Obtaining Credit in a Challenging Market Place
Are you experiencing sales growth and considering expansion in the near future? Are you struggling to meet the minimum cash flow needs to stay in business? If either of these situations applies to your business, you may be considering borrowing additional funds to meet the needs of your business.
Today’s credit market is completely different than it was just a few years ago. Banks and other credit institutions’ lending requirements appear to be more stringent as their perception of risk has changed.
Whether funds are needed for expansion or to maintain operations, you should be aware of several factors that would help your cause in obtaining some form of debt instrument. You may need to provide a business plan for the use of the funds, furnish corporate and individual tax returns, and internal and/or accountant-prepared financial statements. The financial information you provide to these institutions should be carefully reviewed before submission. Taking a proactive role and having timely information available will only help your cause.
You will also need to understand what debt instrument should be applied for, such as a line of credit, term loan, or letter of credit, and what the clauses are within the debt agreements. Factors that need to be considered are what will be included as collateral, if there are personal guarantees, whether there are covenants that need to be met quarterly or annually, and how your tax situation will be affected.
Before you make a decision, you need to be sure that you understand all of your options and the implications which they may have on you and your business. Obtaining financing with terms that are in conflict with the operational goals of your business could do more harm than good.
At Anstiss & Co., we have been assisting our clients with critical business decisions for over 45 years. Call one of our experienced professionals today at 978-452-2500 so that we can help you choose the option that best suits your business and assist you with any other questions you may have.
Anstiss & Co. is a Lowell- based public accounting firm serving clients throughout the United States. The firm was founded by Ray Anstiss, Sr. in 1964, and is currently listed as a Top-35 Accounting Firm in Massachusetts by the Boston Business Journal.
