Is Your Business Financially Ready to Apply for Financing?
Maybe you want to purchase equipment.
Expand your facility.
Open another location.
Hire employees.
Acquire another business.
Or simply increase working capital.
Whatever the reason, you're considering business financing.
Before approaching a lender, ask another question:
Are your financial records ready for the conversation?
Start With Organized Books
Businesses seeking financing may be asked for financial information.
Depending on the lender and financing product, that could include financial statements, historical performance, debt information and other documentation.
If your books are months behind, preparing that information can become difficult.
Regular bookkeeping helps establish a better financial foundation.
Understand Your Profitability
Revenue gets attention.
But lenders may also want to understand whether the company is generating profit and its ability to meet obligations.
Business owners should understand their own profitability before entering the financing conversation.
Know Your Cash Flow
Cash flow can be particularly important.
How much cash does the company generate?
What existing obligations does it have?
How would new debt affect the business?
Understanding your own cash situation helps you evaluate financing from the business owner's perspective as well.
Be Prepared to Explain Your Numbers
Financial statements shouldn't be documents you've never seen before.
Business owners should understand the major trends affecting their companies.
If revenue increased significantly, why?
If margins declined, what happened?
If expenses jumped, what caused the change?
Knowing the story behind your numbers can help you have more informed financial conversations.
Consider the Future
Depending on the financing situation, projections and forecasts may also become relevant.
What does the company expect to accomplish with the capital?
How might revenue and expenses change?
What assumptions support those expectations?
Get Financially Organized Before You Need Capital
SBC Bookkeeping & Consulting can help business owners maintain cleaner books and gain better visibility into their financial information.
Our ongoing Bookkeeping & Consulting engagements can include financial reporting, budgeting, forecasting, cash-flow analysis and capital-readiness support depending on the needs of the business.
No bookkeeping company can guarantee financing approval.
But being financially organized can help you enter the process better prepared.
Don't wait until you need money to start understanding your financials.
Build the foundation now.