Starting Your Business - Financing

Articles:

Top 10 Tips for Bootstrapping Your Startup

"How much money do you need?" This is the question that entrepreneurs are so often asked. The better question is "How little money will get you going?"

How to Get SBA Microloans for Your Business

7 Best Ways to Bootstrap Your Business

1. Work from Home. Setting up a fancy office is a real temptation to show the world, and to make yourself feel, legitimate.

Depreciation Methods for Startup Businesses

When starting a business there are many aspects that need to be initiated. A company must come up with their product or service.

How to Get Start Up Business Credit

If you're looking to learn more about start up business credit, then you've come to the right place. Here, in this article, you'll learn first why you should use business credit to your advantage.

How To Really Finance A Start-Up Business – 3 Simple Ways

If you have been in the market recently seeking some type of financing for a new, start-up business, you are probably a little frustrated by now.

Business Startup - 3 Critical Business Financing Mistakes to Avoid

If you were to start committing any of the following 3 business financing mistakes too often, you would greatly reduce your chances of long-term business success.

Different Types of Small Business Loans

When defining the term small business loan, it is important to understand the definitions of both a small business and a loan.

Private Investors, Angel Business Capital and Why You Need Them

Business Funding Loans Microloans

Microloans are a great way for small business owners to open up their own business. If you only need a few thousand dollars to get started this is a great option for you.

SBA Loans and the New Small Business Bill

Near the end of September 2010, President Barack Obama signed a Small Business Bill into effect. The new bill set aside $30 billion for small business lending.

Five Tips for Bootstrapping Success

Starting a business with next to nothing might seem an ideal - an impossible dream, but people have been there and done it successfully.

Small Business Loans For Veterans - Start a Small Business With Patriot Express Loans For Veterans

If you are a veteran and wish to start your own business , then you must follow the patriot express loan offered by the president Obama that consists of various programs of Small Business Loans For Veterans for the needy people.

Steps to a Small Business Loan

Getting a small business loan is relatively straightforward. Like any other loan- car, home, etc., it comes down ability to repay, ability to collateralize, and creditworthiness.

Jump Start your Business with a Business Loan

Planning on starting your own business? Have been thinking about quitting your day job and focus on your own business instead? Therefore, what hinders you from executing your plan?

SBA Business Loans

The U.S. Small Business Administration (SBA) was originally founded in 1953 as an independent agency of the federal government to Aid, counsel, assist and protect the interests of small business concerns, to preserve

free competitive enterprise and to maintain and strengthen the overall economy of the United States.

Short and Long Term Loans for Small Business

If you are a entrepreneur and planning to get a fund for your business, here is another option to consider, the term loans. In this article, learn about term loans as we discuss to you the basic points about term loans for small businesses.

Starting a Business with No Capital--Do You Have What It Takes?

What Kind of Capital Do I Need for My Business?

Business Start Up Funding Silver Bullet

Startup Your Business With A Business Loan

t is not necessary to wait until you have a lot of money to start up your business. The time is now.

The Evolution of Financing a Small Business

For years I have read the popular business magazines, all having so called experts write articles for entrepreneurs on how to finance their business. "The top 10 strategies for financing your start-up", "How the SBA can help your small business", "Personal credit is the key for entrepreneurs" and so on. In most cases I'm willing to bet those writing these articles are journalists that have never had a successful start-up. How can I come to that conclusion you may ask? Because of the bad advice they give.

Great Ways to Cut the Cost of Starting Your Franchise Business

One of the reasons a franchise business has such a high potential for success is because of all that's included in the initial cost. In some cases, the start-up cost is the same (or very close) to building a business from scratch but without all the benefits such as established name recognition, target market
research and existing publicity campaigns.

The A2Z of venture capital fundraising

If you are new into the world of business, then you might have heard of venture capital fundraising. But most people have little or no information about venture capitalists. There are a lot of misconceptions about the whole thing.

6 Ways To Fund Your New Business

Here are a few of the most common ways to finance a new business. All methods have pros and cons and some (or most) may not work for a specific situation. In any case one must always thoroughly investigate the ups and downs of any new venture before jumping in it with both feet.

Tips to Apply Successfully for Funding

Let’s face it, if you don’t have a proven track record or some notable credit worthiness, it is tough to get financing. Risk factors and high costs of servicing small accounts are the major reasons for banks and financial institutions to stay away from people who don’t have a good credit history.

Top 10 Tips for Bootstrapping Your Startup

By William Keyser

Can you halve the number you first think you need?

"How much money do you need?" This is the question that entrepreneurs are so often asked. The better question is "How little money will get you going?" All too often, huge amounts of energy are devoted to building a plan to fund the startup, rather than starting right away.

The sooner you get selling, the sooner you'll know how customers react. They will almost do the planning for you. Better still, sales produce cash. Cash can provide funding for the next steps.

Can you start sooner than you think?

"I will start the business when the time is right." How often have you heard that? The so-called right time, they suggest, is 'when the economy recovers', 'when the prototype is perfect', 'before the new season starts', and most frequently, 'when I have got the money together'.

The trouble is that the time will never be better than now. That is because you don't have a business until it has revenue. Cash flow will be a huge factor in business success. Being able to at least cover the costs will mean that the business can survive another day. Another day will give you the space to survive till the economy does recover, perfect the prototype, the new season does start, or whatever the reason for delaying the start has come to pass.

Bootstrappers Top 10

Pulling your business up by the bootstraps is not the easy way out, but these top 10 tips will help you avoid delay:

Sell like a hustler; nothing beats revenue for keeping your need for finance down;
Manage your cash like a miser; count your dollars daily; do not accept late payments and offer discounts for same day settlements;
Watch your costs like a hawk; if you don't spend a penny, you don't need to raise one;
Buy like a pro; get every discount going and lease rather than buy-it spreads the cost;
Offer services like a consultant, before your product is ready; it costs nothing to make;
Get paid electronically like a geek; cash arrives faster;
Camp like a Bedouin-use minimalist office space, like a branch of McDonalds with wifi;
Arrange finance when it's not needed, like Noah; it's easier than when the cash runs out;
Hire virtual staff, don't take on payroll-avoid commitment, use them like a faucet;
Share resources like a commune; expensive equipment costs money when it's idle.

You're going to change the world, so make sure you keep dreaming; you need to know where you're going, so keep the data flowing; remember that without dollars you're not in business, so if in doubt, sell; it'll never be like you think, so be prepared to be dogged-and spend as little as you can.

About the Author:

William Keyser, a veteran entrepreneur, is Managing Director of Venture Founders LLC: How To Start a Business. Startup Owl offers a wealth of free information and advice to would-be and early stage entrepreneurs.

Will is a veteran entrepreneur with VC experience and he is committed to help business startups to: clarify their business purpose; sharpen their business model; better their business plan; speed their market entry; offer customer value; finance their business right; grow their business strongly; survive their business challenges-more effectively than they might do on their own.

Will has taught strategy on an MBA program for several years, and serves on non-profit boards.

Article Source: EzineArticles.com

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How to Get SBA Microloans for Your Business

By Lin Jenkins

Each year the Small Business Administration backs more than $15 billion in small business loans. In addition, they also assist with billions of dollars in business disaster loans, and also help business owners secure federal contracts. Note that the SBA does not usually loan directly. Instead, they back loans which are administered through non-profits and banks throughout the United States. Interest on SBA loans is limited by the specific program at a maximum rate above prime. As these rates are subject to change, it is best to visit SBA.gov or speak with your local SBA district office to get the most current information on rates. Note that the SBA prohibits your lender from charging you processing fees, application fees, points or origination fees when applying for any SBA program.

Startups and small businesses in need of working capital may be eligible for SBA microloans. Under this program, the Small Business Administration makes loans to local non-profits who in-turn make loans to business owners seeking $35,000 or less in funding. These loans are administered like a line of credit. Although business owners may not use the funds to pay existing debt, they may use a microloan for working capital, purchase of equipment, or supplies. Although specific to the non-profit that is issuing the loan, there may be an additional requirement for the business owner to attend training on how to appropriately use the loan. Additional resources such as help with bookkeeping may also be available, so be sure to ask.

Eligibility

SBA Microloans are not available to every business. The typical profile is the startup business owner that would not otherwise qualify for a bank loan. Such as a first-time borrower, an individual with a lower credit score or someone with little collateral.

How to apply...

Business owners should contact their local district office of the SBA to inquire about sources of SBA Microloans in their area. Visit: http://www.sba.gov/about-offices-list/2

What if you do not qualify...

If you do not qualify, seek alternative options for getting your business funded. You may qualify for other SBA programs, bank loans, or social funding programs. If your business is involved in exporting goods from the US to overseas destinations, be sure to ask your SBA office about alternatives as new funding programs have recently been established to encourage exports.

A great way to learn more about all aspects of business financing is to read up on the basics. Visit: http://www.smallbusinessloansecrets.com

About the Author:

Lin Jenkins is a frequent author of business articles, and owner of Gold Alliance Group. Visit her site to read business tips articles or to buy ebooks online on a variety of small business topics.

Article Source: EzineArticles.com

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7 Best Ways to Bootstrap Your Business

By Linda Barnby

1. Work from Home. Setting up a fancy office is a real temptation to show the world, and to make yourself feel, legitimate. Resist the temptation unless a brick and mortar presence is absolutely essential. Keeping expenses low is a number one priority. Get the business going and profitable before taking on what is a back-breaking and very likely unnecessary expense.

2. Keep Your Day Job. A new business inhales cash for breakfast. Even the best estimates of your costs will probably be low. You simply cannot plan for every expense in advance. Your focus needs to be on the strategies and actions you need to be implementing - not on how you're going to pay your rent. Keep a steady, reliable income and your energies can be focused on growing your business.

3. Focus on ROI. Every expense needs to pass the litmus test of ROI. "Will this expenditure give me a desirable Return On my Investment?" This goes for your expenditures of time as well as money. After all, time is money.

4. Find Low-Cost Virtual Assistance. In running a business there are always tasks that you don't enjoy, you're not good at, or are not a good use of your time. Outsource these as quickly as your budget will allow and your business will grow faster. Find website designers, graphic artists, virtual assistance and other important support personnel on sites like Craigslist, AssistU and 99designs.

5. Get to Know Your Finances Up Close and Personal. Only finance majors love finances. Invest some time into understanding the key numbers you need to keep a constant and close eye on to know the financial health of your business. You can delegate bookkeeping and accounting chores, but look at reports of your key numbers, at a minimum, at the end of every month.

6. Utilize Social Media to the Fullest. Save your marketing dollars and reach your target audience via social media when you are first getting started. Advertising is another potentially cash draining expense with insufficient ROI. Get the word out via social media. Your only investment is time. And even better, you will be connecting with your target market, if you do it right, in a genuine and personal way, which is the most effective way to market your business.

