Given our area of focus as a business, it shouldn’t surprise you that we are keeping close tabs on access to working capital* in the United States.
We’ve covered why access is so important, the agonizingly slow rise in availability and how to make working capital work for you. But for all that, there’s a lot more to discuss, and The Street has a great post about planning for their opportunities.
Whether you’re looking for financing from a bank or another finance company, it will help you to be ready. That’s the message from Ron Walker, the founder of Boston-based Next Street, who has two pieces of advice that particularly stood out to me.
Browse The Marketplace
Figure out what kind of capital you need first, and spend some time researching your state’s offerings. Don’t go into a company blind; find out what they offer and what kind of rates they can give you. Be familiar with what you need and see how companies match those needs.
Or, as Walker says:
The message is there are all types of lending facilities out there with better rates and better terms, so you have to spend a little bit of time sourcing the different types of capital right in your neighborhood. City and states have various lending programs that small businesses are just not aware of. If we were working with that business, one of the things that we would do is an analysis of the types of capital that’s out in the marketplace.
Never engage in a meaningful talk with a lender without being familiar with your fiscal situation and having the paperwork to back up what you’re asking for. If your financial house isn’t in order, you’re going to find the process of securing capital to be a difficult one.
Really spend time on straightening up your financials. Depending on the size of the company, you may or may not need audited financials, but you need to get a review of your financials for the last three years as well as get the books in order that are going to be appropriate for the financial institution you are dealing with. Secondly and again, what I have seen lately — because the bankers have taken their relationship managers out of the market — is that bankers want to know that there is a plan behind the business model. I recommend strongly — we see it all the time — there needs to be plan supporting the sources and uses of the capital they are requesting from the bank.
What do you think of Walker’s advice?
Photo credit to foxumon at http://www.sxc.hu/photo/1185031
*Working capital not available in the following states: AK, DE, ND, VT