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A brief series of pertinent small business financing questions and answers are provided below as a tool to illustrate why working capital loans and commercial mortgages have become so difficult to obtain. This is designed to serve as a good starting point for any small business borrower about to embark on efforts to secure commercial financing.

After they were given taxpayer funding by the financial bailout in 2008, are banks required to provide small business lending?

No, although it is a mystery to almost everyone (except for the bankers themselves) that there were not such conditions placed upon the banks when they were saved from financial collapse by taxpayer funds. Because the assets are considered to be what is known as fungible, the recipients can effectively do what they want with the money. This seems like a term invented just for such an occasion.

As used for banking purposes it is not possible to say what happened to the money given to the banks because the monetary assets are interchangeable with other funds. Most banks saved from financial collapse now appear to be investing a significant portion in what most observers consider to be risky areas similar to what got them into trouble at the beginning of this crisis, and in any case there were no restrictive conditions which would require banks to provide any particular amount of commercial loans.

Are there really any good banks still standing? After the financial bailout, are banks still failing?

Yes seems to be an appropriate answer to both questions. Telling the difference between good and bad banks is unfortunately not an easy task for innocent bystanders. It should be apparent that there is still a lending crisis that was not resolved by the bailout because (among other objective indicators) there continue to be ongoing weekly reports from the Federal Deposit Insurance Corporation about bank failures.

The rest of us can still draw our own conclusions even though bankers and politicians do not want to talk openly about this situation.

Do phantom business loans refer to commercial financing that lenders say is available but in fact is not?

Yes, and the term is influenced by technology firms when they talked about products often called phantom software when they were trying to discourage customers from purchasing a competitive product even though the company that made the announcement did not have such an item actually available. Because there were so many documented instances in which the phantom software never materialized beyond a press release, the practice was usually viewed as controversial. The world of small business lending has now apparently adopted this questionable public relations ploy.

While the preceding discussion was not intended to be a complete examination of small business loans, it was designed to reveal potential lending difficulties to small business owners before it is too late to take appropriate action. The brief business financing quiz shown above also illustrates several key issues to help explain the recent lack of adequate commercial real estate loans and working capital funding by banks to small businesses.

So many times small business (and medium-sized business) owners say, “I need money, I wonder if I can get a bank loan?” Or if they are technology company owners they say, “I need money. I wonder if I can get angel investors or venture capital?”

I say to this, HOLD UP! Don’t jump the gun. There are some other questions you need to ask before you immediately limit your focus to one or two particular sources of small business financing. If you hone in on the “how” too quickly, you shut down your imagination and limit your options. To broaden their perspective, business owners and executive management must focus on the “why” and the “what”.

These are the questions you need to ask FIRST:

·  How much money do I need? This is a crucial question. Yet there are so many business owners who cannot answer this question. The amount you need is a big driver of the best source of the financing. The true amount may be low enough that you can get a customer to pre-pay and thus have the funds you need. Some financing sources do not consider above a certain amount (i.e., 0,000) whereas others will not consider anything below a certain threshold (i.e., million).  If you have NO idea what SPECIFIC amount of money you need, then you are at a severe disadvantage.

·  What is the money for? Does your business need working capital? Do you need money to expand sales and marketing efforts? Do you wish to acquire another firm? Do you need funds for software development? Or do you need overall expansion capital to expand the company across all of sales, operations, etc.? Again, the answers to these questions are key to determining the source of financing.

·  What are your near, mid-range, and long term goals for the company? Do you intend to sell the company in the not so distant future? You may wish to pursue financing now from a strategic investor who could buy your entire company later. Do you have a number of partners or an intention to grow through partnerships? You may want to leverage those partnerships to cover expenses or obtain investment. Do you wish to expand internationally? Your sources are no longer limited to US-based entities.

Remember, asking the right questions FIRST is the key to deciding who you go to (i.e., the source) and how much you ask for (i.e., the amount). Better questions make for better decisions. Do limit your options by jumping to a conclusion or solution so soon that you shut down your imagination.

Can anyone clarify the mystery of creative business financing? Surprisingly enough, there is a myriad of misinformation — and just plain bad advice swarming this topic. If you’re at the point of utter frustration in your search for straight talk about truly creative sources of business start up funding, then read on.

Join me in weeding out “the crap” (pardon the expression) versus the truly creative business financing solutions, by exploring what’s hot and what’s not in business start up funding. Let’s start out by looking at what’s not.
 
