Some Options for Small Business Financing

One of the major problems with being a small business is that the business owner will invariably run into difficulty with the access to and securing of funds from commercial lenders who will be somewhat deterred by the lack of market presence of the business and so will be less inclined to issue a loan.

As a result then, this means that the potential growth of the business is effectively retarded outright, as without sufficient levels of working capital at its disposal, it cannot hope to grow, develop and expand to ensure that it attracts a sufficient portion of the available market to render it a successful venture.

Being a small business is a risky affair indeed, and the reason for this is that the market will already be controlled to varying degrees by those companies that are already firmly established within a community, and which have managed to cultivate a degree of goodwill among their customers. These companies have the advantage of a steady stream of income, thereby ensuring that they have good cash flow, which in turn means that they are fully solvent and as a consequence then, self-sufficient.

A small business on the other hand will need to actually prove their worth to both the lenders as well as the customers whom they are seeking to attract, although it should be noted that this is oftentimes, a task much easier said than done.

Regrettably then, the range of small business financing options that are actually available are very narrow indeed, and so the owner of a small business may have to make some very tough decisions as to what exactly they are willing to sacrifice in order to ensure that their business will increase and blossom as a whole.

One option that the business owner may want to seriously consider is the taking out of a small business loan. This would mean that the business would be able to get his hands on some much needed capital in a short period of time, without having to relinquish any control of it, and so once the loan has been paid off in full, then the company would not be committed to any more or further obligations.

This is of course, assuming that the business will be actually able to get access to a loan, which is a fairly challenging feat in of itself it should be noted. Another option is

Another avenue to explore is small business grants provided by the government. The government is fully aware of the remarkable benefits that small businesses will bring to the economy as a whole as it means that services are much more competitive which in turn helps to stimulate greater demand for associated supplies.

Venture capitalist companies are another option for small business financing, the only problem here is that they are rather demanding as to what they expect in return for their initial investment and so the business owner must be prepared to relinquish a sizeable portion of their company away.

Business Financing and Mixed Signals For Small Business Owners

Business financing programs are resulting in mixed signals for borrowers. Business lenders are increasingly reducing or canceling commercial lines of credit, refusing to refinance commercial mortgages and turning down new requests for small business loans. In contrast to their actual lending practices, most lenders have announced that they are lending normally to businesses. These mixed signals are due to a variety of financial and economic issues, but the end result is likely to be confusion for small business owners.

Having enough cash flow to support daily operational requirements is a critical need from the perspective of a small business owner. Very few businesses are debt-free, and the inability to borrow needed funds on an ongoing basis will quickly produce serious consequences. It is probably fair to say that the average business owner does not understand why they are currently unable to get adequate working capital or commercial loans from their current lender. The primary mission for commercial borrowers is likely to involve locating new sources of capital once they realize that their current lenders might not be up to the task of helping their business financially.

Looking at this perplexing situation from a lending perspective, it is likely that most commercial lenders truly want to be more active in providing small business financing than they currently are. However, many banks are undercapitalized and have been forced to increase their liquid assets to satisfy government standards. This can force such banks to make fewer new loans and to cancel some existing loans. In other cases, lenders have depended excessively on short-term commercial financing sources and now find themselves short of capital to make loans because their own business funding sources are proving to be inadequate.

Some good news emerging from this confusing lending climate for small businesses is that there appears to be an adequate supply of new lending sources to fill the void left by the exit of many banks and other lenders from commercial lending. A prominent commercial lender recently announced that they needed more capital in order to continue making small business loans. Even though the failure of this lender would be inconvenient to businesses using their services, it has become clear that there are indeed other lending sources sufficient for solving the problem.

Despite the unfortunate complications due to mixed signals from lenders, business owners are in better shape than they probably realize to make it through the current business funding chaos. In order to increase the chances of their business surviving, borrowers should take a more active role in their business financing.

Raising Finances For Your Small Business Start Up – Where to Look

There are many people out there who have the ‘entrepreneurial spirit’ and want to start their own small business. So what are the best ways of raising finance for your small business? There are quite a few different options, but let us just discuss a couple of them.

First of all realise that there are basically two different methods of financing for your business, either debt or equity. You are either going to have to borrow the money from someone or some place and repay it, most likely with interest, or you will borrow the money in exchange for a piece of the company or business in return.

Loans- Many banks, building societies or other loan companies have the option to take out a small business loan in order to get your business up and running. You will have to provide some basic information about the company and maybe even have an accountant look over your business plan to make sure that everything is legitimate before you may qualify for a loan. These loans will then be paid back with interest over an agreed period of time.

Family and friends- Depending on the status of your friends and family, they may have a vested interest in your business or welfare, and as a consequence consider lending you some money to get your small business started. It is possible you could offer them some shares in your new company for any investment they make or you could borrow the money as a loan and agree a repayment program with them. It can be risky doing business with friends or family, so make sure you get the agreement on paper to make it official. Also, be aware that if conflict occurs down the line, it can put a lot of pressure on the relationships that you have with these close individuals.

Grants - You never know what your government has to offer. At times they are trying to boost the economy, so there may be some grants available to help finance your future business. Since it would be government funding, it would probably be wise to make sure you have some legal and financial support when submitting your application and business plans to them.

Investors- It does not have to be just friends and family who may be willing to offer financial assistance when starting your small business. Create a detailed and convincing business plan, with projections, and go out and search for some external investors. Indeed, many people are searching for ways of how to invest their money. Again, you may decide to offer shares in your business or agree a loan amount with them and pay it back with interest.

Follow the ‘entrepreneurial spirit’ and find the means to the end as far as obtaining finance for your new business. Look at all your options and make sure you consider all of the costs, whether they are future interest charges, profit being paid-away to shareholders/business partners or other non-financial costs of such as potential conflict with friends or family.