Raising Financing for a Small Business - While poor management is the most frequently cited reason businesses fail, inadequate or ill-timed financing is a close second. Whether you're starting a business or expanding one, you will need ready access to cash at all times, and you will need to manage that cash well.

In order to avoid common mistakes in borrowing money, such as securing the wrong type of financing, miscalculating the amount required, or underestimating the cost of borrowing money, it’s important to manage your existing funds wisely.

Before Inquiring About Financing, Question to Ask Yourself:

• Do you need more capital or can you manage your existing cash flow more effectively?
• How urgent is your need? You should plan your borrowing activities well in advance of your cash
• needs, as you can obtain the best terms when you are not under pressure.
• How great are your risks? All businesses carry risks, and the degree of risk will affect the cost of
• borrowing and the available financing options.
• For what purposes will the capital be used? Any lender will require that you are requesting the
• capital to fulfill very specific needs.
• What is the state of your industry? Depressed, stable, or growth conditions require different
• approaches to money needs and sources. Businesses that prosper while others are in decline will
• often receive better funding terms.
• Is your business seasonal or cyclical? Financing options for seasonal needs are generally short-term.
• How strong is your management team? The quality of a company’s management is the most
• important element of the application package that lenders consider.
• How does your need for financing fit with your business plan? If you don't have a business plan,
• make writing one your first priority. All capital sources will want to see your business plan,
• regardless of whether you are starting up or in a growth phase.