Cherokees offer business loans

This will definitely be a good news despite of the difficulties in obtaining loans from banks.

As banks are tightening lending standards for individuals and small businesses because of the deepening crisis on Wall Street, the Cherokee Nation is stepping up to help tribal members and members of other tribes obtain small-business loans.

The Cherokee Nation's Micro Enterprise Adult/Youth Opportunity Loan Funds are available through the tribe's Small Business Assistance Center.

The loan funds were created to assist low-income American Indians with funding and assistance to start, expand or stabilize a small business, said Lahoma Davidson, a portfolio manager at the assistance center.

Read more about Cherokees' offer of business loans.

Plan The Finances For Your Business

Wichita State University conducted a small business forum which discuss to its attendees the point in learning how to plan finances in their business.

The entrepreneurship forum, on financing a start-up business, featured Feist; Steve Radley, director of the Kansas Center for Entrepreneurship; and Vanessa Klein, a business development specialist at the Wichita Small Business Administration office.

Their task was to explain to students how to finance the working capital for a start-up business. According to them, there are three primary sources for start-up financing: the entrepreneur, the bank and the entrepreneur's family and friends.

Read more and learn from the forum from this article -Entrepreneurs learn how to plan finances for business.

Credit Cards For Small Business

Nowadays, there are already a lot of sources where small business owners can finance their business. One most popular but really difficult to achieve is capital from Angel investors, we also have small business loans and now we have bootstrapping. One way to bootstrap is get from personal funds, borrow from family members or friends and also credit cards.

Well, I just found this news article from Business Week about the use of credit cards in financing small business and reading the whole article really ranged the bell for me. Why? Because this news exposed to as a certain credit card company who will surprise you later on with their 30% interest rate. Woooh! That was too much.

As commercial loans become harder to find, small business owners give in to aggressive credit card marketers and get slammed with 30% interest rates. You must read the whole story of this news and it's for you to judge it.

Read more on Credit Cards Replace Small Business Loans.

Checklist: Business Credit Fundamentals

Developing your business credit rating is very important because we may like it or not, we'll be needing it maybe not right after then but in the nearer future, we will be needing it for financing our business.

Here's a checklist we need to establish our business credit rating.

You can start building your business credit even before opening your doors for business.

1. Establish your business as a separate entity in order to separate your business credit profile from your personal credit profile. This means you want your business to be structured as a corporation (a limited liability company, or LLC, is most common for small businesses).
2. Make sure you have a well-written business plan, which includes all of the sections typically found in such a plan along with the necessary financial details. Be prepared to defend everything in your business plan by showing how you came up with your figures and developed your plans. In addition, before progressing any further, you need to make sure that you have all necessary licenses and/or permits to start and run such a business. Your initial goal is to establish a viable business on paper, with all of the details already in place.
3. Find out exactly what the requirements are for lenders and for credit bureaus. By doing such a credit assessment, you will know what standards are expected before you start to establish and build a credit profile. It’s always advantageous to know what is required of you before embarking on any such project.
4. Start making initial purchases for your business. This is where you will need to invest in your business or have individuals you know who will invest. Then use that money to make purchases from vendors who will:
• Let you establish credit based on your personal credit background
• Report your transactions to the credit bureaus.
5. Build or improve your credit profile:
   • Pay within the set terms of suppliers.
   • Make sure to work with suppliers who are reporting your prompt payments.
   • Try to limit the number of inquiries regarding your credit profile.
   • Do not overdo it with business credit cards -– have a couple, not a dozen.
   • Do not let licenses or registrations lapse -– make sure you are on top of renewals
   or obtain any new licensing that you are expected to have for your business operations.
   • Maintain thorough, up-to-date financial records.
6. Be watchful of where your business stands in conjunction to your industry. You want to know if you are spending much more -- or less -- than your competitors. Lenders will certainly be aware of numbers that appear unusual.
7. Review your credit profiles from credit bureaus such as Dun & Bradstreet or Experian at least once or twice a year. Make sure they have the most accurate information and that no errors appear on the reports. If you do find errors, you need to contact the appropriate bureau and report the errors immediately. Always have paperwork ready to support your argument.

Source: Checklist: Business Credit Fundamentals

Establishing Small Business Profitability

Most small business woes boil down to one thing; profitability. Because really, that’s what it’s all about. As small business owners, we judge our success by our bottom line – not how well the business ran yesterday, but how profitable it was. If your business isn’t paying the bills, it’s not going to be around much longer. Then even if it is paying the bills, is there anything left at the end of the day for all your hard work?

According to Mike Rudd, a systematic financial review can lead to greater profits. He mentioned in the online pdf file - There are several elements within a small business environment that should be analyzed and reviewed to establish potential profitability as compared to current performance.

The several elements as mentioned are:

• Financial Statement Review
• Quantifying Financial Impact
• Accounts Receivable
• Inventory Analysis
• Sales and Margin Mix
• Break even Pricing
• Labor Incentives
• Reducing variable or direct costs
  
• Benchmarking

Read more on details for these elements on Establishing small business profitability.

How Much Capital Should You Raise?

Since a company grows in value as it progresses, the founders can minimize their dilution by raising only as much money as necessary at each stage of growth. Ideally, you would raise money just as you need it, but that would require constant fund raising and preoccupy management with selling stock as opposed to building and selling product. Because investors tie the growth in the value of the business to the achievement of demonstrable milestones, increases in valuation can only be realized in a stepwise fashion.

So the answer to the question, "How much capital should we raise?", becomes apparent. You should raise as much capital as is necessary to get to the next major milestone that will justify a substantive increase in the company's stock price. When it comes to cash, the cost of under funding vastly exceeds the cost of over funding. It is therefore prudent to add a fudge factor to the estimate of how much capital is required to get to the next milestone.

