Every business in America, whether they realize it or not, needs financing to fund growth strategies for their business. However, given the tough lending environment, small business financing is not always easy to find. There are the conventional sources such as banks and finance companies. There are also what are considered unconventional sources such as owner’s savings, friends and family or credit cards.
One thing is certain: small business financing is still available to companies with sound business strategies.
Financing through Conventional Lending Sources
If you want to pursue conventional lending sources, be prepared. In order to go in with a better than 50/50 chance of getting approved, you should know exactly what information your bank needs with regards to your funding request, you and your company. Do not waste your time or the banks time if you or your company is not part of their lending appetite.
Hire the right professionals that can stack the deck in your favor. Every business owner should employ a CPA who knows you and your business that is preparing your financials and/or tax returns in a professional manner. Banks want to believe your numbers. The fact that they are professionally prepared helps your cause.
You might also want to consult with a financial advisor or advisory firm who has experience in dealing with banks and borrowing so they can guide you through the process to make the process easier and less painful.
As we all know, since the last recession, banks have tightened up their lending standards due to increased regulations more than ever before. Knowing your lender is as important as the lender knowing their customer. Your business relationship with your lender can be one of the best that your business will ever have. However, if not done properly, this can be one of the worst relationships your business will ever have.
Financing through Unconventional Lending Sources
If you do not qualify for conventional financing, there are alternatives. This is when you might have to resort to some of the creative financing options such as:
- Friends and family
- Home equity financing
- Credit cards
- Unconventional lenders
- Angel investors
Access to financing and working capital is the lifeblood to every business. Explore all your options and do not get led down the wrong path that will eventually end up in denial. In many cases, being denied financing could have been prevented.
Get more details about small business financing in this much tougher lending environment by clicking the links below to listen to these excerpts from the Financial Spotlight radio show:
Small Business Financing
Do your homework and choose what is the right fit for BOTH you and the lender. Hire the right professionals that you like and trust and have experience dealing with what you are looking to achieve.
Have you tried to get small business financing during this tough economy?