Skip to main content

7 Crucial Aspects to Remember While Positioning Your Firm for Debt Financing

Few years ago, the only way to raise capital for your business was by visiting a bank and requesting for a loan. Today, on the other hand, times have changed with the massive explosion of equity investments. The changes are not limited to just that, as most of the guidelines followed for running an organization have also see a revolutionary change; having said that, these big changes are only meant for big organizations that have the power to accelerate their return earnings and investors hardly hesitate to invest in such organizations.

For the rest of the small businesses, medium sized businesses and even start ups, going the old school way is still the only choice. Even though it is often an expensive affair, many companies can’t help but seek loan from financial organizations.

By understanding what big financial organizations look for, you can prepare your business to be a much credible and attractive prospect.

1. Creditworthiness: Having a list of credit worthy customers can be a big asset. Remember, this is a very challenging task as you would be lending your money to a company, which could potentially never get a proper loan from a good financial organization. So you need to be doubly sure about what you are doing.

2. Taxes: You don’t want the government to be on the driver’s seat through a process like this. So pay the taxes on time to keep off any kind of government intervention. If the latter happens you would hardly be left with any collateral to back up your outstanding money to the business.

3. Applications: Every financial institution performs its due diligence in its own way following its own guidelines. Don’t be threatened; in fact make them feel as comfortable as you can. All the company wants to do is become comfortable with you before going ahead. So give all the information through the applications and be as transparent as you can.

4. Usage of Money: While it sounds very obvious to use the money for right purposes, it becomes quite relevant at times. Sometimes the financial companies are also inclined towards a particular kind of business because of the history they have with people working in that business. This is when raising capital for a start-up becomes a problem.

5. Be Courteous and Professional: This is extremely important. Answer their calls, give information as and when they want and show up when they request you to. This can be a game changer. You would be surprised to see how friendly these financial companies can get just with the help of good gesture.

6. Avoid Concentration: Don’t keep all your eggs in the same basket. You making a big sale to a customer and then sitting happy not trying to push further to other customers will land you in trouble. There are always chances of your original customer not willing to avail your service or product anymore for any reason. This could give you a big blow.

7. In-House Book Keeping: Many organizations choose to outsource book keeping work but having a competent in-house book keeper is a great asset as you would always be ready with your financial snapshots, which would further show your sophistication and competency.

The aforementioned points are broad guidelines and should be followed diligently to be able to appear competent as and when needed. Preparing your firm for debt financing may not be the easiest job but a lot of pressure goes off with an organized and planned approach.

Criss Derek is an investment banker who advises the business owners to streamline their billing and invoicing process, in order to improve cash-flow, and maximize profits.


Popular posts from this blog

Low interest credit cards - how to make them work for you

Credit cards are borrowing instruments, unlike debit cards where you already have the money. Banks are there to make money too. Just like high street stores, they hope to maximise their profits within the rules. So it’s important to understand the basics and find a credit card that’s right for you – you can compare low APR credit cards here . Now you know the rules, let’s find out how to play the game. The financial services industry charges interest on the money that it lends out. Let us assume you borrow £100 on your credit card and keep it for exactly one year before you pay it back. For the purposes of this article, we will assume your loan attracts 8% interest per year, which is the Annual Percentage Rate, or APR for that particular transaction. Practical example

Why it’s important to save for retirement

While retirement may seem far off in the distance for some, financial experts say you’re never too young to begin saving.  In fact, the earlier you calculate your retirement needs and start building your nest egg, the easier it will be to create a viable plan for the future. Many experts advise you begin saving a percentage of your income for retirement as soon as possible, no matter how little the contribution may be, as it’s possible the Social Security benefits millions of people currently depend on may be in jeopardy.

What are the Consequences of Overspending in Life?

How overspending can ruin your financial life? With today’s expenses and their prices, it can be very hard not to overspend. Still, that isn’t an excuse to stray out of your budget. You know why? It is because overspending can only lead to more problems than you think. Overspending can affect your whole life. With all the possible consequences, it may jump from one problem to another. Unpaid bills All the excessive shopping with your credit card can cause steep bills at the end of the month. If you keep on using your credit but don’t have enough money to pay for it in the end, then you’re surely in for a huge financial disaster. This will turn out to be missed payments, and missed payments will ruin your credit report. Missing out on payments will get your credit report marked for 7 years or more. And you can’t get rid of them by finishing them off. Credit report Overspending can cause a chain reaction of events. Once you get your bills due to overspending, it’s possible for you to mi

The Top 4 Reasons People Fail at Budgeting

Budgeting isn’t easy, and many people experience difficulty trying to get the most out of this essential financial tool.  While the concept may sound simple, adhering to your budget could be a lot harder than you might think.  To help you experience success, here are the top 4 reasons why people fail at budgeting .

How does a Prepaid Credit Card work?

Can They Really Be a Solution to Avoiding Credit Card Debt? When it comes to plastic, there are a lot of choices out there. Not only do you have the choice of credit card , debit card, or prepaid credit card, but you also get to decide which financial company you want to use as your card provider. Credit cards and debit cards are both risky. Credit cards can help put you deeper into debt, while debit cards give thieves and collectors access to your entire bank account. A growing number of people are finding that prepaid credit cards are becoming the best option. What Are Prepaid Credit Cards? Prepaid credit cards look and act just like a credit or debit card, except you put the money on the card before you make any purchases. You are only allowed to spend as much money as you have pre-loaded on the card, which means that you are not at risk of going into credit card debt from overspending. These cards also keep your money safe, because thieves will be limited to the amount that is on t

How to Make Your Title Loans Safe and Sound

Although title loans are tagged as risky, innumerable folks still use them for fulfilling their different financial obligations. Therefore, such loans are not completely bad because their significant use despite the risk factor says a lot of their pros. This makes it vital to discuss how these loans should be used so that the risk factor can be minimized up to a great extent. For those who are not aware of, the risk of title loans crop up in the form of consequences when you fail to pay back the loan. With such a failure, you are surely going to lose your car as well as decrease your credit score further.

How Equipment Loans can help your Business Thrive

Image via gettyimages Different companies enjoy common benefits from capital equipment. Machinery has direct and indirect effects on your bottom line. A new oven and forklift each make your business more productive. Meanwhile, interest and depreciation expense are tax write offs that indirectly improve business profits. However, your business may not qualify for a general purpose loan to buy much needed equipment. Some obstacles include: