In today’s rapidly changing climate, businesses have more options to finance their business than ever before.
As a small business owner, it’s imperative to your success that you understand your financing options and select the best fit for your business model. While we are partial to online financing from BFA (of course), we would much rather help your business flourish and establish a relationship built on our mutual success than provide you with financing that would overextend your business.
We have put together a 5 point checklist to assist selecting the appropriate type of financing for your business and we hope that you will consider each point before accepting any offers for business financing.
1) How much working capital does your business need to complete the planned expansion and sustain itself?
This is a good starting point to begin addressing not only your business goals, but also the day-to-day needs of your business. You should already have a pretty accurate estimate of your monthly overhead, and if you have a specific plan in mind for the application of your financing you should be able to correctly calculate how much it will cost to implement your business plan.
2) How quickly does your business need access to the working capital?
This alone can be a determining factor in which financing options will work for your business. If your business needs access to capital quickly, you should avoid trying to obtain financing from traditional banking institutions. It’s no secret that obtaining business financing from banks and government entities is not a convenient process and, in most cases, takes months to complete. Alternative lenders, like us, take a more motivated approach and can have funds deposited in your business bank account within 24 hours.
3) What is your expected ROI (Return On Investment)?
While banks are more stringent with the restrictions they place on how you spend the financing they provide, alternative lenders (like us) provide financing for almost any occasion. If you are going to use the working capital to fund your business’ growth, you should take all the associated costs and expected revenues into account to calculate your estimated ROI. These figures should play a major part in the final decision you make to select an offer for financing.
4) How healthy is your business?
The health of your business is one of the biggest considerations underwriters make regarding how much financing to offer and how long of a term will be needed to repay the loan. Each financial institution has a different set of criteria they use to evaluate your business health, so where banks might think that your business is a risky investment, private lenders & crowd-funders may consider it a risk worth taking. At a traditional lender you will find that you must first satisfy business and personal credit screenings then provide some form of asset based collateral in order to secure a loan. With an alternative lender, like us, you will find that we primarily base our approvals on a proprietary cash flow analysis. This means that we largely disregard credit scores and require no assets or personal guarantees, but instead secure our loans through your future receivables. While the majority of our clients opt for unsecured loans, we also offer asset-based financing enabling you to leverage as much of your business as possible into working capital.
5) Which type of financing best fits your business?
Once you have taken all the questions above into consideration, it’s time to make an informed decision based on your best available options. This entire process is about choosing the best possible scenario for your business to succeed, so you should be conservative when calculating your expected revenue (unless you have a fixed revenue stream).
By answering the questions in our checklist as honestly and accurately as possible you will be able to first identify a range of business financing options that will work within your constraints and predict what kind of impact they will have on your bottom line.
Want us to show you the money?
If you want to save valuable time that you can devote to running your business, give our loan specialists a call at 1-888-668-8185. We will do the legwork for you and provide you with a FREE business health analysis, and help you determine which of our no-obligation financing offers will work best for your individual business.