If you’re looking to obtain financing for your business, a good place to start is to treat your CPA and lender as partners in your financing.
To start, you need to have good financial records and facts that make sense to your lender. Some business owners maintain their financials with the first priority being to save on taxes. But when they want to borrow money, they may not show enough income to justify the loan. Do you know if your lender is a collateral lender or a cash-flow lender? Does your request for proceeds match their use? Knowing how the lender looks at your situation and helping him or her to understand how your business works is crucial to your request.
If you’ve had your business for a while, much is going to depend on your track record and your previous lending results. If you’re buying a business or starting a new one, your previous experience and understanding of how the business works will determine a lot. But you still need to build trust with a potential lender and demonstrate that you can make the business work. You also need to demonstrate how operations will affect your financials and where cash flow will come from to service the debt.
Dave Shepherd, Sr.
President and Founder
Retirement Financial Services
Want to improve the way you run your business? Entrepreneurs, academics, and consultants from diverse industries offer practical advice on a variety of topics each business day.
To submit a tip for consideration, first check our archive of previous tips to make sure you're not repeating a tip someone has already contributed. Then send the tip to Small Business channel contributor Michelle Dammon Loyalka. Because of the volume of material she receives, she may not respond to each individual.