How Much Business Financing Are You Applying For?
A business financing request should be for a specific amount of money for a specific application or purpose.
If possible, it’s important to be specific versus general so that there is a greater sense of planning and preparedness versus throwing out a general number that isn’t yet supported by any research or repayment assessment.
Its also important to outline the total costs of the capital requirement, breakdown the component parts, and identify any other sources of funds.
Let’s take an equipment acquisition example that has a few layers of important information.
Purchase Price: $550,000 Euros
Shipping: $ 5,320 Euros
Installation: $ 12,000 Euros
Sub total $567,320 Euros
Buyer Location: Calgary, Alberta, Canada
Vendor Location: Antwerp, Belgium.
Equipment Available to Ship or need to be manufactured? Manufacturing required.
Manufacturing time: 16 weeks.
Shipping time: 6 weeks.
Installation time: 4 weeks.
Vendor Currency: Euros
Buyer Currency: Canadian Dollar
Exchange Rate: 1.45
Terms of Payment: 20% at time of order. 35% 8 weeks after order. 35% prior to ship. 10% 7 days after completion of installation and equipment commissioning.
In this example, without all the above detail provided, there is no way to actually come up with the financing amount, when it needs to be paid, who it needs to be paid to, currency of payment, and what the financing structure and cost of financing would be.
Equipment financing or leasing requests are great examples to go through as their can be several key elements that need to be considered.
That being said, other business financing requests will have their own specific details that need to be accurately conveyed so that a full and complete understanding of the business financing request is fully understood.
The more information you can provide and the more context you can create, the smoother and faster the overall process is going to.