Monday, March 22, 2010
Working Capital Loans and Commercial Finance Funding
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As reported in The Working Capital Journal, traditional working capital loans are currently available from a shrinking number of commercial banks. Most of these business lenders are not among the relatively small group of larger banks which have received bailout funds.
Small business owners should familiarize themselves about which commercial lenders are still actively providing this kind of business finance funding.
In most cases the active commercial lenders for this specialized form of commercial funding are limiting working capital loans to businesses which are current in their debt payments and are showing a net profit (based on recent financial statements).
If these two conditions are met, new commercial loans can frequently be obtained to refinance lines of credit and term loans which have been cancelled or recalled by many lenders. For businesses not qualified for commercial financing using these two requirements, there are alternative funding sources such as business cash advance programs.
Many small business owners also rely on personal lines of credit to finance some of their business operations.
There have been many reports of widespread cancellations and reductions of these lending programs as well, especially those involving lenders which have received a multi-billion dollar cash infusion from U.S. taxpayer money that was intended to facilitate the lending of money to businesses and consumers.
Personal and business lines of credit have been eliminated in many cases by lenders due to a reduced ability to pay by borrowers and deteriorating business conditions.
As reported in The Working Capital Journal, a high percentage of borrowers, however, had an excellent payment history for many recent credit line reductions or cancellations.
Meanwhile, there are banks willing to make working capital loans. The most notable examples are (for the most part, anyway) not banks which have received bailout funds.
In general, these commercial lenders have been willing to provide working capital financing, either in the form of new business financing or refinancing lines of credit and term loans which have been recalled or cancelled by other lenders.
Because it basically indicates that bailout funds have been given (so far) to lenders who primarily have a history of making bad loans (virtually all lenders receiving bailout funds to date), the lending activities described above are a serious concern to many observers. At this point, little attention has been given to lenders with a healthy balance sheet in federal attempts to get more funds into the hands of consumers and businesses.
Based on recent commercial lending activity, there are several notable conclusions.
(1) Businesses need to increasingly prepare for life without relying on a traditional bank line of credit and instead consider other viable sources of commercial financing such as business cash advances (which provide working capital based upon future credit card processing activity).
(2) The recent unwillingness by most lenders receiving bailout funds to report in any meaningful way how and where these funds have been used would certainly seem to be a loud and clear signal that these particular lenders are probably in worse shape than they are reporting to anyone.
(3) Commercial lenders that have a history of making good loans rather than bad loans should be the focus of further government funding programs.
(4) Business owners should be willing to seek out commercial finance funding sources beyond their previous banking relationships when they encounter difficulties obtaining working capital loans and commercial loans from normally dependable lenders.
Advice about how to avoid problems with business cash advances - Stephen Bush is a working capital finance and commercial mortgages expert => AEX Commercial Loans and Commercial Finance Funding
Article Source: http://EzineArticles.com/?expert=Stephen_Bush
Labels: capital finance, funding commercial finance, working commercial finance
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Working Capital Loans and Commercial Finance Funding
|
Power Vegetables In A Drink |
|
As reported in The Working Capital Journal, traditional working capital loans are currently available from a shrinking number of commercial banks. Most of these business lenders are not among the relatively small group of larger banks which have received bailout funds.
Small business owners should familiarize themselves about which commercial lenders are still actively providing this kind of business finance funding.
In most cases the active commercial lenders for this specialized form of commercial funding are limiting working capital loans to businesses which are current in their debt payments and are showing a net profit (based on recent financial statements).
If these two conditions are met, new commercial loans can frequently be obtained to refinance lines of credit and term loans which have been cancelled or recalled by many lenders. For businesses not qualified for commercial financing using these two requirements, there are alternative funding sources such as business cash advance programs.
Many small business owners also rely on personal lines of credit to finance some of their business operations.
There have been many reports of widespread cancellations and reductions of these lending programs as well, especially those involving lenders which have received a multi-billion dollar cash infusion from U.S. taxpayer money that was intended to facilitate the lending of money to businesses and consumers.
Personal and business lines of credit have been eliminated in many cases by lenders due to a reduced ability to pay by borrowers and deteriorating business conditions.
As reported in The Working Capital Journal, a high percentage of borrowers, however, had an excellent payment history for many recent credit line reductions or cancellations.
Meanwhile, there are banks willing to make working capital loans. The most notable examples are (for the most part, anyway) not banks which have received bailout funds.
In general, these commercial lenders have been willing to provide working capital financing, either in the form of new business financing or refinancing lines of credit and term loans which have been recalled or cancelled by other lenders.
