By most accounts, 2014 has been a pretty good year so far for small-business owners. The economy is improving, new technology is making it easier to compete against larger companies, and confidence is rising.

But not everything is coming up roses. One of the main areas that's still lagging for small-business owners is access to capital. Whether it’s private equity or a traditional bank loan, in order to gain access to growth capital, you need to have your business ducks in a row.

Here are four areas that keep most small-business owners from getting access to the money they need to save, manage or grow their companies:

1. Incomplete financials. One of the biggest red flags for potential lenders is a business that doesn’t have a firm handle on its financials. Most lenders will ask for some, if not all, of the following reports from your company:

• Cash flow statement. This statement shows lenders how money flows in and out of your company (receivables versus payables). A healthy statement has customers paying on time without too many late-payers. Positive cash flow shows more money coming in than going out. If there are any concerns such as a large invoice that's 90-plus days past due, be prepared to explain just why there's a problem.

• Income statement. Also called a profit and loss statement or an earnings report, the income statement shows lenders whether your company was profitable or not over a particular period of time. The statement divides revenue and expenses between operating and non-operating activities.

• Balance sheet. This statement is a snapshot of a company’s assets, liabilities and shareholders' equity at a specific point in time. A balance sheet gives lenders or investors a clear picture of what your business owes and owns.

• The most recent two to three years of tax returns. This is probably the easiest of the four documents to supply potential investors or lenders—as long as you file your taxes every year.

2. Less-than-perfect credit score. The past six years have been tough on the credit scores of most small businesses. The lag between receivables and payables forced many companies to delay payments to their vendors. Because vendors report payments every month to credit agencies, the credit scores of many small-business owners invariably went down. 

When was the last time you looked at your credit reports and scores? Most lenders will look at your personal credit scores and history when deciding on whether or not to extend credit to you. The good news is, federal law allows individuals to get at least one free credit report each year from each of the three credit bureaus (Experian, Equifax and Trans Union). Any score below 700 will make it tougher for you to get credit—it's not impossible, but the interest will likely be higher given the credit risk.

One of the smartest moves you can make before you search for capital is to review your credit reports for any incorrect information. You will need to dispute all claims, which typically take 30 days to resolve. Apply for credit only after any incorrect information has been taken off your reports. 

The first two areas are mainly a concern for traditional lenders or credit companies. The next two areas focus more on what private debt or equity investors are looking for in your business.

3. No firm plans for business growth. An investor wants to know how their money will be used by your company. They'll want to see specific and measurable objectives that will be achieved by you having access to their capital. No clear plan on where you want to go means no clear access to the capital. 

4. The need for money to stay afloat. There's almost nothing worse in business than delaying the inevitable death of a company. My father used to tell me, “Don’t throw good money after bad.” We saw quite a bit of this happen from 2008 to 2010 when many small businesses and entrepreneurial companies suddenly found themselves behind the eight ball. These days, investors are much less inclined to be turnaround specialists. Only if a company has decent assets or a unique niche in a marketplace will most investors consider the opportunity.

Before you approach any lenders with your funding requests, be sure to take the necessary time to examine your business the same way these lenders will be looking at your company. Whether you see opportunities or obstacles, make sure your business is ready to go under the microscope. The best approach to accessing capital is to be prepared before you need it.

Read more articles and see exclusive videos in OPEN Forum’s special section on Managing Your Money.

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