Posts Tagged ‘financing’

Avoid Business Opportunity Investment Financing Mistakes

By devoting extra caution and time, commercial borrowers can avoid serious business opportunity investment financing mistakes. The most obvious benefit will be to reduce the potential for critical commercial loan problems, both now and throughout the life of the business financing terms arranged.

A key factor that distinguishes business opportunity financing from other forms of business financing is the lack of commercial property ownership. Although the transaction will usually involve a long-term lease agreement, the buyer is acquiring a business that does not include real estate in the purchase price.

The two mistakes described in this article are more typical than expected by most commercial borrowers. While we will not be addressing all possible business opportunity financing problems in this article, we will include two of the most severe issues to anticipate and avoid.

Length of Business Financing -

A common mistake when acquiring a business opportunity is to finance the acquisition with business financing that expires within two to five years. One reason for this occurring is the failure to negotiate a longer-term lease, since it is typical for financing terms to expire with the lease.

A viable solution is to insist on a lease that is at least ten years long. This will facilitate business finance terms that can typically be for a ten-year period. One key factor that limits business opportunity financing to a ten-year period is due to the absence of commercial real estate collateral.

Use of Excessive Seller Financing -

Although nominal seller financing (such as 10-20%) can be helpful to a business financing transaction, attempts to finance either entirely or primarily with seller financing are generally inadvisable. There are several different issues which can result in this being a serious mistake.

If a seller is providing most or all of the business acquisition financing, a formal appraisal might not be obtained. While this appears to offer the advantage of saving the cost of such an appraisal, it also eliminates an important method of determining if the purchase price is appropriate. It is also not uncommon for a seller to have acquired a business appraisal that is used to substantiate the purchase price for the business they are selling. An appraisal financed by the seller is not likely to be an independent business value estimate.

An additional restriction when using excessive seller financing is that it typically will cover a period of three years or less. This will necessitate refinancing within a period that is not always practical to do so. A loan history up to 48 months will be required by some lenders prior to refinancing a business opportunity loan.

Solutions and Strategies for Avoiding Business Opportunity Investment Loan Mistakes -

Business borrowers should thoroughly discuss options with a business financing expert before proceeding with investing and financing programs. These efforts will be worthwhile since the potential business finance mistakes described above can be overcome successfully. Borrowers should seek out advisors capable of providing candid solutions in their efforts to obtain a better picture of complicated business opportunity financing possibilities.

Financing and Investing to Buy a Business Without Real Estate

When obtaining a business opportunity loan, borrowers will discover that many lenders simply do not provide business loans that do not include real estate as part of the business purchase. There are several other important business financing issues to analyze prior to buying a business without commercial property.

Interest in buying business opportunity investments has improved because of serious problems with residential real estate. However, because there are so many critical differences between financing residential real estate and business financing, it is important for potential business owners to educate themselves before proceeding.

In order to buy a business, a commercial borrower is likely to need business financing. If the business includes commercial real estate, the borrower will need a commercial mortgage. If the business purchase does not involve real estate, a business borrower must use a business opportunity loan.

Unfortunately the availability of business opportunity financing is more restricted than commercial real estate financing. There are also some potential limitations and problems unique to a business opportunity loan, and commercial borrowers should make every effort to avoid these business financing difficulties.

Our goal here is to focus on several financing issues that you should anticipate when commercial real estate is not part of the business purchase. Our suggested approach to business opportunity financing is provided below.

Begin your business opportunity investment financing plans by formulating a realistic assessment of cash available for a down payment and desired maximum business purchase price. A down payment of about 25% is suggested for most business financing situations described here. Usually seller financing is permissible for a portion of the down payment, but a potential buyer generally needs to plan on investing at least 10% of the purchase price from their own funds even if the seller is providing 15% or more.

Because Small Business Administration loans are essential for this kind of financing, you should explore whether you will in fact be able to qualify for these specialized business loans. This step is both important and somewhat complicated, and the involvement of an SBA loan expert is strongly advised. Among the issues to explore are whether collateral is available for SBA financing and how important refinancing is to your overall business opportunity financing process.

It is important to consider the lease terms which are possible. As noted previously, business opportunity financing and investing does not involve the purchase of commercial real estate, so arrangements must be made for a long-term lease. A ten-year maximum loan term is likely, and a shorter financing term will probably be required if the length of the lease is for less than ten years. In other words, with a seven-year lease, the commercial loan is likely to be for seven years, and even with a fifteen-year lease, the commercial financing will probably expire in ten years.

When buying a business, inquire about the possibility of including commercial real estate. With the inclusion of commercial property, you can obtain a longer business loan and the interest rate will be lower. Because the absence of a commercial mortgage can actually be an advantage, the improved terms possible by including real estate should not be looked at in isolation.

Before any offers are made to buy a business investment, borrowers should discuss their financing options with an expert for business opportunity loans. These discussions should include issues such as potential purchase price, down payment possibilities, seller financing, buyer credit scores, tax return requirements and collateral options.

How to Avoid Business Opportunity Investment Financing Problems

Buying a business investment without real estate requires specialized business opportunity financing. Although this kind of business financing is available, there are several potential problems which should be anticipated and avoided by prospective buyers.

In order to buy a business, a commercial borrower is likely to need business financing. If the business includes commercial real estate, the borrower will need a commercial mortgage. If the business purchase does not involve real estate, a business borrower must use a business opportunity loan.

When obtaining a business opportunity loan, borrowers will discover that many lenders simply do not provide business loans that do not include real estate as part of the business purchase. There are several other important business financing issues to analyze prior to buying a business without commercial property.

The level of interest for buying a business opportunity investment has increased due to the reduction of activity involving residential real estate investing. However, because there are so many critical differences between financing residential real estate and business financing, it is important for potential business owners to educate themselves before proceeding.

This summary is designed to address the unique business financing requirements involved when real estate is not involved. Our suggested approach to business opportunity financing is provided below.

Prospective business owners should begin business opportunity investment financing plans by formulating a realistic assessment of cash available for a down payment and desired maximum business purchase price. In most business financing scenarios, a total down payment approximating 25% of the purchase price is advisable. Usually seller financing is permissible for a portion of the down payment, but a potential buyer generally needs to plan on investing a minimum of 10% or more of the purchase price from their own funds even if the seller is providing 20% or more.

Purchasers should evaluate whether a Small Business Administration loan is relevant for their particular business financing and investing circumstances. This step is both important and somewhat complicated, and the involvement of an SBA loan expert is strongly advised. Among the issues to explore are whether collateral is available for SBA financing and how important refinancing is to your overall business opportunity financing process.

Buyers should make an early determination concerning the length of lease to be arranged in conjunction with buying the business. As noted previously, business opportunity financing and investing does not involve the purchase of commercial real estate, so arrangements must be made for a long-term lease. The length of the lease is important because the normal business finance terms will restrict the length of business financing to the period covered by the lease (although buyers should anticipate a ten-year maximum for investment business loans). For example, with a seven-year lease, the commercial loan is likely to be for seven years, and even with a fifteen-year lease, the commercial financing will probably expire in ten years.

Even though real estate is not included in a business opportunity transaction, buyers should nevertheless investigate whether including real estate is a viable option or not in order to buy a business. With the inclusion of commercial property, you can obtain a longer business loan and the interest rate will be lower. However, improved business financing terms should not be the sole factor you look at, since the absence of a commercial mortgage can prove to be a significant advantage in a declining real estate market that currently exists in many areas of the country.

Investors and buyers should discuss business finance options with a business opportunity loan expert before making any offers to buy a business investment. These discussions should include issues such as down payment possibilities, potential purchase price, seller financing, tax return requirements, buyer credit scores and collateral options.

As a final precautionary note, in most circumstances the availability of business opportunity financing is more restricted than commercial real estate financing. There are also some problems unique to business opportunity loans, and commercial borrowers should make every effort to avoid these potential business financing complications.

Working Capital Financing and Short-term Commercial Loans

It is very easy for borrowers to overlook short-term choices for commercial loans. With an economic recession impacting business activity adversely, all working capital financing options should be thoroughly evaluated. This article will describe alternatives such as short-term commercial mortgages and business cash advances.

