Your company is a great source of pride for you, as well as a great source of stress. This is especially true when you’ve bootstrapped your business thus far – but are running out of capital. You may have just started your businesses recently, or you may have been working diligently for years. And right now, you’ve realized you can no longer do it all alone.
There are many businesses that bootstrap and even find success, but then realize they need to pivot, or their equipment or building fails, or there’s a catastrophe that must be taken care of immediately.
Whatever your reason for considering seeking funding, there are many considerations to take to ensure that your business stays healthy, profitable and moving in the right direction.
Why Do You Need Funding?
You likely have an answer to this question already – that’s why you’re here! An important next step is to break down exactly how you want to spend the funds you’re searching for, so that you can present them in a compelling way that instills your backers with confidence.
For example, if you’re looking to expand into a bigger space, make sure you account for everything that you’ll need. Beyond paying the monthly rent or lease, you’ll also need more equipment, lighting, and anything specific to your industry – such as safety showers (biotech), truck and delivery access, ventilation, and so on.
If you’re funding an upgrade in equipment, make a list of what exactly you need, and why – it will not only help you gain the confidence of funders, but it will also serve as a double-check that you’re neither forgetting anything, nor committing to too much too soon.
It’s a good idea to use a loan calculator to ensure that you’re staying within a reasonable budget for your business.
Make Sure Your Documentation Is Current
It’s important that when you apply for funding, your financial accounting is up to date – more than likely, your financial partner will want to take a look to assess your situation. It’s a good idea to make sure the rest of your business documentation is up to date as well, so that you’re prepared and not left scrambling should they be requested.
This means reviewing your business plan – assuming you have one, and if you don’t, make one – as well as your growth metrics, marketing tactics and any other information that explains how and why your business will be a success. That can sometimes even include your resume!
Review Up Your Credit
Assuming you aren’t preparing for an emergency, it’s a good idea to make sure your credit is as clean as it’s going to get leading up to your funding application.
Depending on your funding habits, this may only take a few weeks, or it may take a few months. Some best practices for everyone include:
- Pay down your credit cards as much as you can – optimally, you’ll get them all below 30% of your maximum.
- Apply for loans all at once to keep credit inquiries low
- Make sure all of your bills are paid on time
Essentially, show that you’re responsible with money, and it will be easier to borrow more.
Make Sure Your Financial Partner Matches Your Needs
This may be the most surprising to many applicants, but it’s important that you do your homework on your potential partners.
If you’re feeling frazzled or desperate, which can happen if you weren’t planning on needing funding, take time to speak with your potential financial partner and ask questions. Make sure your lender will meet your needs, as well as vice versa.
National Business Capital’s Business Consultants are available to help you through each step, and ensure that your business is the success that it was always meant to be. Speak with our business consultants to learn more!