Factors to Consider when Seeking a Bank Loan

Small business owners are scrambling to find ways to finance their businesses. When they approach their banks, often times they cannot qualify for the loan they need. This is due to a varied list of reasons, from not having enough collateral to debt-to-income ratios.

One major factor that is often overlooked, and in many instances, it is not explained to the business owner, is this...If your small business is less than two (2) years in operations, the banks cannot finance you. It does not matter how successful your business has been, they cannot touch you. You must have the required number of years for the banks to even consider your request much less approve your loan.

This is a vital piece of information to know before any small business owner attempts to access financing through the banking sector. It is not that they do not want to finance you. Regulations in place stipulate that a business must be in operation at least 24 months or more. The small business owner must also show that they can facilitate the repayment of said loan without creating a major strain on the business.

During this time, you might be able to qualify for a personal line of credit or a secured loan, but this will not be based on your business. Remember, you have been in business less than 2 years. You would qualify for that line of credit or other secured loan based on your personal situations. I cannot say it any more clearly, you must been in business less than 2 years.

Again, this is all based on if you have all the bank requires. So know what bankers and other financing sources require before you apply for a business loan.

---Karlene Sinclair-Robinson
Author of The Small Business Owner's Guide To Alternative Funding

Outskirts Press Reveals Top 10 Best Selling Books in Self Publishing for October 2010

Denver, CO, November 30, 2010 --(PR.com)-- Alphabetically, its ten best performing self-published books for October were:

* Business with a Purpose, by Darrell Griffin
* Common Choices for Uncommon People, by Barbie Johnson
* Enough Already!, by Bob Tyler
* Feed the Hunger, by Joseph L. Williams and Melinda H. Staples
* God Has A Sense Of Humor For Heaven's Sake, by Mike Chamberlin
* Going Green Using Diatomaceous Earth How-To Tips, by Tui Rose RN
* President Who Did What?, by Robert V. Waldrop
* The Small Business Owner's Guide To Alternative Funding, by Karlene Sinclair-Robinson
* Walking Fish, by Joanne Bodin
* What To Do When You Become The Boss, by Bob Selden


All these books, and other Outskirts Press titles, are available from all major online retailers like Amazon, Barnes & Noble, Powells, Books A Million, and others, plus conveniently from the Outskirts Press Direct bookstore at http://outskirtspress.com/bookstore for discounts ranging from 10% - 55%.

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Know Why Banks Turn You Down

You have applied for a loan from the bank for your small business. They turned you down. You go to another bank, they do the same. You assess your business plan and the additional information you provided but cannot figure out where you are coming up short.

After looking for a loan for your small business for weeks, you finally face the brick wall of "NOs". You figure, this is it, you cannot qualify for a loan. Who's out there that is going to lend you the money you need?

Did you consider asking the banks why they turned you down in the first place? If you did not, it is a vital question to ask. This is valid because it gives you the opportunity to learn how banks work. Never apply for a loan, whether for personal use or for business, and not ask the question as to why you were denied the loan. If you know why, then you can figure out what you need to do next time to get approved.

Procrastination Has No Place In Business

Many of us have this problem. We tend to procrastinate based on things we do not like to do. It is easy to do the things we like of course, but in business, procrastination can cost you dearly.

When you fail to move on ways to grow your small business or just to survive, this can mean the end of your dream. So, what do we do about our procrastination issues? You can make a list of those things you must accomplish on a daily basis and aim to complete as many as possible. Notice I did not say complete the list but to get through as much as possible in that given day.

If you do a ratio of 1:1, for every one thing you like to do, complete one thing you do not like to do. This can help you develop a better attitude towards getting things done. It will certainly create better cash flow in the long run.

Defining Alternative Funding

The president of a prominent organization assisting small businesses asked this question not so long ago, "How do you define “Alternative Funding”?". The response she received helped her decide that this was something she needed to learn more about in order to better assist her clients.

What is Alternative Funding?

