The major reason for a new business’s failure in the first two years of operation is undercapitalization. No matter how you end up funding the business initially, most lenders will want to see at least two years of profits on a business’s tax returns before they will be willing to extend credit. By Jon Skroder
The major reason for a new business’s failure in the first two years of operation is undercapitalization. No matter how you end up funding the business initially, most lenders will want to see at least two years of profits on a business’s tax returns before they will be willing to extend credit. Therefore, it’s extremely important to have enough working capital at the onset to sustain the company during those crucial early years. Few expect major challenges and unforeseen circumstances impacting the bottom line, but that doesn’t mean they shouldn’t be considered in your funding calculations. For example, the fitness and restaurant industries were thriving prior to March 2020, but during the pandemic many of those businesses struggled to pay their bills and stay afloat because of a steep drop in in-person customers. It’s in these types of situations a healthy working capital balance is invaluable. By having cash reserves available, the risk of failure is greatly reduced.
My Military’s M5 Loan is a perfect product for those looking at a service-based business with a smaller requirement for overall project costs. It offers $150,000 to cover franchise fees, marketing, and equipment while still providing a healthy amount of working capital to sustain the business during times of adversity. However, if you are looking to open a business requiring more capital than what is provided from the M5 Loan, the M5+ provides funding up to $350,000, with no requirement for personal collateral. It is a perfect vehicle for those interested in the acquisition of an existing business. The M5+ provides funding for both the purchase of the business and the working capital essential for continued operations and growth. It is a great fit for expanding businesses that have two or more years of documented profits.
Bottom line, ensure you secure ample funding at startup to create a heathy cushion of working capital to address any type of adversity that could threaten your success!
Jon Skroder
Contact: mymilitaryloans.com, 833-444-VETS, Jon Skroder, jon@mymilitaryloans.com
Senior Chief Petty Officer Jon P. Skroder (Retired) is a 26-year Navy Veteran (1993-2019) and current COO of My Military Financial Services. Assignments include NAWS China Lake, CA, Pacific Missile Range Facility, HI, HSL-42 NS Mayport, FL, Weapons and Tactics Unit NS Mayport, FL, HSL-48 Mayport, FL, HSM Weapons School Atlantic, Mayport, FL, HSL-37 KBay, HI, and HSM-40 Mayport, FL. MED/MEF deployments aboard the USS San Jacinto (CG-56) and the USS Monterey (CG-61) and 7th Fleet support deployment aboard the USS Michael Murphy (DDG-112).