One of the most rewarding things for any entrepreneur is when they break even and start getting severe returns on their initial investment. But reaching this point is just another step on the ladder of success, and the next one comes rapidly after it: growing your business.
This means that you need to start knocking on some doors all over again to fund that growth. If you are already starting to plan to level up your company: you’ll need to plan how and where you’ll be applying for small business loans, either with small business lenders such as Camino Financial, a bank, or other options that are out there.
The thing they all have in common is that they’ll ask you for some paperwork to prove that you have an operating company. So, depending on whatever option you want, you’ll have to get a file ready and be willing to show it a lot. Get ready!
Essentials of your business file
Most banking institutions have the same requirements to approve your application. The truth is that having all of this ready will help you make the process faster and less haring and relearn every corner of your business. These are the most common business documents you’ll need to have in hand:
1-. Bank statements
This will help the financial institutions understand your income monthly so make sure you have at least the last two years ready. If your company is younger, then have them all.
2-. Tax returns
This will have to match your bank statements and prove to the institution that you are a compliant and real company. If you “forgot” to do them… it’s time to get them done, even if you are not applying for anything just yet.
3-. Business license
To work, you’ll have to be registered with local and national authorities, so, depending on what you do and where you do it, you’ll have different licenses, permits, and paperwork. And they have to be in your name. If you are not the company’s legal representative, you won’t be able to ask for small business loans.
4-. Financial Statements
Is this ready? Because every decision you make has to be taken by these numbers. How else can you understand your business if you haven’t traced the incomes, expenses, taxes, projections? This document is the backbone of every company, your history in numbers.
5-. Business Plan
The financial institution of your preference will want to know what you are planning to do with the money they give you. After all, they want to make sure you’ll have a way to pay it back. And it’s also a way for you to understand your business and your market so, if you didn’t write one at the beginning, now it’s the time. It will serve you as a road map for the future.
A Different Approach to Small Business Loans
Even though banks are traditionally the way companies fund their businesses, there are new and different alternatives. There are pros and cons to each, so you’ll have to research them before making a decision.
– Fintech: Financial technology companies like Camino Financial have been around for a while, explicitly created to help people with little or no relationship with banks access funding. These companies have less red tape and faster solutions, though It could also mean less money.
– Partnership. You could convince someone, either friends or family, to invest in your company and become a partner in the company’s next level. They will have a say in the decisions since they’ll be working with you, and you’ll be “selling” a part of your company to them.
– Private investment. From Angel investors to Corporate Venture Capital, there is a world of choices for you out there. You have to be mindful of writing and revising a good deal that pays back the investment with interest (debt) or shares of your company (equity). Sometimes, this option can even help you make a great deal and end up selling your company for a lot of cash and start something new.
Get ready for the next step and start your file. Write down whatever you are lacking and get your company ship-shaped to be attractive to possible lenders. Your job is to better your company; theirs is to multiply their money, so find a win-win situation.