Commercial Loans for Small Business and Job Creation

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Well, it looks like our economy is finally turning the corner and the small businesses are starting to show a profit, much like the corporations have been for the last 18 months. Indeed, there are a lot of retained earnings at the corporate level, and the banks are on solider footing and willing to make more small business loans now.

We are also entering an election year, and typically that is good news for the US economy. In my retirement I do a little bit of business consulting, and the other day I was assisting a small business person prepare a business plan, put together some proformas, and the other required documents to secure a business loan. She had decided not to go with a SBA or Small Business Administration loan because of all the stipulations and requirements, which did not make sense for her financial wherewithal, and abundance of personal assets.

Nevertheless we got to talking about what she was planning on doing with the money and it turns out she was going to expand her business so she could make more money. In doing so she will be hiring more individuals, and right away she will be hiring three new salespeople and two for marketing. That's five additional jobs that she will be creating. She will use some of the loan money for cash flow as the salespeople and marketing department sign up new corporate accounts.

Indeed, perhaps this shows how commercial loans for small business adds to job creation in this country. The corporations are very good at collecting money for their goods and services, and they are extremely good at lobbying protectionistic rules and regulations from government to stifle their competition or put up barriers to entry. But for a small business person caught in the trap of a poor business cycle or the uncertainty of future regulations it causes entrepreneurs to forgo the risks associated with business expansion, or taking out more credit in their personal name or in the name of their business.

Prior to now, there was not a whole lot of lending going on in her industry or sector, and although there was some, it hasn't been until now that she felt confident enough to go out and risk capital or borrow more money. Now she does feel confident, and she is moving this ball forward and down the field. Indeed I hope this will help others see how important commercial loans are for small business and job creation. Please consider all this and think on it.

Commercial Lending Programs and SBA Loans Considered

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Before retirement, I ran a franchising company, and occasionally our franchise buyers would need to take out a loan to buy the equipment, and pay for the franchise fee. However, whenever someone told me that they wanted to get an Small Business Administration loan, I had to think twice about selling the franchise because I was worried it might take too long for them to get approved, and get funded so they could order their equipment, and eventually start their business. You see like any franchisor, I was on a mad dash to put in as many units throughout the country as possible in the shortest amount of time.

Therefore, I would much rather sell a franchise to someone who could pay cash, or had their own financing already available. So the question you might ask is; do Small Business Administration loans always take so long to process? No, not really, actually they don't take any longer than most commercial loans, therefore it is often a myth, and I must confess that I too once believed that. In speaking about SBA loans, and the mysticism behind them, they aren't as complicated as you might think.

In fact, last month I read a very interesting article in the Wall Street Journal published on May 16, 2011 which was titled "Debunking the Myths About SBA Loans," by Marshall Eckbald. He commented on four common myths;

1.- SBA Only Lends to Hard Cases
2.- Lendors Face No Risks
3.- It Takes Forever to Get an SBA Loan
4.- You'll Get Buried in the Paperwork Trying to Get an SBA Loan

Now then, I'd like to tell you my experience with Small Business Administration loans as a franchisor, rather than focusing on the Wall Street Journal article which was written for a different type of audience. On the first point of contention I would say that the author is correct, that statement is false, because I know of people who were financially qualified to get a loan just about anywhere, but when they went into their local business bank, and the bank steered them toward and Small Business Administration loan because it made sense for their situation.

Now then, it doesn't always make sense in all situations because everyone's financial wherewithal, and portfolio is different. The second item is not true either because whereas the government guarantees the largest portion of an SBA loan, they don't guarantee it all. Further if a local bank has too many SBA loans go bad, they get taken off the list. On item number three as I stated above it generally doesn't take any longer to get an SBA loan.

And the fourth item I can say that an SBA loan is rather simple, and there doesn't seem to be any more paperwork asked for or involved than any other type of commercial loan for a business venture, or an existing business which is expanding. At least that has been my observations. Now then, there are many reasons why you would not want to get an Small Business Administration loan, for instance if you are buying it or selling a piece of property, or you don't want certain collateralized assets tied up for a long period of time.

And I believe for most people this is their biggest concern. And therefore I hope you will please consider all this, go find and read that Wall Street Journal article, and think about what I've said here today. If you have any other comments or questions, perhaps some concerns or a case study of your own when dealing with Small Business Administration loans, please shoot me an e-mail. Your information might help someone else out for a future article.

Cash Flow Statements And Management

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For any business to run smoothly, it is important to focus on cash flow statements. Optimized business output stands on proper cash flow management, or in other words, monitoring and analyzing of the cash inflow and outflow, thereby ensuring stability. In the recent years, a lot of focus has been given to cash flow management of small and large businesses so the are able to maintain solvency.

