Small Business Funding -- Why Your Financial Statements Must Be In Order
In today's business financial climate, it is critical to understand what bankers and other possible financial sources require of business owners
. When accessing capital through traditional sources such as banks, they must have specific financial documents from the party seeking to borrow from them.If these documents are not in order, then there really is no way for you to access the money you need for your business. Imagine what will happen if you cannot access the funds you must have to grow your business or for your survival. What would you have to do? Cancel one of your best clients? Lay off employees? Close your business? These are important questions to ask yourself, so get your act together.
You must have many of the following documents ready to present to the funding source: Current Balance Sheet, Current Cash Flow Statement, Current Profit and Loss Statement, Tax Returns (business and individual), Current Accounts Receivable Aging Report, Current Accounts Payable Aging Report, Bank Statements, Merchant Processing Statements and your Current Client List.
These are just a few of the applicable financial docs that a financing source might ask for. If you can't present them, it will certainly create a problem for you to access capital. This is the case regardless of whether you are seeking traditional financing or using alternative funding. These lenders have the right to ask for any documentation they feel necessary to make the transaction safer for them.
Remember, it is not What's in it for you; it is what's in it for them. You are the one asking for their money and though they might be more than willing to lend it to you, they are not willing to risk their capital when they know from the get go that you are not up to speed with your documentation.
So, for those business owners who think you can access capital by the seat of your pants, that is not going to work. Make sure to have your documents in order to present when you decide to borrow other people's money. Remember, it is their money and they are the one taking on the risk to fund you. Be sure to get it together.
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