We have looked into applying for grants to expand our business ($50,000) but you have to have a 50% matching ratio! If we had half that amount we would not apply for a grant. When dealing with the banks they just look at us and say no to everything. eg: we don't have a $500,000 home, we don't have 2 cars worth $50,000each, we don't make over $100,000 a year. When we looked into out local Economical Development Corporation, we have to pay a $100.00 fee just apply then the $50,000 loan would be subject to a 7% interest rate and have to be payed back within 3 years. ($1500.00/month is not realistic for us) Our business is based in the Agricultural sector and we offer a very niche product within our area. We are looking for someone to help us out financially with an open mind and understand our needs. We need to purchase 2 pieces of equipment ($25,000 worth) to further our unique business for 2015.

In situations like this it can be very tough to obtain the necessary financing. The banks will definitely want personal guarantees and hard assets (such as a home) to secure their loans. The banks will also want a steady historical stream of cash-flows to give meet their security needs, they must obtain reasonable assurance that you will be able to make your interest and principle payments. Your last ditch effort would be to seek alternative sources for the funds, such as a leasing company who will purchase the equipment then lease it to you. This will most likely involve some sort of down payment along with high interest rates.

My suggestion would be to put together your historical financial information (i.e. financial statements and tax returns) along with a proper 1-3 year financial projection proving that you will be able to make your future payments and generate enough cash flows to justify the purchase of the equipment. This may help when presenting yourselves in front of any potential lenders. It is always better and more professional to have these items ready to go rather than having the lender request them afterwards.

Fabio Campanella 
Accounting