Category: business loans

Business Lending Options for the Businessmen and Businesswomen

Knowing the types of business lending options and for when and where they are used is beneficial to all companies even if you are not looking for a loan option at the moment. Plus, it pays to be prepared. You never know when you might need one so it is best to keep abreast and know which alternative will be most beneficial for you and your company. So let’s proceed and discuss briefly the different types to it.

export fundingEXPORT FUNDING is the solution to help businessmen who are in the export industry. What export funding facilities do is that they provide you with the cash flow to support your exporting operations like sourcing, manufacturing and delivery of goods overseas.

TERM LOANS are those that come with a predetermined interest rate and are to be repaid either monthly, quarterly, semi annually, yearly or depending on the credit terms. These are by far the most common option in the list and are those that are often used in the corporate world by those with sound financial resources and established small, medium and large companies.

SECURED ones are those that come with an asset used as collateral or as a form of guarantee in the event of non fulfilment of obligations as stated in the agreement or contract. Such assets may be limited to those that are company owned or may encompass and include personally owned assets of the owners. This is common where the values to be borrowed often include a rather large amount.

COVENANTS are those that come with a condition to the borrower where failure to comply gives the lender the power and the right to demand full payment of the amount owed in full. Such covenants are arranged on a case to case basis. These may be a requirement to maintain equity, a certain cash flow level, limited allowable other loans and the like.

PERSONAL GUARANTEE is where the lender provides a personal guarantee for the business using his or her own credit history for qualification instead of that of the business. This one can still be beneficial but may be disregarded by companies with multiple owners as the risks to their personal assets are out there.

Moreover, there are many other business lending options for your business. It would be better to seek advice from your counsel or financial consultant as to what options can provide the most advantage on your part with the most minimal risks and costs. Having the resources to make a company operate is a key player in ascertaining success. It may be challenging and hard but with the right plan and strategies, you will surely get the results you want.

Spot Factoring Requirements

If you haven’t borrowed financial resources for your business, then better read up. Unlike personal, home or car loans, spot factoring have a thing or two unique to them specifically on the spot factoring requirements.

1. Financial capability to pay corporately and personally.

commercial business loansBanks and other financial institutions will not lend you anything not even a cent if they can ascertain that you have the inability to pay what you will borrow. Financing is still a business after all. Besides as businessmen you avoid extending credit to your customers who may not be able to pay you in the future. The same goes with commercial business loan providers. They will check on your company’s current financial standing. They will ascertain how much assets you have to be used as collateral. This can even extend up to your personal assets.

2. A good current and previous credit score.

They will also look into whether or not you have other borrowings at present. At the same time, they will inquire regarding your previous loans, how timely you pay them and whether you actually pay for your dues.

3. Up to date, timely and accurate financial statements.

Yes, your financial statements are another requirement. Banks may ask you to submit quarterly, semi-annual or annual income statements, balance sheets, cash flows and all that. There are others who specify in their terms that your business must have a positive cash flow or that the ratio of your profit versus your expenses be at a certain number. Depending on the amount of your loan, the terms, your industry and other related factors, this requirement can vary.

4. Reliable and organized documentation.

Some lenders require you to initially submit three to five years of income tax returns and financial statements. Other corporate documents may be required. Even the personal financial records of the company’s owners may even be asked. At the same time, other forms of documentation will be required of you. This makes it a must that you maintain a safe and reliable file of all your transactions. Preservation is a must so go and do it. Even if you are not getting a loan, such is still required and mandated by law.

5. The patience to wait.

Commercial business loans with all its requirements, those not in this list included, can take quite some time before it gets you the funds that you need. This makes it a must that you plan things beforehand so that everything falls into schedule. Otherwise, you might as well consider other financing methods.

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