Business Finance - Five Options For Start Ups

When starting a company it can be extremely difficult to find the business finance that will allow you to start operations and begin trading. This is why it is vitally important to understand the different business finance options available to start ups. Hopefully this article will be able to put forward five of the best funding options.

The first and most obvious business finance option is to use your own money. For those blessed with a large amount of savings this can be a good option, even taking a second mortgage to fund a business can be worthwhile. The main advantage of this form of finance is that it gives you control over all of the financial interests in the business, the wants and needs of investors are not an issue. However, care should be taken, by risking your own money you may have o sell your house, or may even end up bankrupt if the business fails.

Another option for those trying to find business finance is to ask friends and family for start up capital. Normally friends and relatives will be able to lend you money along better terms than a bank. It is worth remembering however that being indebted to friends or family can be troublesome, placing tension on relationships and in some cases can even ruin friendships. When borrowing from friends and family, be sure to have a written agreement, by doing this the chances of any misunderstandings are reduced greatly.

One of the most frequently used options for those starting a company is to visit their bank in order to obtain business finance. This may take the form of an overdraft, which can be beneficial due to its flexibility. However, if buying over an extended period of time a loan is likely to be a far more suitable option, due to the lower rates of interest.

There are a number of different small firms that are able to provide business finance to companies. Some of these firms work within a government lending structure and as such secure any loans given to government guarantees rather than personal possessions. With a little research it can be possible to find this form of government assisted loan, which reduces risk on your part.

As well as loans, another business finance option is to find external investors who may be interested in buying shares. Typically they will put their money into the company and will only expect returns once the operation begins to bear fruit. One of the major advantages of this can be the free expertise brought to the table by investors; a downside however is the loss of control over the company's direction and the need to share any profits.

These five forms of business finance represent the most commonly utilised options for those who are starting a business. It is only through careful consideration and a process of detailed research that the correct option can be found. If the right decision is made however it should be possible to create a solid financial platform for your business.

Business Financing Alternatives For Troubled Companies

The number of troubled businesses has increased dramatically as a result of the current economic environment. Usually, the problems start when clients start delaying payments. This has a negative impact on cash flow, and if your company does not have a working capital reserve, it can create major problems. The first reaction for most owners tends to be to delay vendor payments as well. That seldom works as a long term solution unfortunately. Before long, like falling dominoes, other payments start getting delay and the company gets into deeper trouble.

Most company owners look for business financing - hoping to implement a stop gap solution to the working capital problem. Unfortunately, getting a business loan is very hard for companies that are not in pristine financial condition. The catch 22 is that if the company where in pristine financial condition, it would probably not need a business loan. Most of time times, this situation can be fixed with the right financing. Otherwise, the company risks going out of business.

There is a solution that can help companies who face slow paying clients and who are not in the best financial shape. It solves this particular problem at its source - the slow client payments. The solution is called invoice factoring.

Factoring provides you with a funding advance for your slow paying invoices. It provides you the capital you need to pay suppliers, vendors and employees - on time. The fact is that while your clients are paying invoices more slowly, most of them are still good solid clients. Factoring companies can provide you an advance on your invoices because they consider them to be your best collateral - something most institutional lenders don't always do. Because of this, invoice factoring can be a good solution for a troubled company that still has a solid roster of clients.

Another advantage of factoring is that is a dynamic form of financing that grows with your business. Since financing is tied to your invoices, it can be used to grow your business and restore its financial health.

Managing Business Finances With Alternative Financing

Bank loans used to be the most expedient source for business financing. But since the mortgage industry has increased the bars for loan qualification, it is not startling for low equity corporations to employ alternative financing.

Programs in business financing have increasingly developed over time, serving the diverse needs of discrete industries. By evaluating the value of concrete property like business equipment, firms can profit from a financing option in the form of asset-based lending. The assests' cash-converted value creates the corresponding worth of business financing offered to firms by lending establishments. For companies running with highly specialized equipment, lender-assessed cost value is regularly devalued, making it hard for asset-based lenders to procure a loan.

For cases wherein business equipment value does not qualify for asset-based financing, corporations can make use of their accounts receivable to request for upright funds. With inventory assessment and receivables estimation, finance firms can bestow business financing based on the consumers' payment ability and not through credit standings of a company. The notion is almost akin to merchant card processing, wherein issuers of credit cards pay the full invoice value minus the discounts. Borrowers and creditors are both benefited in this method of advertising because loans can be granted without the burden of debts, and credit is settled through actual sales of assets.

