Many small IT companies with good growth patterns and serious capital requirement always find themselves in the position where, company makes good money, company grows really fast, but at the same time lacks cash for expansion, marketing, equipment and new employees. This might be related to many reasons and in fact, within current banking environment small business loans for IT or many other segments of the industry are very difficult if not impossible to get. So what options owners of IT companies and self-employed IT professionals have in order to receive small business financing – small business loans?
Typically the only real way to obtain small business loans in a conventional way is to go through the bank, qualify your company or your self-employed business based on credit history financial performance over 2-3 years, or personal financials over the same period of time. Many companies struggle to show continuous success since initial growing years require constant reinvestment and personal investments from the owners of the company, which takes from the bottom line every year. Also the requirements for financing might come much sooner, and absence of 3 year financials right away hit your chances with the banks almost guaranteed. Our firm had advised dozens of IT companies in obtaining debt and also sometimes equity financing for the expansion. We advised companies with revenues of 200k-300k, and also companies with revenues of $1-$7 million. This article will describe multiple ways that we can help our clients in IT industry to receive required financing.
Most IT clients that we served historically, typically spend their money most of the time on the developers salaries, rent and equipment purchases and leases. The more and more evolving and growing segment of IT companies expenses is on-line marketing and street marketing of the IT services. Because most of the banks had never financed on-line marketing expenses IT companies and any other sector of economy that relies on web for its marketing having massive difficulties financing this segment of their budgets. Before reviewing the possibility of putting together financing package for potential IT client, we normally review company’s performance over last 2 years or less if company exists less than 2 years on the market, current and future capital requirements and targeted usage. Capital amounts and usage is extremely important since banks have very solid guidance what can be financed and what cannot be financed, therefore proper advise on what to ask for and what not to ask for is super important. Most clients that have never financed their operations cannot know those details up front, and many clients without sophisticated financial background stand virtually no chances of getting bank financing without in depth knowledge of the banks requirements and guidelines. Our knowledgeable associates will be able to cut through the capital requirements. Then separate those requirements in time so the most important requirements are covered within initial 12 months after financing kicks in. Then chop the financing budget in segment and time to make sure that both size of financing, timing of the financing and partial usage of such a financing is within the banks guidance.Small Business Loans for IT Companies – 2
Our associates will also give very useful advice in terms of how potential financing could be used more efficiently. We normally emphasize that initial spending within first 2 years of company existence has to be made in order to maximize revenue and earning capacity of the firm. We help our clients analyzing which activities make the most of the money in terms of revenue and profit margin. Also due to our past experience and number of transactions we helped with financing, we also could advise our IT clients what other services or initiatives they could make in order to expand their earning capacity even further. Thus allowing higher chances of obtaining small business loan much sooner, and expand their business much sooner as well.
Even though each case is unique and require unique approach our company is well positioned to help most IT companies obtaining small business financing, with highest level of customer service and satisfaction. Please contact us and start growing your business now!