Seeking Funding? Craft a Compelling Loan Application

This July, NCSC Director of Portfolio Management Ian Flanders presented at the NTCA Summer Symposium in Hilton Head, South Carolina, on the essential elements for creating an effective loan request. His goal for the presentation, titled “Anatomy of a Loan Request,” was to help telcos better understand how to craft a compelling loan application that speaks directly to lenders’ needs.

Now, we’ll turn it over to Ian, who is here to break it all down for you.

Anatomy of a Loan Request

By Ian Flanders, NCSC Director of Portfolio Management

When I review a loan request, I’m looking for a clear picture of the business—its operations, financial health and goals for the future. A well-prepared application allows me to tailor financing solutions that truly fit the applicant’s desired outcome.

A strong loan request blends both numbers and narrative. Financial statements are essential: income, balance sheet and cash flow, along with assumptions if projections are provided and capital expenditure breakdowns. I pay close attention to key ratios like Debt Service Coverage, Cash Flow Leverage and EBITDA. These metrics help me assess your financial stability and repayment capacity.

That said, numbers alone aren’t enough. I always emphasize the power of narrative. A strong story helps me understand your strategy, your market and your long-term goals. It’s your chance to show how your project fits into the broader landscape—your marketing and pricing strategies, regulatory environment and demographics.

There are six stages of the financing process:

1. Initial diligence and analysis: Initial conversation, discussion of options, formal application.
2. Proposal: Conditional Commitment Letter to detail the terms and conditions of the potential loan.
3. Underwriting: Detailed review of the application and credit decision.
4. Legal documentation: Lender prepares documents, and Legal Department reviews them.
5. Funding: Conditions precedent to funding, draw period, required documentation.
6. Compliance: Post-closing proactive communication and financial reporting.

Each step requires preparation and transparency. Proactive communication is key to maintaining a strong lender relationship.

And remember, boards play a critical role in this process. Their support in aligning strategy and reviewing term sheets is vital. I’ve seen firsthand how board involvement can make or break a financing effort.

Finally, I encourage you to ask thoughtful questions. Understanding prepayment options, key performance indicators (KPIs), covenants, fees, timelines and post-closing requirements helps borrowers avoid surprises and stay ahead of the curve.

A few questions to ask your lender are:

• Are there any hidden costs to the lending process?
• What are your preferred KPIs?
• What are your negative covenant requirements?
• What are your post-closing compliance requirements?
•  How are post-closing compliance requirements tested?
• What fees do you charge for underwriting, preparation and funding transfers?

My hope is that this overview provides a clear roadmap for navigating the loan application process. If you’d like additional details, you can review the slide deck here. With solid financials, a compelling narrative and strategic board engagement, you can position your company for successful financing outcomes.

Interested in securing a loan with NCSC? Reach out to your account manager directly, call 800-346-7095 or email NCSCTelecomContact@nrucfc.coop to start the conversation today.