Obtaining funding for your business can be difficult and frustrating. You need funding for your business, but the process of obtaining business financing is not always as straightforward as you might assume. A simple mistake or error on your application for funding or the documentation you provide with your application could result in a denial of your application for business financing.
Working with a South Carolina business lawyer can help avoid some mistakes that could delay business financing.
Five Things a South Carolina Business Attorney Wants You to Understand About Business Financing
1. Your credit score could affect business financing.
If you own a small business or you are obtaining a larger loan, the lender may require you to personally guarantee the debt. When you personally guarantee the debt, you agree to pay the loan from your personal funds if the company defaults on the loan.
Therefore, the lender checks your credit history when processing the application for business financing. If you have negative items on your credit report, it could impact your ability to obtain business financing.
2. Using a Post Office Box raises red flags just like incomplete applications.
A lender does not like to see a Post Office Box as a business address on a loan application. The lender wants to verify that you have a physical location for your business. You may use a PO Box for a mailing address, but you need to use your physical address for your business address. A PO Box could raise as many red flags as an incomplete application.
Incomplete applications make lenders nervous because they are not sure if you meant to leave something off the application to conceal a problem. Therefore, review your application for business financing several times to ensure every section of the form is complete and accurate.
3. You need to know how much money you need before approaching the lender.
You need to closely review your business needs to determine the exact amount you need for your company. You should meet with your accountant to obtain a realistic amount that your business needs right now.
The more money you seek, the closer the lender reviews your application for business financing. Many businesses ask for more money than they actually need, which can increase the risk of the application being denied.
4. You may qualify for financing through a government agency instead of a traditional bank.
Depending on your business, you may qualify for business financing through a government agency. If you are a Veteran, you may qualify for a VA business loan. Also, small businesses may find business financing through the Small Business Administration. Business financing through the SBA has many benefits that a traditional bank loan does not.
5. Write a compelling background statement.
Some lenders still require a statement about your business. A background statement can highlight your experience and resume in addition to the history of your business. You want to demonstrate your knowledge of the industry and your ability to successfully grow your business to increase profit. Successful growth and higher profits are a good indication you can repay the loan. In many cases, a background statement is part of your business plan, so make it a strong part of your business plan to highlight why you are a good candidate for business financing.
Do You Need Help From a South Carolina Business Lawyer?
Applying for business financing can be an overwhelming process. Contact our South Carolina business lawyers at Willcox, Buyck & Williams, P.A. Our South Carolina business attorneys can help you through each step of the process. We can also assist you with other business matters that you may encounter as you grow and expand your business.