The Truth About Alternative Financing

Alternative financing is a resource for small businesses that need operating capital right away. This type of funding has its pros and cons, just like any loan. The application process is less stringent and those with poor credit have a good chance of approval, but the interest rates can run higher than traditional bank loans. This is just one of the many truths about alternative funding.

The Good Truths

Truth be told, this type of funding provides cash when businesses need it most. Successful ventures only become that way because they took advantages of opportunities when they arose. For example, a business owner has an opportunity to expand by opening a new store in a desirable location, but he or she doesn’t have the cash to purchase the location outright. Alternative funding can provide that cash.

Other instances include the need to fund the manufacturing of a new product or to take advantage of discounted inventory prices. Raw materials, new equipment, additional supplies to meet holiday demands, all of these things are opportunities for businesses to seek alternative financing and save money in the long run.

The Bad Truths

Businesses also face hard times, and they may need to secure financing to stay afloat. In these instances, some might consider alternative funding bad, simply because the business is in dire straits and must take on a financial burden that it normally would not have to. Many banks are reticent to issue emergency loans, so companies turn to alternative options instead.

Unexpected closures, such as inclement weather that ceases operations for days on end, will negatively affect the company’s bottom line. As many people learned, economic crash changes how consumers spend their money, and sales might go down. Equipment failure, supply and demand, vendor closure can also wreak havoc on a business’ ability to earn a profit.

When one considers the need for money, whether good or bad, one understands the truth about alternative funding. This option provides owners a chance to expand his or her business when opportunity arises or stay afloat when opportunity is fleeting. The unexpected is inevitable, and an owner must be prepared for it.

The undeniable truth is every entrepreneur will experience times when he or she needs cash, and alternative financing is a viable solution. The loans are approved quickly and the cash disbursed within two days. Payment plans are flexible, and the business owner will find the lender to be more willing to work with him or her. This is why this type of funding is so appealing.


ABL for Short Term Finance

Asset based lending (ABL) is great for companies that need just a short term loan to cover unexpected finances. Since ABLs are easier to obtain than traditional lending options and can be modified or customized without any additional underwriting, many mid-size and large corporations take advantage of this type of loan for different reasons.

Who Can Benefit from Short Term Financing

One example of companies that can benefit from an ABL are those that are experiencing rapid growth. The loan can cover the sudden costs that have arisen. These companies can use this type of financing to cover the expenses needed to expand, whether that means acquiring more equipment, real estate or staff. With an ABL’s flexibility, companies need not specify precisely what the funds are for as long as they are used for business purposes.

The second example of companies that can take advantage of this type of lending are those companies whose income seasonally fluctuates. Examples of these companies are retail businesses, who can readily pledge their merchandise as collateral, purchase more merchandise and make a profit. Other companies can include manufacturers, who could then invest in more machinery to increase their output.

The third example of companies that can benefit from asset based lending are those companies who are temporarily struggling. These companies can take advantage of the immediately available funds to bail themselves out of a temporary slump.

How ABL Works

Many financial institutions now offer an asset based loan option to companies. Lending companies usually require that companies borrow a prescribed minimum and that only 75%-855 of their assets can be levied. In addition, only 50% of the collateral can be in equipment and inventory. Unlike other traditional loans lines of credit, an ABL is easier to obtain as long a company has viable goods that are not under lien to any other lender.

Not only is the loan easier to obtain, but the repayment rate is different. First and foremost, the borrower only has to repay the portion of the loan it uses. Secondly, the interest and principal are paid differently. The principal often gets recycled into the lending circle, making the asset based loan a sort of revolving credit. It is also easier to increase an asset based loan as assets from the company increase.

An asset based loan is among one of the principal ways companies can maintain their business acumen.  Companies have many options to cover anticipated shortfalls and can always contact a qualified lender to explore all their options and should consider and ABL for short term finance.


SBA Loans: 6 Steps to Getting Approved

The Small Business Association is a government agency that offers assistance in many ways to small businesses. One of the ways it offers help is through SBA loans. These are basically loans that you can get through your typical lenders, but they are backed or guaranteed by the SBA. This lowers the risk for the lender, making it easier for small businesses to get loans.

To qualify for this type of loan, you need to meet the requirements of the bank and the SBA. Here are six steps you can follow to help you get approved.

Step 1: Gather Documentation

You should make sure that you have all the documentation that is required by your lender. It helps if you have all your personal information and business information. Make sure to gather all financial documents and identification documents. You may also need statements from all business partners, if you have them. You want to begin gathering documents as soon as possible.

