Thursday, February 27, 2014

Things to Consider When Getting a Business Loan

Whether you are just starting your business, in growth mode, or just cruising along – there will come a time when you consider getting a small business loan.  A small business loan is essentially a way of financing your business when you would otherwise be unable to.   The number of reasons why you would get a business loan are as varied and numerous as the types of business loans available.  Business owners usually look to lenders to provide business loans to finance vehicles, equipment, real estate and other expenses.  They are generally short term loans (6 to 10 years) but could be longer based on the type of financing required.  Some type of collateral will generally be required by the lender to secure the loan.  Usually this is the vehicle, equipment, or real estate being purchased with the loan.

Lenders usually provide business loans to finance vehicles, equipment, real estate and other expenses. These loans are generally for a short term, such as six to seven years, but the duration can often vary based on the type of financing required.  Some type of collateral generally must be used to secure the loan - usually the vehicle, equipment or real estate being purchased with the loan or what is called a “blanket lien” on other assets. You should also expect to pay a loan origination fee, and of course interest.  The rate of interest will depend on a number of factors including your credit rating.  Business loans can offer the security of a fixed monthly payment and a fixed interest rate, although variable rate loans may also be available.

You may be considering a small business loan if you have the ultimate business idea to grow your business, or you want to spend more on marketing and growth, or really have outgrown the space you are in.  Well, every good idea needs one thing - money.  Success in getting financing of any type, including a loan for your loans for small business is not an easy task.  In today’s economy, lending is tight, and only those who can prove they are not a risk are able to reap the rewards.

When considering getting a small business loan, it pays to be knowledgeable about what a lender will look at before loaning money to a business.  There are a number of different financial items that a lender will look at.  Knowing these criteria beforehand and having the answers in place will go a long way in getting you that loan.  The first thing that a lender will look at is your ability to repay the loan.  An established business will definitely have an advantage as it has a proven track record and can provide financial statements from prior years that can show growth and profitability (or the potential for it).  A business that doesn’t have high profits but has an excellent marketing plan to expand into a new key market also has the key information that the lender will want.  A start up business has the disadvantage of not having a track record of any type, and may need to overcome this disadvantage this with excellent business planning and a well thought out marketing strategy that will show how the business will make money and how it will pay for the loan.

The second factor that lenders look into when considering a small business loan is your individual credit history.  Just as if you were getting a personal loan, the lender will pull the three major credit reports and will check scores for credit worthiness before issuing a small business loan.  Being prepared by checking over your credit reports and being familiar with your credit score is always a good idea when apply for a loan.  Be sure you are checking for inaccuracies and errors, if there are any you should start the process to correct the information.  Doing what is needed to correct any past due accounts will also be helpful.

Lenders will also consider equity prior to issuing a loan.  They will look for some form of equity in any business before lending money to it.  Most of the time, they expect the business owner to have invested at least one quarter of the total value themselves.  Along with equity comes collateral, and before issuing a small business loan, a lender may ask for some type of collateral.  Lenders are more willing to invest in a business if there is a secondary way for them to get their money back.  A business that has collateral that can be sold off in the event of defaulting on a payment will have an advantage on getting a loan over another business with no collateral.

Finally a lender will look at business experience.  You will need to show them that you have the business experience to make things happen.  Lenders are never too eager to lend money to someone starting a business in a field which they have no prior experience in.  Either you will need to gain the experience before getting a loan or have plans in place to hire someone with that experience to run the business for the lender to be comfortable in loaning the money to the small business. Knowledge equals profit in the eyes of the lender.  It is critical that you consider what the lender will require from you when seeking a business loan.  This can only help you in getting a little bit of an edge and perhaps having someone give your small business loan application deeper consideration.

Knowing how to get a small business loan may seem like a difficult proposition, but in reality it’s not too difficult when you are armed with the right information. Knowing what a lender will require is a good start.  You will also need to consider what type of loans you are looking to take advantage of (small business loans, lines of credit, specialized loan programs), and more importantly what you are going to use the funding for.  That will help ultimately determine what type of loan you should be looking at.

So really think about what you need the money for.  Of course there are urgent needs, long term needs, and things that you just need to help your business run.  Each of them may require a different type of loan, with a different term.  The main types of loans to consider for your small business are ones to pay for inventory, to increase working capital, and for real estate purchases.

A major characteristic to consider when contemplating loans is the length of the loan and whether it is short term or long term. The length of loan is typically matched to purpose of the loan.  Long-term loans are used to finance the purchase, improvement, or expansion of fixed assets such as equipment, company vehicles, and real estate while short term loans are used to finance current or short term assets and liabilities such as accounts receivable, inventory, and accounts payable.

One type of short term loan is to fund inventory purchases.  Almost all small businesses need inventory to get started, and then also need to anticipate future inventory needs.  Your business will be a success or failure depending on your ability to be able to consistently give your customers what they want, exactly when they want it, and optimally give it to them before they know they even want it.  Meeting that demand keeps you in business; going above and beyond helps you grow. Since most small businesses are seasonal in nature, you may need more inventory before you have made enough to pay for it.

Lenders have special loans available to small businesses designed to be used to just purchase inventory.  Also called “inventory financing” it is a line of credit or short-term commercial loan made to a company for the specific purpose of purchasing products for sale.  These products or inventory will serve as collateral for the loan if the business cannot repay the loan.  Inventory financing is especially useful for businesses that must pay their suppliers in a shorter period of time than it takes them to sell their inventory to customers.  Lender loans to purchase inventory are generally short-term in nature and companies are usually able to pay them off the season is over with the proceeds of sales from their seasonal sales.

Loans to increase work working capital are similar to inventory financing.  They are short term loans designed to get and keep your business running.  Lenders will sometimes provide short term financing to small businesses to enable them to get off the ground and grow.  Working capital loans are a great way for small businesses to generate capital and start focusing on business growth. To be able to run and grow a business it is critically important to have capital on hand to cover costs, payroll, and any other unexpected costs that may occur.  If you are aware that you will have a slow period during the year, you can use the loan to meet your payroll or other recurring payment obligations.  Or you can use a working capital loan to stock up on inventory before the coming holiday season and you don’t have enough cash on hand.  You can even use your loan to buy things on sale!  Yes, take advantage of seasonal discounts offered to you by vendors.  You don’t have to exhaust all of your finances to meet your financial needs use working capital commercial loan to keep money in your businesses pocket as well as meeting your needs with cash to spare.

Perhaps you are looking to make a real estate purchase for your business.  Small business loans are available to finance real estate!  If your business is growing, turning profits, but you are busting at the seams in your office – you may be a great candidate for a commercial real estate loan.  You may want a completely new space for your business and warehouse, or you may just need to expand on what you already have.  Unlike working capital and inventory loans, real estate loans are a type of loan for small businesses that is long term.  Longer term financing is available to business owners to allow them to purchase commercial real estate or to expand their existing operations, and in turn grow their business and as a bonus bring jobs and money to the local economy.

Lenders are more likely to approve commercials real estate loans for existing businesses that want to purchase real estate to expand their operations. If a business has been established for a while and ready for expansion, then the lender has some confidence that the business is successful and will continue to be.  Of course the lender will look at your financial statements, and if you are ready to expand they will see that your company is turning a profit, has a positive cash flow, and positive forecasting numbers for the future.

And another consideration when looking for loans for small businesses, is do you qualify for a special loan program?  There are a number of specialized financing programs available to certain industries, groups, and business sizes.  One of the largest most diverse programs is through the small business administration.  The small business administration helps small businesses grow.  They offer special programs for veterans, women in business, and are perfect for those who many not qualify for traditional financing.  Small Business Administration loan programs are designed to help borrowers who may not meet the lending standards set by most banks. These can include issues such as a recent change in business ownership, a shortfall in collateral to secure the loan, business principals who have a low net worth or the need for extended payment terms.

These are U.S. government-backed term loans that are available at most banks and commercial lending institution.  In any given year, the SBA can guarantee tens of billions of dollars-worth of loans that support tens of thousands of small businesses.  Loan terms can last up to 25 years for real estate, up to 10 years for equipment (as long as the equipment is likely to stay useful during that time) and usually up to seven years for working capital. Interest rates are also competitive because the SBA limits the interest rate spread that banks are able to offer on the loans.

There really is a lot to consider when you are pondering the possibility of obtaining a business loan.  But, once you have done your research, decided on what and how much you need, you will be armed with everything required to get that business loan.

Thursday, February 13, 2014

15 Tips to Save on Valentine’s Day

The sexiest way to save on Valentine’s Day? Do the seemingly impossible: spend less and get more. shares 15 ways to pull it off.


What you need to know first: The best red roses are ice cold. “If the product is outside of a cold chamber, which is 32 to 36 degrees, they lose life for every minute they’re outside that cold,” warns Christine Boldt, executive vice president of the Association of Floral Importers (AFIF) Hence, this advice:

1. Never buy from the side of the road. They’ll only last a day or two, because roadside vendors don’t get the best product. “Those flowers are what we in the industry call seconds,” Boldt says.

