Archive for January, 2011

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Commercial Lender Changes Hurt Small Business Financing Options

January 31st, 2011

Most tiny small business proprietors are likely to be severely impacted by current industrial financial institution adjustments. In just about all instances, the small business lending adjustments are everlasting and can not be avoided if a industrial borrower wants to carry on their current banking connection. One noteworthy exception is illustrated by some new and additional versatile commercial lending sources.

One of the greatest industrial lending modifications entails new pointers for operating funds financing. Most banks seem to be quietly eliminating business enterprise lines of credit score or severely reducing the amount they are prepared to finance to a stage which is not beneficial to an common small business. Quite couple of businesses can survive without having a reliable resource of operating capital, so this change promises to obtain the highest priority from most smaller corporations. To change the disappearing commercial lines of credit score, the most practical solutions for enterprise borrowers include operating capital loans and merchant funding from 1 of your option commercial finance sources nonetheless active in small enterprise financing plans.

A different business financial institution alter is illustrated by the trouble of locating investment property funding. An rising number of banks will make commercial mortgage loans only once the commercial home is regarded as to become owner-occupied (which means the industrial borrower occupies a significant portion with the constructing). Commercial properties like apartment buildings and shopping centers are generally owned by traders that do not occupy the property. For numerous banks, it appears that they’re currently restricting their industrial lending routines to people which qualify for SBA loans (Little Organization Administration) which generally exclude investor-owned circumstances.
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Small Business Financing Strategies

January 30th, 2011


In these tough economic times, it can be difficult to obtain funding through the usual channels of lending. Fortunately, there are many nontraditional sources of funding which other small business owners have relied on in the past, and which you can use to your advantage. Here are just some of the resources you might want to consider: Friends and family Many small business owners have used funding from friends/family to get their small business off the ground. If you are going to go this route, it makes sense to have a written agreement specifying the terms of the loan, repayment, interest, and so on. This can prevent many arguments and hurt feelings if the business struggles early on. It also creates clarity for the small business owner as to whether or not the business can be a profitable operation. Barter with other small business owners Through barter, it is possible to find another business owner whose products/services can be exchanged with yours. However, as with the friends and family option, you’ll want to specify in advance what the terms of exchange are, preferably in dollar figures for services performed. Keep in mind that the exchange need not necessarily be a 1:1 exchange; for example, if you really need advertising, you might make an advertiser a 1.2:1 exchange in their favor. Yet, by the same token, if one of you has to perform special services to complete a barter transaction, make sure that any contract reflects that these costs will be extra. Special offers to customers One final method for funding can come from offering customers discounts for volume purchases, advance orders, and similar agreements. You should especially look for minor benefits which can be provided at low cost (or no added cost) to the customer, and use these freebies to make your special offer more enticing. Even if you have a service, the same basic principle can apply through the use of gift certificates or free consultation. Just be certain that there is an eventual expiration date, or some other adjustment for when your expenses increase. In summary, with a bit of shrewd planning, many sources of funding can be found which are atypical, yet highly useful to the new small business owner. Still, when creating any contract, it is strongly recommended to have an attorney review the terms and conditions of any agreement so that common pitfalls are avoided.

Copyright 2010, Marc Mays

By: Marc Mays

About the Author:
Marc Mays is the creator of http://www.myplatinumparachute.com/, which helps first-time small business owners obtain the critical skills needed for their small business success.



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Posted in Business

Searching For The Right Business Financing

January 29th, 2011


Exploring the world of business financing can be an exciting and confusing adventure. If you are just beginning to search or you have been searching for business financing for some time without success, taking a fresh approach may bring you the results you want.

What are your options and how do you qualify? These two questions will be easier to answer once you identify the following:

1. What is the purpose of the business financing?

2. How long have you been in business?

3. What is your annual income?

4. How many and what type of assets do you have, i.e., account receivables, machinery or real estate?

5. What type of organization is your business, i.e., sole proprietor, partnership or corporation?

This information will help you shop for your business financing smarter. Even if you are in dire circumstances, a solution is easier to find if you keep a cool head and have your facts straight. Business financing can be provided from a variety of sources; each has its own requirements and carries its own benefits and drawbacks. One factor will play a key role in which source you choose will be TIME-how quickly do you need access to the funds and when will you be able to repay?

The next factor to consider is the AMOUNT of funds you require-some of the sources you can use will be eliminated if you want less than $10,000 or more than $275,000. Along with the amount of money, keep in mind that in most cases there will be an interest rate applied which increases the total amount of money you will be responsible to repay.

With all of these facts in front of you, re-think your business-financing proposal. Put yourself in the position of the bank, venture capitalist or government agency-is your business a high, medium or low risk financing project? Remember business financing is a LOAN not a grant: whomever you approach wants to safeguard their interest.

Before you approach these type of business financiers, here are three of the most easily negotiated sources of business financing:

Accounts Receivable Factoring

If you need business financing quickly, it makes sense to look for ways to get the cash you need without taking on more debt than necessary. Account Receivable Factoring is one of the first options you should investigate if your company is in need of cash. For a fee, there are factoring companies that will advance you up to 90% of the total value of one or all of your account receivable invoices.

These companies have extremely fast response rate, usually you can have cash in hand within 72 hours. When your customers pay their invoice, the factoring fee is deducted and the balance is paid to you. Some factoring companies will extend a credit line to your company ranging from $25,000 to $15,000,000.

Credit Card Sales Loans

After account receivable factoring, if your company accepts credit cards for purchases, there are companies that will loan you up to $150,000 depending on your credit card sales history. With this type of financing arrangement, you pre-qualify for the loan with only the necessary information to receive a preliminary loan quote. Once you qualify the financing is usually available within 10 business days. These companies collect a fixed amount from each of your credit card sales until the loan is repaid.

Personal / Private Loans

There are business success stories that started with a loan from family and friends becoming profitable, making everyone happy. But the other side of the story is not so pleasant; when the idea doesn’t capture the market attention and the profits never materialize, it creates an uncomfortable situation for everyone. In both of these situations a written agreement can make all of the difference between relationships remaining civil or becoming difficult.

When you ask a friend or family member for a loan, treat this request with the same respect as you would your bank. Be prepared to discuss your business, how you plan to spend and repay the money, in addition to how much you interest you will pay. Once you reach an agreement, consult your attorney and have the terms put in writing.

Finding your business match

Although we have discussed 3 viable ways to stimulate your business cash flow, they basically serve to spark your imagination to begin to view your financial management more creatively. These options work well for short term financing, that will “buy” you some time to plan your strategy for utilizing the more involved long term financing options that are available to help your business thrive.

By: Andrew Brown

About the Author:
Andrew Brown and Small Business Guru provide Coaching, Inspiration and Practical Advice for Small Business Owners and Entrepreneurs. Subscribe to the free, weekly newsletter at http://www.small-business-guru.com



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Posted in Finance