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Let’s address the elephant in the room: COVID-19.  To say that 2020 has been brutal would be a gross understatement. I find it difficult to believe that anybody imagined or even prepared for a worldwide pandemic like the one we have all been faced with.  We often hear of the importance to save for any unforeseen expense or emergency, but if anything 2020 has redefined the meaning of “emergency”.  Yes, many business owners proactively have a “rainy-day” fund and in some cases may even have reserves to last 3-6 months, but we are well past both of those scenarios.

Below are the top ten methods you can use to keep your business afloat, and weather the storm.  Some focus on improving your business during your downtime, and others offer strategies to minimize costs and eliminate unnecessary expenses. Choose a few that are best for your business and implement them.

1- Focus on What you Can Control, not what you Can’t

Transparency into the financial state of your business is an absolute must! The application process will be more seamless if you take the time to keep your financial, accounting, and tax records up-to-date and accurate. Make sure your business has a system in place to keep everything organized. You might even consider hiring an accountant or a bookkeeper.

Many small business owners attempt to save money by self-financing and handling their own bookkeeping. However, this too frequently leads to owners ignoring the books when they get too busy. A good accountant will also help the owner to look at the books without emotion when making tough decisions

2. Maintain good credit.

In addition to keeping track of your documents, make sure to pay your bills on time. You’ll have to meet some type of credit criteria, so it’s important to have the best credit possible. Avoid foreclosures, bankruptcies, charge-offs and late payments. While banks have different credit requirements, good credit is an essential part of the process. Although Mint Financial Group has flexible credit requirements on our funding programs, we like to remind all of our clients that the owner’s personal credit always plays a factor in the decision-making process.

This also means you should apply for one loan at a time! Lenders often require a credit report that can mildly impact your credit. One of the benefits of applying for a business loan with Mint is that we only perform a “soft pull” which will not appear as a hard inquiry on your credit. Applying for too many loans at once could really hurt your chances of obtaining any financing.

3. Know which type of loan you need.

Understanding the type of loan that works best for your business is very important and will save you a ton of time. Applying for a highly scrutinized loan like a Small Business Administration (SBA) loan when all you need is a line of credit will greatly slow down the process and possibly even end in a denial.

The biggest misconceptions based around small business lending are that it is hard to get approved, expensive, and takes too long to get done. The truth is that it all depends on what program the business owner is applying for. If a business owner is looking for an SBA loan they have higher standards and take 30 to 90 days to complete. They will ask for much more documentation as well. If a business owner applies for a line of credit or a short-term loan the requirements and documents needed are less stringent.”

4. Demonstrate sufficient cash flow.

If you’re an existing business, banks want to see that you have demonstrated cash flow sufficient to make your monthly loan payments, be prepared to supply some business bank statements in order to verify your revenue. They’ll also do this analysis by looking at your past tax returns and existing debt. How you manage your cash flow is important as it will allow the lender to determine your likelihood of repaying the loan in a timely manner. It also plays a significant factor in the overall risk assessment of your loan application.

5. Understand that every bank is different.

There are pros and cons that come along with every lending institution. Large banks are often preoccupied with bigger clients because they have larger portfolios and quotas to manage. While they might be willing to finance your business, you could potentially get more attention or more favorable terms at a smaller bank or boutique funder such as Mint Financial Group.

Large banks may have the significant staff to facilitate small business loans, however, these same large banks frequently are bound by high qualifiers which may exclude small businesses. Boutique lending firms, on the other hand, are usually built upon personal relationships. Having a dedicated funding specialist, for example, may provide some flexibility to place a story around your loan request. Building a relationship with your funding specialist can make all the difference.

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