Due to misunderstandings about long-term commercial financing, short-term commercial loans are often not considered properly. Although long-term commercial real estate financing options are often appropriate, there are practical short-term business financing choices that will be more workable and profitable for commercial borrowers.

The most critical short-term commercial financing techniques typically include short-term merchant cash advance and credit card processing programs and commercial real estate loan programs. Both working capital funding approaches are frequently a source of confusion for business owners.

An underutilized commercial financing strategy for businesses is possibly the best commercial loan strategy to secure cash for their business: a business cash advance using credit card processing. Credit card financing is an effective business financing tool that is usually overlooked by any business accepting credit cards as a customer payment method.

Service businesses, restaurants and retail stores are the most likely candidates to benefit from this working capital cash management strategy. This funding strategy uses an under-utilized business asset (credit card receivables) to obtain business cash advances based upon sales volume. This working capital cash strategy is also known as credit card factoring. Some business owners have used receivables financing or factoring which allows them to sell future receivables on a discounted basis.

Not all service and retail businesses can document business receivables to obtain a commercial loan. Businesses such as bars and restaurants do not typically have receivables to use for business financing. What these businesses do have in many cases is documented sales activity. It is this documented level of credit card sales activity that becomes a financial asset to the business and its working capital management strategies. Business cash advances from ,000 to 0,000 can usually be obtained based on a merchant’s sales volume and future sales.

The commercial financing repayment requirement for working capital advances is normally under 12 months. The arrangement can be renewed for merchants that need the business cash advance program for a longer time.

There will usually be only a few business financing sources that are regularly successful at executing the credit card financing and processing. There are key difficulties to avoid with a working capital advance, and selecting an effective funding source is essential to an appropriate business cash advance program.

A long-term commercial mortgage is appropriate for many businesses that own commercial property. Business properties should normally be financed with a combination of short-term and long-term funds. When a longer-term commercial real estate loan is viable, it is preferable to secure long-term business financing, preferably for 30 years.

However there will be many commercial mortgage loan situations in which longer-term commercial financing is not appropriate for the business owner. In such circumstances it is important for a business owner to realize that there are viable short-term working capital strategies.

It is prudent to explore short-term commercial loan choices for business owners who want to refinance or sell the property within a short time frame. Appropriate short-term commercial mortgages will have more reasonable lockout fees and prepayment penalties than typically required with long-term commercial real estate financing.

While we will not attempt to describe the technical aspects of commercial loan prepayment fees and lockout fees in this article, we will note that the absence of such fees in most short-term commercial mortgage loan programs is a very positive aspect of these short-term working capital management options. The lack of such penalty fees could easily translate to a savings of 10% to 30% or more if a business owner needs to sell their commercial property during the time period which would have triggered prepayment fees and lockout fees in traditional longer-term commercial real estate loans.

Although prepayment and lockout fees will typically be avoided with short-term commercial mortgage loans, there are some trade-offs to be made if a business owner selects shorter-term working capital loans. When short-term commercial mortgages are available, they will usually not be readily available for special purpose commercial properties, the interest rate will frequently be in the range of 11% to 13% and the loan-to-value will typically be under 70%.

Multi-family, warehouse, mixed-use, office and retail commercial properties are the best candidates for short-term business finance options. For a typical short-term commercial loan, business owners should be comfortable with a time period of less than three years.

Few commercial lenders are capable of successfully executing short-term business financing. There are also numerous problems to avoid with short-term commercial mortgage programs, so selecting a lender is critical to business owners wanting a short-term business loan involving commercial property.

It is sufficiently important to repeat that a vital key to successful short-term commercial loans and business cash advances is selection of an appropriate lender. Despite the potential benefits of shorter-term business financing, the choice of a lending source cannot be overlooked.

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Quick Guide On Financing Your Business

Even the most attractive and lucrative business or franchise opportunity can be unsuccessful if you have insufficient business financing to continue on with the deal. This is really important in business acquisition since unique opportunities do not come very often. Therefore, finding business purchase financing on time is the key to scoring on such business deals. It is important to be adequately prepared when planning to buy a business establishment.

