Learn To Be A Fix & Flip Investor: business loan

Showing posts with label business loan. Show all posts

Thursday, March 2, 2017

The Pitfalls of a Short-term Business Loan

Are you thinking about getting a short-term business loan in the near future? If the answer is yes then it’s important to know just you are getting into.

Practically, every business at some point or another needs additional financing or a business loan. But, what many business owners simply do not realize is the important differences between short-term loans, standard bridge loans, hard money loans, etc. In fact, many business owners often go into the situation relying solely on what their potential lenders tell them or have promised; this, of course, can lead to confusion down the line as lending, at the end of the day, is also a business.

Clearly, you do not want to be one of those business owners who secure additional financing without all the facts i.e. you will do the necessary research to find the most advantageous business loan you can. If you have already done your research then congrats, you are one step ahead of the game. But, ask yourself this— are you sure that you know everything you need to know about short-term financing for businesses? The truth is, obviously, you cannot know all there is to know about anything. But, that’s why the question asks if you know everything YOU need to know. In other words, do you have enough information to make an advantageous and informed decision that is right for you as well as your company? Do you understand the pitfalls of short-term financing? Well, these are things you absolutely need to know in order to move forward with this particularly kind of business financing.

Of course, if you need financing sooner rather than later and do not necessarily have loads of time to spend comparing offers, interest rates, and terms then the very least you can do is become clear on the potential pitfalls. Thus, without further ado, let’s go over the major pitfalls of short-term loans for businesses.

The Real Deal on Short-term Financing

The major pitfalls of short-term financing are unsurprisingly the over-the-top interest rates and ultimately how this extremely expensive financing will affect your company’s bottom line. For example, you will see fairly quickly how needing even an extra month or two can significantly impact the amount of interest you will end up owing i.e. a loan of $50,000 at a three percent interest rate not only will run about $1,500 in interest but with that extra month or two the number quickly increases. Moreover, many lenders often penalize or add additional fees for extensions. In regards to your company’s bottom line, if for whatever reason you are unable to meet the terms or obligations of your short-term loan you can very easily put your business and its future at risk.

A Little Business Advice

Ultimately, if you are the position to secure a short-term loan and you are fairly positive that you will be able to cover future terms or obligations in spite of very high-interest rates and you have explored all your options then this kind of financing may be, in fact, right for you.

About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: business loans,business loan

Tuesday, February 28, 2017

When is a Business Loan Right for You?

Are you considering a business loan, but aren’t quite sure if the timing is right loan for your business? If so then you’ve come to the right place to help you figure it out.

The hard truth is that if you are a large business, in many ways, the world of lending is your oyster. However, if you are a small business not only do you have fewer lending options you probably do not have a clue of where to begin or in this case when to begin. Well, that’s okay. Statistically speaking, most small businesses (newer businesses) or rather more like only half of small/ newer businesses in the US apply for financing. So as you can see you are not alone in be wary or fully apprised when it comes to applying or securing a business loan.

Moreover, you are not alone in your uncertain quest for the right business loan because when asked most small business owners admitted to believing that financing was just too hard to find due to the mainstream or traditional lending options available. Well, the truth is they are not completely wrong. Small business owners do, in fact, have a harder time of securing financing generally if they do not explore non-traditional lending options or if they do not truly take the time to understand what’s required of them since they are small business borrowers.

In other words, if alternative lending options are not your thing per se and you are still looking for additional financing then it’s time to understand your eligibility as a small business. In general, you should also decide what are your top priorities are i.e. money today or better terms and a lower interest rate. By simply doing these two things, you can put your small business in the best position in the short-term as well as the long-term. With that being said, let’s go over what it means to be eligible for additional financing as a small business.

Understanding Your Eligibility

Unsurprisingly, most traditional lenders and alternative lenders look for specific factors when approving a business applicant such as your revenue, the age of the business, your personal FICO score, how you plan to use the additional financing as well as the amount you are requesting i.e. the size of the proposed loan. One factor, in particular, that many small business owners tend to not give too much weight to is the age of the business. But, in reality, this factor matters and it matters a lot. Generally, most lending institution will offer you better options if your business has been operational for more than two years.

Timing Is Everything

Thus, it almost goes without saying that the best for securing additional financing is when your business has been successfully operating for at least two years. Are you curious as to why two years is the lucky number? Well, you shouldn’t be. It is because a significant number of small/newer businesses fail in the first two years and even more fail in the first three. Thus, you can see not only is it your best interest, in general, to getting your footing as a business it is also advantageous when it comes to additional financing.

Technorati Tags: business loan,business loans

Monday, February 27, 2017

Common Issues that can keep you from securing a Business Loan

Are you interested in securing additional financing? If the answer is yes, then it is absolutely vital to make sure that you have all of your ducks in a row before you begin the application process.

