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Financing Considerations: How to Grow Your Business

Greg Bourdon is the Partner Vertical Sales Manager at Direct Capital with more than 11 years’ experience in providing financing for the print and apparel decorating industries. Greg is an excellent leader with a unique and focused perspective on small business growth, thanks in part to Direct Capital’s dedication to making every customer experience remarkable. Direct Capital offers a technology-enabled financing platform that allows business owners to apply within minutes and often get approved within seconds. To find out more, visit DirectCapital.com or call 877-786-5327

The decorated apparel industry has seen explosive growth and change in the last few years thanks to a rapidly swelling consumer demand. Improvements in print speed, image quality, and durability of materials have made custom apparel a more attractive option than ever, while alternatives like eco-friendly solvents and cost-saving choices allow businesses to provide a better service for customers. This boom in demand means two exciting things: a climb in sales, and need to be on the cutting edge of technology.

It’s true that staying up to date with apparel decorating technology can be pricey, but it doesn’t have to break the bank. Businesses commonly seek out lenders for funding on all sorts of large- and small-ticket equipment, ranging from new printers to embroidery machines to heat transfer presses. It’s become a standard and accepted funding model for small and mid-sized businesses outside of the printing world.

Know your financing partner

There are some key things to know about your financing options when it comes to funding your equipment purchases or upgrades.

It is always important to know your financing partner’s source of capital. They should be fully regulated, and you should be aware before you sign what the average rates and terms are for a shop your size. It’s also valuable to ask beforehand how quick the process will be since it varies by lender. Above all, your relationship with your lender should be a partnership.

A smart way to ensure you’re entering into business with a quality lender is to listen carefully to the questions they ask you. Some common questions you might hear are, “How do you typically pay for your equipment upgrades?” “When adding this equipment, how much money will it save or earn you per month?” “What else on your business wish list would you acquire if you had the capital to do so?”

These are all standard questions, and while they may seem intrusive, they establish that you would make good professional partners.

Don’t be afraid to ask questions about anything including the application, the review process, payment timelines, and the process of payback. Make sure everything is mutually understood before you sign the contract.  Remember, too, that just because it’s in the contract doesn’t mean it’s not negotiable. Know what you’re signing, so you aren’t locked into an unfavorable contract.

Understand what you’re getting

In a rate-driven society that’s always looking for the “best deal,” we expect all financing terms to be alike. In actuality, financing rates can be calculated many different ways, and not all calculations are equal. A good way to determine the value of what you’re getting is to look at the monthly payment. Will the monthly payment and term of the loan work for you and your business? The most important factor is that you can afford to pay your bill on time, every time. When comparing quotes from different companies, make sure you’re comparing apples to apples. Be sure to use the amount you’re borrowing to compare what you’re being offered for a monthly payment. 

Be prepared to share

Most people have a few financial skeletons in their closets. Credit reports are one tool lenders use to determine a borrower's credibility. If your credit report shows a lack of past diligence in paying back your debts, there may be a risk of getting denied when applying for a loan. Sometimes people have credit issues for reasons beyond their control. These issues can, unfortunately, become a barrier from entry into the world of small business. However, according to Business News Daily, there are five other factors that business lenders consider when you apply for financing.

Cash flow: Lenders look at your cash flow history, projected cash flow, and sales numbers to determine your ability to pay them back in a timely manner.

Collateral: Depending on the strength of your cash flow, banks may look at your current assets such as mortgage, working capital, inventory, etc., to see if anything can be used as collateral to secure your loan should you have trouble paying it back.

Business credit: In addition to your personal credit and payment history, lenders will check if your business entity has established any past credit, including on-time bill payment for any business-to-business services.

Character: Your overall character and reputation in the community matter to the people taking responsibility for funding your business.

Capacity: This is typically the least important factor in a credit decision, but lenders still want to know the capacity your business has to grow. A local ice cream franchise, for instance, has a limited capacity to boost sales, but a global e-commerce or tech business could grow exponentially in just a few short years.

It’s normal to have reservations about signing on with a lender. Assuage those reservations by researching your considered lenders and seeking out ratings in things like compliance and security. Outside funding is now a standard model for small and mid-sized businesses, but the lender you choose should be in step with your unique needs within the decorated apparel industry and have previous transaction experiences within the field. Compare before you sign anything, and read customer reviews.

Financing Online

Fintech is shorthand for financial technology, a financing method rising in popularity with small business owners across the board. Speed and convenience are the two motivating factors in today’s fintech model. Through fintech, apparel decorators can strategically manage their cash flow without devoting excessive hours to the process.

One of the major benefits of working with a fintech company is the time-savings it allows. Business owners have a limited amount of time to spend acquiring equipment and managing books, so it’s important to be able to execute on their financing needs based on their schedule. Easy financing through fintech allows them to invest in technology and maintain momentum while staving off competition. Hours can be saved through a fintech approach to financing. Applications are quick, as is approval, and capital regularly comes through in a matter of days to help fund even big-ticket equipment.

With the new fintech solutions on the market today, businesses like yours can arrange to finance on the spot with their customers through a fast, easy online funding process. This is available through “portable banks,” that is, access to their financing accounts from any mobile device. These portable banks put the sellers in control of their B2B financing program. Sales goals can be met and even exceeded, and revenues can be increased by offering these fast and affordable payment options. Through a partnership with a fintech lender, sellers can provide their customers with flexible financing options. They can track every deal status in real time, manage their sales pipeline, and promote financing options anywhere online and through all marketing channels.