Consider Business Loans Carefully

Money also referred to as capital, funds, and financing is a critical factor in starting a business. You will need “seed money” to launch the business to cover costs such as vehicles, equipment, machinery, land, building, fixtures, and supplies. You’ll also require money for your daily operating expenses – inventory, rent, taxes, salaries and wages, advertising, utilities, etc.

You can finance your business through debt (borrowed money) and equity (invested money). The type of financing you seek depends upon how much you need, how you plan to use it, how long you need it and how you’ll pay it back. In most cases, a combination of debt and equity is the most effective way to go.

With these types of financing you need, it pays off to opt for easy process, fast funding and above all great service. These are exactly the considerations that entrepreneur must consider for their loans. Business Loan is critical and so is the entity we trust who could give us what we need is critical as well.

Effective Financial Management

Below is the excerpt of Suzanne Macguire’s report, Boost Your Business With Effective Financial Management.

Receivable factoring or credit card factoring is another unique working capital management strategy, whereby the businesses sell their future receivables at a discount. However, it is not possible for all small businesses to document their receivables in order to qualify for this financing option. The documented sales volume and credit card sales activity of these small businesses serve as financial asset to attain a business cash advance or a merchant cash advance. (NyCityWatch.org)

Well guys you must check it out. It's a good article for us to learn effective financial management.

Business Loan Is Indeed Critical

Money also referred to as capital, funds, and financing is a critical factor in starting a business. You will need “seed money” to launch the business to cover costs such as vehicles, equipment, machinery, land, building, fixtures, and supplies. You’ll also require money for your daily operating expenses – inventory, rent, taxes, salaries and wages, advertising, utilities, etc.

You can finance your business through debt (borrowed money) and equity (invested money). The type of financing you seek depends upon how much you need, how you plan to use it, how long you need it and how you’ll pay it back. In most cases, a combination of debt and equity is the most effective way to go.

With these types of financing you need, it pays off to opt for easy process, fast funding and above all great service. These are exactly the considerations that entrepreneur must consider for their loans. Business Loans is critical and so is the entity we trust who could give us what we need is critical as well.

Business Opportunity: Nothing more appealing than this!

They're definitely distracted because they focus more on how to keep their heads floating and forgot or missed other aspects of their business which needed much attention.

And true, this is in fact the perfect time to start our own business.

The above is actually my comment in this post -- Opportunity Opens the Door When the Competition Is Distracted. This insightful post from BigThink did really hit the sweet spot when comes to opportunities.

Acquiring venture capital might be a not good idea these days as a means of business funding but the opportunity that our top competitors are in fact very disturbed about the current situation, then this opportunity becomes really appealing more than anything else.

This time is the perfect time to invest and start a business. We actually have an option. It is up to us if we spend or invest. So where do you want to belong? A spending puppet for all your leisures and wants or a wise investor to your business?

The door is finally open! So what are we all waiting for?

The stimulus package allocates $730 million to the SBA!

Time for some good news! According to Nancy Kaffer, the stimulus plan can help backed up SBA backed loan programs. Well, definitely this is good news. I quoted the news below.

U.S. Small Business Administration officials are hopeful the American Recovery and Reinvestment Act will breathe new life into the SBA-backed credit markets.

The stimulus package allocates $730 million to the SBA, and changes its programs in an effort to increase accessibility for small businesses.

The stimulus funding includes: $375 million for temporary fee reductions or eliminations on SBA loans and increased SBA guaranteed shares — up to 90 percent for certain loans; $255 million for a new loan program to help small businesses meet existing debt payments; $30 million for expanding SBA's microloan program, enough to finance up to $50 million in new lending and $24 million in technical assistance grants to microlenders; and $20 million for technology to streamline SBA's processes, according to an SBA statement.

The bill also allows the SBA to offer loan guarantees of up to 90 percent and provide deferred payment loans of up to $35,000 for qualified businesses to make payments on existing loans. And, it will allow business owners to refinance existing loans for fixed assets.

Source: Crain's Detroit Business

Breaking the Barriers of Lending

This time around, I need my readers' help on explaining to me what does the figure above means. Just click the image to zoom it in. Thanks in advance everyone!

Top 5 Trends for Small Business Finance in 2009

Top 5 Trends for Small Business Finance in 2009 is gladly brought to us by Scott Shane.

1. The amount of capital provided to small and start-up companies will continue to shrink

2. Investors in start-up companies will continue to face a poor market for exiting from their investments

3. Methods for internally financing companies will grow in popularity

4. Government officials won’t pay much attention to entrepreneurial finance

5. Attitudes toward financing start-ups and small businesses will change

I am honestly not so sure how confident will I be with Scott's list but the explanations he presented on each point does really made sense.

Read more about Top 5 Trends for Small Business Finance in 2009 for Scott's further explainations.

Business Credit Cards for Business Financing

Justin McHenry, one of Small Business Trends expert have written this simple yet very meaning article talking about The Upside of Business Credit Cards.

As anyone who’s ever tried to start a business knows, a failed venture can lead to debt that haunts you long after the business is an unfortunate memory, regardless of where the financing came from.