Alternative Funding is defined as any financing option available to a entrepreneur or investor outside of traditional institutions/options, i.e.: banks and banking products. These options are not provided by banks (traditional lenders) but through private companies or individuals.

Alternative Funding options are created through a need that is not easy fulfilled and someone realizing that there is a need and figures out a way to fill that void. With that, you have options based on niche markets or niche transaction based funding. These options includes Merchant Cash Advance, Purchase Order Financing, Microloans, Commercial Private Financing and other Real Estate related financing. Be sure to understand your business methodology before approaching a particular alternative financing source.

By Karlene Sinclair-Robinson

Business Owners: Why Your Financial Statements Are Important

By Karlene Sinclair-Robinson

In today's business financial market, it is important to understand what bankers and other financial sources require of business owners. When accessing capital through traditional sources such as banking institutions, they must have specific financial documents from the party seeking to borrow their funds.

If these financial documents are not in place, then there really is no way to access the financing you need for your business. Imagine what will happen if you cannot access the money you need to grow your business or for survival. What would you have to do? Lay off employees? Cancel a prominent client? Close your business? These are important questions to consider, so get it together.

You must have some of the following documents on hand to present to the funding source:

* Current Cash Flow Statement
* Current Balance Sheet
* Current Profit and Loss Statement
* Tax Returns both Business Individual
* Current Accounts Receivable Aging Report
* Current Accounts Payable Aging Report
* Bank Statements
* Merchant Processing Statements
* Current Client List

The above list is just a few of the applicable financial documents that a financing source can ask for. If you are unable to present them, this will certainly create a problem for you accessing capital. This is the case whether you are seeking traditional financing or using alternative funding or other private sources. These lenders have the right to ask for any documentation they feel necessary to make the transaction viable for them.

Remember, it is not “What’s in it for me”; it is “What’s in it for them”. You are the one seeking their money and though they might be more than willing to finance you, they are not willing to risk their capital when they know from the get go that you are not up to speed with your documentation.

So, for those business owners who think you can access capital by the seat of your pants that is not going to work. Make sure to have your documents in order to present when you decide to borrow other people’s money. Remember, it is their money and they are the one taking on the risk to fund you. Be sure to get it together.

Small Business Owners: Failing Is Not An Option!

In today's business climate, if you are not as savvy or in the know, you might as well call it quits. For your business to succeed, you must know all the key areas of your business inside out. If you don't know those areas, then you must have staff that is qualified to do the work and more.

SBA statistics show that over 90% of start up businesses fail in the first year. Why is this the case? This happens for a number of reasons. Let's look at a short list:
* Business Owner's experience
* Financial situation
* External Factors
* Internal Factors

The short list above can be broken down based on the individual business owner. Looking at the list brings to mind that there might not be enough capital to operate the business prior to profit being made, that is, after gross income minus all expenses, taxes, and other financial obligations. It also brings to mind the fact that the business owner might not have prepared for the external and internal factors that can affect a business from staffing, timing, obligations, mandatory requirements, and more.

Assessing your business model, business plan, marketing plan, human resources (internal and external), and your personal and business financial position is extremely important. You need to ascertain whether you are in the right industry for your skill set, or if you need to improve your job force. This is where a personal skills assessment would certainly come in handy. This would include your skills, strengths, weaknesses, and much more. It would help you figure out whether you are in the right business or if you should be doing something else.

Access to capital is another major contributor to start-up businesses failing so quickly. You must determine if capital resources are a positive or negative factor. Know how you will gain access to capital through a variety of methods as this will assist you in staying in business longer.

Written by: Karlene Sinclair-Robinson
Author of The Small Business Owner's Guide To Alternative Funding

Where To Go To Access Capital

It is a major decision when a business owner decides to seek access to capital. You might be at the point where you have used up all your personal finances and realize that you must go to an outside source. On the other hand, you just might be looking to improve your business without using your own money. Not a bad idea.

