Take advantage of these 3 financing tips to help your business grow, including improving your reputation and exploring financing options for small businesses.
As a business owner, you have taken great risks to get your business to this level. And now you may be considering the next stage in your business life cycle: growth. You may want to add staff, expand your customer base or enlarge the physical footprint of your operations. Financing can be a powerful tool in accelerating the growth of your business. But financing is about more than just borrowing money. Whether you’re looking to add capacity, upgrade equipment or expand into new markets, there are financing options that fit. Knowing where to start and understanding your choices can save you time and money.
It all begins with relationships
Many businesses can benefit from a strong support system: a good accountant, a good lawyer—and an experienced and knowledgeable business banker. Establishing a professional relationship with your business banker, even before you require financing, is a great tip for future growth. Your banker is your first step when exploring financial options. The more your banker understands you, your business and its growth potential, the better he can recommend a viable financing option. In addition to building a relationship with your business banker, it helps to build solid relationships within the local business community.
Building a Good Reputation
- Are you present at or a supporter of charitable events?
- Do you regularly advertise in the local media or indirectly promote, say by sponsoring local non-profits?
- Does your business have good relationships with employees, customers and vendors?
The more information you provide, the better
Your business has an impressive array of financial records, such as:
- Accounts receivable, accounts payable
- Cash flow, profit/loss statements
Your business banker will ask to see these and perhaps other financial documents. Your accountant will be a great help in pulling together the most up-to-date information in a presentable manner. If your business has borrowed before, you will want to provide your business credit score and report. This information is monitored and obtained in the same way as your personal credit. You can contact the same providers used for personal credit reports. Except, the main difference is that you don’t provide your Social Security Number. Instead you provide your company’s:
- Taxpayer Identification Number (TIN)
- Standard Industrial Classification (SIC) code
- North American Industry Classification System (NAICS) code
You also may be asked to demonstrate the value of your business. You can do this by showcasing commercial letters of intent for future orders, holding a membership in industry associations, or by demonstrating leadership in your field with published articles or providing continuing education for your staff. A business plan will be your biggest asset. It shows the bank how you identify opportunities and your plans for execution. It is right here in between these two points—opportunities and execution—that financing plays a key role in making it all happen.
Work with a business banker to explore financing options
You know what you want. You even know how to get there. But you may be short on the funds to do so. Speak with your business banker to understand how the variety of financing options can work to benefit your business:
- Lines of credit — For short-term working capital needs, such as financing emergencies, purchasing inventory or managing seasonal cash flow.
- Small business term loans — For longer-term purposes, such as expanding business operations, buying a piece of equipment, refinancing business debt or acquiring another business.
- Commercial real estate mortgages — To purchase, refinance or improve retail, office, industrial or multi-unit real.
- Small Business Administration (SBA) guaranteed loans — An alternative to traditional business loans with an SBA guarantee and streamlined approval processes for a faster turnaround.
- Commercial equipment and vehicle financing — Practical leasing and loan alternatives to meet business needs, such as purchasing vehicles or capital.
Your business banker will help you determine which option will best help you fund business growth. Before jumping into the financing pool, be sure you fully understand the trade-offs between pricing and repayment terms. These include variables like the interest rate, fees, payment frequency and amount as well as how long you have to pay the money back. Be sure to select the loan structure that best fits your company’s cash flow.
Ready to take the next step in your business? Learn more at santanderbank.com/us/business/borrowing/small-business-borrowing.
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