Looking For The Suitable Business Finance Solution For A Small Business

Surely it’s no mystery that searching for the most suitable business finance option to be able to get the financing essential to launch a small business gets to the mind of every businessman. While business finance options are around every corner it is essential to end up getting the right type of funding for a particular kind of business.

As a business owner, you need to find out that picking the wrong type of funding may lead to undesired situations just like feuds between you and your financier, a shift of control that is out of your hands and total waste of time and money, as well as other unwanted consequences.

The thing is that you have to look for and go for the most beneficial business finance option which best fits your small business. As a way to aid you to find the ideal financing alternative, we’ve outlined various financing options which you may find appropriate for your business.

Friends And Family

In the event that your loan wasn’t granted, give some thought to asking a rich relative or good friend for a little help. The most sensible thing about obtaining a small business financing from family and friends is that asking for a small amount of funds is fast, hassle free and has no legal expense. Even so watch out, continue to be professional and keep in touch. No doubt you wish to safeguard your relationships with friends and family and so make sure to repay the amount of money you have borrowed.

Debt Financing

Most new small businesses are funded with debt financing by means of a finance company. If perhaps you pass muster, banks can give you a history of credit. Know that this loan includes an interest rate and repayment schedule. However in advance of offering you a loan, they will carefully examine your company’s earnings, collateral and liquidity of your property. In addition, you furthermore should have a good business plan and know the inside and outside of your financial condition. If perhaps you need to improve the probability of your success to have your loan given, you need to establish a relationship with your lender ahead of your request for loan.

Grants

For anybody who is starting up a whole new business from scratch or in the technology game then getting a grant via the Small Business Administration is the very best way to try. Remember that SBA does not grant loans, they do guarantee them. They considerably reduce the lender’s risk so making them qualified to provide a loan. The pre-qualification program of SBA is intended to help new and growing business, disabled business owners, low income borrowers, veterans, exporters, rural, and specialized industries. In these times of economic crises, an entrepreneur shouldn’t fail to notice ‘free money’.

Venture Capitalists

Approaching the venture capitalists is an excellent way to consider just in case you happen to be beyond the start-up stage, have initial revenues coming in, a quality team in position and also have a clear path to finally sell the business. Yet be aware that the VCs right now have higher standards than in the past. They remain a serious player in the investing world up to now. They offer you a very time-sensitive funding and assures they immediately get their money and profits. In case you are planning for a meteoric growth and will require further business financing later on to attain it, they’re certainly a great source.

Equity Financing

Even if debt financing is often preferred by business owners, however there are still a lot of companies which are funded by private or institutional investors in exchange for an equity ownership stake.

Angel Investors

Angel investors can be your wings to get funds, they fill the gap between friends and family and venture capitalists. Angel investors now seldom even take a look at investments below $1 million. They made their name as being warm and friendly and patient about their investments as well as by providing their business wisdom and priceless relationships along with their money. So why don’t you get a knowledgeable business finance adviser to plan the deal.

Strategic Investors

Strategic investors could actually help if perhaps you need to get to market without delay. They brighten up the investee’s outlook for more investment and success by means of putting value to the funds it invests with its contacts, experience, and know-how of market. Nevertheless you really need to be careful that they can prohibit you from selling to your competitors, can swamp your business with opportunity, manipulate you into reallocating your company’s assets in a lopsided way as well as end their business relationship with you on in just an instant! Which means that you need to make certain you know what you’re getting into.

The bottom line is, choose intelligently. Be aware that even some small business finance options can be complex and risky and you have to make the right choice. It’s very important that you complete your homework; request the right amount, get the right source at the best time. With this you can get the funding for your start up company which is right for your business and stay prepared to achieve business success.

What Is Credit Card Receivable Financing?

If your company is seeking or has been turned down for a small business loan, an unsecured line of credit, unsecured business financing, or other short-term business financing to use as “working capital” you may have heard of Credit Card Receivable Financing (CCRF) – but you’re not quite sure what it is. CCRF is an alternative funding solution that many existing businesses are able to use when they don’t qualify for traditional bank financing.

Credit Card Receivable Financing is a fast, easy and convenient way of getting working capital or a short-term business loan for a business that has accepted credit cards as payment for its goods or services for at least the previous six months. Unfortunately, it is not available for start-up loans, start-up funding, new business loans as will be explained later in this article.