Step 2: Choose a Lender

Choose your lender carefully. You should try to match your business with the right institution in order to improve your chances of approval. It can help to work with a lender that you already have an established relationship with. In addition, smaller banks tend to be more open to lending to small businesses than larger ones, so keep that in mind.

Step 3: Make Sure You Meet the Requirements

You will need to meet the requirements of both the SBA and your lender. SBA loans may have stricter requirements than traditional loans because they restrict loans to only businesses that can’t get traditional loans, that are a certain size and will be using the loan in certain ways. In addition, some types of businesses can’t qualify for SBA loans, like casinos. Lender requirements usually focus on your financial ability and likelihood of paying back the loan.

Step 4: Develop a Concise Business Plan

You should always go in to apply for a loan with your business plan. Your business plan should paint a clear picture of every aspect of your business. It should include details on every facet of how your business operates. Make sure it is as detailed as possible.

Step 5: Prepare a Detailed Financial Report

Your business plan should include information on your finances, but you may also want to make sure you have a financial report that contains the complete history of your business. It should outline everything, from previous loans to capital to assets. It should also contain a forecast of what you expect to occur with your finances in the future.

Step 6: Fill Out the Application Completely

Your final step will be to ensure that you fill out the application completely. Don’t leave anything blank. Ask questions if you don’t understand anything.


Property Investments: 5 Tips for Buying Your First Rental

Investing in rental properties is an excellent way to increase your current cash on hand, and has some serious benefits when it comes to taxes, upkeep and more. However, anything dealing with property investments has the potential to be extremely stressful, and this simple face discourages hundreds of would-be investors each and every year. That doesn’t mean that investing should be avoided, though. In fact, following these 5 tips can help make your first buying experience successful and less stressful than ever before:

Do Your Research

When you’re looking to get involved in property investments, you’ll likely have several people looking to give you advice on the matter. It’s always good to listen to these bits of advice, especially if they’re from experienced sources, but in the end, you need to do your own research.

Know Your Limits With Realtors

Your real estate agent can certainly help you out during the buying and renting processes, but don’t rely on them exclusively. Working on unlisted properties without the help of a realtor can actually help to guarantee you the negotiation of a better deal in the long run, and may have a few other distinct benefits.

Have Realistic Expectations About Rent

When it comes to choosing your property, you need to ensure you’re choosing a type of building that will rent. Researching into popular rentals in the area is the best way to get an idea of this. Furthermore, have realistic expectations about how much each space will go for in your specific neighborhood. Outrageous prices can drive away potential tenants.

Financing the Right Way

After gathering enough cash for your down payment, it’s always good to meet with a professional to discuss the extra or hidden costs of owning your type of property. These can include maintenance costs and many other details that you’ll be paying for.

Closing Time

When you’re making the final purchase of your property, keep in mind you’ll want a financial cushion left over. Therefore, always buy your properties at a good 20 – 30 percent below the current market value.

Following these tips can help make your first purchase of investment properties a breeze.


5 Best Benefits of Investing in Multifamily Properties

If you are looking for investment opportunities, there are many options. When it comes to properties, you still have a lot of options, like apartments, business locations and single-family homes. One of those worth considering is investing in multifamily properties. This type of property offers some great benefits that you won’t find with other property investments.

1. Tax Breaks

Multifamily properties offer great tax benefits for a few reasons. You are able to take deductions from appreciation. You also may be able to get tax benefits from providing clean, affordable housing, depending on what city you live in.

2. Increased Cash Flow

When you buy a single-family property or a business property with only one renter, you are very limited in what you can do. Having an apartment, though, gives you options. You have increased rental income coming in. Not to mention that you can add to the property. For example, you could put in a laundry room, which would earn you income every time a tenant does laundry.

3. Easy Management

Investing in a multifamily place instead of a bunch of single renter places makes it much easier to manage your investments. Everything is under one roof. You can streamline all the appliances so they are all the same, making repairs simple. You also only need one on-site manager.

4. Lasting Value

Apartments maintain their value much better than other properties. As long as you keep tenants, the property remains attractive because of the steady cash flow being made. In addition, it is much easier to maintain the building and grounds because all your tenants are in one place, letting you keep it in top condition. If you plan to sell in the future, this can mean getting a nice profit from your investment.

5. Increasing Value Is Easy

With an apartment complex, you can easily add to the value of the property. There are plenty of options, such as adding in higher end appliances, redesigning common areas and adding in amenities. You don’t have such options with other properties. For example, adding a pool or a garage can greatly increase the value of the property, while also making it much more attractive to renters, which will also help to boost the overall value.

Multifamily properties offer you a range of benefits. They allow for more earning potential and increased abilities to sell in the future. Considering all these benefits will help you to make the right decision when it comes to investing your money in properties.


