Archive for the ‘business loans’ Category

What to Know About Business Loans For a Home Based Business

August 4, 2010

Entrepreneurs may ask if a home based business can acquire a business loan? The truth is that any business can get a business loan if they meet expectations.

Business lenders are all looking for the same things. These are the same things that a mortgage lender or car lender is looking for. They want to see that one is creditworthy, that they have a capability to repay, and that they can collateralize the loan.

With a house or car loan, the collateral is self-evident. With a business loan it may not be that easy. One could put up what they are purchasing (inventory or equipment) if the lender is accepting of the idea. But many times they will want something outside of the deal like personal property. So, before putting up one’s home it may be cheaper to use a mortgage refinance rather than using a home to collateralize a business loan. Plus, there are personal tax advantages to a mortgage.

The ability to repay will be shown in the business’s business plan. Yes, even home businesses need to develop a business plan. It would be better that a business has a history to show and hopefully the current history is profitable. Current financials will go a long way to making a lender comfortable about lending to a home business. Should this be an at home start-up, then one will definitely need to spell out one’s business plan. Be sure to include why having a home office makes more financial sense than having a commercial property office.

Creditworthiness is key too. Not only the business’s credit but a lender will examine the personal credit of the owner(s). This is why it is important that one keep their personal credit score up if they desire to be an entrepreneur.

Overall, if one can show all three aspects covered then they should be able to get a business loan, even if they are a home based business. However, should they be weak in any category, being a home based business will make it double-tough.

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What Are Some Advantages of Unsecured Business Loans?

August 4, 2010

If you’ve been in the process of starting up your own business, or are helping someone do so, then you must know that the biggest factor that determines whether or not that business succeeds is not its marketing. Nor is it the sales people. And it certainly isn’t whether or not the website is cutting edge. The one factor upon which your hopes and dreams rest, the one thing that determines whether or not your business will succeed is cashflow. That is, the ability to maintain enough cash in the business to pay for expenses, such as equipment, overhead such as lighting, rent and heat, and of course, to pay the owner. After all, its why you started your business in the first place right? With this in mind, you may want to consider unsecured business loans to aid in cashflow.

That said, there are times, especially when your business is just starting out, where you will need more cash than you have on hand. Here again, unsecured business loans can be of great help. But have you stopped to consider some of the advantages of them? For one thing, as opposed to secured business loans, where you have to have some for of security to offer the lender (your house, or car for instance) unsecured business loans require no such thing. This in and of itself is a great advantage, especially when you’re looking to access cash quickly, whether it be to move your business from the garage to an actual office, or to purchase much needed software or computers, or even to start the hiring process and ensure you can actually pay your staff at the end of the pay period.

Another advantage of unsecured business loans is that should you be late, you may not pay late fees. Say that the monthly payment on the loan is due on the 5th of the month, but the business can’t pay it until the 10th. This is not a problem as there is a grace period during which you can pay the outstanding monthly payment without late charges. Why would the lender do this? Simple: they understand that if you (and your business) have a good experience with them, you will most likely come back for more unsecured business loans and be more likely to recommend their service to your friends and family. This ultimately means more customers and income for them. In short, they’ll want to make the process of obtaining unsecured business loans as easy as possible. Just don’t go in unprepared.

Finally, another advantage of unsecured business loans is the fact that the funds can be used for anything so long as it relates to the business. This of course covers a lot of ground and doesn’t just mean use for equipment purchases or overhead. It can be used to obtain the first in a fleet of company trucks for instance. And it can also be used to offset entertainment expenses (i.e. food) incurred provided that it was during the course of business, say, having a lunch meeting with a potential client.

Get a Loan For Business – Did Your Bank Say No?

August 4, 2010

For many business owners in today’s economy, it is becoming increasingly difficult to get a loan for business. The normal channel of the local business bank has been all but shut down due to tightened underwriting conditions and difficult approval standards. Additionally, many businesses and business owners have suffered through negative credit ratings due to the economic situation.

For these business owners, there are few options outside of borrowing from friends and family, taking out an equity loan on their house, or accepting the offer of a merchant cash advance from their credit card payment processing company.

These unregulated “advances” are not true business loans. Legally they are considered “cash advances” which means that the cash advance provider can charge any interest rate they desire. They can also change these rates at any time during the repayment period on the loans. It is not uncommon for cash advances to businesses to have effective interest rates above 50%.

Additionally, many merchant cash advance providers will charge hefty upfront fees as a condition of receiving the money. They also will require merchants to switch payment processing providers or purchase new swipe equipment as an additional requirement. While often advertised as “unsecured” and “not based on credit”, it is important to realized that merchant cash advances are not secured on the business owners credit, but they do often file a UCC (uniform commercial code) lien against the business.

This means that if the business is ever sold, the cash advance company has a legal claim to the proceeds of the business before the owner receives their money.