Well, in making this decision, business owners like you must understand the ramifications. When seeking any outside financing, do your research. Whether it's a bank or private lender, there are significant things you must be aware of, such as, their terms and conditions, fee rates, closing time frames, and more. You must understand these areas before you make that big leap.

Financing your business can occur through various methods and sources. Using a bank is important but know that they look at your past performance verses your future potential, while alternative financing sources look at both. Alternative funders want to know what you plan to do to grow your business. They want to see that you are going for more clients, contract opportunities, and any legal avenues for generating income. Based on their method of financing, if applicable to your business, they will do their utmost to work with you.

Here are five (5) alternative funding options when seeking access to capital:

* Factoring Sources - They will buy your receivables at a discount, so you are not creating debt.

* Asset-Based Lenders - They assess your current assets, put a value to it, and lend you an applicable amount.

* Purchase Order Funders - These sources will pay your supplier for you so you can fill large volume orders from your clients.

* Micro Loan Lenders - These private lenders will lend you smaller amounts anywhere from $500 up to $100,000 based on your business type, income and expenditures, and any other applicable factor.

* Private Commercial Lenders - These lenders will assess you and your property to determine the maximum they are willing to lend. They tend to make their decisions more based on the collateral presented.

These sources can be of value to you in times when banks are saying "No" more than they are saying, "Yes".

To learn more, Click Here

Written by: Karlene Sinclair-Robinson
Author of The Small Business Owner's Guide To Alternative Funding

Why Cash Flow Is King

Why do we say "Cash Flow is King"? Often times, you find that small business owners do not always understand this phrase. When a business owner looks at their cash flow, many times they see it as a negative thing. Why? Well, when you do not have enough of it, of course you are going to think of it in a negative way.

You can get your cash flow moving by understanding how to use what you have. If you invoice your clients, then your invoices are an asset. Use those invoices to access the cash flow you need or should have on hand, not in someone else's bank account. Isn't it better to have your money today, verses waiting 45, 60 days or more? What good is it to you if it is only on paper? So, if you have a cash-strapped business that have receivables (outstanding invoices), you really should consider selling those invoices.

This concept is called "Factoring" or "Accounts Receivable Financing". Use them to benefit you in today's tight credit/lending market! Having your money today will cost you less than waiting 60 days or more to access it. To learn more, contact me.

Written by: Karlene Sinclair-Robinson
Author of The Small Business Owner's Guide To Alternative Funding

How Bankers and CPAs Can Assist More Clients

In today's market of tight credit, banks and other institutional lenders are holding back on lending to even some of the most qualified borrowers. We all know that this is happening. It certainly does not help the business owner who just does not have the liquid cash flow to meet their daily operational expenses or those who could benefit through expansion.

Business owners must consider all areas affecting their cash flow and deal with it. These cash flow problems can stem from late paying clients, contracting issues, contract payment terms that might be too long, sales forecasting or pricing issues, or other mitigating circumstances that might affect that business' cash flow. These cash flow issues will certainly cause the business owner a lot of sleepless nights. When you have business owners having to make the choice between what bills they must pay certainly does not help to relieve the strain of whatever else they might be going through. When they can get the necessary assistance to move their small business forward, they will certainly be able to sleep better and meet their daily business needs.

This is where collaboration through a financial network can be a major asset for any business owner. When the banker, CPA, attorney, or other key business contact, can assist the business owner and guide them toward alternatives that can be a benefit them, it makes for a win-win-win for all involved. Often times, I find that bankers or even CPAs do not know of alternative financing options. In other instances, they do not understand how these options can benefit their clients. These individuals sometimes seem taken aback with the number of options that are available. Imagine what it would be like for the business owner who gets turned down by their banker, who is then directed by that banker to contact an alternative financing source that can help them.

When a CPA is reviewing a client’s file and realizes that this client is in need of financing alternatives, and knowing that this business owner cannot easily access institutional lending, they can then assist their client through their knowledge of and access to alternative financing options. Many small business owners have no idea where to go to access capital except their banks, so it is important that those who work closely with these enterprises be aware of and are connected to sources that provide such options.