Finding funding for your prospect business Business acquisition financing generally comes in two methods:

1. Debt financing – You will rely on an outside source to acquire financing for your business.

2. Equity financing – You will sell shares or stocks of your business to some investors.

It is difficult to get approved on business acquisition financing through either method because credit market conditions are tight and investors are wary about providing financing. However, if you were a knowledgeable entrepreneur, it would be a lot easier for you to get past this ordeal.

There are few key aspects that you need to know if you want to use the first method to borrow a certain amount of money. In this approach, you will demonstrate your business skills and knowledge to prospective banks and lenders. The bank or the lender will most likely ask for detailed information on the business you intend to purchase, your collateral for the loan, and the means for you to pay the money back.

In securing business acquisition financing, there are some things you need to remember. One is to have a backup plan. It is better if you get approved by as many banks and lenders as possible, for these will be handy in situations when one backs out. Another consideration is to acquire adequate business purchase financing that covers operating costs. It is highly recommended to have a plan B in case the profit decreases. Lastly, see to it that you have a detailed business plan. Remember that this is one of the many bases of banks and lenders in approving your business financing loan.

The second option is equity financing, wherein you would agree to sell shares of your business to other investors. In choosing this option, you don’t have to worry about the risks in repaying debt, but you would be giving up partial ownership and control of your business.

Keys to successful business acquisition financing The most helpful way to secure business financing is to become inventive. You may try the easiest approach of all, which is to secure seller financing. In this deal, the seller will have to wait for a certain period of time to be fully paid off. The seller will also most likely offer assistance in ensuring your business’s profitability. However, not all sellers are willing to offer this type of setup. Even if you do find a willing seller, the asking price can go as high as 5 to 25 percent.

If a bank denies your loan request, you can try to apply for a small business administration loan or SBA loan. This type of loan offers good terms and requirements, but you won’t be getting additional funds from any other source.

There are many other possibilities to explore in securing financing for your business. Try asking for help from your family and friends to fund your business. You may also opt to draw money from your 401(k) plan. Contacting franchise financing companies is also another possible option. With a lot of choices available for you, acquiring financing for business is not difficult after all, don’t you agree?

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Funeral Home Loans and Golf Course Financing

Golf course loans and funeral home financing provide a particularly challenging set of circumstances for both refinancing and purchases. For most small business loan programs involving specialized properties like funeral homes and golf courses, the prevailing chaotic bank lending climate has made a bad situation even worse. These specialized businesses are among the most difficult small business finance situations for commercial borrowers.

Buying or refinancing a golf course or funeral home is usually difficult to finalize. Funeral home financing and golf course financing involve problems not found in most commercial loan situations. Refinancing for both of these business categories is likely to be more complicated than the original business financing for purchase.

Fewer Business Lenders – Golf Course and Funeral Home Financing

As a further complication for a difficult business loan for a golf course or funeral home, fewer business lenders are currently willing to offer competitive small business finance terms. There has recently been a noticeable shrinkage in regional and local banks which offer commercial mortgage programs for golf course loans and funeral home loans.

Buy a Business – Business Opportunity Financing

Business financing to buy a business opportunity is a special commercial loan variation in which commercial property is not purchased. In such a situation, the buildings and land are typically subject to a long-term lease. Similar to a conventional mortgage to buy a golf course or funeral home, competitive business opportunity financing is not easy to find.

Avoiding Problematic Commercial Mortgage Terms

Some regional and local banks will probably offer short-term business financing instead of a long-term business loan for golf course financing and funeral home financing. Another key term that can vary significantly is the percentage of value for the commercial financing. It is of critical importance to avoid undesirable commercial loan terms, especially commercial mortgage loan conditions involving length of loan and percentage of value when buying or refinancing a funeral home or golf course business.