However, there is now a better way for a business to get working capital quickly, even if their business credit is less than perfect. This new type of business loan is called credit card receivable financing or CCRF and is characterized by:

  • Interest/Factor rates that are 50-80% LOWER than a merchant cash advance on average
  • No need to switch credit card processors – stay with existing processor
  • No need to buy any additional equipment
  • No upfront fees
  • Owner credit down to a 550 score
  • Maximum loan to $500,000
  • A regulated business loan that builds true business credit is subject to state laws regarding maximum interest rate.
  • Approvals in 48 hours: Fundings in 7 days.

Business Loans Without Personal Guarantee – An Outlook

August 4, 2010

Often, aspiring entrepreneurs find themselves in a need for money to make their ideas a reality. Contrary to perceptions, a successful startup takes a lot more than just a great idea, and most of the “lot more” part revolves around the M word. Business Loans without personal guarantee are one way out for such people.

One of the prime mistakes that most entrepreneurs who get grants from venture capitalists tend to commit is – spend all the money in the setup process. Resultantly, they find themselves looking for their second round of funding even before they have started functioning as an organization. A small business loan is something that can come to their rescue, but without any personal guarantee against which to borrow, it can be a tough nut to crack.

Since banks and financial association would not care much for your past records with other businesses, you need to give them something concrete to rely on. Even with a great business plan, and an amazing idea, it is very tough to convince the establishments to extend credit for your business, especially when you have just started out.

If however you do manage to convince a lender to give you a loan for your business, there are certain issues that you must be very clear about. Make sure to get your Employer ID Number (EIN), which shall act pretty much as an identification code for your business. Mark clear boundaries between your personal finances and those of your enterprise. Unsecured personal credit may be granted, which you can use for your venture. However, it is safer to demarcate the two, so that if the ship of your business sinks, you don’t go down with it.

Another great option to look for money is to apply for a business credit card. Several investment groups grant you cash advances if you agree to subscribe to their credit card services for a stipulated minimum duration. A business credit card also helps you meet most of the smaller payments, though using it solely as your finance resource is not advisable. Getting such loans is easy and quick, and some groups even provide emergency funding within 72 hours.

Your suppliers’ firms maybe a great place to look for business credit. Most established suppliers provide small business financing and allow entrepreneurs to operate on credit for a while. However, establishing a good rapport with them is essential to receive this favor from them. List your business with the three major credit agencies, namely EquiFax, Dun & Bradstreet and Experian. Obtain a trader supplier account with your associates.

Once such accounts and a few credit cards are in our control, you gain a level of credibility with the finance companies you might approach for further loans. Be firm about separating personal credit from business credit. Remember, a bad personal credit can cast a gloomy shadow over your business prospects. Business Loans without personal guarantee can be tough to obtain, but they surely are your best bets in taking your venture to higher levels.

Apply For a Small Business Loan Online

August 4, 2010

Apply small business loan refers to business owners applying for funding via an online application. Many lenders, including commercial banks, credit unions, and non-traditional financial companies, now provide online applications to speed up the approval process for loans. While the amount funded, interest rates, and repayment options vary by lender and by type of loan, most online applications are very similar. It’s important to note that the Small Business Administration does not offer electronically submitted applications. However, they do provide applications that may be downloaded and printed out for the applicant’s benefit.

In order to apply for a small business loan online, applicants must first make sure they meet the criteria required by the lender and by the loan type. Most commercial banks and credit unions require personal and business financial statements, credit checks, and a working business plan from applicants. While a business may fill out and submit an electronic application, it may be asked to fax, mail, or otherwise present the necessary documents to the lender before the application is considered for approval. Non-traditional loan companies, however, usually do not require as much documentation as traditional lenders; therefore the only item required for loan consideration is a completed application. Be aware that because these lenders do not require credit checks or other financial information, their interest rates may be much higher than other loans.

The next step needed to apply for a small business loan online is to complete the online application. Most applications ask for basic information: name, address, date of birth, contact numbers, social security numbers, and others. It’s best to make sure that all information is correct before submitting the application.

Applying small business loan usually refers to business owners applying for a loan. Commercial banks, credit unions, the Small Business Administration (SBA), and independent financial companies offer loans to small businesses. The loan amounts, interest rates, and terms of repayment vary from lender to lender, but all of them usually have the same loan requirements.

When applying for a small business loan, business owners must first research the type of loan they want to make sure they qualify for it. Some loans are made specifically for start-up expenses, while others may require a business to have been in operation for a certain period of time. Still others are general-purpose loans available to any business that meets certain requirements.

The next step in applying for a small business loan is to make sure a business has all of the necessary financial documents needed to apply. Most traditional lenders require businesses to submit business and personal financial documents, credit reports, and a detailed business plan. Lenders use this information to determine if an applicant presents a high-risk, in which case he or she will most likely have to pay a higher interest rate with stricter loan terms. A low-risk business proves its ability to profit and, therefore, repay the loaned funds.

Once all documents are gathered, a business must apply for the small business loan. Applications can be accessed at a lender’s place of business or through the lender’s website.