Basically, accounts receivable are provided intrinsic worth based on the tenets of factoring. Debtor's risk are assumed by a factor upon purchase of reduced invoices. In spite of the uncertainty that the factors might run into with debtor's account settlement, they are still willing to quickly offer financing to industries. By delegating accounts receivable management, corporations are given the freedom to effectually deal with creative efforts in other business operations like marketing and selling.

Factoring business invoices have benefited businesses in more ways thinkable. Emerging industries are ensured continuous cash assistance for effectual operations as long as they are able to fill in bigger and more invoices. Together with business growth of developing companies, the line of accounts receivable factoring also expands.

Financing by means of cash advance should be taken into consideration by businesses that need monetary aid but are deprived of monetary assets and are devoid of profitable monetary statements. By anticipating future credit card sales, financing companies could give credit card processing merchants an equivalent value of capital to oversee a business. Due to the flexible nature of business cash advance, raising of necessities in business outlay is becoming more manageable. Industries need not be anxious about recurrent fees because payment collection for business cash advance is only made when as soon as a business earns.

Fiscally disadvantaged industries have found a new light in alternative financing; through this funding option, more industries have survived the strains of a more severe mortgage industry. With the recent setting of lenders versus funders, it should be every corporation's aim to purposefully position itself in less pricey yet more effectual business financing resources.

A Bumpy Ride For Business Financing

Based on how chaotic the commercial banking climate is currently, the situation described in this article is expected to prevail for a long (but unpredictable) period of time. In spite of the confusing and frustrating commercial loans environment, a prudent business financing strategy is likely to produce the most effective results that can be hoped for by small business owners. With working capital financing and business loans, commercial borrowers need to be prepared for a long and bumpy ride.

Misinformation and insufficient information will play a somewhat unpredictable role in achieving the desired outcome of business borrowers finding appropriate commercial finance solutions. The eventual success of commercial financing efforts will depend on an individualized and detailed assessment of the unique financial circumstances for a specific business, although it is appropriate to note that there are new and effective business loan options that will satisfactorily fill the commercial funding gap for many small business owners impacted by their current ineffective commercial bankers.

Anticipating the long and bumpy ride that lies ahead for even the most ordinary business financing request will be prudent and wise for small businesses. It has not been unusual for commercial borrowers to wait for one to two months before their bank finally declines to make a commercial loan that had appeared to be a mere formality when the lending process began, either because banks do not want to publicly admit that they are not presently making business loans or perhaps due to their somewhat secretive and changing guidelines for making such loans. Regardless of their prior description of "normal" for working capital management and commercial financing options, many business owners have already discovered how much and how quickly this has changed.

A prevailing banking climate that is characterized by misinformation as well as insufficient information about current commercial finance options for small businesses provides sufficient rationale for describing the journey to business financing success as being both long and bumpy. After they have finally been informed by their current bank that needed business finance help is not forthcoming, because they simply do not have enough information to successfully complete their task, a small business owner might be unsuccessful in their attempt to find a new source of commercial funding in one typical scenario involving insufficient information. When a commercial banker misleads a prospective business borrower by advising the business owner that the bank will be able to help in providing an unsecured working capital loan when the banker has already been told by senior bank officials that such financing will not be provided except for specific established business clients, this is an increasingly frequent misinformation scenario. Most banks are in fact eliminating or reducing working capital financing to small businesses as indicated by one public report after another.

More successful results should be produced by realistic expectations of what lies ahead in business financing efforts. This article represents a sincere attempt to accurately portray the recent confusing and unpredictable state of commercial banking for small business owners, and this fulfills a primary purpose in describing current attempts to obtain small business loans as potentially being a long and bumpy ride.

Looking for Small Business Financing? Consider An Account Receivable Financing Strategy

Could account receivable financing help your firm? The dramatic rise of small business financing in accounts receivable ( by the way, Canada's largest corporations use this tool also!) Is simply a factor of companies such as yours wanting to capitalize on the working capital and cash flow that is, in effect, locked up in receivables

It doesn't take rocket science for any business owner of financial manager to figure out that if his or her firm has investments in receivables and inventory then those assets, typically called ' current assets' requires financing in some form. Of course you can ' self finance ' - meaning simply wait for your inventory to turn into receivables, and then wait probably even longer for A/R to turn into cash. But, doing that forces you to give up on sales opportunities and challenges the very core of your financial health, given that we all agree cash flow is king.

If you are fortunate enough to be financing via a Canadian chartered bank you are of course familiar with ' collateral '- our banks do a great job of explaining that to you! Why don't you use your own firm's collateral, its assets, mainly accounts receivable, and monetize that asset into cash.

Clients are often fairly clear on the benefits of account receivable financing, which is also called invoice discounting or factoring. What they don't seem to have the best handle on is how it works.