2. Don’t buy online. You can save money and score good deals online for almost anything – except flowers. Why? Boldt answers that question with her own: Have you ever seen a refrigerated UPS or FedEx truck? No.”

3. Do buy from grocery and even warehouse stores. Ask if those stores keep their flowers refrigerated. If so, then they can be just as long-lasting as those at a florist.

4. Look for tight buds. In other words, look for flowers that don’t look good at that moment – because they’ll blossom in a few hours and will stay that way for many days. If those buds are already open, they’ll only last another day or two.

5. Use the food. If your flowers don’t come with a tiny packet of flower food, ask for it. And use it. That packet isn’t a gimmick – it really does help.

6. Don’t be afraid to ask for replacements. If you buy a jar of spoiled peanut butter, you take it back to the grocery store.  Florists (and other experienced retailers who sell flowers) know that they sometimes stock buds that are duds. If you’ve taken all this advice and they die early, ask for new ones.


What you need to know first: “Our number 1 money-saving tip is: Stay out of the restaurant and bring your celebration home,” says Elizabeth Mascaali, one half of an event company called Party BluPrint. But doing that right means:

7. Eat elsewhere. Romance means special, and eating in the kitchen doesn’t cut it. “Make a move from the table to a cozy spot in your home,” Mascaali says. If you have a fireplace, she recommends spreading a blanket in front of it and dining “picnic style.”

8. Burn for your love. Let’s face it, flames are sexy. “Get a fire lit, whether it’s a fireplace or candles,” Mascaali says.

9. Put the petal to the metal. “Make one red rose work for you,” Mascaali advises. “Take the petals off the rose and sprinkle them all throughout the area. It really adds a luxurious look and feel to your celebration.”

10. Don’t pay double for your bubbles. Most people can’t tell good Champagne from bad. So why bother? Mascaali’s business partner Dawn Sandomeno suggests, “Keep the cork on the Champagne and pop the Prosecco. A really good bottle will run you $15 – a fraction of the cost of Champagne.” A sparkling white wine from Italy, Prosecco is not too sweet and cloying.

11. Flirt with dessert. The last thing you want on a romantic evening is a heavy dessert to weigh down the romance. The best solution is also a cheap one: sorbet. “It’s inexpensive and refreshing,” Sandomeno says. But it can look pricey and exotic if you buy several flavors. Sandomeno’s sexiest combo: “Tangerine and pomegranate with a sprig of mint.”


What you need to know first: Set a budget and go with your gut. “Don’t take the allure and the romance out of the purchase and turn it into buying stocks and bonds,” says Jeff Malvin, president of the Beverly’s Jewelers chain. “Just buy beautiful.” That means:

12. There’s more in store. We told you not to buy flowers online. Well, that goes double for diamonds. Many online diamond dealers tout that their stones are certified, so you don’t need to see them. But if you’re spending a lot of money, comparing stones in person and under magnification is important. Use the internet as a pricing guide, but if you can get similar prices from a local jeweler, you’re better off buying locally.

14. Certify before you buy. Speaking of certificates, once you like the look, go by the book. Most people know diamonds come with certificates that attest to their “Four Cs” – cut, carat, color, and clarity. But even gold has marks you need to look out for. “The manufacturer’s trademark must be on that item, close to the karat stamp,” Malvin says.

15. But don’t go certificate-crazy. “The young lady is not going to wear the certificate,” Malvin says. “So get the most beautiful stone you can for your budget.” And if you get the hard-sell from any jeweler, Malvin says take advantage of the competition for carats: “If you walk in and don’t have a good feeling,” he says, “go to the next place.”

Wednesday, February 12, 2014

Banks Using Every Reason to Decline Loans

Many of you who are reading this may have experienced first hand what it’s like in the current bank lending environment to get a loan. In some cases, bank underwriting criteria is downright ridiculous and frustrating. And with the new QM Rule, or ‘Qualified Mortgage’ Rule, even less potential borrowers will qualify for loans this year. For this reason, more people will be seeking private money mortgages in 2014.
There are so many stories out there such as this one. A borrower with perfect credit and good income is declined at the bank after months of deliberation. In some cases, a lot is at stake in a real estate transaction including large earnest money deposits, third party fees, and invested time. Many banks simply aren’t lending on investment properties, particularly vacant and poorly maintained properties. Although many people may complain about the higher interest rates charged by commercial hard money lenders, at least bridge loans are readily available for financing on under improved properties or in cases when a bank decline is imminent.

