Stage 6 · Handle the financing conversation · Lesson 1 of 2
The committee: what is said in the room, without you
Your funding is decided in a meeting you will almost never attend. This lesson follows your file to that table and shows what gets asked there and what comes out.
You will not be in the room
Your file is presented by someone else
Many business owners expect to argue their case before the committee. At a bank, they are almost never there. Some funds invite the founder to present, but the discussion and the decision happen without them.
The file is presented by the person who worked on it: the relationship manager at a bank, the investment officer at a fund. At a bank, the committee is often chaired by the head of lending. Around the table: members from risk and operations, a lawyer or compliance officer, and sometimes someone from senior management.
Most members have not read your file. They have read the relationship manager’s memo, sent out a few days before. That memo is what gets discussed, together with how well the manager answers for it.
From submission to decision
Between your submission and the decision, five stages
The names change from one funder to another. The sequence is much the same almost everywhere.
- First screeningrelationship manager
Does the file fit what the funder does: sector, country, amount, type of funding? Your background and your market are looked at here.
- Appraisalrelationship manager, risk analyst
They gather the documents, visit the business, ask their questions. At many banks a risk analyst reviews the file in parallel and gives a separate opinion.
- Credit memorelationship manager
A few pages: who you are, the need, the figures, the security, the risks, the recommendation. This is what committee members read.
- Committeecommittee members
Credit committee at a bank, investment committee at a fund. Presentation, questions, discussion among members, then a decision.
- Decisioncommittee chair
Approval, approval subject to conditions precedent, deferral or decline. It is written up in a signed note, then passed on to you.
A common sequence, simplified. The order, names and timings vary by funder and by country.
At a bank, a small amount can be decided without a committee, by someone who has been given that authority (this is called delegated authority). Above a threshold each bank sets, the file goes to the credit committee, and the largest ones up to the board or the group.
At a fund, the investment committee often meets twice on the same deal. The first time, it approves in-depth checks (due diligence) and sending a term sheet. The second time, after those checks, it takes the final decision. It sometimes includes members from outside the fund’s team.
- What is presented
- The interruptions
- The question of the amount
- When the members talk
- Four outcomes
- The decision note
- What reaches you
The rest of the lesson
Keep reading with your free account
7 more parts, with the calculations on your own numbers and what to write in your file. The account is free, no commitment.
The words of this lesson
Each word links to its full definition in the glossary.
- Credit memo
- The document the investment officer writes for the committee: what was checked, the risks, and the recommendation.
- Credit committee
- The meeting where the funder’s senior people decide to say yes, no, or yes with conditions to your file.
- Condition precedent
- A condition written into the agreement: until it is met (a document, an approval), the money is not paid out.
- Deferral
- The committee says neither yes nor no: it postpones its decision and asks for more answers or documents.
- Investment officer
- The person at the funder who follows your file, studies it and presents it to the committee.
- Term sheet
- A short letter, before the contract, summarising the investor’s offer: amount, share, conditions.
- Audited accounts
- Accounts an independent professional has checked and signed an opinion on.
- Working capital
- The money stuck in your stock and in invoices your customers have not yet paid.
From the lesson to your file
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