Tips for acquiring business financing

Most business owners eventually find themselves in the position of needing additional business financing. Whether you are looking for working capital to bolster your cash flow or purchase new equipment, you will need to find ways to secure business financing. Because of the difficulties of the economy, many business owners find themselves turning to both traditional and non traditional lenders to find the money they need. However, no matter who you turn to, there are tips that will help you be more successful in getting the money you want. Here are some tips for acquiring business financing-

• Know what your credit looks like-It is important to understand that any potential lender will be looking at both your personal and business credit. Long before you begin the application process, you should pull both credit reports and go over them carefully. You want to make sure that you catch any mistakes or inaccurate information on either credit report. Keep in mind that your personal credit report will be scrutinized as carefully as your business one. Lenders will assume that if you can't manage your personal money, then you may not be able to do it for your business, as well. It can take time to correct mistakes and take care of problems, so you should do this step long before seeking any business financing.
• Have a well written business plan-For a time there was belief in the business community, that you did not need a business plan, to gain financing. This for the most part is largely untrue. The majority of lenders will be looking at your business to determine if you have a plan for the money they will lend you, and most important to them, a plan for repaying it. You need to have taken the time to clearly define what your business is, what it will offer your target market, who your target market is and how much money you will need to borrow. You want to have outlined your business goals, and how you will achieve them. Finally, you will need to be able to show on paper that you have the expertise and management needed, to run your business.
• Income stream-Any potential lender will want to know what type of income streams that you have within your business. Whether you are relying solely on sales, or other methods of income, you need to be able show that. Your potential lender will need to feel comfortable loaning you money, and knowing that you can repay it when the time comes. If your income streams are unstable, or less then optimal, you may find it a challenge to get additional business financing.
• Business assets-You may need to be able to show your potential lender that you have business assets that can secure your loan. If your business uses heavy equipment or machinery, you may be able to use them for collateral. In addition, you may be able to use your accounts receivables, as a means of securing your loan. You should take a close look at all business assets, because often being able to offer collateral can mean the difference between getting the financing and going home empty handed.
• Potential for profit-Your lender will want to look at your financial projections when deciding whether or not to grant you a business loan. You need to be able to show in writing that your business has a significant market share and the potential to maintain it. It is highly unlikely that nay lender will invest in a business that has a short shelf life. In other words, you may have a product that is hot now, but if it cannot maintain its market share, over time, there is little chance that you will get the business financing you are seeking.