Entrepreneurs are often tempted by financing deals that appear inexpensive due to low interest rates and rigid credit lines. However, these deals typically assume that projects will proceed without delays or unexpected costs, an unrealistic expectation in real estate. Banks focus on actual cash flow rather than projected profits, while entrepreneurs rely on forecasts that can quickly become outdated as real-world challenges arise.

Legal advisors may not always address the financial risks, as they tend to become involved after commercial terms are set and may lack expertise in cash flow management. A real-world example demonstrates that what appears to be a cheap financing option can lead to significant budget shortfalls and increased risk. By creating a flexible financial plan and collateral structure, entrepreneurs can better prepare for unforeseen expenses and ensure project completion.

Ultimately, the lowest interest rate is not always the best choice. Paying more upfront for a financing arrangement that accommodates real-world challenges can provide greater certainty and improve the chances of a successful outcome.