Is your business in a financial crisis and you need help quick? I know, I know… that sounds like a cheesy opener to an even cheesier ad. But if your business needs a loan and you don’t know where to start, the following pointers could be helpful.
First of all, be aware of your specific need and research various loans to find the best solution.
With a Secured Personal Loan, you must provide collateral to secure your loan. The loan process will typically move quickly since you put up collateral and the lender has less risk as a result of your collateral. In the event that you cannot make your payments, the lender will collect by selling your assets.
If you own your home, a Home Equity Loan may be the best solution for you. A home equity loan essentially allows homeowners to borrow against the equity in their home. On the negative side, this loan also referred to as a second mortgage, could result in the loss of your home.
An Accounts Receivable Loan is not highly recommended, but it is there in case you really need it. The lender holds your company’s accounts as collateral and you must repay the loan as your customers pay their receivables. Interest rates can be higher than most other loans, but this loan is sometimes necessary to even out your cash flow if you have no other collateral.
Other methods for funding could be from friends and family, taking on a partner, merging with another company, or by tapping into your own savings.
For a further explanation of these methods as well as other ways to prepare for making a loan request, tune in to the SmallBusinessNewz video.
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Leasing and Cash Flow
Abby,
Another effective method of maximizing cash flow is to utilize leasing and hire purchase options although this is not always an effective strategy. The basic philosophy is that if you can afford to buy something upfront then it may be wise to finance the equipment as it spreads out your repayments and in most countries equipment leased by a business is a legitimate tax deduction and is much easier to manage from an accounting perspective than working out the depreciation of assets.
It also leaves you with some money in the bank to assist with any cash flow hiccups that may be sprung on you by slow paying customers or an unexpected expenditure. Plus you can make some interest on the cash at the bank to offset the increased overall cost. Also many leasing companies offer upgrade options to avoid you investing thousands of dollars in obsolete equipment which has no effective resale value compared to the original asset cost.
If you cannot afford the item upfront then you should be very wary of leasing and financing as this may place additional strain on the cash flow of your business. This is ulimately the same potential pitfall of using credit cards for bridging finance for cash flow lulls.
Whilst on the subject of credit cards I should mention that these can also be used to assist in financial crisis but they should be used with caution. My recomendation is that if you are the kind of person who doesn't believe in credit cards and does believe in budgeting then ironically credit cards could work very effectively for you! On the other hand if you are the kind of person who finds it hard to save then credit cards are not for you no matter how appealiong that quick access to cash may be.
The basic key to using credit cards is akin to the principle of using a line of credit attached to your mortgage except it is your business and supplier debt rather than a mortgage. Basically you get a credit card with an interest free period and make sure that it is paid off within the interest free terms. Instead of putting your last pennies on the credit card at the end of the month and hoping you have enough to make the minimum payment you put all your cash on the card at the beginning of the month and then pay for everything on the card. This keeps the debt on the card as low as possible and if this process is applied consistently you will pay very little compund interest and you can often clock up rewards at the same time! If you play your cards right (pun intended) then you wil pay no interest at all and only a marginal fee (usually ~$50 a year for the service fee on the card)
Many people ask me why the bank's don't tell them how to do this and my answer is simple - They don't want you to know!
Logical IT is an Australian based reseller of a wide range of computer equipment and related services and we offer a comprehensive range of finance options for IT procurement through our partners .
Our website address is www.logicalit.com.au and we welcome enquiries from Australian registered businesses and computer enthusiasts.
Thanks Abby for an informative article.
Kind regards
Alex Brooks - sales@logicalit.com.au
Getting quick cash for your business
Another overlooked cash cow for businesses is their dead-stock merchandise. Most businesses have at least one shelf full of merchandise that has failed to sell if not a whole rack of shelves full. There are many businesses that peruse the internet on a daily basis that look for said inventory. To place your merchandise for sale where these people are looking is the easy way to sell it and get your investment back into circulation into your operating capital. The best place to advertise this merchandise and reach a multitude of buyers is http://www.sellmyinventory.com where buyers and sellers meet each day to help each other.
http://www.sellmyinventory.com
Spread the word!
Cash Control
You need your cash. Using borrowed money to increase your profit is a smart idea. The key is to borrow at the lowest rate and invest in the highest return. Everything you do should be profit driven, it should add to your bottom line, or don't do it. Look for creative ways to save on all of your expenses and investments. If you need employees to do things that help you create more profit, use a credit card/line of credit to pay for the advertising, make the debt payments according to your contract, and cash needs while minimizing your cost of funds. The overall picture should be one that tells you, the use of credit added to your target net profit within a controlled timeline. Small businesses drive growth in economies. There is help set aside for small business owners who are committed to profit and job-creating improvements. Get committed, get the help you need, and drive profits.. Seriously...It's your lively hood..don't play with it. Ken McCormick-kgc@kgc1.com
Venture Funds
Did you know there are resources available through Government programs to assist small business in growth and development. Yes money is one of them. Low interest loans, and even venture funds are available if you know where to look and how to present your idea. It's not easy to raise funds, but you can do it if you can show that you are qualified, and your business idea will produce profit and jobs. The qualifications and standards are too detailed to lay it out here for you, but if you need funds to start, or grow your business it would be smart to investigate every resource. Contact me and I can help you to the next step. Ken KGC@kgc1.com
Need Help
My father is 80 years old and has had a "mom & pop" type business for 30+ years. With this economy, everything has hit them - bad. They are in need of some financial help. The banks tell them they are too old. They are such great people and help everyone else out. Somebody, please help them. I have had serious health issues and cannot afford to help at this time. If you have a way to help, please contact me. Thank you so very much.
ALTERNATIVE TO SMALL BUSINESS LOAN
My name is Dave Smith and I work for a company called Swipe Payment Solutions. What I can suggest as an alternative to a traditional bank loan is a merchant cash advance. The way it works is my organization buys a certain percentage of future debit and credit card recieveables and in return gives the client a lump sum of capital, typically 1.5 times monthly credit and debit card sales. The benefits to the client are quite substantial in that it is esentially an unsecured loan with a quick turn around time and the client does not have to put down collateral. Let me know if i can help, you can reach me at daveksmith7@gmail.com or 917-837-8150.
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