The time will likely come when you will need to apply for financing, whether it's to raise capital, lease equipment, or build a business line of credit to prepare for a budget shortage.

During business activity, many problems could arise that would force your company to seek financing solutions. These factors can include external market forces causing a slowdown, customers not paying bills on time, or even a simple budget error. Fortunately, financing offers a means to overcome these obstacles and exit stronger and with greater flexibility.

To capitalize on the many benefits of financing, it is important that you prepare yourself and the company for the application process. If you start the application process blindly without doing your research or preparation, it may prevent you from getting the financing solution your company needs. Keep these six tips in mind when applying for financing:

1. Organize your documentation

No matter what level of financing you need, the lender will require you to have the proper documentation in order. You can follow a general rule of thumb: You will need three to five years of budget information, tax returns, and financial evaluations done by a third party.

The sooner you organize this documentation, the easier the application process will be, allowing you to obtain financing more quickly.

2. Avoid the bank

A captive finance company can provide you with the solution your company needs along with the equipment knowledge and experience to guide you to success. A captive finance company works in your industry, be it construction, mining, agriculture, or oil and gas. This internal position ensures that the company knows your needs and can offer information-based recommendations that best suit your organization.

3. Take advantage of flexibility

When looking for an equipment financing solution, review the options available and speak with a representative before making the final decision. There are many different options to choose from, each with its benefits, for example:

·         Loan

·         Financial leasing

·         Operating lease

It is important that you understand the needs of your company, before submitting an application, so that you can find the right financing option. With these varied options, you can choose to lease equipment for a fixed period and then have the option to purchase the entire machinery after a predetermined time or at the end of the contract. Flexibility allows you to find the perfect option for your company's needs.

4. Pay attention to business cycles

If your company experiences slow or busy seasons (which are likely to occur), be sure to keep these business cycles in mind when applying for financing. Incorporating financing options into your annual budget designations can go a long way toward making your money last during downtime.

Another advantage of working with a captive financier is the fact that she understands and accommodates flexible payment options. A captive financier understands your business cycles and can recommend the right financial solutions to make payment management simpler.

5. Stay up-to-date with technology and manage obsolescence

Managing technological obsolescence in your company ensures that you do not get tied to outdated equipment. Failure to keep technology as up-to-date as possible gives an advantage to those competitors who regularly update their equipment. Put in place a financing strategy that manages technological obsolescence and ensures that you work with the equipment and technology necessary to propel your company to success. In many cases, a captive finance company will develop a solution that helps you adjust the size of your company by offering you common extension contracts or by facilitating exchanges of equipment for higher value ones that allow your company to use the necessary technology to remain competitive.

6. Approach the transaction as a relationship

Working with a captive finance company is much more than just a business transaction. A captive financier will approach each exchange as part of a growing relationship. These companies are committed to the success of their company and put their best efforts in finding a bilateral solution that benefits everyone. A captive finance company succeeds when you succeed, which is why it is in your interest to ensure that you find the optimal growth solution for your company. With these tips, you can get the best financing solution for your company without hampering your budget or your company's chances of success.

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