Get your business ready for the next step
Five tips before you ask for a business loan
Last year I attended a forum through ASSETS, a local community and economic development non-profit in Lancaster, Pennsylvania, that focused on how women entrepreneurs and leaders can collaborate and innovate in ways that build stronger, more equitable communities. I left feeling inspired and empowered.
Working in Everence Federal Credit Union’s business loan department has given me a small window into the many rewards and challenges facing entrepreneurs. According to a report put out by SCORE in Spring 2018 called “The Megaphone of Main Street: Women’s Entrepreneurship,” “Women owned businesses currently make up 39 percent of the 28 million small businesses operating across the United States, and this rate continues to rise.”
When it comes to owning a business, accessing capital can help businesses grow. Many entrepreneurs face challenges with financing and research shows that women are less likely to seek and obtain financing than men.
As you develop your business, here are five things that can strengthen any financing requests you make and improve overall financial wellness of your organization:
- Check your personal credit history
It’s important to pull your credit report annually to verify that creditors are recording your payment history accurately and that there aren’t any surprises. Any errors should be corrected prior to applying for credit. A clean credit history is a good place to start!
- Ensure accurate financial bookkeeping
Make sure you keep good financial records and/or have a reputable accountant to do so. Most financial institutions require three years of business and personal financial statements in order to obtain financing.
- Create and maintain a business plan
Not every business will need to include a business plan to apply for financing, but it is especially useful for newer businesses and startups who may not have an established financial history. Developing your business plan shows you have carefully thought through the business strategy.
- Establish a good relationship with a financial institution
A financial institution is typically much more willing to take a risk on an existing member that has had a well-established, positive relationship, even one that is not related to lending. Get to know the branch staff and local business lenders if possible.
- Get support from mentors and other networks
Local SCORE chapters, professional networks, social media platforms and business mentors are integral for both start-ups and the ongoing sustainability of a community’s small businesses and the well-being of its owners.
For those of us who, like me, aren’t entrepreneurs and don’t plan on becoming one anytime soon (or ever), we can do our part to support local business friends and community. It may seem obvious, albeit sometimes hard - buy local whenever possible.
Want to take that challenge further to support other women entrepreneurs? Shop women-owned.
And when buying local or women-owned is not an option, another way to ensure your dollars bring a positive social return is to look for certified B Corporations. These are companies across the country who have committed to exemplifying values related to people, planet and profits.
Whether you own a business or not, let’s continue to show up for each other, our families, and our communities. In doing so we have the power to positively impact social, environmental, and economic change.