Because banks won’t be lowering their underwriting standards in 2014, and competition for loans will be higher than ever this year, borrowers should get a head start on financing options and get lots of them. Visit for more information.

4 Ways to Raise Private Money For Real Estate Investors

by Mike Lautensack
Now that the mortgage market for buying investment real estate is all but dead - investors need to have other sources available or go out business. Fannie and Freddie will no longer be available for investor mortgages, traditional banks and saving and loans will not touch investors loans for many years to come and hard money lenders, when available, can have total cost over 25%.

The answer is private money raised from people, not banks, through a process called private lending. Here are the four top ways to attract and develop your group of private lenders.

Private Lending Group Presentations

A private lending presentation involves getting 5 to 20 people into a room and doing a group presentation where you lay out the details and benefits of your private lending program. This may not be for everyone depending on your comfort level of talking in front of a group of people. But there is big advantage of doing group meetings. When people start to ask questions and tell positive stories a certain level of group think starts to take effect and can be very powerful on the attendees.

One-on-One Meetings

If you are not comfortable with group meetings - one-on-one meetings are a great alternative. I generally recommend a breakfast meeting in a quiet restaurant where you can have 15 to 45 minutes of time with your prospect. Like the group meeting you need to lay out your private lending program's details and benefits.

Out of Town Prospects - Creditability Kit

If the potential prospect is out of town you will need a good creditability kit you can send in the mail. It is very important to follow up two or three days after you send the package to see if they have any questions. Even if they do not participate right away, keep in contact and they may invest some time down the road after a number of follow up contacts.

Existing Private Lenders

If you already have a private lender, or lenders, be sure to keep asking them if they would like to participate in more deals. You will be shocked that most investor only give a very small investment to start and wait to see how things turn out before giving you more money. So keep asking and do what you say you are going to do they will develop a better relationship and trust level with you. As the relationship grows they will invest larger and larger sums to grow your real estate investing business.

And I invite you to learn more about Private Lending by going to

How To Get A Business Loan With Bad Credit

by Bev Sninchak of Media Shower

You’ve taken the leap and decided to start your business – except there’s a problem. You need money for your startup, but your credit isn’t so great. In fact, it’s downright bad.

What do you do if you need funds and financial backing, but you don’t have an excellent financial track record? Don’t give up, because there are ways you can secure capital for your fledgling business.

Here are some tips for locating business loans when your choices seem limited.

When you have bad credit and are starting business, two things must happen: You need to find the money to fully support your business plans, and you also need to find a way to grow your credit score and improve it. Obtaining financing can be a challenge, but once you do, you’re on your way to setting up shop as well as rebuilding your credit worthiness so, in the future; you can obtain loans more easily.

According to Entrepreneur Magazine, traditional bank loans only account for one-quarter of the money obtained by entrepreneurs with new startups.

That’s What Friends Are For

Although you might not want to ask, you should consider discussing your startup with your family, extended relatives, and close friends. While you may not be able to get a complete business loan from them to support the entire launch of your business, you may be able to secure the majority of funding to get the ball rolling. Most of the time, your reputation and reliability are well known to the people closest to you, so while they won’t ask for a credit score before fronting you a business loan, they will have an idea of how dependable you are.

Another option would be to ask them to co-sign a loan for you, using more traditional financial resources. Regardless of which path you choose, it’s important to make good on your promises to pay back the loan, and you should insist on a professional loan contract so each person involved can have peace of mind that all matters are understood, agreed upon, and aboveboard.

Look Beyond Big Banks

Once again, traditional bank loans are in the minority when it comes to business startups. Where else can you get a business loan? There are smaller lenders out there – known as microlenders – as well as online lenders that do business solely over the internet. You will need to research these types of lenders and be sure they are legitimate, of course, as well as comparing the rates they offer in addition to their rules and regulations.

If you are a woman launching a startup business, you may want to check out Count Me In or Magic City Capital. The latter is a resource site particularly targeted toward women seeking business loans and additional education while launching their own company.

Although it may be more challenging to secure a business loan if you have bad credit, that doesn’t mean it’s impossible. By following the suggestions above, you can find a way to get your startup running with a line of credit and rebuild your credit score at the same time.

Contributor: Bev Sninchak is a veteran freelance writer with 16 years of experience producing content for various publications. She writes about many subjects, from blogging advice to acquiring auto loans for bad credit.

