How to Get Funding For a Small Business
Small business funding helps fill the gap that exist between daily business operations and the lack of operating capital. Due to significant economic decline in the past several decades, however, it has become much harder to get the funding you need to keep running. Here are four steps to help you get approved for your next round of funding through the various financing tools available, ranging from traditional clear-cut options to more sophisticated government grants for small businesses.
Collect All the Information You Can
Different lenders will have slightly different requirements. You will need an updated credit history report, both from your personal and business finances. Financial statements that can clarify your personal and business status will be crucial documents for getting approved. Projected financial statements and cash flow for at least the entire year will give lenders a better idea of whether or not your business is creditworthy. Providing a complete set of information and documents will also help expedite the pre-approval process rather than have you wait for several weeks only to get rejected.
Choose the Right Lending Institution
Start off with traditional large banks. Expect to have a harder time securing a small business loan from large banks though as they tend to focus more on larger contracts that are apparently more profitable. It’s not to say that small business loans are not profitable or that it’s impossible to secure. Approach banks or private lending firms that you’ve worked with in the past or is currently using for your savings or debit account. Community banks and credit unions are also a viable option, but are usually difficult to be eligible for.
Consider Government Grants
This option is like free cash for your small business. Government grants for small businesses, however, is not an actual grant, despite what you hear on TV or from online advertisements. Still, approaching the government will give you access to programs that make it much simpler to get funding for a startup or small business. The U.S. Small Business Association provides a guarantee to banks and lending firms that a certain portion of the debt will be covered by the government in the case the business owner defaults on the debt owed. There is at least one Small Business Association branch in every state. Extensive help can also be provided by Small Business Development Centers, SCORE, and the Women’s Business Centers.
Pitch to Investors
Sometimes, you don’t need to march to your bank or lending firm to get funding for your small business. You can get the financial assistance you need by bringing investors on board. Have a clear presentation ready that will tell prospects what your company is all about, what the product/service is, projected cash flow, and other key parameters that will show prospects your business’ risk-reward features. Pitching is all about presentation, be sure to learn as much as you can online.
Be sure to visit Government Grants For Small Business and check out our other blog posts for more small business tips!