What’s Not!
 
Borrowing from Family & Friends
This is usually not a very good idea. It’s one thing to risk your own assets, but what happens if your business doesn’t do as well as expected? 
 
Credit Card Financing
Using credit cards as a source of start up funding is a very bad move. Not only is the interest rate unfavorable, but so are the repayment terms. Read the fine print of your card holder agreement and you’ll see exactly what I mean.
 
Merchant Account Financing
This is like a loan, in that you are given a sum of money up front. However, there are no loan repayments. The lender takes a chunk of each and every one of your credit card transactions as repayment. Please, please, please – this is a very bad idea!
 
Peer-to-Peer Lending Groups
This is a loan from a non-traditional source – but nonetheless a loan.

The major players are Prosper, Loanio and Zopa.
 
Before We Continue, Let’s Make a Quick Stop in Oz…
 
Did you know that creative doesn’t have to mean difficult? Challenging circumstances are often conquered with very simple — dare I say, childlike solutions. 
 
Remember Dorothy and Toto? Dorothy just wanted to get home to Aunty Em. What she didn’t realize (until it was pointed out) was that she had the means to get back to Kansas the whole entire time. She just needed to understand how to effectively manage what she already had. Along comes Glenda her personal coach (a/k/a The Good Witch). 
 
Glenda provides Dorothy with the training she needed to utilize the resources already at her disposal (exhibit A: the ruby red slippers). The end result? Dorothy is empowered to use what she already had, to get to where she really wanted to be. So what is the moral of this story? Are you trusting in “so called” Wizards? 
 
Learn proven, creative financing strategies to fund your start up by exploring the benefits of bootstrapping.
 
What’s Hot!
 
Bartering
Trade the value of your products or services for the products and services of other business professionals. I am well acquainted with this form of creative business financing, as a few of my customers have offered me services in lieu of payment. Check out AmericanBarter.com and BizXchange.com if you’d like more information.
 
Equipment Leasing
Leasing business equipment is a creative means of unlocking needed cash flow. This form of business start up funding is especially helpful if your business requires expensive machinery or equipment.
 
Piggyback Marketing
Find complimentary businesses to partner with. This is an excellent form of promoting your business for free.
 
Bootstrap Financing
This involves a complete system for creatively financing your business, without loan financing or the misuse of credit. All of the strategies we’ve just explored are some of the many methods of bootstrapping. For the best possible results with this form of funding, you need to invest in a proven, start up business survival guide.
 
Start Your Business TODAY!
 
As a Start Up Business Consultant, I talk with people everyday who just didn’t think that they had enough money to start a business. 
 
Even if you have little money, poor credit or don’t own a home, you can find creative business financing solutions. I encourage you to get the help you need to find business start up funding — and start your business TODAY!
 
Begin by claiming your complimentary copy of the “The Bootstrapper’s Start-Up Business Planner” by visiting my website.
 
©2009 Kimberly Kelly – All Rights Reserved Worldwide.
 
Permission to reprint this article is granted strictly on the condition that it be reprinted in its entirety, with all live links and author bio in tact.

Startup business financing has always been a lot harder to come across than financing for more established businesses. This is due to the fact that lenders can never be sure that your business is going to be a success and that they will ever see their money again. However, there are a few things you can do to ensure you get approved for that loan.

The first way to ensure you’ll get financing is to have everything in place when it comes to future plans for your business. Put together a solid business plan and this is a great way of convincing lenders that you really mean business and that you will be paying back the loan in future. Your business plan also needs to include profit and expenditure forecasts. It also helps to have a good credit rating, but if not you can try some other options.

It is a good idea to ask for advice when it comes to filling in business loan applications.

Make a mistake here and it could cost you your financing. Chances are that you’re going to be required to go to an interview, where a potential financier will interview you about your business and your past success. Be prepared and you will make sure to answer all of the questions correctly, guaranteeing your financing.

There are many different avenues to startup business financing, and getting a loan is just one of them. Take your time to research into the many different routes available to you and you can ensure your business gets the best possible start.

As you dream of owning a brand new home, you are also probably thinking of how you are going to finance for it. Right after you decide on the kind of neighbourhood that you want to live in and the type of property that you want own, you must also decide on the budget that you can allocate for your home. In fact it is a good idea to pre-qualify for your loan and finalize the financing options before you even start looking for homes. There is nothing more frustrating than having to let go of a property that you have your heart set on, only because you find out too late that it is way out of your financial league.

