She was a good customer, no doubt, but the decision to decline her request was necessary
There comes a time when tough decisions must be taken in the interest of defending principles and values.
-Unknown
As a matter of principle, we do not provide financing for startups that have barely exited the ideation stage to develop commercially viable solutions that address a market pain point and have a clear pathway to profitability and liquidity. The reason is simple: First, the lessons that need to be learned while searching for product-market fit, is a cross that must be carried by the entrepreneur, alone, for self-development purposes. Second, and this is connected to the first point: the cost of making mistakes whilst you go-to-market, is directly proportional to the risk of a lender incurring credit losses. This, in summary, describes our reasoning for terminating a relationship with a very good customer, with whom we had transacted for over 3 years.
Following the massive disruption the COVID-19 lockdowns brought to the market, Mrs. Aboagye (not her real name) winded down her current business and thought about venturing into a new business, without formally discussing the details with us. Now mind you, we had provided credit facilities to fund her business over the years, and so we were very predisposed to providing any assistance we could, to keep her afloat. Realizing that a credit request for an unproven business was a hard sell to YieldRock, she attempted to renew her credit facilities for the old business, which had not operated for over 12 months, with impaired accounts receivables amongst others. Long story short, she was angered by the fact that we required 6-month operations as Condition Precedent (CP) to renew credit lines for the moribund business. Very painful to lose a good customer, but in this case, it was a necessary sacrifice.
Tough decisions are sometimes unpleasant, but like bitter medicine, a healthy patient is worth the momentary discomfort. Be firm on principles, always!