Commercial Loans - Small Business Borrowing and Economic Data Considered

http://commercialliabilityinsurancecompan.blogspot.com

It seems that most of the economists know that our economic engine for employment is our small businesses. Unfortunately, after the "too big to fail" Wall Street bailouts of all of the banks, the small business community didn't get the juice it needed. Our smaller firms did not get the money they needed to borrow to stay in the game during the economic recession. Now that the recession has lingered far too long, and unemployment rates are going back up companies are not interested in borrowing money, even though it is now available.

This presents several problems. First, if small businesses aren't expanding, and new business startups aren't occurring, then we cannot have job growth in the small business sector. Since 60 to 70% of our population is employed by smaller firms, without the help of the small business community we are stuck, without a direction to move in.

An interesting article in this regard was published on MSN Business News on the last day of June 2011 titled "U.S. small business borrowing surges" by Ann Saphir which attempted to put a really nice little spin on things as it stated;

"Borrowing by small U.S. businesses rose at a record pace in May, data released by PayNet Inc.," and "overall volume of financing to U.S. small businesses, rose 26 percent in May from a year earlier. The index is now at its highest since July 2008, two months before the collapse of Lehman Brothers and the near derailment of the world financial system. Dallas Fed President Richard Fisher on Tuesday said he expects 4 percent growth in the second half, more than twice the 1.9 percent pace in the first quarter."

As a former franchisor, I realize that when new businesses start, they have to hire people and employees. If new businesses don't start, then obviously they aren't around to hire anybody. Each time my company set up a new franchise, that franchisee would immediately have to go out and hire four or five people. Our existing franchisees as they expanded and got new contracts and increased their customer base they had to hire another five people, and so on.

That's how it works, the only problem is that the percentage of smaller companies that are willing to expand isn't moving forward fast enough to accelerate our economy. As things move forward, albeit slower, and more credit becomes available that's a start, but it's not only the available credit that matters, it is the number of small business wishing to take out loans for expansion, or startups. Indeed I hope you will please consider all this and think on it.

Commercial Financing For 2011

http://highriskcarinsurancequotes.blogspot.com

Despite the ongoing credit crunch there are plenty of commercial financing options available in 2011. Not from the banks which require stellar credit history and consistent and large business status in order to lend, but from asset based lenders who, based on your assets, would be happy to lend you money. It is a great option for small-sized or growing businesses who find it hard to get financing from other financiers.

You could get financing based on invoice factoring or based on your other assets such as inventory, equipment, plant, or property. In the case of invoice factoring, you will be getting cash based on your accounts receivables. You will be sending your invoices to the lender who would free up credit for you based on the invoices. The invoices would then be sent to your customers who will pay your lender directly. Based on individual lender policies, you can get roughly 90 to 95% of your accounts receivable as cash this way.

An immediate advantage of the invoice factoring process is that you will be getting the money your customers owe you almost immediately (albeit not from the customers). If you have customers who take a long time to pay, then this is the perfect option. The lenders will even do customer credit checks and share this information with you. This allows you to offer credit to new customers in order to expand your business without compromising your cash requirements.

If you do not have receivables then asset based lending may be for you. The cash flow in this case might be a lower percentage of the collateral than what you would get based on accounts receivable, but the results will be as immediate and the other advantages would also apply. Assets are typically evalued by a third party to receive credit. This is a perfect option if you are in immediate need of working capital and cannot find financing from banks.

In fact, asset based lending is a great commercial financing option even if you are able to get bank approved loans since you have much more flexibility with this type of lending. You can take the cash when you need it instead of in a lump sum as bank financing works. You do not have to submit your records for regulatory reviews as banks need you to, and hence, you have more freedom to work. Bernard Linney and his staff can be reached easily to help build a financial lending strategy that will allow your business to grow.

Car Wash Loans - Show Me Some Money

In today's financing environment, money talks now more than ever. If you're looking to buy or build anything, if you don't have it, you probably won't get a loan. Years ago, you used to be able to get high Loan To Value (LTV) loans with minimal down payments, which often was borrowed from the FRP Express (Friends, Relatives and People that Love You) or from home equity loans and other sources. While this is not illegal by any means, underwriters want to see your OWN sweat equity and not someone else's. You might think "My home equity IS my own sweat equity!" This is true, however, that is also a loan and is has to be paid back. This ends up being looked at as a Combined Loan To Value (CLTV) and not just what the bank is lending.