One you have such a facility set up it quite frankly is one of the easiest and quickest ways to unlock cash flow and working capital on a daily, weekly, or monthly basis. The power to choose your timeframes remains with yourself. And by the way, you only pay for the financing you are using. Let's get back though, to how it works.

In Canada there are two types of factoring, we'll focus on the most common one, which, by the way, isn't exactly our favorite (there is a better one) but let's keep it simple for now.

After your firm generates an invoice you submit it to your factor firm partner. That could be once invoice, several, or many or all. Funds for those invoices are wired, or sent to you, that same day into your account. Didn't you just feel your cash flow being totally unlocked and flowing?! Approximately 10% is held back as a buffer, but as soon as your client pays you get those funds back also, less what is known as a discount fee, typically between 1 and 3% - 2% is pretty well the norm.

2% you say! Isn't that expensive for small business financing. Absolutely, positively maybe, but we actually don't think it is. That is because all in rates from your bank when you total up all the fees, services, standby fees etc often total in the 11-12% range, not the 6% or 7% you think you are getting. And furthermore, if you take the huge amount of cash you just receive and use it to purchase more efficiently, or takes discounts on supplier invoice payments you make your total cost of capital goes down. And, another point, if you are in a competitive environment, (who isn't) does your ability to have unlimited cash flow put you steps ahead of your competition? We think it does.

There are a number of ways to finance your business. If your firm has A/R assets and you are challenged by the timing in which money flows through your business then consider the benefits of account receivable financing. Speak to a trusted, credible, and experienced business advisor on this popular financing tool for small business financing in Canada.

Does Your Business Need Funding? Consider a Business Finance Loan

Many businesses, no matter if they are huge businesses with thousands of employees or just yours where the chief cooks and bottle washer is you, eventually will need to speak to lending agents with regard to outside funding. This could be due to a need to suddenly higher a whole group of employees, it could be to update business processes, most often computers; it could even be to build and develop a full-scale training facility on open land. Regardless, with things like these you really need to look at a business finance loan.

The business finance loan it should be noted can be use for almost anything so long as it is related to the business. One thing to consider is that with the current financial uncertainty bigger business and more established business may get preferential treatment when it comes to these loans as opposed to the small business owner that has only been in business for two or three months. That being said, if you are that small business owner and you shouldn't let this fact deter you. It simply means that you're going to have to be more organized and faster than your competition.

Also, the a successful business finance loan you're going to need to be very forthcoming with the way your business is being run and how profitable it is. What this means is that you're going to have or have had organized records that you can show. This includes not only profit and loss statements but also liabilities, credit reports, and other financial statements. Also, you will need to be able to answer your lenders questions quickly and easily. What this means is that if you've never done it for you may want to practice in front of a mirror or with a friend so that you're not nervous when it comes time to apply for your loan.

Although this may seem strange, after all didn't we get over this high school? You're going to want to do this so that you get your best shot at getting your business finance loan. If it means you need to practice and run through the questions that you may be asked then do so! The key here is to be better prepared than anyone else that may be looking for the same amount that you are. Never forget, that there is only so much money that goes for you to be able to seize the opportunity when it presents itself

Proven Tips For Business Finance - Part I

If you want to safeguard your business' failure, you must learn the different ways of business finance, how to conserve cash and bookkeeping, and how to raise funds. You will not be able to succeed in your venture without sufficient funding. Following is a brief rundown on how to ensure your success by taking care of the finances in the most efficient manner.

Raise More Fund Than You Actually Need
Before you start a new venture, it is very important for you to understand that you more or less get only one chance to raise fund. Therefore, you have to be very careful about what you need, what your sources are, and how much money will be sufficient. You are strongly recommended to arrange more funds than you actually need. This extra amount should go to your emergency fund. For example, you calculations may prove to be wrong at a later stage and then you may find it very difficult to arrange business finance a second time. That extra funding will be a great help in such cases. Always remember, your business propositions may become unviable if you carry on with figures that are too conservative. So, plan accordingly.

There Are Better Alternatives Than Bank
Depending upon your actual needs and requirements, there can be several alternatives for raising funds that may prove to be much better and cheaper than bank financing. Therefore, you must thoroughly research your requirements first, such as how much amount is needed for your business and for how long. For example, if you need it for a short period of time, re-mortgaging your house will be a bad idea. Likewise, renting and leasing options can be more suitable if fund in needed to support equipment purchase.

