How To Get Financing For Your Business

How to get the best financing for your small business

If you own a small business, chances are you will need financing at some point.  While you might not be thinking about it at this moment, it’s best not to wait until you have a cash flow problem to seek funding.  Here are the steps you can take now to ensure you will get the best rates once you decide to apply for funding.

Get your documentation together

Lenders, both large and small, will require documentation to determine whether you are a good candidate for financing.  The more detail you provide, the better the rate and amount of funding you will potentially get. Put together a financing package for the lender based on the type of information it wants to see.  Include your sales projections, expenses and costs, as well as two years-worth of audited financial statements (such as an income statement, balance sheet and cash flow statement) along with financial footnotes.  An outline is fine. You will also want to provide your most recent financial statements with prior year comparables. And don’t forget about growth projections for sales and profit to show your company’s potential.  You can also include Accounts Receivable reports, a sample of purchase orders and copies of any contracts you may have. Double check everything for accuracy. If you don’t have solid business projections and accurate financial statements, now is a great time to start preparing them.  Putting in the time to get all of these documents together will set you up for success and give you the best chance of getting what you need.

Explain how you will use the funding

Lenders will want to know how you plan to use the funding you are requesting and why you need it.  Perhaps you want to invest in new or upgraded equipment to help keep up with demand so you can reach your sales goals.  Maybe you want to hire some additional employees to help you run the business smoothly. However you plan to use the money, make sure it aligns with your growth strategy.  And know you can always change how you will use it along the way.

Be clear on the amount you need

Every financial application will ask how much funding you are requesting.  Be realistic with what you think you will need. If you are applying for a factoring line, for example, you will need to determine what amount will provide you with the cash flow you need to offset your invoices.  The lender will want to know the number of invoices you process each month and the average size of each invoice. Also, be prepared to list information about each of your debtors. The financial institution to which you are applying will ultimately need to get paid by your debtors after loaning you money, so you want to make sure there aren’t any red flags.

Choose the right lender

Look for a financial partner who will not only help with your immediate financing needs, but will also be willing to work with you in the long run.  It takes a lot to run a business and ExpoCredit (www.expocredit.com) understands that. We offer flexibility and expertise with a wide range of customized financial services, so you can focus on running your business while we focus on the financials.  

With the right preparation, you will be able to get financing that will keep your small business growing and thriving for years to come.

 

 

Blogs

4 Myths of Factoring Debunked

Accounts Receivable (A/R) Financing, or factoring, used in conjunction with long term debt management and equity financing can help growing businesses free…

How Invoice Factoring Can Grow Your Business.

Five advantages of invoice factoring: Cash flow is the lifeblood of any business. However, small startup businesses normally find themselves in a…

7 Tips To Wrap Up Your Buisiness At Year-End

1. Complete End-Of-The-Year Reviews The end of the year is a great time to review how well your team worked together. But,…

Ready to Grow?

  • This field is for validation purposes and should be left unchanged.

Translate »