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CAPITAL, The Foundation to Good Business

by James Saia, Status Group

As you may know, financing is an important part of growing business and it is almost always a concern for the owners. Nothing is more vital to the health of a small business than having the right financing in place. Eventually, almost every business reaches a stage of growth where owners are forced to seek out credit or investment solutions to fund such growth. There are ways to show you how to build your business credit profile in order to help you obtain the financing you require for growth and success.

Often times it is advantageous for a company to save their cash and to obtain new computer systems and consulting via a lease option or by obtaining a loan.

The reasons businesses don't find funding are:

• Not knowing which lenders offer what they need.
• Not knowing how to pre-qualify before applying.
• Not knowing how to prepare and present their funding request.
• Not knowing that by omitting just one thing in a funding request will result in rejection.

Most businesses apply first and prepare later. Business owners rarely pre-qualify before they apply and often do not even submit all of the proper documentation; this is the leading reason to a declined request for funding. It is crucial to prepare your request to the lenders requirements and have supporting documentation in hand. Do not apply until you have a well thought out and documented business funding request package. 85% of all businesses that started in the past 5 years have failed for not having enough capital available to them to weather the storms that every business encounters.

Another issue that many business owners face is using all their personal credit for the business which takes their debt ratios through the roof. 30% of your FICO score is determined by this one fact. Any balance over 29.9% will result in a hit on your personal FICO score. Another 35% of your FICO score is determined by your bad information like late payments, judgments, tax liens, foreclosures, and inquiries. This is why business owners using their personal credit for their businesses can often have their FICO scores drop. This is one area where a financial consultant who specializes in securing financing can help you make sure you secure the funding you need while protecting your personal credit rating.

Today banks are turning down more loans because of the pressures of the economy. They also have more rules now and are turning away loans from applicants with excellent FICO scores. When this happens what the banks are really saying is that they would have to invest more time in the project then they wish too. They want as little contact with the business as possible to speed things along. When all the numbers are great and the package is put together well, the loans move quickly and the bank has very little risk in losing time on deals that have some issues. Bottom line they want your business only if there are no storms in your past or any issues going forward. A word of caution, what you don't see today will come and grab you in the future. There are no free lunches and a bank always has other motives. If you don't think so just think about how your own mortgage loan works with banks. You go to the bank for a loan to buy your dream home. They now ask for at least 10% down or more. If you are buying a million dollar home they now ask you for 30% down. Think about how much interest they are paying you on your down payment. What's that you say? The bank is not paying you interest? Then they charge you interest on the money they loan you, so you could say they are double dipping by investing your down payment money and charging for the balance. As you can see it is a win, win for the bank.

Utilizng a good consultant who does not work directly for the bank is an excellent way to make sure that all of your interests are being looked after and that you go into the financing process with everything in order. Doing research online is also essential. Captial Solutions, a local firm here in Las Vegas, has an excellent website to review the options that you may have to secure financing that you had not thought about. Their website is www.capitalsolutionsllp.com. This should get your thought process going and open up the opportunities that small and medium size businesses have not considered. Build your capital foundation and you will have a strong base to handle any issues going forward. You will have the ability and credit worthiness to move your business to the next level and beyond.

- James Saia, Status Group Vice President of Operations Las Vegas Office, has over thirty years of broad operational management, successfully generating multimillion dollar revenues and profits utilizing diverse workforces in highly visible domestic and international environments.  From stock room to Kmart Vice President, Jim has consistently rallied his team to great accomplishments. You can contact James at the Status Group website or directly at jsaia@statusgroup com