MADE INC
working capital to free up
cash flow. These measures
can help increase credit
scores, thus improving the
chance of securing a small
business loan.
There are a ton of options
available to small- and
large-businesses, but picking
the appropriate loan will save
a lot of time. For example,
a new bakery will not be
an attractive business for
angel investors or other large
investments meant for rapid
growth. A company such as
that will want to pursue a line
of credit, a Small Business
Administration backed loan
or one through a lending
institution. Targeting the
appropriate funding option
will save an entrepreneur time
and money.
American Express offered
some advice for raising the
likelihood of small businesses
receiving loans below:
• Take action to increase
cash flow and credit scores.
You can sometimes kill two
birds with one stone by pay-
ing invoices up front in return
for pre-payment discounts.
This can prevent black marks
on your credit record for
late payments and can help
with the cost of inventory. If
possible, try to cut the cost
of existing lines of credit and
• Leverage the power of
technology to help find
funding. Platforms such as
Biz2Credit can easily connect
borrowers with lending insti-
tutions that they might never
have thought to approach.
Frequently, these lenders
can offer funding at more
attractive interest rates than
the big banks.
Biz2Credit also offers a
BizAnalyzer tool, which
calculates cash flow and
benchmarks against the
industry average and lenders’
loan criteria. This is especially
valuable at a time when
entrepreneurs are routinely
rejected for loans by their
own banks. Using the Inter-
net saves time, money and
resources.
3. Organize Your
Business Financials.
While this is fairly apparent,
properly organizing the
business’ financials can be
a challenge, especially for a
young company. An easy
place to start is to create
completely separate busi-
ness accounts to avoid mix-
ing personal and business
expenses. An entrepreneur
will also need to nurture their
own credit score, along with
the company’s to boost their
chances of obtaining a loan,
and to improve its terms.
“Demonstrating at least two
years cash flow to banks
is essential to securing a
reasonable investor or a
business loan with a moder-
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ate interest rate; also, clearly
outlining how you would
allocate the loan is immensely
important.” For instance, if
you own a restaurant and
need $12,000 to develop a
new payment system, detail
that in your plan and the
application.
Apps like LivePlan and
Business Plan Premier can
help jump start the process.
4. Be Smart with What You
Tell Your Funder.
It would behoove you to
be transparent about your
intentions for the loan during
the application process but
be sure your intention for
your loan is to generate more
income so that your investor
will feel comfortable receiving
a return on their investment.
“I don’t recommend telling an
investor you’re using to funds
to pay unpaid debt or back
taxes,” Cole said. “It would
be better to let them know
that you will use investment
to hire
employees and already have
the contracts lined up so
you just need the revenue to
generate more revenue.”