7. Barter. You have skills that others could use. When funds are tight, you can stretch your dollars farther when you trade your services for the services you need. Bartering can be done informally or through barter exchange groups.

Are you in business just to make a living? Or is it your business to enjoy a great life? At http://NationalAssociationofEntrepreneurs.com, business is the vehicle to make life - and business - more fun! Won't you join us? Find out how to start a peer group of entrepreneurs where you live. http://theNAE.org

About the Author:

Linda Barnby is the "Head CEO Master Mind" and founder of the National Association of Entrepreneurs. She is a multi-business entrepreneur with diverse companies including a successful law practice, a real estate investment company and a non-profit association benefiting women and children.

Article Source: EzineArticles.com

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Depreciation Methods for Startup Businesses

By: Justin Hayes

When starting a business there are many aspects that need to be initiated. A company must come up with their product or service. A business plan must be created which can be implemented. Startup capital is necessary to get the fundamental equipment needed. Another aspect is the handling of accounting functions for the fledging business. There are many different aspects of accounting for a business one of which is depreciation.

Depreciation is the method of allocating the cost of an asset over its useful life. These assets can be the equipment that a new business will utilize to get started. Businesses depreciate assets for both tax and accounting purposes. Depreciation is shown differently between a balance sheet and a income statement.

Depreciation is represented on a balance sheet by an accumulated depreciation account. This is a contra asset and shows the cumulative total of all the depreciation expense that has been recorded for the asset since the organization first took ownership of the asset. Depreciation on a income statement is reported as a separate expense item. Depreciation is reported as a separate expense item because these expenses do not result in disbursement of cash.

Businesses can calculate depreciation through a variety of forms based on levels of activity, expected units of production or the passage of time. For the purposes of this discussion, this paper will focus on straight line depreciation and double decline depreciation.

Straight line depreciation is one of the most frequently used methods for calculating depreciation expense. To calculate depreciation using the straight line method one must first deduct a salvage value from the newly acquired asset. Once the salvage value has been subtracted one will divide the cost of the asset by the amount of years the asset will be considered useful. The result one achieves once the calculation has been completed will be considered the annual depreciation expense. This differs from the double declining method.

Double declining balance is a method of depreciation where during the early years of an asset there is a higher depreciation expense and therefore a lower net income. During the later years of the asset's life the annual depreciation expense using the double declining method will be less than the straight line method. When calculating the double declining method, it's initiated as straight line method and then the total percentage of the asset that is depreciated the first year is figured out and doubled. Each subsequent year, that same percentage is multiplied by the remaining balance to be depreciated. Each year of the life of the asset the double declining rate will be recalculated against the net value at the end of the previous year. Utilizing this method each year, the depreciation expense will be less than the prior year's for the remainder of the asset's life. The question startup businesses have to ask is what method or methods are preferable to their operation.

There are many advantages for a new organization to use straight line depreciation. One of the advantages is that calculating straight line depreciation is very easy because the asset is evenly expensed throughout its useful life. Therefore the company will use the same numbers for depreciation each year. This reduces the amount of work and time spent on the organization's financial statements.

Straight line depreciation is an advantage to organizations regarding income statements in the early years of an assets use. Straight line depreciation will have a higher net income in earlier years because the depreciation expense will be lower. This is advantageous for startup businesses that wish to show a higher net income in their first years especially in regards to promoting themselves to new investors.

Another item new businesses must focus on is forecasting. Organizations forecast by attempting to predict the future performance of a business, usually by looking at figures. By using straight line depreciation forecasting becomes much simpler. It is easier for the organization to look ahead as the asset is evenly expensed over time. There are taxation advantages in using the double declining method.

Double declining is often used by companies for tax purposes. Because the depreciation expenses are larger in the early periods of the asset's useful life, the tax savings are greater in the beginning of the depreciation cycle and the tax benefits come sooner. This can be a great advantage to a startup company as it will maximize tax refunds and minimize the amount distributed in cash to pay for additional income taxes. Some businesses will take advantage of both methods of depreciation.

Utilizing both methods of depreciation can be beneficial for organizations. A firm will use straight line depreciation for financial statements and double declining depreciation for taxation purposes. This will give a business both the ability to show the higher net income through straight line depreciation while taking advantage of tax benefits from the double declining method.

There are many different ways with differing benefits for startup companies to calculate depreciation. An organization must review all the available options and make an educated decision on what is best.

Article Source: ArticlesBase.com

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How to Get Start Up Business Credit

By: John Miller

Welcome. If you're looking to learn more about start up business credit, then you've come to the right place. Here, in this article, you'll learn first why you should use business credit to your advantage. After that, you'll discover the different options available to you as far as secured versus unsecured lines of start up business credit. So read on to discover more about how these types of start up business credit can help you when first getting established.

Why Use Business Credit?

First of all, you are probably aware that more than 50% of all businesses fail within the first five years. But do you know why they fail? The largest reason for business failure is an inadequate cash flow. That means that the businesses did not have cash available to them when they needed it. This is why it is so important to have a business line of start up business credit established. There will be times when you need access to cash on a short-term basis. This can mean the difference between delivering as promised or failing your customers when it comes to accessing a line of start up business credit.

Unsecured Lines of Credit

Your first option that you should shoot for is an unsecured line of credit. This means the bank does not require collateral in order to issue start up business credit to you. This is important because it can mean the difference between success or failure.

However, the bank may look at your personal credit history if you are a sole proprietorship. Indeed, you should have good credit habits already established when starting a business. You do not want to use an unsecured line of credit flagrantly. You should use it as a business tool for funding operating activities. If you're unable to establish an unsecured line of start up business credit, then you should look into secured options.

Secured Lines of Credit

A secured line of start up business credit is when you use collateral to establish the account. This means that the bank can feel safer that you will repay them, because you are risking something of value to you. If you do not pay, the bank can seize whatever asset you secure your line of start up business credit start up business credit with.

This should not be a problem for you if you intend to repay the bank as promised. In fact, by putting up your own collateral, you are more likely to use your start up business credit with a keen eye towards controlling expenses. That can help you begin making a profit as soon as possible.

So there you have it. You know now why you should use business credit. You also understand the difference between secured versus unsecured start up business credit. Finally, you know the advantages and disadvantages of each one. With this information, you can now properly fund your business for success.

About the Author:

I've been employed in the lending industry for several years. I write articles primary to assist and inform business owners of the variety of funding options available to them. I hope that by educating my readers, many will abstain from using personal funds and credit to fund their business, and search for corporate credit solutions instead.

Article Source: ArticlesBase.com

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How To Really Finance A Start-Up Business – 3 Simple Ways

By: Joseph Lizio

If you have been in the market recently seeking some type of financing for a new, start-up business, you are probably a little frustrated by now.

The thing is: Banks and most other non-bank or private lenders just do not lend money to start-up businesses. That is just the way it is.

They claim that the risk is just too high and their regulators or investors agree with them.

In fact, very few businesses last more than three to five years – the typical loan term for a standard business loan.

But, just like many businesses before you, there are ways to finance your new start-up:

First – always look to personal assets or personal means. Now, I know that you don't want to hear this but if you don't have any other choice and you truly believe in your business – then why not use your own assets or cash to get that business off the ground and making money?

You want a bank or lender to take a risk on you but you won't take a risk on yourself – just does not seem fair.

Plus, I can guarantee you this: If you have your own assets at risk you will work harder and longer to make sure your business does succeed (which is the end goal anyways).

Second – other bootstrapping means. There are many ways to bootstrap your business besides using your own personal funds or assets. You might look into:

Crowd funding – while this might not provide a huge amount of money, it might provide enough to get started. Once started, other financing avenues will begin to open up.

Friends and family loans – your friends and family know you best and if you can't sell your business concept and benefits to them then you will never be able to sell it to paying consumers. Even if your friends and family can't or won't invest in you, they may know of others who will – you just have to ask.

Micro credit lenders – backed by the SBA, these lenders provide more than just small amounts of capital – usually up to $35,000 with the average loan being around $13,500 – they also provide advice and guidance to help you better manage and grow your operation.

Third - Look to partners or investors. If your business concept is not in a huge market, has high and quick growth potential or has a lot of proprietary assets, then you will have to look locally. Get out and network in your community for other business owners or local investors.

You would be surprised at how many local or retired business owners just want to give back to their community and can provide more than just capital but can open up many other doors to you and your business. You just have to get out there and talk to everyone who will listen. And, don't be afraid to ask. If you don't ask, you will never get what you want!

While you might hear of others business owners landing some type of bank debt or professional investment to get their business started; also know that there had to be some outstanding circumstance or reason for it - like their uncle being the president of a national bank or as a favor to a well known family member or just simply that they have other sources of outside income that qualifies them for the loan.

The bottom line is that banks and other lenders just do not lend to start-up businesses.

In your early days, you really do have to go it alone. But, make it a challenge. Make it one of your goals to eventually qualify for that coveted business loan. This not only will help you financially manage your new business better (keeping items like cash flow, collateral, credit and debt ratios in mind) but, when you do get approved for your business loan, it will really let you know that your business has made it to that next level and on the right path to further success.

A true entrepreneur does not look at a failure to secure outside financing as a fatal obstacle to starting their new business but, in focusing on the long-term potential gains that business could provide, would easily utilizes these three steps and other self-funding means to get up and running as soon as possible.

As your business grows, more financing opportunities will open to both it and you – you just have to get started.

About the Author:

Joseph Lizio holds a MBA in Finance and Entrepreneurship, is the founder of Business Money Today, has a strong commercial lending background and is regarded as an expert in business and finance - specifically business loans and working capital.

Article Source: ArticlesBase.com

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Business Startup - 3 Critical Business Financing Mistakes to Avoid

By Keelan Cunningham

If you were to start committing any of the following 3 business financing mistakes too often, you would greatly reduce your chances of long-term business success. And to be a success in business you have to think long-term. Track record and reputation in business is earned over time. A good business track-record is largely judged on financial success and financial success in business is assessed largely through the examination of business accounts. Good business accounts demonstrate to banks, financiers, colleagues etc., that you are a bankable business person and will lead them to put their faith and money into you and your business ventures.

By not committing any of the following 3 business finance mistakes you will, at the very least, have good financial indicators and be able to respond to the businesses financial position in time. The key here is to understand both the causes and significance of each.

Business Financing Mistake # 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. In a word, your business is doomed if you are not doing monthly bookkeeping.

