Category: Finance & Capital

Deciding how to approach financing needs for your small business is an overwhelming and daunting task, as the financial world can be quite intimidating and confusing.There is a wide range of products available to cater to the needs of small businesses, and funding can be secured for a variety of reasons, in a variety of fashions.Explored in the article are some of the options available for consideration, to better acquaint you with the various types and sources available for funding.Prominent lenders and banks are happy to offer clients many resources for funding their professional endeavours including:

Business Term Loans

Business loans are available for all general business purposes other than residential property, where you may be best off looking at fixed rate home loans from NPBS. The borrower is required to provide security for these loans. Loans offer flexible repayment options with amortisation up to 20 years. Interest rates can vary greatly and are determined by calculating the current interest rate plus a margin for the risk factor.

Business Overdrafts

A business overdraft is essentially a line of credit attached to the business account. They offer many advantages, including limited administrative charges, variable interest rates, access to internet banking conveniences, flexible borrowing opportunities with no fixed repayment schedule and interest payable on credit balances.

Leasing and Equipment Finance

Because of the way assets and equipment are financed they can have a significant impacton a business’s bottom line. This avenue of financing includes funding for items and expenses like commercial vehicles, medical and dental equipment, engineering equipment, computer systems and specialised equipment to a name a few. Financing packages are tailored to address each business’s individual needs.

Residentially Secured Business Loan

These loans offer fantastic rates for any business purpose, and there are many benefits including flexible repayment terms, amortisation up to 30 years, no valuation fee, no administration fees after the loan is secured, and no society legal costs, making this a desirable financing option. These loans are available to for business owners who intend to use a residential property to provide security for the loan.

Financial Institution Guarantee

This is a formal obligation to another person or business. The purpose of a financial institution guarantee is to eliminate the need for cash to provide a bond or deposit; the lender instead vouches for you. A financial institution guarantee is a great tool for any business and is useful in a number of scenarios and requires security by either a property or fixed term cash deposit.

Is a Business Credit Card the Answer?

If you are just seeking more available resources for your business, perhaps a Business+ credit card is the solution you are looking for.

Securing a credit card for your business can be a simple and easy way to manage and track company expenses, as well as providing a cash resource when necessary.

Using the credit card can provide many benefits including fraud and theft protection on lost or stolen cards, multiple cards per account, both cardholder and account level statements, the ability to balance transfer, cash advance and transfer funds all at a competitively low rate. Businesses can also enjoy up to 44 days grace before accruing any interest charges.

This provides a lot of versatility and convenience for a business of any size.

Whatever your borrowing needs may be, it is important to understand your options, and carefully select the lending product ideally suited to your business and its financial needs. Let the professionals at reputable lending institutions advise and guide you to making the best decision for your company or for your personal goals.

So you want to be the boss, of your own life and possibly future employees. Entrepreneurship is tough enough, but lots of would-be business-starters are hit with a double-whammy when it comes to funding their dream businesses, because of one thing:bad credit. Bad credit sucks, but luckily, there’s hope!

Good credit is like a good relationship. You work on it for years and it doesn’t happen in one day, or even one year. However, unlike most good relationships, the ways to achieve good credit can be confusing in their technical complexity. When you have a bad credit score, fixing it can take years and be incredibly frustrating. But don’t give up, even if your credit is less than perfect.

Are you a GOAL digger? You just need dedication and a smart approach. Almost no one has flawless credit, so don’t feel ashamed! There are some tried and true steps you can take today to kick-start your credit score. You are investing in yourself; a little work here can save you a lot of trouble in the future.

1) Deal With Debt
Debt drags down your credit score, whether it’s old student loans or unpaid medical bills. Stop feeling guilty about the money you owe, because guilt isn’t productive. Instead, take a deep breath, rev up your willpower, and make a plan. If tackling a pile of scary paperwork is overwhelming, then enlist someone to help you. Support from a friend, family member, or professional can keep you committed to progress.

Here are the steps for addressing debt: 1) Evaluate what you owe. 2) Figure out your budget for daily life. 3) Plan how much you can pay off on a regular basis. 4) Negotiate with your creditors. People can be more forgiving than you might expect! 5) Most crucially, stick to your plan.

