Solutions For the Business Financing Puzzle

The comparison of small business financing to a puzzle is not meant to diminish the critical importance of success by business owners when they encounter difficulties with commercial lenders. The most practical goal for using a puzzle analogy in this article is to help describe an otherwise complex working capital and commercial finance situation in a more understandable way. The current commercial loan stakes for commercial borrowers are high because their business survival might be hanging in the balance.

In using a puzzle comparison, this analogy provides an opportunity to evaluate the commercial loans puzzle (a challenging commercial lending climate) as something that tests the ingenuity of small businesses to solve. When reviewing the current small business finance environment, an increasing number of commercial borrowers are comparing what they are finding to a puzzle with pieces scattered everywhere. The ongoing descriptions of commercial financing in terms of solving a puzzle should provide a reasonable reflection of the underlying problems that cannot be ignored by a prudent business borrower. The growing confusion represented in small business owner interactions with their current bank concerning available business financing options is no doubt also reflected by such an analogy.

Recent experiences by many commercial borrowers with their business banker probably resemble a constantly changing level of difficulty for an already confusing small business finance puzzle. It has become a common experience for banks to take over two months for a working capital financing process that should realistically be completed in three weeks or less, and in many cases even then the lender does not complete the process for providing the requested working capital to the business which has been waiting without any awareness that funding might not be finalized. Suggestions that commercial lenders have misrepresented what is required to finalize commercial loans are emerging in too many reports for borrowers to ignore.

For a number of years most business financing has been more complicated than borrowers realize. Recent events have made these complexities more obvious primarily because the eventual results have changed so drastically. It is situations like those noted above that cause business borrowers to feel like some of the required puzzle pieces have been removed from the board. In effect that is exactly what has happened in many cases because fewer banks are now providing small business financing. When this happens with the bank that a business has previously relied upon for their small business finance needs, a business owner is indeed likely to feel as if the commercial finance puzzle pieces have disappeared.

By continuing the puzzle analogy, there are two practical options for commercial borrowers to analyze and consider. First, in an approach which can lead to a small business finance puzzle which will involve “fewer pieces” if executed successfully, business owners should assess the potential for a reduction in their commercial debt requirements. Second, by looking for alternative commercial lending sources, small businesses should attempt to find the “missing pieces”. As with any complex business financing situation, both of these (as well as any other realistic commercial loan choices) should be thoroughly reviewed with the help of an experienced expert.

The Easiest and Most Successful Ways to Finance Your Business

In order to succeed as a business you need a definitive and solid understanding of your business’ finances. While many new small businesses are often times financed out of, you the owner’s pockets, most of the others need some extra funds from other sources in order to get off the ground. The truth is however, you need to be smart about your choices.

You need to be selective and pretty keen when it comes to finding finance for your business. A few wrong choices and you’ll find yourself along with your business in a lot of trouble. There are several methods to finance your business especially for small businesses. Here are five places where you can find finances for your business:

One way to finance your business is through a business loan. Try researching the The Small Business Association for any loans available for what you are doing. They are one of the best sources of information for financing a business. Of all the sources of funding on this list, a loan will require to spend a lot of time and energy to do the legwork for it but it definitely will pay off in the long run. Make sure you have a well-written and clearly defined business plan in order to expect to be approved.
Have you thought about possibly utilizing your home’s equity? Obviously this only pertains to those of you who own a house but it is a viable option if you do. You basically use the equity of your home in order to finance your business and allows for a tax deduction on the interest paid. Many savvy business owners use the combination of this in order to get the business loans discussed earlier. The only downside is that the security of your home ownership is now tied into the business’s success. If the business fails, you can lose your home.
Another option often overlooked is the possibility of person to person lending. There are numerous personal investors out there looking to provide the appropriate funds in order to see a return on their investment. Some websites and businesses deal solely on brokering these types of deals. You can also approach friends and family members for money as well.
One of the hottest trends in business finance is the use of investment financing. This can found in the form of venture capital firms and business partners looking to make an investment with the hope of receiving a return on it down the road. The only problem is that finding an investment group can time consuming and the process is sometimes not that easy. You even run the risk of giving up a percentage of ownership to the investor.
The final option for you to choose from is the use of business credit cards. Many financial institutions will approve business with a credit card but it depends on a number of factors such as the amount of financing you need. I would only recommend this choice of financing is your business can afford to pay the high interest rates that come with these cards.

The Many Advantages of Accounts Receivable Financing

There are many accounts receivable financing advantages. Businesses the need capital will be hard pressed to find a much better or faster option. Such financing is not dependent upon a businesses’ credit or the length of time that they have been in business. As long as a company has clients with good credit and outstanding invoices, then accounts receivable financing is a viable commercial financing option. Below, we will go into a little more detail about only a few of the many advantages of generating capital in this manner.

Fast money

Accounts receivables financing is a really great way to get money fast. Most factors are able to provide payment for invoices in about 24 hours. This process may initially take more time. However, after a business has established a relationship with a factor, the process goes really quickly. Unless a company has an open line of credit, it is difficult to think of a faster way to raise commercial capital. Even in cases where a line of credit is utilized a company is forced to pay interest which can be extremely expensive. There are no such costs associated with receivables financing.

Easy money

Accounts receivables financing is easy money. When a business desires to get a bank loan, they must be willing to jump through hoops. They will need to have all of their financial documentation in order. For a small business, this might require an unpleasant trip to the accountant. They then must also be ready to answer any questions a bank has. If they are unable to satisfactorily do so, then they won’t qualify for the loan. Also, many banks won’t loan money to new businesses, these are often the companies that need it most.

Today, it is even more difficult then in the past to receive bank financing. Banks simply aren’t willing to part with their money right now. They are turning down loan applications from businesses with good credit and that have been in business for a long time. Commercial financing has become more difficult then ever to secure, though not in every sense. Accounts receivables financing is a pretty easy way to get money. As long as a business has outstanding invoices owned by clients with good credit, they may be able to qualify for monies.

A business credit score doesn’t matter

If a business has any chance of receiving a bank loan, they must have a good credit score. In this day and age, they just might need an excellent credit history with no blemishes. Fortunately, businesses that utilize accounts receivables financing don’t have to worry about this. A factoring company is more concerned about the credit history of the invoiced clients then the company that owns those invoices because that is who they will be collecting their money from.

Accounts receivables financing has many advantages over traditional capital financing options. Generating capital in this manner is fast, easy, doesn’t require that a company has been in business long, nor do they need to have good credit.


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