The sources for your down payment really have not changed that much. The first place that people look for down payment for buying or building a car wash is personal savings accounts and liquid investments. This is a logical place to start. Frequently people would use their line of credit from a home equity loan but while this is still an option, you still will have to show the majority of money coming from non-borrowed assets.

Many people will take money out of their retirement account. You will need to consult with your account regarding any possible tax implications from doing so.

People also often offer additional collateral if a residence or investment property has significant equity in the form of a second. It is highly possible that if your property is under-collateralized, the bank or lender will look for additional collateral.

From a collateral point of view, lenders will normally take an appraisal, discount the real estate and building by 20%, the equipment by 50% and good will usually has little to no value from a collateral point of view. So your $2,000,000 car wash might be viewed worth $1,500,000 from a collateral point of view, after a lender has discounted the appraisal. If you're bringing in 20% equity ($400,000) they will view the site as UNDER-collateralized and will look for more collateral. I'm sure it makes your eyes wide open, but that is how the system works. Be prepared for it

While it is true that certain types of financing instruments offer higher Loan To Value (LTV) financing, they still will look to see if there is enough collateral. For instance, with a SBA 504 loan, occasionally you will see a 90% advance. In most cases, if you are getting 90% financing, the site itself will not be sufficient collateral and a lender will look for additional collateral. This is what they don't tell you. If you are doing conventional financing, you normally will bring in 30% down plus pay closing costs. You normally can not borrow money for working capital or inventory. With conventional financing, you normally will not have the issue of having insufficient collateral like you will with SBA financing. If you're getting anywhere between 75-90% financing with an SBA loan, especially if you are financing closing costs, working capital and inventory, it's almost certain you will have insufficient collateral and the lender will be looking for more.

This does not make conventional financing a better option because if you're looking at Cost Of Funds (COF) and Return On Investment (ROI) the higher advance will almost always outperform the lower.

If you have insufficient on equity, it might be necessary to find a partner with more equity. If this partner does not with to have involvement in the day to day operations of the car wash, after a period of time, you should be able to buy them out from the profits of the facility.

Regardless of what the source of your equity is, be prepared to prove it right up front to lenders and have backup options if you are told that you need to have more equity into the transaction.

Business Loans Are Almost Non-Existent Causing Companies to Seek Alternative Financing Programs

http://cheapautoinsuranceforhighriskdr.blogspot.com

For those restaurateurs with negative credit, a merchant cash advance may perhaps become an obligatory part of small business costs. The beneficial part of using a merchant cash advance as opposed to business loans is they will provide funding for important purchases and the known fact that there is no restriction set on what you can acquire. The working capital can be applied to buy supplies, patch up or remodel your businesses storefront or even pay off your taxes.

As one would probably think, business loans for your restaurant provided through your merchant account contains more expensive interest rates than those supplied with a more traditional resource, such as your near by bank. This means that over the life of the loan, you may repay additional costs for the advantage of speedy access to cash flow along with fewer hassles. Additionally, for those who use these alternatives to a small business loan, the repayment schedule is often adjusted right to your business's credit card revenues of the week, thereby getting rid of doubts with regard to your establishment not possessing enough to make the monthly payment and keep up with your other necessary obligations.

Different compensations for the small business owner seeking an advance by taking advantage of bad credit business loans include:

- No assets required

- No processing fees to apply for the loan

- No restrictions on the spending of the funds

- No set repayment plan

- Fast processing

- High approval rate

While credit card factoring may propose capital choices to a huge number of entrepreneurs, there still remains somewhat explicit pre-requisites needed in order to be approved. Each factoring company has different stipulations, either way the following are the norm.

- The merchant must have been in business for 6 months to a year

- The merchant must have at least 6 months of credit card receipts with a provable minimum amount of credit card business monthly

- The merchant must have a supportable lease that will last for at least one additional year

- The funding company may need the transfer of all credit card transactions to their machines

- The business type must be non restricted and legal

Business Loans - Community Banks As A Funding Source

Community banks can often be a great funding source for a business. Whether or not they will be the right source of financing for your business will largely depend on the growth stage of your business. Let's take a look at the common stages.

