Need A Working Capital Line Of Credit For Your Business?

A working capital line a credit is essentially a revolving line of credit from which your business can draw from and pay back as needed.
Example: Your small business just closed a larger then average customer. However, your business needs to pick up $10,000 in materials to complete this new, very profitable job.
However, your cash situation is a little low given the recent slow recovery we all are facing.
You had a business line of credit years ago, but the bank that held that line was one of the many that had to take the government's TARP funds and thus, to improve its own balance sheet, reduced your line of credit to your last outstanding balance of $2,000.
After which, you did not renew the line (and pay the hefty fee for it) and thus, your line of credit expired.
So, what are you going to do now? You don't think your bank or any of the local banks will provide you another line of credit - not for the $10,000 you are seeking.
Most of the banks that remain are struggling themselves - and are unlikely to take your call. Plus, it probably would take them months before you got an approval or decline - time that your business just does not have right now.
A simple solution is a Business Credit Card.
A business credit card is essentially a working capital line of credit. It is designed for short-term purchases and financing. Just like the example above.
The only real differences between a business credit card and a traditional business line credit are:
1) A traditional line of credit typically has to be zeroed out - once a month, once a quarter or at least once a year. This means you have to pay your balance to zero a least once during the term of the line.
The reason is that the banks force you to properly use these lines of credit for the purpose they were designed for - short-term and short-term working capital only.
Business credit cards do not have that restriction. You can draw from the line and pay it back when it best fits you to do so as long as you stay within your credit limit.
2) Traditional lines of credit can potentially have a much larger credit limit. Good if you need it - but, if you only need a little to get by - like our example above - a business credit card's limit will more than meet your working capital needs.
Other benefits of business credit cards:
- Easy and quick to obtain. You can get an approval in minutes as compared to weeks and months with a traditional line of credit.
- You can easily use your business credit cards to pay for online purchases or to make quick buying decisions when talking to your suppliers - Or, make purchases that are sometimes restricted by your line of credit; like paying your phone or internet bill.
- You can give cards to your employees - with restrictions on the amount they can spend and where those purchases can be made.
- Business credit cards are typically unsecured - requiring no business collateral or financial assets tied to the line like with accounts receivable lines of credit.
The real con to using business credit cards when compared to traditional business lines of credit is the interest rate.
Example: You business line of credit may have an 8 ½ percentage interest rate. Your business credit cards might have a 12 percent rate.
But, if you use your business credit card like you should - meaning for short-term working capital - then the rate should not really matter all that much.
Let say you will use the $10,000 business credit card to purchase supplies and after the job is done in two months - you will repay the $10,000 - the way you should use any working capital loan.
If you held that balance outstanding for two months, your net costs (your interest costs) would be $150 at 12%.
Whereas if your business used a traditional line of credit with an interest rate of only 8% - your net costs would only be $100 - that is if you could get a traditional business line of credit soon enough to make the delivery to your customer.
Now, $50 is $50 dollar - but, compare that to either making the profit on the job by using a business credit card or losing the job all together because you can't get the supplies you need. Plus, you can always add that additional bit of interest into the price of the job - passing the higher interest cost along.
The bottom line - if you use business credit cards for what they are intended to be use for - short-term working capital and don't keep large balances on them for extended periods - then they will function very well to cover the working capital needs of your business.
Thus, when that new, large customer does come along - you can jump right into to completing that order and refill your coffers with the resulting profits.

Short Sales, REOs, Flips and Rehab Loans

Investor Financing Programs

Do Short Sales lending, REO Funding, Investor Rehab Loans and Flip Lending. That is a mouthful for any lender to say. There are sources for all these programs for both commercial and residential properties. Now is the time for Real Estate Investors to make money. Many of these programs can be done with little or no money as a down payment. Sometimes the closing costs can even be rolled into the loan.

Short Sales

These are properties sold by the current owner below what is owed on them. The bank that holds the note would negotiate and approve a price less than the amount due them. This is an opportunity to get property well below market value. Many lenders will fund these transactions like any other transaction the problem is that the criteria at most financial institutions are so tough that these deals are next to impossible to finance through banks for real estate investors. There are sources for both commercial and residential short sales to be financed at little or no down payment based on the market value of the property and the credit profile of the buyer.

REO's

REO is short for Real Estate Owned. These are bank owned properties that many institutions sell that a investor may get a good deal on. One reason is carrying non performing assets on their books results in poor ratings from bank regulators. This can result in banks being taken over in the worse case scenario or in the least the will have reduce ratings by investment rating services. Secondly, these non performing assets cost money to keep. As such income producing property investors may find good deals buying REO's. As with short sales investor financing may be challenging but many of the same resources are available to finance them.

Rehab Loans

Many of these distressed properties have been neglected and sometimes vandalized and require updating, renovation and rehabilitation. As such the acquisition costs are lower but to realize the full value and be able to sell them at market value many REI's (Real Estate Investors) need to rehab the property. REI's of commercial and residential Short Sales, REO's, Foreclosures and otherwise distressed property need a source of short term financing to Purchase and Rehab their investment. The answer quite often is hard money, private funding or bridge loans.

Flip Lending

There are a group of REI's that are wholesalers. They find distressed properties at drastically reduced prices and wholesale them to other investors. These wholesalers must take title to protect their interest. This short term financing is termed transactional funding. A transactional funding loan can be for 1 day (most are) up to 90 days. This way wholesalers and legally flip property because they have gotten a loan and taken title in their name. This is usually a three party two transaction deal. Party "A" is the seller to the Wholesaler or other R.E.I. Party "B" is the wholesaler. Party "C" could be another R.E.I. or an end buyer. "A" sells to "B". "B" sells to "C" for profit. "C" rehabs, renovates and stabilizes the property to create optimal value. This can be done using transactional funding and rehab lending simultaneously. These resources are available for commercial and residential property Real Estate Investors.

Commercial Loans Possible With Bad Credit

There are different kinds of business which use commercial loans even with bad credit. With the help of the commercial finances it becomes possible for them to improve their financial conditions, reduce expenses, increase availability of funds and a lot of other advantages are associated with commercial loans. Generally the norm is such that loan is given for a period of 30 years. In case of those who have a bad credit the loan options are far more flexible. In the first place, in case of the ones with bad credit it is likely that you get a low equity rate and low fees.

In case of commercial loans with bad credit it is very likely that loans are either secured or unsecured. Commercial business loans give up to 79 percent LTV or load to valuation with variable rate of interest. Here it is worth mentioning that with the length and status of loan borrowed the interest varies accordingly. There are several options of commercial loans in the market. For instance, there are credit lines, short-term loans, loans for equipment, for real estate and a lot others.

Besides the different kinds of commercial loans available there are a wide variety of commercial lenders as well. All across US, these lenders give loans both to private and public businesses. Even the size of the organization is not a criterion in providing loans to a company. Moreover getting these loans are also pretty easy because you just have to fill up an online application form.

The purposes for which companies offer loans are also different from one another. For instance, one can get loan for the buying of equipments, expansion of business, for the purpose of merging, acquisition and others. Generally the terms and conditions of these loans are flexible so that people are not inhibited to take these. The price of these loans is also widely varied as competition in the market is pretty high.

Finally it can be concluded saying that companies with bad credit can also opt for commercial loans. Some of the common instances where commercial loans with bad credit used are export/import financing, working capital financing and a lot others. There is no denying the fact that commercial financing with bad credit is most suitable for the ones who have a small business. With these loans the small business houses gets an opportunity to develop their business credit.

