Every industry has unique challenges and opportunities, so the types of financing which work best in certain sectors may not be the best in others. Because of this, it’s smart to choose financing options designed to work for your industry, but if you haven’t gotten financing before or are struggling with denials, it’s not always easy to know where to turn.
This page will guide you through the steps of finding the right financing for your industry, so your company can grow, and you don’t spend more money than necessary.
1. Consider Your Business Plan
All too often, business owners jump on a loan option simply because it fills the immediate need, only to discover later that it derails long-term plans. Before digging into your options, go over your business plan. If you haven’t already created one, you need to. Look over all your expenses, anticipated cash flow, and revenue projections. Spend time going over your goals as well. Although this is a simple step, it helps reaffirm your mindset as you enter into the lending process. You will likely be offered a number of options, and you’ll need to compare each to the results you want to achieve.
2. Identify Your Best Opportunities
The money you receive should be leveraged in a manner that generates cash. Instead of falling into the trap of borrowing to make ends meet today, identify which opportunities within your business will help you earn the most. For example, covering payroll could let you increase sales or output, while purchasing inventory can enable you to fulfill more orders. Buying equipment may increase efficiency or deliver better service. You may also wish to spend funds on marketing to increase your client base or sales.
3. Connect with an Industry-Specific Financing Company
Whenever possible, always work with an industry-specific financing company. They’ll understand your needs better than a general provider and can pitch solutions which are proven to work for your industry. Plus, they’ll understand the unique challenges you face, which is important in finding the right solution and in getting approval. You can find industry-specific financing companies through search engines, referrals or marketplaces.
4. Examine All the Solutions Presented
Keep a running list of financing solutions you hear about, even if you don’t intend to leverage each one. Your needs will change as your company grows. It’s helpful to have financing solutions in your back pocket for later and doing the legwork now will save you the time and trouble of researching options again later. It may also be beneficial to track pros and cons for easy reference. For example, a bank loan may be the least expensive option, but you probably won’t qualify until you’re well established and have good credit. On the flip side, a choice like invoice factoring may allow you to get cash advances on your B2B invoices without going into debt, but it’s probably not ideal if you aren’t in a B2B sector or your customers don’t have good credit.
5. Get a Second Opinion
It probably goes without saying but talk to more than one company to ensure you’re being given the full picture and are being offered the best possible rates.
6. Crunch the Numbers
Sometimes options can sound really great at the onset and the numbers may look good, too. However, certain forms of funding can wind up being very costly over the lifetime of the loan and some will hook you into a long-term cycle of debt. Even if you feel good about a particular solution, work out exactly what you’re paying to leverage it and identify how you’ll pay off the balance, too.
7. Run a Reputation Check
Once you’ve got a lender and financing option selected, do a quick online search to see if others have had good experiences with both. Review sites and the Better Business Bureau can be helpful tools.
8. Build a Relationship
Once you’re established with a financing company and you find they’re treating you right, stick with them. They’ll be the best people to turn to when you need financing again later and can help you navigate issues as they arise.
Work with an Industry Financing Specialist at Interstate Capital
Interstate Capital is North America’s leading invoice factoring company. Over the years, we’ve developed specialized financing solutions for a number of industries, including transportation, manufacturing, services, staffing, and more, allowing companies to reach their goals without getting caught up in a debt cycle. Get an instant funding estimate today.