If your business is up and running but needs more capital, you can rely on familiar options. However, funding an existing business still requires slightly different preparation.
Content
Prepare to request more funding
Anyone who gives you funds wants to feel confident that their investment will pay off. Prepare a business case and financial statements to convince lenders, crowdfunders, or investors to fund your small business.
Make your business case
You’ll need to make a solid business case for more funding. Produce a short statement with the total requested amount and specific reasons for it.
Maybe your business is cyclical — like construction or education — and could use funding to get through expected slow periods. Or maybe it needs capital to invest in new machinery or launch a product line. Whatever the reason, update yourbusiness planto include this stage of funding.
A business case should give assurances that new funds won’t be mismanaged. Include descriptions of your management team to highlight their skills and expertise.
Prepare financial statements
Display that your business is doing well with financial history statements. Show how your business has grown by reporting revenue, expenses, and profit over time. If you don’t have a history of positive growth, explain why more funding will allow you turn it around.
Prove you’re financially responsible with a business credit report. Review your business credit file to make sure it’s accurate before sharing it.
Determine how much your company is worth today by performing abusiness valuation. This is the same process you’d go through if you were planning tosell your business. Valuation methods vary, but you can do a self-evaluation or seek out aqualified business appraiser.
Show how your business will grow in the future with a forecast. Your business forecast can be based on intuitive judgement, quantitative analysis, or both. Show your projected revenue and expenses, and clearly explain how you arrived at those estimations.
Connect with a local SBA resource center
Meet with local experts, counselors, and business mentors at alocal SBA resource centerif you need help preparing your business to get more funding.
Choose your funding source
Get loans, credit, or crowdfunding
Additional funding options for existing business are similar tofunding options for a new business.You’ll have the same general set of options, which include small business loans, credit cards, and crowdfunding.
Existing businesses have the advantage of an established financial history with credit reports,business bank accounts, and internal financial reports. Lenders, investors, and even crowdfunders can use that information when they decide whether to fund your business.
Sell ownership in your company
If you decide to sell an ownership stake of your company, yourbusiness structurewill determine your options. Remember, whenever you sell ownership in your company, you dilute the ownership of current owners.
An LLC or a partnership can accept new members and give them a percentage of ownership in exchange for a capital investment. Just make sure you comply with your articles of organization and operating or partnership agreements. Thennotify your stateas necessary. Some states may require your LLC to be dissolved and re-formed with new membership.
Corporations can sell shares of the company, so long as it’s done in compliance with your articles of incorporation and bylaws. Again,notify your stateif necessary.
Use Lender Match to find lenders who offer SBA-guaranteed loans
If you have trouble getting a traditional business loan, look intoSBA-guaranteed loans. When a bank thinks your business is too risky to lend money, SBA may guarantee your loan — that way the bank has less risk and could be more willing.
UseLender Matchto find lenders who offer SBA-guaranteed loans
