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7 Tips on Getting Financing for a New Business

 You’ve come up with a fabulous new business idea, formulated a strategy, marketing plan, and list of goals. All that’s left is getting your idea financed! Question is: where to start?

While obtaining a small business loan can be difficult and tiresome, you can make it a lot easier on yourself by following these 7 tips for getting financing for your new business:

Tip 1- Transparency is Key

When it comes to the application process, it’s important to be as prepared as possible. This means being 100% transparent about your business goals, plans, and finances. The application process will go a lot smoother if you show up with as much material as you can gather. This includes (but is not limited to) your up-to-date accounting records, financial records, tax records, and business proposal. Transparency into your business model is an absolute must so make sure to bring as much documentation as possible to support your business plan.

Tip 2 -Have a System in Place

Make sure that your business has a good system in place to help keep finances and documents in order. You may even consider hiring an accountant ahead of time so that you have someone who is solely in charge of managing the books. An accountant can also help balance your books in a reliable and un-emotional manner.

Tip 3 -Good Credit is Vital

Your chances of getting approved for a small business loan depend immensely on your credit score. This is why in addition to keeping track of your document, it’s equally important to pay all your bills on time! The credit criteria will vary based on the type of loan you’re going for, but all loans will have some version of criteria – so be sure to have the best credit possible.

Tip 4-One Loan at a Time

Make sure to only apply for one loan at a time. Lenders will require a credit report that can mildly impact your overall credit score. Therefore, applying for multiple loans at once could hurt your chances of obtaining any financing at all! Essentially, when submitting a loan application all lenders will do a “hard pull” on your credit score. This “hard pull” knocks only a few points off your credit score, so doing it for just one loan is not a big deal – but doing it for multiple loans at once is a no-go!

Tip 5-Figure Out the Type of Loan You Need

No two loans are the same so figuring out the type of loan you need is imperative to your process! To understand the type of loan that will work best for you and your new business you need to do the appropriate research. For example, one of the most expensive and highly scrutinized loans is the SBA (Small Business Administration) Loan. But if you’re not looking for something as intricate as this, then all you really need to apply for is a merchant cash advance or line of credit. Getting approved for this is a lot easier, cheaper, and the requirements are a lot less stringent.

Tip 6-Showcase Sufficient Cash Flow

Since your business is new and you have no past financial track record to show for it. Make sure to at least show detailed financial projections. When you meet with your loan lender, make sure to provide a financial plan that clearly demonstrates that you’ll be able to make your monthly loan payments.

Tip 7-Understand that All Banks Are Different

All lending institutions have their own lists of pros and cons. Large banks are often preoccupied with bigger clients and small banks usually rely on personal relationships. Do your due diligence and look into the bank that you feel will best represent your interests.

Million Dollar Mama Club brings beginner level resources to inspire women to follow their dreams. Starting a business might seem daunting but with the right help it doesn’t have to be. We believe you were made for more….the question is, do you?

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