When your established business requires additional funding, you need to follow a well-prepared strategy to ensure success in securing the necessary capital. Here’s a detailed guide on how to get funded for a business:
Create a Convincing Business Case
Craft a compelling business case to present to potential funders, outlining your financial needs, the reasons for them, and how they align with your business goals.
Tailor your case to reflect your specific requirements, whether it’s overcoming seasonal fluctuations, investing in new equipment, expanding into a new market, or launching a new product line.
Ensure your business plan reflects this new phase of funding and how it fits into your overall growth strategy.
Provide Assurance of Responsible Fund Use
Reassure potential funders that the additional capital will be managed effectively and responsibly. This builds trust in your ability to utilize the funds wisely.
Highlight your management team’s qualifications and experience to demonstrate their capability in overseeing the allocation of funds.
Financial History Statements
Present a comprehensive financial history of your business, showcasing its growth over time. Include details of revenue, expenses, and profit.
If your financial history has had challenges or periods of less favorable performance, be prepared to explain how the new funding will address and resolve these issues.
Business Credit Report
Assess your business credit report to ensure its accuracy. Make any necessary corrections to provide an up-to-date, reliable overview of your business’s creditworthiness.
Business Valuation
Determine the current value of your company by conducting a business valuation. This is a crucial step, similar to what you’d undertake when selling your business. Various valuation methods exist, and you can either perform a self-evaluation or enlist a qualified business appraiser for this task.
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Financial Forecast
Create a financial forecast that outlines how your business will grow in the future. This includes projected revenue and expenses. Clearly explain the methodologies used to derive these estimates, which can be based on both quantitative analysis and expert judgment.
SBA Resource Centers
Seek assistance from your local Small Business Administration (SBA) resource center. Meeting with experts, counselors, and business plan writers can provide valuable guidance in preparing your business for the SBA funding process.
Choosing Your Funding Source
Exploring Funding Options
Explore various funding options available to established businesses, which often mirror those available to new startups. These options encompass small business loans, credit cards, and crowdfunding.
Leveraging Your Financial History
Established businesses hold the advantage of having a financial history, complete with credit reports, business bank accounts, and internal financial reports. Lenders, investors, and crowdfunders will scrutinize this information when deciding to fund your business.
Selling Ownership Stakes
If you decide to sell ownership stakes in your company, your business’s legal structure will play a pivotal role in determining the available options.
Limited Liability Companies (LLCs) and partnerships can admit new members and allocate them a percentage of ownership in exchange for a capital infusion. However, this process must adhere to the stipulations outlined in your articles of organization and operating or partnership agreements.
Corporations can issue shares of the company, but this must be done in strict compliance with your articles of incorporation and bylaws.
Lender Match for SBA-Guaranteed Loans
When your business needs more money to fuel growth and expansion, turning to the Small Business Administration (SBA) for financing can be a smart choice. SBA loans and grants provide a reliable way to acquire funding. Whether you require an additional loan to fund your business plans or you’re exploring avenues to get more capital, the SBA offers a variety of programs to cater to your needs.
It’s important to note that most SBA loans are made by authorized lenders rather than directly by the SBA itself. This makes it crucial to work with a reputable and legit business loans provider.
By following this comprehensive guide, your established business can confidently approach the process of securing additional funding, whether it’s through loans, selling ownership stakes, or other financing options. Remember that thorough preparation is key to successfully convincing funders of your business’s growth potential and financial responsibility.