How to Qualify for Business Financing
December 11, 2019 | Mason Roberts
You have a great idea for a business. This is something that you have wanted to accomplish for as long as you can remember. You want the benefits of running your own business, and being able to make a difference in the lives of others. You want to be a leader and make a change. This is one of the many appealing reasons as to why people choose this career path. When you are your own business owner, you can forge your own path. You can make your own decisions on your own time.
Many times, business owners become worried about this. They know that if they fail, it is probably due to their bad decision-making. But, in retrospect, if you succeed, it is also because of your “good decision-making”. The fact of the matter is, if you truly strive to succeed and work as hard as you possibly can, you are much more likely to accomplish your goals. You will face obstacles along the way, though, just like anything else. Anything that is worth it can be hard, and likely will be.
There are many struggles that aspiring business owners face daily. It is a long, winding road of a career, making some days harder than others. The most common problem for business owners is finance. Or, the lack thereof. This is a common struggle for people all over the world, whether they are starting their own establishment or not. Whether we like it or not, money runs the world, and sometimes you just need to find the best option for you in gaining some of it.
There are choices for aspiring business owners in good standing when searching for the right amount of finances. Some may be great for you, some may not. It really does take a lot of research and consideration in choosing which option is right for you. There are so many out there, with underline requirements and consequences that you may have to do a little extra digging to find. A lender, traditional or non-traditional, will probably not tell you about something outright that may deter you from choosing them for your business funding. You may have to search for it.
This is all great to know. The more knowledge, the more power you have. There are much simpler steps to be sure of first before jumping in any major decisions. Your business has to be ready in order to be a strong candidate for the funding you are looking for. Just as you choose which lender to go with, they also choose you. They have every right to deny you, so it is imperative that you make that a hard decision for them. Here are the best tips in qualifying for business financing.
1. Be Sure You Have Some Of Your Own Capital
Unless you have a very generous granny, no lender is giving you 100% of the funding you need to stay afloat. You will need to come up with some of that another way. When presenting your business idea to a lender, you should make it known that you are not looking for anywhere near 100%. If you do go into the meeting thinking that maybe they will line your business proposal enough to fully fund it, you are wrong. They will not. If you do not have your own capital to contribute, it is time to find a way to gain some. Whether it is simply saving, or borrowing from another person outside of the professional finance business, such as a family member. You need some capital to fall back on when starting your own business. This is an unpredictable field, which is why you need to protect yourself in the process. Lenders will only entrust you with so much, so be ready to make up the rest of it.
2. You Need Cash Flow
Startup businesses struggle when trying to get approved for funding. More often than not, a lender wants to see your sales and profits before handing over a lump sum of money. This means that if you do not have anything to show them, or if it is lacking in strong results, you most likely will be denied. To be approved, your sales must be up. They should seem like they will never stop and convince a lender to get on board. The more cash flow you have coming into your establishment weekly, the better. This may seem obvious, but it is best for different reasons. Besides the fact that you want to make money and strong cash flow is an example of how you are doing just that, it will help you in your future endeavors. Even if you do not need funding from an outside resource right now, you may need it another time. Businesses can flip on a dime, and when that happens, you need to be ready to help your establishment succeed.
3. You Need at Least Some Credit
Credit can be helpful or hurtful. While lenders do not depend solely on credit anymore, it is still part of the process in most cases. This means that your credit score should be strong. Your credit is made up of your credit score and its history. In order to be in good standing, you must simply be on top of it. You have to pay off your bills and avoid excessive spending on your card. When going to a traditional lender for help, they will look at your credit. Depending on who it is, this can play a big part in if you are chosen or not. The last thing you want is for your poor credit to hinder the possibilities that your business can offer you in your career. Do your best in keeping up in your payments and it should not be a problem. Actually, the better the credit score, the more likely you are to receive funding.
Qualifying for funding can seem out of reach, but it is not. As you make sure you have all of these tips in order, your chances of receiving the finances you need will grow quickly.