Securing a business loan involves careful planning, to say the least. You need to be clear on things you need, things you want, what assets you have and how you are going to pay it all back regardless of whether or not your business, itself, survives. Thus, long story short, getting a business loan is more than filling out an application.

In fact, even before you start filling out applications, you should make sure that you’ve successfully avoided any serious missteps or common issues to ensure that you are denied down the line. For instance, many business owners, much like regular people have a few skeletons in their closets. If your business has a dark past for some reason like say you had trouble paying past debt, you better believe that, in many ways, securing your business loan just became a pipe dream.

Similarly, having a lack of cash flow is also another non-starter for most lenders. Unsurprisingly, your cash flow tells your potential lenders how much cash you have available to, wait for it, pay back a loan. Of course, if you have tons of cash on hand, you may be asking yourself, why apply for a loan in the first place? Well, as you very well know, loans help businesses of all sizes accomplish a variety of projects, ventures, and business upgrades. Nevertheless, you should always ask yourself if you and your business are actually able to afford additional financing.

Other Issues that scream Danger beware Danger

Having bad credit and a lack of cash flow aren’t your only concerns, you also need to make sure that you have a clear plan for the future and that your head is not in the business clouds sort of speak. For instance, if you approach a lender will a careless or hopelessly romantic attitude about your business plans or your plan for additional financing you better believe you are going to turn off some reputable lenders. So, again be clear about your projected earnings, your plan for business and be organized—nothing is worse than not having the right documentation on hand or appearing unprepared i.e. being disorganized. Other common issues that can easily derail your additional financing plans for your business include being too picky or reserved when it comes to your lending options as well as letting a rejection impact your plans ( at least one of your loan applications will be denied that is the nature of business; remember you cannot be everyone’s cup of tea).

Make Your Dreams come true

At the end of the day, you can easily address these above-mentioned issues with just a little elbow grease and once you do remember it is still important to have a strong pitch prepared for your potential lenders and to be passionate about your future plans when dealing with lenders. Lastly, if you are a small business or a newer company take your time making this decision as it is everyone’s interest to not bite off more than you can chew.

Technorati Tags: business loan,business loans

Friday, February 24, 2017

Simple Steps to Securing a Business Loan

So, you have made a big enough dent in your industry to take your small business to the next level. Well, let’s celebrate with a how-to-guide on securing a business loan, shall we?

Surprise! If you didn’t know by now that you were going to need outside financing to take your small business next level, well now you know. The truth is as your business starts to grow simple things like payroll and inventory that use to take you a few hours to complete now take days or even months alone. So, what else can you really do but choose to expand?

Yet, since you are considered a small business by most lenders, you will quickly find that it is somewhat difficult to secure a business loan initially. But, that doesn’t mean it’s impossible. In fact, the best way to secure a business loan for your small business is to get in the know and start applying. By “get in the know” we mean understanding why you need the money, narrowing down your loan options or types, finding the lender that gets you and seeing if you qualify. After all of this is accomplished, really all that’s left is to get the necessary documents together and apply.

But, wait this sounds fairly cut and dry. It may seem so cut and dry, in fact, that you are wondering why people say it is difficult for small business owners to secure additional financing? Well, the obvious answer is, it’s more about qualifying or rather meeting your lender’s requirements than it is about getting your paperwork together and coming up with a clear plan. But, the good news is by getting in the know i.e. completing the above-mentioned steps you will actually make it much easier for yourself and your business when it comes time to meet those pesky lender requirements.

How to Get in the Know

When meeting with potential lenders or your future lender it is important to know exactly why you need this loan, so again make sure you know as well and preferably beforehand. Next, you need to decide which loan is right for you. This step is actually not as hard as it seems because if you know why you need the loan then you can find the right loan. For instance, if you are looking for some financial assistance in managing the day-to-day expenses more than likely you want a short-term cash flow loan or a line of credit. If on the other hand, you want an additional financing to grow your business then you should be looking at term loans. Based on these two steps, your next move is, of course, finding the right lender (note: if you have bad credit you might want steer away from traditional lenders).

Exceed Your Lender’s Expectations

So how does all of this help you exceed your lender’s expectations? Well, it makes it much easier to figure out key factors that affect your approval such as your credit score and it helps you to see if you are truly in a position to secure a loan( been in business more than 2 years, meet the minimum annual revenue requirement and have the ability to make payments).

Technorati Tags: business loan,business loans

Small Business Must-Haves when Applying for a Business Loan

You probably heard it all before, you absolutely need this piece of documentation and this info regard x and this report to explain y when applying for a business loan. But, if you are like most people, after a while you get lost in all the noise and simply aren’t sure what you truly need when applying for a loan.

