Without a doubt I’ve always felt as though my biggest hurdle was to secure funding for my start-up business. Although I’m not a huge advocate for one to acquire a loan, a dream of this magnitude requires a significant amount of resources! Big dreams require big money! With that being said, it was of major importance that both my business plan and my financial projections were completed early on and completed to the best of my ability! I chose to invest in a financial consultant who specializes in my industry to assist me with getting my financials done and I have to admit, he’s one of the best!
Funding–How do you know which type of funding to seek?
This is a great question and I wondered the exact same thing when I was at a point where I needed to have this figured out! Do I get a personal loan, SBA Loan, angel investor, grants, etc. Personally, an SBA loan was always at the top of my list for several reasons & grants too, of course!
As I began to look into all of the options very closely, one thing led to another and before I knew it I was submitting all of the documentation to apply with a bank I already had a relationship with. Remember, last year my application was devastatingly rejected which led me to take a pause on everything BUT that experience taught me so much and I would love to share with you some lessons I learned. Even if you don’t ever plan to seek a SBA Loan for funding this will still help you in some way given how important numbers are when it comes to making your dreams come true!
Know your numbers!!! This is SO important. Yes, I had a professional to help produce my financial projections but I provided the numbers to him to begin the process. You must understand how those numbers were derived and what it will take to ensure all projections are met accordingly. A total of 3 years of projected financials are required and please make sure you have enough working capital as well! Know your numbers and ensure they make sense!!!
Save, Save, Save!! In order to qualify for a SBA loan you must have money saved (liquid cash) to put down and usually that number is around 20%. They will not loan you any funds if you do not have cash to put down towards the loan, personally. Also, make sure you have those funds in an account that’s easily accessible. Let me add…the 20% down is for the TOTAL project amount, not just the amount you need to borrow! Very important & can make a huge difference!
Good creditworthiness is a MUST! We all know this. They will not loan to any individual who has a history of bad credit! If you’re delinquent on payments this will negatively affect your chances of approval! They will check so be prepared!!!
Personal Financial Statement (know what this is)! If you’ve never had to complete this form before, get familiar with it prior to you applying and this goes for any type of funding you may be seeking! This form gives a complete snapshot of ALL of your personal finances! In essence, it shows your assets vs. liabilities! You always want your assets to be more than your liabilities! If you have liabilities (i.e. school loans, car loans, credit card loans, unpaid taxes, etc.) they all will be required to be listed on this form along with all of your personal assets too. No doubt, this form will require some homework so prepare yourself! Business assets are not included.
Ensure you are working with a reputable and trustworthy banker! Super important! In fact, I would even suggest establishing relationships with a banker(s) before the process begins. It doesn’t hurt to reach out, introduce yourself, and let them know your future plans. They could help steer you along in the right direction and provide valuable information to help better prepare you in the long run. Referrals are always the best!
There you have it! I hope this information is helpful to you! I’m still believing that it’s already done and I hope you’re believing with me!
Be sure to come back next week and see how this story continues to unfold! Be well!
~The Aspiring Spa Owner~
