Small Business Information

Getting a Small Business Loan

2009-06-05T01:03:00.003-07:00

by: Dave Ryan

Are you in need of financial resources in order to start or even maintain your small business? Most of us are. The fist step is to take a look at the vast number of commercial loan sources that offer help in this area such as Chase, Citibank, etc. Also, with the Small Business Administration (SBA), you should be able to arrange a connection with one of these banks. This is one of many organizations that specialize in loans to small businesses.

Contrary to the belief that bankers actually look for reasons to turn down prospective clients in need of a loan, they are in the business to lend money. This means that every time a banker is sitting in front of a potential client, they are hoping to make the deal work just as much, if not more than the client wants it to work.

A bank’s primary role in the small business lending area is funding growth. An example of this would be to finance the expansion of small business with a proven track record. Most banks can offer a wide variety of loan packages designed to finance expansion of an already existing small business.

Below are a few examples bank loan packages :

1. Asset Based Financing. Asset Based Financing is a general term describing a transaction whereby a lender accepts collateral and assets of a company in exchange for a loan. Most asset based loans are collateral against other accounts receivable, inventory, or equipment. Accounts receivable is the most favored of the three because it can be converted into cash quickly. Banks will only advance funds on a percentage of receivable or inventory, typically being around 75% of the receivable and 50% inventory.

2. Line of Credit. A line of credit involves the bank’s setting aside designated funds for the business to draw against for the cash it needs. As the line of credit is used, the credit line is reduced and when payments are made the line is replenished. One major advantage of a line of credit is that no interest is accrued unless the funds are actually used.

3. Floor Planning. Floor Planning is another form of asset based lending in which the borrower’s inventory is used as collateral for the loan. Car dealerships are a prime example of a business that often uses floor planning as their primary financial tool.

About the author:
For more great business, marketing and mind power ideas to develope your business visit the Higher-Profits Blog at

Five Tips to Obtain Credit for Small Businesses

2009-06-05T01:03:00.001-07:00

by: Monique Hawkins

Copyright 2005 Monique Hawkins

As many small business owners know, financing is crucial to the financial health of their enterprise. While some small business owners have the resources to launch their business, most look to the credit market for financial help. Indeed, the banking industry is an important source to gain necessary capital. However, many entrepreneurs may not realize that that applying for commercial credit requires a great deal of preparation. Here are five tips to assist entrepreneurs in improving their chances of getting credit approval.

Tip #1: Decide on the type of commercial loan that is needed. Loan options include short-term loans, intermediate loans, long-term loans, and lines of credit.

Short-term loans are usually for less than a year. They typically provide interim working capital for a business temporarily in need of cash.

Intermediate loans are often used for business set-up, the purchase of new equipment, expansion, or an increase in working capital. This loan can be anywhere from 1-3 years.

Long-term loans are for major capital improvements, acquiring fixed assists, and business start-ups. The loan term is usually from 3-5 years and repayment installments are on a monthly or quarterly basis.

A line of credit gives a small business the ability to borrow money repeatedly, up to the credit limit. The lender will usually perform a review once a year, at which time the borrower is asked to update financial statements.

Tip #2: Make sure all paper work is in order. Applying for commercial loans can be very tedious and requires much more documentation than applying for consumer credit. So, the key is to be prepared. In addition, entrepreneurs who have carefully put together the needed paperwork to include the loan purpose, the amount of money needed and for how long, and a repayment schedule proposal will be viewed more favorably by many lenders.

Tip #3: Develop a well thought out proposal. The proposal should include the loan purpose, the amount of money needed and for how long, and a repayment schedule proposal. Points to include are the business description that tells the nature of the business, product and service, a personal profile, and a business plan that outlines the corporate strategy for the next three to five years. Additional points to add are supporting documentation that supports the information outlined in the proposal, and collateral that will be used to secure the loan. Financial statements, both personal and for the business, are important as well.

