Gathering Information For Small Business Financing

Small business financing information is a crucial component to investigate when starting a new businesses or expanding a current business. It includes understanding the various types of lenders and loans available as well as understanding the advantages and disadvantages found in each.

Current small business financing information suggests that businesses displaying the most potential usually receive the best business financing. Lenders search for companies that can prove they have an operating advantage, advanced technology, and a solid business plan. There are many options available to finance new or expanding businesses, with sources such as angel investors, traditional bank loans, personal financing, SBA loans or account receivable factoring.

Trying to establish small business credit financing, lenders review the “Five C’s: capacity, capital, collateral, conditions, and character” before approving a business loan. When working on compiling this information for review, businesses want to include the following (some of which will likely be included in your business plan):

• Purpose or need for a loan
• Amount of money needed
• Business management profile and overview
• Marketplace analysis
• Detailed financial statements
• Plan to pay back financing

Finding, applying for, and securing the right loan for financing depends on the size, profitability, age, operating costs and credit history of the business. Businesses need various amount of supporting documentation when applying for a loan. Such details usually include but are not limited to organizational documents, material contracts, letters of reference, financial statements, tax returns, business plans, and credit score history.

Once a business has been approved for a cash advance or a loan, the terms will be determined such as the due date, loan payments, payment schedule and interest rate. Your independent research should also include understanding the fees associated with the loan and the default terms of the loan.

Albert Malwicky is a freelance writer who writes about a variety of different topics for small businesses everywhere. A specialist currently building a resource dedicated to business financing [http://www.boilermovie.com/category/business/], Albert enjoys the challenges of writing for different companies everywhere.

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Small Business Finance Bad Dredit – Make Efforts For Low Cost Funds

While you make search for small business finance with a bad credit tag, one aspect that should be at the upper most on your mind is the costs. Any such loan that drains away larger portion of your finances towards the monthly outgoings will result in stress on your trade.

If you have a history of late payments, defaults, arrears or CCJs, then the loan approval will be harder to get. You should save money for making greater down payment, which gives a sense of security to the lender and the approval comes with ease.

One way to ensure a less burden some finance for your trade is to approach the lenders with an excellent or good credit rating. Make sure that your FICO rating is above 600 or in the vicinity of it. Get copies of your credit report to make it fully free of any misrepresentation of the facts about the payments you made in the past. In case of the rating being lower, then make timely payments for few months for improving it, before applying for the loan.

Ensure that you have made a convincing plan of repaying the finance. You would be using the loan for variety of purposes like buying the raw material; equipment, machinery etc. hence, keep a good amount of money in your bank for few months at least. This will give the impression that you can repay the loan installments, without depending on our business.

You can choose to borrow small business finance in secured or unsecured options. Greater funds can be accessed under the secured loan against your residential or commercial property. Lower interest rate is the main advantage of the loan. you can repay the loan in 5 to 30 years. The unsecured loan has no risks for the business people, as it comes without collateral. However, only smaller amount will be approved for 5 to 15 years, at higher interest rate.

First, apply for the rate quotes, so that you can have access to select small business loans bad credit, which are of lower rate and few additional charges. Repay the loan on time for escaping any debt accumulation.

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The Small Business Financing Crisis

The current small business credit crunch is getting much attention and rightly so. We know very little about the overall small business universe because it is so huge and diverse. Most discussions about this topic focus on credit and lending, but the issue is much more complex than that. A more broad-based discussion is necessary to understand the full extent of the current crisis. The crisis encompasses both types of financing, debt and equity.

Personal Wealth

In good times or bad the top source of small business capital is the personal wealth of the owner. Even beyond startup, owners often tap into their personal wealth like a line of credit, on an ongoing basis. If available, personal wealth is easier to access than other forms of financing and may be the only source available. The primary sources of personal wealth are typically real estate and retirement accounts. Since 2008 both of these sources have taken a huge hit, so the amount of personal wealth available has plummeted. Most owners are experiencing the worst economic times in their lifetime. So even if they have personal wealth available, they are less likely to invest it in their businesses. Instead, they are cutting back or forgoing expansion.

Friends & Family

Another common source of capital has essentially dried up – friends and family. For the reasons discussed above, friends and family have less wealth available and are less willing to invest.

Creditworthiness

The ability of a private company to borrow funds depends on the cash flow of the company, the available collateral, and the credit of the owners. Most small business revenue, profits and cash flows are down substantially. The value of available collateral, often including the personal residence of the owners, has also dropped significantly. The compensation of the owners is often based on profits, so it is down, too. With both personal income and wealth declining, the credit score of the owners has likely declined as well. All of these factors, in combination, result in less creditworthy private companies.