How To Get Government Loans For Your Business

Whether you like to believe it or not, the truth is that the government has plenty of money, billions of dollars floating about just as business loans to small business owners. There are more ways to get government loans to start a business than one can imagine. The government does not lend you the money itself, but it comes in as a guarantor and you can be sure that when the government is the guarantor, then you must get your start up business loan from the lender. Every year, the government comes up with more programs to avail loans to small businesses in a stimulus program that is supposed to impact positively on the recovery of the economy. It should not be hard for you to get a loan under any of the government programs.

The first thing for a smart businessperson aspiring to get a loan to do is to find out all manner of loans that might be on offer. Start easy by finding out what the local government in your state might have for you. Many local governments have small business loan programs of different variety and its amazing how you might have missed out on them to find this information, just use the internet.

There are many more government loans options for you than you can use. The best is to approach the SBA for help. If you go to the lender on your own, you can be sure that they will most likely not touch you. However, through associations like the SBA they will not hesitate to give you the money. The SBA comes in as a guarantor to assure the lenders that their money is not at risk because if you default on payments, SBA will still make good the payments to the bank.

However, this should not be taken to mean that you should default on your payments. To improve your business credit worthiness, you should pay up every month without failure such that you can be able to borrow even more in future when you need to expand your business. The personal and business credit worthiness comes into consideration a lot when you are getting a loan and that is why you should build the best credit history for your business. Take out a credit card in the name of the business and make sure you pay all the business bills on time.

Think about the special interest loans that are given out to minority groups to help them get started in business. Unknown to many people, there are many such programs and you only need to know when and where to get them if you meet the prerequisites. Watch out for more opportunities of getting government loans because every time, the government rolls out new and better programs into the market to make loans access easier. And what about the grants? Free money? Sounds hard but it happens. Have an ear to the ground for such offers because they could come your way anytime. The good news is that government loans for small start up businesses abound. You just have to find them.

5 Key Steps to Build a Valuable Relationship With Your Bank

A good banking relationship is critical for any business; that relationship should grow as your business grows and can develop into a very strong bond as long as you manage it properly. A good connection with your bank will provide ongoing information with often, free consultation regarding the growth of your business. As a small business owner, free expert advice on your financial matters from someone that really wants you to succeed is invaluable. The bank wants you to flourish since your growth and success will directly influence their overall financial strength.

Establishing a strong and positive relationship with your bank starts with the following 5 key steps:

1) Set up your business bank account with an institution which deals specifically with your size of business and type of product line. You don't want to be the only food distributor the bank works with; you want the benefit of the bank's experience based on other businesses in your category. It will be easier to build your relationship if they are familiar with your particular industry.

2) Manage your business account carefully and avoid keeping your balances too low; over-draws and bounced checks are counted against you. This will raise a red flag internally and you will not be eligible for the best programs the bank has to offer. Bankers are very much aware of whom their stronger clients are; you want to be in that category.

3) Borrow several small short-term loans and pay them back quickly to establish positive business credit. Even if you don't need the loan and you can pay cash, go ahead and take it out anyways. It will do 2 things for you; help you learn the process and paperwork shuffle required to get financing and second, it will establish good pay-back history which will be important as your business grows.

4) Inevitably, in the young life of a new business, payments will be missed and forecasts will be off target. When these issues arise, make that first phone call to your bank to discuss what is happening with your business flow. Keep them informed so that the bank knows you consider the relationship important and to get valued feedback. Even if you can deal with the matter yourself, sharing your challenges will strengthen that partner relationship.

5) Develop a personal relationship with your banker, that's why their business card states, "Relationship Banker." Take them out to lunch, they will never say no because they understand the value of networking and building trust in the community which is vital to their success. Tell them your story, summarize your plan and let them in on your dreams; where you want your business to go and what you envision for the future. Make your personal banker a cheerleader for your cause and you will have someone on the inside always voting in your favor.

Relationships are important for all parts of your business; the relationships with your vendors, suppliers, partners, employees and customers are all vital. But one of the first relationships you need to solidify is the one with your bank. Since lack of capital is one of the top 3 reasons businesses fail, you want to build a strong alliance with your source of capital. They may not be able to supply all the funding you need for every situation but they will always be a cornerstone for your daily operations and financial stability. Build your relationship early on and enjoy the benefits throughout the life of your business.

Merchant Cash Advance: The Best Solution for Restaurants

When it comes to financing a small business, a merchant cash advance is the right option for most. But for those in the restaurant business, it truly is the only option you should consider. Although every business wants to stay ahead of the game, restaurants can't afford to be one step behind. They need financing quickly so they can respond to changes in the market and continue to invest in the growth of their business.

The food industry changes quicker than you think. Thai fusion food may be all the rage this year, but by next year, consumers are all about Mediterranean. Even if you have the luxury of being in business for years and people regard your restaurant as their "go-to favorite," patrons still want to be wowed every time they come in there. After ten years of eating the same dishes, customers will find a new place to call home.

Business cash advances are the easiest way to update and upgrade your entire restaurant. New equipment and appliances will eventually need to be purchased. You can't expect to be the best restaurant in your neighborhood if all your pans are damaged and someone broke the last spatula. Every so often, the restaurant will need a fresh look. Use the money to redecorate or expand the room when the market is doing well. If business is booming, open up a new location. Garner more attention by investing in advertising or host a special event. You can even use the money when business is bad to tide you over. With a business loan, the money is only supposed to be used to invest in your business.

A business cash advance is sometimes the only option a restaurant even has. Many restaurants close down within one to three years of opening. With a staggering rate like that, you can't really blame a bank for refusing to loan you money. Banks always consider a restaurant "high risk." A bank wants to be certain your business is guaranteed for success, and unless you're Bobby Flay opening up your tenth restaurant, you probably won't be approved. Another advantage to the merchant cash advance is the easy application process. Restaurant owners are chefs first and they may lack the financial expertise to negotiate a business loan. A cash advance is simple and straightforward, and best of all, you get your money quickly.

Don't let your dreams of opening a restaurant be shot down. A merchant cash advance can help you open up restaurant or keep it in business for years to come.

Invoice Factoring For Businesses Today

Today's small business owners are struggling and many looking for answers as to how these tough times will affect the overall value of their businesses.

It is times like this in our economy when we actually see an increase in a tactic known as invoice factoring, when a business sells its accounts receivable invoices at a discount. Invoice factoring has helped many companies survive and stay in business in the midst of the current global economic downturn.

A recent report tracking the health of small business, (BizBuySell.com) indicates that there has been a decline in business-for-sale transactions and valuations. Plus, the number of closed transactions reported in the first quarter decreased by 36 percent as compared to the same 2008 time period.

Another area that is dropping during this current economic environment are the value metrics for businesses. Revenue multiples for closed transactions dropped 5.5 percent to.69 in the first quarter of 2009, while cash flow multiples fell 3.8 percent to 2.69. The way this is determined is by dividing the selling price of a business by its annual revenue or cash flow.

The same report also indicates that median business sale price for closed transactions decreased 17.3 percent to $165,500.

Valuation multiples are going down and now buyers are hesitant to pay the asking prices for a business. Uncertainty causes concerns about a business's cash flow and future revenues.

Apparently buyers are having difficulty accessing the capital they need to purchase a business, and keep it going. The traditional banks, and venture capitalists, or angels, as well as SBA-backed loans have all simply dried up. Therefore, when there are fewer buyers able to bid on most businesses, there's less pressure for upward pricing.

Economic conditions have made it more difficult to close deals than ever before, but a number of business brokers are reporting a record number of buyer inquiries due to an increasing number of layoffs.

The good news is that market conditions for small business transactions should improve as selling prices continue to decline. The reason for this is because credit will slowly become available to new buyers.

Standard factoring companies have been around for more than 4,000 years. A highly effective cash management strategy, invoice factoring allows businesses to obtain funds based on their current accounts receivables and benefit immediately from 90 percent advances against invoices that would otherwise not be paid for 30, 60 or 90 days.

