A Quick Checklist for Getting a Small Business Loan

So, you've decided you want to get a small business loan, but where do you start? Here is a quick checklist to help you get started. 1. Try to get a realistic expectation of how large of a small business loan you really need. It might be tempting to try to borrow as much as…

So, you've decided you want to get a small business loan, but where do you start? Here is a quick checklist to help you get started.

1. Try to get a realistic expectation of how large of a small business loan you really need. It might be tempting to try to borrow as much as possible, but remember the more you try to borrow the harder it will be to get funding and probably the worse terms you'll get

2. Conduct a quick Google search for loans specifically for your company. Most industries have specialized lenders and advocacy groups that exist to help walk you through the process of getting a loan. This can be a very powerful resource to help you get started.

3. Check with the Small Business Administration. The SBA is a government run organization (based out of the United States) that provides assistance for small businesses, they provide a range of services from basic advice to detailed consulting designed to assist you in creating a good business plan and get all your ducks in a row to get a loan.

4. Have a professional review the terms of any loan you are offered. Do not count on your own non-professional interpretation, a term or condition you do not understand could end up costing you a hundred if not thousands of dollars. Do not take this risk, get all the help you can get.

If you carefully follow through this checklist and take the time to understand what your needs are and what you are getting into when you sign on the dotted line you will save yourself a lot of time, money and stress.

How To Get And Finance A Franchise Purchase In Canada

The decision to both get a franchise opportunity and then finance a franchise purchase are of course intertwined. Is picking the right franchise more important than financing the new business venture? – we're not sure – probably equally as important – but let's look at some solid tips and info on franchise financing in Canada,…

The decision to both get a franchise opportunity and then finance a franchise purchase are of course intertwined. Is picking the right franchise more important than financing the new business venture? – we're not sure – probably equally as important – but let's look at some solid tips and info on franchise financing in Canada, how it works, and how that choice or pick you can just translate it into successful entrepreneurial career.

There is a whole industry known as 'franchise consultants' that have the skills and ability to help you assess which type of business best suits yourself. If you talk to these people it always comes down to matching your basic personality to your business strengths and interests. Your ability to match those against a solid business opportunity in the franchise industry will absolutely be your success.

We're the first ones to agree that when you pick a franchise that meets your skills and overall financial capacity your chances of profit and success greatly improve.

So, you have made you finance decision, now how do you get and finance a franchise purchase. In Canada there is one major program our clients use to qualify for franchise financing – it's a loan program called the CSBF / BIL program, which is the way in which the major of franchises are funded in Canada. Utilizing this program will certainly guide you extremely to a well funded business that should allow you to meet your personal and business goals.

Your ability to get a franchise purchase closed successfully requires you meet the requirements of your franchisor, ie your new business partner so to speak, as well as the lender. You need to understand your initial costs, which are often a combination of soft costs and hard costs. In your experience you will have greater challenge financing the soft costs; they include the franchise fee, and other misc items that are not tangible assets.

The BIL / CSBF program we mentioned covers assets such as fixtures, equipment and also leaseholds. Your ability to finance leaseholds under a franchise loan is very important, as these items are typically not capable to be financed under conventional means.

Money. Yours and the lenders. By that we are referring to your ability to put a reasonable down payment, or what the lender calls 'equity' into your transaction. And, you're right. We already know your next questions, because it's been asked a thousand times: 'How much do I have to put into the business to get and finance a franchise purchase properly'. Answer: It depends, but a typical franchise investment should be in the 30 -40% per cent range to allow you to have the right combination of both debt (ie borrowed funds) and equity – which is your cushion that allows you to maintain proper leverage around how much debt the business can manage.

One mistake many new franchisees make is that they finance the business from an opening purchase perspective, and are not focusing on ongoing working capital needs, which is in our opinion just as important.

In summary, use you own skills or that of a consultant to match your strengths and experience and personality to a franchise that will work for your personal and financial goal perspective. Speak to an experienced, reliable and successful Canadian business financing advisor on how to structure the banks around your purchase. Utilize the BIL / CSBF program to the maximum that you can, as it provides solid terms, minimal guarantees, and great rates and flexibility.

PS Keep us posted and congratulations on your new role as business owner and entrepreneur.

