Business Finance Funding With Credit Card Financing

August 31, 2010 by davidguide · Comments Off
Filed under: Cleaning Business 

In the face of a growing commercial finance funding crisis, many small business owners are exploring new options for commercial financing. Credit card loans and business cash advances are two working capital financing strategies which are proving to be practical and effective sources of operating cash for commercial borrowers.

The use of credit card financing often refers to business cash advances in which working capital is obtained by business owners based upon future credit card processing activity. Alternatively the use of personal credit cards to obtain a cash advance is also referred to as a credit card loan. With business finance funding shortages, small business owners are increasingly using both approaches to obtain operating cash for their business. The two financing approaches are not equal in terms of how they are viewed by commercial financing experts although the strategies might be called by the same name occasionally.

Many commercial lenders have suddenly reduced or cancelled business lines of credit and other forms of working capital loans. In response, many business owners have been forced to rely on cash obtained via their personal credit cards to sustain their businesses. We strongly urge all commercial borrowers to review our predatory lending discussion in The Working Capital Journal in order to prepare for some of the most undesirable actions being taken by many lenders which have a substantial credit card loan exposure.

There are two particular observations we want to emphasize about small business owners using personal credit cards to obtain operating cash: (1) This really is a business financing method of last resort that should be avoided whenever possible. Before assuming that this is the only source of capital available, commercial borrowers should consult with a working capital finance expert. The possibility of business cash advances and working capital loans should be thoroughly explored. (2) This questionable method of obtaining commercial finance funding will prove to be increasingly more difficult because credit card issuers are already cutting back on their unsecured lending programs.

Like reductions in their lending programs for business lines of credit, most banks are now making similar cutbacks in credit card lending. They are reducing or cancelling credit lines even when borrowers have a superb payment record. The rationale for banks reducing both credit card lines and commercial lines of credit is similar. With unsecured commercial loans or personal loans, banks fear that massive defaults are almost inevitable due to a very shaky economy and business lending climate. Unlike residential real estate financing in which real property is pledged as collateral, banks know that they have no collateral to fall back on with working capital loans and credit card loans because they are unsecured. Many small business owners use home equity lines of credit to obtain operating cash, and these funding sources are also diminishing in most areas of the United States. Although these lending programs are backed by collateral, the value of homes in many areas has decreased to the point that many outstanding loans exceed the current property value.

One of the most disturbing and frustrating occurrences in the current difficult commercial financing environment is the lack of clear information for many business owners about which funding options are realistic and possible. This factor alone has probably led thousands of commercial borrowers to obtain operating cash from their personal credit cards when there were better alternatives.

Due to the growing tendency of several major credit card issuers to exhibit predatory lending practices, the use of personal credit card loans should be avoided. At a minimum, each business owner should contact a business finance funding expert to determine if a business cash advance program or a working capital loan program can be used to obtain needed cash.

Obtain effective strategies for business cash advances and commercial loans – Steve Bush is a business finance funding expert => AEX Working Capital Finance and Commercial Real Estate Loans

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Failing To Plan Your Business Financing Can Be A Death Sentence For Your Business

July 16, 2010 by davidguide · Comments Off
Filed under: Cleaning Business 

Most businesses start out thinking the first thing they need is a great business plan. The popular myth is that potential lenders will place great stock in your business plan as a major consideration for approving the financing you need.

While a well written business plan will assist you when you are seeking financing, it is far down on the lender’s list behind things such as your business management team’s experience, your past business successes and your “lending character “. Having a plan for accessing the business capital you need to execute your business plan is what is required to bring your business success. Not having a viable business financing plan is the direct cause of why 90% of all new businesses fail.

Your lending character means the lender sees you having the ability and stability to repay the loan. They also ask how far they believe you can take the business to maximize the potential earnings and therefore their chances of getting repaid.

The first thing a lender is going to look at is how did you structure the business and were you responsible and knowledgeable in that. Are you Incorporated or an LLC? If not you are declined for a business loan and everything becomes based solely on you as an individual. Did you do your EIN, State, business licenses and bank filings correctly? If not, you are declined because lender’s require attention to detail.

A simple business credit report check by a lender will quickly show whether or not you are even in the ballpark for getting approved for financing. If the lender finds that you haven’t bothered to insure that your business has active reports with all three major business credit reporting agencies, then of course you are immediately declined.