Stated Income Business Financing Difficulties

Stated income small business loans (involving minimal or no income verification for the borrower) are not widely available for commercial real estate financing in the current restrictive lending conditions. The use of stated income business financing is not recommended for a funeral home loan or golf course loan, even though a stated income commercial loan has a certain number of benefits when available. A major limitation of a stated income commercial mortgage is the maximum amount which can be financed. A further limitation is the low percentage of value for stated income commercial financing involving either golf course financing or funeral home financing. In other words, a stated income approach to financing funeral homes and golf courses is not recommended even if it were an option.

When Commercial Real Estate Loan Value is Less Than Business Value

For golf course loans and funeral home loans, the commercial real estate loan value is often less than the business value. This is particularly true with a funeral home appraisal. The problem with this disparity is that many business lenders will provide a business loan that includes only the commercial mortgage loan value, and this will produce significantly reduced business financing.

Exorbitant Commercial Loan Fees for Funeral Home and Golf Course Financing

Business owners should be prepared for reasonable business financing fees during the beginning of the business loan process for golf course financing and funeral home financing. Several lenders are taking advantage of the shortage of commercial loan choices for building, purchasing and refinancing a golf course or funeral home. A common tactic is to charge excessive fees of ,000 and more even if the commercial financing is not finished.

Fewer Commercial Lender Options for Funeral Home Loans and Golf Course Loans

As already noted, the availability of suitable lenders for this specialized type of business loan is shrinking. A viable commercial mortgage for funeral home financing or golf course financing will depend upon a prudent choice involving the lender. It is critical to select a lender with the ability to successfully complete the complex business loan process and at the same time avoid the commercial mortgage obstacles described earlier. It is important for a borrower seeking to buy a golf course or funeral home to be prepared in advance for the limited number of acceptable business financing lenders.

One Solution – Business Consulting and Small Business Finance Experts

In complex commercial loan and SBA business loan financing, the use of a small business finance consulting expert should be conducive to a better understanding of difficulties to anticipate. Since funeral home loans and golf course loans are among the more difficult commercial financing situations that a commercial borrower is likely to encounter, the use of preliminary business consulting should be helpful in obtaining better terms and avoiding serious problems.

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Business financing case study: When to get an SBAloan?

In today’s case study on SBA loan we will look at Steve’s circuit board company. Steve provides circuit boards for construction companies that placed the boards into HVAC equipment such as central air conditioning and heating. During the time of the construction boom Steve was left with a choice, he did not have the available funds to expand his business fast enough into these emerging construction markets. So what should Steve do? Let’s take a look at a specific example to illustrate the choice left before Steve. For Steve to expand his factory he will have to spend the equivalent of 0 per circuit board sold at capacity. The cost of building the new factory works out to about 0 per circuit board over the course of three years. After three years Steve Circuit Board Company will be running profit from the building as the building will be paid off. So to look at a sbaloan example if Steve borrows the money he needs for the building at 10% interest per year or in this case 10% interest equivalent per circuit board the true cost of the circuit boards over a three-year period would be 0 per board.
But is this a fair assessment of Steve’s decision to borrow or not borrow? The answer of course is no, as the loan Steve gets for the circuit board factory will take longer than three years to pay back in this case Steve gets a 15 year loan. So even though Steve will only make a couple hundred dollars profit per board and spend a very large sum of money to build the factory it is advantageous for Steve to get an sbaloan for his electronic circuit board company.

In the debate to overhaul financial regulation, Ms. Warren has divided Washington in her push to create a new consumer financial protection agency. Related Article: nyti.ms

Make Business Financing Easy With Small Business Loans

Small business is one that is organized for profit and also contributes to the economy by way of paying taxes and employment opportunities. A small business may be defined as a business with a small number of employees. The legal definition of small business often varies by country and industry, but is generally under 100 employees. These businesses are normally privately owned corporations, partnerships, or sole proprietorships.

Whether the business is small or big, it needs fund to carry on its operation, because the returns in business are not stable. Sometimes the company or a firm can have huge profits; at times, it can have losses too. Nevertheless, in the period of financial depression, every business needs a financial help to support in its working.