Private Investors, Angel Business Capital and Why You Need Them

Private investors, angel business capital or even funding from venture capitalists may seem like a boon to your startup business. But you need to be careful while dealing with them and weigh carefully the pros and cons of the entire agreement. This is very important. A lot of times, entrepreneurs are unable to give angel…

Private investors, angel business capital or even funding from venture capitalists may seem like a boon to your startup business. But you need to be careful while dealing with them and weigh carefully the pros and cons of the entire agreement. This is very important. A lot of times, entrepreneurs are unable to give angel investors the high rates of return that they demand, resulting in their business getting closed down.

Say Hello To Angel Investors

If you do not know what I'm talking about, let me introduce you to private angel investors. There are several categories of private angel investors – some of them invest passively, which means that after they provide funding to your company, they assume a very passive role in the day to day workings of your company. Most times, these passive angel investors are professionals in their own right, in various fields like medicine, law etc and do not really have prior entrepreneurial experience. They are merely looking to make a good investment.

But there is another category of angel investors who take an active hand in the company that they back. They may be looking for an opportunity to put the network and influence they have acquired over the years, to good use, or they might also want to experience the thrill of setting up a company again, using the new entrepreneur as their means. For these types of private investors, angel business capital is not the only thing on their plate, their agenda usually involves a seat in the board of directors or having a say in the management of the firm.

There are other angel investors who take on the role of mentor. This last type of angels are not just called private angel investors, but Super angels because they have large sums of money at their disposal and are willing to invest it. They can invest up to a million dollars in just a single deal! Whatever the category of angel, you must realize that they all have private wealth of their own, which is what distinguishes them from venture capital firms.

A Word Of Advice

Before you approach private investors, you need to work out the amount of angel business capital that you will need. Do keep in mind that this should not just be an arbitrary amount. This should be a calculated amount. Plus, you have to be able to show exactly why you will need the money – a detailed account of how you intend to allot the cash is the order of the day.

If you are in need of several million dollars and are confident in your ability to provide a good rate of return on the money, then you should in fact, approach a venture capital firm, because private angel investors, who like to invest close to home , do not generally have that kind of money at the ready. An angel investor can be just what your business needs, but do be careful in your dealings with private investors; angel business capital does not come easy.

Applying For Small Business Loans

Everyone knows how tough it can be to get small business loans! Hell, my Uncle Frank is a well established small business owner and he wanted to branch off into the restaurant business, but he just could not secure a loan for it! Pretty gruesome huh? But he learned from his experience and he's taught…

Everyone knows how tough it can be to get small business loans! Hell, my Uncle Frank is a well established small business owner and he wanted to branch off into the restaurant business, but he just could not secure a loan for it! Pretty gruesome huh? But he learned from his experience and he's taught me a thing or two about applying for small business loans.

Tips For Small Business Owners

Here are some tips you can use in order to secure your small business loan.

• Be very clear about the reason for your loan. You need to show a very good, very legitimate reason why you want someone else's money, otherwise they will not part with it. Also, be logical about your demand, your lender will consider the scale and expertise of your business area before they grant you the loan amount.

• The next thing to keep in mind is that everyone who is lending you money is doing so because they want to make money off you, so you must concentrate on a detailed account of how you plan on returning the loan money. Eg, specify that you will use your profit money to repay the loan.

• Put in your business plan as well and make sure that it is a logical one which is darn good. The business plan will give your lender an idea about your abilities as a businessman and will also give your lender an idea about the management and any other pertinent information.

• Reassuring the lender is very important, especially for small business loans. So do give a detailed account of the security you will be able to provide to your lender. Think about it, if you can not offer them some security, then why should they?

• Include your financial statements of the past three years too. These must be clean and the information provided by you should be accurate and legitimate. Also get your tax advisor to put his signature on it, or, if that's not possible, your account can do the needful too.

• In order to boost the security aspect of things, you can put in your financial financial statements, this will definitely help.

• Reports of creditors and debtors.

• You should also put in the latest set of management accounts. Keep in mind that your business should be like an open book. It may seem intrusive at times, but remember, you're the one in need of money!

A Word Of Advice

Before you approach your lender, think about all the shortcomings in your business proposition that your lender might come across. Try and get into the head of your lender. A good idea would be to prepare that you are your money lender. Think about whether you would give your money to someone with your business plan. If not, why so? Try and eliminate all the glitches in this manner. Small business loans are not the difficult to handle, one must know the right technique, that's all!

