Growing a business is exciting, but it can be overwhelming. Having a good team of people that can help you is critical to your future success. One road bump that small business owners frequently run into is the need for financing. It could be that you need financing for equipment, vehicle fleets, a building, buying out a partner, or even just getting a line of credit to free up cash reserve.
Here are five tips we discussed with Timothy Nichols, Vice President of Commercial Banking at Arizona Bank and Trust, about securing financing for your business.
1) Know your banker. Get a banking relationship before you need it.
Believe it or not, bankers are people too. While they have restrictions/parameters they have to follow, the more they understand a business/its owner then the more they can help and provide alternative options.
2) Be profitable and retain earnings in the company.
Many small businesses and business owners try to show as little profitability as possible for tax reasons, but that can hurt you when they need financing. Be thoughtful when preparing/filing tax returns.
3) Have quality financial reporting.
The basics of tracking income and expenses are critical to knowing the financial solvency of any business. If a business does not do this, then it will find it very difficult to find financing options. If a business hasn’t kept good records in the past, just know that some companies/accountants specialize in recreating a set of books for past years based upon information available.
4) Know how much financing you need and how you will use the funds.
A request for financing needs to be tied to a specific asset/benefit of your company.
5) Keep your credit report spotless.
Bad credit makes it difficult to get financing. Since many small companies are taxed as an S-Corp (pass-through taxation), this means having good credit for both your business and for you individually as the business owner).
Special Suggestion: One thing that all banks require before lending is that you have your business’s legal records (partnership agreement, entity formation documents, business contracts, asset protection documents) in place to ensure that you have a legitimate chance to succeed.
Contact Counxel Legal Firm
If you need help getting your business ready for financing, or if you would like us to help you get your business legal records (like partnership agreements, entity formation, business contracts, asset protection documents), then contact us at (480) 744-6621 or at request@counxel.com. Don’t forget to check out the good things that others are saying about the services they received from Timothy Coons on Google.
This article is intended for informational purposes only and does not constitute legal advice for your specific situation. Use of and access to this article does not create an attorney-client relationship between you and Counxel Legal Firm. Please contact request@counxel.com or (480) 744-6621 to request specific information for your situation.
*Conveniently located off the 101 Freeway and the US 60 in the middle of Phoenix, Scottsdale, Tempe, Chandler, Gilbert, Mesa, and Queen Creek!
