We Reviewed 200+ Debt Deals — Here Are the 3 Mistakes Founders Keep Making

At Hum, we have a unique vantage point. Our marketplace sits between borrowers and lenders, which means we see both sides of every deal — the ones that close smoothly, and the ones that stall, reprice, or fall apart entirely.

Over the past two years, we’ve reviewed more than 200 debt transactions across venture debt, revenue-based financing, asset-based lending, and structured credit. We’ve seen companies raise in weeks and companies that spent months spinning their wheels. And the patterns are remarkably consistent.

Here are the three mistakes we see founders make most often — and what the best-prepared borrowers do differently.

Mistake #1: Treating debt like equity and running a “process.”

In equity fundraising, running a competitive process makes sense. You take 30 meetings, generate multiple term sheets, and use them as leverage. Founders try to replicate this playbook for debt — and it almost always backfires.

Here’s why: lenders aren’t VCs. They’re underwriting risk, not buying into a vision. When a lender sees that you’ve sent your deal to 15 firms simultaneously, it can signal urgency rather than selectivity — and that changes how they engage with you.

What works instead: a targeted approach. Identify the 3–5 lenders whose credit box actually fits your business, approach them with a clear and complete data package, and move quickly. The companies that close fastest on our platform are the ones who come in knowing what they want and who can provide it.

Mistake #2: Not understanding what the lender actually needs to say yes.

Most founders walk into a debt conversation thinking about what they want — the amount, the rate, the timeline. Very few think about what the lender needs to see to get comfortable.

Every lender has a credit box — a set of criteria that defines who they’ll fund. Some care about recurring revenue. Some care about asset coverage. Some need a minimum EBITDA. Some require an equity cushion. If you don’t understand the specific lender’s criteria before you engage, you’re wasting both your time and theirs.

The most common version of this mistake: a pre-revenue hardware company approaching a SaaS-focused RBF lender. Or a bootstrapped company with $8M in ARR approaching a venture debt fund that requires institutional equity on the cap table. These aren’t bad companies — they’re just talking to the wrong lenders.

What works instead: do your homework before you engage. Understand the lender’s typical deal profile. Ask about minimums and requirements upfront. Or use a platform like Hum that matches you to lenders based on your actual financial profile — not your assumptions about who might be interested.

Mistake #3: Waiting too long to start the process.

This is the most expensive mistake on the list. Founders consistently underestimate how long debt takes to close. They start the conversation when they need capital in 30 days, and then discover that most debt facilities take 60–90 days from first meeting to funding.

The result: they either accept less favorable terms because speed becomes the priority, or they run out of runway and have to raise a bridge round at punitive terms. We’ve seen companies give up 2–3x more in effective cost because they started the process 60 days too late.

What works instead: begin the process when you don’t need the money yet. The best time to explore debt is when you have 6+ months of runway, clean financials, and no urgency. That’s when you have leverage. That’s when lenders compete for your business. And that’s when you get the best terms.

The common thread across all three mistakes is preparation. The founders who get the best debt deals aren’t the ones with the best businesses — they’re the ones who understand the process, know their audience, and start early.

If you’re thinking about raising debt in 2026, the smartest thing you can do right now is figure out what you qualify for before you actually need it.

→ Ready to explore your options? Speak to Hum.