On comparing small business with big business we find that the need of funds more often arises in the former case as the returns are not constant. Financial crisis in the company can affect the working adversely. Therefore, to stop the effect of this financial crisis a small business can rely on loan for assisting them in need of funds. Small business loan helps them to come out of this situation of crisis. Small business loan can also be used for starting a new venture.

Although small business firms are considered backbone of the economy, but getting a loan for small business firm is not an easy task. Lenders think number of times before lending a loan to the borrower as risk involved in small business is huge. It involves numerous formalities such as giving proof of income that depicts your creditability. Your credit history also plays a crucial role in it. The person with good credit history is always benefited in applying for a loan.

The most important factor that the small business owner should consider before going for a loan is flexibility in repayment. As most small businesses would experience irregular income for some period, so the flexible payment will help in making those repayments easier.

There is also an increase in the number of sources available for funding the small business. Traditional lenders like banks and financial institution also provide loans. In addition to that, loan can also be applied online, which also provides you three benefits

•Fast : you have to just fill a form and get an instant match

•Easier : it makes comparison easier between various lenders available in the market

•Flexible: choose the lender which suits your needs.

The rate of interest charged in small business loans is generally higher since there is threat to the lender about non-payment of installment on time. Therefore, one can trust small business loans for their dream project.

A Better Way to Business Financing

Arnold McIntosh is the first one to admit that, even in this down economy, there are still a few places left where a struggling business can turn to get credit and a loan.  It’s just that  most of these credit options tend to have huge drawbacks.  But through his program, “Unsecured Business Lines of Credit,” McIntosh hopes to help these entrepreneurs find a better way.

“There are lots of different programs that are out there that they they’re going to provide a path to funding,” McIntosh says, ” but often they’ll have a ,000 or ,000 fee.  And in today’s economy, what small business man can afford that?  Ours on the other hand has a very low startup fee. 

“And then others might not have that high a fee, but it will take a long time for them to find funding for you–maybe as much as six months.  Our program takes only 30 to 45 days, from start to finish. And we guarantee that if you meet the requirements, you will get the funding your business needs. That’s our guarantee.”

At its core, “Unsecured Business  Lines of Credit” is an quick, easy path to obtain an unsecured loan.  No credit checks are run, no tax papers are required, and no collateral is asked for. The program is available as an “e-report,” meaning obtaining it is as simple as downloading it online.

McIntosh has faced the need for business funding on a personal level: He himself is a  private contractor.  Much of the information in his report he obtained as he himself sought business credit.  He’s now been involved in the quest for funding, in one way or another, since 1975.

The results of his research?  A system for applying for and getting unsecured credit that offers the following benefits:

·        No tax returns required

·        No reference to your credit score

·        No personal guarantee

·        Revolving Line and Perpetual Line available

·        Interest only payments

“Truthfully, there are a lot of other programs that they they’ll provide unsecured business lines of credit,” McIntosh admits, “but often there’s a problem.  A lot of these people offer it in three different fashions:  through credit cards, vendor credit, or very low cash-lines of credit.  Our program in the industry is referred to as 100% total Unsecured Business Lines of credit.  This simply means once a client has been approved by the U.S. bank, let’s say for 0,000, that hundred thousand can be drawn down in cash.”  So it’s important that you pay attention to what people mean when they talk about unsecured business lines of credit, McIntosh says.

The other problem with some other programs, says McIntosh, is that many won’t offer a written guarantee.  “Our program is straightforward.  It’s right there in the body of all of our documentation that the processing fee is refundable if the client feels we’ve not performed to their satisfaction, and that they didn’t get close to the amount of money that they sought.

“This really is a passion for me.  I believe in entrepreneurship, and my passion is to help businessmen get the money they need to grow their businesses.”

For information about McIntosh’s special report, please visit http://www.unsecuredcreditforbiz.com,

7 Ways to Get Small Business Financing

Money is always an issue for small businesses, especially when starting out.  However, the need for cash injections can continue long after you get that first dollar.  Even same industry businesses can differ greatly, but they all have in common the need for money as well as the places they can go to get it.  Here is a look at seven opportunities to get cash for your small business.