Keep Your Financers Informed With Your Business Plan And Progress
When it comes to business finance, it is also very important for you to inform all the parties involved in the venture with the latest updates about your plans and how things are progressing. The idea is to get a good understanding of the needs of the people associated with your business in some way or other. If you keep them in dark, you will have a very tough time running your business operations smoothly and successfully. On the other hand, if your banks and financers are thoroughly updated with the latest happenings and developments, they will be more sympathetic to your needs.

You are also recommended to stick to set procedures, especially when it comes to chasing debts. There are several other tips as well about business finance, which I will explain in the next part of this article. For example, I will walk you through the various ways on how to deal with cash shortage - after all, cash is king for any business. So, do not forget to check out back.

7 Critical Business Financing Mistakes

Avoiding the top 7 business financing mistakes is a key component in business survival.

If you start committing these business financing mistakes too often, you will greatly reduce any chance you have for longer term business success.

The key is to understand the causes and significance of each so that you're in a position to make better decisions.

>>> Business Financing Mistakes (1) - No Monthly Bookkeeping.

Regardless of the size of your business, inaccurate record keeping creates all sorts of issues relating to cash flow, planning, and business decision making.

While everything has a cost, bookkeeping services are dirt cheap compared to most other costs a business will incur.

And once a bookkeeping process gets established, the cost usually goes down or becomes more cost effective as there is no wasted effort in recording all the business activity.

By itself, this one mistake tends to lead to all the others in one way or another and should be avoided at all costs.

>>> Business Financing Mistakes (2) - No Projected Cash Flow.

No meaningful bookkeeping creates a lack of knowing where you've been. No projected cash flow creates a lack of knowing where you're going.

Without keeping score, businesses tend to stray further and further away from their targets and wait for a crisis that forces a change in monthly spending habits.

Even if you have a projected cash flow, it needs to be realistic.

A certain level of conservatism needs to be present, or it will become meaningless in very short order.

>>> Business Financing Mistakes (3) - Inadequate Working Capital

No amount of record keeping will help you if you don't have enough working capital to properly operate the business.

That's why its important to accurately create a cash flow forecast before you even start up, acquire, or expand a business.

Too often the working capital component is completely ignored with the primary focus going towards capital asset investments.

When this happens, the cash flow crunch is usually felt quickly as there is insufficient funds to properly manage through the normal sales cycle.

>>> Business Financing Mistakes (4) - Poor Payment Management.

Unless you have meaningful working capital, forecasting, and bookkeeping in place, you're likely going to have cash management problems.

The result is the need to stretch out and defer payments that have come due.

This can be the very edge of the slippery slope.

I mean, if you don't find out what's causing the cash flow problem in the first place, stretching out payments may only help you dig a deeper hole.

The primary targets are government remittances, trade payables, and credit card payments.

>>> Business Financing Mistakes (5) - Poor Credit Management

There can be severe credit consequences to deferring payments for both short periods of time and indefinite periods of time.

First, late payments of credit cards are probably the most common ways in which both businesses and individuals destroy their credit.

Second, NSF checks are also recorded through business credit reports and are another form of black mark.

Third, if you put off a payment too long, a creditor could file a judgement against you further damaging your credit.

Fourth, when you apply for future credit, being behind with government payments can result in an automatic turndown by many lenders.

It gets worse.

Each time you apply for credit, credit inquiries are listed on your credit report.

This can cause two additional problems.

First, multiple inquiries can reduce you overall credit rating or score.

Second, lenders tend to be less willing to grant credit to a business that has a multitude of inquiries on its credit report.

If you do get into situations where you're short cash for a finite period of time, make sure you proactively discuss the situation with your creditors and negotiate repayment arrangements that you can both live with and that won't jeopardize your credit.

>>> Business Financing Mistakes (6) - No Recorded Profitability

For startups, the most important thing you can do from a financing point of view is get profitable as fast as possible.

Most lenders must see at least one year of profitable financial statements before they will consider lending funds based on the strength of the business.

Before short term profitability is demonstrated, business financing is based primary on personal credit and net worth.

For existing businesses, historical results need to show profitability to acquire additional capital.

The measurement of this ability to repay is based on the net income recorded for the business by a third party accredited accountant.

In many cases, businesses work with their accountants to reduce business tax as much as possible but also destroy or restrict their ability to borrow in the process when the business net income is insufficient to service any additional debt.

>>> Business Financing Mistakes (7) - No Financing Strategy

A proper financing strategy creates 1) the financing required to support the present and future cash flows of the business, 2) the debt repayment schedule that the cash flow can service, and 3) the contingency funding necessary to address unplanned or unique business needs.

This sounds good in principle, but does not tend to be well practiced.

Why?

Because financing is largely an unplanned and after the fact event.

It seems once everything else is figured out, then a business will try to locate financing.

