What’s Holding Back Businesses From Getting Financing They Need
In conjunction with having accurate and detailed personal financial statements, a lot goes into the decision to provide financing to a potential client. Oftentimes, your business is doing the right things to be successful in your industry, but one or two things can hold you back from getting the financing you need.
Today, we talked to a few employees at KLC Financial to understand what holds clients back from financing and some tips for what they can do to get the financing they need for the best terms they can.
Understand Alternative Financing Sources
KLC’s Chief Credit Officer Shannon Smith said that one of the major things he sees that holds businesses back from financing is being unaware of alternative financing sources aside from their traditional bank. While a bank may be constrained to not approve a loan due to historical cash flow, companies like KLC can work with a business to see if there is a route to get that financing completed.
Pay Attention to Business and Personal Credit
1. Business Credit
Brian Bourne, Business Development Associate at KLC Financial said that the thing he most commonly sees that holds customers back from financing is a lack of business credit. Regardless if a business is sound and successful, and even if the business owns its current equipment outright, if there is little or no borrowing history from a business perspective, it’s tough to determine the risk on the financing side.
2. Personal Credit
For the personal credit side, low personal credit due to any number of reasons like late payments, liens, delinquent reports, etc. can impact financing as well. While remedying those parts to your credit may take time, it’s important to monitor your own credit to keep tabs on what it looks like at any given time, especially when planning to get financing.
3. Cash Reserves
In addition, building up cash reserves can help offset hesitancy due to low or damaged credit. Showing a proven ability to save and stock up cash reserves will increase your ability to put money down and get a better deal.
Have a Registered LLC
By registering your business as an LLC, it opens the financing process to see business bank accounts that shows deposits and withdrawals with a decent balance. This helps show you have a solvent business, and is important to the process.
If your business is poised to start financing new equipment purchases, contact KLC Financial and Brian Bourne at email@example.com or 952.224.4308.