I still remember the first time I filed taxes for my business. In addition to having no idea what a write-off really was, I also didn't worry too much about guessing on the numbers. A few government audits later, I discovered what it really meant to do things the right way. Over the years, I have met lots of business owners that weren't too worried about fudging the numbers, and nearly all of them have run into problems. Proper accounting is important, which is why I created this website dedicated to business accounting. I know that if you learn the right way to do things and focus on integrity, your business can avoid a world of problems.
For businesses, the decision about whether or not to take out a commercial loan can be a complicated one. It increases the debt that your business holds, but there's also an opportunity cost associated with not expanding—if a commercial loan allows your business to bring in significantly more revenue, you'd miss out by not taking it.
The process of applying for commercial loans can be complicated as well. There's a substantial amount of financial paperwork involved, as lenders want to make sure that your business can eventually pay back the loan. Thankfully, businesses can receive help with the process by hiring a certified public accountant. Below, you'll find three ways that a certified public accountant can help your business secure a commercial loan for expansion.
1. Guide You Towards the Loan Products That Suit Your Needs
If your business needs an extra influx of cash to purchase inventory from vendors, would a line of credit or a merchant cash advance be a better choice? If you need to purchase equipment for your business, would it be better to look for a term loan or to use the equipment as collateral in an equipment financing loan?
These questions can be difficult for business owners to answer. While a certified public accountant can't make business decisions for you, they can guide you to the loan products that are best suited for your business' financial needs. After reviewing your business' finances, they will be able to give you a rough estimate of how large of a loan your business will actually require. Most importantly, they'll be able to tell you how large of a loan you can afford—you never want to be in a situation where your cash flow is inadequate to make payments on your commercial loan.
2. Help You Compile Financial Statements for Prospective Lenders
Whenever businesses apply for a commercial loan, lenders ask to see extensive financial records. They want to ensure that a business is financially healthy and capable of generating enough revenue to pay back the loan. A certified public accountant can help you compile and prepare your financial records for lenders. In most cases, they will even work with lenders directly so that you can focus on running your business instead of compiling financial reports.
In fact, when your business starts to seek larger commercial loans, lenders will often require that your financial statements be compiled by a certified public accountant. This gives lenders reassurance that they've been created in accordance with good accounting standards. Business owners who do their own bookkeeping sometimes make mistakes like categorizing expenses incorrectly or even ignoring them entirely.
3. Identifies Expenses That Can Be Cut in Order to Service Loan Payments
Finally, a certified public accountant continues to help you after you secure the loan. Your business now has an extra expense in the form of loan payments, and it's important to reconfigure your other expenses around that fact. While a commercial loan can help your business expand and generate more revenue, it may require some time before that happens. In the meantime, a certified public accountant can help you understand areas of your business' budget where expenses can be slashed in order to make your loan payments on time.
Ultimately, a certified public accountant, like those at John M Vlasac & Company, is a great aid for businesses who are seeking a commercial loan. Furthermore, if your business is starting to expand, now may be the perfect time to start a working relationship with a certified public accountant. When they do your bookkeeping for a long period of time, they'll gain a greater understanding of your business' financial situation, allowing them to provide you with even better service.
Share17 October 2019
