The entire business financing/lending industry has changed over the past four or five years. As “traditional lenders” (banks) have reduced lending to small businesses and all but the most well-capitalized businesses in general, “alternative” sources of capital have risen to the challenge. The result: a new and better (and still evolving) business financing industry.
As with any rapidly-changing industry, faulty assumptions and misconceptions have cropped up. Do you know what’s true and what isn’t about securing financing today? Sooner or later, most businesses will need capital to grow and thrive. It’s important to know the 3 commandments of business financing, so that you can prepare now and be ready when the time comes.
There are important differences between getting capital from a bank and another type of business finance company.
Businesses of all sizes, small, mid-size and even large, are finding ready access to loans and other types of business financing through new resources. We’re one of them, offering loans of $5,000 – $2 million. Because our business loans are different from those of banks, some of our requirements are also different. We’re in the business of providing short-term capital to businesses, while banks generally loan money for longer periods of time.
Non-banks look at your “capital-worthiness” different than banks do.
Banks typically require a considerable amount of paperwork, two years of tax returns, balance sheets and cash reports, collateral and even personal guarantees. Frankly, what is a lengthy and complicated process is a turn-off to a lot of small and medium-size business owners.
“Capital-worthiness,” to us, means looking at the health and prospective growth of your business—first, by talking to you, the business owner. What’s your operating model? How is your cash flow now? And most importantly, perhaps, How will this capital help grow your business? Of course, we also require an application and some paperwork, but the entire process is very do-able and takes a fraction of the time and effort required traditionally.
Any blemish on a credit record can disqualify you from getting approved for a business loan or line of credit from a bank. Sure, we’re concerned about risk, too. But our primary concern is the health of your business today. Are you paying your vendors on a regular and timely basis? Is your cash flow healthy? And, Are you in growth mode or poised for growth—and is it sustainable?
The best reasons to get business capital are growth-related.
For us, the bottom line is this: Is your business likely to be bigger and better with an infusion of capital? And if so, how? The more you can describe and quantify the results you anticipate with new equipment, expansion of your physical plant or adding new locations, the better able we are to provide capital that will facilitate that growth. Something else different about us: If we think financing will not help your business move forward, we’ll tell you so.
Taking advantage of growth opportunities can also mean needing to move quickly, which is why we move quickly in the underwriting and approval processes. Ultimately, we guarantee that you’ll have your funds within five business days.
Keep these “commandments for business capital” in mind, since they could be key factors in helping you realize the full potential of your business through growth and expansion.
Image courtesy of Stuart Miles / FreeDigitalPhotos.net
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