A business often times doesn't get paid right away for a product or service that it has already delivered, so the bottom line is that accounts receivable factoring, also known as single invoice factoring, might be an answer. Factoring is an extremely quick way to turn a company's receivables into cash rather than waiting up to 90 days for an invoice to be paid. Factoring companies - also knows ASN factors - will look at your customers' credit rather than yours. The single invoice factoring process includes due diligence that typically takes one to two business days. Once completed the client is at liberty to offer invoices to the factor for purchase.

Factoring is not a loan - it is the purchase of a financial asset, or the receivable. Factoring varies from a bank loan in several ways. Banks base their decisions on a company's credit worthiness, whereas factoring is based on the value of the receivables. Bank loans involve two parties, while factoring involves three parties.

Factors typically look at the creditworthiness of a client's customers and they do not expect to buy 100 percent of a company's receivables. There are no minimum or maximum sales volume requirements. All the factors professional rates are competitive because each client's circumstances vary, which may have an impact on the fees charged. The program allows choices of invoices to be factored, enabling customers to retain most of their money, while spending the minimum fees to guarantee adequate cash flow.

Upon receipt of invoices, the factoring company checks the credit of the debtor named on the invoice to make certain that the sale represented has been completed satisfactorily. Once completed, the debtor is advised of the purchase by the factor and the client receives their funding. At the end of the credit period, the debtor pays the factoring company directly completing the transaction.

Bad Credit Business Loans - No Credit Check

These tough economic times seem to be the best time to start your own business. So many folks are facing unemployment with no prospects of finding a good job, the only viable way to sustain oneself is starting a business. But, because these tough economic times have caused a lot of people to take big bad hits on their credit reports, finding the funds to start up or grow your business can be tough to do.

Some Lenders Willing to Help Small Business Borrowers

Because so many borrowers have taken hits on their credit reports, and because traditional lenders may not be willing to underwrite such loans, private lenders have stepped in to provide them with the funds they need to start or grow their businesses. Many of these lenders can be found online. You should talk with others, even strangers, who have a small business and ask them how they went about getting the funding they needed.

You Must Have a Dream of Success

Of course, funding is important. But the driving force behind making a business work is having a dream. Having good knowledge of how what you have to offer in terms of business is something that is needed and will reward you with success and a very decent income. No matter what difficulties you may face, especially in the form of funding, the dream is what will help see you through. Do not give up - you can make a go of it.

Know Yourself and Know Your Business

The first thing you must do is have a solid business plan. You need to know how much you need to start the business, how much you will need to survive until the business takes hold, and how much you can afford to pay each month. You should make every effort to keep your personal finances separate from your business finances. Without a solid plan and a solid budget, not many lenders are going to be willing to talk to you. Not even private lenders.

Government Lenders and Private Lenders

Once you have a solid plan and budget, you need to cast your search net wide. You should approach traditional brick and mortar financial establishments, these folks can help you land small-business government loans that carry very low interest rates with very generous repayment terms. When you first start thinking about funding, be aware of what the government has to offer. Avail yourself online of the resources available through government and other sites. Check out the Small Business Administration.

Some Lenders Willing to Go the Extra Mile

Do not be discouraged if you are turned down in the traditional venues. Plenty of private lenders are out there who are willing to help out the small businessman or businesswoman. However, with these lenders you may find the interest rates somewhat more hefty than those of the traditional lenders or government lenders. On the other hand, you may find that some of these lenders are willing to go the extra mile if they believe what you believe about the prospects for your business success. They may be willing to cut you some very interesting or innovative ideas when it comes to the cash you need.

Do Not Forget Who Helped

Whatever you do, make sure you meet the repayment conditions specified in your loan contract. You may not have the best credit, but you will want your business to have excellent credit. After all, that is part of the dream of owning a small business.

Best Ways To Get Venture Funds

For starting small business one requires early stage investors and venture capitalists. Find angel investors and use them for their expertise and as a useful external source of capital for foundation of new business. Being a valuable source which brings new startup ventures appreciative value, the factors are important.

Businessmen aim to find angel investors for starting small business with the help of venture capitalists and private equity funds. Unless the business already has a large fortune to finance the start-up activities of the venture, the success of the business depends on the availability of the investment funds. The financiers focus entirely on early stage venture carefully choosing the suitable strategy for requirement of finances.

Some of the suggested solutions that may be of some use are as follows:

Business credit cards: A number of flourishing businesses can be financed through credit cards for their start-up venture. Tough the need not be ideal solution for the investment funds, but are a helpful source of financing when needed. This source not only acts as an effective way to manage cash flow and maintaining the investment in an easy manner.

Supply chain financing: In case of dealing with suppliers and manufacturers, a line of credit can use useful to get a favorable loan.

Microloans: It is a small procedure considered a short-term loan for a business start-up working its successful way towards required capital. Microloans are offered by the monetary institutions who distribute them to the mediator lenders associated with nonprofit communities. Little collateral according to the loan and flexible terms the microloans can be easily planned.

Business plan competitions: Due to varied competitions in the industry the business plan also offers rewarding prize money to preferred professionals in order to finance their ventures.

Grants: Another important factor for early stage venture, the grants form a source of free money. They are a desirable source of investment and also difficult to obtain. Awarded by government agencies these sources of funds are specially reserved for starting small business. An exhausting process this factor is capable of providing high-end services to the community for varied business ventures.

Personal savings: As an inspired source of venture capital, the personal savings are widely used for start-ups. Not only do they allow businessmen to own all the shares of the company, they also come with attractive terms minus the business liability.

Hence, these are the perfect solutions to find an easy to use capital for a new venture and successfully convert into a full fledged business idea without the investment worries.

Commercial Loans and Business Plans Considered

It's not easy to write a business plan, but it is paramount that entrepreneurs do so. For instance, consider if you will the type of folks who are entrepreneurs - gregarious types of individuals, who are probably not very good with the fine details as accountants are. Therefore, they often have trouble preparing business plans. Nevertheless they need to do this so they understand what they're getting themselves into, and evaluate their potential business opportunities appropriately without allowing their optimism to run away with the game.

Over the years, since retirement, I have helped various entrepreneurs in their businesses, and often they need to get funding or financing to start these endeavors, so they go and look to get a commercial loan. The bankers know that entrepreneurs aren't very good at writing business per-startup plans, so generally they except business plans which are half baked, or in the case of the small business administration, they have a form which is filled out by the entrepreneur in place of the business plan, it's about 13 pages.

However, a decent start-up plan could easily run 40 pages including the proformas in the back. It seems to me rather than making it easy for entrepreneurs to get commercial loans and therefore requiring less than adequate business plans - that we should be moving in the other direction, stipulating that the business plans the very well done. Indeed as a taxpayer I am concerned that my tax dollar will subsidize the SBA loan program. And many of these loans fail, but right now the taxpayer and SBA guarantees 90% of the loan with the local banks which make the SBA loans.

Since the bank has very little risk because the government is guaranteeing 90% therefore they are only on the hook for 10%. Are you beginning to see the problem with this? If entrepreneurs and small business people can't prepare start-up plans, and they aren't sure what they're getting themselves into, why an Earth is the SBA and commercial business banks providing more rope for these future business owners to hang themselves with? Indeed that makes no sense at all does it?

Perhaps, this is why I often tell entrepreneurs to create a business startup plan, then look at the real numbers, and play devil's advocate a little bit against their overbearing opportunistic enthusiasm and hyper drive optimism. Indeed, I hope you will please consider all this and think on it. If you have any questions, comments, concerns, or even case studies, I would be glad to hear about it. Please shoot me an e-mail.

When You Can't Pay Your Business Loan - 3 Steps To Take Immediately

There will come a time to most businesses where they struggle to make loan payments. It is just the nature of business and a fact of our ever fluctuating economy.

