What Is a Bridge Loan in Real Estate?

Bridge loans are loans given for a short period of time granted by a bank or an agency against the equity of the property you are selling. This loan would help you to bridge the gap between the period of realization of the sales proceeds and paying money to buy a new home. So, you…

Bridge loans are loans given for a short period of time granted by a bank or an agency against the equity of the property you are selling. This loan would help you to bridge the gap between the period of realization of the sales proceeds and paying money to buy a new home. So, you can use the bridge loan to fulfill your needs in the intermediate period when the sale of your home hasn’t given you cash to buy the new house. Thus, it can be understood as an interim kind of financial arrangement.

Financing Tips for Food Distributors

One of the financial concerns of companies within the food industry has been financing for food distributors. While inventory in other industries can lose value over time such as clothing, electronics, and furniture, inventory in the food industry has an expiration date. Lending to the food distributors has not been easy over the last 4…

One of the financial concerns of companies within the food industry has been financing for food distributors. While inventory in other industries can lose value over time such as clothing, electronics, and furniture, inventory in the food industry has an expiration date. Lending to the food distributors has not been easy over the last 4 to 5 years. Many lenders are not familiar with sales cycles and turnover rates. Such lenders are more likely to understand and value those assets and provide greater liquidity and flexibility. Traditional banks may not be the best source in providing financing for food distributors.

A Line of Credit

A business line of credit is probably the best option. However, business lines of credit are not easy to qualify for. However, today there is an array of alternative lenders providing business lines of credit at a higher cost. The convenience of a business line of credit is that you will only pay over money you utilize. If you can obtain a business line of credit with a bank, your cost of capital will remain very low.

Factoring

Factoring is another solution. Many food distributors turn to factoring. The challenge that factoring has is that it takes time to process and there is double underwriting process. If you are seeking factoring not only does your company need to qualify but the companies that owe you money as well. You may be approved but the company you sell to may not be approved. Factoring companies request financial documents not only from you, but the companies you sell to. Imagine the amount of paperwork that is required. In the end factoring is a good solution.

Cash Flow Lending

Cash flow lending is becoming more popular every day. While some business owners know it as a cash advance or a daily payment loan, this is one of the fastest solutions. The process is fast and simple. Most cash flow lenders can provide you with a loan approval within 2 business days. If you can turn around inventory in less than 30 days and make a 20% profit; these loans may be your solution. They tend to be costly. The average rate can range from 1.5% to 3.5% per month. However, if you can make 20% return every month and pay 3%, you will still come out ahead and yield a 17% return without utilizing your own capital. The rates are very similar to factoring, the difference is the payment collection process.

There are other solutions. These are some of the best alternatives to consider when seeking financing for food inventory.

5 Valuable Ways Business Funding Will Scale Your Business

Most businesses think that business funding is something that you need when your business is short on cash or times are hard. A lot of businesses go out looking for business funding when the business is not good. The time to get business financing is not when your business is doing horrible or you are…

Most businesses think that business funding is something that you need when your business is short on cash or times are hard. A lot of businesses go out looking for business funding when the business is not good. The time to get business financing is not when your business is doing horrible or you are strapped for cash.

If your business is doing great, there is no better time to go out and get business funding. Why?

1) It's easier to qualify
2) You can get better rates and terms
3) It's easier to grow your revenues with a capital infusion
4) It's easy to utilize the simple formulas that we have in here to scale your growth.

DO NOT WAIT FOR THINGS TO GO BAD; IF YOU ARE DOING GOOD – BUSINESS FUNDING CAN SCALE YOUR BUSINESS TO THE NEXT LEVEL.

This is how you can determine if business funding can help your business grow. There are 5 simple steps which will show you the value of business funding.

Step 1: What Do You Need To Grow Your Business?

While this may sound like a stupid question, it is a very important question.

The FIRST STEP you need to take is determining what your business needs to grow sales. Most businesses need one or more of the following?

• Inventory and More Products
• Expanding Existing Line of Products
• Adding Additional Services
• Marketing and Advertising
• Sales People or Personnel
• Machinery, Equipment, Software or Hardware
• Expanding into other Territories or Adding Another Location

Step 2: How Much Money Do You Need to Achieve That?

How much money do you need to realize that? Again, another simple question and it may sound stupid. But you need to start off with basic questions.

How much would you like to invest into your business or how much do you need to grow your business?

$ 10,000, $ 20,000, $ 40,000, $ 50,000, $ 100,000 +

Step 3: Where will the come from?