Tuesday, February 11, 2014

4 Great Tips For Finding Funding For Your Startup

Entrepreneurs are full of great ideas and powerful ways to implement them, but like anything in life, starting a new businessrequires a hefty stack of cold, hard cash. At one time, gathering this cash required hours of traipsing business plans to oneinvestor after another, hoping one would be interested enough to invest. This approach often took years and yielded disappointing results.
As we approach 2014, however, support for small businesses and startups has never been stronger. Everyone from President Obama to the stars of NBC’sShark Tank acknowledges that small businesses are the backbone of our nation’s economy. By investing in small businesses, we help strengthen that economy by creating jobs while also supporting other companies through purchasing products and forming partnerships.
But for an entrepreneur starting out, it can be hard to sort through the many funding options available to determine which are most lucrative. While it would be ideal to line a roomful of investors out and let them fight it out for the honor of funding your business, that is often, unfortunately, not the reality. Still, through leveraging the global outreach of the Internet, your startup can receive the funding it needs to get off the ground. Here are a few tips to help you locate the best finance deal for your business idea.
Consider Your Niche
Chances are, there’s something special about your idea. Maybe you’re a single mom or your idea will help those in underserved areas. There are grants tailored to either specific business owners or specific business ideas that can help get your idea off the ground.
Defining your niche will have an additional benefit. As you seek out funding, you’ll be able to summarize in only a few words what sets your business apart from others. Research any investors you approach to discover those financiers that have a particular interest in what your business offers.
Find a Grant
When it comes to locating financing, nothing beats a grant. Money is provided to you, free of charge, that you can put toward your startup. Understandably, locating and landing these grants is extremely difficult, but you’ll definitely never land a grant if you don’t try. This site aggregates federal grants in a variety of categories to see if one might apply to your business idea.
Grants are available based on the theme of your business, as well as your own demographics. There are grants for minority business owners, women, single mothers, and more. In order to apply, you’ll have to dust off your keyboard and start typing. Most grant programs require extensive proposals where you detail every aspect of your organization.
Enter a Contest
Perhaps another sign of the growing support of small business startups is the number of contests that encourage innovation by offering a large financial reward. The Amazon Web Services Start-Up Challenge provides annual rewards of $50,000 plus $50,000 in AWS credits to businesses each year. MIT offers rewards of more than $350,000 each year for its pitch, accelerate, and launch contests.
To improve your odds of success in these contest, find ways to make your project stand out in the crowd. You’ll either have to present your idea in person or pitch it through an essay, so the idea itself has to be as original as possible.
Crowdfund Your Idea
Sites like Kickstarter and Indiegogo provide the perfect platform for businesses to locate funds for a new startup. Crowdfunding has exploded in popularity in the past year, getting attention from both investors and businesses alike. But all of this popularity also means an increase in competition, which means unless your business can catch the attention of the matches, it will likely join the large number of projects that go unfunded on these sites each month.
The most successful campaigns seem to come with a good story. While most entrepreneurs are inclined to highlight the product and hide in the background, on crowdfunding sites, the entrepreneur is the story. It’s important you share what led you to create your concept and the passion you have for seeing that concept to fruition.
Find an Angel Investor
Believe it or not, there are real-life Shark Tank stories. These angel investors are continually seeking a great idea, but before you think they’re simply sinking money into startups out of the goodness of their hearts, these investors have an ulterior motive. In return for your funding, you’ll usually be asked to promise a sizable chunk of your company. If you’re comfortable exchanging equity for financing, an angel investor or two might be just the solution you’re seeking.
Once you’ve decided to seek out this type of investor, the next challenge is in finding an angel investor who is looking for a project like yours. One place to start is the Small Business Administration (SBA). The SBA offers Small Business Development Centers, located around the country, that can help connect entrepreneurs with investors. Gust is another great resource, listing investors and entrepreneurs and boasting more than 1,800 startups funded in the past year.
Take a Loan
If you own a small business, the Magic City Capital can help you locate a loan opportunity near you. There are a variety of specialized options available, including loans to help with disaster recovery and microloans. This can be easier than trying to secure a bank loan, especially since restrictions have tightened.
However, if you do decide to contact a bank for a small business loan, make sure you have as many details about your proposed business as possible. This includes full financials that disclose exactly how the loaned money will be used. It might be best to start with smaller, community-based banks, as they will have a more thorough understanding as to how your small business will fit into the existing local landscape.
Putting together the funding to get your business off the ground doesn’t have to be complicated. By creating a good business plan and honing your pitch until it wows anyone who hears it, you’ll increase your odds of getting the financing you need to put your idea in motion.