Small Business Loans For Women Are A Boon In Today’s World

In today's day and age, women have provided adequate proof that they are as good as men in every field and business is no exception; so small business loans for women entrepreneurs are on the rise. In the past few decades, businesses owned by women have flourished dramatically and thus, small business loans for women…

In today's day and age, women have provided adequate proof that they are as good as men in every field and business is no exception; so small business loans for women entrepreneurs are on the rise. In the past few decades, businesses owned by women have flourished dramatically and thus, small business loans for women have been designed keeping their interests in mind. Whether a lady wants to start a little bed and breakfast or something as large as a cellphone company, she can get loans for it!

Women Are The New Go Getters!

What is so special about women owned businesses? Their sense of business is quite starkly different from that of a man's. They like to think beyond the rules imposed by the methods in which traditional businesses are run and this kind of thinking – breaking away from tradition – has bought them rich dividends for sure. This is probably because women are much more open to the idea of ​​different possibilities and opportunities.

There are many loan facilities for women business owners, but one of the most popular ones is the one from the Small Business Administration. The SBA does not directly give loans to women entrepreneurs. What they do is more specialized – they guarantee the loan amount that is taken by a woman entrepreneur. This makes the entire process of obtaining a loan much less stressful for a woman. Having a guarantor is like having a guardian angel!

The application process for small business loans for women is no different from the conventional application process of a loan. There is guaranteed approval from the SBA, which is a boon, but of course, the business is thoroughly evaluated as per its potential and its ability to grow. The business proposal is subordinated to much the same amount of scrutiny that a business proposal presented by a man would be subjected to.

A Common Misconception

A lot of times people tend to be misguided into thinking that loan rates for women are on the lower side; this may not necessarily be the case. In fact, it is quite the contrary; the interest rates are at par, or sometimes, even over the typical rates offered by financial institutions and banks. Of course, there is also a guarantee fee of about 3.875% on the dollar value of the portion of the loan which is guaranteed by the SBA.

The advantage of small business loans for women is that they give you a longer amortization rate than the commercial loans offered by banks and other corporations. For example, working capital loans can be advanced for a period of up to seven whole years, real estate construction of a building can be financed for up to twenty five years and fixed asset loans for a period of a decade!

Before applying for a small business loan for women, women have to do their homework thoroughly just like any male entrepreneur, eg. If your credit scores are not up to the mark, then work on them, have a solid business plan and find out the motivations of your lender and you're good to go.

Business Acquisition Loan

Unless you have assets to spare, then chances are you can not purchase a company with no support of your business acquisition loan. If you hope to qualify for the best prices on these loans, you need to spend time preparing with regards to interviews along with possible lenders. Follow this advice to help you…

Unless you have assets to spare, then chances are you can not purchase a company with no support of your business acquisition loan. If you hope to qualify for the best prices on these loans, you need to spend time preparing with regards to interviews along with possible lenders. Follow this advice to help you prepare for applying for any business enterprise acquisition loan, in addition to how to obtain fully ready for the interview. Before you apply for any business acquisition loan, ensure you can provide a solid case for what you are able to accomplish with the business.

This consists of documenting just associated with skill, education, as well as experience that you can provide. For example, if you want a business acquisition loan to purchase a small club and barbeque grill, note that you are the actual manager of the club and barbeque grill for 10 years, possess knowledge as being a fry cook, and also have a small business Management degree.

Lenders often approve a business acquisition loan faster when there is solid evidence how the applicant has what it takes to achieve success. Together with your expertise and basic background, you should also possess a strong strategic business plan to provide towards the lender before you decide to actually submit that first business acquisition application for the loan.

Having well documented strategy, which sets short-term and long-term goals for your business, as well as identifying how those goals will probably be obtained, can make a huge impression on the lender and lead the way for getting the business enterprise purchase loan you seek. Last, wear small business clothes whenever you talk with the lender to discuss your company acquisition application for the loan.

The clothes do not have to end up being expensive, but it is advisable to convey that you are a person by having an attention for fine details and understand how to conduct yourself in a business environment. Since you only have once chance to make which very first perception, make sure it is a great one. Usually, you may find your odds of obtaining that business acquisition loan be a waste before you know it.

