Small business formation boomed during the pandemic, yet many are facing financial hurdles they hadn’t expected. A survey by the U.S. Chamber of Commerce found that 45% of small business respondents will take out a loan as they face rising costs due to inflation.¹ However, women- and minority-owned businesses may face an even bigger hurdle in securing the funding they need, finds a report on the Global State of Small Business.²

The good news is that capital can be plentiful for organizations that know where to start. Here are six secrets to help you get the infusion you may need to grow your business.

Secret 1: Your banker can be an ally
When you started your business, the first thing you probably did was open a business account. That’s a wise first step since it’s crucial to separate your personal and business finances, even for solopreneurs.

Yet while online banking tools can be convenient for most routine activities, it’s important to go a step further and meet your banker. They are a wealth of knowledge about all types of business services – from recommending products that can streamline your banking to offering advice on the best type of loan for your situation and goals.

While a traditional business bank loan might be right for you, many companies can benefit from the appealing rates and terms of an SBA loan. As the No. 1 SBA lender in Illinois in 2022, Wintrust can walk you through a variety of SBA loan product options, then give the personal service you need to shepherd the loan through.

Since Wintrust provides local decision-making, they’ll take the time to get to know you and your business needs, providing a more personalized experience than a national bank whose decision makers may sit far away. And Wintrust’s deep knowledge of the local market and its unique intricacies mean they can help approve loans faster.

The more a banker knows about your company, your finances, and your goals, the more informed their advice can be, so don’t wait: Build a relationship before you need a loan.

Secret 2: Your personal credit might be holding you back
You probably know that your personal credit has a big impact on whether you can secure loans, like a mortgage or a credit card. What you might not realize is that your personal credit can also influence your ability to qualify for business banking services, such as a credit card or small business loan, even if you intend to spend the money only on your business. That’s because although business credit and personal credit are technically separate, they might be linked.

And, in particular, they might be connected for businesses that are sole proprietorships or single-member LLCs with no employees, common structures for small businesses.

If you’re not sure about the status of your credit, take the time to check it to make sure there are no errors or issues that need your attention. (You can check it for free at AnnualCreditReport.com.) And if your credit score isn’t quite as high as you would like, take a look at these helpful tips, or talk to your banker about how to start raising it today.

Secret 3: Separating your business and personal finances may make it easier to qualify for a loan
As mentioned above, it’s vital to separate your business and personal banking accounts, including opening up a separate credit card for business expenses. Independent accounts will make it easier to track business expenses for tax purposes and can also limit your personal liability.

In addition, a business bank account offers a number of functions that will be useful as you grow your business, such as cash management tools, like merchant processing and wire transfers, along with business credit cards with features like free management reports to help you monitor spending and track and forecast expenses.

But another key reason is that it helps you establish a business credit history, which can make you a more attractive candidate for a loan.

Secret 4: A strong business plan can help you secure financing
You might think that a business plan was something you put together before you started your company to identify your market potential and target customer. But updating your business plan on an ongoing basis presents you as a worthy lending risk. That’s because your business banker wants to know you have thought through every detail of your business, including where your opportunities are and how you intend to scale and spend the additional money.

A robust business plan should include details on your core idea, leadership team, finances and projections, market research and competitive landscape. To help your banker understand your story, include specifics on how you intend to use the funding. The SBA has helpful resources to guide you in crafting a complete business plan that will help boost your potential for obtaining capital.³

Secret 5: Specialty grants might be available
While loans are often necessary to get your business off the ground, don’t overlook other sources of funding. Many businesses seek grants, which are appealing because, unlike a loan, they don’t have to be paid back.

Many local and national organizations offer grants based on your location or industry, and others are available specifically for women and minorities. Here are a few places to consider:

• GrantsforWomen.org
• Women’s Business Centers
• Minority Business Development Agency

While grants are a great source of funding, the application and process can be time-consuming so be judicious about which ones you apply for. Read the criteria carefully to ensure you have a good chance of qualifying.

Secret 6: Diversity certification can open doors
Many women- and minority-owned businesses may qualify for supplier diversity certification. This designation is conferred by different organizations; three widely accepted ones are:

• National Minority Supplier Development Council (NMSDC)
• Women’s Business Enterprise National Council (WBENC)
• National Women’s Business Council (NWBC)    

Earning the certification creates eligibility for potential grants and inclusion in supplier databases, which can be valuable as many large companies and even the federal government have supplier diversity goals. That means they might be more likely to award you a contract based on this status.

Before starting, read through the criteria and the process to ensure it fits your goals and that you are prepared to bid on and have the capacity to fulfill the larger jobs these organizations typically offer. As with obtaining grants, the process for diversity certification can be lengthy, though it can potentially offer a sizable return on your time investment once you have earned it.

The challenge pays off
Although the process might seem challenging, securing the funding you need to run your business doesn’t rely on luck. Once you realize exactly what a banker is looking for when they process your loan, you can start developing the foundation and systems to show them you are ready to be taken seriously. Are you ready to move to the next step in finding the capital you need? Talk to a Wintrust business banker today and get on the road to growth.