Bookkeeping services are dirt cheap compared to most other costs a business will incur. Bookkeeping should be done on a monthly basis along with Management Accounts so that your financial records are always up to date and you can view the financial status of the business (Profit and Loss, Balance Sheet etc.,)

Once a bookkeeping process gets established, the cost and time involved usually goes down. 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 Mistake # 2 - No Projected Cash Flow & Budget

Having no meaningful bookkeeping creates a lack of knowledge on where you are. And having no projected cash flow and budget creates a lack of knowledge about where you're going.

Without keeping score, a business tends to stray further and further away from its targets and, invites a crisis that eventually forces the business to change its monthly spending and cash-management habits.

A projected cash flow first and foremost needs to be realistic. You should project both a best-case and worst-case scenario based on projected sales and business expenditures. It’s a good idea to aim for the best-case scenario but know how the business would respond should the worst-case scenario transpire.

Business Financing Mistake # 3 – Inadequate Credit Control

There’s nothing worse than making sales, doing the work, sending your customer an invoice and then not getting paid on time…or worse still not getting paid at all! It’s a well-established fact that the longer a debt isn’t collected the less chance it will be collected. Typical credit terms in most established business are 30 days. However, due to a culture amongst some customers of paying late and small business not operating strict credit control, a business can often not get paid on time and fast run out of cash. So how do you avoid this? Well, there are numerous steps you can take but the following 3 steps will help ensure you always get paid…and paid on time.

1. Appoint someone in the business to be in charge of credit control. It’s vital that someone is responsible for sending out invoices and statements; reminding the customer that payment is due, handling queries on invoices etc.

2. Reinforce your payment terms and conditions on your contracts, on your website, on your invoices etc. It’s important that customers are aware of your payment terms and the consequences of late payment (cessation of service, interest charges etc.,)

3. Send your invoices on time and include a statement of the account with each invoice. If you don’t send your invoice out at the end of each month how can you expect to get paid before the end of the following month.

In a world of tightening credit from banks, strict business finance practices are required even more. You can’t expect your bank to extend your overdraft or facilitate a term loan if you are guilty of any of the 3 above financing mistakes.

About the Author:

There’s so much more to business finance and money management than I have covered in this article that I could write a whole book on it! But for the moment if you are starting out or taking over the running of a business and are experiencing working capital or cash-flow difficulties than I would first start investigating these 3 key areas and see that they are being managed diligently. If you do this, than many of your cash-flow difficulties will begin to disappear and your business finances will improve.

Article Source: ArticleRich.com

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Different Types of Small Business Loans

By David Castro

When defining the term small business loan, it is important to understand the definitions of both a small business and a loan. In the United States, a small business is defined as a privately or independently owned and operated business that employs less than 100 people. And a loan is defined as something furnished on condition of being returned. Therefore, a small business loan is something furnished to a privately owned business with less than 100 employees that must be returned.

That being said, there are many different types of small business loans, various ways in which a small business loan can be acquired, and a small business loan does not have to be lent through a bank as many may have been be misled to believe.

One of the most popular types of small business loans are SBA loans, loans that are distributed through private lenders such as banks, credit unions, etc., and are backed by the Small Business Administration. Since banks are usually the lenders of these loans, they typically come with strict requirements including excellent credit scores, collateral, and fixed monthly payments. These requirements are to ensure that the borrower holds up his/her end of the deal, and repays the loan in a timely manner. A small business owner who has excellent credit, collateral, and a well thought-out and put together business plan and presentation may be able to receive a sufficient amount of money through an SBA loan.

The SBA also backs micro-loans which may be easier to obtain, but the maximum micro-loan amount is $35,000 and the average SBA micro-loan amount is only $13,000.

Another type of small business loan that many business owners may be unaware of is equipment leasing. As implied earlier, a loan does not have to be given and/or received in the form of money. Instead of providing small businesses with the funds to purchase equipment, equipment leasing companies actually supply the equipment. Small businesses can rent the equipment, and return it, and they may also be given the opportunity to eventually purchase the equipment.

As bank lending practices tighten and business owners move away from traditional forms of small business financing, business cash advances are becoming an increasingly popular form of small business loans.

Business cash advance lenders purchase a business' future credit card sales. This allows merchant business owners to receive a sum of cash upfront in exchange for a small percentage of their business' credit card sales until the business cash advance is completely repaid. Business cash advance lenders do not require borrowers to have excellent credit scores or collateral, making them easier to obtain than many other types of small business loans. The repayment procedures allow for flexibility unlike most small business loans that require a borrower to repay a specific amount on a specific date every month.

The aforementioned are only a few of the existing types of small business loans. As a small business owner seeking small business financing, be sure to look into the various types of small business loans before choosing one. Discovering which small business loan is best for you and your business could save you both time and money, and in the long run, can be more beneficial for your business.

About the Author:

David Castro often writes articles about Small Business Loans for Merchant Resources International - To Learn more Visit Us at http://www.cashprior.com

Article Source: ArticleRich.com

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Private Investors, Angel Business Capital and Why You Need Them

By Vincent Irwin

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

Say Hello To Angel Investors

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

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

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

A Word Of Advice

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

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

If you are a private investor, Angel business capital can help you to make your investment decision. Visit http://www.ventureworthy.com/Private-Investor-Angel-Business-Capital.asp to know more.

Article Source: EzineArticles.com

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Business Funding Loans Microloans

By Patrick Gage

Microloans are a great way for small business owners to open up their own business. If you only need a few thousand dollars to get started this is a great option for you. There are many people out there who are searching for business funding loans that are not getting approved because of a lack of credit or experience. Microloans are backed by the Small Business Administration, so it is fairly easy to obtain this loan for your needs.

A microloan is just like any other loan, but it is for a smaller amount. Most microloans are set at around $13,000 dollars, and the maximum you can get is about $35,000 dollars. The longest payment term you can get is six years, but this may vary if you have a smaller sized loan. Either way, it is an easy way for you to get the money you need to start a very small business. The payments are great for you as well, since you won't be faced with the expensive premiums that come with large loans.

The idea really took off with Dr. Muhammad Yunus, who personally supplied microloans to local business owners who wanted to start their own businesses. With his help, many people where able to improve their lives and the overall economy of Bangladesh. Some of the loans he gave out were as little as $20 dollars. Dr. Muhammad was the winner of the 2006 Nobel Peace Prize for his actions.

How to Get a Microloan

Before you try out this type of business funding loan, you should be sure that it is the right type for you. They work well if you have only a few employees and very low running costs. If your startup costs are too high a microloan will be fairly useless for you. Work out a business plan to find out exactly how much money you need to open up before taking out this type of loan.

Contact the Small Business Administration and ask about getting a microloan. They will be able to inform you of possible grants your business can get and help you with your business ventures. The SBA is set up for all small business owners who are looking for more help and information about running their business. It is available in most states and deals locally to insure you get the most accurate information. When the SBA is backing you up you have a much better chance of being accepted by a bank or lender for a microloan.

After you contact the SBA you can go to your local bank or investors to ask for business funding loans. They are more likely to accept you since the SBA guarantee them a percentage of the loan if you fail to pay. You are still held accountable if you do not make the payments, so don't think you don't have to pay it at all. There are many different websites you can go to that will help you get business funding loans if you need any more help.

About the Author:

As the Nations Leading Expert in Business Funding, Pat Gage has created a system for raising unlimited money for any business. The system is called 10 Steps To Money and has assisted many of his students and himself in raising hundreds of thousands of dollars for their businesses. Pat is not only a sought after business funding expert but also a national speaker and frequent radio show guest. For more information on any topic discussed, visit Pat Gage's site at http://www.10stepstomoney.com

Article Source: EzineArticles.com

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SBA Loans and the New Small Business Bill

by Trey Markel

Near the end of September 2010, President Barack Obama signed a Small Business Bill into effect. The new bill set aside $30 billion for small business lending. The law also includes $12 billion in tax breaks for small companies. This bill was signed into effect as a response to the 9.6 unemployment dissent in America. President Obama and the administration signed the bill to demonstrate an effort to decrease the unemployment levels in the United States. President Obama hopes that the loan will create as many as 500,000 new jobs within the next couple of years.

Small Business Jobs Act 2010 Changes

The Small Business Jobs Act includes the Recovery Act Loans Extension that provides $14 billion in lending support. Small Business Administration (SBA) Recovery loans will be extended under the law with a 90% guarantee and reduced fees. At the time that the bill was signed, 1,400 small businesses were waiting for funding. Since the signing of the Recovery Act, 70,000 Recovery loans have been supported. Over $680 million dollars have created $30 billion in lending support.

The bill supports higher loan limits, and the maximum loan sizes increased in the pre-established loan programs. The new bill also increases the 7(a) and 504 loan limits from $2 million to $5 million. Manufacturers may receive up to $5.5 million. The 7(a) loan program is one of the most flexible loan programs offered for start ups and existing small businesses. Most of these loans are gained through commercial lending institutions. The 7(a) loan program includes an Export Loan program and a Rural Lender Advantage program. Some businesses will be able to refinance and incorporate their commercial real estate mortgages into the 504 loan program. However, this only applies to owner occupied units.

Microloan limits increased from $35,000 to $50,000. These loans are designed to help entrepreneurs with large start-up companies and small businesses owners in underserved communities. The new bill also increases small business eligibility for SBA loans. They make this possible by increasing the "alternate size standard" to small businesses with less than $15 million in net worth. This also applies to those businesses with less than $5 million in average net income. The law also increases the amount of Small Business Administration (SBA) Express loans from $350,000 to $1 million. Working Capital and Commercial Real Estate Refinancing received temporary enhancements to assist small business owners.

Tax Cuts

The tax cuts include the following:

- More Deductions for Start Ups - Deductions for Cell Phones provided by the Employer - Self Employed Health Insurance Deductions - Penalty limitations for small business tax reporting errors - Accelerated or Bonus Depreciation - Provisions for up to Five Years of Net Operating Losses - Up to $500,000 for Small Business Expenses: The Highest Expense Ever

Fees Associated with the SBA Loans

Fees are assessed to offset the costs of the SBA loan to the taxpayer. Lenders are charged a guaranty fee and servicing fee for each approved loan loan. The fees are a percentage of the amount loaned to the borrower. The lender may charge the guaranty fee upfront. However, the borrower is not responsible for the lender's annual fee.

ARC Loans

ARC Loans are small business loans that do not carry any associated fees. In the past, the fees for loans were between 1% and 3.5% of the total cost of the loan. ARC loans offer 100% guaranty from the SBA to the lender. No fees are required to be paid to SBA. Many of these loans are provided over a six month period. The repayment of the principal of the loan may be deferred for 12 months after the final disbursement of the loan. Repayment may last as long as five years. The best candidates for this type of loan are companies that have been profitable in the past, but are currently struggling. These companies may have begun to miss payments recently because of financial hardship. These funds may be used to make payroll, buy inventory or improve core operations.

