By Paul Bosley, Executive VP, Health Club Experts
Looking for money? Aren’t we all, right? In this article we’ll review everything you need to know about ways to find money for your business.
PLEASE NOTE: The information contained within this article can get confusing at times. For more specific questions, AFS can connect you directly with Paul Bosley to answer any questions you might have.
In today’s world, many businesses opt for “debt financing” to access capital and/or assets because it can be accomplished without changing the ownership structure of the company. This is opposed to “equity financing” which involves ownership structure changes, usually meaning you have to relinquish a portion of your business in exchange for the funding.
Traditional bank financing is typically available only to those companies that (i) have been in business for more than three years, (ii) report a profit with rising sales; and (iii) all owners have very good personal credit.
Consequently, bank lending is not a viable alternative for businesses that do not meet these criteria. However the following debt financing alternatives can be considered by nearly all studio owners depending on (i) time in business, (ii) personal credit, (iii) personal assets, and (iv) the nature of the debt financing request.
The first step in financing your new studio is to prepare for the underwriting process. Regardless of the form of financing that you choose, the underwriting process is similar so it is wise to take the following 5 steps to prepare:
1. Focus on you & your partner’s personal credit. All underwriting decisions are affected by your personal credit score. Request a free copy of your credit score www.equifax.com, www.experian.com or www.wallethub.com. First, make sure everything is accurate. Dispute all derogatory items because sometimes you will get lucky! If you have many derogatory items, consider hiring a credit advocate & hold off from applying for a loan or a lease.