 

Small Business Loan

Probably the most known source for small business cash is the small business loan.  This most often comes from a bank or the SBA; for startup capital or an expansion.  The lender looking at your proposal needs to feel that you are a good investment and you can help them decide in your favor.  Wherever you go to get the loan, there are several things you will need in order to give your business its best chance to get that loan.

Your business plan will tell the lender about your business and you.  They will see how much planning you have done, your grasp of the industry, and how effective the loan will be.

A good cash flow projection tells the lender not only how you will pay them back, but when.  Your best bet is to show hard, but honest numbers.

Your personal financial statement helps the lender to understand where you are coming from and where exactly your business is at.  After all, you’re tied to your business at the hip.

Bring past business tax returns if you have them.  It will show the lender how your business has done and how you have managed money in the past.

Your credit rating is key for establishing trust.  The lender may be giving money to your business, but they are forming a pact with you.  A credit report will fill in the rest of the details of who they are about to trust with their money.

 

Microloans

From the SBA, the microloan program may be a perfect fit for your current financial needs.  With a maximum of ,000, a microloan can be less daunting to acquire, if not a little easier than a small business loan.  The most common use for a microloan is short-term working capital and equipment purchases.  Since most microloans require collateral of some kind, the best use is probably equipment, since the equipment can then be the collateral.

 

Supplier Credit

While this source of income may not work with all businesses, it is ideal for manufacturers and retailers.  A supplier makes money by you buying their products, but if you can’t first buy their products to make yours, they lose a sale.  If you cannot be billed – net 30 days – or if it may take longer to receive your money, it is possible to work out a deal with your suppliers.  An ideal situation is to procure credit out to sixty days.  If that isn’t possible, maybe they will take a percentage of the sales of the end product on top of the cost of the supplies.  This temporary solution could generate higher interest than a loan, but in some situations, it could be your only choice. 

 

Angel Investors

Best in times of growth, angel investors can be a boon to help a small business get over the hump to where they need to be.  Angel investor loans fill the space left after you’ve gotten your small business loan and other capital.  Unfortunately, they are few and far between and spending too much time looking for them can be even more detrimental to your business than cash problems.  The best time to look for an angel investor is when you already have growth, you’re approaching the breakeven point, or you’re expanding.  The worst time is when you’re hemorrhaging money.  Take care, you still have your business to run.  Plan to spend four to six months looking for an angel investor, but use only a quarter of your time.  Like getting a small business loan, be ready with all that proof that you are worthy of an angel’s blessing.

 

Credit Cards

It’s a source of quick, red-tape free cash, but credit card cash advances can eventually kill your business if you’re not careful.  Always keep in mind the high interest charges when you are looking at credit cards as a cash source.  Use them, but only for quick-turnaround, time-sensitive, and/or small scale solutions.  Treat credit card advances like you would a fire; it’s great for quick warm ups, but really hurts if you leave your hand in there too long.

 

Home Equity Loans

Like credit card advances, a home equity loan for your business is a personal risk solution.  They are more attractive however, because of their lower interest rates.  The catch is that if things go south, you lose your home.  Depending on how personally invested you are in your business, this may not be such a different outcome from credit card advances, or even small business loans if calamity strikes.  The main thing to remember when considering the bad side of a home equity loan is that due to consumer protection laws, it’s a much longer process to seize your house than it is from a normal bank loan. 

 

Family or Friends

Nothing ruins a friendship or splits a family faster than money problems.  When you are considering approaching the people you are closest to, you must know the best way to handle the situation, as well as the potential pitfalls.  Some common relationship killers due to business loans is the recipient squanders the money, doesn’t use the money as indicated, doesn’t pay the money back, or doesn’t pay it back in a timely or agreed upon manner.  If you can avoid those situations, you’re way ahead of the game.  The best course for loans with friends and family is to handle it as professionally as a bank loan, or even more so.  Make sure there is a formal agreement with signed paperwork stipulating how much is to be loaned, collateral, interest rate, how it is to be repaid, and what happens if it cannot be repaid.  If you spell out everything on paper, there is no room for disaster due to misunderstandings.  Remember always:  these people trust and believe in you… don’t make them regret it!

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