7(a) Loans

Lenders will be charged an annual fee of 0.55 percent of the guaranteed portion of 7(a) loan. The fee will only be assessed to the balance of the loan and not the entire loan amount.

504 Loans

Borrowers will pay an annual fee of 0.749 percent on the outstanding balance of the 504 loan. This amount increased from 0.389 percent. Loan interest rates may not exceed 4.75% and may be as little as 2.25% when negotiated through a bank.

How Long is the SBA Loan Process?

Since the Small Business Administration is a guarantor and not a lender, the amount of time required to approve the loan will vary. The Small Business Administration attempts to reach its decision within seven to 21 business days from the receipt of the application. To accelerate the process, applicants should have several components of their application in place.

The length of time it takes for the SBA to respond to the application depends on the loan program your business elects to apply to. A business plan with financial statements is required for all loan programs. Earnings projections and collateral offerings must be established. In general, the SBA microloan is the least time consuming application and will be approved the fastest. The maximum loan amount was increased to $50,000. The funds cannot be used to buy property or pay debt.

Top Five SBA Loan Lenders

The banks have sorted SBA lending by region. Some of the most prominent banks involved in lending are the following:

Wells Fargo Bank

Wells Fargo managed a No. 1 ranking between October 1, 2009 and September 30, 2010 for the Small Business Administration 7(a) loan. The bank issued 91 SBA loans with a total value of $31.9 million. The bank was the second leader in terms of ARC loans. The bank issued 23 loans for a combined value $710,100.

JPMorgan Chase Bank

Chase Bank issued 33 ARC loans with a total value of $935,100. They ranked No. 1 in this category of loans issued.

Mortgage Capital Development Corporation

This particular bank issued the most 504 SBA loans. Businesses may use these loans for real estate purchases, property constructions and upgrades.

TMC Development

This bank issued 71 SBA loans for a combined value of $54.1 million. Nearly, 56 of these loans were 504 loans. The loans had a total combined value of $48.9 million.

Capital Access Group

Capital Access Group issued 51, 504 loans for combined value of $37 million.

Rates of Top Five SBA Loan Lenders

Wells Fargo

Typically, 3.5% of the SBA amount is due at the time of the loan. However, the fee may be financed. An origination fee may include bank fees. A fixed or variable interest rate will be negotiated by the bank for the Wells Fargo portion of the loan.

Chase Bank

A guaranty fee of 1% to 3.5% of the guaranteed amount must be paid by the lenders. The lender must also pay the annual fees of 0.25%. The lender may pass the guaranty fees onto the lender, but not the annual fees.

Mortgage Capital Development Corporation

This bank charges 0.389% of the balance of the loan for fees.

TMC Development

Most 504 loan programs will pay up to 90%. Therefore, most borrowers only have to make a 10% down payment. This bank offers a 4.39% interest rate to those seeking a loan. The fees are typically 1% or less.

Capital Access Group

Businesses may get up to 90% financing with a SBA loan. The interest rates are 4.40%. The fees are typically 1% or less.

SBA loans are a great resource for any small business owner or entrepreneur. SBA loans can also be a nice tool if your business is looking to get into exports or disaster relief.

Article Source: ArticleRich.com

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Five Tips for Bootstrapping Success

by akhil shahani

Starting a business with next to nothing might seem an ideal - an impossible dream, but people have been there and done it successfully. No one said bootstrapping was easy, but with a few prudent measures and heaps of smartness, you can build a business with very little funding.

We’ve got five tips for you – more like classic wisdom actually, on how to bootstrap your business.

Draft friends and family. Charity starts at home, and never more so than when you’re starting a business. Enlist the support of your well wishers in as many ways as possible. Do you have a relative who is an experienced finance manager? Why not take some advice on how to keep your books, rather than hire an expensive accounting firm upfront? Request your friends to recommend your services whenever possible – that’s valuable word-of-mouth advertising at no cost!

Of course, there’s a strong possibility that you will need to borrow money from family or friends, in addition to taking their help in other ways. Borrowing from such sources is a good idea, but fraught with certain risks. While people may lend to you purely on the basis of your personal relationship with them, the same relationships are at stake. Take care not to over-leverage or spend irresponsibly.

Stay within your means. Continuing from the last point, we’d like to emphasize the importance of restricting your expenditure to sustainable levels. Don’t give in to the urge to splurge just because you’ve had a good quarter. As long as finance and cash flow is at a premium (and in the case of bootstrapping, it will be for a while), manage your outflow very carefully.

Successful bootstrapped firms continue to follow this policy well after they’ve got past the initial stage. Perhaps financial prudence is part of the bootstrapper’s DNA!

If cash is king, cash flow is the queen mother! And keeping working capital on a tight leash is the answer to it all. Consciously work towards lowering your average outstanding days, while securing better terms of credit from suppliers. If capacity is tight, service the orders of the better paying clients first.

If you’ve got a few troublesome paymasters in your client list, force the issue when you feel you have the upper hand – for example during the closing stages of a large order.

Grab freebies by the horns! Think of ways in which you can cut costs. For example, could you make use of waste materials generated by other companies to your advantage? As an example, offer to clear up waste packaging material from a warehouse nearby – they get their place cleaned up free of cost, and you save precious dollars by not having to buy fresh material.

Opportunity does not knock. And bootstrappers better make their peace with that if they want to survive. As the owner of a small, cash strapped business, you don’t have the luxury of expensive advertising or even a sales force. Keep your eyes and ears open for any opportunity you could seize. Be prepared to walk that extra mile. In the final analysis, this is what will make the difference between success and failure.

Hi, I'm Akhil Shahani, a serial entrepreneur who wants to help you succeed. If you like to work smart, check out http://www.SmartEntrepreneur.net. It's full of articles and resources to help you start and grow your business successfully. Please visit us & download our special "Freebie of The Month" at

http://www.smartentrepreneur.net/freebie-of-the-month.html.

Article Source: ArticleRich.com

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Small Business Loans For Veterans - Start a Small Business With Patriot Express Loans For Veterans

By Luke Cambell

There are around 45 millions of veterans in America today. They are important members of the small business communities. Government agencies do not provide grants to veterans for starting a business. In that case, people borrow debts for the commercial purpose. If you are a veteran and wish to start your own business , then you must follow the patriot express loan offered by the president Obama that consists of various programs of Small Business Loans For Veterans for the needy people.

SBA is committed to help the service people in America and approaches directly to the patriot express loan for the people who wish to start the commercial activities, and in the process encourages job creation and growth which is an essential part to promote economic agenda. It also provides small business loans for veterans.

The patriot express loan is offered by SBA which can be used for many commercial purposes that include start-up, working capital, expansion, inventory or equipment purchases. You will be amazed to know that more than 14% of commercial activities in America and SBA guarantees more than $1 billion debts annually for the owners. Therefore emphasis is also given to veterans by providing them with commercial loans.

Patriot express loan is available to military community members including veterans, service-disabled veterans, active-duty service members participating in the military's transition assistance program and the widowed spouse of a service member or veteran who died during service or of a service connected disability. This loan features particularly the level of authority to the lender under the plan and they consider that patriot express loan must be used exclusively for business related purposes.

Therefore, SBA expects lenders to make use of reasonable methods to make sure that debt is used only for small commercial purpose. All this work is done with proper verification and proofs to obtain guaranteed mortgage from federal agencies.

Lenders must specify clearly that all mortgage they are providing must be only used for small business purpose . Small Business Loans For Veterans features SBA lower interest rates and they cannot charge fees before the patriot express debt is provided to the borrowers. It is generally 2.25% to 4.75% over prime rate depending upon the size and maturity of the mortgage.

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Article Source: EzineArticles.com

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Steps to a Small Business Loan

By Darryl Noble

Getting a small business loan is relatively straightforward. Like any other loan- car, home, etc., it comes down ability to repay, ability to collateralize, and creditworthiness. Unfortunately, for business owners showing ability to repay it is not easy as showing current check stubs. Nor is collateralizing as easy as a car or home loan which self-collateralizes. But just as there is mechanisms in place to make car and homes loans, there is a system for business loans.

The first order of business is to make sure the home front is in place. That is the personal credit of the principal owners of the business is good. Then the credit of the business needs to be in good standing also. Many times credit applications for businesses want up to ten credit references. The next thing is to make sure the financials are looking good. The balance sheet, the profit and loss statement, and the cash flow statement should all be in order.

The financials lead to the next step and that is developing a business plan. A business plan lays out for lenders how a business intends to use the funds it receives and how it plans to increase sales to repay the money. Though there is a narrative section, what is most important is the projected financials. That means that a business should present two forms of financials. A lender will receive from a business past performance financials and projected financials based upon the capital it receives.

These steps will show ability to pay and creditworthiness, but it will not present how the business will intend to collateralize the loan. The business will have to present that option. Businesses could use real estate, vehicles, inventory, equipment, accounts receivable, or even personal assets of the owners should the business decide. Except for real estate most other options are considered lesser but it does make the lender feel more comfortable that the business has something to lose.

Should a business not be able to show an ability to pay, have creditworthiness, or have collateral getting financing could be difficult. That is one reason it is always good to secure financing or a line of credit when times are good for a business. Seemingly, when a business needs it most it may not be there. The old adage is true, banks only want to lend money to people who do not need it.

There are options for businesses that may have difficulty getting financing but the price is often high. Sometimes an investor can help but will want part ownership. Factoring is another option, which is some who prepays on accounts receivable. Downside to factoring is the rates are very high, one could receive only 70-80% of the value of their accounts receivable. Finally, there is community based lending but this is often done as microloans. Microloans can be defined as loans under $35,000 dollars. This may not be enough for many existing businesses to truly expand. Still, it nice to know that there may be other forms of capital a business can acquire.

When looking at the options for business loans there is help for finding out the small business loan rates. Getting a good rate could help decide which kind of loan to pursue. There is also information for SBA small business loans and what each type of loan serves. Visit now to find out more.

Article Source: EzineArticles.com

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Jump Start your Business with a Business Loan

by Irish Taylor

Planning on starting your own business? Have been thinking about quitting your day job and focus on your own business instead? Therefore, what hinders you from executing your plan? Are you worried because you don't have sufficient capital to start up the business? Do you think that your fund is too small to start the business?

If you've answered yes to all these questions, let this article help you find a solution to your problem. Here, we will talk about possible business start up aids that you can obtain to push through with your plans.

Business Startup Financing Options

Business Loans.The first option you may consider is to apply for a start-up business loan. Status of your credit is dependent on your application for business loan whether it can be secured or unsecured. Since you're just starting up with the business and have not yet established a business credit, lenders would be checking on your personal credit report instead. If you have an excellent credit rating, you should have no problem getting approved for an unsecured business start up loan. On the other hand, if you have a poor credit score, you can choose to obtain a secured business loan instead.

