8. Question, Small business owner: But will I be able to get the funding sooner with these alternative resources?
Answer, Financial consultant: Yes, but you should build the actual costs relating to these types of loans into your budget and see how that impacts the company’s profitability?
9. Question, Small business owner: I expect to repay the funds within a few months while I get my financials ready to reach out to the banker.
Financial consultant: What you are telling me is that since you do not keep your financial information current you will have to pay a higher borrowing cost. That does concern me.
10. Question, Small business owner: What can I do about it
Financial consultant: I would suggest that in the future you review your financial information – at least quarterly, and not rely on your accountant to provide the data.
There are many software systems that are cloud based that will allow both you and your accountant to share data. He can always review and refine your internal data so that you have financials that you can consistently use as a benchmark for your growth.
If you cannot accomplish that, your company’s growth pattern will slow up, despite the increase in revenue. Planning ahead is an important part of business ownership.
11. Question, Small business owner: Do I have to guarantee the loan?
Financial consultant: Yes, you and all owners of 20% or more of the borrowing entity must guarantee a bank loan.
That is customary for all small business loans, because the lender wants to look beyond the business to be certain the loan is repaid. And the guarantee does provide you with a much lower rate than the alternative lenders can offer.
Don’t forget that a working capital line can be a line of credit. You only pay interest on the funds outstanding.
Related articles:
Keys to Obtaining Funding
Small Business Capital, Digital Lenders and Angels
Small Business Funding Options – Equity or Debt
