As December comes to a close, the team at Florida Capital Bank (FLCBank) is already preparing for that “new year, new me” mindset, especially when it comes to your finances.
In addition to ringing in a fresh calendar, 2023 offers us the chance to plan for those big business money moves.
With economic uncertainty clouding some of this past year, you might be considering a side hustle — to see if you can grow into a sustainable business. Or, your business may be thriving and now is finally the time you want to really dive into an expansion plan.
Here are some tips to get you started:
- Establish Where Your Finances Currently Stand
A complete picture of your finances can help you decide where to focus your efforts for the coming year. This audit will allow you to understand where your business expenses are concentrated, which can indicate if you’re missing out on potential savings or if you need to reallocate funds. For example, maybe you see an opportunity to cut back on packaging costs — while increasing your marketing spend.
As part of this process, we recommend organizing your current financial documents, including bank statements and tax records — which will be needed should you decide to apply for a loan.
- Set a Measurable Goal for the Future
Regardless of whether you run an established enterprise or you’re trying to create a new hustle, establishing where you and your business stand financially is just the first step. Financial goals, like securing a commercial loan to grow your space, is easier when you plan for those road bumps you might encounter along the way.
We recommend defining your goal (i.e., the loan) and building out milestones — or mini goals — that can help you get to the finish line. Remember, when creating your goal, always be as specific as possible: “I want to secure a business loan of $XX amount by Dec. 2023.” Then build out those smaller steps to help guide your journey, such as: “I want to create a safety net of $XX in my business savings account by June 2023.”
Between establishing your finances and setting your goals, you’re on the way to creating a business plan, which will be required by commercial lenders in order for you to acquire a business loan.
- Outline Your Budget
One of the biggest mistakes businesses can make when it comes to acquiring a commercial loan is underestimating — or missing entirely — the expenses that might be associated with the transaction or purchase.
Commercial real estate is often the biggest purchase a business can make — and understanding the costs, such as purchase costs, repair expectations and operating expenses, is crucial.
Your budget should contain: revenue, expenses and and your overall profit. After you’ve created the budget, don’t forget to track it!
- Work on Your Credit Score
Establish good credit in your business’s name right from the start by securing a loan or business credit line early. Like in personal finance, the better your business’s credit score, the better your chances of securing an affordable loan. For commercial lending, the individual’s credit may be considered in some instances, but a solid business credit history is essential.
Remember, though, that applying for more than one loan at a time can decrease the credit score and raise red flags with banks regarding your business’s financial state and the ability to pay back the loans.
- Get a Commercial Business Loan
When preparing to get a commercial loan, understand that it’s a bit different than a personal loan. Aside from it being an agreement between the bank and your business, these loans can only be used for:
- Commercial real estate
- Equipment, fixtures, or furniture
- Fleet vehicles
- Partner buy-outs
- Debt reduction
Each lender has its own process for loan approvals, but the tips above will help you prepare for a common commercial lending process. To apply for the loan, you first have to get pre-approved. During this step, you’ll need to provide your financial records and your business finances. The lender will want to understand how much loan your business can afford.
From there, you’ll submit the application for the lender to review. After approval, your loan will be funded — and you’ll be free to start on the next chapter for your business.
FLCBank proudly serves our community with full-service branches in Tampa Bay, Orlando, Gainesville, and Jacksonville; if you’re not in one of those areas, though, we can still help! We bring the bank to you with cutting-edge tools to make managing your money a breeze.
Whether you want to expand a business that’s been serving our community for decades or a franchise opportunity may be on your horizon, FLCBank wants to partner with you to see your dreams come to reality. Speak to one of our experienced lending experts today to get started.