2) Be Careful With Cards
Stay on top of your credit cards. Don’t spend more than you can pay back, don’t have a zillion accounts, and don’t open and close a bunch of them quickly. This is not to say that you shouldn’t have a credit card at all. As noted on myFICO, “having credit cards and installment loans (and paying timely payments) will rebuild your credit scores. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.”

Keep this in mind also: According to Bankrate, “One of the major factors in your credit score is how much revolving credit you have versus how much you’re actually using. The smaller that percentage is, the better it is for your credit rating.”

3) Pay Bills Promptly
Pay your bills on time! This is hugely important. If you have trouble remembering, use payment reminders or an automatic online bill system.

If you can’t pay because you’re truly out of money, don’t avoid the issue. Instead of dodging phone calls and throwing “URGENT” envelopes in the trash, talk to the person or company you’re dealing with. Picking up the phone is stressful, but the results will be far better in the long run.

4) Be Skeptical; Be Cautious
The reality of life, and especially of finances, is that there are no shortcuts. Change takes time, effort, and strength of character. You will have to do hard work and make sacrifices, because very seldom can you have your cake and eat it too, as they say. Don’t fall for the hucksters who try to convince you that they know a secret no one else has discovered.

As the MintLife blog advises us:
“If someone tells you they can double your money in no time with no risk, tell them you already know how. Then fold your money in half and put it back in your pocket. Risk and reward are correlated.”

5) Maintain Good Habits
Read the fine print. Do plenty of research—it’s a good sign that you’re reading this article! Spend less money than you earn. Start saving now, even if you’ve only just started to pay off debt. Set goals for yourself (“I ain’t sayin’ she a goal digger”). Place higher value on what money can’t buy: family, friends, partners, and experiences. Love and accomplishment are way better than owning the latest shiny thing.

About TrustLeaf.com

TrustLeaf is a new funding service that helps self-started businesses and entrepreneurs get starter loans from friends and family, without straining their relationships. Because loaning money to friends and family for new ventures can be tough on relationships, TrustLeaf formalizes personal loan agreements, keeping money far away from affecting relationships, so entrepreneurs can get their business going and friends and family can feel more secure.

As an entrepreneur and small business owner, you know that cash is like oxygen for your business. Without cash you cannot keep the wheels turning. You need cash to purchase materials and supplies, pay employees and cover your monthly operating expenses. As important as cash is, it’s difficult to come by for small businesses, especially in the beginning.

Most banks aren’t interested in small business loans. Your chances of qualifying are less than 20%. Even if you are able to qualify, the application and underwriting process takes months. A bank loan is completely off the table if your business is new or struggling or if you only need a few thousand dollars. The old saying that banks only want to loan you money when you don’t need it is true.

Fortunately, there are other non-traditional lenders out there that do provide financing for small businesses and entrepreneurs. While these non-bank lenders are only a small fraction of the overall lending market, the total amount funded by these sources grew by more than 100% last year.

Short-Term Installment Loans

A short-term installment loan is one of the quickest, easiest sources of funds for a small business owner. The application process takes minutes and approval is almost always instantaneous. The one drawback is that these loans will be more expensive; however, given that the alternative may be closing your doors, the cost is worth it.

There are a number of companies that allow to you apply online. If approved, you can literally have the funds in your bank account the same day. Many lenders don’t have any special credit requirements either. Using the lender Max Lend Loans as an example, the only requirement is that you have a regular source of income.

These short-term installment loans are the quickest way to get funding in an emergency situation.

Merchant Cash Advances

If your business accepts credit cards and does consistent volume, a merchant cash advance lender will give you an advance on future credit card sales. They will project what you expect to collect over the next 12 months and will give you a loan based on that amount. They then take a portion of your credit card sales each month to repay the loan.

There is a small underwriting process. It’s slightly different from what you would see at an installment loan company like Max Lend Loans, but considerably easier than what you would experience at a bank. Even with the underwriting process, approval is fairly easy and funding is quick.