There are only three forms of cash that flow into a business:

REVENUES FROM SALES
INVESTMENT DOLLARS
DEBT: A LOAN OR LOANS

Where will the money come from to help your business grow?

If you have an existing business and you want to invest in your business either either sell more or you have great close out balances and have enough reserves to re-invest. If you plan on selling more; most sales and marketing strategies require some sort of cash infusion. If that is not the case you only have two options: an investor or a loan.

Step 4: If you had the amount of money you needed to do what you want in your business – there are two key questions: If you know the answers to these two basic questions; you will know immediately how to increase your sales fast.

1. How much money will you make with that money?

In technical financial terms – What will be the ROI (Return on Investment)?

2. In what time frame will you make that money back?

In what time frame will you achieve the anticipated or planned ROI (Return on Investment)?

EXAMPLE (CASE STUDY): (Simple Version)

If someone gave you $ 100,000 – what would you do and how would that affect your business.

Example:

I (YOUR NAME) would take $ 100,000 and allocate that money into marketing and increase personnel. (NEED AND WANT)

I (YOUR NAME) would take $ 100,000 and make 50% return in 5 months. The equivalent of 10% return per month …

Based on this information, you are clear on how you would use the money, what type of return you would make and in what time frame.

The next step; is to determine if you can?

• Increase sales to $ 100,000 and have the extra money to do this.

• If you obtained an investor how much would they want? Most investors will either charge you anywhere from 10% to 30% in interest or they will want 20% to 50% of net earnings. You have to figure out the cost of capital versus your return.

• If you obtain a loan the interest rate may range from 7% to 30%. You need to factor in the cost of capital versus your return.

EXAMPLE (CASE STUDY) – Crunching Numbers:

For Existing and Operational Businesses

Food Distributors of America currently generates $ 50,000 per month on an average. At the end of the month they close out $ 5,000 positive which is about 10% net. Currently, there cost of inventory is $ 20,000. This means every month they purchase $ 20,000 to make $ 50,000 Gross. The question you need to address is: How much are my costs to generate gross earnings? Once you know that, you know how much you need to increase gross earnings by 10%, 30%, or even 100%. In this example, we can increase earnings by 100% by making a capital infusion of $ 20,000.

We know that $ 20,000 generates $ 50,000 per month. We know that $ 20,000 and $ 50,000 of gross sales generates $ 5,000 per month net; which is 10%. They want more inventory because they have prospective buyers.

Conclusions:

• An additional $ 20,000 would generate an additional $ 50,000 in gross sales; increasing earnings to $ 100,000. This is a 100% increase in gross sales.

• An additional $ 20,000 would generate an additional $ 5,000 in net margins; increasing earnings by another 10% monthly = 20% monthly.

• If this business can do this every single month, they would increase net earnings by 10% x 12 months = 120%.

Not all businesses can do this. Even if you increase your net earnings by 2% per month = 24% increase in 1 year.

Businesses that carry inventory have an easier time achieving this.

Businesses that sell every day; such as restaurants, hair salons, and anyone who sells consumer products; have an easier time achieving this.

Seasonal businesses can also achieve these types of returns.

Step 5: Calculating Cost of Capital versus Return on Investment (ROI).

If you do not have the extra money; you will need an investor or some sort of business funding or a loan.

There is nothing wrong with taking on investors or a loan. Most successful businesses have grown with capital infusion. Think of this way. Would the New York Stock Exchange or would the Chicago Board of Trade exist if businesses did not take on investors or debt? All businesses on major stock and debt exchanges have investors or debt.

How do you calculate ROI and Cost of Capital? Easy as 1, 2. 3.

Let's assume you are able to obtain a loan for $ 50,000 to invest in your business. You project that you will make 5% return per month for the next 5 months = 25% return. Let's assume you get a loan with a 12% annual rate = the same as 1% per month.

5% per month (your return) minus 1% = 4% your new return
4% x 5 months = 20% (after cost of capital)

The interest rate on a loan is important. However, if you know how to make a Return on Investment with a loan you will WIN in the end. More important, this is known as OPM (Other People's Money). Making money with other people's money! Read the Art of the Come Back, by Donald Trump. Do you think Donald Trump, Warren Buffet, and others utilize their own money to make money? The answer is NO.

Dealing With Funding Rejection

Whatever your business venture is just getting off the ground, you are currently facing financial difficulty or require additional support to expand your enterprise; a business loan offers the ideal solution. While seeking additional financing is nothing out of the ordinary, sometimes loan approval is not easy. According to the Bank of England, in late…

Whatever your business venture is just getting off the ground, you are currently facing financial difficulty or require additional support to expand your enterprise; a business loan offers the ideal solution. While seeking additional financing is nothing out of the ordinary, sometimes loan approval is not easy.

