By Daniel Marantika, BIDUK Business Development Manager

You need to secure a loan to get your Small and Growing Business (SGB) through the next phase of growth, or to sustain you during this one, and you’re not sure if you’re eligible or how to prepare for a meeting. 

BIDUK is not your typical financier in that we don’t require collateral and we also don’t have standard “products.” What we do offer is the possibility of creating a solution that works for both of us — through a series of conversations. This means that the way we look at your business is different from what you may have encountered before from a bank or investors.  

What type of questions will BIDUK ask? How will BIDUK assess your business? We’ve outlined 5 questions to ask yourself as you prepare for a conversation with BIDUK to help determine whether we’re a good fit. 

1. Do you know your cash flows?

First and foremost, BIDUK looks for the ability to repay the loan from cash flows. But what does that mean in practice? Although the vast majority of lenders require collateral to provide a loan, BIDUK does not. As our main differentiator, we do not require any assets to be pledged as a guarantee against the loan. Instead, the projected cash flow of the business will ultimately determine the loan size and structure. This doesn’t just mean expected cash inflows; we also look at the cash outflows.

Coming prepared with information on your company’s cash flows will enable BIDUK to determine your capacity to pay back a loan by assessing if your business will bring in enough money to cover the costs of any current financial obligations, current expenses, expenses for growth, as well as the cost of a new loan. We weigh the cash outflows against cash inflows, like purchase orders, letters of intent, or committed clients.  

Unlike most financiers and early stage investors, we’re also ok with cash flow volatility — meaning that it changes from month to month — even if it’s a lot. What we look for is transparency and the ability to work with you to determine the cause of the volatility to see if a loan from BIDUK can help you get through or over the periods of wide volatility.

2. Does your business make a positive impact? 

As an impact-oriented investor, BIDUK looks for companies that have a positive social or environmental benefit. For example, BIDUK will not invest in a business that imposes any harmful environmental practices. This includes extractive industries (like mining or oil and gas), or those that use child labor. Since we have an explicit gender lens, prioritizing investments in women-operated businesses, we also look at the ownership structure, and for women in the C-suite, in management positions and in the supply chain. Given that Indonesia is an island nation we care a lot about preserving the marine ecosystem, and sustainable livelihoods. So we also look at things like the packaging used, sources of energy, sustainable business and labor models, and ensuring non-pollution.

3. What are the dynamics of your sector and industry? 

BIDUK assesses each business based on the market trend of its sector, whether it is a growing industry and how it has been impacted by the pandemic. For example, due to the pandemic, business was down for dine-in restaurants and cafes at the beginning of 2020, with very limited growth in Q2. At the same time, the retail food industry expanded with many people forced to eat at home due to lockdown and other restrictions. 

We also look for how you are positioned within your industry and sector. What are YOU doing to stay ahead of the competition? How have YOU pivoted under COVID 19? What are YOUR strengths? How will YOUR business evolve to stay ahead of the trends and find new customers?

4. Does your business have a path to profitability?

BIDUK looks for growth and profitability beyond cash flow stability. Below are some questions you can ask yourself to prepare.

• Is your business/product scalable?
• How can the business increase revenue? Can the business increase production capacity? Or is it necessary to develop a new product? 
• Can the business expand to tap a wider market? When expansion is in the plan, how much capital is needed for that expansion?
• Are there ways for you to generate income while also growing? What can and are you doing to keep expenses down to grow “smartly?”
• Can the business describe the funding needs for a particular expansion project that you would like to secure funding for? 
• How much income will be generated from growth or expansion, and when will that income start to come in?
• Do you need to engage in Research and Development to build your next product? 
• Is it necessary to go through a reseller network? 
• Will you be exporting? 
• Are you operating through a franchise system?

BIDUK assesses whether the business projections make sense for the local market and for the industry. 

The BIDUK model includes more than just capital, it is a relationship-based approach to building healthy businesses. While we look for paths to expansion, we do not encourage over-indebtedness or growth that is too rapid. We want to see each client become a stable part of the Indonesian economy, by creating sustainable jobs in their communities. We also understand that many of our clients are focused on social impact or building resilience. We understand that some businesses have slower growth models; we embrace that. Not everyone can or should have unicorn growth. 

5. Does the founder have the skills to successfully run this business?

BIDUK looks at the experience the founder has accumulated over the lifetime of the business, asking questions like: What made the founder start the business? What skills and experience do they have in the industry that may be different than others? How did the business get through the pandemic? What kind of team is in place to support the founder/business owner? These questions reflect the founder’s resilience and ability to think strategically during a challenging time. 

Risks are inherent in every business, especially during expansion. BIDUK seeks leaders who take calculated risks, are quick to find opportunities, and can make product innovations. We also look for leaders who can build and lead a team around him/her to help make the business a long-term success.

BIDUK also looks for founders who:

• are aware of and disciplined about applicable regulations. For example, complying with the need for organic, Fair Trade or HACCP (food safety) certification. 
• are innovative and can make breakthroughs in terms of business processes. 
• have the team, strategic thinking and managerial skills required to grow the business. 

BIDUK partners with clients beyond capital. We’re revolutionizing financing for Small and Growing Businesses by offering tailored, flexible financing solutions. No other financial firm in Indonesia offers our loan sizes, cash flow-based lending underwriting, and our product flexibility. We’re here to help you be better business owners who run better businesses. This is what gives us a unique position in the market — and keeps our clients coming back again. If you’re interested in learning more about how to secure a loan, please contact Daniel Marantika, BIDUK’s Business Development Manager, at [email protected].