Just think about the business slowdown that happened with the 2008 financial crisis.

If you find yourself or your business in this position - not being able to pay your business loan - here are three steps that you should take immediately:

1) Review Your Loan Document: Your loan documents will state specifically what a lender can do in the event of a default. While you should have read these in detail when signing them, most of us do not. So, read them now!

Your loan documents will outline when you are considered in default, what fees and interest rate increases you may face, what assets (business or personal) that can be taken as well as any other recourse the bank or lender may be able to take against you and your business - including what courts they can use or if it can only go to an arbitrator of their choice.

The idea is to arm yourself with as much knowledge about this process and what a lender can do. Many bankers will try to do underhanded things - mostly because they don't want a loan they underwrote to make them look bad.

2) Call Your Lender: The reasoning here is to make them aware. Thus, it does not come as such a blow to them. A mad banker or lender is very hard to work with.

Also, if you have a guarantee on your loan - like with a SBA loan - call them as well.

The goal here is to try to work out a deal. Your bank would rather work a deal with you then to have to incur the added costs of seeking a judgment against you or taking and selling your collateral (personal or otherwise) - especially if they think that they will not get anything in return for the added costs.

So, try to work out a deal. Try to get your interest rate reduced or your fees waived. Set up a payment schedule or extend the term on the original loan; making the payment more manageable.

3) Create A Payment Plan: Create a payment plan with what money you have left as well as the assets that you can sell right away for immediate cash.

Get a list and amounts of all the cash resources you can muster as well as the 'fire sale' value of all the assets you are willing to sell off immediately (do know that if there is a lien on some of your business assets, you cannot sell them without the lien holders approval - thus see number 2 above regarding working with your lender).

Once in place, prioritize who will get paid - e.g. who should get paid first!

You always want to pay your employees and your tax liabilities first. Not paying these could land you in jail. You definitely want to avoid this.

Also, look at those who have additional claims on your business or assets. Your suppliers who may only have claims on the goods or supplies you purchased from them. They could be moved down the list.

But, your bank or lender could have an additional claim on all your business assets as well as (and here is the kicker) your personal assets. Thus, look to pay them first or near the top. You definitely do not want to lose your personal asset - like your house, car, retirement fund, stocks or other valuable heirlooms or personal possessions.

Lastly, never file for bankruptcy. Only use this option as a last (a very last) resort. The reason is that filing bankruptcy on your business will severely impact your personal future life as well. Thus, a few years down the road when you want to purchase a new house or a new car or even try to get a job or insurance, this will come back and haunt you - much more than just having some late pays or charge offs on your credit report.

The overall goal of these 3 steps is to reduce the damage - both to you and your business. If you can manage this entire process in the right way - making deals and paying those high priority first - you might be able to come out of this mostly unscathed; which can only help you in the long-run.

How to Choose the Right Business Loan

Unlike fast loans, business loans can be something that are often long term, so the pressure is on to get it right. It can be difficult to find the right loan when there are so many on the market too. Here, we've listed some of the main points to consider when choosing the right loan for your business:

What are your needs-The first thing you should consider is what you need from your business loan. Do you need the money to be ready when you need it, or upfront? How much will you need? What is the type of security you want to provide? Will it be residential or do you want to go with a loan that does not require going through this process?

Do your research- It's a good idea to start by looking on the Internet and explore a range of loan options. Read the fine print and make yourself familiar with all the details. Failing to do this can lead to disaster. Know the terminology and what you are getting yourself into, that way you will be best equipped for making the right decision on the best loan for your business.

What type of loan do you require- There are many different types of business loans that are specifically tailored to the needs of the business owner. Some of these include:

Start up financing: If you are starting up a business there are loans that are specifically designed for this. If this is the type of loan you are after it's a good idea to go with a lender who specialises in these types of loans in order to get the best deal available.

Business growth financing: New businesses are always growing at a steady pace. Business growth financing is a good option is you are needing a loan to help you expand your business quickly to meet customer demands.

Motor vehicle business loan: The motor vehicle business loan is a good option if you need a loan to assist with the growing transport requirements of your business.

Inventory financing: Inventory financing is all about helping you to meet the demand of your product for your customers. This type of loan will help you get your inventory up, to meet customer requirements.

Business property loan: If you want to purchase a property to conduct business, a business property loan is the best option, helping you to get expert advice on purchasing the right property, and with all the loan options you require.

Finance for equipment and plant tools: You may have to purchase or lease a large piece of equipment to be used in production and a loan specifically for equipment and plant tools is ideal for this.

General business loans: Of course, you may just need a loan to help assist with tax, wages, bills and other things not listed above and of course there are a great number of loans suited for this available on the market.

There are many different types of business loans. Some are similar to cash loans in that they can be arranged fast when you need to pay things like upcoming bills and wages. There are also other types of business loans that require a lot more time in application and can be for much larger sums of money, it really just depends on what you want the business loan for.

Invoice Factoring

A lot of companies and businesses go into financial difficulty without knowing which is the best solution, a lot of the time they go on for too long so that not much can be done to help the business and it has been declared bankrupt in most cases. Invoice factoring is often a method to convert your corporation invoices and future credit card receipts into immediate capital quickly. Anyone can sell these invoices or credit card receipts to an invoice factoring firm to acquire instant cash.
Factoring, as opposed to a regular loan, isn't going to generate company arrears. You simply won't be asked to produce monthly instalments. Your credit line won't be based on your company's financial strength or your own personal money. Your credit line can be dependent on the particular financial strength involving your clients as well as size of the invoices you hold.
Any organization would need funds to build. The truth is, generally the more quickly an organization grows, the greater its cash flow turns into a worry. If perhaps you've attempted to get yourself a bank loan of late, you recognize banks move carefully, if at all. The actual approval method is without a doubt problematic and the majority applicants don't even end up being qualified for a bank loan.
As a business owner, you most likely don't have time to put in writing your own business plan and additionally accumulate the never ending heaps of papers the banks insist upon, aside from time and energy to sit around patiently waiting weeks and months whilst bank committees take into account your application form.
You probably have clientele which will take 30 days to pay your invoices or your organization accepts credit cards routinely and you simply need cash quickly, factoring will help. There is certainly hardly any need to borrow from your lender to have the cash you need - factoring invoices will allow you to without all the time and difficulty involved in seeking conventional bank loans.
In most cases, businesses for most sectors should be eligible for an invoice factoring. The primary condition is that you simply sell to in financial terms sound consumers consistently, and do so on open credit terms.
Invoice factoring is a good opportunity for any business to treat financial problems instantly. A lot of companies offer you guarantees of money in as little as 1 day's time. But if your business requires cash to progress, buy equipment, or simply settle payments; business invoice factoring could possibly be the best answer for you.

Construction Loan Calculator and What You Need To Know

Construction loans are far different from other loans. To be able to understand the construction loan calculator and how it works, you must first know what a construction loan is and how it is done. After discussing a brief explanation on construction, we will go to the construction loan calculator usage advantages.

The contract to a construction loan is more of a mutual deal than a formal one. In this loan, the borrower and lender should have strong oral ties as the success of the application for this loan is based on the borrower's personal background and reason. The usual method of payment for this loan is through interest. After the construction is completed, that is the only time for you to pay-off the sum total of you loan or remaining loan balance to the lender. The amount you have to pay is the amount that the construction loan calculator will give you.

It also has special situations like, for example, you own the land and don't have enough money to build a house yet. In result to this, you will need a calculator for this type of loan. The lender would usually ask you to present a plan for the construction and financial plan for the project. You would need an initial payment to get the construction started. An initial payment is a crucial input in the loan calculator. After the agreement is made between the borrower and the lender, the lender will go to the place and check it for the approval of your loan. After this process, the construction will now take place.