There are many reasons for this including: entrepreneurs are more marketing oriented, people believe financing is easy to secure when they need it, the short term impact of putting off financial issues are not as immediate as other things, and so on.

Regardless of the reason, the lack of a workable financing strategy is indeed a mistake.

However, a meaningful financing strategy is not likely to exist if one or more of the other 6 mistakes are present.

This reinforces the point that all mistakes listed are intertwined and when more than one is made, the effect of the negative result can become compounded.

What Mom Didn't Teach You About Working Capital Business Financing

If you're like most of us Mom never really gave us a lot of advice on working capital! That's why for such an important business financing subject we recently wrote on an older article in Canadian Business magazine that covered a total of 15 - yes that's 15 ways) to finance your business. Perhaps these were the secrets of the Holy Grail that Mom never taught us, we thought?

The reality was that we had some strong comments and additional information on those 15 items, and we commented on 7 of them in the last article. Let's cover off those final items and hopefully get some real value on what Mom never told us about these things!

Under the category of ' government programs' the article talked about various federal and provincial programs or initiatives for business financing. Mentioned was the Community Futures program as well as the Canadian Youth Business Foundation. These are very narrow and segmented programs, in the case of the Youth Foundation, guess what, you have to be a youth, which hardly suits most business owner's.Community Futures programs have tended to be rural in nature, have ad minimal funding allocated to them, and seem to have focused primarily on start ups that might generate employment.

Secondly, Mezzanine debt was referenced. This is of course essentially an unsecured cash f low loan provided by private finance firms. In many cases it focuses solely on cash flow as the repayment vehicle. The bad news on mezzanine debt is that it typically is available for transactions in excess of 5 Million dollars, which certainly doesn't work for most small and medium business owner's.For the record mezzanine financing rates are in the low to mid teens.

Private equity was out third source of capital. Typically these funds are provided by niche Canadian and U.S. private firms who focus on equity and convertible financing instruments that force the business owner to give up partial ownership.This isn't necessarily a bad thing if you get the working capital and business financing that you need, but you should absolutely be prepared to give up some ownership on these transactions, which are often quite substantial and take several months, if not longer, to complete.

Hey, let's go public and have access to unlimited sources of capital. That's the typical pitch made to Canadian corporations who consider this type of financing. The reality is that a true IPO listing on the TSX or Venture exchange in Canada requires a significant capitalization and track record. Ownership becomes diluted, and companies are forced into very strong levels of reporting and disclosure. Many of our clients have ' gone public' via reverse take overs of shell companies that had a listing, we have never seen this work satisfactorily, at least from a viewpoint of giving them unlimited working capital.

The Canadian Business article focused on the federal SRED program. Finally! A good one! An absolutely great program that provides billions of Dollars of capital for any firm in Canada that qualifies for research spending and adheres to the program guidelines. Sred claims can also be financed, similar to a receivable, as soon as they are filed, that supercharges the program even more from a working capital perspective.

VC money is often bandied about and sought by many corporations. Venture capital in Canada is struggling in the 2010 environment, any fundings seem to be going to firms that have been previously funded, and are getting additional capital (to stay alive?). Any Venture capital firm expects a high rate of return relative to the risk they are taking in financing your firm on an equity basis - in fact traditionally, as the article stated, the venture capitalists are looking for a 5 times return. Unfortunately for many Canadian business owners these types of fundings go to the sexier industry segments such as biotechnology, high tech, etc.

Well, that's it. Hopefully we haven't sounded too negative, but the general trend clearly are that the ' 15 ' options outlined in the original C B article clearly need to be grounded in a bit more reality for the average Canadian business owner and financial manager seeking capital. Speak to a trusted, credible and experienced business financing advisor who can provide you with an up to date realistic alternative on business funding.

Bad Credit Personal Loans

For someone with Bad Credit Loans, getting a loan can seem impossible. There are no credit check loans out there, however, that can help a person with bad credit get the money they need.


However, finding a no credit check loan is not easy. In addition, there are a lot of scams out there regarding no credit check loans. Before you decide to sign a no credit check loan, you should get to know more about them.


A no credit check loan may seem ideal. If the lender does not check your credit then you will never know that you are a liability. Of course, the lender is well aware of the risks they are taking. That's why most no credit check loans are set as if Bad Credit Personal Loans. The loans come with high interest rates and often require a co-signer.


Lenders are aware that the no credit checks are probably going to get applicants who have bad credit. People with good credit will just go get a traditional loan because the loan terms are better. With a no credit check loan the bank will set the conditions to be a great interest and usually a short recovery time.


