Having all financials well documented and prepped up will help you along many hurdles in business. It will give you an accurate view of how your business is thriving, and help you get the best deals in financing. Take a look at the following required documents that you should have, which can be helpful when you’re getting external funding or investments.
1. Profit and Loss Statement
Also known as an Income Statement, this document is the most important thing that you should have in your records. A Profit and Loss Statement will tell you where your revenue comes from. It will also show where you spend your money on and what are the most profitable aspects of your business.
The income statement will reveal your profits in different sources and how much you spend for recurring expenses. This will be essential in making projections for your costs and profits, along with knowing performance trends in different time periods. You can use your income statement to compare the sales or profits you have last year.
You have to check your income statement at least once a month. You might see something unexpected from the actual data you have at certain periods.
If you’re going to apply for a business loan, an income statement will be an essential part of your Business Financial Statement.
2. Cash Flow Statement
A cash flow statement involves 3 parts. These are the following:
Operating Activities: This section summarises the amount of money flowing in and out of your business. These include sales earned and expenses incurred in daily operations. Any changes that revolve around accounts receivable, inventory, or actual business cash are reflected in the Operating Activities section. You’ll see how much your business is spending on income tax payments, employee wages, interest payments, and money spent on vendors or suppliers.
Investing Activities: The second part of the cash flow statement features investing activities such as buying and selling of business assets.
Financing Activities: This shows how much money is flowing in and out of your business, which may involve debt or equity activities.
3. Balance Sheet
A Balance Sheet is the third document that will make up your Business Financial Statement. It tells you how much your business has and owes. It will mainly show the following:
Assets: These show how much wealth your business has. It includes bank accounts, property, equipment, computers, and etc.
Liabilities: These include what your business owes, such as credit cards, small business loans, overdrafts, or other debts.
Adding your assets and liabilities gives you the total equity of your business. The goal is to have more assets than liabilities, and make sure that you’ll grow your income so that the difference between the two increases.
You can use your balance sheet to compare short-term liabilities and short-term assets. It will help you determine if you have enough liquid assets (or assets that can be easily converted to cash) to settle upcoming payments.
4. Accounts Receivable Ageing
A lot of business revolve around sending invoices to customers. Businesses who use invoices have to make sure that customers pay on time so that they can cover business expenses.
An Accounts Receivable Ageing Report shows the time frame from when the invoice was sent to when it was paid by the customer. You can identify which customers pay on time, who frequently pays late, or how much money your customers owe you.
In case that your customers pay late, you can opt for Invoice Financing. You submit the invoices to a financing house, and they’ll give you payment in advance. The unpaid invoice serves as security for the loan. The lender advances you a percentage of the total invoice amount – usually 70% to 90% of it. The lender may also charge a weekly fee, because they will take care of collecting the invoice. You can use the advance to cover business expenses. You get the funds once the invoice has been paid by the customer, minus fees and charges.
Get Your Documents Updated to Avail of the Best Financing
Get a good overview of your business financial documents first before applying for a small business loan. You’ll be more prepared as to what a lender would ask or require when you have all your documents well updated. You’ll also know what funding options are available for you once you get a good grasp on the financial health of your business.
Here at Bizzloans, we can help you take away all the hassle in applying for business loans. We match you with the right lender and financial product for your business needs. Comparing lenders won’t affect your credit score, and you can get funding within 24 hours. Get a free quote below to start you way to smart financing.
No Security Necessary
The main thing that makes unsecured loans more attractive than secured loans is the fact that they’re no security. It might be an obvious thing to highlight but it clearly matters. You won’t be weighed down by the pressure and worry associated with having collateral hanging over you and potentially being lost to the lender if you fail to make repayments. If you don’t want to take the risk of losing your collateral, you just need to opt for an unsecured loan instead. It’ll allow you to avoid any risks associated with secured loans.
Build Up Your Future Credit Score
By taking out a loan and then paying it off on time, you will help to build or repair your credit score. Many companies are dealing with poor credit, but by taking out an unsecured loan with a lender that is happy to lend to companies with poor credit, you can start to turn the situation around. Meeting regular repayment deadlines shows the world that you are able to stay on top of your financial obligations and pay off the money you owe, and that will only help your business going forward.
Why Your Business Might Want to Take Out an Unsecured Loan
There are lots of reasons why your business might take out a loan, as well as reasons not to. You shouldn’t take out a loan to cover running costs, but if you want to do other things, such as the things we’re going to discuss below, an unsecured business loan can be ideal.
Grow and Expand
Most entrepreneurs have big plans for their businesses. They want to ensure that their business is one that’s got a bright future. So if the time has come for you to grow and expand your business, you should think about whether taking out an unsecured business loan might help you to do that. It could be exactly what you need to get your business moving in the right kind of direction. It takes money and investment to grow your business and a loan might just be the ideal solution.
Take on More Clients and Customers
If your business doesn’t currently have the resources to deal with more customers and clients, it could be time to scale things up. However, that’s something that costs money, whether you like or not. Taking out an unsecured business loan could help improve the resources your business has available. It could mean hiring more people so that you have the human resources needed to take on more clients and make more customers happy. The loan will cover the costs associated with doing that and it’ll pay for itself if you’re able to improve your profits as a result.
Fund a New Marketing Campaign
Maybe it’s the case that attracting new customers to your business is where your problems lie. It’s not always easy to get your voice heard and make people aware of why they should be taking notice of your business. An unsecured loan could be used to fund a new marketing campaign that gets your message out there and makes more people interested in your business and what it’s offering. So if you have an idea for a marketing campaign that you think might work but you don’t have the financing for it, consider a loan.
Improve with Fewer Risks
The chance to improve your business in the many ways mentioned above offers you a real opportunity that you might want to grasp. Secured loans can offer the same access to financing but come with more risks to your business. With an unsecured loan, you can reap all the rewards that come with having the cash to invest in your business without having to worry about the risks adversely affecting the business in the future. The chance to improve with fewer risks attached to that chance should not be ignored or dismissed.
The Requirements for Getting an Unsecured Business Loan
There are some requirements you’ll need to be aware of before you take out an unsecured business loan. These aren’t too harsh or restrictive at all, but they are important.
24 Month Limit
When you take out an unsecured loan from Bizzloans, you have to pay the loan back within 24 months. That’s the maximum repayment term that’s on offer. Of course, that won’t be a problem for the vast majority of businesses out there. It’s important that you look at the finances closely and decide for sure that this is something your business is going to be able to do. You’ll have a chance to do this when you get a quote from us, so you’ll know exactly what you’re signing up to.
Business Bank Statements
To ensure your business is in a financial position to take on a loan of the size you’ve applied for, you’ll need to simply submit your business’s bank statements. This allows us to ensure that we lend responsibly and don’t burden you with a debt that is too much for you to take on. It’s in both your best interests and ours that you’re able to handle the loan that you take on.
To ensure everything is correct and proper, and you are who you say you are, you have to submit a photo ID. This is common practice and ensures that all financial transactions are above board and in order. It’s very easy to do and needn’t be a headache for you. Once we are satisfied with your application, you’ve provided the bank statements and we’ve checked your ID, it won’t be long before you have access to the loan you applied for.
Getting an unsecured business loan for your company could be just what it needs right now. It’s a much safer option than taking out a secured loan and you’ll be accepted much faster. Don’t hesitate to get in touch with us here at Bizzloans if you’re thinking of taking out an unsecured business loan.