What to Have on Hand When Seeking Business Financing

Acquiring business financing means getting all of your ducks in a row and really selling the idea of supporting your company to the lender. It is important to walk into your appointment with the bank confidently, with the proper documents and figures in hand that will paint an accurate picture of your company for the lending party.

CREDIT STATUS

It’s smart for every person to be mindful of their credit status, but when you’re seeking a business loan an up-to-date credit report is the very first step. Presenting the report on directly to the lender will allow you to avoid having your credit run more than necessary. In addition, you may be able to use it as a reference before your appointment to get a better idea of what amounts and interest rates you can expect and afford.

CASH FLOW REPORT

You should put together a cash flow report to make it clear to the bank that you have the funds to pay back the loan. Having documentation that goes back for 2 years or so will allow the lender to compare your current cash flow statement with the trends over the past few seasons to conclude that your business isn’t in a dire state. In addition to the limit of the loan, you should consider interest rates and business trends and how they will affect your payments. If you are only able to afford a very low interest rate, working to improve your credit rating may need to come before taking on a loan.

ASSETS

If it is to be your first experience with business financing or if the loan is of considerable size, you may want to look into assets that can be used as collateral. In some instances, collateral can be the measure of good faith that allows you to close the gap between your company and a sizable loan.

BUSINESS PLAN SUMMARY

Although it may not necessarily be financially based, taking a detailed summary of your business plan in addition to your financial documents can help your case. Lenders will be most interested in companies with continuing relevance. If your product is one that is a necessity, you’ll be more likely to catch the attention of the bank.

The documents that you prepare prior to your business financing appointment can help you present the financial portion of your business plan. All of these things can work in your favor to convince the lender to provide the financing that you need. Taking the time to learn enough about current and seasonal business trends should help you get a better idea of what rates you can expect, and prevent you from entering into a loan agreement that is too much for your company to handle.