Alternative financing has now become a primary option to traditional bank financing. The shifting commercial lending market and past issues has created a need for small and mid size business owners to continue to seek financing through a variety of alternate sources. Following are some trends happening in the alternate finance markets.
Websites are a must. Banks didn’t care much if you didn’t have one but 3rd party lenders look to see that you have a site and that your vendor has one also. It is now a sign that your business is legitimate and established and selling the products which you say you are selling. If you don’t have one or never needed one then it’s time to consider getting one developed.
Sole proprietors are limited. If you still operate as a sole proprietor consider filing as an LLC or some other small corporate form. As a sole owner, you will always have to personally guarantee any finance; you may still have to as an LLC but at least you will have the chance for a “corp only” approval down the road as your company grows. Many lenders and investor groups prefer to work with non sole proprietor owned businesses.
Use an outside accounting service. Keeping your own books works fine when starting out but as your sales grow, hire an outside accounting service to handle your financial statements. A CPA is best but if not practical, an outside accounting service will add legitimacy to your financial accounting system. Lenders will view your business and ultimately your finance request with more legitimacy and with fewer questions. Overall, it’s a better strategy for your business anyways.
These are some trends we are seeing across the country with all lending sources and even with banks; of course if you never need money or to finance anything then you don’t need to worry about it but few businesses can grow and flourish without the requirement for capital dollar to expand.