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For any business owner seeking to grow, getting funding when they need it can be a sizable challenge. According to the 2018 Small Business Credit Survey, more than half of the participating businesses faced a financial challenge in the last 12 months. Most of these business owners predict an increase in revenue, so lack of working capital can hinder growth.

Here are the top mistakes that entrepreneurs and businesses of all sizes make, along with funding solutions on how to grow your business.

Failing to Thoroughly Prepare  

One of the biggest mistakes entrepreneurs can make is applying for funding before they are ready. Begin with a solid business plan and your vision for the company. Do you want to expand, and how fast do you anticipate growth? A solid business plan identifies your long-term goals and growth path. Aim to have a comprehensive list of your business financial statements, accounts receivables, and cash flow to current and past debts.

Not Knowing What You Need

Before you seek funding, you’ll want to know exactly what you need and why you need money for growth. Is it for new equipment to bring operations in-house? Is it to expand the team or open an additional office to service customers? Do you need a fallback plan or fund plans for expansion? The reason you might need additional funding will determine what type of financing is right for your business and your growth. For example, if your business secured an increase of purchase orders but you don’t have the resources to produce the orders, you’ll limit your ability to meet the additional costs of providing the services or product.

Dragging Your Feet to Secure Funding

You’ll want to gain funding sooner than when you really need it – growing a team, ramping up marketing, or adding physical space requires time and preparation. You’ll want to get ahead of the opportunity so that you can have your revenues increase rather than decline. If you need to boost cash flow for an unforeseen challenge, you’ll need to seek financing quickly so that you’re able to manage the unexpected.

Applying for the Wrong Type of Funding

When choosing the best funding option to grow your business, you’ll want to take into account how each option impacts your business. The key is to choose the funding solution that best fits your business’ immediate cash flow needs. Here are the top three ways businesses can fund their growth:

Commercial Loans

What it is: Incremental funding for a variety of business needs, such as location expansion, increasing inventory, building cash flow and financing new equipment. The ideal candidate is a seasoned business with a successful track record with a clean and profitable financial history. To learn more about commercial loans and how a commercial loan can help, contact the team of banking experts at The Bank of San Antonio, and we’ll set up a consultation to learn more. Email commercialbanking@thebankofsa.com.

U.S. Small Business Administration (SBA) Loan

What it is: A loan focused on growing businesses. Banks provide the funding and the SBA provides a guarantee. With an SBA loan, you could have a lower down payment and a longer term amortization. The SBA guarantees 7(a) term loans up to 25 years for purposes ranging from working capital to the purchase or refinance of fixed assets and eligible owner-occupied commercial property. To learn more about if an SBA loan is a fit for your business, feel free to reach out to The Bank of San Antonio’s SBA advisor, Maitland Rutledge at maitland.rutledge@thebankofsa.com.

Receivable Financing

What it is: A funding option that allows businesses to use their accounts receivables or purchase orders to generate cash on hand. When you partner with Texas Express Funding, a receivable financing company, you sell your business’ outstanding invoices and Texas Express Funding then quickly advances the working capital needed against your business’ unpaid accounts receivable.

Texas Express Funding, part of The Bank of San Antonio, is a funding option that bridges the gap between performing work and getting paid for it. It’s an alternative to traditional loans, and turns invoices into cash flow. If your business is seeking cash solutions to fund growth, learn more at txexpressfunding.com, or get in touch with Wayne Schroeder at Wayne.Schroeder@txexpressfunding.com for a no-cost quote and consultation.

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Angelica Palm

Angelica Palm leads the marketing and digital strategy at Texas Partners Bank focusing on sharing practical advice on how entrepreneurs can build, open and grow their business. She is a native San Antonio...