Small Business Financing – Finding Capital For Your Business

Starting a small business is an exciting adventure. From writing out the business plan to executing the minor details, the thought of being your own boss is thrilling to many people. However, not everyone who wants to begin a business has the funds available to make their dream a reality.

The good news is that because the government wants to see small scale businesses continue to grow and thrive, there are many financing options made available to those interested in becoming an entrepreneur.

- Grants – Perhaps the most appealing way to begin a business would be for free, and grants do not have to be repaid. However, the application process is quite intense, and the competition for funds is extremely fierce. Therefore, it is best not to rely on grants as your sole source of capital.

- Micro and SBA Loans – Micro loans are loans of amounts from $5,000 to $35,000 that can be used for any business purpose. If a loan is made to a small enterprise by a private sector lender such as a bank, they can be guaranteed by the SBA.

- Franchise Financing – If your business dreams include the purchase and operation of a franchise, you may be eligible to apply for specialized financing. Franchisees operating certain well known businesses are the most likely candidates for this type of financing.

- Development Financing – Businesses in need of capital for the development of land or buildings may be able to receive special financing with a long term and fixed rate program.

- Personal Loans and Equity – Finally, you can also seek help from friends and family by requesting a personal loan. Be prepared to have a detailed business plan. It is also recommended to have a formal contract written up to avoid legalities between loved ones. Alternatively, if you have equity in your home that you can withdrawal, you may consider writing yourself a check to begin your new enterprise. These options should be used as a last resort.

Finding and securing funds to begin your small business doesn’t have to be a daunting task if you know where to look. Some options will be more viable than others for you, depending on the business you are starting or the capital that is needed. Keep an open mind and a steadfast attitude, and you are sure to find the answer that best fits your situation — and business.

Wondering About Financing Small Business Loans?

Many small companies in the US expect some growth opportunities in the next year. That is the great news! The bad news? Financing opportunities are looking bleak, particularly if the business owner has less than great credit, or a new business. Why would you need to know about financing small business loans? The main reasons for small business financing are to receive working capital and funds for capital expenditures.

It used to be that applying for business cash for a smaller business was fairly straightforward. You’d pay a visit to your local friendly banker and talk about your business needs. You’d discuss what you needed and they would help with financing a business loan – yours, to be exact. Then, the financial crisis hit, and banks closed ranks and decided that loans for small business were too risky. Business cash almost dried up. The big losers? Small business owners.

Now, we see the result of lack of financing: many small companies are either struggling to stay afloat, or are finding it almost impossible to capitalize on upcoming opportunities. In a recent Year-End Economic Report published by the National Small Business Association, nearly 40% of small businesses report they are unable to acquire adequate means for financing small business loans they deem necessary for their business to continue and grow.

What are the options for companies to get the business cash they need? The large corporate bankers and small locally owned banks are not the alternative they have traditionally been. You may feel that your business is a captive being held by the current economic situation and credit crisis. What you may not know is that there is a great source of alternative lenders who can provide working capital for small businesses. It is possible for loans to be secured against cash flow or your accounts receivable. In addition things such as inventory and purchase orders can be considered. Do you own property, machinery or equipment? These things as well may be leveraged to secure loans for small business.

What happens when your long time banker tells you there is no money for your business? Don’t give up and think that all is lost. There is help just around the corner for you. Business lending has changed. It may seem a little different to do business on the internet, but that is the new way. You just may be able to get the financing you need when the bankers say “No way.” Asset-based lines of credit may be the way to go in this Brave New World.

Typical banks are just no longer willing to extend traditional financing to the small company owner. There are many reasons for this, some of which are tightened federal requirements, as well as skittish investors who only look at the bottom line. These factors combine to make it seem that any loans for business may seem quite impossible. But don’t believe that! There is a whole new world of private banks and small business lenders who welcome your business. Once the level of risk of the business being financed is determined, you may be pleasantly surprised by the rates and terms you may be offered. Take advantage of the growth opportunities for your business. Grow your business just as you’ve dreamed.

Managing Small Business Finances

TOP TEN TIPS FOR MANAGING YOUR SMALL BUSINESS FINANCES
Always work on the basis that you’ll need more than you actually do.

You often only have one chance of raising money so remember that when working out your figures. If your figures are too conservative, it could have a huge impact on the future of your business.
The bank is not the only place to get money.

Having said that, don’t go anywhere near Loan Sharks but always keep in mind that other resources can be available.

Cash Flow
If you’re having a problem with cash flow, contact all the people that it may affect,
Customers and suppliers. Try to re-negotiate term where possible but make sure that you
can afford the new payment terms. This will help to maintain trust.

Never give credit
You haven’t made a sale unless you have received the money for it! Never give credit would be a hot tip but if you do go down that route check out references from other suppliers. Also make sure that payment conditions are included in the bill of sale.

Keep the important people in the know
Banks, Inland Revenue etc will be more sympathetic if you keep them informed. Even if that means just dropping emails to people or giving them a quick ring. Keep those contacts open.

Chasing those debts
Make sure you have a procedure in place for chasing non-payers. This could be a an invoice followed by a ‘phone call and then another invoice including an admin’ charge if this is what you want to do.

Forecasting

Forecasting and estimating for your business is essential but remember that it need to be Realistic. It’s sensible to forecast monthly but if things get tight this can be done either monthly or daily if necessary.

Records

Despite being a tedious task keep a record of everything!!!! Telephone calls, receipts, orders, payments, bank statements. EVERYTHING. Track all money coming in and out of your business. Utilise one of the many software packages that are available.

banks
Even if you do not get your funding from a bank, you will still need to use one. However everybody is in the market now to get your custom so make sure you shop around for the best deal. Read all the small print so you know when any low interest rates are due to end. It does not good business sense to be loyal to any bank. Always get the best deal you can.

Negotiate, Negotiate, Negotiate
Negotiate on everything – interest rates, payment dates, minimum/maximum orders. Etc.It never hurts to ask and “if you don’t ask you don’t get!