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Virtual Accountant | Should Entrepreneurs Specify Type of Financing in Business Plan

A business plan is important for more than just helping give entrepreneurs a blueprint to grow their business and says virtual accountant. And also is going to be the documents they need to give their financial institutions. In order to obtain the loans they need to start their business

However, many entrepreneurs end up with the wrong kind of financing or the wrong terms that they want in their financing. Simply because they weren’t specific enough in their ask.

Therefore, entrepreneurs needs to understand what they should be asking for. And why they should be asking for it. So that they can write it very clearly in the executive summary of their business plan.

Ultimately, business owners needs to know that there are four different Financial products that they could be asking their bank for. They might want to ask for one, and I hope that they can apply later and get another. But this is not an effective strategy says virtual accountants.

In fact, a business owner should look at their business plans, and determine all of the financings that they are going to need, and apply for it all at the same time. As an entrepreneur owns their business, it will fall deeper and deeper into a cash crunch. That will make obtaining loans in the future much more difficult.

Therefore, a business owner needs to read through their entire business plan, ideally with their accountant. In order to figure out exactly what Financial products they’re going to need. And how much to ask for with each product.

In order to do this, business owners needs to know what Financial products are available to them. The first one is a credit card. And this is often the most important. Because almost all businesses are going to need a credit card at some point or another. Whether it’s to order products online. Give to their suppliers to have on file. Or whether it is a preferred method of payment.

Business owners need to be very mindful of how much they ask their credit cards to have a limit of. Because the larger the limit, the lower the other amounts of financing that they’re going to be able to achieve.

Lines of credit are another product that business owners can apply to guess. And these are often the most sought-after. Simply because they typically require business owners only make interest payments. And not principal payments, which is more financially viable for new entrepreneurs.

Term loans are specifically for assets says virtual accountant. And are going to be used for purchasing assets, vehicles, or leasehold improvements for example. Business owners also needs to be very mindful of specifying exactly what assets they are going to purchase with the money. Because different assets will have different terms applied to them.

And finally, a mortgage is what it will be called when an entrepreneur needs a loan to buy land, build a building, or buy a building. However business owners also needs to be very mindful of specifying with their bank. Because whether they are buying land, constructing the building themselves, or buying a building. All of these mortgages will also have different terms as well.

Virtual Accountant | Should Entrepreneurs Specify Type of Financing in Business Plan

It’s extremely important that’s an entrepreneur is detailed when talking to their Bank says virtual accountant. Because the more detailed they are, the higher likelihood that they are going to get the financing they need.

Just like Benjamin Franklin, the Founding Father of the United States of America said. If you fail to plan, you’re planning to fail. And the reason why business owners needs to plan properly. Is so that they can be as detailed as possible in their request to their financial institution. So that they have the best chance as possible at obtaining the loans they need in their business.

Business owners should specifically be listing the desired financing and their executive summary. The executive summary is the most important part of their business plan says virtual accountant. Because it is at the beginning of the documents. And will outline the most important parts of the business plan.

It is incidentally, also the only part of a business plan that will be read by Banks and financial institutions. In order to make their decision on whether they are going to loan entrepreneur money. Therefore, it’s not only an incredibly important part of their business plan.

But it is also why entrepreneurs should be extremely detailed and what they are asking for. Business owners should figure out with their virtual accountant exactly how much money they are going to need in their business, and what they’re going to do with all of the money.

The reason why, is so that they apply for all of the loans that they need at the same time. The reason why this is important. Is because an entrepreneur will be less likely to obtain the loans they need in their business. Once they have owned it for a while.

The reason why, is because the longer an entrepreneur is in business, the more of a cash crunch they are going to find themselves in. And that makes them a larger risk to Banks.

Not only is that important to specify says virtual accountant. But entrepreneurs also need to list in their executive summary what terms and amortization they would like. It’s not likely that business owners are going to get exactly the money that they want with exactly the terms that they have asked for.

But entrepreneurs need to understand, that while there’s no harm in asking. If they don’t ask, they might not get. However, on the off chance that they do great what they ask for. They will be glad that they put the request in there.

Business owners also need 2 indicate for each product that they are requesting financing on. What they are going to do with all of the money. Financial institutions will want to ensure that a business owner is using all of that money. And if not asking for more money than they need, so that they’ll have additional funds to use however they want.

So it becomes extremely important for an entrepreneur, even with each separate product that they asked for. That they specify everything that they are going to be doing with that sum of money.

By keeping these things in mind, virtual accountant says a business owner can use their business plan. To help them get the financing that they need to grow their business.