That said, many small businesses can and do benefit from business credit cards, especially businesses with a track record. Those who get into trouble are more likely to be startups who use credit cards to finance a dream. While this approach has led to some of the more celebrated and inspirational entrepreneurial triumphs, it also leads to many poor outcomes that don’t make the headlines.

According to Justin, the most proper and best use of business credit cards is as a tool to manage cash flow. If there is one universal problem that frustrates small business owners, it is the tendency to have enough work to do but not enough cash on hand to finance the work until payment arrives. A business credit card can (at least partially) solve this problem, letting you buy goods today that you don’t pay for until next month. This “float” can significantly improve cash flow, making it more likely that you’ll receive payment from customers before the card’s bill comes due.

Well, for anyone who could not secure its business a venture capital then this business credit cards for business financing will definitely come to rescue. You can read more about Justin's post here.

Angel Investors Fill The Gap

Scott Shane pointed out that much of the writing on angel investing suggests that angels fill the gap between the low amounts invested by friends-and-family, and the large amounts invested by venture capitalists. The question is -- do angel investors do really fill the financing gap?

Scott as usual who does not run out of figures to better explain his thoughts presented a math calculation which pointed out to us the answer -- it isn't true. Angels don't really fill the gap.

If angels are filling a gap between friends and family and venture capitalists, then the maximum number of firms that are founded each year for whom angel capital could fill a gap between friends-and-family money and venture capital cannot be larger than the total number of companies that receive non–seed stage venture capital, which, tends to average fewer than 3,000 businesses per year.

Moreover, for angels to fill a financing gap between $100,000 and $5 million, then angels need to put that amount of money into businesses. However, most observers have found that very few angels do this, with the typical angel putting in $10,000 and the average angel investing $77,000.

Check out more of this interesting post by Scott Shane after the jump. Read here --The Funny Math of the Angel - Venture Capital Financing Gap.

What if Lenders are not Lending?

It is a fact that one of the major source for business financing are from lenders. It is also a fact that only a few manage to get all the financing on their business from their personal savings, from family and closest friends.

So, I thought of something especially in this tough time for business -- what if Lenders are not Lending us money anymore? What can we specifically do in this situation? How are we supposed to approach this problem? Do we all have to do is shut down our business (in worst case scenario)?

Have you thought of that too? How did or how will you manage it? I would be very glad to hear your comments on the comments section. Thanks!

Get to know Angel Investors

It's time to get to know the possible sources of business financing.

1. Angel Investors
2. Venture Capitalists
3. Personal funds, credit cards, family and friends
4. Business loans

The above cited are four (4) of the possible sources where we can get financing for our business. This time around, let's get to know first about Angel Investors. Who are these Angel Investors? I found a helpful article written by Scott where he presented Angel Investors in a more interesting way.

A business angel is a person who provides capital from his own funds to a private business owned and operated by another person who is neither a friend nor a family member.

The typical angel is often described as a wealthy, retired, former tech entrepreneur who regularly invests in other people’s start-ups. While a few angels look like this, the typical angel does not.

Most angels aren’t wealthy. Estimates based on data from several sources suggest that the majority of angel investors are unaccredited investors.

• Few angels are retired. About two thirds are still working full or part time.

• The majority of angels live in two earner households.

• Most angels aren’t old. Surveys show that the odds that a person makes an angel investment peaks at between 45 and 54 years of age.

• Angels are more educated than the rest of the U.S. population, but one quarter of them have not graduated from college.

• Angels are no more likely to be experienced entrepreneurs than friends and family investors.

• Angels tend not to make many such investments, with a significant minority making just one angel investment in their careers.

You can read more about Angel Investors in Scott Shane's article -- What do Business Angels Look Like?

Open letter to President Bush: Bail out small businesses, too

There's no other much alarming news today none other than the financial crisis in America specifically the Lehman Brothers bankruptcy and now this bail out plan added more intense to this situation. I don't really know if this bail out plan is the best solution to this crisis but my goodness, $700 Billion - is a big, big money. Check out Rhonda Abrams's open letter to President Bush: Bail out small businesses, too.

Managing Cash Flow

As you will notice my dear readers, this is again Managing financial matter effectively which I posted earlier.

Now, this post is about how SCORE assisted small business owners in managing their cash flow. SCORE, which stands for Service Corps of Retired Executives, is a great resource for small business owners and I found this article about Managing Cash Flow really engaging especially when we are very eager to learn financing and matters relating to it in small business. You got to check it out guys. You'll surely learn a lot.

Strategic Investors To Obtain Business Finance

A business can also obtain finance by finding strategic investors. Firstly, a small venture needs to find out, whether its products or services are directly benefiting a larger organization or not. If yes, then it is better to contact them immediately.

The small venture has to convince the larger company that their products or services have the potential of positively influencing their trade. This way, a firm can obtain finance by the means of direct equity, loan, or prepaid contracts. A company has to search for strategic investors, and there is no dearth of them in the market.

Strategic Partnership to Obtain Business Finance

Creative tips to obtain business finance focuses on strategies to acquire capital, which is a vital component for the success of any commerce. Irrespective of whether a firm is in proprietorship or a big organization, finance plays an important role in its development.

Looking for potential partners

Find who is reaching the customer or client base. Find out who offers the services or products that benefit the customers or client base. Examine which firm has better business skills or expertise. All these units will make great potential partners.