Business owners by nature, have a do-it-yourself, self-starter mindset. Taking initiative to make things happen comes naturally to them. Asking for help, however, is not so second nature. When exploring financing, many owners fail to take advantage of the following resources for guidance that can improve the chances of efficient, successful financing.
Operating in all 50 states, Small Business Development Centers (SBDC) and Service Corps of Retired Executives (SCORE) chapters offer free consulting for small and start-up businesses. SBDC offices usually tap into university and college resources for their staffing and research. SCORE chapters use entrepreneur and business volunteers to offer a huge variety of workshops and one-on-one services.
These organizations are great resources for drafting and refining your business plan and identifying quality banks and nonbank financing institutions in your area with a reputation for supporting small business. It is smart to work with an experienced counselor who can help you test your business case, sharpen your growth forecast and clearly articulate your growth plan before sharing your plan with lenders.
Many businesses look to their business partners and suppliers as potential sources of capital. Supplier financing is a particularly attractive, low-cost option for established businesses with strong suppliers and significant purchases of inventory and capital goods. If you take advantage of supplier payment terms, discounts for early payment and financing options can free up a significant amount of working capital affordably.
Your lender or investor will want to see complete cash flow, income and balance sheet statements. Most business owners do not have a financial background, so it is important to meet with your accountant to prepare accurate, professional documents – generated by both personal and business finances. A sound business with a grounded growth plan can be denied approval if financial statements appear incomplete or inaccurate.
Financing is not a one-shot action, but a long-term process. Establish a working relationship with a banker who can help you optimize your cash flow with cash management banking tools. When it comes time to consider loans, they already know your business and can help you move quickly through the application process. Over time, an effective banker will suggest solutions to meet the needs to your changing business.
SunTrust Business Owner Research reveals that less than one-fifth (14 percent) of owners consider applying for Small Business Administration (SBA) loans that offer attractive terms and rates. There are many reasons, but most have to do with misperceptions about the cumbersome, slow process of working with the government. In reality, SBA loans are administered by local banks. Look for preferred lenders who specialize in underwriting SBA loans. These banks have committed resources to small businesses and have completed the training and certification needed to quickly process and approve SBA loans.
About SunTrust Business Owner Research: SunTrust surveys small business owners and advisors as part of its ongoing business seminars and symposiums. The small business owners attending these events include both SunTrust client and non-client business owners and are representative of the broad spectrum of businesses located in the SunTrust markets. The research cited in this report is extracted from these 5,425 small business owner surveys collected between 2007 and 2011.
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