Credit Cards

Another common source of capital is using credit cards typically based on the personal credit of the owner. Credit card companies have tightened credit standards for getting new or increasing existing credit lines. In many cases they have actually reduced existing credit limits. As discussed above, the creditworthiness of both the owners and the company has declined. The result is that credit card financing is less available and tougher to get.

Bank Financing

Many banks have funds available and seem willing to increase small business lending, but have other issues preventing them from doing so. The demand for business loans has decreased because many companies are cutting back or forgoing expansion. As discussed above, there are fewer creditworthy companies. Many banks are facing increased pressure from regulators to reduce risk while experiencing difficulties with some of their commercial real estate loans. Although small business loans can be very profitable, they are very risky. Many small banks are more familiar with other types of loans and may have little experience dealing with Small Business Administration (SBA) loan programs. Continuing issues with the funding of SBA programs has created some doubt about the availability of loan guarantees. Again, the result is bank financing is less available and tougher to get.

Conclusion

All of these issues create a complex small business financing crisis that requires broad-based solutions. A vigorous and sustained economic recovery would alleviate many of the issues, but many expect small business to lead us out of the recession. How is that supposed to work? We need better ways to finance small businesses. Ones that will enable institutional and individual investors to invest in small, private companies like they currently do in large, public companies. The expansion and increased visibility of the secondary market for SBA guaranteed loans is a small step in the right direction that will hopefully lead to a more comprehensive solution.

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What You Will Need to Get Small Business Finance

Poor credit is no barrier to small business owners wishing to obtain business finance. When a small business owner plans to expand business and finds that he has already used up available sources of funding and getting additional finance through regular sources may be too time-consuming, then finance from “non-conventional” sources may be a better option.

What would be the requirements for a business owner to obtain small business finance?

A running business

Startups are precluded from obtaining this type of finance on soft terms. In order to be eligible, a business must be in operation for at least a year.

A minimum amount of sales per month

Someone who has started the business recently and is generating revenues of less than $ 10000 by way of credit card sales may not be eligible for small business funding unless the case is assessed and considered on other grounds such as a potential for growth that the owner can justify and support.

Documentary proofs

Small businesses are usually proprietary types. A business owner, even one with poor credit, should not hesitate to obtain small business capital even if it means paying a higher interest amount because it can help him get back on track to fast growth. The documentation is minimal. He needs to submit proof of ownership. The other documents he must provide are bank statements for the previous six months, proof of identity and proof of residence.

An applicant may wish to get small business finance within 3 to 5 days for which he should apply online and keep ready scanned copies of the above-mentioned documents. These may be uploaded along with the preliminary application. Should the application be approved he may be required to furnish printed copies.

What is not required for the small business loan?

• An applicant need not have a stellar credit history.
• He may not have to furnish collateral or mortgage property.
• He may not have to furnish a guarantor.

It is fast. It is easy. However, there are a few things to keep in mind. An applicant must consider the factor rate applied. This is a fancy term for rate of interest though it is not specifically so mentioned. Repayment may range from 3 months to even as long as 36 months and it is tied to the credit card sales as a percentage of daily turnover or a fixed monthly amount. Should sales be high repayment is completed in a shorter time. In real terms, an applicant may end up paying processing charges plus interest that can be as high as 50% because the loan is unsecured. The best thing to do is to examine the offer and obtain such funds only from a lender who does not charge anything upfront, no processing charges and applies a moderate interest rate.

It is easy to get this type of finance if one has a running business but repayment is the tough part. Small business owners would do well to keep in mind to plan to use funds to generate more revenues instead of paying off existing debts.

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Small Business Finance the Smart Way

Are you a small business owner? If you are, you’ll know that running a small business is one of the most difficult things you’ll ever do in your life. You’re the company’s spokesperson, owner, founder, advertiser and investor. You are its inspiration. It is your livelihood and your passion. And like all passions it is all consuming.

It has you crunching numbers when you should be sleeping. It has you sketching out ideas on napkins in restaurants when you should be eating. But like any love affair the irritations are worth it. You know that almost nothing in your life can match the highs that your business gives you. So stick with it! Give your business all your heart and soul. But be sensible when it comes to your cash.

Business Finance.

Starting your business can be incredibly costly. Buying the machinery, renting the premises, purchasing the advertising space… well you get the picture, you’ve been there. You are also probably aware that the cost of kicking your business into life is so high it can affect your businesses ability to grow later on down the line.