HomeCoast Capital, LLC is a commercial finance provider operating nationwide. The company offers an entire range of capital solutions, capital development services, asset-based lending lines of credit, accounts receivable factoring, equipment leases, commercial real estate financing, and merchant financial services to new and existing businesses. For a small or medium-scale business looking to improve cash flow, HomeCoast Capital provides means to get immediate payment, minimize in-house cash drain, ensure continuous cash by narrowing the gap between heavy cash flow and dry periods, and accelerate the speed of collection of funds.

The basic path followed by HomeCoast Capital for cash flow management is analyzing and examining the various components of a business that affect cash flow, such as inventory, accounts receivable as well as accounts payable, and credit terms. A comprehensive analysis of these components helps pinpoint the source of cash problems thereby finding solutions to rectify such problems.

HomeCoast Capital offers accounts receivable factoring by advancing capital to existing businesses using receivables as collateral. Such an arrangement ensures steady cash flow back into the business independent of the payment patterns of various debtors. In such a scenario, the business receives working capital to produce goods and provide quality services at the time of high market demand. Bidding of larger projects can be made possible with the excess cash flow without depending on payment from debtors. Moreover, it can be beneficial to customer relationships since slow-paying customers need not be constantly reminded to pay.

HomeCoast Capital performs due diligence for their clients and can accurately project how long it will take the account debtor to pay. This is done by immediate generation of customer invoices and monitoring use of credit by customers thereby adjusting their credit limit. This way the gap between cash inflows and outflows can be narrowed. Bernard Linney and his staff are eager to show you how easy business financing really can be.

Business Loans From Private Finance Groups

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Private finance companies have replaced banks in terms of providing business loans to entrepreneurs who find credit companies more reliable when it comes to borrowing money in the form of loans. There are satisfactory reasons behind businesses approaching finance groups rather than banks for loans. The first reason is the easy loan procedure. Conditions put forth by banks for borrowing loans are so strict that most of the businesses remain out of purview of the banks' loan program. However, a finance company finds no reason in denying a loan to a business, however small it is. The finance groups have loan offers for each business; the amount may vary from one business to another though.

Loans work as a lifeline for a business hence most of the time entrepreneurs are on the lookout for low interest quick business loans on easy terms. Borrowing money in the form of a bank loan could be troublesome because banks take their own time in processing loan applications. Also the loan is approved after assessment of the business hence entrepreneurs seldom get the full amount they have asked for. But a finance company assures the full amount of money requested, if it is satisfied with the performance of a business. The finance group can even give you cash in hand which is near impossible to receive from a bank, however generous it is.

People are fed up with the bank's cumbersome loan process and they are looking for someone who could provide business loans at reasonable interest rates without consuming too much time. Private finance companies or groups are a boon for businesses as they promise to be an easy loan facility to all irrespective of its performance. The credit companies look for ways to make their loan process more convenient so that every business can take advantage of easy loans. On the other hand, banks look for businesses that are capable of repaying loans with high interest rates.

Banks are no longer a favorite place for obtaining business loans and this is evident from the number of entrepreneurs approaching credit companies to finance their businesses. Obviously the ease of borrowing and low interest rates are the guiding forces behind the businesses approaching finance companies. The convenience of repayment and the capability of giving cash in hand provided by a finance group are becoming more interesting into today's entrepreneurs. The private finance groups are always happy to help. Loan applications are available on their sites and one can also ask for assistance to fill the loan application properly.

Business Loans - Getting Your Supporting Docs In Order

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Applying for a business loan can seem like a mammoth effort when you start to see all the paperwork that is required. Many potential deals get sidetracked not so much because they are bad deals, but because the supporting documents are not submitted to support the application.

There is an old saying in law regarding evidence. It is only worth something if you can get it in front of a jury. The fact you have a great argument that isn't supported by any objective makes it as useless as, well, you can paste your favorite clich?? here. The same tends to go for supporting documents with a commercial loan. Without the supporting docs, your application doesn't stand a chance. With this in mind, let's look at the common docs you must have.

• Business profile description - You must prepare a document that will provide a summary of your business that includes business description, financial summary, history of the business, number of employees, ownership structure and the basic hard boiled facts surround the entity.

• Business plan - A good business plan will outline the vision of your company and highlight its past performance. You should also provide a picture of where your business is going. It is also an absolute must to include projected financials.

• Loan request details - Be very clear about the loan amount that you require and do not fluff it. You should also explain exactly how the funds will be put to use.

• Collateral - Most banks will require collateral to consider your loan application. You should be able to provide a description of your intended collateral and provide supporting documentation to back the numbers.

• Financial statements, both personal and business accounts - If you own more than 20 percent of the business, you will need to provide complete financial information about yourself as well as your business. You should include outstanding debt, collateral used for other loans, maturity on other loans.

With real estate, they say the golden rule is location, location and location. With commercial loans, the golden rule is document, document, document. Make sure you follow the rule and the end result will be funding.