Because it basically indicates that bailout funds have been given (so far) to lenders who primarily have a history of making bad loans (virtually all lenders receiving bailout funds to date), the lending activities described above are a serious concern to many observers. At this point, little attention has been given to lenders with a healthy balance sheet in federal attempts to get more funds into the hands of consumers and businesses.
Based on recent commercial lending activity, there are several notable conclusions.
(1) Businesses need to increasingly prepare for life without relying on a traditional bank line of credit and instead consider other viable sources of commercial financing such as business cash advances (which provide working capital based upon future credit card processing activity).
(2) The recent unwillingness by most lenders receiving bailout funds to report in any meaningful way how and where these funds have been used would certainly seem to be a loud and clear signal that these particular lenders are probably in worse shape than they are reporting to anyone.
(3) Commercial lenders that have a history of making good loans rather than bad loans should be the focus of further government funding programs.
(4) Business owners should be willing to seek out commercial finance funding sources beyond their previous banking relationships when they encounter difficulties obtaining working capital loans and commercial loans from normally dependable lenders.
Advice about how to avoid problems with business cash advances - Stephen Bush is a working capital finance and commercial mortgages expert => AEX Commercial Loans and Commercial Finance Funding
Article Source: http://EzineArticles.com/?expert=Stephen_Bush
Labels: capital finance, funding commercial finance, working commercial finance
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Realistic and Effective Commercial Finance Options
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In making commercial finance decisions, it is becoming increasingly important for small business owners to first determine their options and in doing so it is vital to focus on effective and realistic funding choices. This is not a simple task in the face of recent chaotic conditions impacting working capital markets.
One especially difficult challenge in this process is that there has been much confusion and misinformation about the actual availability of business financing. While it is true that some commercial lenders have stopped making commercial loans or have gone out of business, the availability of commercial capital for businesses is probably better than most business owners realize.
Despite some positive news about commercial financing, there are a number of harsh realities which must be confronted by most businesses when honestly evaluating their practical alternatives for business financing in today's challenging commercial funding climate.
While unsecured lines of credit are rapidly disappearing for many businesses, some working capital financing alternatives such as business cash advances are proving to be among the most reliable funding choices currently available to small business owners.
Even for business owners who are satisfied with their current business funding arrangements, it will still be advisable to explore financing options that might be necessary if economic conditions change further.
Getting more accurate information about what is realistically possible is the primary challenge which must be successfully overcome by commercial borrowers. A key ingredient in this process should include a conversation with a commercial finance expert who will not hesitate to help by providing candid advice.
Because we are experiencing an unusually difficult business finance climate, ideally such a working capital funding advisor will also have experience in completing more difficult commercial financing.
Stephen Bush is Chief Executive Officer of AEX Commercial Loans and Commercial Financing. Steve provides working capital financing strategies for small business owners throughout the United States. Please contact Steve for practical and candid advice about commercial mortgages and business cash advances.
Article Source: http://EzineArticles.com/?expert=Stephen_Bush
Labels: commercial finance options, effective commercial finance, realistic commercial finance
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Commercial Mortgages - The 3 C's of Commercial Finance
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When pursuing financing, it's important to keep in mind that lenders are interested in making loans only to borrowers who handle money wisely. For most lenders, the evaluation of borrowers boils down to the three C's: cash, character, and collateral information.
Without these three elements in place, you'll be hard-pressed to obtain approval for your loan. This lesson summarizes the relevance of these critical factors.
Cash
Cash relates to your property's ability to repay its debt from the available net income or cash flow. Lenders want to know that you understand and are realistic about the mortgage you think your business can afford.
Most of the time lender's spend in the underwriting process involves thoroughly analyzing a property's cash flows, expenses and potential cash flows. Properly prepared loan requests present lenders with well documented historical and projected cash flow information.
(In an upcoming article, we'll explore how you can make sure your property has cash flow and meets the other cash-related requirements a lender might have.)
Another crucial item associated with cash that every lender will consider is how much money the borrower has at risk in the transaction. All quality lenders require you, the borrower, to have at least 10 percent of your own money in the transaction.
The concept of no-money down commercial mortgage financing is not a practical reality. If you are not willing or able to invest money into your project why would a bank take all the risk? It won't.
Many will also review your personal financial statement to determine that the loan you're requesting is not greater than your personal net worth--although there are ways to get around this requirement.
Credit
Credit provides lenders with a mathematical way to gauge your trustworthiness as the borrower. Your credit score is a result of your personal credit history and is based on your past and present usage of credit.
Any score above 680 will easily qualify you for the mortgage you seek. And there are still some commercial mortgage programs available for people with credit scores lower than 650. However, interest rates are significantly higher and the loan terms are more difficult.
