Effective communication and a good understanding of your business can significantly improve the chances of securing the financing you need. Many entrepreneurs struggle with this aspect, particularly when seeking working capital. From choosing the wrong type of funding to not engaging with lenders properly, there are many pitfalls. The experts at Capitally Finance Corp. have shared some fundamental recommendations to ensure a successful dialogue with any type of lender—be it a bank, a leasing company, or an alternative financing provider like Capitally.
1. Maintain Clear Communication:
‘Ghosting’ a lender can severely damage the chances of securing funding. If there is a delay in gathering necessary documents, it’s essential to inform the lender. Found another financing solution? Let them know. If their policies or terms don’t align with your business needs, politely explain why. This level of transparency can help lenders understand areas where they can improve, helps the relationships to remain professional and constructive, and ensures you don’t “burn any bridges” you may need to cross in the coming years.
2. Be Prompt and Responsive:
Timeliness is a critical aspect of communication, especially in the financing world. Lenders often manage multiple files, and delayed responses can slow down the entire process. Providing requested information promptly keeps the application process moving smoothly and helps maintain a positive standing with the lender.
3. Plan Ahead for Cash Flow Needs:
A cash flow forecast is a fundamental tool for any business seeking financing. It provides a clear picture of when a business might face a cash crunch and need additional funding. Relying on last-minute financing requests or expecting a “miracle” solution is not a sustainable strategy. Capitally, for instance, recommends planning for a three-week timeframe from the application submission to funding. While quicker turnarounds are possible, having a realistic timeline helps both the lender and the borrower manage expectations and avoid unnecessary stress.
4. Understand Your Business Inside Out:
Knowing your financials and business fundamentals is crucial when approaching any lender. Answers like “I don’t know how much money we’re making,” “We don’t have a financial projection,” or “We don’t have accountant-prepared statements” can severely hinder the approval process. Entrepreneurs need to be well-versed in their business operations, financial health, and market positioning to build lender confidence.
Practicing good communication and maintaining a solid understanding of the business can significantly increase the likelihood of securing the working capital needed to support growth. Companies like Capitally, which uses on-the-ground teams to assess situations and provide capital based on current invoices, upcoming growth, and other real-world factors, prioritize these basics to make the funding process as seamless as possible.
Effective communication and preparation can make the difference between a successful funding application and a missed opportunity. If you have any questions about alternative funding sources, visit capitally.ca to start a conversation with their team.
