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  • Writer's pictureR&R Commercial Lending

Getting a Start-Up Company Ready for Financing

One of the most important items for a start-up company is conservation of capital. Equipment Financing can lower the initial expenditures while helping the business obtain the necessary tools and equipment required to get the company growing. Getting financing as a startup is not easy, so here are some things a lender or equipment lessor look for to help you improve your chances for approval.

Have a strong credit rating or multiple guarantors

A lessor primarily wants to verify financial stability. Some start-up companies may already have an established short-term payment history, but since many do not, the lessor will be interested in the financial health of the owner or guarantor. It is a good idea to be familiar with the owner’s credit and financial history. If it is known that the owner’s finances may not be sufficient for approval, having a cosigner with strong credit can increase your chances at approval.

Maintain your financial agreements from the beginning

For companies a couple of years old, lessors will want to examine current spending trends for the company to verify its ability to make payments. This may include checking corporate accounts and/or obtaining a Dun & Bradstreet report. They are looking for evidence that monthly expenditures do not exceed the budget, and will look as far back as a year to check this. Lenders will often review the Dun & Bradstreet ‘paydex’ report for companies; this number measures the average punctuality of payments for a period of 3-12 months. It is wise to stay on top of your bills to make sure your score stays strong.

Your Investors are important

Some start-up companies are financed by owners with sufficient capital to support them, or take loans to start their business; many others have investors to help them get started. Financing sources are impressed when investors maintain an active role in the company, and that the investors also have healthy relationships with their creditors.

Have a strong plan of action

Lessors want to know that a business will survive, and may ask to see a business plan. Start-ups should have a successful course of action for the company’s future and how it intends to grow as a business, whether or not a lease is required. A lessor has little reason to take an interest in a company that does not take an interest in itself.

Experienced officers are a bonus

Lenders like to see that the managing members of the company have had experience in successful business endeavors. Having an experienced officer/manager is impressive to a lessor and can increase your chance at approval.While a lessor or lender may not look into all of these areas of a business, they are important factors for a start-up company to consider. Lenders will want to inspect every aspect of a business they can in order to get a clear picture of its future and ability to meet its obligations.R & R Commercial Lending is here to help. To learn more call us at 407-740-5166 or request a call from one of our representatives.

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