It's also important to understand that in commercial lending, as opposed to residential lending, lenders look beyond your "credit score" to try and determine your "credit worthiness".
They are interested in understanding the specific line items in your credit report and making sure that you will be able to maintain the ability to pay your new debt after the transaction.
Because of this, your credit score is used more as a filter to eliminate marginal transactions than it is to qualify a transaction. Prospective borrowers with high credit scores are not necessarily deemed to be "credit worthy" for a proposed transaction.
Collateral
Collateral--the property being mortgaged--is at the heart of every commercial finance transaction. At the end of the day, lenders need to feel comfortable that in a worst-case scenario they could liquidate a property and recover any proceeds they might have loaned. This makes collateral a vital element in the financing decision.
Commercial appraisals will be required in order to determine the collateral value of your property for the purposes of a commercial mortgage. Do not order an appraisal yourself. Banks will only accept appraisals they ordered themselves.
Also know that the bank will use the lower of the appraised value or your purchase price when determining the collateral value for lending purposes.
If the property you are purchasing has appraised at $1 million, but the purchase price is $850,000, the bank will always calculate its loan size based on the lower value.
Understanding the 3 C's of commercial finance should help you understand a lender's decision making process. Wouldn't you use the same criteria before making a loan if it was your money at stake?
Article Source: http://EzineArticles.com/?expert=Ken_Kaplan
Labels: benefits commercial finance, commercial mortgages, the 3 C's commercial
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Commercial Finance - 6 Benefits of Using Accounts Receivable
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Small and mid-sized business owners have historically been limited in their options for commercial finance. That said, innovative solutions have emerged, particularly in the form of invoice financing performed through the use of an online auction marketplace.
This market-based working capital solution allows small and mid-sized businesses to gain quick access to working capital that is currently tied up in their accounts receivable. Not only can a company get cash quickly and efficiently through this real-time auction process, but this form of financing provides additional benefits to businesses. Here are six benefits that a business can tap by using this solution:
1. Complete Financing Control- Small and mid-sized businesses maintain complete control of the transaction. The seller sets all the terms - the minimum advance amount, maximum discount fee and the length of the auction. Compared to other traditional methods of financing, this is a unique feature of this form of financing and an attractive incentive for using the online receivables marketplace.
2. Fast Accessibility- You can sell an invoice today and the cash advance can be electronically deposited the very next day. The process really can happen that fast. No matter how many days it takes for the invoice to sell, the money is available within 24 hours once the auction closes.
That kind of fast access means that businesses can take advantage of any opportunity that comes along by simply converting their outstanding invoices to cash on this easy-to-use receivables marketplace.
3. Few Restrictions-This online receivables marketplace does not require all-asset liens, restrictive covenants dictating the actions of the business, or personal guarantees. Once businesses are registered and approved to sell their outstanding invoices, the only criteria is that the total auction value must be at least $10,000.
4. Access to working Capital without taking on additional debt- This is not a loan. In fact, accounts receivable financing allows you to increase liquidity and improve your cash flow without taking on new debt. The only real risk here is if the debtor fails to make payment.
By selling accounts receivable on this marketplace, you are participating in a "true sale" of the asset. There is a "repurchase obligation". This means that if the account debtor, your customer, fails to pay the outstanding invoices, you, the Seller, are required to repurchase the remaining balance...
5. Seller Flexibility- Post one invoice or five, however many you will need to provide the amount of capital required to meet your business needs.. Use the auction site how and when you see fit - once a month or twice a week.
6. Privacy- The online auction site protects the privacy of the sellers and the buyers. The account debtor, your customer, does not know that their invoice has been sold to a third party.
In addition, because this is an open auction format,. the seller does not know who has purchased the invoice. The buyer(s) - a global network of accredited institutional investors - identity is kept anonymous.
When small and mid-sized businesses have to choose where to obtain working capital financing, these six benefits make commercial finance through an accounts receivable auction platform an attractive alternative to other traditional lending methods like factoring and bank loans.
With commercial finance small and mid-sized businesses can sell their invoices receivable to the parties in online marketplace and raise capital to meet their business needs. Know more about this innovative way of fund raising at http://www.receivablesxchange.com
Article Source: http://EzineArticles.com/?expert=Andrew_Stratton
Labels: benefits commercial finance, commercial finance, using commercial finance
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Monday, March 15, 2010
Hello World
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Welcome to the Commercial Finance blog.
Labels: asset based lending, asset finance, bibby factoring, bridge financing, bridge loan, bridging finance, business credit, business factoring, business finance, business financing
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