Free Business Funding Checklist
Learn how to get the funding you need for your business
Step #1: Determine the funding amount
It is essential to determine the exact amount of funding you require to meet your business needs. This ultimately comes down to what you need the funding for, what your goals are, and your current financial situation. Oftentimes, business owners borrow far too much or far too little and either take on more debt than was necessary, or eventually realize they don't have enough capital to achieve what they were looking to accomplish. So really sit down and write out the numbers. Get a good understanding of your business financials as they are today, where you want them to be, what would be required to get there, and how much capital it would take to make it all happen.
Step #2: Identify the type of funding you need
There are many different types of funding and credit available to businesses, all with different terms and conditions. Examples include equipment financing, invoice factoring, term loans, merchant cash advances, and more. This is one of the main reasons you should always consider working with a professional loan broker to help you determine what type of financing is best for you. But ultimately, the type of funding that's best for your business comes down to the industry you're in, as well as what you need the funding for. It's important to know at least the basics of how these different types of funding work so you can choose the best one for you. Otherwise, you could end up with a much more expensive loan with harsher terms, instead of a loan that is more suitable to what you need with more favorable terms and conditions.
Step #3: Review your credit score
Obviously having good credit is important to getting the best possible terms and conditions for your loan, as well as the most amount of funding possible. Yes, there are types of loans that are more forgiving when it comes to your credit score and history. But this often leads to higher interest rates and lower loan amounts. So, it's always a good idea to start improving your credit when considering getting funding for your business, as it can only help you in the long run. Working with a credit repair company, which most loan brokers can provide or recommend, as well as considering options like tradelines to quickly boost your credit score, are good places to start for improving credit. But following basic good credit practices like making payments on time, not holding large balances on credit cards, maintaining a low utilization rate, and even paying off past debts are all important strategies for improving credit. You can get a free credit report to see where you're at by going to freecreditreport.com
Step #4: Research potential lenders
This is a big part of what working with a loan broker can do for you, resulting in a lot of saved time on your end. Loan brokers often already have a large lender network that they have relationships with, thus can point you to the best lenders for the specific type of funding you need. With that said, whether you work with a loan broker or not, it's important to research different potential lenders. Google is a good start (just search for "small business funding or loans", but oftentimes your current network of other business owners can be a great source of referrals for good lenders. Ask colleagues and business owner friends who they typically go to get the funding they need and see where it leads you.
Step #5: Prepare your documents
To get approved for funding, you eventually need to submit an application along with supporting documents. Be prepared to provide these documents in an organized manner to speed up the underwriting process. You want to make sure the lender has everything they need when you submit the application, and that you send them any further documents they request later on if needed. This shows that you are organized and take your business seriously. Common documents you'll need to submit with your application include income and bank statements, driver's license, at least 2 forms of identification, tax returns, etc. Every lender is a little different with their requirements, but you'll find that there is some commonality among them with the types of documents they require.
Step #6: Prepare your pitch
This is part of the funding process that is very often overlooked. Remember, you're not just submitting an application for funding. You're selling the lender on why they should lend to you. That's why it's so important to know why you need the funding, what you're going to do with it, what your short and long term business goals are, what your current numbers and financials look like, and more. All of this combines into your pitch for why you are a good candidate to be lent to. So make sure to know your story and practice it before submitting applications. It can go a long way in helping you get approved.
Step #7: Submit applications
It's important to note that you don't want to start submitting a bunch of applications to random lenders online to see if one of them comes back with an offer. This can actually hurt you in the long run, especially your credit, since most lenders pull credit to help determine eligibility. That's why you want to be strategic with who you apply to. Again, working with a loan broker and/or doing your lender research is going to come in handy here. With that said, once you found the lender(s) you want to work with, filling out the application is a pretty easy, standard procedure. You'll provide basic personal and business information, as well as attach or upload your documents (most applications are done online now). Once received, the lender's underwriting department will being reviewing your file and come back to you with either an offer, or a reason they declined you. Some lenders respond within 24 hours of submitting your application, others may take a few days. It just depends on the lender and the type of funding you're applying for.
Step #8: Close
You'd be amazed at how many business owners get approved for the funding they apply for, but then never get their funds because they don't complete the process. Just because you get approved, doesn't mean the funds are going to automatically show up in your account. Most lenders have a finalizing process to make sure the terms and conditions of the loan are completely understood, signatures are acquired, and funds are transferred. So make sure to be on the lookout for any communication from the lender to ensure you get the funding you need. It would be a shame to come this far only to let one missing signature screw up the deal!
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Want Help Getting Funding For Your Business?
Click the button below to request a complimentary Custom Business Funding Plan. This will show you exactly what your best loan and credit options are based on your current revenue, credit score, etc. You will also be assigned a dedicated Business Funding Expert to assist you with getting the funding you need and answering any questions you have.