According to the Bank of England, in late 2014 lending by all UK resident banks and building communities indicated a unstable flow and on average, lending was broadly close to zero. It is clear that despite the heavily strained days of the financial recession may be behind us, small businesses are still considered a lending risk.

Despite considering, the above does not need to stress that business lending has become a complete “no go zone”. However there are no doubt a number of business owners considering what options they have left – particularly if once once already returned.

Rejection is never easy but do not be surprised and do not be disheartened if you have been told that it's a no. With strict lending guidelines, loan rejection may be down to a number of issues, some of which can be easily improved …

Over Borrowing

Lenders will initially want to determine whether the loan is necessary which is why it is important to know the exact figure you wish to borrow.

A ballpark figure will not suffice and over borrowing will simply lead to rejection; Be sure that you can explain exactly how much you require and for what purpose.

Financial Statements

Transparency is key, regardless of whether you consider your financial statements to show your business in the best light or not, it is critical that everything is out in the open.

Detailed financial statements will highlight earnings and allow lenders to determine whether your business is profitable with the ability to pay back the loan.

The Process

Obtaining a business loan goes beyond walking into a bank and filling out a form. A lot of businesses often fail because they have not taken the time to understand the application process.

Not all banks are the same so make sure to research what lenders will want to see. This may include something similar to a business plan where you will be expected to highlight how much and for what you require a loan. Understand the process to avoid missing out anything vital.

Before applying for a business loan, are you sure you are as prepared as possible for the lengthy process that lies ahead? Whether a large or small sum, when requesting lending from a bank or building society your business will be examined very carefully, is everything out in the open and ready? Are you prepared to answer every question that you may face?

If a previous loan request has been rejected, take a look at the above points; is there anything that you could have improved on?

Advantages of Using a Hard Money Commercial Lender

As we all know, conventional financial institutions such as banks will not willingly lend money to you if you have bad credit. But does this mean that all your options are closed? Certainly not. More and more people are seeking financial assistance from hard money lenders so as to help them and their businesses get…

As we all know, conventional financial institutions such as banks will not willingly lend money to you if you have bad credit. But does this mean that all your options are closed? Certainly not. More and more people are seeking financial assistance from hard money lenders so as to help them and their businesses get back on their feet. So what are some of the advantages of using a hard money commercial lender?

1. Minimal paperwork is involved in the process. When it comes to traditional banking institutions, you have to go through reams of paperwork before your loan is approved. This takes a lot of time and can also prove to be quite frustrating. One of the benefits of opting for private funding is that minimal paperwork is involved in the process. Typically, the documents that you would need to have for your loan to be considered are a promissory note, and insurance binder listing and a mortgage. Considering that the procedure only needs these few documents for the transaction you can rest assured of less stress during the process.

2. The transaction is simple as well as cost effective. One of the attractive features of dealing with a hard money commercial lender is the simplicity of it all. You do not have to be a rocket scientist to understand what is going on. In addition to this the money lender can walk you through it so as to expedite the process speedily. You will also find that dealing with these financiers is much more cost effective. There are no hidden fees when it comes to processing the loan. In the real estate world business people view time as money, so the shorter the process, the less money that is wasted.

3. You will not encounter high fees during the process. One thing that everyone will agree with is that getting a loan from a bank can prove to be more expensive than initially conceived. This is due to these institutions charge high processing fees for a myriad of things and you may simply not have that money at hand. You do not have to worry about this though with hard money lending. Since the acquisition of the loan takes a short time, there are no exorbitant fees being charged to process it. So you do not have to worry about additional funding to clear the balance that you are accumulating while trying to have your loan go through.

A Brief Overview of Small Business Administration Loans

The Small Business Administration offers loans to the small businesses who do not meet the eligibility criteria required in order to secure them from the banks as well as other traditional organizations. It is vital to remember that this organization does not offer money to the small businesses directly and that it sets up proper…

The Small Business Administration offers loans to the small businesses who do not meet the eligibility criteria required in order to secure them from the banks as well as other traditional organizations. It is vital to remember that this organization does not offer money to the small businesses directly and that it sets up proper guidelines for the loans that are offered by its partners that include credit unions, community development agencies, banks as well as micro-lending organizations . This organization gives the assurance that a certain portion of this type of fund will be paid back within the scheduled period of time. This type of guarantee from this organization will be able to eliminate all sorts of fear from the mind of the lender in the best possible way. This article will highlight on a few important loans that are offered by this organization for the borrowers in order to fulfill their requirements in the best possible way.