You’ve established yourself as a great business; you know you have the ability to expand and to grow. But you just don’t have the cash to do it. But what is the best way to get that much needed cash injection? You don’t want to be taken for a ride. This is why you need to know about business finance.

Small Business Cost.

The first thing to do when you start investigating small business finance is to look carefully at what you want to achieve. Having clear goals is one of the basic rules of success in business. If you are going to borrow money to support your business you must have a clear aim in mind. That way you can easily track the success of any investment and see how much, making your small business grow will cost. So, determine what you want. Are you purchasing assets, such as land or machinery, or stock? Or are you looking to improve your market position through advertising, or expand into new markets? Whatever you’re doing be clear about your goals.

Small Business Finance.

There are two types of small business finance available to you. The first is the more traditional and common form, known as ‘debt finance’. This involves your company lending money from a financial institution, usually your bank. There are up sides to this deal, you get your cash and you keep all your business. You do have to pay more back than you borrowed in the first place, with the onus on you to repay as soon as possible.

However, if you have clearly identified a use for your money this should present no problem to you and allow you to expand quickly. This is why it is the route taken by the majority of small businesses. If you fail to pay back the money you have borrowed however the consequences are severe, as part of the agreement will involve collateral. Often, this could be your house.

A less common option is that of ‘equity finance’. Ever seen the TV show Dragon’s Den? Then you’ll know what I’m talking about. Equity finance is when an investor gives you the cash you need and in return you give him a share, or a stake of your business. As the investor has no assurances, unlike the bank, he or she requires a much greater pay off if things go well. They want some of those profits! However if things don’t work out, you won’t be sleeping in the streets!

Your Future.

So there are plenty of ways you can offset your small business cost. Small business finance is easy to get if you pitch correctly and your business is heading in the right direction. Whichever mode of business finance you choose make sure you keep following the dream and your passion might end up making you millions.

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Small Business Financing Goes Into Intensive Care

An earlier article noted that business financing is effectively on life support based on recent reports of reduced business loans made by banks throughout the country. There are several reasons why intensive care comparisons might help to explain what is wrong with working capital financing and at the same time provide a healthy prognosis for impacted businesses. Because commercial financing is proving to be a serious challenge for most small business owners, this analysis should be reviewed by any borrower about to obtain or refinance commercial loans.

During the past two years, banks have lost much credibility and good will. Until the federal government provided massive bailouts for many of them, most of these lenders were on life support themselves. While some of the banks have recovered, others are effectively still in the intensive care process. But whether we are reviewing the healthy banks or ones still recovering, working capital financing for most small businesses is predominantly in what appears to be long-term intensive care. Banks are generally reducing or eliminating a large portion of their business financing activities, as indicated from most ongoing public and private reports. For example, with little or no advance notice, most banks appear to be closing commercial line of credit programs for small businesses regardless of profitability or length of the lending relationship. This is apparently not a temporary move to the sidelines but rather a permanent reallocation of resources to more profitable activities based on the manner in which this is being accomplished.

Lending activity has also decreased significantly for other forms of business financing such as commercial mortgage loans. Commercial loans have essentially been downsized or laid off just as many workers have. The realization that banks are rarely announcing publicly that these cutbacks have occurred is what makes this situation different. Perhaps bankers like to think that when they stop making small business loans nobody will notice. When it becomes public knowledge that their small business lending window is effectively closed, the bankers who placed commercial financing into intensive care are astute enough to realize that their public image will suffer even further damage.

Before they realize that the business financing world has changed before their eyes, it is possible that small business owners might need to connect several dots. As this article and other reviews indicate, banks are simply no longer providing the commercial loan services that they once did. Commercial borrowers should primarily rely on extensive candid discussions with other small business customers of the bank to confirm whether their bank is one of the few exceptions to this new reality. Even in the rare instances in which banks are truly lending “normally” to small businesses, the prevailing trend of less working capital financing coming from traditional banks should not be ignored.

While business financing patients (commercial borrowers) might be in serious condition when they find that their bank will not provide needed commercial loans, experienced small business finance specialists can frequently help in restoring financial health that will facilitate a business getting out of an intensive care situation. In some cases, this involves finding a healthy bank that is willing (and able) to provide “normal” commercial loans and working capital financing. For successful commercial funding it will be necessary to explore non-bank solutions in many other instances.

