There’s no such thing as a “one-size-fits-all” business financing option that’s picture-perfect for any small to medium-sized business owner or entrepreneur.
No, your specific business structure, your business model, your cash flow situation and your capital demands are all going to have a huge impact on whether or not one specific type of financing option is right for you compared to any other.
In reality, the odds are pretty good that your business is going to need to capitalize on a handful of different types of financing services over its lifetime. Different loans and different lending packages will make sense at different times to take advantage of different opportunities – and zeroing in on the right option for you every time is a huge piece of the puzzle.
But that’s why our friends from Lithuanian fintech company Bruc Bond have put together this quick guide.
What Are Your Needs?
Right out of the gate you are going to need to consider what your needs are, the trigger point behind actually going after financing packages and loans in the first place.
If your business is rolling along, sort of self funding your operation, it’s pretty unlikely that you are going to be looking at taking on loans and working with outside lenders and financiers.
You really need to think about what you are trying to accomplish, what you need to get out of this lending package, and what all of this extra funding is going to mean to your business, your bottom line, and your financial future.
Without having a crystal-clear picture of how this money is going to impact your business (positively as well as negatively) you simply aren’t going to be able to objectively compare different financing packages against one another.
How Much Money Are You Looking For?
The second big piece of the puzzle here is that you obviously need to know exactly how much money you need to finance to begin with.
It doesn’t do you a lot of good to be looking at microloan solutions if you need $750,000 in financing ASAP, just as it isn’t going to make much sense to look at crowdfunding lending opportunities if all you really need is a few thousand dollars.
You’ll want to first figure out the amount of money that you are looking to take advantage of (which is informed by understanding how you’re going to use this money to begin with) before you start your search for lenders that may be the right fit.
You’ll also need to think about how interest rates are going to play a role in your ability to repay these loans, you’ll need to think about the total cost of these financial packages “all in”, and you’ll need to make sure that you are able to meet different repayment terms without putting your business in dire financial situations along the way.
What Do You Bring To The Table?
The last real piece of the puzzle that you’ll want to think about before you go hunting for the right business financing option for your specific needs is what you are bringing to the table yourself as a business and even as a business owner that might help you moving forward.
If you have a lot of business success under your belt (at least a couple of years, anyway), impeccable business records and financial data, and a sterling silver credit history the odds are pretty good that you’ll have your pick of the litter when it comes to business financing options.
On the flip side of things, though, if you are just starting your life in the world of business, do not have financial records or financial data you can provide access to, and your credit score leaves a little bit to be desired your business funding sources and opportunities are going to be a little bit restricted – but that doesn’t mean that they disappear altogether.
You’ll want to think about the kind of collateral you can use to guarantee your loans, the types of assets you can use to secure lending packages, and anything else you are able to bring to the table that might help you get your hands on the cash and capital you need to succeed in the world of business today.
Focus on the three cornerstone elements we highlighted above when it comes to finding the right business financing for your needs and the process will be simplified dramatically.