When you are an entrepreneur launching your first business or taking your business to new heights, it is essential to get funding.
However, the path to getting much-needed capital for a business can be daunting and not all entrepreneurs know which route to go down or what resources to use.
The process of business funding can be easier if you:
1. Have a clear plan of the type of funding you need,
2. Know how long you will need the funding for, and
3. Know where to get the necessary funding.
Tom Stuart, chief marketing officer at fintech company Lulalend, offers the following tips to entrepreneurs who are seeking business funding:
Choose the best funding option for your business
There are different options available to business owners to help fund their business and it can feel overwhelming deciding which option to go with. Before making your choice, carefully consider the risks and benefits that come with each option.
Weighing up the risks and benefits and then going for the funding option that offers the best benefits appropriate to your small business will help save you money and time in the long run.
Plan your funding
Have a clear plan in place as to what you will be using the funding for. This will be helpful in the application process. Lenders usually need to have a clear idea of what the funding will be used for. Having a plan for your funding will also help you manage cashflow, determine whether short-term or long-term funding is necessary, and save time and resources during the application process.
Find a funder who ‘gets you’
There are benefits in finding the right funder that understands you and your business. An alternative lender with an approach tailored to SMEs, for instance, can act as a business partner and mag offer the best possible value. Usually, they are better positioned to service small businesses, which can enable a fulfilling and long-term partnership with the business owner.
Take a look at the Ts and Cs
Checking the terms and conditions of a credit application can help get a clearer view of the most important lending terms for business funding. A funding agreement that has flexible terms can help save on costs, as some agreements require at least three months written notice to settle early, and interest will still need to be paid.
Make sure you meet the requirements
The success of an application for business funding is also highly reliant on the credit health of the business. Good credit health is essential for taking out a business loan. Lenders will base their decisions, in part, on a credit rating. Once an application is submitted, lenders will review the credit history of the business and the business owners supplied by credit bureaus.