If you’re looking to obtain long-term loans, SBA loans, or any quick financing for your accounting business, here’s how you can get a hold of the money you need:
1. Figure out what type of business loan you need
Start by examining what your specific business needs are. Are you looking to expand your office space? Invest in specialized technology? Maybe you’re looking for a financial cushion to ease the blow of slower seasons? By identifying exactly what you need capital for – as well as the amount you need and when you need it by – you can then make the most informed decision as to which loan solution makes the most sense to apply for. You should also think about whether or not you’ll need spending flexibility.
Like many other businesses, accountants and bookkeepers have two choices when it comes to obtaining financing – banks and alternative lenders. Banks usually have stringent requirements and are more reluctant when it comes to granting loans to small businesses. Alternative lenders may be a better choice for accounting firms that lack strong financials and need quick funding.
2. Gather your financials and review them
Once you’ve decided on the type of loan that best meets your business’ needs, it’s time for you to gather your business’ financial documents. You need to know where you stand financially so you know what loan products you can afford. As an accountant, your expertise in the financial analysis will certainly come in handy during this part of the process.
Start by looking at how long you’ve been in business. Go over your annual revenue, monthly profit, and business credit score. If you’re aiming to apply for a business loan from any traditional lender, you need to prove that your accounting firm is doing well and that it can meet the required payment amounts. The better your numbers are, the higher your chances are to qualify for better term loans.
3. Collect all the documents the lenders need
After you’ve finished reviewing your firm’s financial documents, and you’re confident that you can afford the loan you want, the next step is to gather the documents needed for the application. The lender may provide a list of the needed requirements through their website, but not all do. If they don’t, you should call the lenders and ask what documents they require for a business loan.
In general, lenders may require you to submit the following documents:
• Personal identification
• Business licenses and permits
• At least three months of personal and business financial statements
• Business plan
• Two years of tax returns
• Balance sheets
It’s worth noting that banks may require more documentation like proof of ownership, business lease, or business affiliations. Alternative lenders may require less. In some cases, they only need your personal and business financial statements. The requirements will vary from lender to lender, but it’s better to come prepared.
4. Fill out the loan application form and submit
Lastly, fill out an application and submit it along with the required documents. Then you just have to wait for the lender’s approval. Bank loan applications could take 60 to 90 days to be approved, but alternative lenders can approve your loan within 24 hours after submitting your application. If you’re in a time crunch and need to address a cash flow gap quickly, the latter would be a much better choice.
Being an accountant gives you an edge when it comes to business loan applications. Your extensive knowledge on the matter will help you gauge your firm’s financial standing, thereby making it easier to choose what type of loans you can afford and apply for.
Think about your business’s current needs. From there, identify the type of loans that will address those needs, then study your financial documents. Once you have the loan, make sure to meet the required repayments on time. Late payments and defaults can hurt your business credit score and can ruin your chances of applying for better loan terms in the future. Create a strong repayment strategy and use the business loan to run and grow your accounting firm successfully.