The Secret Weapon That Can Help You Get a Better Business Loan
Carolyn Walters’ small business clients know they can ask her more than just tax questions. While “tax is the heart and soul of what I do,” she says as the owner of Financial Solutions Accounting and Tax in Greensboro, NC, she has expanded her business to offer a variety of different services.
“The challenges that small businesses have usually end up in my lap one way or another,” she says with a chuckle.
Walters wants to be the first resource her small business clients turn to when they have questions about small business financing and credit. “Quite a few of my clients are looking at ways to expand and grow their businesses, and that takes money,” she says.
Some of them have the funds they need to grow, but others will need to borrow. And even those who don’t have to borrow may find it advantageous to do so. “If you can get credit at low rates and still maintain the integrity of the business goals you are trying to accomplish, it may make sense,” Walters says.
Research by the Federal Reserve has found that accountants are among the top sources of financing advice for small business owners. It has also found that for many entrepreneurs, searching and applying for funding is a frustrating process that takes many hours out of an often already full schedule. In fact, around one in five entrepreneurs are so discouraged about the process that they don’t even apply.
Over the past several months, through Nav’s Accounting Professional Advisor Program, I’ve worked with hundreds of accounting professionals like Walters who are eager to help their clients with their business financing challenges. I want to make sure entrepreneurs know they may have a secret weapon in their contacts list—their accounting professional―who can help make the financing process smoother and help improve their chances for success.
Ask yours if they can help you with the following:
1. Crunch the Numbers
Maybe you’re a creative type who shies away from “numbers.” Or maybe you’re too busy to add another item to your to-do list. Why not enlist your accounting professional’s help to prepare the financial information you’ll need to apply for business financing? Here are some recommended documents your accountant may help you gather or prepare:
- Tax returns (two years’ business returns if available, one year personal)
- Business bank statements
- Profit and loss statement
- Pro forma and business plan (bank loans)
Each lender may have slightly different documentation requirements, of course, and some may want beyond what’s listed here, but having this basic information ready to go makes things a lot easier when you start shopping. In addition, you’ll want to make sure you know your personal and business credit scores. Some lenders will look at one or the other, while other lenders may take both into account. (You can check your personal credit scores and your business credit profile for free on Nav.)
Most importantly, your advisor can help you prepare for funding before you need it. “Business owners tend to be more reactive to business cycle challenges and rarely take a proactive approach to planning, awareness, and preparation,” observes Ron Sass, a CPA, former IRS Senior Revenue Agent, and founder of Theeonus LLC, a business consulting firm. “The lack of preparedness results in higher costs and personal stress, both of which are detrimental,” he adds.
2. Ask the Right Questions
The most common answer when a business owner is asked how much financing he or she needs is “As much as I can get.” Unfortunately that’s not an answer a lender likes to hear.