However, many business owners still don’t fully understand the difference between Merchant Cash Advances (or business cash advances) and Credit Card Receivable Financing. The reason is they are very similar in the requirements to qualify, term length and repayment method – but they are different.

While both are known as a form of credit card receivables funding, the primary (and most important) difference is; a Merchant Cash Advance (MCA) is the actual “purchase” of your future credit card receivables at a discounted rate. It is unsecured financing, but it’s not classified as a loan. Much like “Accounts Receivable Financing” the same concept applies, that is; your business sells its receivables at a discount for cash that you need now and you agree to repay the funds from future revenues. Since this is a purchase of future credit card sales the company providing the funding is not required to give an established rate of interest. In fact they cannot even call what is charged interest, it’s called “the cost of money” and the amount charged can vary based on factors having to do with your business. (Those factors will be discussed in another article specifically related to Merchant Cash Advances).

With CCRF the business still uses future credit sales as a basis on which the lender will determine the amount of funding, but the difference is that CCRF is a true regulated “business loan” and as such the qualifications are slightly more involved but the costs are usually 50-80% less than most MCA’s.

When attempting to secure any type of business loan, unsecured business credit line, or business financing many new small business owners will try to qualify for CCRF because of the savings benefit it offers. In fact, many owners who currently have a MCA will use CCRF to pay off the existing advance because of how much they are able to save on the costs of money.

Another advantage of CCRF is, in the first few years many businesses are unable to establish a credit history that banks will require to qualify for loans. With CCRF as payments are made the business owner can make sure those payments, to an unsecured business loan, are reported to credit agencies so that a history of repayment is being made. This can potentially improve the credit score and possibly help in future bank loan applications. In addition, there could be tax advantages that your accountant may be familiar with regarding interest payment and so forth.

With both CCRF and MCA the amount of funding that you receive depends on your monthly credit card sales. And funding typically ranges between 100 to 150% of your monthly credit card sales average. For example, if your businesses monthly Visa/MasterCard sales average is $10,000 lenders can fund $10,000 to as high as $15,000 for the normal six to twelve month terms that are offered. Remember, this unsecured business loan is short-term working capital so don’t expect a 36 or 60 month payment term.

To qualify, your business must have processed at least $3,000 in Visa/MasterCard transactions each month for the previous six months, be in business for minimum of one year, have a minimum FICO score of 540 or greater, have at least one year remaining on your business lease or own the property and no open bankruptcies, foreclosures or liens (some liens with payments plans may be OK). There is no collateral required and the term is usually six to twelve months.

Read more Articles on;

  • CC Receivable Financing
  • Floral Business Easy Loans
  • Merchant Cash Advance
  • Easy Small Business Loans
  • Creative Marketing/Financing
  • Medical Office Patient Financing
  • Customer Finance Auto Repair
  • Easy Pay Patient Financing
  • Medical Optimization
  • Small Business
  • Financing New Business
  • Veterinary Patient Financing
  • Auto Repair Marketing
  • What is CCRF
  • and more Information in our blog. (See link below!)

Canadian Franchisee Loans and Business Funding – 4 Secrets To Financing A Franchise

The inside edge. You want it, we have it! Have we got some tips and secrets to share for you.

We’re talking about financing your franchise – the successful completion of your entrepreneurial dream in Canada. As a franchisee you want to be aware of your options in loans and funding programs that are geared specifically to financing a start up business in the booming franchise industry.

We’re going to discuss 4 key elements of a proven formula for franchise success. What are they? Simply speaking its ensuring you have a business plan that accurately resembles the financial aspects of your business. Number two is the types of emphasis that is put on your own personal background and credit history. Number 3 is the knowledge of franchise financing options in Canada, and number 4, (often # 1 in your mind probably) the amount of personal funds you have to commit or invest to get your business going and your franchisee funding approved.

Let’s dig in! OPM. What is it? It’s stands for other peoples money and its critical you understand that a franchise is composed of two elements with respect to your financing plan – debt (what your borrow) and equity (what you put in). Our key point here is simply that while there is no proper mix of what works for the combination of those two elements. No franchise is financed with 100% borrowed funds – conversely you don’t want to ‘ pay cash ‘ for your business and risk all, or a lot of everything you own (house, savings, etc) for a start up business such as a franchise.

We will also share with you that some of the very specialized franchisee loan program in Canada typically require a 30 – 40% owner equity, or down payment. That can be achieved in several different ways.

Should you tap into your retirement plans to fund your franchise? That’s not our call, but if you have capital outside your savings we would not recommend collapsing RRSP’s, or taking out home mortgages, etc for the purpose of financing and funding your franchise.

Clients often ask how their personal credit history affects their ability to get franchise financing. In general we can say it’s a key point in the whole approval process. Many Canadians aren’t aware that the entire credit history system in Canada is based on a simple score. You should have a score of at least 650 to be successful in traditional franchise finance. So check your score in advance. And by the way, higher is better!

The business plan is a key element of your whole package. Many clients don’t have experience or financial acumen to prepare a proper plan. Not a problem as you can seek a Canadian business financing advisor, or accountant, etc to prepare your plan. A good basic plan comes at a very reasonable cost.

The business plan is your ‘ total picture ‘of your franchise. Basic elements are yourself, your background and business or industry experience, info on your franchise, and some basic financial projections. Naturally the better recognized and successful your brand the more attractive your perceived chances of success are.

As a franchisee what loans and funding is available in Canada. As unbelievable as it may seem the government of Canada, via Industry Canada, is one of the largest players in your franchise success. A program called the BIL / CSBF program is hugely popular and finances mot franchises fewer than 350k in Canada. We strongly recommend you seek out and investigate this program, it’s probably the key to 95% our client’s success in financing a franchise with funding that comes with great rates, terms and structures and limited guarantees. Bottom line, check it out!

So there you have it, 4 key elements, and secrets if you will, to franchisee financing success. Summarized… a solid business plan, some good business or industry experience coupled with a reasonable personal credit history, a down payment that is aligned to your overall financing needs and personal situation, and, last but not least, knowledge of programs such as the BIL which are geared toward franchise finance success.

So now you know!

P.S. Good luck in your entrepreneurial dream, and going it alone is never good, so seek the services of a experienced, credible and trusted Canadian business financing advisor.

Used Car Financing For Any Credit Score

The first thing that comes to mind is how can there be such a thing as any credit used car financing. The answer is that there is a huge demand and need for automobiles and if you cut out all the buyers that have less than perfect credit you would greatly reduce the consumption of vehicles and hamper the growth of the economy. So in order to fill that need there is a little known part of the auto retailing business that sells and finances vehicles for buyers that have credit that most lenders would turn away.

The dealers that offer any credit used car financing are usually called Buy Here Pay Here (BHPH) dealers or car lots. The buy here pay here terminology is no secret, in fact it is quite simple. You buy at the dealer and you make your payments at the same dealer. In short the dealership or car lot is not only the retailer of a used vehicle, buy they also act as the bank or lender. These establishments only offer used or pre-owned vehicles for sale rather new ones as a way of reducing their risk.

Car Financing Options for Any Credit Status

You may have noticed advertising that says bad credit or every credit qualifies for financing at certain dealers which is actually in house financing offered at buy here pay here car dealerships. These are the dealers that have any credit used car finance options. They are not bound by the underwriting or regulations that most auto lenders use to determine if a borrower is a good risk or not. They decide right there in the showroom in they are going to approve for an auto loan. The methods they use to decide if they will finance your choice of vehicle is based on income, time on your job, and length of time at your address. One of their favorites sayings are “If you have a job you are approved”.

This rather unconventional method of providing financing for used cars has been growing steadily for a number of reasons, from the economy to a higher rate of bankruptcies being filed. The main thing is that people that have terrible credit can still get a vehicle. If these people were unable to get a dependable vehicle they would have a problems keeping and finding a job, providing for their family and taking care of the everyday business of life. So there really is a need for any credit vehicle financing.

Somewhere between having great credit and extremely bad credit there are people that have credit that may not qualify for the conventional auto loan from an auto maker’s lending unit, but they can qualify with what is called sub-prime lenders. These lenders specialize in providing auto loans for the person with marginal credit that needs to buy a car. They use the buyer’s credit score to determine eligibility along with income and length of employment. However they also have certain stipulations for the auto loans they approve. These stipulations can limit the dollar amount of the loan, the term on the installment contract, the age and mileage of the vehicle and the amount of down payment that the buyer must have before the final approval is made.

These sub-prime lenders don’t have used car financing for bad credit, but they charge less interest on their loans than the buy here pay here car dealership does or at least in most cases. As you can see there really is a solution for any credit used car financing the only difference is where or with whom the transaction is made.