Building Your 10 Piece Funding Kit

Successful business owners are master planners. They know how to prepare for anything that comes up forcing a pivot in how things are done. When cash flow issues or new opportunities come up, timing is very important. COVID-19 reinforced the need to expect the unexpected.

Having a complete funding kit ready is something that is under the complete control of the business owner. Lenders commonly ask for a basic set of documents in most deals and having them as up to date as possible and ready makes it easier to identify the right lending sources and reducing the amount of time it takes to get a funding decision.

Keeping these items updated and ready empowers companies to quickly apply for funds to grow, expand, or improve their cash flow. Faster decisions favor business owners and lenders. These include,

1. A completed loan application: This will typically include personal and business financial information, as well as details about the loan you are seeking. Since lenders generally have forms specific to them, a strong executive summary from the business plan details should be ready to share with potential funders.
2. A detailed business plan: This should outline your business objectives, total addressable market, sales/marketing strategies, operations, systems, competitive analysis, key team members, and financial projections.
3. Financial statements: These may include balance sheets, income statements, and cash flow statements for your business. Keeping year-to-date statements ready following the most recent month's close out are always good. Depending on the type of loan you are seeking, other key reports to keep current include accounts receivable and payable aging schedules and revenue by customer reports.
4. Tax returns: Lenders may request copies of your personal and business tax returns to assess your financial situation and the health of your business. Company guarantors with greater than a 20% ownership share in the company are asked to provide returns. The most recent three years filed are required for these reviews.
5. Collateral: You may need to pledge collateral, such as real estate, equipment, or accounts receivable to secure the loan. Value of business assets and revenue streams are the primary things considered. Personal assets of company guarantors come into play for startup companies or those that do not own hard assets.
6. Personal and business credit reports: Lenders will typically review your credit history to assess your creditworthiness and the risk of lending to you.
7. Proof of income: You may need to provide documentation of your income, such as pay stubs or bank statements, to demonstrate your ability to repay the loan.
8. Legal documents: Depending on the type of loan and the terms of the loan agreement, you may need to provide organization documents for the company, such as, articles of incorporation/organization, bylaws, and operating agreements. Other legal documents such as purchase and sale agreements, property deeds, leases, letters of intent, or contracts are necessary for evaluating the deal.
9. Personal financial statements: This document provides an overview of your personal financial situation, including your assets, liabilities, and net worth. Lenders want to see the wherewithal for all company guarantors with a 20% or greater ownership stake in the company.
10. Resumes: Lenders may request resumes, experience statements, or CV's for the key members of your business to assess their qualifications and experience. Demonstrated success managing similar projects and investments can often lead to more favorable loan terms.

Your package tells a story and demonstrates you are a great candidate for our lending partners. I'm here to help make sure you put your best foot forward with the best source for your project. Each deal and every borrower is different. Our goal is to create win-win-win relationships that benefit our lenders and clients. Their success is our success!