A secured business loan would require you to submit some form of security or collateral to your lender. Lending company could allow you to use your personal investments, properties or savings as security for your loans. This is done so that just in case you fail to keep up with your loan payments, your lender can use the property or the savings you submitted to pay for the money you borrowed. Although a secured business loan involves risk, many successful entrepreneurs started their businesses with the help of this start up financing.

Small business credit cards. Another option to help you get started is to apply for a small business credit card. If you feel that your start up capital is limited, a credit card for small business can help you allocate your funds more efficiently. For instance, you can use your business credit card to purchase the necessary equipment or materials for your business and save some of your cash to use for operating costs or emergency costs.

Business credit cards can also be secured or unsecured just like any other business loans. Having an excellent credit score, getting an unsecured business credit card could be very easy. You can apply online and get approved within minutes. Generally, it takes 5-7 banking days before you can receive business credit card and start using it.

It is also easy to get approved for a secured business credit card regardless of your credit status. In fact, you can use your business credit card as a tool for improving your credit or establishing your business credit history. All you have to do is submit a security deposit to your account and this would be used in the event that you fail to pay off your credit card debts.

Irish Taylor is a business loan consultant with Startup Business Loans and has been providing consumers and business owners with startup business financing since 1992. For years she has helped people with credit and loan problems especially pertaining to Unsecured Business Loan, SBA loan, Unsecured Business Loan and start up business.

Article Source: ArticleRich.com

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SBA Business Loans
by Business Capital Group, LLC

free competitive enterprise and to maintain and strengthen the overall economy of the United States.

Although the SBA has grown and evolved in the years since it was established in 1953, its bottom line mission remains the same. The purpose of the SBA is to help Americans start, build and grow businesses.

Through an extensive network of field offices and partnerships with public and private organizations, the SBA delivers its services to people throughout the United States, Puerto Rico, the U. S. Virgin Islands and Guam.

The SBA is an independent agency within the federal government that operates

under the authority of the Small Business Act of 1953.

The SBA can makes loans directly to businesses and acts as a on bank loans. In some circumstances it also makes loans to victims of natural disasters, works to get government contracts for small businesses, and assists businesses with management, technical and training programs, some of which can be done on-line.

The SBA has directly or indirectly helped nearly 20 million businesses and currently holds a portfolio of roughly 219,000 loans worth more than $45 billion making it the largest single financial backer of businesses in the United States.

The SBA has survived a number of threats to its existence. In 1996, the then newly Republican-controlled House of Representatives planned to eliminate the agency. It survived and went on to receive a record high budget in 2000.

Renewed efforts by the Bush Administration to end the SBA loan program have met congressional resistance, although the SBA's budget has been repeatedly cut, and in 2004 certain expenditures were frozen.

SBA Loan Programs

The most visible elements of the administration are the loan programs it administers. The SBA itself does not grant loans. Instead, the SBA guarantees against default certain portions of business loans made by banks and other lenders that conform to its guidelines.

Contrary to popular belief, these programs are not generally for persons with bad credit who can not get bank loans, nor are they primarily used for startup funding. The primary use of SBA programs are to make loans

for longer repayment periods and with looser affordability requirements than normal commercial business loans.

Also, a business can qualify for the loan even if the yearly payment would be the same as the previous year's profit, whereas most banks would want payment for a loan to be no more than two-thirds (2/3) of the prior

year's profits for a business. The lower payments, longer terms and looser affordability calculations allow some businesses to borrow more money than they could otherwise.

One of the most popular uses of SBA loans is for commercial mortgages on buildings occupied by a small business. These programs are chosen because most bank programs, while having similar payments and rates, require borrowers to refinance every five years.

How Can I Benefit From The SBA?

The Small Business Administration (SBA) has created a program of government-guaranteed loans designed to help give small businesses that may not otherwise qualify for credit get the funds they need. SBA loans make it possible to qualify businesses more easily and provide them with more flexible terms than conventional loan options, letting you preserve working capital for other expenses.

Qualifying for an SBA loan is easier than qualifying for other loans. First, the SBA allows higher loan-to-value ratios. Depending on your loan request, you may be able to borrow up to 90% of your financing needs. Second,

we consider the projected income of your business, not just historical cash flows, when making a decision. This may be especially advantageous if your business is growing rapidly.

SBA loans can help growing businesses purchase or renovate real estate, acquire fixed assets such as heavy machinery or specialized equipment, borrow working capital for ongoing financing needs, or fund the acquisition

of new businesses.

Who are SBA loans for?

SBA loans are for businesses that are:

Owner-operated

For profit

Organized as a sole proprietorship, corporation, or professional partnership

Within the size guidelines designated by the SBA

Unable to secure other credit under reasonable terms SBA Loan Industry

The SBA loan industry can be divided into distinct categories:

The largest United States Banks, such as Bank of America and Wells Fargo, generate the bulk of their SBA loan volume by the loans, especially the express loan and business line of credit, being offered to those who would be declined for a normal bank loan due to factors such as length of time in business or slightly stricter affordability factors. These banks have sophisticated computer systems that generally makes this process seamless, and are quite different from other financial institutions who utilize SBA lending for separate and distinct purposes.

SBA loans are used heavily by banks of all sizes to finance the purchase or construction of business owner occupied real estate (i.e. real estate purchased by a business). Many banks only offer SBA loans for this purpose. In particular, they are using to finance properties that the bank would consider too risky to finance on their own, due to them being of a special or environmentally risky nature that can make their resale value limited; these properties include Motels, Gas Stations, and Car Washes.

SBA loans are also used to allow individuals to buy existing businesses. Since, unlike in real estate transactions, commercial lenders are allowed to pay a referral fee to business brokers who help people buy and sell businesses, this segment of the industry is dominated by smaller banks and standalone

finance companies who engage in this practice.

Criticism

Businesses applying for SBA loans are supposed to be ineligible for financing elsewhere, as the applicant bank affirms. Designed to avoid direct competition with banks, this provision allows the most promising projects to be

funded by the private sector, leaving higher risk projects to be picked up by the government, resulting in the government holding a higher share of non-performing loans.

Though it accepts higher risk, most SBA borrowers pay their loans, the same loans that lenders affirm could not receive credit elsewhere. The Agency has traditionally had a currency rate on its loans of 90% or more, not

meaningfully worse than banks.

The SBA is also one of very few agencies that pays its own way and does not drain the treasury for its loan programs. Price Waterhouse affirmed, some years ago, that the tax revenue generated by only a handful of

SBA startup loans more than paid all the operating expenses for the Agency.

One of the primary uses of SBA funding is for business owners to get a loan to buy the property their business occupies. Owning the property and having the business rent the property from the owner is a form of a

tax shelter, so the SBA has been criticized for aiding tax shelters. Of course, legally taking advantage of tax law provisions is completely ethical.

Various banks are often criticized for offering or writing fewer SBA loans proportionally than other banks, which critics see as a sign of discrimination. However, others counter that SBA loans are equivalent to or many times worse than what the banks offer themselves, so a customer of that bank might choose the normal bank product more often than their SBA product.

Overall, the SBA creates a vast avenue of opportunity for companies looking for a relatively cheap source of capital.

For more information on the SBA and other excellent ways to secure a small business

loan, visit our website at Small Business Loans.

Article Source: ArticleRich.com

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Short and Long Term Loans for Small Business

by Irish Taylor

Business startup financing

What is a term loan? Term loans have a fixed length of repayment period, lasting from a year to 20 years or more, depending on the type of loan you obtained. The amortization or the amount of repayment that the borrower would need to submit includes both the principal and interest of the loan.

Short Term Business Loans

Short term loans mature within a year or less and are ideal for growing businesses that need additional funding in the middle of operations. Lenders offers a number of short term business loans. Examples are working capital loans, accounts receivable loans, equity, lines of credit, etc. For instance, if a business needs funds to launch new marketing campaigns, buy more stocks, or hire additional workers, short term business loans provide an easy solution.

Long Term Business Loans

What about long term business loans? Obviously, this type of term loan takes a longer time to mature and complete. Long term business loans can have a 10-year, 20-year, to 30-year repayment period depending on the amount of money borrowed. Long term can range from from $25,000 to as much as $50,000 or more.

Long term business loans are more practical choice if you are in need of large money to start your business. Usually, term loans require collateral as a guarantee for the loan. lenders are more strict and cautious when giving their approval when it is a long term business loans which involves big cash.

Applicants for long term loans should be prepared to submit all the necessary documentations that the lender requires. Aside from the collateral, a professional business plan, along with business licensing certificates and accounts spreadsheets are often required to be submitted.

Your Business Credit History

Whether you're applying for a short term or long term business loan, the status of your credit plays an important role in getting approved for the loan. Thus, it is advised to check on your business credit report before submitting your loan application. Although, there are lenders who grant loans despite bad credit, these loans usually have higher interest rates and fees. On the opposite, an excellent business credit gives you the advantage of getting lower interest rates and faster approval from lenders.

But what if you haven't yet established your business credit history? In this case, your personal credit history would be used by your lender. Obtain a copy of your credit report to check on your credit score. Of course, a higher credit score makes you a more qualified candidate for a business loan while a low credit score puts you at a bad light. It is best to work out your credit fist before engaging to business loan application if you have a very low credit rating.

Irish Taylor is a business loan consultant with Startup Business Loans and has been providing consumers and business owners with startup business financing since 1992. For years she has helped people with credit and loan problems especially pertaining to small business loans, SBA loans and new business loans

Article Source: ArticleRich.com

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Starting a Business with No Capital--Do You Have What It Takes?

by Jim A. McDonald

Do you want to start a business, but you have absolutely no money to invest in it up front? Don't despair! You're certainly not alone and you may find that your business will actually turn out better. Chances are your business will be healthier and better equipped to respond to change. You'll learn creative new ways to handle different challenging situations. However, success will require a healthy dose of time and commitment to hard work on your part.

When you don't have the money you think you need to start a business, you may feel isolated and alone. The truth is that starting a business with zero funds is so common that there is a word for it--bootstrapping. The term comes from the idea that you can "pull yourself up using your own bootstraps." Although that might be physically doubtful, it is possible to creatively gather and apply scarce resources to start a business. It may not be the most comfortable way to start a new business, there are advantages to avoiding entangling relationships with investors, lenders or venture capitalists.

Those who support the practice of bootstrapping your new business into existence point out that companies started in this way are usually healthier and more stable in the long run. Why would this be so? Imagine you've just started a new business with a big wad of cash courtesy of some optimistic investors or venture capitalists. In this situation, there is very little pressure to make money immediately. There's no real penalty for wasteful spending or loss of focus.

