Be Bankable: Giving Small Businesses Credit

Whether the economic environment is friendly or not, small businesses will turn to their banks to secure lines of credit and get funding to smooth out bumps in cash flow and availability.  Getting credit is always a challenge, even in the best of times.  When the economy stalls and times are tough, getting the necessary cash to support the business gets even tougher.

America’s small businesses can’t catch a break.

After two years of shutdowns and restrictions due to the Covid-19 pandemic, they’re straining to keep up with price increases without losing customers to larger competitors. They are struggling to keep positions filled as competition for workers remains at a fever pitch. And just at the moment that many business owners begin to recover and shore up their depleted savings, they’re worried that the Federal Reserve’s medicine for inflation will bring fresh hardship: higher borrowing costs and timid consumers.  (… small-business-recession)

Times are tough, and banks will manage their risk to increase the predictability of repayment for loans and lines of credit.  If accountants are looking for a reason to adopt and implement analytics and forecasting for their clients, there it is.

Accounting professionals can help their clients get the credit they need by helping demonstrate how bankable the business is. 

Here are some ways to improve the odds when trying to get financing for the business, and where your accounting professional and accounting systems can be pivotal players.

Tighten up the books.

The value of good financial reporting cannot be understated. Being able to demonstrate profitability and a strong balance sheet reduces ambiguity often present in a small business’s financial statements. Banks want borrowers who demonstrate an ability to repay the loans and credit lines, lowering the lending risk to the bank. Business owners who can do that will stand a better chance of getting approved.

Show strategic thinking.

Show how your strategy will help your bottom line and help you to repay the financial institution for their trust (and money). This takes detailed qualitative and quantitative reasoning rather than a generalized or high-level approach.

Use the right software.

Using the right software to support business operations increases the chances that necessary financial and other data makes it into the financial statements. For the majority of small and growing businesses in the US, QuickBooks is the standard for keeping the books and managing financial information. Using a structured system like QuickBooks helps businesses keep their data in a way that makes it easier to create financial reports, supporting efforts to get business financing among other things.

Get some help.

While most small businesses don’t need a full time CFO, most should at least consider hiring a reputable accounting firm. The right accounting professional will help you develop a better understanding of the company finances and can be a big help in drawing a financial picture of the business the bank will find attractive.

Every business relies on its financial reports at some point, and the better the data the more informative the reports are. In order to satisfy bankers or other lenders, business owners need to make sure their financial system and the reports it produces accurately reflect business performance as well as the outlook for the future.

Let Mendelson Consulting help your business get the most benefit from your QuickBooks financial software with consulting, training, data services and integration support. We support business growth, helping our customers improve the quality and accuracy of their financial and reporting systems. It makes the banks happy and your business more bankable.

Joanie Mann

Joanie Mann

Focus is on Digital business transformation for small/medium businesses. As the principal consultant for Cooper Mann Company and Noobeh's Director of Cloud Services, Joanie Mann provides support and guidance for businesses seeking to implement cloud solutions and hosted services in their IT environments and consults with solution providers to develop or expand application hosting and application delivery service offerings. Joanie is the Director of Delivery for Noobeh Cloud Services (a division of Mendelson Consulting), and is on the board of advisors of ACE Cloud Hosting &

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