Business Loans

Looking for business financing can be one of the most important tasks that a business owner handles. Unfortunately, the chances of successfully getting a business loan are actually quite small, especially in the current credit environment. When it comes to business loans, most institutions are very conservative and will only lend to the strongest borrowers. That means that you business will need a solid track record of success. You will need to provide financial statements, most often audited, dating a few years back. You may also need to put up your home as collateral for the business loan.

What can a business owner do if they don’t qualify for a business loan? One alternative that has been gaining popularity is to finance their invoices. Most companies that have commercial or government sales need to wait 30 to 90 days to get the invoices paid. However, they have expenses that must be paid immediately. Employees, suppliers and landlords must be paid in a timely fashion. This discrepancy in the timing of your supplier payments and your clients’ payments can create a substantial working capital problem. This problem can easily be fixed by factoring your invoices.

Suppose that instead of waiting 60 days to get paid, you got paid a few days after invoicing. Would you still have cash flow problems? Probably not. You can achieve that by using invoice factoring. Invoice factoring provides a simple solution to a simple problem – it advances you funds on your slow paying invoices tiding you over until your client pays. The factoring company charges you a small fee for that service, usually a percentage of the invoice.

One of the advantages of invoice factoring is that the financing company makes their decision based on the credit worthiness of your client. They consider your invoices from reliable clients to be a solid asset and are willing to finance them. This means that small companies whose biggest asset is a roster of good clients can usually qualify.

Another advantage of invoice financing is that your financing line is based almost exclusively on the credit quality of your clients and the size of your sales. Because of this, your financing line evolves and grows with your sales. This makes it an ideal financing program for emerging and growing companies.

Author: Marco Terry
Article Source: EzineArticles.com
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Getting business financing is one of the bigger challenges for business owners – especially during these times. Although it’s well known that getting a business loan has never been easy, nowadays getting business financing appears to be close to impossible.

Although getting a small business loan may be very difficult, there are other forms of business financing that remain relatively easy to obtain. However, not all solutions are suited for every type of business. For example, most companies that sell to commercial clients have to give customers 30 to 60 days to pay the invoices. However, they need to pay suppliers and employees regularly. This creates a situation where a company may have a substantial amount of money due to it – but very little actual cash at hand.

This creates a very real problem for business owners. On one hand they have a growing business that had a lot of potential, but on the other hand they have their resources tied in unpaid invoices, leaving little working capital to execute their plans.

Ideally, you should be able to go to your clients and ask that they pay their invoices quickly. But that will never work. Large corporate clients tend to demand payment terms as a condition of working with them. It’s a take it or leave it scenario. But what if they did pay quickly? That can be achieved by using invoice factoring.

Invoice factoring is a business financing tool that can eliminate the challenges of waiting for payment. It provides you an advance on your soon to be paid invoices, providing the working capital you need to pay employees and suppliers. It also enables you to take on larger orders, since you no longer need to wait to get paid.

Factoring your invoices is fairly simple. Once the work is completed, you sell the invoice to a factoring company. The factoring company buys the invoice in two installments. The first installment pays for 80% of the value of the invoice. The second installment, paid once the invoice is paid for by your client, pays for the remaining 20%, less the finance fee.

One major advantage of invoice factoring is that it’s easy to obtain. The most important requirement is that you do business with solid commercial clients that pay their invoices on time. Also, you company must be free of commercial liens, judgments and encumbrances.

Given that invoice factoring lines are based on your client base, they usually grow with you sales. This can be a great advantage over a conventional business loan, as your financing will adapt dynamically with your business based on current conditions.

Author: Marco Terry
Article Source: EzineArticles.com
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Selling your products or services in export markets can be a very profitable and a true engine for growth for your company. Manufacturers, service providers and traders can all benefit from adding foreign markets to their portfolio of customers. However, selling into export markets can also deplete your cash flow. Large companies that have a cushion of funds in the bank, usually have no problems. However, smaller and emerging firms can run into cash flow issues very quickly.

The biggest issue for exporting firms is waiting 30, 60 or even 90 days to get paid for their goods or services. Slow paying customers can really affect your company’s cash flow. This can challenges your ability to pay suppliers, employees or even rent. read more »