As a small business owner, you understand the importance of capital for your business. In the end, strategic plans and projections won't mean much if you don't have the significant capital you have to fuel your plans for growth. And that's why we at Pacific Community Ventures designed our loan program to provide affordable, transparent capital and flexible terms that actually work with you and your business.
As we approach a brand new year of small business lending, we can't help but reflect there are several things that-time and time again-prove to be real about the lending process. Read on to discover the 4 things we all know to be real about small business lending, and get an insider's consider accessing capital.
Awareness is Everything
When you are looking at presenting yourself as a smart, solid candidate for lending, awareness is everything. Meaning, a savvy business proprietor understands all the intricacies of the business and may explain them very well. Sure, as an entrepreneur, lenders expect you to be visionary, but it is important too to determine that you have a grasp on intricate details. Small business owners who understand how long it takes to create XYZ, who can break down the need for their work and understand how to best spend their time-come off as impressive and tuned-in.
One problem lenders often see with business people is they rely an excessive amount of on an outside person or persons. Hearing, “oh, you'd really need to speak with my CPA about that” when asking in regards to a balance sheet is really a warning sign for any lender. For a lender, having trust and confidence inside a borrower is essential, and just how can someone trust you like a small business owner if you cannot explain a significant issue inside your profit and loss statement? The answer is: most can't. In this same regard, a good business owner knows the things they don't know-and they are confident with either asking for assist in order to learn, or taking the initiative to understand themselves.
Partners are Truly Partners
One misconception in small business lending is that partnerships don't matter, however they do. In order to get financing, it's important for a lender to get buy in from all of the partners involved in a company. One method to accomplish this is to get partners to supply a personal guarantee, which is a document saying all of the partners are 100% committed to repaying the loan. For lenders, this is a manifestation of good faith.
The the truth is that many lenders will not approve financing unless all partners of 20% or more sign a personal guarantee. A lot of small businesses overlook this detail when applying for capital, and once they stumble upon it, quite often the process gets delayed or they fall off from the lending radar altogether. Don't let this happen to you. When considering a small business loan, talk with your partners first, and interact to come to a consensus and reach mutual buy-in.
Education is Key
In addition to the partnership talk, there are several other “first things first” to think about. One being: what sort of small business loan is right for your online business? These days there are more options than ever before before-from traditional bank lending to micro loans, from credit cards to crowdsourcing-its important to not just find capital for your business, but to find the best kind of capital which will support sustainable growth.
Too often than not we have seen small business owners rush through the research facet of lending. For this reason “quick cash” from predatory lenders, like the merchant cash loan, are growing in popularity; but yet, the high rates of interest attached to this kind of capital often do a business more harm than good. Be sure to educate yourself on the safe alternative lenders out there for example Community Development Banking institutions (CDFIs).
As a professional CDFI, we at PCV have seen the way the flexible conditions and terms work nicely for small businesses who might not yet be strong enough candidates to have a bank loan. Remember, CDFIs are community lenders, so whether your business' location is urban or rural, you will find safe financial loans available to you.
Character Gets Reviewed Too
In accessory for getting all of your paperwork reviewed, keep in mind that your character is under review too. (This is a unique facet of alternative CDFI lending that sets us aside from banks-we really become familiar with you and your business.) Sure, you may not have a flawless credit rating, but they are you responsive in communications, do you turn in documents when you say you will and also have you been transparent through the process? All of these factors matter to some CDFI lender, because it can signify if you are responsible, reliable and truthful.
The best advice we are able to share with a small company owner is to be upfront. For those who have a business blemish, do not try to cover up because lenders will find it each time. So when a small company owner doesn't disclose something, it makes their potential lender doubt all of the other information he/she has given.
Take the chance to instead be transparent and upfront about your concerns. The right kind of lender won't use you, however your honesty will up' their assessment of the character. Unsure how to deal with certain blemishes and/or improve on them? Keep in mind that most community lenders offer mentorship too. It is a package deal that may strengthen your business-not simply to secure capital-but to solidify your future.
We Want to Help!
As rewarding as the work is, running a small company is tough. We hope this roundup of insider tips are helpful for you, no matter your business stage or current requirement for capital.
Thinking it's time to explore a small company loan? Let PCV help you navigate your capital needs! We're providing affordable small business loans of $50,000 – $200,000 to California businesses. Create a quick click to see if you're eligible and browse concerning the ways in which our small business loans are different.
In the meantime, would like to get some free advising for the small business? Be sure to register at BusinessAdvising.org, where you get one-on-one advice tailored to your business' unique challenges.
The powerful paring of lending and advising is exactly what PCV is all about, let our unique mixture of support try to make a difference for your small company, its employees and community-today!
