Capital is a critical ingredient for the success of a business. Schedule a counseling session for additional information and specific assistance with your financing needs and requirements by calling 936-294-3737. Remember our services are FREE and CONFIDENTIAL.The questions below will assist you in preparing for a counseling session or to gain knowledge of factors to consider before meeting with a financial institution or investor.
1.) Is your company or business an established or emerging business?
Meaning have you been in business for more than one (1) year or just starting.
2.) What kind of financing are you seeking to obtain? Equity Capital? Debt Capital?
Knowing which form of capital needed better prepares you for the loan process and the resources that should be used for loan payments.
3.) If you are seeking debt capital do you know which kind?
Knowing this answer will better enable you to determine what loan possibilities will apply and which are better suited for desired outcomes.
4.) If you are seeking equity capital, are you willing to sell a minimum of 51% ownership in your business to an investor?
Investors may ask for ownership in your business or simply act much like a bank. Often times, investors want a combination of these and/or other factors.
5.) Do you know your most recent credit score? Is it greater than 700?
If not, you may need to take certain steps to improve your credit before approaching financial institution or investor.
6.) Do you have at least one-third (1/3) of the total loan amount that you are requesting?
Generally, most banks will ask for approximately 30% of the requested loan amount down as part of owner’s injection into the business and to secure the loan.
7.) Do you have assets that can be pledged as collateral for the loan?
Having items of value to secure your loan improves loan funding success. In some cases it will be an essential factor in whether you obtain the loan.
8.) Can you provide a personal financial statement?
This is an important document for the loan approval process.
9.) Do you have experience in the industry?
Having limited or lack of experience (or working knowledge), will be considered a weakness that will affect the outcome of the loan, if funded.
10.) Do you have a business plan?
Having conducted a feasibility study and prepared a well written business plan will often determine whether you can get a loan and/or improved loan terms.
If you are currently in business (for more than a year) and/or you are seeking the loan to purchase an existing business:
1.) Can you provide the company’s Federal Income Tax Returns for the three (3) most recent years? (Provide as many as possible if less than 3 years in operation)This will be a requirement for obtaining a loan. Additionally, you will be required to submit the last three (3) years of your personal tax returns.
2.) Can you provide the company’s financial statements ( i.e. balance sheet, income statement) for the most recent three (3) years?
These will be reviewed for consideration of loan approval and/or how the loan terms are finalized.
3.) Does the company have a positive Net Worth?
This will be a consideration for the loan approval process.
4.) Does the company currently have loans outstanding? Is the company current on its loan payments?
Outstanding loans (and the number) will affect the terms of the proposed loan and whether the loan will be approved for funding.
5.) Does the company have positive cash flow?
Positive cash flow will better enable the company to obtain a loan.
6.) Does the company own assets free and clear that can be used to collateralize the loan?
This will significantly improve the company’s chances of obtaining a loan.
7.) Has the company’s management team been in place for at least one (1) year?
This will factor into the loan approval process for it implies stability, along with the ability to use key personnel and retain the experience factor for greater company benefit.
If you are wondering about grants, there are many things that you should know such as the SBA does NOT provide grants for starting and expanding a business. However, some business related grants can be obtained through state and local programs or groups, and some non-profit organizations. Additionally, business owners should know most of the grants are not free money and typically require matching funds or other structured considerations. Visit the SBA.gov webpage about loans and grants to learn more.