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As banks’ lending criteria become more stringent, many companies have had to face the reality that traditional financing options aren’t always available.
Luckily, if you’re struggling to find funding for your next move, here’s what you can do to survive:
1. Update your financials
To uncover which solutions will be best for your business, update your forecasts and business plan as quickly as possible.
Perform a credit check on your company and identify any problem areas you can correct before approaching a new financial institution. You should also conduct a registration search to see if any of these registrations need to be dealt with before talking to a lending partner.
2. Reach out to your network
Once you’re in a position to put your best foot forward to a new lender, reach out to your network of contacts. Ask if they have connections with lenders that specialize in providing funding to companies like yours.
It’s important to look for a funding partner who can understand your struggles and the intricacies of your industry, especially in unpredictable economies.
3. Don’t overlook your curb appeal
Whoever you approach, preparation is key when looking for a new funding partner. Not having an up-to-date financial statement is a red flag for lenders that can easily be avoided.
Professional lenders will check into your background (both personal and professional), so make sure they don’t find any shortcomings — or worse, skeletons. In this era of pervasive social media, examine your online presence, including your personal one, for anything that may cast you in an unflattering light. It could affect your credit rating and, ultimately, your next banking or lending relationship.
4. Stay current with market trends
If your business is shipshape, keep an eye out for changes in the economic climate that may sideswipe you, as banks tend to not view individual businesses in isolation. Stay current with market and industry reports because banks will often express concern about certain sectors in the media.
If banks announce they are reducing their exposure in your sector, then it’s time to get proactive. Begin making contingency and continuity plans in the event that your current funding becomes unavailable or limited.
5. Consider alternative funding solutions
If your business is hurting and out of financial covenant, you may need to reach beyond conventional banks and approach non-traditional funders such as invoice-factoring partners and asset-based lenders.
Alternative funding solutions can give you the flexibility you need, without adding further debt to your books. For instance, invoice factoring allows you to sell your open accounts receivables to a lending partner such as Liquid Capital for a small fee. You receive the money you’re owed much faster and, because it’s not a loan, there is no interest to pay. This can be a really effective cash-flow strategy for businesses during a crisis.
Have you lost funding from the banks? Ready for help? Access the working capital you need with Liquid Capital’s alternative funding solutions. Click here to contact us today!