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Matthew R. Meehan is the CEO of Shield Advisory Group and a notable finance specialist. He specializes in assisting small businesses in obtaining financing and funding.
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For most entrepreneurs, scaling a business is an exciting step. During this stage of growth, most entrepreneurs will need to get capital. This process can be incredibly rewarding, but it can also be extremely frustrating for an entrepreneur.
As someone who has assisted thousands of small business owners over the course of my career, I’ve seen that they often overlook minor things that might stymie their ability to obtain the financing they require to grow their firms.
Before seeking for company capital, entrepreneurs should undertake the following:
Correctly lay your foundation
It’s critical to make sure your foundation is in good shape before applying for company capital.
Ensure that your secretary of state has received all of your corporate filings. If they aren’t, you’ll want to get this taken care of immediately away.
ADDITIONAL INFORMATION FOR YOU
Verify that your company name, phone number, address, and website are all right on your application and the documents listed above. The lender may deny your request if your state classifies your entity as inactive or if the information given on your funding application does not match the information provided by the secretary of state.
After that, go to your website and double-check that all of your information and items are current.
When markets shift, many entrepreneurs make hasty decisions and fail to update their websites. I once had a customer who was turned down for funding by a large bank because the website he listed on his application indicated he was a realtor, despite the fact that he hadn’t worked in real estate in over ten years.
Your company’s basic principles and ideals can also be described on your website. During the due diligence process, lending institutions will examine your website. Why don’t you be the one to tell them your company’s story?
Most banks and private lenders will conduct a Google search as well, so you should do it as well. It’s usually worth clarifying any inaccuracies or negative reviews about your firm before applying.
Make sure your finances are in order.
You’re already ahead of the game if you’re working with an accounting firm. Simply contact them and ask for the reports listed below. Compile them yourself if you aren’t already.
o Personal tax returns from the previous two years.
· Business tax returns from the previous two years.
o 12 months’ worth of bank statements from your firm.
o Profit and loss statement as of today.
o The most recent balance sheet.
Before lending money out, banks and private lenders want to make sure they’ll get their money back. Each lending institution has its own set of rules, but these documents will almost certainly be requested by all.
Before applying for funding, check your personal and business credit.
In the underwriting process, personal and company credit will be considered to make decisions. When it comes to credit, some lenders are more liberal than others. Before you apply, be sure you know your scores.
There are a number of websites that allow you to review both at the same time. If you find any inaccuracies or inconsistencies in your credit reports, contact the credit bureaus as soon as possible.
Keep in mind that not all business financing options are loans.
When most entrepreneurs require financing for their enterprises, the first place they look is the internet these days. You can find pages and pages of traditional banks and lenders prepared to lend you the money you need if you do a simple online search. However, standard loans aren’t the only way to get money for a business.
You can save a lot of time and frustration by doing some research and understanding the differences between products.
Terms, repayment durations, and interest rates will vary by product. SBA 7(a) loans, for example, may have 10-year repayment periods with monthly payments, whereas a merchant cash advance may only have a nine-month repayment period with daily payments.
Recognize Your Company’s Strengths
It’s critical to understand your company’s strengths before applying for any lending product on the market in order to acquire the best rates and terms.
To determine whether your company is lendable, lenders will look at the following characteristics.
They’ll start by looking at your cash flow. They want to know how you manage your business’s monthly income and expenses.
They’ll then look at both your personal and corporate credit. Lenders usually want to know that they aren’t the only ones providing credit to your company. They must, however, see that you returned the agreed-upon amount in a timely manner.
Last but not least, lenders will want to know if you have collateral or are ready to put it up. Lenders want to know that you’re willing to put some money down and won’t bail out at the first hint of problems. Some lenders, referred to as secured lenders, will request collateral. Others won’t because they’re providing unsecured loans.
Your company may simply need one of the above-mentioned strengths in order to obtain funding. The more you have, though, the better the conditions and rates you will almost certainly be provided.
Take the phone.
Yes, I understand that this may appear to be a chore, but it will save you a lot of time and aggravation. Before you apply online, speak with a representative from a lending institution to learn about their underwriting standards. Inquire about things like: o Are you a direct lender?
o What types of financing options do you provide?
o Do you have a range of pricing and periods available?
o What is your minimum credit score?
o Do you require any kind of security?
Most lending institutions aren’t willing to provide their “secret sauce,” but starting these processes before filling out applications will make the process of securing the finance your company need much easier.
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