But when you're bootstrapping a new business from a zero cash starting point, creativity and problem solving are your highest priority. There's no safety net of cash to catch you if you fall, so it's essential to keep your eyes on the task of creating profit. Not only does this make you more successful more quickly, it also provides excellent training for future periods of rapid growth. Many businesses often have difficulty if the needs of growth are greater than current cash flow. Business started by bootstrapping don't have this problem because this is where bootstrappers live--using scarce resources creatively to meet the needs of business growth.

Do you have what it takes to successfully bootstrap a new business with zero funds? Most business planners agree that knowledge about a particular business or industry is the best asset you can start with. If you are an expert in a specific subject (or you choose to become an expert in an area), then you should also have useful knowledge about that market--the sources, the competition, the major players, the likelihood of future demand, etc. This specialized knowledge almost always helps you to find new opportunities and ways to creatively build a business without the need for a fat bank account or investment fund.

If you want to start a business from scratch without major funding, you'll have to make up the difference with hard work and a huge investment of your time. So it's best to stick with something you are passionate about. You need to believe in what you're doing and believe in yourself. Successful bootstrapping will require personal sacrifice, so be sure you start something that's worth it to you.

When it comes to starting a business with zero funds, providing services is usually the best choice. Selling products usually requires a cash investment at the beginning to create or purchase inventory. Plus, you'll have to pay for storage space. But when you are providing services, you really only need the tools of your trade, which you may already own. Lower startup costs will increase your chances for success.

Whenever you consider starting a business with zero funds, you should be open to help from any and all sources. Friends and family can be excellent sources of "in-kind" contributions, like a place to provide services or a couch to sleep on when things are tight. Another option worth thinking about is working a part-time job to make your living expenses and building your business the rest of the time. Once your new business starts showing a profit, you can drop the part-time job and put 100 percent of your time into your new endeavor.

Starting a company without any startup money may seem like a crazy idea, but people do it successfully all the time. The businesses that emerge from this process are flexible, adaptable, and never have cash flow worries. When you start with nothing, it can only get better.

This buying a business article was produced for http://www.business-trader.com.au

Article Source: ArticleRich.com

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What Kind of Capital Do I Need for My Business?

by Mark Knotts

The title of this article best describes the question that most entrepreneurs ask themselves when they want to raise capital for their businesses. The question about raising capital should not only be about how much capital you need, but what kind of capital you need. Do you want to raise debt capital where you have to pay interest or do you need more rocket fuel and need something more like equity capital? These are all the things you should know.

Debt Capital

One of the lowest risk investments is debt capital. Debt capital is of low risk for the investor, because he knows that he will get his money back. For you, the entrepreneur, however, debt capital is exactly what it describes, debt. Debt capital is also known as debt financing or a business loan and the investor only gains about a ten percent profit from the interest of the loan.

Equity Capital

Equity, on the other hand, is quite different from debt capital. When you win an investment for equity capital, you don’t pay the investor back, like you do when you raise debt capital. This makes equity a high risk investment. The reason you don’t pay the investor the equity back is because investors who invest equity usually invest in companies which will exit through what is known as a liquidation event. A liquidation event is usually when you sell your company to a larger company or when you place your company into an IPO or an initial public offering, which means that you are actually going to have your company stock publicly traded in the stock markets. Now, you know a bit about equity, let’s see how equity is categorized.

Equity is basically privately owned assets and is categorized as either private equity or venture capital. Yes, there is a difference between the two categories. Venture capital, for example is private equity funding that is earmarked for investments into small startup companies that are poised for high growth. Private Equity, on the other hand, is invested in companies who are in their later stages and ready to either be bought out or just primed for IPO.

Investors

Along with the different types of capital, you also have different types of investors who invest all this capital. Some of these investors are known as angel or private investors, whereas others are known as institutional investors or venture capitalists. Differentiating the different types of investors is just as important as knowing what kind of capital you need to raise. Let’s first look at what the different kinds of investors there are and what they do, or how they invest their money.

Angel investors are also known as private investors and are usually wealthy individuals who invest in companies at their whim and with their own money. Angel investors do not really invest professionally for a profit, though some angels might do that. Usually most angels invest to feel like they are helping someone out or want to invest in a company that reflects their morals, values, or other interests.

Institutional investors, on the other hand, invest on a professional basis and invest other people’s money. Usually institutional investors invest for private equity firms. Venture capitalists are also institutional investors who deal only with venture capital and work for vc firms.

How Can I Get in Touch With an Investor?

It is almost impossible to find investors on your own. However, the internet has plenty of resources to help you find the right investor for your company. One of these resources that has helped me out is the Vcgate Venture Capital Database. This database can give you instant access to over 4300 venture capital and private equity firms and has powerful affiliates who can also provide you with valuable information about how to approach investors with your business plan.

Mark Knotts is an entrepreneur who was very successful in three of his ventures. He writes about business and the character needed to handle the riggers of business. He believes that raising capital is more involved than simply submitting a business plan to investors. Mr. Knotts also knows and writes quite a bit about internet marketing and consumer goods. He also recommends services that have helped him out in his career.

Article Source: ArticleRich.com

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Business Start Up Funding Silver Bullet

by Wil Schroter

Business Start Up Funding

Startup companies often get frustrated when they can’t find investors willing to fund their new idea. What they don’t realize is that in order to get an investment, they need more than just a good idea and the promise of future profits. What investors are looking for is a “silver bullet” in the business that ensures their small investment will yield a huge return.

Business Start Up Funding - You Need a Silver Bullet

The silver bullet is the aspect of your business plan that proves your company can grow quickly. For example, perhaps you’ve proven that 100 customers are willing to pay $99 for your newly developed product. If all you need is additional cash to build 1,000 more items to sell more at that price, you’ve got a silver bullet.

Investors are compelled to make investments in startup companies that have proven some aspect of their business model “works” and that what they really need is more capital to make it work better, or to sell more products.

Many entrepreneurs, on the other hand, wander around in search of business start up funding to find the silver bullet in their business plan and that’s a less attractive proposition. In this case you’re asking an investor to put money into a treasure hunt, and not into a business. Until you demonstrate you can sell something (at a profit), you don’t have a business worthy of investment. Therefore you need to re-focus your efforts on finding your silver bullet.

Investors Love Paying Customers

Every business model is different, and as a consequence the silver bullet of one business may look somewhat different than another. The common thread, however, is that each of them show your investors you have found a facet of your business that works well and simply needs business start up funding to be exploited.

A great place to start is with paying customers. Even a few customers create proof that that there is an active buying market for your product that could be even bigger if you had the capital to reach more of them.

Notice that here you’re not telling an investor, “if we build it they (customers) will come”. What you want to say here is “we built it, and they already came”. This puts you in a much stronger position to suggest that if you are capable of repeating the process provided you have more business start up funding.

Understanding Conversion Works, Too

Maybe you don’t have a 10,000 paying customers but have found, on a more modest scale, that for every $1 you spend in marketing you can earn $2 back. This information is a silver bullet too. In this case you’ve proven that you understand how to acquire a customer for less than they are spending, which is a big deal.

This may seem like an obvious necessity for any successful business (let alone one looking for business start up funding), but there are plenty of companies that overlook this point. If you haven’t proven that you can profitably acquire a customer, perhaps this is a good place to start.

Analyze the costs involved in acquiring your first batch of customers and try to project this cost out to the next round of new customers and the round after that. Try for those next customers and see if your results match up with your predictions. Once you feel comfortable that you understand your cost to acquire customers you can begin identifying specific capital needs to accelerate that process.

Speed Things Up

Speeding up time can also be good reason to ask for business start up funding. If you find that it takes you two months to service a customer now, but with additional capital you could service a customer in two weeks (and therefore earn revenue in a shorter time) you’ve found another silver bullet.

Investors are always hungry for businesses that could be even more profitably or grow faster if just a little more capital was applied. Creating a strong case for this use of capital will make it easy for investors to understand your needs.

Read, Aim, Fire!

Perhaps you only have one of these silver bullets ready to present to investors. That’s fine, as long as you have prepared a strong argument for why this one single factor will have such a great influence in your growth.

Presenting your case to investors isn’t about coming up with as many reasons for investment as possible. It’s not about quantity, it’s about quality. What you want to demonstrate is that you have key factors in your business that have a demonstrated track record for growth, but need capital to accelerate that growth.

If you’re in the process of raising business start up funding right now, step back and take a second look at your PowerPoint presentation. Does it clearly articulate the fact that you know how this investment is going to ramp up the value of your startup? If not, try taking another pass with the focus on finding your silver bullet. That’s the type of ammunition your investors are really looking for.

Wil Schroter is the Founder and CEO of the Go BIG Network, the largest network of startup companies and entrepreneurs. He is also the author of the new book “Go BIG or Go HOME”, download it for FREE at http://www.GoBIGnetwork.com. Get your business start up funding at: http://www.GoBIGnetwork.com .

Article Source: ArticleRich.com

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Startup Your Business With A Business Loan

By Amanda Hash

It is not necessary to wait until you have a lot of money to start up your business. The time is now. The market may change and make things difficult and you could be left with the bitter taste in your mouth of not having taken the decision at the right moment. Business is not only about buying and selling. It is about taking the right decisions at the right moment.

Do Not Let Others Beat You To It

If you have detected a niche in the market that you can fill in, go for it. Do not waste time watching to see what happens, whether it is the right moment or not. Waiting gives your precious time to others. Rushing to do things without a proper planning is not good either. You have all the ideas in your head, so just write them down, on paper or on your computer and make a checklist of everything you need to open your business.

Niche Marketing

Your first attempt should consider every nail and every sheet of paper needed to get your business going. There will always be time to cut down on unnecessary things later on. I talked about a “niche” above, because niche marketing is very interesting. Once you detect the niche and the needs it has, you tailor a product or service for that niche and you already have a market, without having to spend precious cash on random advertising. What little advertising you will have to carry out, will be specifically directed to your niche.

You will have time later on to expand and add products to your line, innovate and improve, to widen your scope, a little at a time, so as to grow steadily and firmly and surpass the critical moment. It is said that 80% of new businesses do not make it through the first year.

Start Closing The Circle

Once you have your business plan ready, you can start to think of a business loan. Considering what is mentioned in the previous paragraph, every lender knows the risks that a new business implies. So, this risk will have to be shared, in the form of the provision of some asset of yours, whether private or dedicated to the business, to show confidence in your own project.

Very few loans will be granted on the business plan alone, however brilliant it may appear, so bear this in mind and place your car, truck, a piece of land, whatever it may be, as collateral from the very beginning. Do not wait for the lender to ask for it.