Pre-Qualifying for Financing

The best thing about pre-qualifying for a home loan is that you get to establish your budget, which can save you a great deal of time and frustration. If you know what you can spend, you will look only for property within that limit.

Remember that taxes, closing costs, utilities and insurance can also affect your budget.

Whatever your budget is, financing solutions are available. There are 15 and 30 year fixed mortgages, Adjustable Rate Mortgages and even government programs like Fannie Mae (Federal National Mortgage Association) to help you.

Obtain the Best Mortgage

Shop around for the best mortgage, do not settle on the first one that you find. A buyer’s agent or a mortgage broker can assist you in securing the best financing deal. A mortgage is just a product that the lender sells you, so just like any other product the prices and terms maybe negotiable. A mortgage broker is best placed to help you here because they deal with a large number of lenders and obviously have more bargaining power because they deal on a whole sale basis.

When they approach a lender, they have a fair number of prospective buyers under their arm, so the lender may offer them the best rates and deals that are not advertised to the general public.

Home loans can be availed from different types of lenders – banks, mortgage companies and credit unions. Different lenders quote different prices and offer different products. A broker will have access to a big basket of loan products out of which you can choose the best one. A broker’s compensation could be a percentage commission, points paid at closing or as an add-on to your interest rate. Talk to the broker to find out how he or she works. You could even approach a few brokers to select the one whose fee and work style you are comfortable with.

The Cost

An average home buyer may make the mistake of thinking that the monthly payment amount and the interest rate are all the information that they need to know. Wrong. You also need to know about the loan amount, loan term and the type of loan and interest. Find out whether the interest rate is “fixed” or “adjustable.” When interest rates for adjustable rate loans go up, monthly payments also generally increase. You also need to know about the annual percentage rate (APR) of the loan which takes into account the interest rate, points, broker fees, and any other credit charges that you may be required to pay, expressed as a yearly rate.

Points are fees paid to the lender or the broker and are generally linked to the interest rate. The higher the points, the lower the interest. Home loans also involve many fees, like loan origination fees, broker fees and closing costs. Many of these fees are negotiable with the broker or lender. Application and appraisal fees are paid when you apply for a loan and others are paid at closing. “No cost” loans are also available at higher rates. The lender will also require you to make a down payment which could be 5 – 20% of the home’s purchase price.

Select the Best Deal

Negotiate the best deal with the lenders or the brokers. They may offer different prices for the same loan terms to different consumers who qualify equally for the loan. This is because loan officers and brokers are often allowed to keep this difference as extra compensation.

Get a lock-in from the lender once you are satisfied with the terms. If the interest rates fluctuate while processing your loan, lock-ins can help you keep the earlier rate even when the interest rates shoot up. However, if the rates fall you may stand to lose unless you are able to re-negotiate.

When buying a new homes, always shop around for loans, compare all costs and terms and negotiate for the best deal. Very soon you will be moving into the home that you’ve always dreamed of.

In order to discover which methods of business financing are most suitable for you, you will first need to understand the requirements for each method and determine which ones you actually qualify to receive.
There is a plethora of business funding options out there; the key is knowing which ones will work best for you. Use the following guide to discover which business financing methods you and your business qualify for.

SBA ARC Loan

The Small Business Administration’s (SBA) America’s Recovery Capital loan program offers business owners up to ,000 to pay off existing debt.

Requirements

• Business has had positive cash flow in at least one of the last two years
• Business must show evidence of immediate hardship (i.e. decline in sales, lost line of credit, etc.)
• Business must be for-profit and located in the United States
• Must currently have a qualifying small business loan
• Cannot be used to pay debts that are more than 60 days past-due

Merchant Loan

The merchant loan AKA merchant cash advance, is a business financing method designed specifically for merchants.

Merchants can get up to 0,000 against their businesses’ future credit card sales.

Requirements

• Owned business for at least six months
• Business processes minimum of ,500 in monthly credit card sales
• Owner has no unresolved bankruptcies
• Business has at least one year remaining on lease

Business Line of Credit

Many banks offer business credit cards for small business owners.

These cards can be used to make business purchases and are paid down just like consumer credit cards. Requirements for these cards vary depending on the bank and the card. Most banks require business owners to gather information about the business and its owner(s) and apply for a business credit card in person.