As a small business, you are more than likely just getting your feet wet when it comes to applying for a business loan, which is perfectly okay. Everyone once had to start somewhere and additional financing for any business can be a godsend. With that being said, let’s make it a little easier to get your business loan by cutting through some of the red tape.

For starters, it is true that you will need important documentation such as your business and personal tax returns. You will also need your business and person bank statements, your business financial statements as well are your business legal documents i.e. articles of incorporation, your commercial lease, franchise agreement and so on. Your lender may not necessarily require all of these items but it is always in your best interest to have these items on-hand when trying to secure your business loan.

Nevertheless, at this point, you are probably looking for those must-haves that were mentioned earlier and rightly so. Obviously, some of these top must-haves will not be revolutionary i.e. it is not shocking that you need strong credit to secure additional financing for your business. But, other must-haves like an updated, detailed business plan that even covers your social media presence kind of is revolutionary; since only as of recent have lenders started to factor a company’s social media presence into their overall decision to approve financing.

Be Successful and Be Prepared

Other must-haves you should have handy when applying for your loan include a compelling personal resume, credible P&L statements and in-depth knowledge of the actual loan you are trying to secure. A compelling personal resume makes the list of must-haves because traditional lenders as well as most lenders in general want to know that they are investing in a qualified individual. Obviously, your ability to run your business successfully hinges on your skills, talent and know-how, so don’t be afraid to show it. Additionally, when it comes to your personal resume make sure you thoroughly proofread it and edit your resume to near perfection. In terms of having credible P&L statements, this means your P&L statements should speak to your reliability, ethicality, and professionalism. Lastly, you already know that knowledge is power so if you truly want that loan, take the time to research your many lending options and pick the right loan the first time.

The Benefits

Clearly, the benefits of being well-prepared and on top of all your lender’s must-haves means that you are more than likely to secure that loan of yours. So, don’t think you can just fill out an application and wing it. Today’s lenders aren’t afraid to turn a small business down so you shouldn’t give them a reason to.

Technorati Tags: business loan,business loans

Thursday, February 23, 2017

More than a Standard Business Loan

With a large chunk of your business loan research under your belt, you may feel as though you are clear on all your options. But, you might pleasantly surprised to know that there are more than traditional term loans, short-term loans, personal loans for businesses, business credit cards and lines of credit available when it comes to securing additional financing.

So, if you are like most newbies in the business world, you have probably been led to believe that a “standard” business loan is the only way to go when it comes to securing additional financing. Well, get ready to be shocked and amazed or rather just better informed. The fact is you can apply for a standard business loan and/or explore several different lending options.

For instance, you may or may not know about SBA loans. SBA loans are basically a long-term and low-interest loan for small businesses that is partially guaranteed by the government. The reason you may not have heard of SBA loans is because they are hard to come by as they often involve lengthy paperwork, longer approval times and collateral that you may not have available. Nevertheless, SBA loans still offer some of the lowest down payments and terms. Moreover, these loans come with reasonable interest rates and can ultimately be used for a wide variety of business purposes.

In addition to the existence of SBA loans, you may also be surprised to know that there are lenders (private, family and alternative) out there that are sympathetic to your start-up state i.e. these specific lenders offer start-up loans. Start-up loans are, in essence, any kind of financing aimed at helping businesses with no business history. You can also use business assets that are already in your possession. In other words, you can use such things as your accounts receivables or business equipment in order to secure additional funding.

How to Secure Additional Financing In-house

In-house financing, if you will, is when you utilize such things as your accounts receivables or invoices as collateral. This essentially means that you sell your invoices to another entity in order to not have to wait for payment which in turn provides you with the cash flow you would have eventually received had your customers paid. As an additional financing option, this can be advantageous if you only need the amount of your outstanding invoice, though it is important to note that fees are typically the downside to this kind of financing. Similarly, equipment financing is yet another in-house option where you are able to receive a loan for new equipment by using that new equipment as collateral. Equipment financing is a great way to have quick access to cash with very little paperwork, but keep in mind that equipment depreciates which can and will affect your bottom line.

Things to Consider with a Merchant Cash Advance

Another rarely-discussed option is merchant cash advances. This is basically a lump sum of additional financing that you gradually repay via a portion of your daily credit card transactions. This particular option is definitely the quickest and easiest way to get additional funds, but it also the most expensive—so choose wisely.

Technorati Tags: business loan,business loans

Learn To Be A Fix & Flip Investor

Featured Post

The Big Show is Coming to Town.

Thursday, March 2, 2017

The Pitfalls of a Short-term Business Loan

Tuesday, February 28, 2017

When is a Business Loan Right for You?

Monday, February 27, 2017

Common Issues that can keep you from securing a Business Loan

Friday, February 24, 2017

Simple Steps to Securing a Business Loan

Small Business Must-Haves when Applying for a Business Loan

Thursday, February 23, 2017

More than a Standard Business Loan

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