So, you want to receive some financing for your business, huh? Well, we wish you the best of luck. If you’re not Amazon, a company that hops onto the latest bandwagon, or even a business that will turn a profit (seriously, how many businesses with zero profits receive funding every day?), then it can be hard to get money.
The big banks don’t want to work with you, venture capitalists are wary, and you can’t tap into your home equity to launch or expand operations.
So, what can you do? First, acknowledge that the market is really competitive today. Second, make a few changes to your business to improve your odds of getting the capital you need.
Here are five tips to get business financing in today’s competitive market:
1. Start a Business Plan to Map Out Your Course
When you’re constructing a new home, you need a blueprint. These will give you an idea as to how to plan your home, what you need to do, and where it will be in a year from now.
Why shouldn’t your business have the same kind of thing? A business plan is like a blueprint: you’re mapping out your company’s course; you’re meditating on where you private firm will be in the next three to five years, from projected revenues to your estimated cash flow. These are all things that are critical to your corporate outfit.
If you have a detailed business plan, then you will inevitably attract the right kind of financing.
2. Have an Excellent Credit Score – Not Just Good
A credit score is essential to financing, particularly when it is business-related. Unlike other forms of credit, however, business financing requires a couple of extra things, including an excellent credit score, not just good.
Since you have the opportunity to get your hands on a vast amount of capital, the ones extending these funds will want someone who is reliable and dependable and will have the credibility to repay the sum.
So, what’s an excellent credit score? In Canada, it is anything above 850. In the U.S., it is anything above 750.
3. Grab That Interest-Free Money
Interest-free money? You might say it is impossible, but it is definitely within the realm of possibility. Unfortunately, there is one caveat: it is ultra-competitive.
All over the place, there are ways to capture money without any interest. How? Here are few ideas:
- Government grants (federal, provincial, and municipal).
- Academic and corporate grants.
- Tax credits.
- Partnerships with non-profit organizations.
Of course, you need to meet strident, modern requirements, such as being female or a minority.
4. Business Credit Cards Are Alternative Sources
Rather than wasting time to capture capital from angel investors and twiddling your thumbs until cash comes in, many entrepreneurs are using business credit cards to grab quick money.
While it is true that these business credit cards come with hefty interest rates and a myriad of other fees, it is better to do some research around the market and to grab the best terms and rates possible.
This can be rather difficult to do, but with due diligence you can perhaps get an interest-free card for three months, a $250 bonus for signing up, or perhaps thousands of points.
5. Establish a Business Budget
Like a household, every business needs a budget. It is the only way to survive and thrive. Without a daily, weekly, and/or monthly budget, you are walking around blind, throwing your money away.
Everything from how much you will be spending on IT to how much you will be allocating to real estate, you need a budget to outline your expenses.
In addition, with a newfound budget in your pocket, you must ensure that potential lenders and financiers are aware of your numbers. This means that your figures need to be realistic, otherwise they will scoff and you will have lost out on necessary funding.
As a business, it is hard to be approved for financing by the big banks. Despite a booming economy, startups and small businesses are being given the nod for a loan less and less. It is hard out there. So, moving forward, you should take advantage of these tips in an ultra-competitive market. With a little bit of hard work and luck, you can be granted the business financing you need.