SBA 7 (a) loan

This type of fund is used for multiple business purposes such as renovation of buildings, purchase of fixed assets such as buildings, machinery and furniture and so on. It is used for other business purposes such as repayment of debt, investment of capital and so on. Its term is twenty years in the case of purchase of fixed assets and its term is twenty five years in case of repayment of debt.

SBA 504 loan

This type fund is used for the purchase of land and buildings and for the purchase of different kinds of fixed assets. It is designed in such a way that this organization offers fifty percent of the total cost of a particular project within the scheduled period of time. It is vital to remember that this type of fund can not be used for capital investment at any point of time. It is used for the purchase of land, machinery and other fixed assets and it is used to renovate buildings and properties in the best possible way.

Microloan

If you want to run your startup company successfully and if you want to expand your business, it is advisable that you should try to obtain it in the best possible way. It is mainly used to purchase furniture, machinery, equipment, inventory and other fixed assets in the best possible way. It is offered by the intermediary lenders who are associated with nonprofit organizations and who have long years of professional experience.

Disaster loans

The Small Business Administration offers them to the businesses that are affected by any kind of disaster. This kind of fund is often used to repair machinery, devices, damaged property and other kinds of assets in the best possible way.

Whether you want to obtain SBA 7 (a) loan or you wish to acquire microloan in the best possible way, it is vital that you should be able to gather knowledge about its application procedure. All you have to do is to provide the necessary documents such as financial statement, documents on income tax, business certificate and so on. The next step that you should follow is to fill up its application form properly and to submit it to a particular partner within the scheduled period of time.

A Brief Introduction of Small Business Administration Loans

The Small Business Administration enters into partnership with multiple lending organizations in order to provide diverse loans to the startup companies. In fact, this organization does not offer them directly to these companies, but this type of organization gives the guarantee that a certain portion of their total amount will be paid back by the…

The Small Business Administration enters into partnership with multiple lending organizations in order to provide diverse loans to the startup companies. In fact, this organization does not offer them directly to these companies, but this type of organization gives the guarantee that a certain portion of their total amount will be paid back by the organization even if they are unable to pay them back within the scheduled period of time.

Unlike the traditional lending organizations, this organization typically does not verify the business records of their borrowers prior to the money lending procedure. It means that anyone who suffers due to poor credit record has the scope to get this kind of fund without any kind of difficulty. This article will highlight on different types of SBA loans that are available for the borrowers in order to fulfill their requirements in the best possible way.

SBA 7 (a) loan is designed with the purpose to provide money to the borrower who wants to buy devices or furniture or who want money for other purposes such as house renovation, debt repayment and so on. Its maturity is ten years for repayment of capital and its period of repayment is twenty five years.

SBA 504 loan is often used for multiple purposes such as purchase of fixed assets, renovation of fixed assets and so on. Its amount varies from one million dollar to four million dollars. Unlike SBA 7 (a) loan, it is designed where the Small Business Administration provides forty percent of its total amount and the borrower pays ten percent of its total amount as collateral. It is vital to remember that this type of fund is used for development of the community while the other types of funds are used for development of business in the rural areas.

Unlike other kinds of funds, the Small Business Administration employs a different approach with their microloan programs. If you want to acquire this type of fund, there is possibility that this type of organization does not give money directly to the borrowers. In fact, this kind of organization offers money to the non-profit associations who often lend money to the startup companies at their discretion. Its amount is thirty five thousand dollars and its term is six years. It is vital to remember that this kind of fund can not be used for repayment of existing debt or for purchase of valuable property. In fact, it can be used in order to fulfill diverse business purposes such as purchase of equipment, devices, capital and so on.If you acquire this type of fund, it is vital that you should be able to enjoy a few important benefits such as a fast application process, lucrative amount, flexible terms and variable rates of interest.

Those who have faced disaster can get the disaster fund that is offered by the Small Business Administration. In fact, this type of fund can be utilized in order to repair the device, damaged property and other relevant purposes.

How Do You Get Small Business Administration Loans Quickly?

If you wish to get loans offered by the Small Business Administration, it is vital that you should follow a few essential tips. You should prepare an effective business plan and you should check your credit report and so on.

If you wish to get loans offered by the Small Business Administration, it is vital that you should follow a few essential tips. You should prepare an effective business plan and you should check your credit report and so on.