Startup Business

Community banks are much more personal in the sense that they will use a lot of personal judgment in awarding a loan. They will also look at your complete credit score and not just the FICO credit score. This is important because it is possible for a person to have good personal credit history but have a low credit score at the same time. While most other banks will turn down your application, community banks might be more lenient in this regard.

The drawback, however, is that a community bank will rarely lend to a business that has been operating for less than 2 years. Another drawback is that they are often subject to mergers and acquisitions where they get gobbled up by large private banks. When that happens, they might revamp the whole system in such a way that your existing loan will be negatively affected.

Growing Business

This is the ideal time for a small business owner to approach a community bank as they usually lend to businesses that have already gone past the introductory stage. As mentioned earlier, if your business is more than 2 years old, there is a good chance to get approval at your local bank.

The disadvantage here is that they will usually have just one or two locations. If your business is growing, you will probably need more than just one branch to conveniently carry out your banking. This will not be possible with a local bank.

Fast growing business

You will probably expect this to be the most attractive classification. The fact however is that they get very fidgety when they see one of their clients experiencing a rapid growth in their business. This happens because rapid growth and profitability levels do not always go hand in hand. The community bank will assess your growth and may refuse to fund future expansions for your business as they might not be comfortable with the really fast pace of growth. You will thus be a bit stranded and might have to seek assistance from other banks and lending institutions that will usually have tougher terms than a community bank.

Should a community bank be on your potential lender list? Well, objectively analyze your business and the answer should become fairly obvious.

Community banks can often be a great funding source for a business. Whether or not they will be the right source of financing for your business will largely depend on the growth stage of your business. Let's take a look at the common stages.

Startup Business

Community banks are much more personal in the sense that they will use a lot of personal judgment in awarding a loan. They will also look at your complete credit score and not just the FICO credit score. This is important because it is possible for a person to have good personal credit history but have a low credit score at the same time. While most other banks will turn down your application, community banks might be more lenient in this regard.

The drawback, however, is that a community bank will rarely lend to a business that has been operating for less than 2 years. Another drawback is that they are often subject to mergers and acquisitions where they get gobbled up by large private banks. When that happens, they might revamp the whole system in such a way that your existing loan will be negatively affected.

Growing Business

This is the ideal time for a small business owner to approach a community bank as they usually lend to businesses that have already gone past the introductory stage. As mentioned earlier, if your business is more than 2 years old, there is a good chance to get approval at your local bank.

The disadvantage here is that they will usually have just one or two locations. If your business is growing, you will probably need more than just one branch to conveniently carry out your banking. This will not be possible with a local bank.

Fast growing business

You will probably expect this to be the most attractive classification. The fact however is that they get very fidgety when they see one of their clients experiencing a rapid growth in their business. This happens because rapid growth and profitability levels do not always go hand in hand. The community bank will assess your growth and may refuse to fund future expansions for your business as they might not be comfortable with the really fast pace of growth. You will thus be a bit stranded and might have to seek assistance from other banks and lending institutions that will usually have tougher terms than a community bank.

Should a community bank be on your potential lender list? Well, objectively analyze your business and the answer should become fairly obvious.

Best Ways To Get Venture Funds

http://commercialautomobileinsurance.blogspot.com

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.

Are Working Capital Loans What Your Company Really Needs What Type Of Finance Company Can Help

http://carfreeinsuranceonline-quote.blogspot.com

The shock has probably worn off by now. We're referring of course to the business owner and financial managers realization that sales don't equal cash flow and that your management of working capital might just be your key to short and long term survival.

So what type of finance company or institution can help you in the access to liquidity? The reality is that every industry needs a different level of working capital. That relationship of your assets to your turnover to your cash on hand is what is going to make the final call on what type of loans you might need for your cash flow management solution.

And we will add that you might find that ' loans' or bringing on additional debt to your balance sheet is not only the wrong solution, but you have alternative non loan solutions!

