Regardless of the capital you are looking for, there are a number of items that MUST be in place in order for you to convince the banks that you are a “Safe-Risk.” Banks are in business to lend money, yes; even in this credit crunch they are still lending money. Keep in mind; it is a credit crunch, not a credit freeze.
So even in slow economic times your business can still obtain financing if you know how to request it. Make sure your business meets these criteria and you will stand a much greater chance of obtaining funding.
- Business Plan - Not only will lenders want to see a business plan, but having a solid business plan will help you to know what the businesses goals are, and quantify them along the way.
- Business Foundation - This simply means that your business must actually be a legitimate business. Make sure you meet the following:
- Business entity - Separate and apart from your personally
- Business license - Check to make sure you have proper licensing, depending on where you do business.
- Business Bank Account - Banks have what they call a business bank account rating based on how much activity you have in your bank account and what your average balance is.
- Business Phone Number - You will need a local land line phone number. No cell phones and no VOIP numbers.
- Corporate Compliance - All legal documentation is in compliance such as meeting, minutes, resolutions, etc.
- Business Credit - Once you have the business foundation in place, you are now ready to start building business credit. This will show the banks how you have handled credit in the past, and even estimate how you will handle credit in the future. They will even give a credit limit recommendation on how much they feel the lender should extend to your business. This means that the stronger business credit profile you have, the more financing you will be able to obtain and the more favorable the rates and terms will be.
Be properly setting up a solid business plan, solid business foundation and solid business credit you can shows the banks that you are a “Safe-Risk” and they will be much more likely to extend credit to your business.