Tip #4: Seek advice! It is important for entrepreneurs to talk with someone who has gone through the process of obtaining commercial credit before a lender is approached. This is especially important for the first time buyer. Entrepreneurs can approach mentors, qualified business counselors, business support groups, and the U.S. Small Business Administration. This step will increase the chances of getting a favorable credit decision.

Tip #5: Be prepared to pursue various options. Sometimes, financial institutions will say no. Once again, obtaining credit can be difficult, especially for entrepreneurs who are first-time borrowers. However, since financial institutions have different standards, an inability to meet the standard of one lender does not mean one fails the standards of all. It is highly possible that credit approvals can be gained with another lender. So, it is important to keep seeking until a lender is found.

Obtaining credit is necessary for many small businesses. Knowing what steps to take in this process can greatly increase an approval from a financial institution. Now, put these five tips into practice and be on your way to getting the credit you need for your business venture.

About the author:
Monique Hawkins is the owner of the online music box store; "Monique's Music Box" located at . She enjoys sharing information with business owners that will help them attain success. For additional assistance from one of the most respected markets around today, Jay Abraham, visit:

20 Small Business Tips - For Success

2009-06-05T01:02:00.001-07:00

by: Dave Ryan

These are just some general tips to keep in mind as you design/operate your small business:

1. Take the time out to explore and understand whether or not you are compatible with running our own business. Some people are just plain happier and better off financially on the other end of the paycheck.

2.Get your personal finances in order. Before you jump into the entrepreneurship world, get your own money matters squared away.

3. Pick your niche. Many small business owners succeed in businesses that are hardly unique or innovative. Take stock of your skills, interests, and employment history to select the business that is best suited for you.

4. Benefit from your business plan. The exercise of creating a business plan is what pays the dividends. Answer the tough questions now before the meter starts running.

5. Do not think you need bankers and investors at the outset of your business. The vast majority of small businesses are bootstrapped.

6. Acquire the proper background. In the early months and years of your business, you will have to acquire many skills. Gain the background you need to oversee all facets of your business well, but determine what tasks you should outsource or hire employees.

7. Remember that nothing happens until a sale is made – How many good products go nowhere because they do not reach the shelves? Sales drive your business. You will need a good marketing plan to sell your product or service.

8. You have to see a customer to know one. N o matter how busy you are, spend at least 25% of your time with customers. You cannot make the proper business decision without understanding their viewpoint.

9. Solve your customers’ problems. The best way to satisfy your customers is not by selling them products but by giving solutions to their problems. There is a big difference.

10.Quality takes minutes to lose but years to regain. Quality is not a destination, it is a never ending journey. After you have strayed from quality’s path, your journey maybe sidetracked forever.

11. Put profitability first, rewards seconds. In small businesses, profitability must come first. Find out how to measure your cash flow and understand key financial ratios.

12. Hire supporters. If you intend to create a growing business, your number one duty is to assemble a great team of employees.

13. Do not do it alone. Find such help from small business peers, a mentor, even trade associations. They can help take some of the trial and error of beginning your business.
14. Vendors are partners too! Treat your vendors like customers and watch your partnership grow.

15. Make use of benefits. Understand how to provide insurance and other benefits for your employees and cut your tax bill at the same time.

16. Ignore regulatory issues at your peril. Federal, state, and local governments require licenses, registrations, and permits. Obey them or face losing your business.

17. Know the tax laws. Invest in understanding tax issues that affect your small business.

18. It’s the people! Whatever happens to a small business happens at the hands of the people who work for it. The evolution of the business is a result of their efforts.

19. Fast, good, cheap. Pick any two. Serious trouble awaits those who attempt to be all three in the market place. Stick with what you do best.

20. Develop a passion for learning. As your business grows, you need to change and grow along with it. One common denominator can be found in all successful business owners and that is a passion for learning.

About the author:
For more great business, marketing and mind power ideas to develope your business visit the Higher-Profits Blog at