May 15, 2014 By

Working Capital Loans

timeShort-term and Long-term Financing

There are line of credit loans, angel investment, SBA loans, and many others. Loans are offered under different government programs, and the terms vary depending on the current economic situation and fiscal policy. Businesses apply for loans to cover their short-term and start-up costs . Entrepreneurs, small business owners, and new start-ups apply for financing. Businesses benefit from the fact that these loans are guaranteed by the government. Financial institutions require that borrowers offer collateral, a breakdown of their capital, and cash flow projections. There are lending criteria to meet, but business loans allow companies to purchase materials, supplies, fixtures, furniture, and machinery. Businesses use the funds for different purposes, except for a partial change of ownership. Businesses seek financing to expand, cover operational expenses, develop new products, and more. They can use the funds to finance leasehold improvements, production facilities and equipment, software and communication equipment, and buildings.

Applicants can choose from fixed and variable rate loans. Microloans are an option for borrowers who need working capital. The criteria of intermediary lenders and the presence of collateral determine the loan terms. Banks accept assets such as inventory, marketable securities, real estate holdings, etc.

Secured and Unsecured Loans from Private Lenders

Businesses can apply with non-bank entities, peer to peer lenders, and brick-and-mortar banks. They usually offer a higher interest rate compared to funding under government programs. Financial institutions require documents such as your financial statements, business tax returns, commercial leases and franchise agreements, and others. Borrowers also submit documents such as copies of contracts, articles of incorporation, and others. Your chances to get an attractive offer increase if you submit a business plan. Some banks also require a valuable asset to be offered as collateral. You can offer livestock and crops, certificates of deposit, bonds and stocks, and other assets.

Other Options

Borrowers can choose from different financing options, including home equity, commercial, and other types of loans. Venture loans are one option, but they are difficult to obtain. The types of business loans with bad credit to apply for depends on your project, location, and other factors. If you apply for a business loan with a private lender, you can use the money to pay off debts, purchase real estate and equipment, buy assets, and for your normal operations. Grants are also offered to businesses that focus on research and development. While the government offers grants, applicants must meet stringent criteria.

Filed Under: Banking, Loans Tagged With: , ,
April 7, 2014 By

Financing for Entrepreneurs and Small Businesses

Entrepreneurs and small businesses need financing to buy equipment and machinery, land, and facilities, for their normal operations, and to start a business. Financial institutions offer different types of financing, including start-up, commercial, construction, and other loans.

The interest rates are based on the economic environment, loan term and amount, and other factors. Lending platforms offer loans with different interest rates, fees, and closing costs. You can calculate the monthly payments based on the loan amount and term of repayment. Enter the loan amount and your credit quality (excellent, good, fair, or poor). Some peer-to-peer lending platforms also offer women’s small business loans. Microloans are offered through different programs to help non-for-profits and small businesses to expand. The lending criteria and requirements are more lenient compared to credit unions and banks. Borrowers can choose from different funding options such as

  • commercial mortgage loans
  • equipment leases
  • funding for equipment purchases
  • cash advances
  • business loans

Customers with poor credit are usually offered secured loans because they are considered risky. Financial assistance is also offered through government programs, including small business loans and economic development grants. The main benefit for businesses is that the interest rate is lower compared to private lenders. Small business owners also resort to loans from family and friends as well as equipment and real estate loans.

Supplier and vendor financing and SBA loans are also options. There are other types of loans, including vendor financing and equipment leasing and financing. A standard bank loan is another option, but the application process may take several weeks, and applicants with poor credit are often turned down. Banks take into account factors such as length of time in business, payment history, type of business, and others. Businesses with poor credit are often asked to offer collateral such as equipment, land, real estate, etc. Financial institutions that offer business loans require supporting documentation such as profit and loss statements, tax returns, and others. Banks are also interested in your dealer and supplier information. A good business plan increases your chances of approval. Submit a business plan and include a mission statement, description of services and products, and funding request.

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Filed Under: Credit, Debt, Loans Tagged With: ,
December 26, 2013 By

Business Loans and Receivables Financing in Canada

Financial institutions in Canada offer different types of business loans to start-ups, franchises, and large and established businesses. The main sources of business financing are credit unions and banks. Small business grants, angel investors, and receivables financing are other options to gain access to funding.

Types of Financing

Businesses have access to different sources of funding such as leaseback and sale solutions, inventory financing, and confidential invoice discounting. Other sources include credit card receivable and purchase order financing and confidential invoice discounting. Micro loans are another option for businesses. There are different micro lending practices and loans available to start-ups, entrepreneurs, and small businesses. The funds can be used for different purposes, including machinery and equipment, working capital, fixtures and furniture, supplies and inventory, and others. The terms and repayment schedule vary based on different factors such as needs and requirements, the planned use of the funding, as well as the amount required. Microloans are offered by government agencies through financial institutions that serve as intermediary lenders.

Other Sources of Financing

Borrowers are offered other sources such as subordinated debt and mezzanine financing, asset based lending, operating lines, and working capital credit lines. Receivable financing is another option for businesses. This is a type of arrangement whereby the applicant uses its receivables as a form of collateral. It is done to guarantee repayment and obtain favorable terms. The financial institution offers a loan that is equal or smaller than the value of the receivables. It is not a good option for old receivables.

Factors to Consider

The type of loan to apply for depends on factors such as purpose, credit quality, and the company’s stage of life cycle. It can be distress, maturity, high growth, or start-up. Large, established companies have better chances of getting approved for a business loan. The options available also depend on your industry or sector. Companies in the hospitality, service, and retail sectors are at a disadvantage, especially new businesses and start-ups. They are considered high risk compared to companies in other sectors. Businesses with better chances include agricultural producers, wholesale companies, real estate agencies, insurance firms, and finance companies.

One factor that improves your chances of getting approved is a solid business plan. Other factors include your credit and payment history and whether there are late and missed payments, delinquencies, etc. While some companies are offered plenty of options, others are forced to look into rare and exotic types of financing. The most important thing is to consider your optimal debt level, especially if you already have debt.

Filed Under: Loans Tagged With: ,