When companies decide it is time to begin expanding their business, some are unsure how to receive funding to make it happen. As the economy recovers, businesses are likely to project growth in their future, making business budgeting software crucial for predicting how their plans can translate into reality. Securing financing is not only essential to pay for increased operating and labor costs, it's also a sign that businesses are ready to advance their company to the next level. BMO Harris Bank offers some tips to obtain business financing in Inc. Magazine.
Before business owners research the best financing options for their particular company, they should create a business plan. This document is scrutinized by loan officers and investors alike during the process of determining whether businesses can succeed. The plan should illustrate a business owner's vision for the long-term success of the company as well as how to get there.
"The reality is that most businesses do not have a plan to get themselves ready for the capital they're going to need as they grow," said Patricia Greene, chair of entrepreneurial studies at Babson College, according to BMO Harris. "The need for financing dawns on them, and they have to scramble to get the right business plan in place."
Small business lending reaches six-year high
After mapping out the goals and measures of success of their business, owners can determine how to pay for costs through exploring their financing options. These can include short-term financing or other types of loans for capital spending and purchasing equipment or property. More businesses are finding success in receiving loans to fund their company for expansion and growth than in the past.
Small business loan activity reached its highest level in almost six years, indicating business optimism is picking up, Reuters reported. In the Thomson Reuters/PayNet Small Business Lending Index, lending jumped 11 percent in July to 11.7 from 105.7 in June. The Federal Reserve Bank has offered short-term financing at rates at almost zero percent since December 2008, giving small businesses a needed boost after the start of the recession. Lending for small businesses was better in June than previously indicated, revised from 104.8 to 105.7.
Since companies have to first create a business plan to obtain financing, they can use budgeting software to help project figures relevant to their planning. By forecasting future performance levels, business owners will be more confident in convincing banks and investors that their company is worth financing.