Get to Know Your Business Financing Options
Navigating the different business financing options can be confusing. There are over 44 different types! We review the most common choices, so you can find the best fit for your business needs. Whichever route you go, building strong business credit and making sure your personal credit is in shape will let you access the right amount of capital at the best rates. Click on any business financing option for a deeper dive into its pros and cons.
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Business financing approval factors
Approval for business financing goes beyond credit scores. Lenders may ask to see:
- Personal tax returns
- Business tax returns
- Last ~6 months of business bank statements
- Business plan
- Financial projections
Having these documents before you start your financing search will make the process smoother.
Determining how much business financing you need
A lender may also ask for a detailed list of why you need the funding and how it will be used. You’ll want this list to be specific. Are you seeking funds for expansion? Are you refinancing a loan? Are you purchasing assets in anticipation of busy season?
While it’s tempting to seek as much money as you can get your hands on, you only want to ask for as much as you need. Create a detailed list of the items you’ll purchase and the estimated cost. Will you be hiring employees? Document the projected cost to hire and how much the employee will be paid. Are you purchasing equipment? Research what equipment and an average cost to acquire that equipment. Figuring out how much you need—and how long of a repayment term you need—will be easier after you’ve updated your financial projections to estimate how much you need and when you’ll be able to pay it back.
10 Types of Business Financing: 10 Minute Overview
This was originally published in September, 2015 and updated on June 1, 2018.