{"id":15906,"date":"2023-05-17T13:24:26","date_gmt":"2023-05-17T17:24:26","guid":{"rendered":"https:\/\/www.evol.ca\/?post_type=toolbox&p=15906"},"modified":"2023-08-01T11:19:27","modified_gmt":"2023-08-01T15:19:27","slug":"5-common-errors-in-financing-business-projects","status":"publish","type":"toolbox","link":"https:\/\/www.evol.ca\/en\/toolkit\/5-common-errors-in-financing-business-projects\/","title":{"rendered":"5 common errors in financing business projects"},"content":{"rendered":"\n
Do you have plans to grow or explore an opportunity for your company? Or maybe you want to start or acquire a business? Do you need financing to carry out your project? <\/p>\n\n\n\n
Whether or not this is your first application for financing, it is a good idea to know the mistakes other entrepreneurs have made and to learn from them. <\/p>\n\n\n\n
At Femmessor, we understand your reality and the challenges you face when making a request for financing, and, like you, we care about the success of your project.<\/p>\n\n\n\n
Based on our experience, <\/em>we <\/em>want to share the five classic mistakes in an application for financing so you can avoid them.<\/p>\n\n\n\n
1 – Underestimating your needs<\/strong><\/h5>\n\n\n\n
Applying for financing requires time and preparation. We know that time is scarce for entrepreneurs.<\/p>\n\n\n\n
To avoid your financing application underestimating your capital requirements, you have to plan for your needs and create a complete financial arrangement. <\/p>\n\n\n\n
There are overruns on almost every project, so you need to include some leeway. <\/p>\n\n\n\n
Plus, there is nothing worse than an entrepreneurial project running short of cash and the entrepreneur having to make another application for financing. <\/p>\n\n\n\n
Lenders will wonder about an entrepreneur\u2019s ability to establish a project budget. Even worse is presenting a project and saying: how much can I have for it? This shows that the entrepreneur has not taken the time to do the math. <\/p>\n\n\n\n
A cash budget (weekly and\/or monthly) is your best friend, with complete financial forecasts.<\/p>\n\n\n\n
2 – Waiting too long<\/strong><\/h5>\n\n\n\n
Applying for financing is not the primary passion of entrepreneurs, so many put off starting the process.<\/p>\n\n\n\n
Sometimes entrepreneurs wait so long to apply for financing that they eat away at the business\u2019s working capital, putting themselves in an extremely risky situation. <\/p>\n\n\n\n
If a business begins a round of financing when it is short on cash and can\u2019t meet its short-term obligations, it seriously risks having the application denied. <\/p>\n\n\n\n
Be sure to plan your application for financing when you have time to do it properly, which will increase your chances of success.<\/p>\n\n\n\n
Once again, a draft cash budget allows you to plan and establish a project budget.<\/p>\n\n\n
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3 – Choosing the wrong financial products<\/strong><\/h5>\n\n\n\n
There are a multitude of financial products on the market. So you need to take the time to understand and explore the possibilities.<\/p>\n\n\n\n
Be prepared to expand your vocabulary to discuss alternatives. Asking questions is better than pretending to understand and accepting any offer you get.<\/p>\n\n\n\n
Also, take time to discuss with other entrepreneurs to analyze your needs and compare offers on the market.<\/p>\n\n\n\n
4 – Focussing solely on the interest rate<\/strong><\/h5>\n\n\n\n
Financial products have many features. It is too simplistic to look only at interest rates when making your choice. <\/p>\n\n\n\n
Here are a few examples of features: amortization, annual fees, disbursement fees, early repayment options, support for the resource, a possible moratorium, and fixed or variable rates. <\/p>\n\n\n\n
Take time to compare the options and evaluate what is best for you and your company.<\/p>\n\n\n\n
5 – Hiding information or presenting low-quality information<\/strong><\/h5>\n\n\n\n
Two expressions could sum up this point: it\u2019s a small world, and eventually the truth comes out. <\/p>\n\n\n\n
Non-disclosure, or, worse, lying about your business\u2019s situation to obtain financing, is a terrible idea. Presenting quality, complete information for your project demonstrates credibility and helps establish trust with a financial partner.<\/p>\n\n\n\n
In short, taking the time to ensure you are informed before applying for financing increases your chances of success. Of course, you need to go through a process beforehand to validate and structure your project. Demonstrating your profitability attests to the ability to repay.<\/p>\n\n\n\n
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