The reason you are looking at your working capital situation hinges probably on two areas, your firm is growing too quickly, or you have asset management challenges or problems with inventory and receivables. So hopefully you can now see that what working capital management is all about comes down to matching the financing you need to the assets and equity you have on your balance sheet. As your business and profits grow the owner equity component grows also

So are loans the solutions to your cash flow challenge (or crisis?!). Sometimes, but definitely not all the time. The long term solution to a cash flow management solution might in fact be a working capital term loan, in effect injecting long term capital into your business. If you can qualify for this loan, which is more often than not unsecured, it certainly is an option. Larger loans of this nature are called subordinated debt, but cash flow term loans are available for almost all firms - generally the minimum being 50k, but as we noted, going to several million dollars depending on the size of your firm.

But why would you borrow externally and bring debt onto your balance sheet when the solution is inside your business, not outside? Clients are often surprised when they find out that two other solutions, and not loans, are possible.

We're talking about asset based lines of credit, which are generally non bank in nature, meaning they are offered by private finance firms. Rates on such facilities can be competitive to bank rates, but more often than not come at a premium. However your ability to, in many cases, double your working capital liquidity can significantly increase profits and sales. Just think about it, if you can double sales, keep your overhead costs relatively fixed, the additional profits you generate can easily cover your new increased financing costs.

The other solution we will mention is the sales of receivables. This type of financing brings zero new debt on to your balance sheet, improves your cash position, and provides immediate cash flow for growth. Perceived as expensive and non traditional it is gaining traction with Canadian business every day. In effect it is the trade off you have between growth and survival and additional financing cost, of a non loans nature.

In summary, working capital loans can come from external finance company sources. Alternatively you can become your own finance company by managing and monetizing your assets in a variety of ways. Speak to a trusted, credible and experienced Canadian business advisor to determine which solutions work best for your firm.

The shock has probably worn off by now. We're referring of course to the business owner and financial managers realization that sales don't equal cash flow and that your management of working capital might just be your key to short and long term survival.

So what type of finance company or institution can help you in the access to liquidity? The reality is that every industry needs a different level of working capital. That relationship of your assets to your turnover to your cash on hand is what is going to make the final call on what type of loans you might need for your cash flow management solution.

And we will add that you might find that ' loans' or bringing on additional debt to your balance sheet is not only the wrong solution, but you have alternative non loan solutions!

The reason you are looking at your working capital situation hinges probably on two areas, your firm is growing too quickly, or you have asset management challenges or problems with inventory and receivables. So hopefully you can now see that what working capital management is all about comes down to matching the financing you need to the assets and equity you have on your balance sheet. As your business and profits grow the owner equity component grows also

So are loans the solutions to your cash flow challenge (or crisis?!). Sometimes, but definitely not all the time. The long term solution to a cash flow management solution might in fact be a working capital term loan, in effect injecting long term capital into your business. If you can qualify for this loan, which is more often than not unsecured, it certainly is an option. Larger loans of this nature are called subordinated debt, but cash flow term loans are available for almost all firms - generally the minimum being 50k, but as we noted, going to several million dollars depending on the size of your firm.

But why would you borrow externally and bring debt onto your balance sheet when the solution is inside your business, not outside? Clients are often surprised when they find out that two other solutions, and not loans, are possible.

We're talking about asset based lines of credit, which are generally non bank in nature, meaning they are offered by private finance firms. Rates on such facilities can be competitive to bank rates, but more often than not come at a premium. However your ability to, in many cases, double your working capital liquidity can significantly increase profits and sales. Just think about it, if you can double sales, keep your overhead costs relatively fixed, the additional profits you generate can easily cover your new increased financing costs.

The other solution we will mention is the sales of receivables. This type of financing brings zero new debt on to your balance sheet, improves your cash position, and provides immediate cash flow for growth. Perceived as expensive and non traditional it is gaining traction with Canadian business every day. In effect it is the trade off you have between growth and survival and additional financing cost, of a non loans nature.

In summary, working capital loans can come from external finance company sources. Alternatively you can become your own finance company by managing and monetizing your assets in a variety of ways. Speak to a trusted, credible and experienced Canadian business advisor to determine which solutions work best for your firm.