Most business owners realize the importance of “fit” when hiring new employees or selecting business partners, but overlook the important role it can play when it comes to exploring outside financing.
The right financing fit will not only expedite the process of financing approval, but it can also deliver the best option relative to credit availability, terms and conditions, and overall cost. The life stage and financials of your business and flexibility of terms are key drivers of fit between your organizational needs and financial alternatives.
When exploring your options, it’s important to consider that start-up companies are most likely to have success with non-bank options like micro loans or government programs. Not surprisingly, most start-up and related companies rely heavily on self-funding and personal loans.
Meanwhile, companies that are undercapitalized, but experiencing growth are in the sweet spot for Small Business Administration (SBA) loans/government programs. Free resources like Service Corps of Retired Executives (SCORE) advisors or Small Business Development Centers (SBDC) can be very helpful for identifying high-potential loans and providing a list of quality institutions that successfully process these types of loans. For example:
Lastly, it’s important to remember that “fit” is driven by a strong relationship with a local banker, who can provide long-term advice and adjustments to adapt to your changing business over time.
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.