They can also be especially critical of your finances, including the amount of income you make per month and average monthly expenses. They want to make sure you can afford the loan payment.Bad Credit Personal Loans


One of the No Credit Check Loans more popular is a payday loan. This type of loan is a short term loan, usually no more than two weeks. This is basically an advance on your salary. The lender will look over your recent pay stubs to determine the loan amount. With these loans, however, the interest rate is usually very high, much more than a traditional loan.


When you are shopping for a loan with no credit check, it is important to consider a few different places. Shop around and try to find the lowest interest rate and best terms. Do not settle for the first lender offering the loan. It is important to note that the higher the interest rate, the more you will pay in the end.


No credit check loans can be a lifesaver for someone who needs extra money but has bad credit. They are not a good idea for someone who has good credit, since the alternatives are much better. A no credit check loan should be used responsibly and handled as you would any other extension of credit.


Always read all information given to you by the lender to make sure you fully understand the terms of the loan. No credit check loans typically have many fees associated with them, along with the high interest rate. You do not want to end up paying too much for your loan.

Business Finance for Growth

The ultimate aim of any commercial business is to generate profit, and in most cases, this means that it will need to grow. Economies of scale mean that a larger company is able to have lower costs per unit and therefore can offer more competitive prices than a smaller business could. Growth requires investment in infrastructure and in equipment, and finding business funding to cover the cost of expansion is an important part of the business strategy.

By obtaining finances from a specialist business bank, a company can get access to the additional resources that they need to fund growth. Such funding is structured, and repayments can be built into the expansion plan. This means that the company can manage its growth as effectively as possible and be able to achieve its long term goals more quickly.

The bank will want to know as much as possible about your overall plans, and you may be expected to provide security against the borrowing. For smaller firms, this may mean that the assets of the owner are used as collateral.

Obtaining business finance from a bank is a relatively straightforward process. The bank will want to know as much as possible about your business and your goals so that they can put together the best possible lending package to meet your needs. With this in mind, it is important when approaching your business bank about borrowing money that you are clear about what your goals are, and how you plan to achieve them.

Detailed plans of how you are going to spend the money is vital, and it is important to bear in mind any possible negative issues which may impact on your plans and build a contingency plan so that you have a cushion of funding in place to cover your needs.

Business Finance - Do You Need Huge Capital to Start Your Business?

I was having this conversation with a business coach colleague yesterday. She deals with a lot of business owners, especially those starting out and those experiencing rapid growth. She'd been doing some research and one article she read suggested that a major reason that businesses fail is because of a lack of capital. This got me thinking about how people fund their ventures and whether they need a lot of capital to start their own business.

To be honest this really depends. If you are a product based business obviously you will need capital to invest in product but, if you were to start a service based business, you can often times get your business started with little or no investment plus time. You will need some capital though and there are some options available to you:

Friends and Family- Many people look to family and friends to fund their business ventures, especially if the funding required is small. Family and friends will generally offer you generous repayment terms on your business loan but make sure everything is done professionally. You don't want to ruin relationships with friends and family for the sake of a few dollars. Also, if you get money from family and friends, make sure you allow them to share in your business successes.

Business Credit Cards- Business credit cards are another popular option that people look at when they aim to grow their business. Business credit cards can help with cash flow and, if you pick the right card, you can sign up to a rewards program and get points that can be redeemed for flights, accommodation or a variety of other rewards that may be useful to you. These rewards can be a pleasant little bonus for all of your hard work.

Investors- If your business idea is groundbreaking, or if your business plan is solid, you may be able to pitch to investors and get some investment in your company. If you expect rapid growth or you have a ground breaking product, then this may be the option for you. The problem with investors is that you may lose some of your decision making power as you give away part of your business to an investor.

At the end of the day, the most important factors for business success are clearly defined goals, the dedication to achieve them and then a marketing plan that will get your business in front of people. If you do need business finance there are options available to you. I have outlined three of these above.

Changes For Business Finance and Working Capital Loan Programs

As business owners develop their small business loan plans for future financing and refinancing throughout the United States, there is an increasing awareness that there have been significant business finance changes that cannot be ignored. Some of these measures are likely to end up being permanent, and even the temporary commercial mortgage loan and working capital loan changes are expected to be in place for an extended time due to the severity of the current financial climate.

A reduction in commercial lenders as well as stricter standards for acquiring commercial loans and commercial mortgages has been the net result from business finance changes. Unfortunately there has also been no shortage of misinformation about the availability of commercial funding.

A significant reduction in business lending activity overall is perhaps the most dramatic change. This has been due to several events occurring almost simultaneously. Several major commercial lenders have gone out of business altogether. Many banks have stopped commercial finance lending while continuing consumer lending. Numerous business lenders have enacted stricter standards for the commercial financing transactions they are still willing to consider.

