Do You Need Funds for Your Business?
How many entrepreneurs around the world wish to raise funds for their business, their startup, or to continue supporting a business that is producing great results but is in financial difficulty?
Many more than we think.
But how many step beyond national borders and realize that they can take advantage of the world?
Almost none.
And how many know that the USA is the best place to proceed without being American citizens?
Even fewer.
That’s why it’s important and essential to be aware that in the USA, we can start a company, open bank accounts, initiate our credit system, and obtain funds and financing that may seem entirely impossible in any other nation.
To do this, it’s important to understand the credit scores and reports of the star-spangled banking system.
Let’s start with the definition of a credit score.
It is a numerical representation of an individual’s or company’s creditworthiness, primarily based on credit history, as documented in credit reports.
Here are the main credit agencies.
In the United States, the three main agencies are Experian, Equifax, and TransUnion.
They collect and maintain credit information.
What are the factors that influence the Credit Score?
Payment history, credit utilization, length of credit history, types of credit in use, and recent credit inquiries are some of the key elements.
Let’s also see how business credit scores work.
The measurement is separate from personal credit.
They measure a company’s creditworthiness. Factors considered include payment history to suppliers, credit utilization, company size, industry risk, and financial stability.
Here’s how to start building the structure to become financeable.
1 – Building Creditworthiness
Establishing Business Credit: Open business credit accounts and ensure they are reported to credit agencies. At this point, simply maintaining good Credit practices is necessary. This involves paying bills on time, keeping credit utilization low, and avoiding excessive credit applications.
The same applies to personal credit.
The necessary time ranges from 6 to, rarely, 12 months.
2 – Understanding the Different Financing Options
There are various ways to request funds, loans, mortgages, and financing.
Loans: Traditional bank loans, Small Business Administration (SBA) loans, microloans.
Investor Financing: Venture capital, angel investors, crowdfunding.
Grants: Some governmental and private organizations offer grants, especially for innovative, social, or research projects.
Hard money lending: Private companies that lend money to businesses (as well as individuals).
3 – Preparing to Apply for Financing
Business Plan: A solid business plan is essential.
It should detail the business model, market analysis, financial projections, and growth strategy.
Financial Statements: Balance sheets, income statements, and cash flows are necessary to demonstrate financial health.
Credit Reports: Obtain and review business and personal credit reports.
4 – Navigating the Application Process
Documentation: Gather all necessary documents, including business licenses, tax returns, and legal documents.
Lenders’ Criteria: Understand what lenders look for, such as profitability, strong cash flow, and collateral.
Application: Be accurate and honest in the application. Errors or omissions can lead to rejections.
5 – Considering Alternative Funding Sources
Online Lenders: For quick financing, albeit often at higher interest rates.
Peer-to-Peer Loans: Platforms where individuals lend to businesses.
6 – Leveraging Government Resources
SBA: Offers various loan programs for small businesses, including 7(a) and 504 loans. State and Local Programs: Many states and local governments offer loan programs or grants for small businesses.
7- Managing Finances After Financing
Repayment Strategy: Plan for timely loan repayments to avoid penalties and build creditworthiness.
Financial Management: Regular review of financial statements and budget planning are crucial for sustainability.
The beauty of the American system is that it is built around simplicity, efficiency, and a willingness to help businesses with interesting projects.
No one will ever ask you for a guarantee on a fifth of your father’s salary or the pledging of company funds invested in government bonds.
Once again, the USA is the land of great opportunities.
Final Note.
Just as the USA has a fast system for disbursing money and supporting businesses, they also have a fast and powerful legal system for recovering overdue payments, up to the risk of criminal charges where necessary.
So, handle with care!
Author: Koan Bogiatto
Koan Bogiatto has explored approximately 123 countries around the world and, after living in Italy, Spain and then in the USA, Florida. He is the only Italian to have received the prestigious Green Card for Extraordinary Achievement and Outstanding Individual from the U.S. Government, in the fields of education and coaching. In the past Koan has served as a consultant for eBay, INA Assitalia, Wind, 21st Century, Alviero Martini, Politecnico di Torino, IUM Monaco, Sai, De’Longhi Group, and Il Sole 24 Ore. “He is the founder of several successful companies in various fields, including coaching, education, real estate, and cryptocurrency trading, to name a few.”