Applying for a business loan can seem like a mammoth effort when you start to see all the paperwork that is required. Many potential deals get sidetracked not so much because they are bad deals, but because the supporting documents are not submitted to support the application.

There is an old saying in law regarding evidence. It is only worth something if you can get it in front of a jury. The fact you have a great argument that isn't supported by any objective makes it as useless as, well, you can paste your favorite clich?? here. The same tends to go for supporting documents with a commercial loan. Without the supporting docs, your application doesn't stand a chance. With this in mind, let's look at the common docs you must have.

• Business profile description - You must prepare a document that will provide a summary of your business that includes business description, financial summary, history of the business, number of employees, ownership structure and the basic hard boiled facts surround the entity.

• Business plan - A good business plan will outline the vision of your company and highlight its past performance. You should also provide a picture of where your business is going. It is also an absolute must to include projected financials.

• Loan request details - Be very clear about the loan amount that you require and do not fluff it. You should also explain exactly how the funds will be put to use.

• Collateral - Most banks will require collateral to consider your loan application. You should be able to provide a description of your intended collateral and provide supporting documentation to back the numbers.

• Financial statements, both personal and business accounts - If you own more than 20 percent of the business, you will need to provide complete financial information about yourself as well as your business. You should include outstanding debt, collateral used for other loans, maturity on other loans.

With real estate, they say the golden rule is location, location and location. With commercial loans, the golden rule is document, document, document. Make sure you follow the rule and the end result will be funding.

Business Cash Advances, Speedy, Straightforward, and With No Personal Guarantee

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When you find yourself thinking about a small business loan agreement you want to see to it that your establishment will receive the very best use out of your money. After all, if you are going to accept the money, you had best utilize it sensibly. You don't just want to enter into business cash advances just because; you want it to be the correct deal at the ideal time.

Business cash advances may not be as complicated and specific as a conventional small business loan, but if you consider it to be in line with a bank loan, you are less likely to request extra money frivolously. Think of each step. Does your establishment know of other sources providing capital that won't cost you interest? Is it a possibility to retrieve money out of an IRA temporarily? Is it possible to ask family or friends to purchase partial ownership in your establishment in exchange for cash flow? There is normally other ways to receive money. Finally, ask yourself if you really need the capital, or would it be easier to do without or close your doors.

If you do pick to enter an agreement for merchant cash advances, look around and consider your options. Many companies ask for different terms. One may request you to pay back 10% more than you are advanced while needing to draw 5% of your future credit card proceeds. Another company may only request you to pay back 8% more, but want you to commit to giving 10% of your income. Which works best for your business?

Once you have the working capital in your bank account, utilize it for its proposed purpose. It is very enticing to purchase something you don't actually need when you have money to spend, but remember, you will be paying for your purchase for some time, so be sure it is a smart investment.

There are many companies to choose from for business cash advances so make sure you shop around. Many companies will promise you the world only to end up stringing you along. The turn time shouldn't need longer than two weeks if you are working with a professional company. Don't pay any closing costs other than the occasional UCC filing fee. Never pay any application or upfront fee.

Avoid Getting Your Commercial Loan Rejected

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Sometimes all it takes is an idea to apply for a commercial loan. All first timers approach banks, the safest and understandably the only financial institutions to raise funds. This was the only way out for the previous generation of commercial loan hunters. Today the options have improved as venture companies have emerged as viable alternatives. The approach road to making dreams come true s more open.

If the business plan is ready, then welcome to the world of commercial loans, where a good deal can be made great with a stable venture partner. There are chances that if the bank is approached directly the answer may be no. Banks now reject funding due to many reasons. Repayment of loans and bad debts, no collateral, first time entrepreneur risk, difficulty in accepting terms and conditions imposed... the list is endless. The dream run can continue to steamroll, with the borrower approaching a funding VC.

The working capital is the stepping stone to success and the journey begins with real expectations and not idealistic plans. Not every business sounds 'safe' enough even though it is unique for the owner. The idea may work or not work. To reduce the risks ask an alternate VC for the commercial loan. Go easy on the infrastructure and needs. Start only with the basic requirements to gain confidence of the VC. Seek professional help in getting the funding process.

A financial head is likely to come with more options to get the business rolling rather than look for bigger companies to fund the huge loan. The current lending environment is not conducive to new outrageous ideas. Funding only the potential clients who will bring the returns is possible. If you are expecting to break even only after two years, and shall not pay back soon enough the commercial loan is likely to be rejected. Rework the modalities with the loan experts and get the best offer.

Hiring a professional is the best way to ensure that each time the loan application meets an acceptance hurdle; the offer can be tweaked to suit the initial loan requirement. It is not easy to overcome the SBA commercial loan rules to get funding for the working capital. Things have backfired in the past for SBA finance companies. They are reluctant to make advance unless there is clarity and assurance that the seed funding amount is returned with fees.