Financing for your corporation comes in two flavors: debt or equity. The majority of businesses go the debt route, taking out a loan from a bank or other lending institution that will be repaid over time with interest. Equity financing means that you are willing to trade partial ownership in your enterprise in exchange for cash. If you choose the equity path, whether the money comes from a professional venture capitalist or your Uncle Ed, you should be willing to give up some control of your business. Whichever way you choose, you’ll need to be prepared.
An incorporated business might need a bank loan for various needs, including operating capital and long-term growth. To secure this loan, financial institutions will require several years of financial information on both the business and the entrepreneur. They will want collateral to secure and guarantee a loan. To facilitate the process, engage with the financial institution at the earliest stages of the enterprise–not necessarily for a loan at first, of course, but for a merchant account, credit cards and a checking account. Over time, the bank will become familiar with the company and the entrepreneur will be in a better position to seek additional banking products – including loans – when needed.
For some very fast growing companies, the organization reaches a point in its life cycle when venture capital funds are required for hyper growth. In this case, the company may need tens of millions of dollars to enter new markets, expand sales or add new products. Once again, these investors, who have money to deploy, conduct their due diligence to ascertain the viability of the enterprise. Their ultimate goal will be to sell your business to garner a financial return for its limited investment partners and the entrepreneur.
Keep Business Credit Separate From Personal Credit?
Protect your personal assets and reduce your personal liability by creating a separate corporate entity and business credit. Establishing your business credit asset only strengthens this liability protection. Now more than ever it is very important to separate your personal credit from your business credit to keep thing separate. This is completely legal and a strategy that the rich use to bounce back FAST!
Do you think Donald Trump was flawed in his bankruptcy experience or was it strategic on how he had a billion dollar bankruptcy and bounced back to become rich yet in only a couple of years again.
Steps To Building Capital For Your Business
Capital is the lifeblood of a business and every entrepreneur needs to have a plan for obtaining it. The problem often found is that most entrepreneurs don’t start thinking about obtaining capital until they need it, which is typically too late! Regardless of the stage your company is in, you need to have a plan for how you will fund its growth.
As you plan your business funding needs, consider multiple lending sources. The most obvious source is a bank, but that doesn’t mean that banks are the only capital source. You should have a portfolio of business capital that is a mix of bank loans, lines of credit, business credit, credit cards, and so forth.
One alternative financing source is business credit (also referred to as trade credit). Business Credit is an area of financing that every entrepreneur needs to be aware of and focus time in establishing. Without spending dedicated time and resources to building the company’s business credit the entrepreneur is missing out on the single largest source of lending in the world.
In addition, by building business credit a company is establishing a presence with the business credit bureaus, like Experian, which help in obtaining credit in the future from banks and other lenders who report their data.
Lastly, it is critical to build business credit the right way. many people want it to happen overnight and not plan for it and in doing so, you can apply for credit in the wrong places and get flagged in the credit markets. Applying for credit using the shotgun method will hurt your company rather than help it establish positive credit profiles with the business credit bureaus.
Corporate Business Strategies can help you obtain:
- HUNDREDS OF VENDOR CREDIT LINES THAT REPORT ONLY ON BUSINESS CREDIT.
- BUSINESS CREDIT CARDS THAT REPORT ONLY ON BUSINESS CREDIT AND NOT ON PERSONAL.
- BUSINESS FUNDING PROGRAMS FOR IMMEDIATE AND LONG-TERM WORKING CAPITAL.
- THAT'S WHAT SETS US APART. THE CORPORATE BUSINESS STRATEGIES ADVANTAGE FOR YOU.