Staff Writer

Whether it is during the start-up or growth phase, sooner or later most businesses need to borrow money. Here are four important ways you should prepare when seeking financing:

Consider the type of financing that will best meet your needs. Have you investigated all types of capital sources — bank loans, leases, lines of credit and working capital loans? Does the term of the financing you are seeking match up with the purpose of the funding? Does the amount of the financing you are seeking match up with your projected cash flow?

Identify and gather documentation that a prospective lender will likely want to review. Among the documents you will need for a loan — but not necessarily for nonbank financing — are:

  • Tax returns – company and potentially personal tax returns
  • Financial statements – last couple of years and year to date
  • Cash flow history and projections

Review your business plan. Do you have an overall business plan, and is it current? Does it include important information like major customers, suppliers and key employees? Do you have a current marketing plan and are you following it?

Consider your tax situation. Are all your tax filings current (payroll, property, income)? Are your returns prepared by a qualified professional to help you ensure your tax benefits are maximized?

Applying for financing can be a stressful experience. In many cases, the officer at the financing provider will not be familiar with your business or perhaps even your industry. The officer’s job is to fully investigate you and your company and then make the approval decision or present your request for financing to an approval group. Being prepared to answer the lender’s questions can help make the process easier and less stressful — and hopefully improve your chances of securing the funds you need.