Looking For Business Credit and Small Business Finance

Looking for business credit involves much time and effort from business owners in order to find the best financing options available. Business credit refers to a company’s history of debt payments and revenue. In order to establish credit, a business must first compile a persuasive business plan that outlines its services, method of operations, and future plans and goals. Potential lenders use this plan to determine whether or not to approve a business’s loan application.

A successful business plan begins with the contact information for the business and its owners and a summary of how the business is organized. Owners should also include a description of the products or services offered and how they will be manufactured or developed. It’s also important to outline the potential market for these products or services and to develop a marketing plan to reach a wider consumer database. When looking for business credit, owners should also explain the payment and duties of employees, potential income sources and how they will be used, and all financial documents pertaining to the business.

Once this business plan is completed, potential lenders will also look at a business’s current credit standing. When looking for business credit, owners should know what lenders look for in a credit profile. Lenders consider capital, the money invested by the owner; collateral, the security available to back up loans; capacity, the ability to repay a debt; conditions, how the money will be used; and character, the trustworthiness and maturity of a potential borrower.

Looking for small business finance typically requires an entrepreneur to research the various funding resources available to find the ones that best suit the needs and capabilities of the business. The Small Business Administration (SBA), commercial banks, and other financial companies provide loans to small businesses.

Most entrepreneurs looking for small business finance go to the SBA, a government agency that provides funding to businesses that have been turned down by traditional lenders, such as banks. The most common SBA loan program is the 7(a) loan. To qualify for the loan, a business must employ fewer than one hundred employees and submit the necessary financial documentation. Financial documentation requirements for start-up and existing businesses vary, but both require a business plan. To apply for the 7(a) loan, business owners should gather the needed documents and meet with a lender who participates in the SBA guaranty program. While the SBA itself does not provide funding, it does guarantee a certain percentage of a small business loan to minimize the lender’s risk.

Existing businesses may find small business financing from banks and independent financial companies. These lenders usually require personal and business financial documents, credit reports, and a business plan to consider an application. Most applications are available online, and approval can take as little as one business week. The exact loan terms vary by lender, type of loan, and an applicant’s financial history.

Small Business Finance – Mistakes to Avoid When Factoring Receivables

Running out of cash to run a business is something that no business owner wants to occur. But even if you are the most careful money manager in the world an unexpected series of events can send your company spiralling and cash flowing right out the door. In those times you need solutions to help you through financial distress. One way to meet funding needs is through factoring account receivables. To make this option work for your business here are two factoring mistakes that you should avoid.

Missing the Signs of Financial Trouble

Factoring is the process of selling a customer’s account to a lender in exchange for a percentage of the balance that the customer owes. Business owners typically turn to this option when customer payments are slow, sales decline, or expenses are rising faster than the growth in revenue. Before agreeing to a factoring arrangement you should prepare a cash flow projection. This will help you pinpoint cash needs, see exactly when revenues are expected to come in, and when shortfalls may occur. As you note the shortages, it is important to determine the cause of negative cash balances. Having this information in advance will help you see how your projections will change over time. When possible try to secure funding before you need it because failure to do so can put your company at an unfair borrowing advantage. Have other options available so that you have some leverage when negotiating factoring terms.

Confusing the Sources of Cash

Another word of caution involves being fully aware of where cash comes from in your business. It is easy to be deceived by the deposits that you see in your account when you do not adequately track cash sources. If your plans are to get out there in a big way you will need to manage big money. So stay informed every step of the way with financial reports. This can make the difference between needing factoring and having adequate cash reserves to take on larger projects. Refer to your company’s income statement, balance sheet, and statement of cash flows for the information that you need. It is important to understand what the reports are telling you so that you are not misled by a cash balance that is derived primarily from debt.

Factoring receivables is one of the many options available to help meet the cash requirements of companies. Use this resource wisely by preparing forecasts and negotiating fair terms. Set your sights on building a company that can sustain itself. The ultimate cash flow picture is one where most of the cash comes from revenues and investments. Learn more about receivables factoring and funding a small business at http://www.tbsusa.com

Starting A Small Business? Choose The Right Mode Of Finance

A small business is like a budding plant– it needs to be nurtured in order to flourish. Just as a budding plant needs to be watered and manured well enough to facilitate its growth process, a small business needs to have an adequate financial back up for it to grow and become a larger concern in the coming years. Proper financing at the grass root level is essential for a business to prosper.

Starting a new business venture needs proper capital planning. To get the requisite start-up capital, entrepreneurs often depend on the general loan schemes offered by various banks and financial institutions. These institutions evaluate the credibility of a loan seeker on the basis of their credit score, available collateral and their financial standing. These loans would also come with a host of strict terms and conditions. Small business entrepreneurs often find it difficult to meet the qualifying requirements for a loan and abide by the stringent terms and conditions. In most cases they will either have to settle for a loan with very high interest rate that results in higher financial burden in the future or will have to look for other cash sources to fund their business. Choosing the right financing solution is one of the prime determinants of the success of a small business.

Finance in the form of loans is of two types – Secured and unsecured. A secured loan is essentially backed up by a collateral or a security on the condition that in the event of the applicant failing to repay the loan, the financial institution has the right to seize the collateral and sell it off to get their money back. An unsecured loan, unlike that of a secured loan does not demand a security or a collateral from the borrower. Due to a lesser degree of risk associated with the lender, a secured loan charges a lower interest rate than that of an unsecured loan. The borrower nevertheless has to make repayments on a monthly basis under both the types.

Of all the available financing options, an entrepreneur should ideally look for a scheme that offers quick processing of the loan, is flexible and more importantly has a less burdensome repayment plan. Besides the various loan offers available in the market, business cash advance satisfies all these conditions to the maximum advantage of small business owners. A business cash advance is one such scheme that makes the very word “business” seem comfortable to the budding entrepreneurs. Unlike loans, a business cash advance neither demands a security or a collateral and at times they are offered even to borrowers with not so good credit ratings. The characteristic that works very well in the favor of the borrower in case of a cash advance is its repayment plan. Unlike other forms of loans, a business cash advance does not have a fixed monthly repayment plan. In this case the repayment is directly related to the frequency of sales through Visa or Master card i.e. the lender gets their money back through the future credit card receivables of the borrower.

Powered by the above benefits, a business cash advance [http://1rstfunds.com/] provides a strong financial foundation to a small business. Opting for a business cash advance surely helps the budding entrepreneurs to grow and take their enterprises to the next level of prosperity.