Written by: Karlene Sinclair-Robinson
Author of The Small Business Owner's Guide To Alternative Funding

Why Credit Is Still Frozen

Elizabeth Warren: Why Credit Is Still Frozen

The congressional TARP watchdog says there's no evidence that the $700 billion bailout boosted lending to small business 

 By John Tozzi

You report that after Treasury infused capital into banks, most recipients decreased their small business lending rather than increasing it. Why?

Wall Street banks cut back small business lending by 9 percent, more than double their 4 percent cutback in overall lending. Small business lending is expensive. It falls between consumer lending, which is driven almost entirely by numbers like credit scores or Zip Codes and pays off in volume, and large business lending, which is very much about relationships but pays off in very large fees per transaction. Small business lending has proportionally more expense associated with each loan.

Treasury is proposing a measure to provide smaller banks with $30 billion to get them to lend more to small companies. Will this do more to increase credit than the Troubled Asset Relief Program did?

What the Secretary of the Treasury now proposes is not a TARP program. It would require new authorization from Congress. But it continues to follow the same basic TARP pattern: Put money into banks, and they will lend it. The legislation would add some incentives to make the borrowed money cheaper if it's loaned to small businesses, but it's not clear that those incentives will be strong enough.

Even if small banks do start lending more, can they make up for the contraction by the largest banks?

Our economy increasingly must rely on small banks to fund small businesses, but many of those same small banks are themselves in trouble. Commercial real estate loans have left huge holes in the balance sheets of many of these banks, and there's more trouble on the horizon. Frankly, I'm worried.

Some banks argue that lending is constricted because regulators are pressing them to reduce the risk on their books. Do you agree?

Banks have to show that they're strong, and if they're not strong, then the regulators are right to press them to reduce risk. Banks complain about their regulators, but the banks are not going to get structurally stronger from looser regulations. Right now there are no data that suggest the regulators are too tough.

You say Treasury doesn't have good data on small business lending.

The data were terrible even before the crisis—very little information was collected. TARP presented an opportunity to require much more granular reporting from the banks that took taxpayer money, but Treasury didn't ask for it. We pointed this out early and often, but no changes were made. Now, policymakers are flying blind because they failed to collect data on many aspects of how lending shifted when the financial crisis hit.

Tozzi covers small business for Businessweek.com.

Dwindling Cash Flow Is A Big Problem

To a business owner, Cash Flow is KING.

Everyone knows this. You know this. Unfortunately, for some of you, your cash flow is now dwindling. Accessing your cash reserves for a short period is one thing, but going back to it numerous times leaves you in a precarious position.

When you do  not replenish your cash reserves or see a way in the near future to do so, you are walking a tight rope with the likelihood of falling on your face. With all that is happening, you have got to determine ways to help you during times like these.


Ways to Assist You During Cash Flow Crunch Time

1. Assess your current business position.
2. Assess how you use your current resources.
3. Assess what you pay for the goods and services you need.
4. Determine if  you need all the supplies, machinery, and/or equipment you purchase or services you use.
5. Assess your clients against your outstanding receivables.
6. Assess your growth potential into new markets.
7. Be sure to assess the added skills you and/or your staff can bring to the business.
8. Assess your borrowing power. 
9. Assess whether it is time to seek Alternative Financing even before you exhaust all other avenues.
10. Assess alternative sources and funding programs that can get you to where you want to be.

Once you have run through this exercise, you can then communicate with a source qualified to assist you. You can then access Alternative Financing in a variety of ways that can benefit your company. Once you get back on track, be sure to model this process so that you do not end up in the same situation again.

Let me know if this information was useful to you.

Accessing The Right Alternative Funding Option

When you decide to seek financing for your business, you are primarily going to head to your bank. That's obvious. Well, some of you are aware of other financing options to help your business but not necessarily how to access them. Then again, you might not be aware of any option outside the banks. This is where Alternative Funding can be of great value to you and your business.