A Beginner’s Guide to Mezzanine Financing

Mezzanine financing is a loan that combines traditional debt and equity. In addition, a lender has the right to convert the debt to equity or ownership of the company if the loan is not paid on time or in full. Mezzanine loans are typically subordinated to debt provided by banks and venture capital companies.

This type of financing is usually issued with little or no due diligence by the lender and no collateral from the borrower. As a result, the interest rates are aggressive, typically in the 20 to 30 percent range.

The typical borrower is an established business with a solid reputation, a successful product and an established track record. The company is usually looking to expand its operations with the help of outside funding.

Advantages for the Borrower

Mezzanine financing provides the borrower with the capital it needs to expand into new markets or acquire other businesses. As long as the firm continues to prosper, the lender will not interfere with the operation of the company.

The interest on debt is tax-deductible. Since the standard corporate tax rate is much higher, the after-tax rate becomes significantly lower.

Many mezzanine debts have flexible payment options. For example, the borrower may be allowed to pay interest by rolling that amount into the loan balance. This is helpful when cash flow is low.

If the company grows at a healthy rate, its value will increase too. Before long, the borrower will be able to refinance its mezzanine debt into a more reasonably-priced loan.

Advantages for the Investor

Many loans include a kicker clause, consisting of a piece of equity or options to purchase equity in the future. If the company is a success, these bonuses may exceed the original loan amount.

The return on mezzanine financing is significantly higher than traditional financial products. Given that U.S Treasury notes pay less than 2.3 percent annually, the profitability of these loans is attractive.

Mezzanine investors have contractually mandated interest payments on a regular basis. Equity investors are not entitled to recurring payments.

Disadvantages

If business performance does not meet expectations, management could lose control of the business. This is especially true if the lender has a significant share of equity.

The debt agreement may have restrictions on financing and spending. The borrower may not be able to obtain additional financing or be able to restructure current debt. Also, the company may not be able to spend money in certain areas, such as specialized personnel.

Though mezzanine financing has risks, this loan might be a viable option if your company is poised for aggressive growth. Your due diligence will tell you if this is the right approach for your business.


7 Reasons to Use Invoice Factoring

Growing businesses face many challenges over the years, many of which involve a shortage of cash required to get the inventory and business required to expand and pull in more customers and clients. Fortunately, invoice factoring is there to help out with these sorts of issues. This is a service which allows you to sell your outstanding invoices to a factoring company rather than waiting for customers to pay up, a process which can take months in some cases. There are several distinct advantages to taking this course of action for your business, such as:

Fast Cash

This is perhaps the fastest way to get the cash you’d otherwise have to wait for. It can take up to 3 months for customers to pair their invoices, and in the meantime your business’s cash flow dries up. With invoice factoring, this issue is no longer a threat.

No Resulting Debt

Because this arrangement is much more like an actual sale than a loan, you won’t be tethered to the factoring company by debt after the process is complete. You’ll be free to enjoy your cash.

Flexibility

The terms associated with this type of arrangement are fairly flexible. Choose which invoices you want to factor and when you want to factor them without the needs for contracts and negotiations.

Low Cost

Of course, this service will cost you a bit, but in the end it’s much cheaper than applying for a loan. For each invoice factoring order you complete, you’ll merely give up a small percentage as a fee.

No Loss of Control

You won’t have to worry about another party telling you how to run your business. When dealing with this type of factoring, you aren’t selling equity in your company, so you’ll always be able to develop your business just as you’ve always planned without interference.

More Savings

Because this service tends to cost much less than the interest rates from loans, your bottom line is bound to be heftier each and every month.

Less Stress

Finally, this process simply eliminates a great deal of stress associated with getting your business the financing it needs. No debt, no contracts, and no stress is necessary to get your business back on track.

Invoice factoring has some huge benefits, and any small business is sure to benefit from the service in one way or another. Speak to a professional to learn how these advantages can help your business in the coming years and really make your company a success.


5 Fix N Flip Tips for Big Profits

The fix n flip method of investing has become all the rage in recent years, among both experienced investors and newcomers alike. This is, perhaps, in response to the many home design television shows that have sprouted up around this issue, and made it seem almost like a simple venture that’s guaranteed to make a large profit. However, taking on this type of project can be challenging, especially for the unexperienced. Fortunately, there are a few tips anyone can follow to help make their next project a real success:

Know Your Limits

When it comes to making your initial purchase, never, ever overreach when it comes to your budget. Know how much you have to spend on this part of the project and stick to your numbers at all costs. This way, you can be sure you won’t need to go over your limits during the renovation portion of the project, and you won’t be biting off more than you could chew.

