Beyond the Bank: Alternative Funding & Strategic Financing

Mar 27, 2024

Securing appropriate funding is crucial for the growth and opportunity of businesses of all sizes. Exploring alternative funding solutions provides the financial support businesses need. This article discusses alternative business funding, addresses common misconceptions about SBA loans, and highlights the importance of storytelling in persuading lenders, enriched with actionable advice and insights.

The Importance of Precise Reporting and Financial Statements

The significance of bookkeeping and accounting is foundational for successful financing. So often we talk about this at ProCFO Partners – just about any new initiative that requires outside input will require people to know what’s happening now and next with your business. Without well-organized financials, you’ll face challenges in securing funding. Ensuring accuracy and completeness through regular reviews and updates of financial statements is essential. Utilizing accounting software or engaging a professional accountant can keep financial records in order, but what you’re reporting on and when requires a more strategic lens. Investors will want to better understand context around the numbers.

Addressing the Myth of Local Banks as the Only Financing Solution

Most of us have a trusted banker or a familiar banking relationship, or visit a bank’s options on the advice of another. If the options those banks provide for funding aren’t practical – or are simply not an option – it’s easy to throw our hands up and think well, now what. Remember that there are lending sources beyond local banks, such as online lenders, crowdfunding platforms, and venture capital. Evaluating the pros and cons of each can determine the most suitable option for your business needs. Networking events and industry conferences are excellent venues for connecting with potential investors and lenders, expanding your financing options. At ProCFO Partners, our clients leverage our existing network of experts in this area.

The Role of Specialization and Expertise in Financing Solutions

Identifying lenders who specialize in your industry or have a history of lending to businesses similar to yours can make a significant difference to your options. Preparing a detailed business plan and financial projections for these potential lenders and customizing your pitch to align with their focus areas and criteria can increase your chances of securing financing. This is where your network is valuable – some investors or lenders love to work with a specific vertical, or have history or success working with certain industries. Remember that you don’t just want to find a lending or funding partner – you want to find the right partner for you.

The Power of Storytelling in Persuading Lenders

Developing a clear and engaging narrative about your business that showcases its potential for growth, impact, and how the funding will be utilized is crucial in persuading lenders. Practicing your pitch to emphasize the strengths of your business and plan for overcoming challenges, while incorporating testimonials or case studies, can add credibility and resonate with lenders. While accurate reports are critical, this is where that context comes in. Ultimately, lends are interested in the people involved, the vision and trajectory, and the purpose and possibilities. The right partner, like Multifunding, can help craft and tell your story to the right audience, in the right ways, at the right time.

Exploring Alternative Business Funding Options

It’s also useful to know that “alternative funding” doesn’t mean risky, unusual or unproven. The Small Business Association, for instance, is a significant source of alternative lending options. Understanding and considering SBA loans as a viable funding option requires familiarity with their criteria. Initiating conversations with SBA-approved lenders to discuss your business’s qualifications and preparing a comprehensive loan application that includes a strong business case and financial statements can open options to this funding avenue.

The Variable Nature of Lending Criteria

Lending and funding dynamics change according to all kinds of variables, from global economics to political headwinds to headlines, policies and more. Staying up to speed on lending criteria changes by following financial news and attending industry seminars can help you adapt your plans to meet potential lenders’ requirements, while regularly reviewing your business’s financial health and building relationships with multiple lenders can provide insights into their preferences and criteria so you can adjust your strategy accordingly. Here again, however, is where going it alone is, for many, not the best solution. At ProCFO Partners we have relationships with alternative lending experts who can insulate you from some of the high and heavy details that can slow down and bog down processes if this isn’t already a sweet spot for your company. Such partnerships not only offer access to a vast network of lenders and specialized knowledge but also guide you in refining your financial strategy and identifying the most suitable funding options.