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What Business Funding Strategy is Best for Your Business?

What Business Funding Strategy is Best for Your Business?

By Marco Carbajo, Guest Blogger
Published: December 10, 2013

If we have learned anything from the economic downturn several years back, it’s that business is cyclical and tough times stress the finances of a business tremendously. If a company is out of funds and does not have access to financing, it may not be able to recover.

While many businesses fail for numerous reasons, insufficient capital is among the leading causes of business failures. A lack of funding will hamper any company’s ability and threaten its potential for growth and stability.

Having access to business funding is essential in today's business environment. Preparation, integration and amplification of one’s funding strategy leads to many financial advantages. In addition, access to the latest business finance information, resources, tools and funding sources further support the stability of a business. That’s where credit becomes a factor.

Success in obtaining business credit and financing is greater than simply being qualified; it's about being fully prepared. Numerous business owners are qualified yet still get declined due to the fact that they were not ready. A business owner failing to prepare and be fully knowledgeable with respect to personal and company creditworthiness is the source of 99% of declines for credit.

It starts with carrying out an individual and company credit analysis. By identifying the weak points and strengths that you and your business have, the much better you can plan and execute the most efficient business funding strategy.

Whether you own a start-up or existing business, the very best time to implement a short term and long term funding strategy is now. Don’t you think it’s better to have access to credit and funding before your company actually needs it?

First, some fundamental questions include but are not limited to the following:

  • Are you a startup or existing business?
  • What is the major industry focus for your company?
  • Does your business operate as a sole proprietorship, partnership, corporation or LLC?
  • Do you have a commercial location or is your company home based?
  • Is there a bank account in the company's name, if so just how long has it been opened?

These simple questions are meant to provide basic information about the stage, structure and operation of your business. Once this is established, the next step is determining what funding programs are readily available to you based upon your individual assets and company assets.

However, when it comes to personal assets I am not just describing assets such as real property, IRA & 401K investments. This also refers to personal FICO® scores and potential credit partners you may have.

A solid FICO® score is an asset that has value to your company’s capacity to obtain funding such as obtaining high limit business credit cards that report solely to the business credit agencies.

For business assets I'm not merely describing annual revenues, credit card sales, owned equipment, outstanding invoices or commercial real estate. Your business credit ratings, business credit reports, and bank ratings are also assets.

For example, with a creditworthy business you may qualify for greater credit limits and more flexible terms because lenders can assess the creditworthiness of a business instead of merely relying upon the personal credit ratings of the individual business owner.

Did you know a creditworthy business has 10 to 100 times greater credit capability than an individual?

By taking an honest individual and business credit assessment one could layout a sound business funding strategy – a strategy that enables you to maximize your funding capacity for the short term and the long term.

About the Author:

Marco Carbajo
Marco Carbajo

Guest Blogger

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in 'Fox Small Business','American Express Small Business', 'Business Week', 'The Washington Post', 'The New York Times', 'The San Francisco Tribune',‘Alltop’, and ‘Entrepreneur Connect’.