Familiarize Yourself With the Local Market

Knowing your local market is a must if you really want to get a good deal in both the buying and selling processes. Take the time to observe any local trends when it comes to the type and price of housing that’s been selling in recent years. Has it been rising or falling? Are there any particular neighborhoods you’ll want to invest in to maximize your profits? These are just a few of the details you’ll want to pay attention to for the best possible fix n flip experience.

Know What Your Buyers Want

You can’t simply throw a house together and expect buyers to pay top dollar for it. Rather, take a look at the homes in the neighborhood you’re working in that have been selling, and observe the most popular styles. Ensure you have enough bedrooms and bathrooms to make the space appealing to a growing family, and ensure that the kitchen and master bedroom and bathroom spaces have modern amenities and other important details.

Advertise

One surefire way to make sure your house doesn’t sell is to let it sit after completion without paying attention to it. Advertise your recent project to ensure potential buyers are able to see the potential in your finished product.

Avoid Overpricing

Regardless of how much you spent throughout the course of the renovations, never overprice your house when you’re looking to sell. Of course you want to get your money back, but setting your price too high discourages others from seeking out more information on the house.

By following these 5 tips, you can help ensure that your next fix n flip project is a success, and you’re getting the returns on your investment that you really deserve.


5 Ways to Boost Employee Morale

Having employees who are not happy can be a real drag on your business. It is up to you as the boss to keep employee morale high. That can be a challenge, especially if everyone is working hard to meet deadlines or you are in the midst of an especially trying project. However, here are five tips for boosting morale that you can try out when things get a little down at the office.

1. Vary Routines.

One of the reasons employee morale can drop is because people get bored. They feel restless doing the same old things time after time. By simply varying up the routine a bit, you can help give everyone a fresh start.

2. Give Them Time Off.

Sometimes employees just need a break. Being overwhelmed can be a huge blow to morale. If you can arrange it, consider giving everyone a day off from whatever it is they are working on. You can give them the actual day off or you can allow them to spend a day working on something different. This break may be all that is needed to make morale rebound.

3. Make Things Fun.

Speaking of boredom again, another way to fight it is to bring some fun into the office. Consider throwing a party or having a theme day. Everyone loves fun, so by doing something unexpected and exciting, you can get your employees engaged again.

4. Show Employees You Value Their Work.

Employees who feel valued will work harder and be more dedicated to their work. All you need to do is show them you appreciate what they are doing and that they are important. An employee who knows they are needed will be more invested and happier about doing their job.

5. Reflect on What Has Been Achieved.

Sometimes the focus becomes too centered on what needs to be done. As you are working on a project, it can help to take some time to reflect on what you have already accomplished. Allowing your employees to celebrate how far they have come instead of focusing on how much they have left to do, can be a major morale booster.

It is very common for employee morale to drop at times. People get bored with what they are doing, feel unappreciated or see no end in sight to a long, tedious project. When these things happen, it is up to you to do something to break up the monotony of the situation and raise employee morale.


Boost Sales With Consumer Financing

When you are the owner of an online business, there are plenty of different concerns that may cross your mind on any given day. One big thing that may come up is how to encourage your customers from making a purchase. While it is true that there are plenty of tactics that can be explored, from sales and discounts to limited offers, the truth is that these are fairly shortsighted goals. An excellent way to see better business in a safe and effective way over an extended period of time is through consumer financing. With this service, you will be able to boost your sales with ease.

Up until recently, this type of financing was generally only available through larger companies. Nowadays, more and more small businesses are pursuing consumer financing for their needs and the needs of their customers. With this option, consumers are granted the chance to open a line of credit specifically through your establishment. This has been shown to not only increase sales in general, but also raise the average for the amount that is spent during a specific transaction. Studies have shown that shoppers are more likely to make a big purchase if they feel like they will have time to pay off the balance. With this option, you are also able to dictate the terms and conditions depending on the specifics of what your business has to offer. For example, you can create incentives that will help to encourage your customers to buy. A great way to do this is by offering no interest if a shopper pays off the full balance within a certain amount of time.

Boosting your sales is just one small advantage that you can see when you decide to pursue consumer financing for the needs of your online business. On top of the financial benefits, you will also be able to create more of a dialogue with your customers. When you offer a service that allows consumers to feel comfortable, it can help your reputation. This, in turn, will transform into word-of-mouth advertising and, eventually, more traffic to your online shop. Doing a little can go a long way, and there is very little that you will have to concern yourself with while exploring consumer financing for your company.

If you are curious to learn more about what this service entails, it can be helpful to reach out and speak with a credit company that offers this type of service to online stores. Once you get the information you need, it can be easier to see why this is a wise choice for you to make.