“A rising tide lifts all boats”

Being a business owner today costs a lot: personally, professionally and monetarily.

Personally, you have to be courageous. You’re fulfilling that internal need for more by being adventurous enough to dare to try something on your own. Leaving the comforts of an assured paycheck to venture down a path you will shape along the way.

Professionally, it is wrapped up in the sum of all your past experiences that have led you to take what you have learned and turn it into a marketable and hopefully profitable endeavor.

Money. Some say it’s the root of all evil. Some say it is king. Others say it is essential to success. But in business, it is the tie that binds us. It is the number one need for all businesses of all sizes in all industries. It isn’t the need that differentiates us, it’s access to it or lack thereof that does.

Small business owners inevitably run into issues when they are seeking lending options. Couple that with a business that functions more than 60 percent within the public sector, working predominantly within the federal marketplace, and you have more hurdles to overcome in accessing the funds you need to achieve the vision of your business.

The playing field is leveling out between traditional lending from the bank and some of the more relative alternative solutions to access and pricing. It used to be that access to loans and lines of credit for your business were exponentially lower cost with a bank. Now, year after year, and most recently, quarter after quarter, with rate increases by the Feds, we have seen the pendulum swing back toward the middle in terms of cost. Banks used to be able to tout 3 to 5 percent interest. Now with prime at 8.5 percent and lending restrictions imposed deep within the banking industry across the board, alternative lending solutions are seeing a surge that may not stop.

Collateral in traditional lending to businesses is heavily reliant on receivables. The bank wants to see that you have robust and consistent money flowing in, so if you ask to borrow, the investment is protected by your ability to pay it back. Banks have never been known to lend on a bet. Due to federal regulations and covenants, they have always protected their interests from industries that present a more risky environment–like government contracting. The ebb and flow of the procurement process doesn’t promote confidence in a traditional lending environment.

But don’t be discouraged, there are still banks that are lending to government contractors. The key is having financial documentation that supports the ability to put your business into the underwriting process. Businesses also need to be informed on how well they are performing from a cashflow perspective in terms of billing going out and payments coming in. No reputable lender can give you money simply because you have won an award or because you say you are profitable. You have to prove it. And that is done through financial reporting, so be sure yours accurately reflects where you are today and where you are going.

For more tips on how you can prepare to fund your growth, you can reach out to our team anytime for a free consultation.