Here are 10 points to ponder before starting the quest for financing:
1. Whether you’re a start up or established business, you need a well thought-out and documented business plan with your financing request fully laid out in the business plan. All sources of funding will want to see your business plan.
2. Prove that you really need more capital and not to better manage your existing cash flow.
3. Be able to document whether the capital is to be used for start up, to expand, or as a cash-flow cushion against risk.
4. Understand whether you have time to shop for better terms or you need the financing immediately.
5. Have an assessment of the risk involved, since this affects the cost and type of financing.
6. Be able to explain if the business is transitioning since financing is more critical in then.
7. Documented the uses of the funds since lenders require that the capital be tied to specifics.
8. Document the economic climate in of your industry, stable, growing or depressed since the terms of the capital acquisition may depend on this.
9. The strength of your management team is very important to lenders.
10. Seasonality and business cycles can affect the type and length of financing.