More on the basics of Business Funding
Well, this is a topic that will always keep coming up as long as you need funding for your business. First of all there are few persons who have the privilege to decide of if you get funding. They are an authorize Bank officer, Wealth Venture Capital Investor and authorize personnel for investment funds. Bear in mind these funds could be private investors or a standard investment fund.
I bring this up to highlight that regardless of how many offers out there to help you get money, you need to meet the requirements of these people. Yes, you have different form of brokers that will help you meet some requirements but bear in mind that there is always a risk despite their past success. Risk in the sense that the people who control the money can change requirements any time they wish.
How can you be sure to get past the need for business funding regardless of the funding source? Lets first look at common factors.
1. Corporation – You will need a corporation either new or old. Old is great if in good standing as it can get you past the initial scrutiny but by itself won’t work. In fact you can get an old corporation cheap with permission from the existing owner.
2. Credit Profile – While people will charge you 1000s to do this, most of this is free. You get an EIN free, DNB number free and I think all the other credit agency numbers are free.
3. Credit Activity – Show some activities on your business profile to get a score that is minimum for consideration. The Paydex 80 is the usual minimum – The cost to do this is very cheap.
4. Business Plan – While banks may not ask for this, it’s critical to make sure you have a good purpose and plans for the money. Can’t just say you want to borrow some money. You need to have good plans to pay back. Investors would want to see your plan to even consider lending the money in the first place.
Now with those basics out of the way, you may be able to get $50K or so depending on the bank without doing anything else. Lets look at some advance areas to consider to more credit.
1. Personal/Business Guarantor – Once you get up in the $100K range, you will need to show some kind of personal guarantee to the bank which means they will check your personal credit score and other factors. This is where you may need to get a service if you don’t want to do it yourself.
2. Company Financial – When you present a aged Corporation for large sums, they will want to see your finances with activities and most likely tax returns proving that. Typically when people go and buy corporations, this is one of those services that they want to have. be careful with this route as the bank could catch any bogus documents used
3. Large Trade Lines – This area is critical especially to apply for large amounts of capital. You could take time and apply for trade lines directly with stores and vendors but some companies may be able to get large lines attached to your profile. This would show good business practices over a period of time and give the funding source some confidence in your business.
The main reason I am writing is to warn people again about dishonest providers. First they do not know how to do things right, second they do not have much success in the past and finally they will not take blame for failures. As I said early there are risk in this field when you ask someone to do it for you, however, they need to be above board and have the best of integrity.
As I said before, make sure the payments are protected.