Next, the lender will look at the character of your business credit reports. What do they say about your business? What kind of payment histories have you had with debts that are easy to get such as vendor trade lines, small business credit cards, equipment leases, etc? If your business has no credit history or very minimal history then no lender will even consider your business for a larger loan when you have no track record of paying smaller debts.

If you pass these simple tests, now a lender will get to the heart of you business loan application and it is only at this point that you even get the opportunity to present your funding request. Unfortunately as high as 90% of all business loan applications never get to this point, because most business owners never take the time to complete the initial steps.

So you have made it this far, The next question you need to ask is what is a lender going to want to see? Debt service! Here is where the lender finally looks at your business plan (or at least the financial pat of it) to determine if your business can debt service the loan. To make this determination a lender will test the reality of your numbers. Basically this means do your numbers add up and do they make sense.

If you don’t know anything about accounting you had better get help. When a lender looks at your projected financial statement and finds simple accounting errors, then in most cases you will again be declined. They don’t want to lend money to someone who cannot produce a simple proof and loss statement; or someone that can’t balance a balance sheet. There is a lot of help out there, get some.

Next, a lender will look at the market niche section of your business plan. While most business owners think that this is the place that sets them apart from the competition, it actually is the part where lenders will compare you to your competition. Here is where lenders must see that you have done you market research. Can the revenue claims that you are making in your financial projections be backed up by the actual market demographics for your specific business industry, location, customer base, etc.? It essentially comes down to the need for your product or service.

All of this can seem overwhelming and in truth it can be. It is the reason that 97% of all business loan applications get declined. The overriding reason is that business owners are not taught this in school and typically only gain this knowledge through years of brutal experience that normally includes having one or two failed businesses under their belts.

This will give you plenty of information to get you started on putting together a business funding request. In my next article I will cover some of the other aspects of your business plan. For a full version of an excellent business funding guide do a search on Google, Yahoo, or MSN for “Business Funding Workbook”.

Corey Pierce is the CEO of BusinessFinance.com a business capital search engine with the funding criteria of 4,000+ sources for business capital. Visit www.businessfinance.com to search the funding directory for free.

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How to Get Funding to Start a Cleaning Business

March 3, 2010 by Steven Sutherland · Comments Off
Filed under: Advertising 

Startup costs for a small cleaning business are reasonable compared to other business models. But many entrepreneurs underestimate cleaning business startup costs which can still be considerable for a business that is wanting to start off properly and professionally.

Once costs have been forecasted you can then look at sources of funding so that you can get together the necessary startup capital for your new venture. For a well set up cleaning operation these costs are likely to range anywhere from a few thousand dollars up to around ten thousand dollars.

Let’s take a look at some of the sources of business funding that you may have available to you.

1) Fund it yourself. This is a good idea as it shouldn’t take you too long to save a few thousand dollars. Avoid going into debt if possible and consider delaying your business for six months or so if you need to save more.

2) Friends and Family. A small loan from someone close to you could be just the ticket but be careful that you don’t damage relationships by being slow to repay it.

3) Investors. While it is likely that you will be too small for venture capital funding you may know someone in your social network who would consider backing you financially. Be careful here though as they will probably want to have some input into management decisions and they may clash with your way of thinking.

4) Small Business Bank Loans. You will need to offer the bank some form of guarantee or collateral to qualify for credit line. You also may need to prove that you have a solid business plan and show a willingness to take on some of the risk yourself by at least providing some of the necessary funding.

5) Government loans and grants. Look into the opportunities offered by the Small Business Administration (SBA) and other government agencies. If you meet their criteria then you may qualify for a small business loan or grant.

6) Credit card financing. As a last resort, getting a cash advance on a credit card or multiple cards offers you quick access to funding when you need it. Risks with this option are high due to the interest rates that you will have to pay but if you are confident in your business plan and feel that you will be able to start paying back the debt within a reasonably short period of time then this option could work out well for you.

No matter which source of funding you decide to go with to get your small cleaning business off the ground just remember that every dollar counts and should be put towards the best possible use.

Author: Steven Sutherland
Article Source: EzineArticles.com
Provided by: Duty tariff

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