A very successful business owner and mentor of mine used to say, “The path of least resistance is what makes men and rivers crooked.” In your business, the path of least resistance is using a credit card or some other form of borrowing. Before you know it, the amount of debt has piled up, the interest you pay on the debt is significant, sometimes 18-24 percent, and you begin to question whether borrowing the money was a good idea or not.
Businesses that took out debt a year ago or even 3 years ago may find themselves in a situation where the cash flow used for the loan or the purpose of the loan has changed. Many businesses find themselves in a situation where a refinance makes sense because they either want to reduce their loan payments to use cash flow for growth or they may want to increase the loan amount because their business is expanding. Businesses are dynamic, but a loan repayment is usually static due to the fixed term of the loan. A floating rate loan is the exception.
Securing financing for your business can be challenging. Whether you're borrowing money for the first time to start your business or you're looking for a loan to grow, the lending criteria banks use can be rigorous. It's important to know what are the must haves that a bank is looking for to approve your loan. Here are the top 4: