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Posts Tagged ‘Financing’

This real estate and business financing article discusses a concept which is referred to here as “Thinking Outside the Bank”. It is meant to be a variation of the well-known “thinking outside the box”. Despite the prominence of traditional banks, they are not the only viable source which should be considered for a commercial mortgage or commercial loan. There are many reasons why a commercial borrower might not go to a traditional bank for a commercial real estate loan or other business finance circumstances.

Business borrowers have more commercial mortgage and commercial loan alternatives than they realize. As noted above, I refer to these business financing alternatives as “Thinking Outside the Bank” because a typical commercial borrower probably believes that a bank is the best source for a business loan in business investing situations. Non-traditional business lenders are usually viewed as having the competitive edge for many common commercial financing and commercial real estate investment property financing scenarios.

In some cases a traditional bank will offer to provide a business loan but will attach excessively stringent terms and covenants. In other cases a traditional bank will decline the commercial mortgage outright, perhaps because they do not even provide business financing to the commercial borrower’s particular industry. In either case, the commercial borrower is likely to benefit by “Thinking Outside the Bank” for their business investing efforts.

Commercial loan borrowers might feel that a bank is their most likely source for business financing. However, since traditional banks usually focus on a few types of businesses and commercial real estate investing, non-traditional business lenders should be emphasized for any business loan situation. Therefore the recommended business finance and commercial mortgage strategy discussed in this article is to “Think Outside the Bank”.

As I reported in a previous business financing and investing report, in many commercial mortgage situations it is common for a local bank to assess stricter commercial loan conditions than would typically be seen in a competitive business loan scenario. Such banks can often take advantage if there are few business lenders in their market.

A prudent response by business borrowers is to consider non-traditional commercial mortgage options. It is not necessary for borrowers to depend upon traditional banks for business loan strategies. For typical commercial loan scenarios, a non-bank lender can often provide better business financing terms because of the competitive market situation.

There are at least three business financing situations in which business borrowers will typically experience that non-traditional lending sources can provide conditions that are best for the borrower: (1) commercial real estate investment property loan programs; (2) credit card factoring and business cash advance programs; and (3) working capital management programs for credit card processing.

Business Loan Investing Options – Commercial Real Estate Investment Property Loan Programs -

Two of the most common commercial mortgage difficulties experienced by commercial borrowers can be avoided if they “Think Outside the Bank”. The first business financing situation is the prevailing practice of traditional banks to avoid most special purpose investment properties (such as funeral homes and golf courses).

A second business loan possibility is the frequent practice of many commercial banks to add recall and balloon conditions to their commercial loans. The bank can then require early payoff of the commercial real estate loan under stipulated conditions. Both business financing situations can easily be prevented by a non-traditional lending source.

Business Financing Choices – Business Cash Advance Programs -

Most businesses that accept credit cards will qualify for a business cash advance with their credit card receivables. Traditional banks will typically be very poor candidates to consider if a business needs assistance with credit card factoring and business cash advances.

Because successful business owners typically need more working capital than they can obtain from a bank, it is important for a business to “Think Outside the Bank” with non-traditional lenders to help with this working capital management function.

Credit Card Processing Programs – Working Capital Management Choices -

The selection of a credit card processing service can be critical in improving the cash flow of a business with significant credit card activity. Credit card processing providers can be combined with the credit card financing process mentioned earlier.

In coordinating a business cash advance and working capital business loan program, it is usually possible to achieve improvements in the business owner’s credit card processing services. Traditional banks are usually not competitive in providing assistance with a business cash advance using credit card receivables. So it is likely that a non-traditional lender will be the major source of competitive help with credit card processing improvements.

A closing business financing and commercial real estate investment property financing thought: I have written an earlier business loan article about commercial lenders to avoid. It should be noted that there are in fact both traditional and non-traditional (non-bank) lenders which should be avoided.

When business owners are “Thinking Outside the Bank”, they should be ready to avoid troublesome non-traditional business lenders in their investment quest for worthy working capital management dealing with commercial real estate loans, credit card financing and credit card processing.

Start up businesss financing and leasing,  business loans, capital, with credit problems are still available in these economic times.

 This article is going to discuss what is start up business financing and leasing, business loans, and capital, what are its benefits,  leasing plans and how it relates to the start up business.

 Additionally, we will show you lending requirements below for start up loans

Leasing is a form of renting but with a buyout clause at the end of the lease to take title to whatever we are leasing. The requirements to get into the lease may be as low as first and last payment and as much as 25%. Each situation is different and this offers the start up and seasoned business a way to invest very little monies into the business. Additionally, all other monies can be used for operating expenses such as marketing and other key areas. Leasing is not a new form of financing but could be a lending solution to the start up business.

The benefits of leasing may result in off-balance sheet financing reporting, tax incentives and conserving cash flow and preserving lines of credit for working capital purposes. Many leasing requirements may only require the initial outlay of first and last rental payment. Most leases finance 100% of the cost of the equipment such as soft costs which include shipping, software, training and installation. Additionally, leasing lets you regularly upgrade your equipment, eliminating your utilization of old, outdated equipment and reducing repair options.

Some of the leasing and financing plans available to the lessee are .00, 10% or 20% purchase options as well as Trac Leases and FMV lease buyouts. Additionally, some lenders offer seasonal payments, deferred payments for ninety days, declining payments and half payments for a specified time period. It is important that the lessee understands all these different lease plans available as well as the buyout clauses. The lessee has many options to consider in negotiating his lease. He must understand each lender’s requirements and see if it fits within the realm of the lessee’s requirements.

 Some lenders will accept the start up business whereas others will not want to lend to this group. They consider that their risk capital can be invested in other types of portfolios that can be better served. Many lenders require full documentation which includes a couple of years of personal income tax returns, a personal financial statement, and other underwriters requirements. However, in the past couple of years, there is a select group of lenders out there require an application only program. These lenders have their own computer scoring model and eliminate the necessary additional paperwork of other lenders.

 These application only programs are usually restricted to the seasoned business, however there are a few out in the industry which will work with the start up business as well. The amounts of the application only program run as high as 0,000 for the seasoned business and ,000 for the start up. Additionally, the lender will lease the qualified asset probably from 36-60 months and many won’t finance any equipment and commercial vehicles over ten years old.

It is important to understand the lease terms, the rate factor the lender is charging and the buyout clauses in the lease to take title. If you anticipate paying off the lease early, you should consult your lender to ascertain there is no prepayments for a early payoff. The last thing to understand that the lessee is going to guarantee the lease.

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1) Recap of Start Up Business Loan, Financing Programs Up to ,000**********Conventional Financing, Bad Credit

0-2 Years Time In Business, Story Book Lender, Credit is Run but isn’t Credit Driven, High Cash balances help a lot for approval

For New Business Start-Ups: (terms 12-30 months) Up To ,000

1. Completed Credit Application

2. Personal Credit Report from all Principals

3. Last Years Personal Tax Return

4. Evidence of an Alternative Source of Income*********

5. Personal Financial Statement on All Owners

6. Evidence of a Business Bank Account (this may not be open yet)

If a Business has been open for a few months, please retrieve bank statements

Lease Terms are Up To 36 Months…………10% Buyout Clause

2 )     Second Start up Lending Program. Business loans,  financing and leasing

 If you have good credit for other start up financing, minimum credit score 650 or higher, the down payment for conventional financing and busines loans may be any from 10 to 30% down.

Industries include owner operators for semi, day cabs and dump trucks. Other industries such manufacturing, construction, medical, transportation, retail and service industries may also be eligible. Paperwork requirements are basically the same as above….

3) If you don’t qualify for the start up programs above, we have many off lease and repo financing programs that start as low as 550 for minimum credit scores, financing up to 0,000, Down payments as low as ,000

Happy hunting for your  acquisition and its start up business loan, capital,  financing and leasing programs

The goal of being realistic when seeking new commercial loans and working capital financing will help commercial borrowers avoid a number of commercial finance problems. With proper preparation business owners should be in a better position to obtain new financing despite the difficult challenges impacting most working capital loans and small business financing. Nevertheless it should be anticipated that terms of financing will be different from prior commercial financing. Because of recent commercial lending difficulties, business owners actively assessing the most effective options for their small business finance decisions are likely to find the smoothest path to business loan success.

In view of volatile conditions which have recently impacted credit markets, this will not be a simple task. The extensive misinformation and confusion that there has been about business financing and working capital availability illustrates a common example of the problem. One of the most difficult challenges for commercial borrowers is obtaining more accurate information about what is realistically possible.

A number of harsh realities must be confronted by all small business owners when seeking to identify realistic choices in a confusing working capital management climate. For most current commercial financing decisions by business owners, there are several major factors to anticipate. In the first example, additional small business loan collateral is being requested by most commercial lenders. Second, many regional and local banks have discontinued lending for business financing and working capital. In a third example, businesses which are not currently profitable or not current in their debt payments will have extensive difficulties. For a fourth factor, commercial construction financing currently has a very limited availability. Fifth, lenders have eliminated unsecured commercial lines of credit for most small businesses.

Despite the new business financing limitations just noted, there are practical working capital options for small business owners to consider. An increasingly effective commercial financing option in the midst of an uncertain economy is a merchant cash advance program based on credit card processing activity. Even though this commercial funding option has been available for a few years, it has not been used by most small businesses. Business cash advances should be evaluated as an important tool for improving business cash flow for most businesses accepting credit cards. Small business owners wanting to pursue this financing option should consult a business financing expert who is knowledgeable about this working capital management approach as well as other small business loans.

This kind of small business financing is still in fact obtainable even though working capital loans are not as widely available as they were just a few months ago. The main change for business borrowers is the likelihood that they will be dealing with a different commercial lender since some of the largest providers have stopped making these business loans. Small business owners will benefit from finding an experienced and candid business financing expert to assist in evaluating realistic options because the most effective working capital financing providers are not aggressively marketing this capability.

As stressed above, when making commercial financing decisions it is becoming increasingly important for business owners to first determine their effective business finance funding options. This task is likely to be much more difficult than most commercial borrowers realize because of recent volatility in financial markets. It is advisable to explore commercial finance options that might be necessary if economic conditions change even further even for business owners who are satisfied with their current working capital financing arrangements. The use of Plan B contingency financing is an important tool to assist commercial borrowers in this process.

This report was produced in a direct effort to provide more understandable insights about some of the most critical business finance issues effecting commercial borrowers. Our approach in this report is to describe current commercial loan circumstances in six words. We have adopted a similar model in other commercial finance reports such as “seven words to describe commercial property loans”. The “simpler is better” perspective reflects the belief that after hearing an almost endless number of reports about commercial lending difficulties, what small business owners might really need is a more concise explanation about these problems and the resulting impact on their business financing options.

Before proceeding, it is important to emphasize that small business finance options are often more complicated than anticipated by many business borrowers. It would be incorrect to assume that we are attempting to characterize business loans and working capital financing as simple and straightforward. Actually, we are making the opposite case. The unfortunate reality that most business financing processes have always been excessively complicated and that meaningful improvements are not on the way is one of our ongoing observations. We nevertheless feel that it is critical for each small business owner to have an absolute and total understanding of the entire commercial finance process in the face of the prevailing commercial lending complexity. This particular report is one of several thorough efforts on our part to help in providing more understandable insights about commercial loans and business banking problems.

“Banks are saying no more often” is our first example of six words describing business financing options. For any small business owner still unaware of this harsh reality and who might doubt this observation, a series of candid conversations with other business borrowers will probably remove all doubts. The primary point to remember is that banks are not currently providing an adequate level of business loans on a widespread basis. It is important for small businesses to realize that they are not alone when they hear their bank say no to routine requests for commercial financing.

A second observation is that “commercial property values have decreased dramatically”. There are very few exceptions. The biggest business financing impact is likely to occur with commercial refinancing situations. Many banks are aggressively recalling existing commercial real estate loans and this literally forces a borrower to seek business refinancing even if a business owner has no interest in refinancing their commercial mortgage. With decreasing commercial real estate values, business refinancing will be a challenge for most small businesses.

In another six-word description of commercial financing, “lines of credit are disappearing fast”. Even the most successful businesses need a reliable source of working capital financing, so this situation is especially serious if a business cannot replace bank financing when it suddenly disappears. Even if a business still has an adequate line of credit, it is important to realize that on a widespread basis banks are reducing and eliminating business credit lines with almost no advance notice.

“Business financing is in intensive care” is our final observation in this report. Small business owners need to be prepared to take more extreme measures such as firing their banker and finding alternative commercial funding sources. Nobody should expect that bankers will publicly announce that they are in any kind of financial trouble after recalling that they have not been sufficiently candid about commercial lending problems in the past. On the contrary, a prevailing outlook from most banks is they are lending normally to small businesses. Commercial borrowers will need a healthy amount of skepticism when dealing with any commercial lender.

As we noted, this article is one of several efforts to help small business owners survive an extremely challenging commercial lending environment. By describing commercial loan difficulties in six words, this report was intentionally designed to produce a concise overview of several complex small business finance issues. A review of related reports such as “seven words to describe business cash advances” and “six words describing working capital financing” should also contribute to a better understanding of practical business financing options for commercial borrowers.

Finding proper business financing is not easy at the best of times for most small and medium sized business owners and managers.  

There are a number of reasons that collectively explain why the business financing market can be so difficult to understand and navigate.

But probably the single biggest reason is the lack of useful information about how the business financing market actually works.

Business financing information and education sources predominantly come in two forms: 1) institutional education material; 2) major bank advertising.

If you’ve ever read through a educational finance text book or taken a business finance course, you already know how difficult it can be to apply the theories, principles, and strategies to a small or medium sized business scale.

From a formal educational point of view, there is very little useful information provided as to how the market place works, how to plan for financing requirements, how to manage periods of growth, decline, transition, start up, etc.  

Sure academic books and courses can go through all these areas in great detail, but is the information practical, real world, something you can relate to and apply yourself as a manager or owner of a small or medium sized business?

In most cases, the answer is a resounding NO.  

Most finance text books speak to big business financing dynamics that are not easily transferable to small and medium sized business scenarios.

Outside of the formal education system, the next great source of business financing information is the information provided by the major banks, which they tend to make available to you by the boat load through there broad based marketing campaigns.

Unfortunately, the information by itself seldom helps you determine if a particular institution would be able to provide you with financing, or what would be required to qualify for a loan.

The massive brand advertising campaigns run by the major banks have told us for years  that these institutions will take care of all our banking needs, and that basically all we have to do is show up on their door step and they’ll take care of the rest.

Depending on whose numbers you look at, in reality major banks provide less than 30% of the financing required by small and medium sized businesses and this number is on the decline.

So, when equipped with little or no useful information, the average business owner or manager for a small or medium sized business will first approach their existing bank for financing.

After all, you just need to show up at the door step of a major bank and they will take care of your needs, especially if you are a long time customer, right?

Despite the branded messages to the contrary, major banks tend to be very selective when providing business financing to small and medium sized businesses.

So, if your bank can’t provide you with the business financing you require, what is your alternative?

The good news is that business financing sources continue to grow in numbers as more and more lenders carve out a particular piece of the market to service.

In order to take advantage of these alternatives, you need to have a solid approach in place when seeking business financing.

Here’s a short list of things to consider

>>> Develop a thorough understanding of both your personal and business assets, income, and cash flow.

Regardless of financing model, these elements will always come into play to some degree.

A good practice to follow is to maintain a personal net worth statement and update it at least quarterly so that when you do need to access this information you don’t have to dig through stock certificates, pension statements, life insurance policies, etc., to come up with a current value for the assets you own and the debts you owe.

Your knowledge of your own business financials is also an indication of your ability to manage your business.

>>> Monitor and manage your personal and business credit.
Small and medium sized business financing is focused on both personal and business credit histories.
Regular reviews of both personal and business credit reports from the credit reporting agencies are important to avoid errors and credit practices that can severly damage your borrowing power.
>>> Develop your marketing position.
Yes, seeking business financing is a marketing exercise.
When applying for business financing, you are marketing your business to lending sources.
In order for them to seriously consider your application, they need to know what’s in it for them.
What will they make as a return?
What is the risk of you not paying the money back?
What are the business risks and how do you intend to manage them?
When will they get their money back?
How will you secure the loan, and so on.
>>> Research Lending Sources
Your goal when seeking business financing is to locate the amount of capital you require to accomplish a specific purpose from a financing source that meets your business needs.
Again, there are lots of business financing sources. But there is also lots of variation in the types of business applications each one can consider.
Broad based lenders reply on credit history and net worth.  As you get more specific in terms of financing application and industry, lender applications become more narrow and can be harder to locate.
Financing consulants and business loan brokers can be an excellent source of information.

>>> Qualify The Lender
Before you make a formal application, find out if the lender has the programs and lending track record to meet your specific needs.
Too often, only the lender does any amount of qualification. Both sides should get comfortable with what each can offer the other before proceeding with a formal application process.
>>> Compare your options
Depending on the scenario, there can be several financing strategies that could work for your business.
Make sure you take the time to compare before making a decision.  The extra time spent could save you considerable time and money in the long run.
>>> Start Today
Regardless of what your business financing needs are right now, you should regularly invest time in staying on top of your business’s financials and researching financing sources that fit your industry and potential future applications.
When the time comes to acquire additional capital, your proactive efforts can make all the difference in getting the capital you require, when you need it, for terms that are acceptable to your business.

Are you hunting for substitutes which could lend a hand you in business financing or may be acquire a few business loans in the present monetary situation or is it really hard  for you to find a  business loan in the current scenario?. Well these days many banks and business financing establishment contain stern their standards of business financing and are only ready to provide business loans to large companies that have unassailable financials and significant assets. Undesirably, very less petite organisations have been capable enough to survive the melt down without a considerable economical effect. Moreover as a result of the recession, several petite corporations do not have flawless fiscal report, thus they need business financing. Fortuitously, getting a business loan from a traditional bank isn’t the only business financing option.

Borrowers of Business financing principally deem that business loans from conservative banks are the best alternative as well as resource for business financing. On the contrary, as most of the conservative banks focus on a small number of identified industries, non-traditional or non-bank and non local business lenders should be considered for several of the business financing situations. Therefore the suggested business financing strategy ought to be considering other substitute also.

There are lots of business financing circumstances where business borrowers may a lot of time find non conservative commercial lenders are in a better situation to give terms which are more helpful to the business borrower: A few are

1) Trader credit card featuring and cash advance alternatives

2) Business real estate loans and

3) Credit card processing alternatives.

In numerous situations a conventional bank would agree to offer business financing but might connect very stern provisos plus conditions. In some other scenarios a traditional bank will decline the business financing totally, might since they don’t even provide business financing to the business borrower from that particular business. In any of the cases, the business borrower is expected to benefit from services given by non-conventional commercial lenders.

Many non-rival business financing situations it is normal for a home -customary bank to implement stricter business financing conditions in comparison to the other rival business financing market. These customary banks regularly take advantage of a comparative lack of other business lenders in their regional market. A correct retort by business borrowers is to hunt for non-bank commercial financing alternatives. It is neither required nor rational for business borrowers to rely only on regional customary banks for business financing solutions. For several business financing situations, a non-bank and non-local business lender is likely to provide better business financing stipulations as they are familiar to oppose competitive with other business lenders.

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