After considering cautiously whether or not the year 2017 is the right time to expand your small business, you have decided to go on and do it. At present, there is one additional thing to discover: Do you’ve the appropriate type of working capital in place to finance your business expansion?
Online and traditional funding sources have lots of options than ever before for small business, and it is less complicated to apply for business financing at present than in the past. The good way to fund your business expansion is to search for financing options available and to be ready to answer all the questions ask by the lender regarding your future business plans. Here are five simple steps to do it:
Do You Have A Business Plan?
Your business plan is the roadmap of your business success, figuring out the objectives and your strategy about your product or service, about your competition, how you will make money and possibly what capital you might need to fulfill your needs.
A lender wants to know how you’ll pay off the loan you’re looking for and in case you are looking for a larger, long-term funding, that means bragging your business plan. There are so many resources available helping you in writing or improving your business plan, such as Small Business Administration (SBA), Small Business Development Centers (SBDC) and SCORE.
Do You Know What Your Credit Score Is?
Your business and personal credit score will have a role to play in funding your business expansion because the better your credit score is, the better the terms of funding will be. You can get a copy of your personal credit report every year from the major three credit bureaus such as Experian, Equifax and TransUnion and review it for any mistakes.
Normally, one in four credit reports generally have an error, therefore in case there is an error on your credit report, resolve it by following these simple steps summarized by the Federal Trade Commission. All three credit bureaus have information on their websites about resolving the issues as well.
Do You Have A List Of Equipment Your Business Will Need?
Whether your small business expansion involves adding up only new services and products or a fully-developed additional location, you’ll probably require additional equipment. Make a list of all items and consider whether it should be bought or leased and decide whether you need new or used equipment.
There is equipment financing program available for both purchase and lease of equipment. Additionally, keep in mind that both the new and leased equipment can cause a deduction under IRS Section 179.
Do You Know What Are Your Funding Options?
Different phases of your business expansion could require different types of capital. Just as there is equipment financing available for additional equipment, there are long-term loans for acquiring a new location or renovating it to meet your requirements and short-term loans for working capital and inventory. Make a list of the types of financing you may require and then list the lenders that provide that. Know that similarly to traditional banks and credit unions, there are several online lenders.
Do You Have The Required Paperwork?
Traditional and alternative lenders can get the information on your business, for instance your credit card volume; however you may still have to provide some sort of paperwork to be approved for business financing. Other than your business plan, you need to have a copy of your current mortgage or lease, plus 3-6 months of bank statements. Therefore you need to be prepared before applying for any loan for expansion purposes.