You would need to pay monthly for the construction to continue. In this situation, this type of calculator comes in handy as it is accessible to almost everyone with internet connection. It can give you your monthly payments and amortized interest. Knowing the formulas to the construction loan calculator would make it a lot easier for you to calculate. There are times when the payments would be different so you need to recalculate them. Again, this is a situation where the calculator is of big help especially in avoiding you from wasting time.

Another benefit from the construction loan calculator is that you will be able to relate different loan proposals, so you could choose the best one. Building a home is not just something you should take for granted or do with speed and without mind, as it can cause you a lot of money and definitely, a waste of time - that could take years! So always remember to compare and research first before diving into any loan proposals. With the construction loan calculator, you can never get wrong with how you want your home to be constructed and lived in.

Short-Term Bridging Finance - Find Out How It Can Benefit You

If you need to obtain financing, you may be concerned that it's going to take you forever to get it. When you apply for a standard form of financing, not only do you have to deal with piles and piles of paperwork, but the processing period can take an extremely long-time. While this may simply be an inconvenience in some cases, in others it can ruin your purpose for obtaining financing in the first place. For example, if you identify an appealing property that is currently being offered at a reduced price, you need to obtain financing as soon as possible. Otherwise, someone else is going to get to pick up that great deal before you.
Fortunately, there is an option that can allow you to obtain financing in a much shorter period of time. This option is called short-term bridging finance. If you haven't heard of this option before, you'll be interested to know that there are quite a few benefits to it. The first is that it can be used for a wide range of purposes. While many financing options have a narrow list of uses, bridging finance can be customized to your needs. As previously mentioned, this type of financing can be used if you identify an underpriced property. The same goes for a property that you find at an auction. You can also use bridging finance if you're interested in purchasing a commercial development. If you've decided that you want to upgrade your home or another property that you own, that's another potential use of this type of short-term finance. It's also possible to obtain bridging finance against the value of a property as a type of general loan that you can use.
As its name implies, another appealing feature is that bridging finance is a short-term option. Unlike many other options, you can choose the financing duration that is the best fit for your needs. Whether it's four months or twelve months, this is yet another factor you can control for this type of financing. Given the amount of flexibility that has already been discussed, it shouldn't come as a surprise that the actual process of obtaining this option is much simpler than other financing routes. It's because of this simplicity that you can obtain this financing option in a matter of days.
If you've had bad experiences with other forms of financing in the past, it's time for you to discover how much easier things can be when you choose short term Bridging finance. One of the biggest differences you will notice if you decide to pursue this type of financing is that the lender will actually work with you instead of seeming to work against you. This is evident in everything from how valuations are calculated to the flexibility that is provided for the terms of your financing. Regardless of your specific goals, there is a strong chance that bridging finance can help you reach them in a shorter amount of time.

Commercial Loans for Small Business and Job Creation

Well, it looks like our economy is finally turning the corner and the small businesses are starting to show a profit, much like the corporations have been for the last 18 months. Indeed, there are a lot of retained earnings at the corporate level, and the banks are on solider footing and willing to make more small business loans now.

We are also entering an election year, and typically that is good news for the US economy. In my retirement I do a little bit of business consulting, and the other day I was assisting a small business person prepare a business plan, put together some proformas, and the other required documents to secure a business loan. She had decided not to go with a SBA or Small Business Administration loan because of all the stipulations and requirements, which did not make sense for her financial wherewithal, and abundance of personal assets.

Nevertheless we got to talking about what she was planning on doing with the money and it turns out she was going to expand her business so she could make more money. In doing so she will be hiring more individuals, and right away she will be hiring three new salespeople and two for marketing. That's five additional jobs that she will be creating. She will use some of the loan money for cash flow as the salespeople and marketing department sign up new corporate accounts.

Indeed, perhaps this shows how commercial loans for small business adds to job creation in this country. The corporations are very good at collecting money for their goods and services, and they are extremely good at lobbying protectionistic rules and regulations from government to stifle their competition or put up barriers to entry. But for a small business person caught in the trap of a poor business cycle or the uncertainty of future regulations it causes entrepreneurs to forgo the risks associated with business expansion, or taking out more credit in their personal name or in the name of their business.

Prior to now, there was not a whole lot of lending going on in her industry or sector, and although there was some, it hasn't been until now that she felt confident enough to go out and risk capital or borrow more money. Now she does feel confident, and she is moving this ball forward and down the field. Indeed I hope this will help others see how important commercial loans are for small business and job creation. Please consider all this and think on it.

What Qualifies As a Business Loan?

Those who are planning on putting up a business or those who are in need of additional funding for existing companies that they own can take out a business loan. This loan is unique in a way that it is only intended for the use of business organizations or individual entrepreneurs. A business loan is set to be paid back at a time that is specified with added amount for the interest rate.

Those who are interested on applying for a business loan can do so by taking into account the amount of loan to take, the interest rate, the date for repayment, and the collateral needed to make the loan.

The amount that will be approved for a business loan will vary. This is mostly dependent on the need for the loan. Some of the most famous needs include funding for business or project expansions, to augment deficits in the budget or in putting up a business from scratch.

Only the business owner will be able to determine how much he or she wants to borrow. This is also reliant on the size of the business. There will be differences in the amount needed for an expansion of a small business and of a large-scale company. For this situation, the range of the expansion is also a factor. The larger the development plans, the more funding might be needed.

The interest rates for a business loan will vary depending on several factors including the borrower's credit standing, the assets involved as collateral, and the risks or advantages involved in the venture. Governments also set a maximum or a minimum level on the rates that lending companies can impose on their borrowers.

More complex and contemporary models may involve more factors in determining the rates. One is taking into account the level of difficulty for the lender to raise the needed money. This is most common in situations when big companies borrow huge amounts. These difficulties can translate to an increase in the expenses of the lending company and will later on be shouldered by the borrower through the amount of interest that he will be paying.

Another characteristic of a business loan, or any loan for that matter, is the schedule of paying back the loan. Lenders look into the purpose of the loan and make their decisions from there.

There are a few methods to pay back the loan. One can be amortization wherein a certain amount is paid back for a particular amount of time. Most of the time, every payment is made with an equal amount. Another variety is when minimal payments are required for a given period of time but with the presence of the need for payment of the entire remaining amount at the end of the schedule.

Like personal loans, business loans also require collateral. Small businesses may make use of personal property of the owner to serve as guarantees to the lending company. Remember that the type of collateral used can determine the maximum allowable amount that can be loaned. So if you are seeking to borrow a huge amount, the collateral/s that you will be setting on the table should be as good as well.

How to Get a Business Loan for Your Home-Based Business

Several are already venturing into putting up their own businesses. And of course, the best way is to begin small but on sure grounds. One of the most famous courses taken is the establishment of a home-based business.

For this task, beginning entrepreneurs would need funds to initiate their plans and move their business. This is possible by taking out a small business loan.

But before you get into the task of getting a loan, you need to complete an important item, your business plan. This will dictate how much you need and how much you can afford to borrow and pay back later on. It may be wiser to create a long-range plan for a schedule of a couple of years. Include the possible profit estimates and the expenses along with several more important factors.

Your business plan needs to be detailed and organized. Create projections for every month in the time frame that you specified, if possible. Make it easy for the loan officer to understand about the business that you are planning to have. Double check and make sure that you have all the needed information and that there are no more missing entries.

If you have come up with a plan before you consulted a bank for you loan, you can confidently show them that you have the ability to pay whatever amount you will borrow from them. This can be helped by knowing your possible profits and the amounts that you can set aside to pay off your loan.

Look for a lender or a bank that offers what you need. There may be several lenders that are accessible to you but you want to find the one which will provide the best opportunity for you and the business that you are starting to develop.