How do you decide what is the best alternative funding option for your business? Well, first start with your business. Take a look at what you do, who your clients are, and what it is you are trying to do. Let's call them Key Points. Are you looking to buy new equipment, do renovations, buy inventory, or be able to meet your payroll needs? Are you going for larger contracts, such as government (Federal, State, or Local), commercial, or residential? Are you looking to expand into new markets? All of these questions and more should be factored into your Key Points.

Once you have determined what the Key Points are to your business, this can then be assessed against the alternative funding options available. For example, let's check out Factoring. Factoring is the sale of an invoice at a discount. Here are a few points on Factoring:

• Factoring is easy and fast.
• Factoring allows you to offer better and more competitive credit terms to your customers.
• You don't incur any new debt.
• Factoring help you meet increasing sales demands.
• Factoring allows you to can concentrate on growing your own business.
• You can use your customer's good credit as leverage.
•  You don't give up equity.

So, if any of the above fits what you are looking for and works with your Key Point list, then you should consider checking out this alternative funding option for your business.

Once again, DO NOT wait till it is too late to access alternative funding.

Is It Too Late To Access Alternative Financing?

Often times, I talk with other financial sources across the nation and one thing seems to be the same all over. Potential clients are waiting till it is too late to access the capital they so badly need. Even when they know it is vital to their business and their personal well-being, especially for small business owners, it seems as though they cannot make up their minds.

The unfortunate thing is that waiting till last minute and expecting to get funded based on a new contract or order just does not cut it. Small business owners must learn that in the world of Alternative Financing, the risk to the financing source is greater, much more so than a bank. In most instances, you are literally betting on the future growth of your company versus the banks who assess your past financial position. Banks do not care how great a contract or how big an order you just received, the bottom line is their assessment of your past.

So, when you have been turned down by a bank, do not wait till it is too late to access Alternative Financing. These sources do need time to assess their risk exposure and determine the viability of working with you.

Help them help you!

Using Purchase Order Funding

Purchase Order financing is a really simple way to get access to the capital needed to finance an unexpected order. A client needing a larger quantity of your product can be a daunting order to fill. If you do not know about PO Financing or PO Funding, as it is sometimes referred to, then you will have a problem.

It is a good problem to have if you know where to look. Using this financing option to pay your suppliers in part or whole can help you grow your business exponentially. The next time you get an order that you think you just cannot fulfill, check out Purchase Ordering Financing. It can mean the difference between growth and survival.

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How to Win Venture Capital

By COLLEEN DEBAISE

Adapted from THE WALL STREET JOURNAL COMPLETE SMALL BUSINESS GUIDEBOOK (Three Rivers Press).

The process of selecting, pitching and ultimately negotiating with a VC can be intimidating, especially to those not accustomed to the world of high finance. I asked Lori Hoberman, head of Chadbourne & Parke LLP's emerging-companies/venture-capital practice in New York, to explain the various steps. Here's what she said:

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Continued Support for Small Businesses’ Recovery Loan Programs

On May 26, 2010, the Small Business Administration released a news release stating their push for longer term funding for small businesses. Based on the information presented, it showed that the SBA had increased their guarantee support but that the $375 million set aside through the American Reinvestment and Recovery Act (ARRA)to fund small businesses had been exhausted by November, 2009.

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ACCESSING ALTERNATIVE CAPITAL IN TODAY'S FINANCIAL MARKET

Accessing capital for your business in today's financial market is just not easy. Many business owners are finding it literally impossible to get the funding they need to survive or even expand their business. When this happens, if you do not know where to go outside of traditional lenders, this can compound the situation even more.

This is why it is important that entrepreneurs develop relationships with alternative sources. Building such a relationship is so important especially when you find your self in a financial crunch with no help from traditional sources.

Here is one unique source that can help you better understand how to access alternative capital. The Small Business Owner's Guide To Alternative Funding by Karlene Sinclair-Robinson was written for just this purpose.

Fund Your Business Today! Click Here...