Proof of Funds for Commercial Real Estate Investors

Creative Financing When a Commercial Real Estate Investor is looking to purchase income producing property utilizing any number of creative financing methods, one of the most important keys to their success is that their ability to provide adequate, verifiable proof of funds – POF- to both the seller and the lender. The verification of funds…

Creative Financing

When a Commercial Real Estate Investor is looking to purchase income producing property utilizing any number of creative financing methods, one of the most important keys to their success is that their ability to provide adequate, verifiable proof of funds – POF- to both the seller and the lender. The verification of funds can enhance the investors credibility with the seller as well as satisfy the lenders requirement to know that the borrower has necessary funds to complete their transaction.

Proof of Funds

There are a few ways acceptable to lenders and sellers to show POF to close your Commercial Real Estate transaction:

  • Bank Statements or Bank Verification
  • Brokerage Account Statements or Verification
  • Escrow Account Verification

“Bank Verification” This is the most acceptable and broadly used method to confirm the investors can complete the proposed deal. As such money must be put into a bank account and confirmed by statements or letter from the banker. This is a “hard” (versus soft) method of verification, because money are deposited in an account in the buyers name to serve as proof the buyer can complete the transaction.

“Brokerage Account Verification” Similar to bank accounts, brokerage accounts show acceptable means to complete a purchase transaction. Likewise, statements or letter from the brokerage house representative will meet the requirement to prove adequate financial strength. This is also a “hard” method.

“Escrow Account Verification” This is the one method that can be hard or soft evidence of necessary assets as the escrow agent simply needs to write a letter of confirmation attesting that the borrower has finances available to complete the transaction. It becomes hard when money is transferred into an escrow waiting for the closing.

Companies

Finally, there are companies whose sole purpose is to provide evidence of the financial ability of Commercial Real Estate Investors to complete their transactions. Many of them provide “Proof of Funds” and Transactional Financing. POF is necessary at the beginning of the transaction and Transactional Financing is for the day of closing only. Both of these methods are a necessary part of an investors arsenal when utilizing creative financing.

Keys to Small Business Financing

The most important aspect of building a small business is in finding the capital that will be used for your business. However, in this time of day when the economic recession has still left us suffering and it has been too hard to obtain financial help. If you are planning to run a small business,…

The most important aspect of building a small business is in finding the capital that will be used for your business. However, in this time of day when the economic recession has still left us suffering and it has been too hard to obtain financial help. If you are planning to run a small business, do not ever fall prey into the hands of the people who will only offer help for their own profit and not yours.

You can not operate your business without any capital or some sort of financing. If you want to run your own business, you should have already planned that out before especially on where you will get financing. It should not be a problem if you are planning to use your personal money to run the business but it would become a problem if you do not have the kind of money that your business needs.

The capital needed to run and operate a fully functional business can change over time and therefore it is important that you, as the business owner, must have some sort of strategy in obtaining financing for your business early on. This is usually most business owners overlook as they lack in the financial strategy that will make their businesses flourish the way it is supposed to be.

Strategies for business financing are usually the weakness of most business owners instead of utilizing it as their strength. This is why there are so many small businesses that are struggling or worst go into bankruptcy. Running a small business is not only about profits but in learning how to maneuver your system in such a way that you will become successful later on.

The methods for business financing are tricky but not that hard and if you are not careful enough your business will end up failing. You are the one who should plan, organize and implement the strategy even before you are putting up your establishment. Make sure that you have backup plans in any case that your initial plan did not work out.

Furthermore, you need to dig well your business financing and this means looking at it on the long term scenario not just for the short term needs. You need a good foundation by which your business can stand tall, flourishing and growing so that you can earn the profits of whatever it is you sow.

The Key To Working Capital Financing – Asset Based Lenders

Wondering how your competition seems to have all the working capital financing they need and you do not – the key to that answer might just asset based lenders and the asset based lines of credit they offer to Canadian businesses such as yours. Let's examine how this relatively new and unique method of business…

Wondering how your competition seems to have all the working capital financing they need and you do not – the key to that answer might just asset based lenders and the asset based lines of credit they offer to Canadian businesses such as yours.

Let's examine how this relatively new and unique method of business financing can totally alter your business financing success.