Some Additional Considerations

When you start to fill in the numbers in your business plan, consider the loan payment in advance. If you take the trouble to calculate how much you need and how you will repay it, making it participate in the general cash flow, it will give the loan officer a good impression. For this, you will need to shop around and get free quotes, not to be confused with applications.

The interest rate will vary slightly from lender to lender and depending on the amount and collateral you offer, but in general there is no great difference. The main difference in these matters is your decision and how you prepare your way for your new activity.

Amanda Hash is an expert financial consultant who specializes in Guaranteed Unsecured Loans and Government Grants. By visiting http://www.yourloanservices.com/ you'll learn how to get approved and recover your credit.

Article Source: FreeArticlesZone.com

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The Evolution of Financing a Small Business

By David Gass

For years I have read the popular business magazines, all having so called experts write articles for entrepreneurs on how to finance their business. “The top 10 strategies for financing your start-up”, “How the SBA can help your small business”, “Personal credit is the key for entrepreneurs” and so on. In most cases I’m willing to bet those writing these articles are journalists that have never had a successful start-up. How can I come to that conclusion you may ask? Because of the bad advice they give.

Going to the SBA for a loan, using your retirement funds, tapping all your personal credit cards or giving up 75% of your idea to an investor are all ideas I have read from the popular magazines. The thing is, in every one of these cases you are using your personal credit and not separating you from your business. You are putting 100% of your credit and assets at risk.

I have worked with thousands of small business owners who have been very successful without the need to use their personal credit cards, retirement funds or fill out stacks of paperwork and wait months for a response from SBA backed banks. In fact I have seen entrepreneurs with access to hundreds of thousands of dollars without giving up a percentage of their company or having any of the money show up on a personal credit report. Sounds good right? Well, there is one catch. You will need to go through the evolution of financing your business. You can’t start at the end. This is the problem with most entrepreneurs. They want fast results and aren’t willing to wait. By taking the quick fix they give up ownership and put their personal credit at risk.

The evolution of business financing starts with a solid foundation for your business. A solid foundation is comprised of several parts. The first of which is structuring your business entity appropriately. I recommend to every entrepreneur that you use a Sub Chapter S-Corporation, C-Corporation or Limited Liability Company to operate the business. This is the first step in separating the business owner from the business. The next phase of building the solid foundation is to ensure the business is in compliance with the lending markets. Several business owners are surprised when I tell them most lenders we work with when reviewing a credit application will first call directory assistance to see if your phone number is listed. It’s a simple check, but it’s the first flag that will be raised for them if the business isn’t listed. Why would a lender finance a company that doesn’t want anyone to find them?

There are hundreds of other due diligence phases that a company must go through in order to ensure the owner and business are not considered “high-risk” for obtaining credit and financing. The more a business has in place to show that it is a real business the more likely a lender will grant credit to that company.

The second step in the evolution of small business financing is to define what the business does, what makes it unique and why it will be successful. The business owner must create a one-page “sales pitch” for the business, also referred to as an executive summary. The executive summary can be used when applying for credit, seeking investors and developing marketing campaigns.

Business owners need to keep in mind when seeking financing that the most important thing for a business is to produce a profit. Without revenue there will be no profit. Marketing the business will help produce the revenue and the executive summary will help create the marketing.

Third, a company must build a business credit report separate from the owner’s personal credit. By working with trade credit, the single largest source of lending in the entire world, a small business can tap into limitless leverage for buying goods and services they need to start, run and grow the company. The beautiful thing about trade credit is in many cases it’s free money. If a vendor grants terms of net 30, a business owner has the ability to use the vendors goods or services for 30 days without interest before they need to pay the vendor. The other wonderful part of trade credit is that there are companies offering products and services small business owners need who will report the credit to a business credit bureau. The reporting of the trade line will create a business credit profile separate from the personal credit of the business owner. Eventually the business will be able to access more and more credit under the business name only if it maintains a positive business credit score.

The more credit received under the business name the more likely other companies will grant that business credit. No one wants to be the first in line to grant a business $50,000 in credit, but if others already have they will be more inclined.

Fourth, is to use the owner’s positive personal credit score in combination with a positive business credit score as leverage for obtaining hundreds of thousands of dollars in unsecured lines of credit for the business. The key is to do this with lenders that don’t report the accounts to the personal credit bureaus but rather the business credit bureaus. Many banks offer business lines of credit and loans, however finding the right type of product from these banks can be tricky. A business owner needs to make sure the loan or credit line they apply for reports only to the business bureau.

By keeping business debt separated from the personal credit report, a business owner has the ability to keep their personal credit score high. The more a business owner uses their personal credit in the business, the lower the score will drop. Credit scores determine the ability to buy homes, rates on car insurance, and several other factors. Keeping a personal credit score above 720 is extremely helpful in the business owner’s personal and business life.

The fifth stage of the business financing evolution is to look at other alternative financing the business may be able to obtain. Leasing is one key area. Why use precious cash reserves to buy equipment or software when you can make a small monthly payment? In addition 100% of the payment on the lease is expensed.

The final stage deals with investors. The majority of investors don’t want to look at companies unless they have already progressed through the business evolution stages outlined above. Keep in mind that an investor is not just investing in a business they are investing in the business owner as well. If the business owner has tapped every available resource for credit and cash personally and never taken the time to establish business credit, financing or lease arrangements an investor will toss that company’s proposal in the garbage quickly.

Not every business owner will find themselves at the stage they need an investor. They may have a combination of enough cash-flow, credit and financing in place from the early stages that they won’t need additional capital. However, if a business needs to grow with the help of additional capital or financing there are two typical ways an investor will look at the deal.

The first is through debt financing and the second equity financing. Debt financing with an investor is where they provide a loan to the business in exchange for a pre-determined amount of interest. Equity financing is where an investor puts money into a business in exchange for ownership. There can also be a combination of debt and equity.

The majority of small business owners believe this is where they should start, with the investor. In reality this is the last place a business owner should look. Investors want to use their money to grow a business by having the money spent on revenue generating activities. The typical small business owner that goes to an investor says “I need a million dollars to start my business.” When asked what they’re going to use the money for they say, “start-up costs and payroll”. This is where the investor walks away. No investor wants to fund a project so the business owner can make payroll, buy office furniture, equipment or office supplies.

This is the perfect example of the evolution of business financing. The company starts out as an idea, then structure is put in place. Next, the business becomes real with licenses and a sign outside the building. Next, the business creates an identity with the right message. Then the business obtains trade credit that separates the personal and business credit in order to obtain larger lines of unsecured credit. All of which is used to build the infrastructure of the business without maxing out all the available credit for the business or business owner. Last, the business has the ability to seek investors because it has done everything required to create the solid foundation.

Receive the booklet How to Build Business Credit by David Gass – President and Founder of Business Credit Services. It will share with you how more than 10,000 businesses across the nation have achieved over $175 million in combined financing in their business name only, all using his patent-pending system to build corporate credit separate from your personal credit.

You will also learn the first steps required to getting a business loan, lease, and other lines of credit without the use of a personal credit check or guarantee.

Article Source: EzineArticles.com

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Great Ways to Cut the Cost of Starting Your Franchise Business
by Candice Clem

One of the reasons a franchise business has such a high potential for success is because of all that's included in the initial cost. In some cases, the start-up cost is the same (or very close) to building a business from scratch but without all the benefits such as established name recognition, target market
research and existing publicity campaigns. With so many advantages, it can be difficult to understand why entrepreneurs choose to launch a business alone. Nevertheless, some of the high costs associated with franchises can become a deterrent for prospective buyers. What many of them don't realize is that there are several options that help cut the cost.

Options for Financing Your Franchise

Many franchise opportunities come with a sizeable price tag. Few prospective business owners can afford to make such an investment without some financial assistance. Unfortunately, not all of them will have access to the necessary capital it will take to satisfy start-up costs, franchise fees, royalty fees and a loss in revenue that will continue until the return on investment finally begins. If you have a well-established credit history (free of bankruptcies and established to the point where you're considered as having enough credit), you may be able to get a conventional loan through a bank or credit union.

However, banks are typically reluctant when lending to small businesses. In reality, they rarely do so. Though not everyone will qualify for conventional loans, there are still options. If you have applied for credit to no avail, you can contact the Small Business Administration, an agency run by the federal
government. The SBA guarantees a certain percentage of its loans, which puts lenders at ease because they are less likely to experience a loss. Plus, the SBA is usually willing to lend for longer periods of time and at larger amounts.

Of course, the SBA has specific criteria to determine eligibility. First, it must be a small business, which translates to less than $13.5 million in retail or service sales. Additionally, it must be located in the United States or
a U.S. governed territory and only those interested in opening a for-profit business can apply. As you can imagine, this agency reviews countless applications, which means that you must handle yourself in a very professional manner. It is always a good idea to have your business plan ready before meeting with anyone regarding financial assistance, even a government agency.

However, the main disadvantage to getting an SBA loan is that the interest rate is set by the Treasury Department, which means that it is variable. Moreover, this interest rate is generally higher than those offered by conventional loans. Thus, if you can find a close friend or family member who is able and willing to lend you the necessary funds or even cosign, this is your
best option next to financing on your own through a bank.

Economic Development Corporations

The federal government is not the only entity that provides monetary assistance to potential franchise owners. More and more state and county governments are pitching in with tax exemptions and other special programs. The New York City EDC, for instance, issues low-cost tax exempt bonds as well as double and triple tax exempt revenue bonds (these are technically issued by the New York City Industrial Development Agency, NYCIDA, an entity of the NYCEDC). Furthermore, this agency can even administer
public loans. The only issue to consider before accepting assistance from an EDC is the fact that much of the available funding is dedicated to improving low-income or developing areas. Nonetheless, EDCs have funds available to prospective business owners like you. And, you have the opportunity to
impact a struggling community. Still, before you decide to locate your franchise in such a community, make sure it is conducive to operating a profitable company.

Community Development Corporations

These non-profit organizations are dedicated to improving their local economies by lending money to small businesses. The goal here is to increase revenue and bring new jobs to the area. What's more, CDCs are well known for developing affordable housing and improving education for residents in low-income areas. Once again, you must weigh the costs and benefits to
starting a business in developing or otherwise lower income sections of a town or city.

Business Development Corporations and Venture Capitalists

If you're weary of relying on public funding, you have the option of appealing to a business development corporation or venture capitalist in your territory. Returning once again to New York, its business development corporation is made up of financial institutions that pool their resources in order to lessen the risk. Rather than focusing on low-income sections of the state, this organization is devoted to helping all kinds of different businesses gain access to financing. The primary concern is to expand New York State in general.

