Funding your childcare business is essential to growing your business. Many good options are available to fund your daycare business, such as an SBA loan or grant. Before applying for any funding, put your daycare business in an excellent position to get approved. To get approved, follow the steps below.
Step 1: Build a Strong Foundation
Put your business in a position for a higher chance of getting approved by lenders. You can start by building a solid foundation for your business. To create a strong foundation, get a tax identification number (TIN), register your business to be incorporated, open a business bank account, and a business e-mail and phone number. Download this worksheet with 14 action steps to build a strong foundation for your childcare business.
Step 2: Sign up for an Accountant Software
Next, sign up for an accounting software and connect your business bank account to it. An accounting software system will keep track of the money coming in and going out of the business. In addition, once your bank account is connected, you can generate income and balance sheets within the accounting system. These statements will be needed when applying for any business loan. Two accounting software includes but is not limited is Wave and QuickBooks.
Step 3: Apply for a Duns Number
Apply for a duns number. A duns number is the universal standard to track businesses worldwide, enhancing your business’s credibility. It lets lenders and suppliers learn about your business when you apply for funding. If you plan on growing your childcare program, apply for a duns number and start to build your business credit today.
Step 4: Build Business Credit
One way to build business credit is to apply for net-30 terms with a supplier or vendor. Net-30 accounts are accounts that extend you 30 days to pay a bill in full after you have purchased products. The supplier or vendor will report those payments to commercial credit agencies using your duns number, which will help your childcare program establish a strong business credit score. In addition, you can apply for a business credit card.
Step 5: Make a Presence Online
The first thing lenders do after receiving your application is google your business. Make a presence online because after you apply for a grant or loan for your daycare business, the first thing the grantor or lender does is a google search to learn more about your business. An online presence will give your daycare business more credibility and can be a deciding factor in getting approved or denied.
Step 6: Get Documentation in Order
When applying for a loan, you should always have certain documents ready and available. Documents include a capability statement, business plan, operating agreement, income tax statements, bank statements, county license, TIN letter from the IRS, article of organization, balance sheet, income statement, and a resume.
Step 7: Apply for Funding
How do I find the best loans for my daycare business? Start by checking with the bank that your business bank account is with. Another option is to create a business account with Nav.com. Nav compares your best options for a loan based on your unique business data. You can also obtain your business credit score with Nav when you connect your duns number.
Step 8: Research CDFI Programs
What if my bank denied my business loan? Another option to consider is Community Development Financial Institutions Program (CDFI Program). CDFIs strive to deliver responsible and affordable lending to financially disadvantaged communities and underserved people. Financial Assistance awards are made in the form of loans and grants.
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