8. START signs
START reviewing the personal credit scores of all stakeholder holding an interest of 20% or greater in the business.
Each stakeholder should pull his own FICO score to avoid hard pulls by the lender being the first step in the loan process. The lender will usually accept your own FICO score and delay the request for a full report until later in the loan process when all parties are closer to agreeing on loan terms and conditions.
9. START signs
START preparing personal financial statements (PFS) for all 20% plus stakeholders.
Most banks will accept the standard SBA personal financial form that is available on the SBA web site. They always examine owners PFS to see how much you own and how much you owe.
10. START signs
START reviewing the accounts receivable schedules and any current outstanding debt owed either personally or by the business. Prepare schedules that include loan balances and monthly payments.
11. START signs
START thinking about cash flow projections for the next two years.
It is best to prepare a schedule of assumptions first and then spread the assumptions on an excel spread sheet. There are good spread sheet formats available on line for this task.
12. START signs
START preparing A Source and Use of Funds Schedule.
Separate the schedule into two categories; working capital and long term purchases such as equipment, and property improvements.
If you are interested in obtaining lines of credit, conventional term loans, SBA guaranteed loans, and special purpose loans such as equipment financing, banks are the best option for most operating businesses with two years of financial reporting history.
At first glance this may appear to be a tedious process, but bank debt allows you to remain the captain of your ship.
The first time may be the worst time, but the long term benefits are worth the effort. That first journey may have hurdles, but it worth the trouble.
With debt you always have the option of changing your course and seeking a better route. Once your growth path accelerates everyone wants to take the ride with you.
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. Marj is currently a financial advisor for Florida SBDC at FIU. She was Chair of SCORE Miami Dade from 2010 to 2014. 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.