Things to Be Followed for Getting Small Business Start Up Loans

If you wish to expand your current business or if you wish to start a new business on your own, it is advisable that you should obtain small business start up loans as quickly as possible. If you want to buy an office promise or if you wish to purchase necessary equipment or machinery, it…

If you wish to expand your current business or if you wish to start a new business on your own, it is advisable that you should obtain small business start up loans as quickly as possible. If you want to buy an office promise or if you wish to purchase necessary equipment or machinery, it is vital that you should obtain this type of fund in the best possible way. This article will highlight on a few essential things that you should follow in order to get this kind of fund in the best possible way.

The first step that you should remember is that you should be prepared to answer all the relevant questions of your potential lender as quickly as possible. If you apply for this type of fund to a bank, there is a possibility that that particular bank will check out Debt to Equity ratio. It calculates the total amount of money that you have borrowed in place of the total amount of money that you have already invested in the company. If you invest a huge amount of money into your business, there is every possibility that you can obtain small business start up loans within a short span of time.

Your second step is to determine the exact amount of money that you wish to borrow as well the appropriate repayment terms that you need. It is vital that you should be able to determine the amount of money that you are able to pay on a monthly basis and that you should also be able to find out the exact time that you will need in order to repay this kind of fund in the best possible way.

You should also be able to obtain the copies of your credit report from one of the popular credit reporting agencies as quickly as possible. There is every possibility that your potential lender will try to know the details of your credit history whenever you wish to make a decision about loan application. All you have to do is to read the credit report in a careful manner and to find out if there is any sort of incorrect information that is being provided in this type of report.

Your next step is to identify different types of small business start up loans that can be available for you. For example, if you suffer due to bad credit records and if you face rejection from conventional lending organization, it is advisable that you should acquire the loans from other lending organizations.

The next step that you should consider in this matter is to complete the loan application process in the best possible way. You should be well prepared so that you should be able to explain the reasons why you want to apply for this kind of fund and the total amount of money you wish to apply for. The final step is to submit this type of application along with the relevant documents such as license, tax return statements of the last three years, one copy of your original trade plan and so on. Plus, you should be able to provide necessary information about the particular property that you want to use as collateral.

Stated Non Conforming Commercial Real Estate Mortgage

Conventional Conforming Commercial Mortgages All borrowers want the best rates and lowest cost to finance their commercial mortgage property. Yet most borrowers do not qualify. With a Stated Non Conforming Commercial Mortgage many borrowers who otherwise could not qualify for financing are now able to. Conventional loans require tax returns for the past two to…

Conventional Conforming Commercial Mortgages

All borrowers want the best rates and lowest cost to finance their commercial mortgage property. Yet most borrowers do not qualify. With a Stated Non Conforming Commercial Mortgage many borrowers who otherwise could not qualify for financing are now able to.

Conventional loans require tax returns for the past two to three years to verify income and expenses. They require bank statements for the last two to three months to source and season down payment and reserves. Conventional loans generally require higher credit scores and years of experience owning and managing similar commercial property types. And Conventional financing takes much longer to close.

Stated Non Conforming Commercial Mortgages

For more lenient underwriting and quicker closing you may want to choose a Stated Commercial Mortgage. Although the rate may be higher many commercial real estate investors and small business owners will do better with this type of financing for many reasons.

First the lender generally does not require tax returns. This helps the borrower to really qualify based on the income generated by the property. If it is a good investment and the property can service the debt and meet the minimum debt service coverage ratios the loan qualifies.

The Stated program does not require funds to be seasoned. They only require funds to be sourced. For conventional financing the funds must be seasoned for two to three months or longer. This requirement also helps many borrowers to qualify for the Non Conforming program.

Many Conventional lenders require a 680 FICO score. Some even require 700 or higher. Not only do they require the high FICO they also require years of experience owning or managing a similar property type. For an agency loan (FNMA, FHLMC, FHA, etc.) You must have if you want to purchase and finance a 12 unit property having owned only 1-4 unit properties would not help you to qualify. They may require you to pay for an experienced property manager to get their loan.

The average conventional commercial loans take 60 days to close. This is even longer for agency loans that can take 90 days or longer to fund. Yet, with the Stated Income program the loan closes in 2 to 4 weeks.

But maybe the most important reason to do a non-conforming commercial mortgage is because they may be too small. Many conventional lenders will not finance loans under $ 500,000 or maybe even $ 250,000. The agency lenders require their loans to be at least $ 1,000,000 to $ 2,000,000. The minimum loan for the Stated Income program is $ 50,000.

There are many reasons to choose the Stated Non Conforming Commercial Real Estate Financing program. None of those reasons are because they offer better rates or terms than a conforming loan. Therefore, check with your conforming lender before choosing this program. If you work with a mortgage broker, they should know right off if you would qualify for the conforming program.