5 Tips to Streamline the Approval Process
February 27, 2019 | Tools & Tips
Small business financing can be a game changer when it comes to taking your business to the next level. Whether purchasing inventory, refinancing other debts, or revving up your marketing efforts, having some extra capital on hand will help you meet the growing demands of your organization.
While the decision to obtain small business financing is an important one, there is no need to be overwhelmed or intimidated by the application process itself. With a bit of advance preparation, everything will run smoothly and you could be approved and funded within hours. This post highlights steps your business can take to streamline the application, approval, and funding process for your small business.
1. Gather and Organize Your Documents
It’s easy to get inundated with stacks of financial documents, tax returns, and bank statements. Because most funders will require at least some of these items to assess your application, we recommend creating and maintaining a filing system in advance of submitting your financing request. Proactively organizing important business documents will help you to avoid an incomplete application and lead to a timelier approval. Some key documents to save are:
- Business Licenses and Permits
- Employer Identification Number (EIN)
- Annual Business Revenue and Profit
- Bank Statements
- Personal and Business Tax Returns
- Copy of Your Commercial Lease
- Legal Contracts and Agreements
Certain funders may require additional items not on this list, so be sure to check with them regarding what documentation is mandatory. Additionally, it may be prudent to have your financial statements reviewed or audited by a CPA (certified public accountant) to provide the funder with greater confidence in your application.
2. Maintain and Update Filing Status
It just makes good business sense to be confident that your company is current on all filings such as taxes, business licenses, and entity registration. Not only does this demonstrate sound management to your prospective funder, but it proves your company’s good standing. To be approved for financing, nearly all capital providers will require proof of good standing, so having this in advance will alleviate potential holdups in your application process. Maintaining current filings also validates that you are in compliance with state regulations.
3. Craft an Elevator Pitch
If you were asked to outline your business goals, products, services, and overall financial health in two minutes, what would you say? That’s the main idea behind creating an “elevator pitch.” As part of your application, the funder may require that you explain your business and operating principles in a manner compelling enough for them to want to provide you money.
Focus on being clear and concise in your elevator pitch and be prepared to answer hard questions about your financial history. Consider including your market opportunity, growth strategy, a problem statement, and how your product or services solves that problem.
4. Have a Solid Plan in Place
To convince a funder that your business is worth their investment, you may need to share a financial plan with them. This plan outlines why your company is seeking the money, what you intend to use it for, and the profits you expect to generate.
Focusing on this information demonstrates not only that you have a clear strategy for utilizing the capital, but that you expect to generate profits sufficient to more than offset the cost of your funding. Being able to articulate a realistic and solid financial plan indicates that you take your financial commitments seriously. It also demonstrates that you accept accountability for paying the funder back as agreed.
5. Have an Idea of Your Credit Profile
Knowing your personal and business credit history and scores is essential when seeking additional funding opportunities for your company.
If you want to find the right funding partner and avoid major surprises in the terms you are offered, having a realistic sense for the strength of your credit will be invaluable. This also allows you to assess options that will be available to you and help you feel more confident in your ability to secure them.
Check your personal and small business credit scores on a consistent basis. This includes updating any outdated information, correcting errors on your report, and working to eliminate any negative items that may be appearing on your report.
If your credit score needs boosting, research and take the steps necessary to improve your score. Maintaining excellent credit scores requires diligence and focus, but doing so will expand your ability to invest in your business and other potential endeavors.
Preparedness Pays Off
The process of applying for small business funding requires some upfront time and patience. But planning accordingly and staying organized will allow you to focus on the most important elements of the process.
Remember that if you aren’t approved by the first funder with whom you apply, you still may have other options available. It’s important to clearly understand why your business was rejected so that you can focus on improving your company’s overall financial standing.
If you remain persistent and keep your business momentum strong, there is no doubt that you’ll successfully secure the funding you need to improve your business substantially.