The acronym for this type of financing is ABL; simply speaking its daily cash flow provide against your current, and sometimes now so current assets. What do we mean by that? Simply that this facility allows you to margin your receivables, inventory, and in most cases, you should choose, fixed assets and real estate. You are probably saying to yourself that you could arrange financing on your own re those fixed assets and real estate – but we are talking about using those assets as collateral for your daily revolving line of credit. So you are not borrowing, you are not bringing debt on to your balance sheet, you are just leveraging your 'assets' (that's the 'A' in ABL!) For daily cash flow and working capital.

And why are we claiming that this type of working capital financing just might be your key to business success. Simply because you have probably found it has been challenging to get the full amount of business credit you need. In some cases you might have discovered its been a challenge to get business lines of credit of any way.

So if your competitors are using this type of financing today, who exactly is eligible for it, and is your firm a candidate. The answer is simply that if your firm has a combination of 250k in working capital assets you are immediately eligible for asset based lines of credit. We would add that firms with smaller asset sizes can still monetize those receivables via invoicing financing or discounting, but that's not our key focus for today's information exchange.

So now you now the offering are out there. But why should you consider it. Simply because your firm may be in one of a number of special situations – that includes issues such as your need for increased daily operating cash, you wish to merge with or finance an acquisition, you have been unable to obtain inventory financing elsewhere, you are growing to quickly for traditional Canadian chartered banking financing, etc! We are pretty sure you get the picture now!

The benefits to this type of business financing must by now be pretty obvious. It's all about access to working capital financing and cash flow that you could not access before. Assets that could not be financed are now financeable, and inventory financing, previously limited or unavailable now looms on your growth horizon.

Who are these asset based lenders, and what is the cost of this financing? We'll leave that one for another day, but if you want to investigate asset based lines of credit for your firm (remember, your competitor probably already has) then speak to a trusted, reliable, and experienced Canadian business financing advisor who will assist you with identifying benefits and the best solution for your current strained needs in business finance.

SBA Loans and Small Business Financing Alternatives for 2011

Managing a business is never easy, but it's made more difficult when confronted with an uneven cash flow stream. Managing cash flow is a going concern for all businesses, regardless of size. Financing customer receivables is not only a cost in itself, but a tremendous drain on a company's resources when they must meet their…

Managing a business is never easy, but it's made more difficult when confronted with an uneven cash flow stream. Managing cash flow is a going concern for all businesses, regardless of size. Financing customer receivables is not only a cost in itself, but a tremendous drain on a company's resources when they must meet their day to day operating expenses. So, what's the solution? Well, business loans and credit lines are becoming less and less of an option as banks and lending institutions tighten credit limits and lending practices in response to the global recession. However, there is a solution and it comes in the form of receivables factoring. What is receivables factoring and how can it help businesses manage cash flow?

Receivables factoring simply involves a company selling its outstanding customer invoices, or receivables, to a finance company in return for the right to draw upon the receivables outstanding amount. In a sense, it's a short term business loan without the added headache of high interest rates. In return, the finance company will proceed to collect on the invoice from the customer. Once the full amount is collected, the finance company will reimburse the company the difference and deduct a small fee for the transaction.

Payouts for receivables factoring depends upon the credit worthiness of the customer, their market or industry and the general likelihood that the finance company will be able to collect. Typically, initial payouts are anywhere from 75% to 85% of the receivables value. Aside from the fact that there are little to no interest rates charged, the overall benefit for business owners is ease of use. Factoring has been adopted by a number of industries in response to customers who have typically benefited from extended payment terms. Companies that use factoring have excellent bottom lines, are well managed and market leaders, but suffer from issues with customer payments. A perfect example would be the housing construction industry where construction requires a significant financial outlay with little opportunity to recoup that investment until the property itself is sold.

Companies that have significant assets tied up in their receivables can turn those receivables into immediate cash. Finance companies are flexible in options and provide their customers with the benefits of using recourse & non-recourse factoring. Recourse factoring allows the company selling the receivables to secure a higher initial payout provided them guarantee the finance company is paid on the invoice. Non-recourse has a lower initial payout but allows the company to avoid any guarantees related to invoice payout. Overall, factoring & accounts receivable financing is becoming a more viable option for business owners looking to avoid the high costs of business credit lines and loans. It is not an indication of a company's overall health, but purely a solution to short term cash flow issues.