There are also governments which offer guaranteed loans and there are also private entity loans.

Of course, there will be requirements when taking out a business loan. Bring with you your income tax returns. Also bring documents for your personal identification. You also need to show the bank that you can take care of your business well and allow it to grow through your experiences and expertise in the field. Those who have ventured into commerce for the first time might have a harder time than those who have substantial knowledge regarding the matter.

If you have good credit standing, there is really no need to worry about your loan not getting approved. Although, there will be more challenge for those whose credit standings are not of the best conditions. Lenders would not risk getting into an agreement with a borrower who obviously does not have the capacity to pay back what he or she owes them.

The next step will be to decide which property of yours you are willing to use as collateral for the loan. Since you are starting a home-based business, your collateral does not need to be considerable like your house but it can be a property which can provide security to the bank and at the same time show your capacity for repayment.

Understanding Receivable Financing Pricing And Rates Is Not Impossible Invoice Discounting 101

' Misunderstanding all you see '; those are lyrics from the Beatles ' Strawberry Fields ', and talk about being a bit appropriate for the confusion around receivable financing and invoice discounting rates in Canada.

So, talk about confusing... let's try and clear up some real basics around receivable finance in Canada -mostly along the lines of how it works and how it is priced. Clients are always providing their version of what they think they are getting but the reality is often far from that.

A/R finance is used by thousands of firms in Canada to address cash flow shortages when in fact more traditional financing simply doesn't make sense or can't be attained.

A good way to clear up some of the confusion around this method of business finance in Canada is to address it head on, which is simply to say that this finance mechanism isn't financing per se, it's simply the sale of one of your assets at a discounted rate. So from that perspective even we own up to being guilty sometimes around the terminology!

Another way of looking at our issue to frankly address what might be perceived or real drawbacks or negatives around A/R financing. The discount rate used on receivables when you sell them, in Canada, ranges anywhere from 1-5%. To be fair, the average discount rate tends to be in the 2% range.

Invoice discounting rates make the most sense when they are used to take advantages of opportunities for growth and higher profits and sales via asset turnover.

Part of the reason A/R finance is viewed as confusing by many is that it's essentially part of an unregulated industry. Clearly our banks are regulated and you know what you get (when you can get it!)

So what does that all mean to Canadian business owners and financial managers. Simply 4 words. Pick a solid partner! Or adviser.

Where invoice discount financing gets confusing is in the terms/contracts, and the rates.

So how do you address that pricing in terms of benefits? Several factors have to be taken into consideration. They are the quality and age of your receivable portfolio, the ' opportunity cost' of what you can do with additional cash flow, and the actual cost of carrying your receivables and inventory as opposed to monetizing them more quickly via a receivable financing strategy.

As we have said in the past carrying receivables anywhere from 60-90 days can easily cost you anywhere from 10-20% when you factor in days to pay your firm, admin costs, lost opportunities, your current financing costs, etc.

So why do Canadian business owners and their finance staff stumble on the issue of receivable finance. It's partly, as we have shown due to their inability to overlook the total pictures in the areas we have demonstrated above.

Invoice discounting rates makes the most sense when you look at opportunity cost. If you finance your receivables as you generate them you lower the balance sheet investment and reduce your day's sales outstanding.

A quick example - if your annual sales are 1.2 million and your daily sales are $3300 per day for example you could add $10,000 to cash flow by a 3 day reduction in DSO. A 30 day reduction adds 100k to cash flow!

Charges or costs for a 100k per month facility equate to a 2k per month cost if you are turning your A/R promptly.

So, confusing. We hope not, although we're the first to admit it takes a bit of time. Speak to a trusted credible and experienced Canadian business financing adviser for clarity on achieving best invoice discounting rates and benefits for your firm.

The Hidden Advantage Of Hiring A Workout Specialist

Clearly, the most important reason to hire an experienced debt workout specialist, a consultant who has successfully handled hundreds of workouts and knows precisely what works and what doesn't, is the risk involved if a workout is not done effectively. For success to be realized, profound expertise is required. As in any specialized practice, only years of hands-on experience can prepare one for these battles, the unique aspects of any individual debt workout case. It should be very obvious why one would want a seasoned professional representing them in a life or death financial battle, especially when in default and presumably defenseless. This is clear.

What you may not consider is the enormous secondary advantage of hiring an experienced, professional debt workout consultant to handle your entire secured debt workout; it frees you to concentrate on growing your business and make it succeed.

We know that a business owner in default, with inadequate cash flow, must fight for survival on a daily basis. You fight to collect receivables so you can make payroll every week. You fight to juggle your cash flow so you can keep your landlord mildly satisfied. You fight with your vendors to ship despite your arrears. You fight with the bank to allow partial payments or no payments at all and to not foreclose.

You pray the IRS does not shut you down or levy your accounts because you are in arrears on your payroll taxes. You beg your insurance company to not cancel important insurances. You receive dozens of calls about your unpaid credit cards at home and work. Under such adverse circumstances, how can you possibly manage your business? How can you successfully market when all you can do is manage your debt?

The answer is, you can't!! So, what can you do about this? Only one strategy exists that supports success in this environment: Hiring an experienced workout specialist that can completely handle your debt challenges, freeing you, the business owner, to do what you need to do and what you do best-manage and develop your business. Wow, it feels like freedom! It IS freedom, freedom to do your job. What a relief, what a delight!

It's a successful concept, a greatly needed benefit, returning to the management of your business to develop a successful growth plan while we handle the banks, vendors, landlord, etc. Finally, you're back to doing business, right where you belong. This works. Call us for an evaluation of your situation and a proposal for a successful debt workout.

Diversify Your Business Finance

Introduction

The Government has announced a new initiative to help diversify business finance which will be led by UK industry experts from both the business and finance sectors.

UK businesses still rely heavily on bank funding to help finance their business activities even though there are many alternative sources of funding available to them in today's ever changing financial marketplace.

The Government wants to ensure, in light of recent and current banking reforms, that the flow of finance to businesses is maintained. Alternative sources of finance will be crucial to help businesses deliver the wider economic growth the UK economy needs.

The panel of experts will seek to establish a framework of alternative finance sources by working with businesses and business investors, financial institutions and providers of alternative finance to coordinate and facilitate the availability of funding that businesses need.

Bank lending

Even though there has been a recorded increase in new lending from the largest banks this year many businesses are still unhappy with bank lending levels and how they have been treated by their banks.

Tighter lending criteria, non-renewal of overdraft facilities and poor communication by the banks are the common problems cited by businesses as making their funding objectives difficult to achieve.

Without the finance they need, UK businesses struggle to survive and grow, and so the UK economy does the same. This is why the Government is not only introducing schemes to increase bank lending but is also keen to encourage as much competition in the financial market as possible and provide a wide range of alternative sources of finance to UK businesses.

Alternative finance

There is already a wide range of alternative finance sources available to businesses.

One of the biggest barriers to increasing the take up of these sources of finance is simply general awareness. New and emerging providers of alternative financial products do not have the branch infrastructure that makes for the efficient and effective distribution of their products.

The other important factor here is that many owners and managers of small and medium sized businesses, which are the backbone of the UK economy, are unaware of the range of alternative finance available and where to find it.

New methods of communication are required and it is hoped this will be a key objective of the Government's initiative.

Invoice Finance

Invoice finance is one of the most popular options in the alternative finance portfolio and has grown over the last fifteen years from about 13,000 companies using it in the UK to over 50,000 companies now.

This extremely flexible method of business finance advances funds against unpaid sales invoices. There are variations within the invoice finance family of products which includes invoice factoring and invoice discounting.

The invoice finance lenders will advance up to 95% against a company's unpaid sales invoices and use the sales ledger as security by taking assignation of the invoice and so the outstanding debt is effectively owned by them.