What milestones justify successively higher prices? Typically they are the completion of a prototype, completion of the management team, conclusion of beta testing for a product, building a list of initial referenceable customers, getting customers to place repeat orders, reaching cash flow break-even and profitability, filling out a fuller product line, and completing a series of profitable, growing quarters on plan.

Prudent CEOs raise more capital than they think they'll need and rarely turn away capital in an oversubscribed round. There are two reasons why taking too little cash and running out is so costly. First, it puts the company in a very weak position when negotiating price with a new investor. More importantly, it reveals a lack of ability to forecast the future and therefore undermines new investors' confidence in management's plans. Most venture capitalists believe with good reason that there is an inverse correlation between bridge loans and a company's ultimate success. If it is available, Take The Money!

Source: Highland Capital Partners

Banks still lending to small businesses despite "crunch"

This will definitely still a good news for small business owners. Below is the article from bytestart.co.uk.

Despite the daily media coverage of the "credit crunch", new data suggests that the major high street banks are still lending to small businesses. In fact, term lending actually grew by 11% in the year to June 2008.

The statistics, released by the British Banking Association, compiled using data from the major high street banks showed that term lending grew to £44bn in the twelve months to June this year. Overdraft borrowing also increased to £9.2bn (a rise of 3% on the previous period).

Interestingly, the number of new businesses opening their first business account compared well to the previous 12 months with 143,404 new business accounts being opened, compared to 145,063 in the year to June 2008.

Read more on this good news at Banks still lending to small businesses despite "crunch".

What About Other Sources of Capital?

Venture capital tends to be expensive capital. It is expensive because it generally brings with it free consulting, an enormous network of relevant contacts, access to additional capital, and early validation of success. There is nothing wrong with augmenting venture dollars with less expensive capital, as long as it's done at the right time and under the right conditions. Start-ups today enjoy access to several additional types of financing.

To know what specifically are those other sources of capital or financing on your business, read it more on A Start-Up's Financing Strategy article.

Market your business with no financing at all

You might be tightening your budget on your business right now but marketing is always part of business and commonly is quite expensive. Well, this article I found from the business expert, Denise O' Berry, will be very helpful for us. Why? Simply because it's so interesting how to market your business with no cost.

Are you trying to promote your business with a tiny marketing budget? Opportunities are plentiful for low or no cost marketing. Here are a few that won’t cost you a cent.

The above is quoted from Denise O' Berry's post. Are you ready to learn how to market your business with no financing needed? Well, read more on Eight No Cost Ways to Market Your Business.

Business Finance Solutions by Recycling Company

A good idea is nice; solid execution even better. But none of it means much without the capital to support it all.

The idea quoted above is from Forbes.Com, an article about The Right and Wrong Ways to Raise Money. I would like to point out the solutions by Recycling Company presented in this article regarding business finance.

Equipment. Because the equipment was very specialized, debt-financing was hard to come by--not that the young company could have serviced it anyway. So the board decided to sell some equity. However, the environmental industry was not attractive to venture capitalists with dot-com stars in their eyes. Instead, RC used angel financiers, mainly from the board’s network, along with some friends and family money.

Real estate. Initially, RC leased its building at market rates, even though there were plenty of subsidies available for those who knew where to look. (I renegotiated the terms with the community whereby RC received a chunk of subsidized financing.)

Working capital. RC used a combination of equity and loans guaranteed by the Small Business Administration--though the founders had to pledge significant personal real estate as collateral. Cash flow was healthy enough to service the debt.

Additional working capital for growth. As the venture grew, the company sold off additional equity and I found attractive debt financing from a regional development financing institution.

Research financing. This money came from a state loan program designed to encourage new-product development.

History of Invoice Factoring

We have been dealing of numbers here and anything that will relate to business finance. It's time to discuss one of the common ways used by start up companies in financing their business which is Factoring.

I found a factoring blog which talked about the History of Invoice Factoring. I quoted some details below:

Elements of factoring can be traced back to the Mesopotamians, who are credited with being the cradle of civilization and the first to generate business code structures and government regulations for commerce. Experts have evidence that proves 4,000 years ago, the Mesopotamians also created the concept of factoring. Following Mesopotamia, there is evidence that the Romans sold promissory notes at discounted prices. Roman merchants also enlisted the services of collectors to settle trade debts. But factoring as we know it today got its start in the Middle Ages.

By the time English colonists settled in the new world, America, this type of financing had become common. Both English settlers in the new world and English merchants were in prime situations to make lots of money. Due to the time distance in getting their goods, by boat, from the colonies back to England and vice versa, these merchants could have gone bankrupt waiting on their money. Cotton, timber, fur and tobacco industries all spurned their own factoring segments. Merchant bankers in London advanced funds to colonists for goods and materials before they made the journey across the ocean. They would ship their goods to the colonists or back to England where one of these factors would pay a discounted rate to the seller before the voyage and afterwards take a percentage for selling and collecting the money owed.

Factoring became a common business practice. Until the 1700s, England and the US shared a common law framework. Originally, English law forbade the selling of invoices unless the debtor was notified in advance. Of course, the United States developed its own government. In the late 1940s United States almost wholly adopted non-notification factoring arrangements and witnessed a boom in factoring in textile industries and transportation industries.

This article about History of Invoice Factoring is written by Thomas Mc Carthy. He emphasized on the first part of his article that "The only thing more destructive to business survival than lack of customers is lack of cash flow to produce goods and provide services in a high demand market, Consistent cash flow is the lifeblood of commerce and the catalyst for healthy economies."