requests get across the finish line. Those assets likely won't be listed as collateral on the loan itself, but the bank knows they're there if needed — and that alone reduces their risk.

As mentioned, a personal guarantee can turn a denied request into an approval, but it can also work in your favor by keeping interest rates low. Banks price based on risk, and less risk means lower rates.

That said, there are typically ways around it.

One common example is asset-based lending, where you offer substantial collateral in place of a guarantee. Say you need $500K and offer a fully paid-off building worth $1.5M as collateral — at that point, the bank can likely move forward without a personal guarantee. Worst case for them, they recover their money through the asset. They don't need an additional risk mitigation tool on top of that.

The downside, of course, is that you've tied up that equity — making it unavailable for future financing needs.

And lastly, if you have an exceptionally strong business — one that's clearly not going anywhere anytime soon — that track record alone may help you avoid a guarantee. But situations like that are few and far between.

[Sean Meyer @SmallBizSean]

Contrary to popular belief, banks — and other creditors — won't do the heavy lifting for you.

It always blew my mind when I was working as a Commercial Loan Officer and business owners would come in with the most underprepared requests.

Them: "I need $1.5M — I'm going to build a truck wash."

Me: "Great, can I see your projections?"

Them: "Uhhh..."

Meaning they'd never taken the time to think through whether it was actually a viable idea or not.

These weren't "bums" either. They'd typically already built solid businesses — but were essentially relying on us to decide whether their next move made sense.

Sure, banks do their own underwriting, and some of that analysis inevitably happens on their end. But the financial planning and analysis that should happen before that point? That's an entirely different role — and it's yours.

Lenders may not tell you this directly, but walking in underprepared can get your request denied before it ever gets off the ground. If the information they're working with is too vague, there's simply nothing for them to act on.

[Sean Meyer @SmallBizSean]

Cash flow lending — even projected cash flow — will always be your best option. But sometimes that's just not feasible.

Maybe you had a recent dip in revenue and banks are spooked by the trend, so they won't provide financing no matter what.

In my experience, this obstacle is typically easy to overcome — but if not, there are always alternative routes.

And remember, even though lenders may have "hard rules," that doesn't mean they follow them 100% of the time.

For the most part, those rules exist to mitigate risk. If you can find a "replacement" solution that accomplishes the same thing, lenders are often willing to work with you.

One prime example of that is asset-based lending. Let's say you have $1M in outstanding accounts receivable, expected to be collected within the next 90 days.

Your clients are strong, you have no reason to doubt they'll pay, and you need $500K for a short-term loan.

The only issue is that banks have denied you in the past — primarily due to thin cash flow — and you can't get anyone to approve your funding request.

In that case, asset-based lending (ABL) might be a strong alternative, as it helps mitigate the risk.

With $1M in A/R on the books and only $500K being requested, the likelihood of repayment is high.

You could leave the country the next day and they'd still collect — and knowing that, lenders are far more willing to extend credit.

Obviously a simplified example, but the underlying concept matters. This type of thinking can unlock funding even when your current financials are scaring away traditional lenders.

[Sean Meyer @SmallBizSean]

One thing that gets business owners into repayment trouble — even though most don't know what it is — financial covenants.

Being an ex-banker, I personally think they're great, but only if you know what to look out for.

These covenants come in various forms. A common example is the debt service coverage ratio, or DSCR.

A lender might include a covenant requiring you to maintain a DSCR of 1.25x or higher, checked quarterly.

If one quarter you come in at 1.23x, they'll likely just flag it and move on. Come in significantly lower, and they could call the note due.

That's the main purpose of these covenants — giving the bank an "out" if your business trends downward. And if that happens, things can get very difficult very fast.

The remaining loan balance becomes due immediately, and if you're unable to refinance, other tactics come into play — think liquidation.

Again, not saying they're the worst thing in the world. Financial covenants can often help get a deal across the finish line — you just have to go in with your eyes open.

[Sean Meyer @SmallBizSean]

I don't care what anybody tells you — bank financing will always be the gold standard of business capital.

You don't give up any equity, you're not agreeing to "unique terms" that come with private creditors, and your rate is relatively cheap.

Being an ex-banker myself, I generally take that route, and even though I've always had success with it - I understand there are "unique" scenarios as well.

One situation that always comes to mind is mezzanine debt. If you're not familiar with it, mezzanine debt is essentially the "excess" portion of financing beyond what a bank will lend.

If you need $10M but the bank will only give you $6M, that's $4M you have to come up with. Assuming that's not pocket change for you, somebody else has to step in —that's where mezzanine lenders shine.

These lenders are private creditors who provide the remaining $4M, but charge a premium for it. Since they sit second in line behind the bank note and only collect after the bank is paid, their risk is significantly higher.

There's no set standard on rate, but as a general rule of thumb, 15% is a safe benchmark.

On top of that, some mezzanine lenders may ask for an equity stake — so always proceed with caution.

I'm not saying this to steer you toward mezzanine financing, just pointing out that there are generally options for everybody.

Bank lending will always be king — but when needed, alternative solutions exist to fill the gap.

[Sean Meyer @SmallBizSean]

@retirementkeys This is refreshing. Had the exact same thing happen, and have noticed very similar changes in my personality.

[Sean Meyer @SmallBizSean]

@blackhatwizardd Works great "pre-call" as well.

Used to do this with a VSL Upside Down Funnel.

They opt-in, watch the VSL, then get emails dripped out every day afterwards - with each one revolving around a primary objection.

Makes sales calls easy when/if they finally reach out.

[Sean Meyer @SmallBizSean]

@reayed6 This is why I'll never "niche" down. Love learning about random industries before writing about them.

[Sean Meyer @SmallBizSean]

@ConnorAbene Don't make "mitigating tax" your main goal.

Most of the time, it ends up providing less cash flow overall, as the expense is larger than the amount you saved on tax.

[Sean Meyer @SmallBizSean]

@Eli_Albrecht Because most Personal Bankers (Consumer Lenders) don't understand how to underwrite tax returns.

Saw this happen all the time when I worked in banking, we (Commercial Credit Analysts) always had to walk them through it.

[Sean Meyer @SmallBizSean]

@reayed6 Big fan of this myself.

Always like to read "Million Dollar Mailings" by Denny Hatch, funny how much we complicate it today, when compared to what used to take place.

[Sean Meyer @SmallBizSean]

@SBA_Matthias I was a lender back in 2015, working with some acquisition loans, it was always a terrible problem back then as well.

Almost like they wanted us to double down as their personal Accountant, doing Financial Due Diligence on the deal, to see if it was a good purchase or not.

[Sean Meyer @SmallBizSean]

@retirementkeys How long did it take you though? Talking from "rock bottom" to "alright, I can handle this".

[Sean Meyer @SmallBizSean]

@ddeutsch @NYCWritesCopy David, can you confirm this ad was written by Gary Halbert?

[Sean Meyer @SmallBizSean]

@reayed6 Gotcha, makes sense. Appreciate the reply.

[Sean Meyer @SmallBizSean]

@reayed6 Interested on your take there. Does provide some value upfront, so I get it, but still sells in every email - while keeping a wildly faithful group of fans.

Think he's an exception, or does this blend mitigate your "firing blanks" concept?

[Sean Meyer @SmallBizSean]

@NicholasVerge I don't know why, but it seems like 90% of referrals are like this.

Everybody claims it's the "best" source of lead generation, much rather have somebody who reads my stuff for months and then decides to reach out on their own.