Financing Equal to Debt?




20 Mar Financing equal to debt? Your business can be prepared

It can be said that financing is the acquisition of a debt; since when accepting a loan from a financial institution or a bank, it is agreed to return the requested money plus an interest. The latter is set by the lender and represents the cost of giving you a certain amount of money.

Every business needs financing to be able to operate in a better way, especially at times when it wants to grow rapidly. Within our Credit and Growth Report of SMEs in Mexico, we learned that only 15% of entrepreneurs have a credit for their business.

Employers who have 0 % financing

Is your business prepared?


 Is your business prepared?

# 1 Know the capabilities you have

In some cases and perhaps most, the lack of liquidity is one of the main situations that guide entrepreneurs to apply for a loan, this is when having a good financial administration will be necessary to manage the resources and that these are destined for one party to liquidate the financing and on the other to cover the fixed expenses.
To recognize that your business is prepared to receive financing, you must calculate the payment capacity you have. That is, the amount of money you can spend to pay your credit without risking the financial status of your company.

# 2 Evaluate the growth you can achieve

The second point to know if you are prepared, is anticipating the growth that your business can get to have thanks to the use of financing; the “what are you going to use it for” is very important. Make sure that the benefit you get from using the money is greater and will generate long-term results. Set strategic goals that make your business really grow. For example, invest in technology, open new branches or sales channels, attract talent to increase the value of the company, among others. Design a plan depending on the vision and future you have in mind for your business, this will help you to use the loan wisely.

# 3 Choose the most viable option


 20 Mar  Financing equal to debt? Your business can be prepared

Another point you must take into account, is the access you can have to financing by traditional banks and financial institutions. Well, most SMEs are limited because they do not formalize their business and have no credit history. Since these two factors are those that allow to assess the existing risk of lending money and predict their behavior with the use of credits. To know in a more timely manner how likely it is that you can apply for financing, you can investigate the requirements that both traditional banks and financial institutions request.

Among the requirements commonly requested are:

  • Official identification
  • Proof of address
  • Documents accrediting the business
  • Business financial statements
  • Guarantee or guarantee *

* Submit a guarantee or guarantee is more common when applying for a loan in traditional banking

How can you realize a business can really handle the debt acquired thanks to financing and use it to the benefit to make it grow. Remember that it is also important to take care of the finances of your business to continue seeing positive results and open the way to better opportunities.