Whether you think you’re going to need financing this year or three years from now, looking for financing any time means being prepared. And, a big part of being prepared means knowing what questions to ask.
As a business owner, you’d probably be inclined to first ask the provider lots of questions about the financing itself and your own creditworthiness:
- What’s the interest rate?
- What are the repayment terms (i.e., number of months to pay)?
- What will I need to qualify?
- What do I need to provide in addition to an application?
But business financing has undergone a transformation in the last few years, with new kinds of non-traditional providers entering the market, offering new types of credit to businesses. With this evolving landscape have come new ways of working with business owners who need capital, new questions that business owners should be asking when looking for financing, and overall, a new awareness among business owners of what kinds of business challenges and opportunities constitute the best circumstances for getting financing.
Business Financial Services is one such “non-traditional” provider of business financing that has become “mainstream” in recent years. BFS offers different types of business financing and just over a year ago, we introduced our short-term business loans to the market. We quickly found that there is a massive demand for these loans; loans designed specifically to help businesses grow and expand. But what also distinguishes us from banks and other financing companies is how we work with business owners; how we encourage them to view financing solutions for the challenges and opportunities they face; and yes, in the kinds of questions we work together with business owners to ask—and answer.
Our short-term loans can be the perfect vehicle for businesses looking at taking advantage of opportunities to grow or expand. We encourage business owners to dig deep for specific answers to a number of questions, quantifying the answers whenever possible:
- Will financing have a positive impact on my bottom line?
- What is the “next level” for my business? Adding another location? Growing my customer base? Rolling out a new product? Will financing help me get there?
- Will the cost of financing be more than offset by the additional growth/revenue it will enable?
Of course, there are other reasons to get financing, too. In these instances, financing could be in the form of a loan but often better serves the customer in different forms. Either way, there are important questions for business owners to ask here, too. For example:
- How will purchasing this equipment help my business move forward?
- Is this a true emergency? Will financing help me recoup my losses and recover quickly?
- Can financing help bridge a legitimate cash flow gap that we’ll make up later?
There are also circumstances in which financing is probably not a good solution for the business. If you’re struggling to pay vendors or meet payroll, there are likely fundamental issues that financing won’t fix. In fact, financing can make the problems worse. Examples of questions that should be asked in these situations include:
- If I don’t get financing, how long can I stay in business?
- Would I be able to continue to meet current financial obligations if I were also repaying financing?
- Have I exhausted other alternatives for staying in business—cutting expenses, laying off employees, speeding up accounts payable or negotiating with suppliers?
For us at BFS and our customers, getting financing for the right reasons all boils down to a key question:
- With financing, will my business be better off in the long run?
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