How to find the money you need for your business

September 06, 2016
Comercial Como encuentro el cash

Learn about the sources of financing available for businesses.

Are you looking for money for your business? Here are several sources of financing that could help you in the process of finding money for your business.

Venture capital firms

These firms help companies expand in exchange for a share of the ownership of the company or property.

Financial Institutions (banks and credit unions)

Banks and credit unions can be your most common source of financing. In these cases, you have to demonstrate that your business plan is solid.

Friends and family

Friends and family may lend money without interest. Of course it is likely that the amount they can lend you is limited. However, this money can help you in the initial stage of your project.

Personal savings

Many business people rely on their personal savings and their credit cards as a main source of capital. However, it is important that you keep your personal accounts separate from your business accounts. It is vital that you do not spend all of your savings on your business. Instead, it’s recommended that you come up with a plan that allows you to keep your savings so you don’t put your family’s economic stability at risk. Take the opportunity to visit a specialist. He or she will be your best ally during this process.

Learn the requirements of financial institutions

You’ve seen your financing options. Now it is important to understand what the institutions will look for when they evaluate an application for financing.

To obtain a loan, you have to be prepared and organized. You have to know exactly how much money you need and how you will pay it back. Remember that you have to convince the financial institution that you are a good credit risk.

With that in mind, here are some of the things banking institutions take into consideration when reviewing your application for financing:

  1. Character: This is the impression that you, as a customer, make on the financial institution or potential investor. Your academic and business experience, as well as your knowledge of the industry, counts a lot in this aspect. Similarly, the quality of your references and experience and history of your employees are also taken into consideration.
  2. Ability to pay: The financial institution will want to know how you will repay the loan. For this, they will take into consideration the cash flow of the business and the likelihood of the loan successfully being paid off. It is important to know that the payment history of current credit arrangements – personal and commercial – is considered an indicator of your performance on future payments. Have prepared situation, income, and projections sheets, in case the institution requests them.
  3. Capital: This is the money invested in the business. It indicates how much you would lose if the business fails. Financial institutions expect you to invest your own assets and assume a personal financial risk to establish the business before you come to them. If you have a significant personal investment in the business, financial institutions will realize that you will do everything possible to ensure the business is successful.
  4. Collateral: This is the guarantee or additional forms of security that you can provide to the financial institution. The bank requires assurance that there is a second source for paying off the loan in case the first one (the business’ cash flow) cannot. Some alternative sources of payment include assets such as equipment, buildings, accounts receivable and, in some cases, inventory. In other cases, the guarantee may refer to someone who signs the loan and agrees to pay it if you cannot.
  5. Economic conditions: These will be determined by the economic environment at the time and depend on external conditions that could affect your business.

What do I do now?

Review all of these aspects and work on those that you think you can strengthen and will be favorable for your business. Remember that for a more thorough orientation about how to prepare to look for the money, you can always call on our experts. We invite you to visit one of our branches (http://locator.popular.com/?lang=es&_ga=1.63708137.771307512.1453480826) or call the Business Banking Center at 787-756-3939 or 787-1-855-756-3939.

We wish you the best as you seek financing for your business!

Financing products, either through credit cards, lines of credit or loans are subject to credit approval.

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