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Small Business Financing Advice – Best Places To Find Real Advice On The Internet

There are so many websites out there that try to give small business financing advice it is hard to judge who to believe and who not to believe. However, there are three sources that I believe you cannot go wrong with when you are looking for small business financing advice:

1. Business Association Websites – The SBA is one of the best places for small business financing advice. As a matter of fact, it is one of the sites I like to use for brand new information. The SBA often releases breaking news when a new type of financing has become available, a lender has made the news, or new options for owners looking to build a new business are available.

Plus, the SBA website is a government website so you can trust that the information is factual. There are many other business associations that give out small business financing advice, but the SBA is my favorite. There is a link button on their site for other associations if you need more information.

2. Lender Blogs – Many banks and other financial institutions are starting to contain blogs with small business financing advice on the blogs. Lenders understand that not every business owner knows everything they need to effectively start a business.

They also know that sometimes new ways of financing are released, and their customers may not be aware. The advice given on lenders’ websites are full of real, authentic, quality information. Check out your lender’s website today to see if they have a blog.

3. Previous or Current Business Owner Blogs/Websites – Often the best small business financing advice sites are those of people that have actually lived the life of starting a business. They can give you tips from their own experiences. The ‘ins and outs’ through the eyes of a real business man or woman.

The relevance of small business financing advice is especially real when you feel you can relate to the author of the blog. Perhaps their advice is being given towards the type of business you have because they currently own a business similar to yours.

These are the three types of sites I visit often when I am looking for small business financing advice for my own business. I suggest you stay clear of sites that are written by people not associated with owning a business at all.

Many people ‘on the outside looking in’ want to give their advice to you. Stick with the professionals. You can feel confident you are getting advice from people within the business.

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Understanding Small Business Finance

If you are an entrepreneur, then you know that there is always a need for small business finance to keep things going. Being able to get the money that is needed for your business means that you need to make several financial and non-financial considerations.

Firstly, before you search for funding for your business, it is important to know what type of financing required. Would the business need debt financing (a loan for running your business) or equity financing (money that is taken from savings or investors)?

Small business finance through debt financing means taking loans from credit unions, banks and other traditional financial institutions. Among the loans that are available are short-term loans which must be repaid, with interest, within a specific period of time. Such loans may be termed as demand loans as the lender can call in the loan for repayment any time. Small business finance longer debt loans are normally used for financing assets like renovations or investments in equipment.

There are many businesses that make use of lines of credit as a source of small business finance. They make arrangements with lending institutions for a set amount of available credit that they can draw upon when need arises. Lines of credit allows businesses to use the cash when they need it and they only need to pay back the amount that has been used and interest is paid on the outstanding balance of the line of credit. Numerous lending institutions offer credit cards as a means of small business financing. These cards are used by establishments to finance their operating expenses. But, credit cards can be expensive because of the interest rates. The cards are ideal for use if the balance is paid in full monthly.

Small business finance through equity is normally used in a limited manner. Informal source of equity funding includes friends and family; while the formal sources include venture capitalists. Venture capitalists generally have a considerable pool of resources that allow them to finance ventures and participate in some of the more crucial decisions in the business. However, these capitalists conduct studies before making the decision to provide funding.

There is also some equity small business finance that are received from people who are called as “angel investors”. These are normally people who have deep pockets and are willing to provide funding.

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Benefits of the Referral Process With a Unique Small Business Financing Program

This unique small business financing program offers many benefits, and not just to small business owners. This program allows referrals, and this can help you make a nice sum simply for referring small business owners to the program. The referral program is a situation where everyone involved wins, and there are no losers. This program requires no credit checks, tax returns, or any of the other documentation that is usually required. It is one of the best available small business financing options, and the referral program means that you can earn extra money simply by telling other small business owners about this fantastic program.

Referrals are paid for by the lender to help identify other small business owners who could benefit from this program. Many small business owners have networks of other small business owners, who may belong to the same trade groups or associations. In addition, many of us know people who own a small business and could really use financing right now to help in these tough economic conditions. The referral process is very easy, and takes almost no time at all. Anyone you refer will put your name as the referral source on the paperwork, and when your referral qualifies for the financing then you are paid a referral fee. You get money simply for helping an acquaintance or friend get the money they need for their small business. This financing program is risk free, because the processing fee is completely refundable if you are not one hundred percent satisfied with the amount of financing offered.

The referral program offered by this financing opportunity means you can help out any small business owner you know or meet, and benefit from it. The extra income you can make from referrals can really come in handy, especially with the slow economy and financial crisis that is raging. The best part is that this small business financing program sells itself, because of all the benefits offered and the fact that there are no disadvantages. You do not not to push to sell the benefits of this financing program, once small business owners realize the enormous potential and the ease and convenience offered. Financing is critical for any small business to grow and expand, and the financial crisis has made getting this financing extremely difficult from banks and other traditional lenders.

