Small business capital hurdles-remedies and must read small business capital articles.
Whether growing your small business or applying for a start-up it's vital to address the following:
The Hurdles and How to address them:
1.) Personal Credit
2.) Record Keeping
3.) The Process and the Players
Your revenue is increasing. Your marketing is effective. Your revenue is increasing. You need to buy inventory, hire more professionals and perhaps buy more equipment. Accessing capital is needed if your company wants to sustain its growth and create long term value.
How do you obtain the best rates and terms in the marketplace?
How can you determine the best resources and spend the least amount of time in your search. If you are wise, you will address the three hurdles before you try to access the needed funds for growth.
The lower your credit score, the higher the cost of money. Aim for a credit score of 680 or higher. That will give you access to the best market rates. Pull your own credit, using Experian, Equifax or TransUnion.
Do not allow lenders to pull your credit until you know they are a good resource for your company and they have indicated a strong interest in your loan.
If you have no major issues that will impede improving your credit scores such as foreclosures, bankruptcies or short sales, stop maxing out the lines available on your personal credit cards. Try using only 35% of the available credit. This is the fastest way to raise your credit score.
Many small business owners ignore or delay financial record keeping.
However, cleaning up financial records requires much more time than setting up the correct system. If the software is properly set up to meet the needs of the company, monthly comparative analysis allows management to make financial decisions without delay. When the financial records are current, a lender can review the reports and quickly determine if they meet the specific underwriting requirements.
It is always easy to blame the lender for delays in loan processing, but a lender cannot be responsible for delays if the borrower cannot supply current financial information. No lender wants to consider a loan if tax returns have not been filed, or an owner has to wait for an outside accountant to update a P&L.
There are many inexpensive, simple software programs that allow a business owner to keep records current.
The accountant may make small refinements, but the owner should not be reliant on an outside accountant to understand the financial condition of his or her company.
Next- The Process and the Players and Must read small business capital articles
About the author
Marjorie Weber has been educating entrepreneurs and guiding them in their search for capital for the past 16 years: combining business training programs with one-on-one mentoring. She was Chair of SCORE Miami Dade from 2010 to 2014 and is currently a financial advisor for SBDC/FIU. She also serves as an advisor to the Goldman Sachs 10,000 Small Business Program and the SBA Emerging Leaders Program and provides training for Veterans seeking an entrepreneurial path upon retirement from the service. She has been facilitating workshops under the auspices of Miami Bayside Foundation for the past 3 years. She commenced her career as a real estate investment banker in New York and Miami.She uses these long term relationships to assist her clients in accessing capital. She knows both the process and the people and has assisted in providing financing for hundreds of businesses in Miami Dade.