It remains to be seen how many changes will be permanent or temporary. But from a practical perspective, commercial borrowers are left with no choice but to adapt to the changing business finance environment. Business owners must be prepared to operate within a more complicated climate for commercial mortgage loans and small business loans regardless of how long the changes might be kept in place.

What should borrowers do about this? A primary option that business owners should explore involves looking beyond their local market area for help with commercial loans. To accomplish this, it should be helpful to contact a commercial financing expert operating throughout the United States.

In addition to fewer business lenders to choose from, there are two other significant changes which must be anticipated by business owners before seeking new commercial loans. First, more collateral for virtually all business finance funding is being demanded by many commercial lenders. Second, most lenders have cancelled or are about to eliminate unsecured lines of credit (usually called working capital loans) for many businesses.

One effective commercial financing strategy for overcoming the combined obstacles of more collateral, fewer lenders and reduced unsecured credit lines is to consider business cash advance programs based on future credit card processing transactions. This is proving to be one of the few sources of business funding that has not been adversely impacted by recent events. To learn more, it will be advisable to discuss the potential with a business finance expert who can provide advice about business cash advances as well as other small business financing solutions.

It is increasingly obvious that many banks will continue to modify their business lending programs in response to changing conditions. This means that another key change issue for working capital financing and commercial mortgages is the likelihood that more changes will be forthcoming in the near future.

To adequately prepare for future commercial finance changes that might (or might not) occur is a daunting task for a business owner. A commercial financing expert familiar with Plan B contingency financing for small business loans will prove to be a valuable resource for any borrower wanting to seriously deal with both current and future changes impacting the financial health of their business. By having a candid conversation with a commercial loan expert, business owners should be more capable of implementing an appropriate strategy for the vast changes which have recently occurred or are about to become effective for most business financing and working capital finance funding.

Business Finance - Seek and Ye Shall Find

I never miss the opportunity to have a major rant against our friendly neighbourhood banks and their questionable business practices - and events in recent years have only served to consolidate my opinion.

Take, for example, the scandal of Royal Bank of Scotland; in February 2009, they posted the largest annual loss in UK business history - £24billion. Now this may sound unreasonable, but with a Chief Executive (Sir Freddie Goodwin) who was earning a reported £4million per year, I would have expected a slightly better performance, even in these difficult times!

And now that RBS has now been taken into public ownership, guess who will ultimately be responsible for these losses - you and me! But it gets worse...what was Sir Freddie's punishment for such glorious failure - early retirement and a pension of nearly £700,000 per year, payable from the age of 50!

Let's get this into perspective; with an average annual salary in the UK running at about £24,000 per year, it would take the average worker 29 years to earn the money that Sir Freddie will get in a single year - and he doesn't even have to get out of bed! Is it me, or does this stink of gross immorality? No wonder (at the time of writing) the Government is desperately looking for ways to cancel this pension arrangement.

And it gets worse - in the UK, the Enterprise Finance Guarantee Scheme is a new government scheme to guarantee up to 75% of any loan that a bank makes to a business. It is supposed to be available to businesses that do not have enough assets to offer banks as security for loans, but recent reports from the Federation of Small Businesses (FSB) and the Forum of Private Business ((FPB) indicate that businesses are experiencing major difficulties accessing the scheme, with the banks being less-than-helpful.

This isn't too surprising; the previous scheme that the EFG has replaced, the Small Firms Loan Guarantee Scheme, faced the same difficulties for many years. The banks conveniently failed to market it properly and many small business-owners who would have benefited from it were not even aware it was in place. Those who did were often made to jump through endless hoops in order to access it. But let's be clear, the Government has backed the EFG to the tune of £1.3bn and so if you are a small business owner looking for finance, don't be afraid to interrogate your Bank Manager about the scheme.

EFG is actually part of a package of Government measures called 'Real Help With Finance,' designed to assist businesses in accessing financial assistance. Other measures included in the package are:

  • A £10bn Working Capital Scheme, securing up to £20bn of short term bank lending to companies with a turnover of up to £500m.
  • A £75m Capital for Enterprise Fund (£50m from Government augmented by £25m from the banks) to invest in small businesses which need equity.

Of course, these all sound great, but, as the experience with EFG shows, the reality for most small and (especially) micro-businesses trying to access these funds may be frustratingly different. Still, knowledge is power and its worth knowing about all the potential options available if you are seeking business finance.