When the invoice is paid by the company's customer the invoice finance company will pay over the balance of the invoice that has not been funded after deducting their fees. There is usually a charge for the facility and an interest charge for the amount of funding advanced.

One of the main benefits of invoice finance is that the facility will grow as the business grows thus making it a very effective method of funding working capital.

Commercial Loan Advice - What Is Needed For a Business Loan?

The Chancellor has recently announced a new 'National Loan Guarantee Scheme' to support lending to businesses - yet why is there so little enthusiasm in response to it?

The Treasury confirms this with these comments "the scheme might not increase the overall amount that banks lend to British Companies". Businesses may see it as boost at a time when funding issues are a sensitive issue but the feeling is it's just another tape ridden scheme to 'help' businesses survive in this tough economic climate.

Our commercial finance specialists say - "No doubt it will be another scheme to join the tsunami of failed initiatives. Just ask yourself, what happened to the Enterprise Finance Guarantee Scheme - why is there such a slow uptake? What happened to the Enterprise Capital Funds? Local Enterprise Partnerships? The list is endless and it all seems to be entangled in red tape."

There are clearly incentives there but businesses are likely to struggle with the time to manage their applications for such finance. There is the copious amount of administration, time and extra costs businesses are unable to allocate to such projects.

This is where our commercial finance partners can help your business. We can apply for business finance on their behalf leaving them to manage and grow their business. After a free initial meeting with no obligation they will know the right way to access your clients finance whether it is direct through our strong panel of lenders or through a finance scheme thus overcoming the hurdles on your clients behalf.

Such is the plethora of commercial finance schemes available it is unlikely that any one business can be an expert in all of them. Commercial mortgage brokers may tend to steer clear of equipment leasing for example and vice versa. Legislation often ensures that to be fully authorised and approved as a supplier of certain products it is thus not viable to spread yourself too thinly and look to be an expert in other fields.

All but the very largest companies tend to remain specialists in their area of expertise rather than cross over into other fields. FSA regulations ensure compliance and therefore that the business advisor in question, assuming they are undertaking to give guidance covered under FSA regulations of course is indeed qualified to discuss such matters.

Keeping up to date on movements in government policy is also a challenge in itself so any good advisor will ensure they have kept up to date on such matters also.

If you have any questions regarding the Financial market then please get in touch via my website. I am happy to offer guidance on what's available in the market based on personal experience and an honest appraisal of what options are best for your business.

Start Up Business Loans, What to Do to Make Approval More Certain

There is no doubt that getting a start up business loan to get your business up and running is one of the most important loans in life. While a home loan might be the largest ever granted, the significance of financing for a business rests on the fact that the business will pay the salary from which everything else will be paid.

Of course, the practical realities of setting up a business is that little progress can be made in the absence of capital and, to secure capital, it is necessary to seek a loan to start up a business. The problem is that, while encouraging enterprises can be a rewarding sector for lenders, many businesses fail in the first year.

Understandably then, lenders are quite strict about the application process, much more so than with personal loans. In essence, applications for business loans to start up companies are filled with conditions and contingencies that require a lot of paperwork. There are four crucial aspects lenders consider before approving an application.

Financial Background

No lender will consider approving a start up business loan to an applicant that has shown little ability to keep their personal finances in order. For this reason, the criteria for applications include a three year term with a solid financial record. Having a bad credit rating, therefore, can be highly damaging.

Of course, there is always a willingness to take into account the reasons why bad credit might have been attained, but for any loan to start up a business to even appear convincing, there must be clear indications of effort being made to improve the rating.

A Clear Business Plan

Also, there is a reluctance for lenders to provide business loans to start up companies if the applicant does not have a very clear business plan. So, detailed documentation should be provided on what is needed, what growth is expected, how that growth is to be achieved and contingency plans should things not progress as expected.

A start up business loan typically needs to cover the purchase of machinery, office equipment, funds to secure staff salaries for a period of time, and needs to be sufficient to keep heads above water until profits can begin to be enjoyed. Often, this is not achieved until after the first year of operations.

Loan Accountability

Perhaps most obvious is the fact that the purpose of a loan to start up a business needs to be set out. In fact, lenders expect borrowers to have allotted funds to specific areas before the loan is given. This will require some careful thinking and planning on the part of the applicant, as well as discipline to stick by the plan once it is approved.

For example, lender of business loans to start up companies will not look kindly on $25,000 that was supposed to be spent on office equipment going on general business expenses instead.

Legal Prerequisites

Finally, there is also an obvious need for applicants for a start up business loan to meet the necessary legal regulations. This can refer to having the right business permit paid up and certified, as well as health, fire and safety certification. Also needed is proof of business, personal and property insurance.

A loan to start up a business is more than just a lump sum being provided by a lender. The whole purpose of the loan is to establish what will be a livelihood, but one that must survive in a highly competitive situation.

There is no escaping the fact that business loans to start up companies are major transactions that require careful planning and undying dedication. Ultimately though, a start up business loan can be hugely rewarding for all involved.

Your Bank and Business Financing - Reality Check

Business owners and managers want to compare equipment finance companies to their bank and for a good reason; a bank is a company's first point of reference when borrowing money or financing equipment or an expansion project. A bank is the most obvious place to start and a secure place to store your money and use their multiple services. But what a bank does not do well, both historically because of their structure and the recent tightening of the credit market, is offer business financing for capital assets (equipment). Yet many people get confused when looking for an equipment loan because they are not seeing the whole picture; this is a case where you definitely want to compare apples to apples to get the best results.

Here are a few points to compare; these are not set in stone but based on years of experience, these trends apply a majority of the time.

1) Total Dollars Financed - banks normally require that you keep a balance of 20% or 30% of the equipment loan amount on deposit. This means they are only financing 70% or 80% of your equipment costs because you have to keep a certain amount of YOUR money in a fixed account for the duration of the loan. In contrast, an equipment finance company will cover 100% of the equipment including all "soft" costs and will only request a one or two month prepayment. No fixed deposits required.

2) Soft Costs - banks also will normally not cover "soft" costs like labor, warrantees, consulting and installation which means these costs come out of your pocket. An equipment finance company will cover 100% of the equipment price including "soft" costs and some projects can be financed with 100% "soft" costs which no bank would ever consider.

3) Interest Rates - this is the most popular question in the finance world; what's my rate? If the bank requires 30% deposit in a fixed account then that automatically raises a 5% interest rate to a 20% rate. Now people will argue that you get that deposited money back at the end of the term but that is money which you do not have access to and has an opportunity cost associated with it. Equipment finance companies target their financing rates between 3-5% for cities and 7-9% for commercial financing which is a real fixed rate and not under-stated as the bank rates can be thus independent finance company rates are very competitive with "true" bank rates.

4) Process Speed - banks often take weeks to review and approve a finance request while independent finance companies normally only take a few days and can work much more quickly. Finance underwriters only review business financing while a bank has other types of requests clogging their channel.

Banks also have many more levels of approval and review to pass while independent finance companies normally only have two, underwriting and credit committee. Even with complicated deals, the finance company's process is always faster.

5) Guarantee - banks require, as a standard part of their documentation, a blanket lien on all assets, both personal and business assets are used as guarantee against default on the loan. Your business assets, your home, your car, and your boat can all be on the line when entering into a bank transaction. This may also be the case with an equipment financing company but if your business operation is solvent then only your business will be listed as collateral and not your personal assets; this is known as a "corp only" approval.

6) Monitoring - banks require yearly "re-qualifying" of all their business accounts which means on the anniversary date of your loan each year, you must submit requested financial documents to assure the bank that everything is going well and nothing has affected your business in a negative way. Finance companies do not require anything during the term of the loan or finance as long as the monthly payments are made on time. Nobody will be checking into your business or policing what you do.

