They want to have as much insight as possible into their business from the financial perspective. This is for their own sake(e.g. to make better decision) as well as to be well-prepared for future loan application(s).
What would you teach this younger sister/brother of yours about financial modelling, forecasting and credit risk analysis so that they are able to generate their own data for analysis before making a loan application?
Once I'm convinced they understand that, I'd teach them how to model the loan itself - how much they would need to repay for how long etc'.
I wouldn't bother to teach them how to model the bank's risk because they shouldn't care, they ask the bank and get an of|er in the form of an interest rate.
But of course, no bank would finance an early stage startup with a non-personally-guaranteed loan, so this is all irrelevant because I trust them to never ever finance a startup with a personally guaranteed loan so there is nothing to model here.
1. In America, it comes down to do you have enough EBITDA to service your debt (DSCR) and when you don’t have sufficient EBITDA are there sufficient assets to cover a creditors exposure
2. Shop for the best possible deal because there are lenders everywhere when you have sufficient EBITDA
3. If you’re a person of color, it’s best to have a white friend call lenders for you so that you can get accurate information
4. Don’t ever sign a personal guarantee if you have EBITDA
5. All that other stuff you can go to school for but since your little brother is trying to be an entrepreneur he should probably focus on his business (eg. Customer satisfaction, product/market fit, pricing, sales, attracting talent, etc etc)