Curing Cash Flow Problems

These type of funding sources are perfect for getting through a rough patch in your business, but they shouldn’t be used as an ongoing source of capital. They should only be used to get you to the point where you can fund your operations out of your ongoing cash flow.

As an entrepreneur, that is exactly where you want to be. You want to have control over your business. But until you can get to that point, look into these alternative sources to get the capital that your business needs.

Some strategies can help entrepreneurs accurately plan and predict their business growth and spending, while also compensating for unknown factors and mistakes.

One powerful strategy is cash forecasting. According to a definition in an Oracle article entitled About Cash Forecasting, “Cash forecasting is a planning tool that helps you anticipate the flow of cash in and out of your business, allowing you to project your cash needs and evaluate your company’s liquidity position.”

Suitable for Business of All Sizes

Cash forecasting is a tool that can be used effectively by an entrepreneur or a corporate treasurer. The size of the business does not matter when trying to anticipate the business level you hope to achieve from one month to the next.

An Art and Science

Cash forecasting is the art and science of building a cash plan to manage your work, your team, your assets, and your resources by taking into account past results, current circumstances, and future probabilities. Cash forecasting is both an art and a science, because it takes ingenuity to expect the unexpected, but also the statistical expertise to combine past performance data and current information to get a good handle on probabilities.

Important vs. Urgent

Another benefit of cash forecasting is that it allows you more time to do what’s important rather than only focus on what’s urgent. You can plan ahead instead of reacting to daily events.

3 Core Ideas

Here are 3 core ideas to begin cash forecasting:

1. Determine the basis for your forecasts.

To clarify your assumptions, you have to figure out the average number of customers gained and lost throughout the year. You also have to work out the average number of sales per customer. Also, determine the cost of your customer acquisition. Notice if certain months are more profitable than others. In retail, for example, customers increase before big holidays and decrease after them as a natural part of the seasonal cycle.

2. Make some reasonable assumptions.

Sometimes, it’s possible to anticipate buying cycles which will help you determine inventory costs and revenue generation. To figure this out, you have to look at industry trends, your financial resources, possible sales barriers, and your current line of products. For instance, if you’re in the mobile phones business, you could take advantage of the current popularity for wellness devices. Taking action on this industry trend, might involve spending your money on improving your line of products by adding fitness trackers. One possible sales barrier might be that people may be reluctant to spend money on something they don’t understand. Consequently, your best strategy is not only to add fitness trackers to your inventory but also to spend money to educate your sales team on why fitness trackers are beneficial for someone looking to get back in shape. Moreover, it’s reasonable to anticipate that these devices will probably sell well at the end of the year when people are making New Year’s resolutions; so, it may be best to stock up then. When making your reasonable assumptions, do market research to put some numbers on your forecasts, as well as outline a list of reasons for making your forecasts. This will help you next year when you are reviewing what forecasts worked out for you.

3. Avoid cognitive biases.

When forecasting, it’s easy enough to have blind spots known as cognitive biases. For instance, accountants have a cognitive bias toward pessimism while salespeople have one for overoptimism. It’s just an aspect of their natures and profession. The way to spot cognitive biases and avoid the pitfalls of unrealistic financial projections is through retrospection. Instead of trying to figure out the levels of sales you need to make for your business to be viable, look at what did last year. This retrospection will allow you to identify what worked and pinpoint what did not work. You will know when to play defense and when to play offense.

Why Link Cash Forecasting with Sales Forecasting?

Think of cash forecasting as collecting data and sales forecasting as applying the data to promote business growth. You can’t do one without the other. Cash forecasting and sales forecasting work like team players. Cash data will give you an idea of some reasonable cash management objectives while sales data will give you a clear goal in mind so that you can start to create steps to move your business plan forward. A holistic plan of action for an entrepreneur is understanding both your operating costs and what progressive steps you need to take to achieve your revenue goal? A caveat: although both cash forecasting and sales forecasting work when applied, we all tend to put off things we don’t like doing, and both types of forecasting are often get thrown into a “do it late” file folder.