Raising business finance is not easy at the best of times and in the current economic climate, it is becoming increasingly difficult. But, as with all things in life 'difficult' doesn't mean 'impossible' and if you have a strong, viable business or business idea, you should succeed even though you now have to work a little harder.

Business Finance Source and Business Finance Start Up

A business finance source is a way a business can obtain funding, either for start-up or operating expenses. There are many different types of sources, including sales, loans, and investors. Each has different terms, benefits, and disadvantages. Business owners tend to use two or more different sources in order to fund their business.

Business finance sources fall into two main categories: internal and external funding. Internal funding comes from the profits made by the business by sale of products or assets. External funding comes from lenders and investors. The most common external finance sources are loans. Short and long-term loans require borrowers to repay funds at an interest rate for a set period of time. Overdraft loans allow a borrower to spend a certain amount of money, and the lender charges interest on the overdraft amount. Debentures are loans that let business owners pay off all loaned funds at a specified time at a set interest rate.

Before deciding which method is best for a company, business owners should consider a variety of factors. The cost of the business finance source usually is the most important factor considered. Owners look at the interest rates and payment plans to determine the profitability of obtaining a certain funding source. Businesses that have a history financial stability may want to consider an internal source of revenue before opting for an external source. It's also important to determine how long the business will need additional funding. A short-term loan would be best for projects that would only take a short time to complete.

Business finance start-up generally refers to the cost to start a new business. It includes determining, calculating, and obtaining start-up costs, as well as managing those finances effectively to ensure the profitability of a new business.

The first steps to business finance start-up are to determine and estimate the amount of funds needed to open a business. These start-up expenses may include one-time fees, such as permits and licenses needed to operate the business. Initial costs may also include ongoing fees, such as rent and utility payments. Business owners usually only include the necessary expenses when determining the total cost to start-up. In order to estimate the amount of funds needed for the business, owners should set up worksheets that list each expense and how much it costs.

Once a business owner has an idea of how much it will cost to start a business, he or she can research the different business finance start-up options available. Most start-up funding comes from loans, which are provided by banks, the Small Business Administration, and other financial companies. These loans are usually based on debt financing and vary in amount of funding, interest rates, and terms of repayment. Family, friends, investors, or venture capitalists can also provide start-up financing based on equity. Federal grants are an additional option for non-profit businesses. Unlike most financing, grants do not have to be repaid, but they usually have strict requirements in order to obtain these funds.

Business Loan Funding - Financing Your Business Growth

There are many people want to own a business. It might be a small business or big and some people also need some financial funding due to lack of funds. If your business suffers from not having enough capital or your business has experienced growing pains due to lack of money, then you need to have a business loan funding.

Some people need some operating capital and you need to have a loan in order for your business to succeed or grow but that is not easy. Since if you have a business loan funding from the bank, then you need to meet the requirements and the documents needed by the bank such as business and personal financial statements, reviews of the financial records and credit reports of the business to determine eligibility for funding and others.

Since a business loan funding refers to money obtained through a business loan, the banks and other financial companies offer loans to small business for start up or operating expenses and with regards to the terms of application requirements, interest rates, loan amounts and repayment plan, which need to be, discussing between the borrower and the lending institutions. Every financing institutions or banks have different requirements to their clients depending on the business loan funding you applied.

There are banks or financing institutions who offer their clients extremely effective tools to assist owners and managers with great growth and decision making for their business which is part of their services. Before having a business loan funding, be sure you have a business plan to present which is profitable enough to pay your loan.

The plan you have includes information on what your business does and the target market where you can reach the customer. You must indicate why people need your products as well as your services. You also include the marketing plan and analyses to help convince your lender s that you will able to repay them. Show also your return profit and your budget for the business you want to have.

Knowing that the main source of business loan funding are the entrepreneurs own pocket and next are the banks and credit unions although some financial institutions offer business loan funding program just to help the small business or other business who need some funding for their business. Most of the business loan suppliers such as bank for example; they are becoming conservative in their evaluations of prospective business loan clients.

Especially for the new businesses, it's hard for them finding business start up funding since you need to put together an attractive business funding proposal, meet the lenders expectations and increase the chances of securing the business financing need.

So the credit personal history is one of the most important things you need to take care since most financial institutions or banks will carefully scrutinized your personal financial history and as well as the asset you have as for collateral if they will asked. Take note, Banks and other financial institutions or other credible lending sources want a guarantee for the money you lend and most likely the guarantee is usually at least the value of the loan or might be greater the amount of the loan you applied.

Banks or other financial institution always wants to be sure that their money you borrowed will be return and with interest since the interest is where they gain their profit; although there are also financial institutions who risk lending you money for your additional capital or starting up due to your good credit history and personal financial capability.