Securing the funding needed to grow can be frustratingly difficult for any business but knowing what to expect when searching out financing options can be the difference between success and failure. Getting financing can help a business progress to the next level and become more profitable so follow these tips to give your business the best chance of securing additional funding.
You need to demonstrate your company’s potential by developing a professional and thorough business plan. The plan should succinctly outline how the business currently operates and how it will be improved through extra funding. Identify areas of the business that the financing will improve and present reasonable projections of how the money will increase profits.
Your plan is an opportunity to demonstrate to the financing company that you have a strong grasp of the fundamentals of business. They will be investing in you as much as your business so they need to be confident in your ability and your grasp on financial realities.
Your business’s credit standing will play a pivotal role in whether or not you’re granted financing from traditional lenders so do everything you can to improve your situation before seeking out funding. If necessary, hire an accountant to go through your records. A healthy and well-maintained credit record will greatly increase your chances of securing a loan.
Pay for a detailed credit report so you know where you can improve. Eliminate any outstanding debts and take care not to miss repayment deadlines. The six months prior to your loan application will be the most closely scrutinized in terms of your credit rating so plan long-term before submitting your request.
Lenders will use every method at their disposal to get an overview of your business, and its reputation and your online presence is a big part of that. Make an effort to polish your digital profile. A professional, well-maintained and efficient website and social media presence will provide valuable assurance to the lender of the legitimacy of your enterprise.
Reviews play a large part in how you’re perceived online so focus on improving your reputation across all areas of your business. Generally, lenders are looking for signs of good business practice so ensure your online persona is a flattering one.
Like with most loans, you may be asked to provide collateral. If your business has tangible assets, calculate their worth and decide before applying what you would be willing to offer as collateral. If you fail to make the loan payments, your collateral may be seized and sold, so it’s important you know its value.
Get independent evaluations of your property or goods so that you can judge how much money you would be entitled to request in return for using it as collateral. If you aren’t confident in your ability to pay off the loan, don’t risk your assets.
It can be tempting to overestimate your revenue and understate risk, but it’s important, to be honest when evaluating your business and its potential. Lenders will take measures to verify the information you provide so it will reflect poorly on your character or intellect if your figures are wrong.
Your loan application should be as thorough and genuine as you can make it. A less successful business with a solid grasp on its own worth and potential will have a better chance of being granted a loan than a more profitable one with erroneous information.
6. Alternative Financing
Invoice factoring is another solution for cash flow challenges. Small businesses with outstanding invoices may sell them to a factoring company for a percentage of the total outstanding amount. The factoring company pays the small business a lump sum and recoups the balance by collecting on the invoices over time. Factoring is a quick fix for cash flow shortages for businesses with a large invoice pool. Because you are trading invoices for cash, you are not creating debt and will not have any payments.
Seeking out additional funding can seem bewildering, but many of the key attributes of success simply boils down to good business practice. The details that financing companies look for are genuine signs of a solid foundation and growth potential, so if you get these basics right, your future will be more profitable regardless of the outcome of your application.
Your Questions Answered Quickly
Whether your business is thriving and you can’t keep up, or you are waiting on clients to pay their invoices, Universal Funding can help your growing company. Call us at 855.851.7416 or complete our rate form today to learn more about invoice factoring and how it can improve your company’s cash flow.
About Universal Funding
Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days.