We’re not shy about what we do.
We fund entrepreneurs, business owners, and those seeking non-traditional financing with alternative lending solutions. We’ve been in the game a long time, so we know what to expect.
And we think you should too.
Before you need it.
If you’re seeking financing, have you pinned the corners on exactly what you need, exactly what your options are, and what to expect? If you haven’t, that’s probably because you have a life…one filled with day-to-day operating questions.
We grant you’re busy, and that’s why the Garrington team believes in stepping back, taking a deep breath, and getting a clear idea of how, and where you should start. Because knowing where to start means knowing what to expect when the forward momentum picks up. It’s also a confidence and sanity booster, a way to move forward that makes you a lot less likely to hesitate before seeking the funding your business really needs. Time is money, especially for a business owner. So let’s help you avoid wasting time hesitating. Let’s make sure you’re prepared.
Here are four steps you should know when it comes to seeking financing for business capital.
Determine Your Collateral and the Cost of Money
The first thing you should do when considering financing is to see if you have any collateral to use to back the loan.
You may have an expensive vehicle in the business’s name that you can use for an equity loan. You might have some property (which could include equipment, not just real estate) that you’re willing to use. Or you may have a large payday coming up with accounts receivable, those client invoices can be used to generate some quick financing.
Once you’ve explored options regarding your collateral, you will need to run some quick numbers to determine the cost of money. This is just how much it’s going to cost you to borrow the amount you’re looking to borrow.
Working capital loans aren’t as standard as an SBA-backed business loan, so they’re riskier to the lender. This means the cost will be a little higher.
You’ll need to know your estimated interest rate and term, but once you do, you can figure out a rough estimate of how much you’ll pay in total interest. Sometimes, you can even get estimates of this over the phone, which brings us to our next point.
Pick Up the Phone
Once you’ve made decisions regarding collateral and have an idea of your cost of money, you should pick up the phone and dial.
To find the best fit for you and your business, call around to different financing institutions and see what their options are.
What should you ask? Well, you’ll want to know things like if they offer the type of loan you’re looking for, what their rates and terms are for that type of loan, what the application and closing processes are like, and what documents they might need from you.
It’s also a good idea to ask if they have any promotions going on and for how long. Institutions will sometimes run promotions involving cash back, interest rate breaks, or term reductions to boost business during slow seasons.
Once you have a good list of this information from multiple institutions, it’s time for the next step.
Compare Financing Deals
Now that you have a good idea of your options, you should compare them.
Get out your list and set to work comparing rates, terms, types of loans, and any promos they have going on.
While comparing options, you may want to run your cost of money calculation again. Rates may be different than you thought for the types of loans you found, which will change your cost of money. At this point in the process, it probably won’t be enough to change your decision regarding financing but you always want to be aware of your numbers.
Make a Decision and Get Things Moving
Let’s review: you’ve made decisions regarding collateral and your estimated cost of money, you’ve called around to see what options are available and any promotions that are being offered, and you’ve compared those options against each other. Now what?
Now, you decide what option you’re going to use and get going. Once you’ve decided which option to use, you’ll want to start the application process. You should already know from your phone conversation with the institution you’ve chosen what this process is like and what documents they’ll need.
Now that you know the process for getting financing, you shouldn’t have any hesitation when your business needs some capital.
Of course, as you explore your options and consider partnering with a company with which you want to develop a long-term relationship, remember Garrington Capital would love to help.
Contact us here to discuss your financing options or to just ask us any questions you might have about the process.