5 Tips for Finding the Right Commercial Funding for Your Business

Starting your own business can bring you incredible fulfillment. Every year, there are about 17 million small businesses formed. 

However, one of the things that you will need to think about is funding a business.

If you are a small business owner that is concerned about their business funds, you should be looking into proper commercial funding. 

What do you need to do to secure commercial funds? What are the biggest things that you should look into? 

Here are five of our biggest tips to get commercial funding. 

1. Create a Business Plan 

If you are trying to make a pitch to lenders to give you funding, you are going to need something to present to them. One of the biggest things that you should prepare before one of these meetings is a business plan. 

What does a business plan do for you? It gives lenders an idea of what direction you want to take your business. 

Your business may barely exist at this stage and it still may be unclear to outside observers where it is going. A business plan can give people a vision as to where this business can go with the right management and the right funds. On top of this, lenders can get a better idea of how serious you are about this business. 

At the end of the day, lenders are putting their money on the line when they give funds to small business owners. They want to be reassured that they will see a good return on their investments. A solid business plan can help put some of these minds at ease. 

2. Build Your Credit 

Another thing that you should do before seeking commercial funds is building your personal credit. If you are new to the business world, you are likely looking at applying for a traditional loan or a personal loan. 

In both of these cases, lenders will be looking at your personal credit. Knowing this, you should review your credit history yourself before allowing lenders to look at this for you. 

To do this, you should have an idea of how your credit score is determined. Factors such as how much debt you currently have, how often you are late on payments, how many credit line accounts you have open, types of credit you have used, and more can determine your credit score. 

There are a few free tools out there that can help you find out your credit score. If you have a credit score under 700, you may have work to do before securing certain commercial funds. However, if you have an excellent credit score above 800, this can improve your odds. 

3. Know How Much Money You Need 

Depending on how much money you need, there may be alternative options for you to secure commercial funding. 

An example can be if you need funds that total less than $50,000. In that situation, you could consider using a microlender that gives out small business loans. 

Or, if the amount is even smaller than that, someone close to you such as a friend or family member may put up the money. 

However, if none of these options work, it still helps to know exactly how much you need. Doing so can definitely improve your odds of receiving commercial funding. 

It can do two things for you when meeting a lender. It prevents you from taking out more money than you need to have to pay back on interest. The second thing it does for you is it likely gives you a tighter explanation of where that money is going. 

If a lender sees that you can track the purpose of every dollar you need from this commercial funding, it is more likely they will approve your loan. 

4. Increase Your Revenue 

When it comes to securing funding, lenders want as much assurance as possible that your business is profitable. So, one thing you should focus on before asking for a large amount of funds is to increase your revenue. 

Sometimes, this can be difficult to do without receiving the funds that you want. However, if you are creative with marketing campaigns and reward customers for buying in bulk, it could give lenders a better idea of the potential of your business. 

Investors are very likely to ask you how much profit your business has made before you ask them for funding. This is especially the case if your business has been around for multiple years. Focus on improving this before asking for large funds. 

5. Invest Something Yourself 

Finally, lenders want to see that you are serious about your business as a small business owner. One way you can prove that you are fully committed to your business is by investing your own money into it. 

Lenders will understand if you are tapped out or do not have the funds necessary to grow the business the way it needs to. However, what they will not understand is you not putting your own money into the business first. 

You need to have some skin in the game. It can show lenders that you are committed and that they can trust you. 

Get Commercial Funding 

These are just five tips that you can use to try to secure commercial funding for your business. Put some of your own skin in the game, increase your revenue, and build solid credit before you ask somebody else for funds. 

Then, you need to create a solid business plan and determine exactly how much money you need from large lenders. If you do all of this, you should have plenty of business funds in no time. 

Are you ready to get started? Apply for business funding here.