As the New Year has gotten underway and you finish your tax preparation, it is time to look ahead to the remainder of 2017 and beyond. While all of your company’s financial information is fresh in your head, it is a good time to look back at how far you have come and plan for the next few years.
Does this road involve expansion, hiring new employees? If so it will more than likely require capital to fund this expansion. If you simply don’t have overflowing bank accounts to fund the expansion, it’s time to consider financing.
The first step
to securing financing is to set a clear path as to how you will use the money to generate more profit. No matter how much you “feel” you need the money, no bank, lending agency or credit union will lend you money unless you have a clearly defined plan. You can do this by identifying your goals, stating how the additional cash flow will help you meet your goals and grow your business.
There are a couple of financial options, a secured line of credit – where you have an amount approved that you can write checks against. Or…a fixed loan amount where you borrow a sum of money. Identify the amount you need. But, particularly with a fixed loan, be cautious that you will be able to reasonably pay the monthly amount back. Establish a relationship with a business banker before you need to ask for a loan. They will help you find that combination works best for your business.
Time management is key
. This being said, be sure to give yourself plenty of time. Don’t wait until you need the money yesterday to make payroll to apply for a loan. This process often takes weeks to a few months depending on the size of the loan. You may find that you are able to secure lending in shorter time frames with some non-traditional lending agencies, however be aware of the interest rates will probably be higher than a traditional bank.
Documentation is vital
. When you go to the lender with a well-documented payment history of your company, you have made it that much easier for them to see that you have done your homework and are prepared for the financial commitment in the loan you are asking for.
As a small business owner it is important to build relationships with other local businesses. Having an advocate on your side that supports your loan will help the process to go a little easier. Find those you do business with and use them as third party credit references.
. 2017 is underway. It won’t be long until the first quarter is complete. Are you looking down the road towards growth? Now is the time to establish a strong financial position for you to ensure you can adequately fund your growth. Identify your business banker and spend some time talking with them about your plans. Don’t wait until you’re in crisis to borrow money. Wishing you continued business growth and success.