BaseFunding

Floyd Tapia asked:


When is there not a time when small business owners need cash for advertising, inventory, marketing, expansion and even for start-up costs? And when asked, most business owners feel their only resources for funding were local banks and credit unions.

Now this was not said in a way to imply that one shouldn’t seek financing from a local financial institution. However, I must stress that most local banks usually want a business loan to be collateralized with personal assets such as a home or land. If know this from experience.

It’s very important for business owners to understand that you must take a proactive attitude about developing banking relationships in today’s financial community. One very good reason for this is that it is much easier to obtain small business financing than compared to personal loans.

Then you have to carefully consider the type of business funding you will attempt to attract. For example, getting unsecured business credit lines would be ideal for your business now and into the future. The biggest advantage to this type of loan is no personal credit or collateral is required.

It is vitally important to remind business owners to consider the need to protect your personal assets and your ability to minimize frivilous lawsuits that could wipe you out financially in the blink of an eye.

An experienced small business consultant can be of tremendous help in establishing your corporate identity and unsecured credit lines which in turn will free your time in dealing with more important day-to-day operations.

Here is a brief summary of important areas to re-consider now that can undoubtedly have a huge favorable impact in your company’s financial outlook.

1. Limited-Liability Corporation (LLC) – If you do not currently have a LLC entity set up, I would strongly encourage you to do so. Although not an attorney, I have personally witnessed personal assets frozen and seized when business owners are faced with litigation. Due to endless research, I ahve come to the conclusion that having a LLC can better protect your assets and estate in the untimely event you are sued.

2. Shelf Corporations or Aged Corporations – These are corporations that have been around for 2 years or longer that are in good standing with your State government. These corporations can dratistically improve your ability to obtain small business loans and unsecured credit lines since many banks will not consider financing to businesses with less than 2 years of existence.

3. Physical Street Address – If you are going to play with the “big boys” you must play like the big boys. You must have a physical street address and not a P.O. Box if you want to establish a solid business credit history. You must also have a phone number that directory assistance can list.

The bottom line is this: You must have your proverbial “ducks in a row” when steering your business down the road of expansion and profitability. Seek expert assistance and then act upon the professional advice given to you. This will make any type of business financing much easier to attain.

Stephen Bush asked:


e efforts by the federal government and commercial lenders to suggest that there is ample business funding, confusion seems to be increasing about small business loans and working capital loans. As a result, the actual availability of basic business finance services such as commercial real estate financing and business cash advance programs is not clear to many commercial borrowers.

It seems apparent that there have been many reports suggesting that normal commercial finance channels are either frozen or extremely sluggish. After reviewing other funding sources, it is possible to find more commercial loan financing options than such reports might suggest. Uncertainties in credit and financial markets have produced misleading and often conflicting information about commercial financing availability. For most business owners, it is probably not clear if business finance funding is realistically available to them or not.

In spite of some admittedly bad news, there continue to be to reliable funding sources for commercial real estate loans, working capital loans and especially for business cash advances. At the same time, the current negative economic conditions will prove to be difficult for most businesses. Commercial borrowers should expect that extra efforts will be required to successfully arrange commercial financing. An especially harsh reality for business financing is that many banks have discontinued all or most of their business lending activities, often with very little advance notice.

To use an example, commercial finance reports might not accurately reflect that some specialized kinds of commercial financing have been disproportionately disrupted. Commercial borrowers might be unnecessarily confused by reports that do not refer to all commercial loan situations but rather primarily apply to a very specialized form of business financing. To illustrate with a key example, commercial construction loans are currently in short supply by most accounts. Such specialized business loans are not as easily available as they were just a few months ago, and a more accurate accounting would reflect that the number of commercial lenders currently active in construction financing has shrunk dramatically. At the same time, most commercial real estate loans without new construction have not been as severely impacted as funding requests which do involve construction financing.

Several publications have reported that most new business financing requests are on hold or have simply been rejected due to recent financial market uncertainties, and this is another example of how business finance funding reports might confuse small business owners. While the sources for this information might have been honestly told by one or more lending institutions that they are in fact deferring new commercial loan funding, this does not mean that is the case for the entire country. If the discussion involved automobile sales, it would be comparable to concluding that nobody is selling cars anywhere after learning that several major dealers and two manufacturers announced that they were going out of business due to lack of adequate sales. Just because one or more banks fail or stop making business loans, it does not mean that there are not commercial loans available from other sources.

Because the banking industry has been involved in financial disruptions of epic proportions, commercial borrowers should maintain a cautious perspective in determining how to obtain and refinance small business loans. Many banks are sounding and acting like they have been through the equivalent of a train wreck. In such a natural disaster, it might not be prudent for business owners to seek the advice of banks which effectively caused the train to derail in the first place.

Despite reports about limited availability of business financing, some commercial lending activities such as business cash advance programs are actually as active as they have ever been. In the current commercial funding crisis, small business owners should seek a commercial loans expert for a realistic assessment and candid discussion about working capital loans and business finance programs.