Overview
The business financing process is going to be fundamentally the same, regardless of the specific form of debt and/or equity financing you may be applying for.
And it can be pretty straight forward to navigate if …
- You are targeting a lender that can provide the capital you need, for terms that are acceptable to you, in the time period you require funding.
- You provide the lender everything they require to both approve and fund your request in the format they require and with explanation they can follow.
But ...
If you can’t figure out these two points in a reasonable amount of time, then business financing can also be pretty hard to navigate.
I’ve put together this guide to outline what you need to consider and how to go about the process of applying for and securing business financing.
If you can figure the business financing process out by yourself, that’s great.
If you can’t, I’m here to help.
There will certainly be differences in the business financing process due to the wide variability in both financing requests and sources of financing, but the fundamental approach will be the same.
And while this guide is primarily focused on debt financing, the same principals apply to equity-based financing options as well.
This guide is broken down into the following 4 sections …
- Use of Funds. This section goes over your specific financing request in terms of amount, description, rationale, and timing.
- Profile. Your financial profile is a business asset that should be kept up to date so that if and when business financing is required, your source financial information is not only readily available, but also fully reconciliated to avoid any information gaps, factual inaccuracies and/or contradictions.
- Sources. The business financing sources for conventional debt financing will be categorized and described with a review of lender models, underwriting criteria, and approaches to risk management.
- Application. Here I go over how to properly prepare and assemble a business financing application as well as discussing why proper presentation of your support information can be critical to business financing success.
Once again, not all sources of business financing are going to require the same amount of information, nor will each assess and scrutinize the information you provide in the exact same way. That being said, the more fundamentally sound your overall approach is, the better your results are going to be over time.
The inherent goals implied here for all companies seeking business financing is that the business financing process can predictably provide 1) the amount of capital required, 2) with terms that are acceptable to the business, 3) in a time period that allows the business to meet its operating and financial objectives.
The best way to increase the probability of success of achieving all these stated goals is to 1) develop a solid understanding of the business financing process, and 2) manage the application of this process at a high level.
I hope you find the information that follows useful.
Good luck with your business financing efforts.
Brent