When comparing your bank financing to an independent equipment finance company, you have to make sure you are evaluating all the key parameters, not just one. Clearly, the fine print and terms of the transaction are more important than the big numbers. Banks work well within their space but have proven time and again not to be as flexible or solution-oriented as an independent finance company which solely focuses on business lending can be.

Microloan For Business - What Is It, Who Qualifies, and How To Get One

The economy is tough right now, but don't let it stop you from fighting for your dreams. If you're looking for a helping hand in starting your small business, a microloan for business may be the answer you've been looking for. This article explores what a microloan is, who qualifies for microloans and how to get one. Let's get started!

Microloan For Business - What Is It and Who Qualifies?

A microloan is a small loan, usually given to those who are at or below the poverty level and are looking to start a business. Quite often, the people who qualify for and receive a microloan are unable to put up collateral or qualify for a traditional small business loan because they lack a steady employment record and don't have a verifiable credit history.

Microloans started to gain in popularity when organizations popped up to help aspiring entrepreneurs in impoverished countries. These programs work quite well, particularly with female entrepreneurs, and has grown exponentially, spurring what is also known as peer-to-peer lending. Peer-to-peer lending is exactly what it sounds like - organizations collect money from donations and interested contributors, sometimes family and friends, and extends small loans to qualified applicants.

Microloans are available through your local small business association. However, before you apply there are a few things to know.

* Small business loans vary in size. The maximum loan amount is $35,000 and according to the Small Business Association, the average loan is about $13,000.

* You can use a microloan for working capital. You can also use it to buy supplies, furniture and equipment. You cannot use it to pay for debt already incurred, or to buy real estate.

* Interest rates for microloans run between 8 and 13 percent depending on the intermediary and lender costs and other loan terms.

* Loan terms depend largely on the size of the loan and the planned use for it. The maximum term for the loan, the amount of time you have to pay it back, is six years.

* Generally, some sort of collateral is required for microloans. However, this isn't always necessary and depends largely on the loan application.

How To Apply

If you're interested in applying for a microloan, the steps are fairly straightforward. Visit the small business administration online and look up microloans. From that page you'll want to find your local small business microloan intermediary. They're listed by state. Contact your intermediary and begin the application process. Each process will vary slightly but will operate like a standard loan application process.

When it comes to starting a business, if you believe in yourself and in your business idea, nothing should stop you, not even a lack of funds. Find out if you qualify for a microloan today and get started living your dreams.

Understanding Receivable Financing Pricing And Rates Is Not Impossible Invoice Discounting 101

' Misunderstanding all you see '; those are lyrics from the Beatles ' Strawberry Fields ', and talk about being a bit appropriate for the confusion around receivable financing and invoice discounting rates in Canada.

So, talk about confusing... let's try and clear up some real basics around receivable finance in Canada -mostly along the lines of how it works and how it is priced. Clients are always providing their version of what they think they are getting but the reality is often far from that.

A/R finance is used by thousands of firms in Canada to address cash flow shortages when in fact more traditional financing simply doesn't make sense or can't be attained.

A good way to clear up some of the confusion around this method of business finance in Canada is to address it head on, which is simply to say that this finance mechanism isn't financing per se, it's simply the sale of one of your assets at a discounted rate. So from that perspective even we own up to being guilty sometimes around the terminology!

Another way of looking at our issue to frankly address what might be perceived or real drawbacks or negatives around A/R financing. The discount rate used on receivables when you sell them, in Canada, ranges anywhere from 1-5%. To be fair, the average discount rate tends to be in the 2% range.

Invoice discounting rates make the most sense when they are used to take advantages of opportunities for growth and higher profits and sales via asset turnover.

Part of the reason A/R finance is viewed as confusing by many is that it's essentially part of an unregulated industry. Clearly our banks are regulated and you know what you get (when you can get it!)

So what does that all mean to Canadian business owners and financial managers. Simply 4 words. Pick a solid partner! Or adviser.

Where invoice discount financing gets confusing is in the terms/contracts, and the rates.

So how do you address that pricing in terms of benefits? Several factors have to be taken into consideration. They are the quality and age of your receivable portfolio, the ' opportunity cost' of what you can do with additional cash flow, and the actual cost of carrying your receivables and inventory as opposed to monetizing them more quickly via a receivable financing strategy.

As we have said in the past carrying receivables anywhere from 60-90 days can easily cost you anywhere from 10-20% when you factor in days to pay your firm, admin costs, lost opportunities, your current financing costs, etc.

So why do Canadian business owners and their finance staff stumble on the issue of receivable finance. It's partly, as we have shown due to their inability to overlook the total pictures in the areas we have demonstrated above.

Invoice discounting rates makes the most sense when you look at opportunity cost. If you finance your receivables as you generate them you lower the balance sheet investment and reduce your day's sales outstanding.

A quick example - if your annual sales are 1.2 million and your daily sales are $3300 per day for example you could add $10,000 to cash flow by a 3 day reduction in DSO. A 30 day reduction adds 100k to cash flow!

Charges or costs for a 100k per month facility equate to a 2k per month cost if you are turning your A/R promptly.

So, confusing. We hope not, although we're the first to admit it takes a bit of time. Speak to a trusted credible and experienced Canadian business financing adviser for clarity on achieving best invoice discounting rates and benefits for your firm.

Diversify Your Business Finance

Introduction

The Government has announced a new initiative to help diversify business finance which will be led by UK industry experts from both the business and finance sectors.

UK businesses still rely heavily on bank funding to help finance their business activities even though there are many alternative sources of funding available to them in today's ever changing financial marketplace.

The Government wants to ensure, in light of recent and current banking reforms, that the flow of finance to businesses is maintained. Alternative sources of finance will be crucial to help businesses deliver the wider economic growth the UK economy needs.

The panel of experts will seek to establish a framework of alternative finance sources by working with businesses and business investors, financial institutions and providers of alternative finance to coordinate and facilitate the availability of funding that businesses need.

Bank lending

Even though there has been a recorded increase in new lending from the largest banks this year many businesses are still unhappy with bank lending levels and how they have been treated by their banks.

Tighter lending criteria, non-renewal of overdraft facilities and poor communication by the banks are the common problems cited by businesses as making their funding objectives difficult to achieve.

Without the finance they need, UK businesses struggle to survive and grow, and so the UK economy does the same. This is why the Government is not only introducing schemes to increase bank lending but is also keen to encourage as much competition in the financial market as possible and provide a wide range of alternative sources of finance to UK businesses.

Alternative finance

There is already a wide range of alternative finance sources available to businesses.

One of the biggest barriers to increasing the take up of these sources of finance is simply general awareness. New and emerging providers of alternative financial products do not have the branch infrastructure that makes for the efficient and effective distribution of their products.

The other important factor here is that many owners and managers of small and medium sized businesses, which are the backbone of the UK economy, are unaware of the range of alternative finance available and where to find it.

New methods of communication are required and it is hoped this will be a key objective of the Government's initiative.

Invoice Finance

Invoice finance is one of the most popular options in the alternative finance portfolio and has grown over the last fifteen years from about 13,000 companies using it in the UK to over 50,000 companies now.

This extremely flexible method of business finance advances funds against unpaid sales invoices. There are variations within the invoice finance family of products which includes invoice factoring and invoice discounting.

The invoice finance lenders will advance up to 95% against a company's unpaid sales invoices and use the sales ledger as security by taking assignation of the invoice and so the outstanding debt is effectively owned by them.

When the invoice is paid by the company's customer the invoice finance company will pay over the balance of the invoice that has not been funded after deducting their fees. There is usually a charge for the facility and an interest charge for the amount of funding advanced.

One of the main benefits of invoice finance is that the facility will grow as the business grows thus making it a very effective method of funding working capital.