Venture capitalists, on the other hand, are different from development corporations because they assume some ownership of your business. Because of this unique feature, they are willing to take more risks than traditional lending institutions. Depending on your specific industry and the stage of your business's development, you may be able to find a venture
capitalist fund to help finance your business.

Take Your Time

While there are opportunities for financing your franchise business and dramatically reducing your initial cost, keep in mind that some franchisees use their own resources for as much as 50 percent of their start-up expense. If you can not afford that kind of investment, consider working for a couple of years and saving some of the money for yourself. If you're able to generate some revenue this way, you are more likely to qualify for a conventional loan. Otherwise, you will appear more serious to business development corporations and reputable venture capitalists. Thus, if you decide to wait after all, don't
become discouraged. Instead, use the extra time to conduct additional research and perfect your business plan. Sooner than you realize, investors will be eager to take part in your project.

About the author:
Find franchise opportunities and information for entrepreneurs at Franchise Gator.

Article Source: GoArticles.com

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The A2Z of venture capital fundraising

by Ganesh

In simple words venture capital is the money that is invested by venture capitalists in new and upcoming companies that have the potential to grow into major giants. If you think that venture capitalists are wealthy financers who wish to finance any new venture, then you are misinformed.

Most venture capitalists are privately owned corporations with a huge pool of money that comes in from pension funds, endowment funds, corporations, foreign investors and wealthy individuals.

But most venture capitalists have high expectations when it comes to returns. You can always expect a venture capitalist looking for a 10 fold return or more within a period of 5 to 10 years.

Criteria

Most venture capitalists will only finance small start up ventures. But there are some who need companies with a proven and established base. Also the venture capitalist will have an equity ownership in the business. They take part actively in management and related decisions.

Some capitalists also help in the development of new services and products. As the risks are high, the expectations for returns are also equally high.

Financing

If you are looking for venture capital fundraising then there are many directories and associations that have memberships with several venture capitalists.

You can register with such associations to get links to individual Venture capital firms. Their guidelines and examples of the kind of companies that they have financed in the past are some of the details that you will get with such directories.

Some directories have links with as many as 1500 venture capitalists. With a nominal fee that may range from $1000 to $1500, you can submit your ideas and get exposure when it matters the most.

For more Information on Venture Capital Fundraising, Venture Capital Funds Visit ibfconferences.com

Article Source: ArticleRich.com

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6 Ways To Fund Your New Business
by Tim Knox

I’m often asked: what is the best way to finance a new business venture. This question is usually followed by "So, do you ever invest in new business ventures?"

The answers, respectively, are: 1. there is no "best" way to fund a new business; and 2. I do invest in new business ventures, but darn it I can’t today because I left my checkbook in my other suit.

The truth is there are a variety of ways to finance a new business and which way is best for you depends totally on your product, your market, your financial requirements, your burn rate, and most importantly, your personal and financial situation.

So with that in mind, here are a few of the most common ways to finance a new business without hitting old Tim up for a loan. Keep in mind that all methods have pros and cons and some (or most) may not work for your specific situation. No matter what financing method you choose thoroughly investigate the ups and downs and don’t jump in with both feet until you’re sure you’ll land on solid ground.

Savings and Investments

The first source you should consider tapping is your own savings and investments. I’m a huge fan of self-financing when it comes to business because it doesn’t make you responsible to others should the business fail. The bad thing is that it if things do go under, it will be your money that goes down with the ship. If you’re not willing to risk your own capital you certainly shouldn’t be willing to risk anyone else’s.

Friends and Family

After tapping their own savings and investments, many entrepreneurs turn to friends and family for help. This works well for some, but here’s the creed I live by: NEVER borrow money from anyone you have to eat Thanksgiving dinner with. Nothing causes tension in a family like lending money that is never paid back. And notice I say "lending money" rather than investing money. Venture capitalists invest money. Your relatives lend you money. They will expect it back someday even if they say they won’t. Remember, when a loved one invests in your business they are emotionally investing in you. It would be tough to tell mom and dad that their favorite son lost their life savings because his business went down the drain.

Credit Cards

I financed my first business on credit cards, which was an incredibly stupid thing to do given the fact that my business could have failed and left me with thousands of dollars in credit card debt that would have taken until the year 2099 to pay off. It worked out in the end for me, but if you decide to finance your business on plastic keep in mind that you will be paying extremely high interest rates on the money you’ve borrowed and unless you hit it big you will be paying for that money for many years to come.

Mortgage The Farm

Bank loans are next to impossible to get if you don’t have collateral and a track record of business success, which is why many entrepreneurs use the equity in their homes to finance their business after being turned down for a bank loan. While this makes more sense than building a business on a deck of credit cards, the financial risks are no less abundant. You must pay this money back whether your business succeeds or not, but it is a good source of low interest money to get you started and the interest may be tax deductible (check with your accountant to make sure).

Angel Investors

An angel investor is typically a wealthy individual who invests in start up ventures for a share of the ownership. Angel investors are usually the first formal investors in a business and provide the seed money to get the business up and running. Some angel investors will write you a check and leave you alone to run your business while others consider their investment a license to "help you" manage and make decisions. If you do accept angel money make sure the terms are clearly defined on both sides. Angel money always comes with strings. Make sure you know whether those strings come in the form of a bow or a noose before you accept an angel’s check.

Venture Capitalists

Venture capitalists are to angel investors as pit bulls are to Chihuahuas. That’s not to say all VC are big, bad dogs, but they do have powerful jaws that can chew up your business and spit it out if things don’t go their way. VC money doesn’t come with strings, it comes with chains and locks and lots of legal documents. VC always have the upper hand in any deal they invest in. That’s just how it works and that’s the price you pay to get access to VC money.

If your business gets to the level that VC money becomes a viable option, don’t jump at the first bone a VC dangles before your eyes. If one VC likes your idea, others will, too. Present to multiple VC and carefully consider each offer before you accept the check.

Just remember, no matter how you finance your business, use the money wisely. Don’t buy $1,500 plasma monitors and $1,000 Hermann Miller chairs.

Have a very clear plan of how the money will be used and how it will be paid back.

And remember this, the more you can shoestring the business, the more of the business you will own in the end.

Tim Knox

Entrepreneur, Author, Speaker

Tim Knox is a nationally-known small business expert who writes and speaks frequently on the topic.

For more information or to contact Tim please visit one of his sites below.

http://www.timknox.com

Article Source: ArticleRich.com

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Tips to Apply Successfully for Funding

By Antony Eldwin

However, the silver lining in the cloud is - business finance, small or big, is the bread and butter for banks and other financial institutions. If you can convince them that you are a good investment opportunity, you are on!

Following tips might make your application irresistible for banks or other institutions.

1. Be Thoroughly Prepared: You need to satisfy the lenders regarding your track record and your future viability. The documentation required for this has been discussed in my other article All About Small Business Funding.

If you are just starting out, you need financial projections for at least next three years. A financial projection typically comprises of:

• Estimates of your income and expenditure

• Working capital estimates

• Cash flow statement

• Projected Balance Sheets

• Precise loan utilization detailing

• Profiles of decision making people i.e. top management who would be handling the project(s) for which you need financing

• Comprehensive business plan

Some of these documents require professional expertise and you would need a professional accountant to prepare them.

You would also need the following documents apart from above mentioned documents, if you are already an established business and want a small business loan to fund your working capital requirements or your expansion plans.

• Copies of the Balance Sheet, Profit and Loss statement, and tax returns of the company

• Personal financial statements and tax returns for last three years

2. Anticipate Questions: You need to be well prepared, and need to have a fair understanding of the lending process to anticipate questions you are most likely to face.

Remember, lenders need to be convinced about your loan repayment ability. Ideally your business plan should also include answers to your banker's questions. The most frequently asked questions are:

• How much money do you need? Be exact! You can add a little extra for contingencies.

• Long term or short term? Be prepared to go into detail supported by your documents, the time you require to repay the loan.

• What are your loan utilization plans? Explain whether it is for capital expenses, working capital, and expansion or to set off old debts.

• How you will repay it? You got your cash flow projections here to explain repayment time frame. Use your financial projections and business plan to convince the banker of your repayment capability.

3. Don’t Be Apologetic: Remember; banks look for good opportunities to invest. Be confident that you are one of the better opportunities the bank has come across and project that confidence to the banker. It is a deal on equal terms. Banks are not doing you any favor by giving you a loan. You are giving banks good business too. You are an entrepreneur who can and will repay the loan.

4. State the truth and back it. Bankers are very smart people. If you make any unsupported grand statements, take my word, they will see through it, and you will come out looking as someone who is desperate for a loan. And bankers don’t touch such people with a barge pole! Better idea is to keep your projections, documents, figures and your statements on the conservative side. You will cast an impression of a cautious and methodical person.

5. First impression is the lasting one. Dress in a professional manner for the interview. All the loan documents must be typed; handwritten documents look unprofessional. This is a business transaction, so treat it as such.

Last but not the least, a word of caution: getting approval for a business loan is good and you are almost through to your path to realizing your dreams. But don't forget to read the fine print. Loans have hidden costs such as: annual fees, bank charges, closing costs, commissions, and balloon payments. So stay focused and clear-minded about these riders during the loan process. Be sure about your goals, keep focused and work according to the plan. Your small business finance requirement may turn out to be just the dose you needed to turn your dream big!

Antony Eldwin is CPA and runs a firm specializing in counseling for business finance. He is also attached to several financial institutions as consultant. He is a well respected professional in Small Business Financing . His articles in various forums have been well received. For more information please visit: www.MerchantCashDirect.com.

Article Source: ArticleRich.com

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Starting Your Business:

Starting Your Business - Financing

Featured Resource:

>>>Article Archives<<<

Articles:

SBA Business Loans
by Business Capital Group, LLC

Short and Long Term Loans for Small Business

by Irish Taylor

Business Start Up Funding Silver Bullet

Business Start Up Funding - You Need a Silver Bullet

Investors Love Paying Customers

Understanding Conversion Works, Too

Speed Things Up

6 Ways To Fund Your New Business
by Tim Knox

Tips to Apply Successfully for Funding

By Antony Eldwin

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Starting Your Business - Financing

Featured Resource:

>>>Article Archives<<<

Articles:

SBA Business Loans by Business Capital Group, LLC

Short and Long Term Loans for Small Business

by Irish Taylor

Business Start Up Funding Silver Bullet

Business Start Up Funding - You Need a Silver Bullet

Investors Love Paying Customers

Understanding Conversion Works, Too

Speed Things Up

6 Ways To Fund Your New Business by Tim Knox

Tips to Apply Successfully for Funding By Antony Eldwin

SBA Business Loans
by Business Capital Group, LLC

6 Ways To Fund Your New Business
by Tim Knox

Tips to Apply Successfully for Funding

By Antony Eldwin