This new and unique small business financing program is a lifeline to small business who need financing but do not meet the perfect credit and documentation requirements that are needed in the current climate. The referral program means that you can get the small business financing you need plus earn some for telling people about the program you use. Unlike all the other financing options, this program is very flexible, and requires a small amount of documentation. Bad credit is okay and can still get approval. This program has helped many small businesses get back on their feet by providing the financing needed. The fact that you can earn money for telling people about this fabulous financing program is just another benefit, for a program that has many.

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The Unintended Consequences of Globalism

Globalism might be good for the world economy as a whole, but does not necessarily mean it has been good for the American worker. Whether intentional or unintended, the American worker has suffered through the philosophy of free trade. Do not miss quote me, Globalism has a lot of positives. Now more than ever the people of earth are connected through the internet and can communicate information faster than any other time in history. People are exposed to different cultures and ideas, and the free flow of information is exponentially evolving our society. “Free trade” plays a big part in globalism, which is why there has been a “backlash” from non-college educated workers in wealthy countries in direct response to the effects of free trade policies. When wealthy counties openly trade with developing countries it can overvalue the wealthy countries currency, which in turn makes imports cheaper while exports become more expensive. However, according to the Economic Policy Institute, the real culprit is not the valuation of the dollar and the increasing trade deficit. (Bivens, Economic Policy Institute)

The USA has increasingly shifted its economy from manufacturing to services like banking and investing. It is cheaper to import products of manufacturing from a country that has extremely cheap labor than it is to employ American workers in the United States. This in turn means there now is a premium on college educated Americans who are filling job openings within the service industry. On the other side of the coin, manufacturing jobs are leaving the country and lowering wages of workers without a college degree. This fact coupled with increasing technology that replaces workers and a trade policy that out prices “expensive” American workers is leading to decreased wages. As the US trades more with developing countries as a percentage of GDP, the wages of unskilled workers continue to decrease. (Slaughter and Swagle, International Monetary Fund)

Though Globalism has a net increase in GDP and employment for countries involved, most of the gains from free trade is disproportionately received by the top 1% of Americans. Policies that protect corporations and their interest at the expense of the American worker exacerbate the problem. Trade policies like NAFTA and others have little protections for workers and heavily favor the multinational corporations that seek to benefit from free trade. This only adds fuel to income inequality, which for poor countries can increase economic growth while having a negative effect on rich countries. Rich countries are also at higher risk of financial crisis when they have high levels of income inequality. (Malinen, Huffington Post)

Globalism and free trade are linked very close together, which is why there is a stigma attributed to the word. There has been growing resentment within the US and other wealthy nations of globalism as a whole. They do not just condemn free trade, but openly blame minorities and marginalized groups for their decrease in wages and “eroding” their cultural dominance that they claim dominion over. This is a deadly cycle, as income inequality only feeds this type of behavior. In a country that is not adequately educating its people, more of the workers within its country will become more ignorant. With free trade putting a premium on college educated workers and decreasing wages of unskilled labor, we are now almost at a tipping point, socially and economically.

Globalism has many unintended consequences that inadvertently caused huge social and economic problems within the US. The problems that globalism is causing is not a hard fix. Reducing the income inequality will eradicate more of the negative effects of globalism. Universal Education, Universal healthcare, and a rewrite of our tax code are just a few ways to reduce income inequality. All of these possibilities are well within our means. We have to take care of these problems swiftly, before globalism becomes an integral part of our own decline. (Mason, Post-Gazette)

Bivens, Josh. “Using Standard Models to Benchmark the Costs of Globalization for American Workers without a College Degree.” Economic Policy Institute. N.p., 22 Mar. 2016. Web. 25 Apr. 2017.

Malinen, Tuomas. “The Economic Consequences of Income Inequality.” The Huffington Post. TheHuffingtonPost.com, 17 Dec. 2015. Web. 25 Apr. 2017.

Mason, Bob. “Single-payer Health Care Would Help to Treat Three Separate Threats.” Pittsburgh Post-Gazette. N.p., 26 Oct. 2014. Web. 25 Apr. 2017.

Slaughter, Matthew, and Phillip Swagel. “Economic Issues 11–Does Globalization Lower Wages and Export Jobs?” International Monetary Fund. Imf.org, Sept. 1997. Web. 25 Apr. 2017.

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