Women Opening New Businesses Are Using These Alternative Financing Options

While traditional brick and mortar brick loans will always play a role in bankrolling new businesses, alternative financing options are rapidly diversifying and becoming more and more mainstream. Traditional funding sources have catered themselves specifically towards prime candidates, those with very high personal and business credit scores, significant business experience, as well as valuable assets that can be used as collateral. This lending model creates significant barriers for new entrepreneurs, especially groups such as women and minorities. Though nearly a third of new businesses are now established and run by women, less than five percent of the total dollar value of traditional bank loans are issued to women.

The list of alternative financing options for women is growing constantly. Many women find success by applying to many different programs at once, tapping into several streams of investments at once.

Small Business Association Backed Loans

Programs such as the Office of Women’s Business Ownership (OWBO) which operates through the Small Business Administration (SBA) works to connect women one on one with local and governmental business resources. OWBO is geared specifically towards low income women who may face additional hurdles in applying for loans.

The OWBO may assist women in applying for a loan backed through the SBA. Though the SBA does not offer loans itself, it does partner with banks to guarantee up to 90 percent of a loan, making you a much safer choice for traditional lenders. As long as you have a solid business plan to present and good business credit standing, you are much likelier to be approved for an SBA backed loan than a traditional loan. The final outcome is typically a lower interest rate and longer repayment terms.

Other Alternative Financing Options

Other options include grants which may be offered on a local, federal level. Many grants are also available in the nonprofit sector. Programs such as peer to peer lending and crowdfunding move even further from the traditional model, connecting individual donors and financiers with business owners on a case by case basis.

Local services which are often chronically untapped can be uncovered by contacting your library, the business department of your local college or university, or through your resident Office of Women’s Business Ownership. These groups often have a deep understanding of alternative financing opportunities specific to your area, and are typically staffed by people with a passion for connecting underserved groups to resources.

This growing array of financing options has allowed millions of women to become financially self-sufficient. Research your options to learn how you can finance and grow your business.

AR Funding: Getting Capital From Your Invoices

If your invoices aren’t being paid, you might wonder if there is another way you can make them work for your business. AR funding might be your solution. This type of funding allows you to actually receive capital from the invoices that haven’t been paid yet. How it works is that a financial institution will purchase your invoices from you, just as you would sell any other asset. They will give you capital that you can use to do what is most needed in your business, and they will work to collect payment from the debtor. The process is generally easy, and could only take a couple weeks or less for you to get started.

The first thing you’ll need to do is contact the factoring company. Speaking with a representative will give you a better idea of how AR funding works and how it will benefit your company. You can also come to a conclusion about how many invoices you both think would be best to factor. As you give the factor information about your business, you can determine together whether this is an effective option for obtaining capital.

Next, you will have to write an application and supply documents to the factor. A sample invoice, aging reports for your accounts receivables, last year’s tax return and a business license are often the documents that will need to accompany your application. Of course, when you speak to someone representing the factoring company, they can let you know exactly what to provide so you can collect it in a reasonable amount of time. Having it all together can often speed up the process.

Finally, the factoring company will review your application and documentation. AR funding is not based on your credit, but rather that of your clients. Because of this, companies with poor credit often find the most success with this type of financial support. The factoring company will sit down and look at a lot of aspects that could apply to approval. If your company is approved for the financing, and specific invoices are also approved, you could have the cash in as little as one day.

Getting capital from your invoices doesn’t have to take months and headaches. If you are interested in obtaining more funds from invoices that haven’t been paid yet, it might be time to look deeper into AR funding. With so many flexible options available to you, there’s no reason you need to wait on those invoices without making a change to improve the way you do business.

How Cloud Based Accounting Saves Time and Money

Small businesses are typically the first to respond to the newest industry trends. They have the flexibility to shape their infrastructure around the newest solutions. Currently, 11 percent of businesses with annual revenues under $25 million have switched to cloud based accounting software, and that number is expected to rise at a rapid pace.

What these businesses have realized is that by outsourcing their accounting needs to IT security and accounting professionals, they are able to save an incredible amount of time and money which can be better reinvested right back into growing their ­company.

Decreased Spending on Hardware Maintenance and Replacement

Hardware maintenance costs alone can be a substantial part of your yearly budget. Most IT professionals recommend you replace your computer system, your network , and other necessary infrastructure accessories once every three years. With cloud based accounting software, the bulk of the computing is outsourced to remote servers, which can extend the life of your in house hardware by an additional three to five years.

Increasing Your IT Support

Keeping your information secure is vital to business success. This is why, if you are planning on keeping your accounting practices in house, it is crucial to have regular access to IT professionals, who can ensure that you have the latest antivirus and firewall protection. For many businesses, this may mean needing to maintain an IT support professional as part of your staff, which can be incredibly costly. Cloud based accounting software comes with access to the absolute latest security technology, as well as a remote team of highly qualified IT professionals.

Others with in home accounting software may opt to have an IT professional check in with your system on a weekly or monthly basis. While this can substantially reduce costs, it also makes your information less secure. Emergency breaches may not be attended to for hours or even days after a potential information leak, which makes you and your clients vulnerable to those who would misuse your information for their own gain. When you or your staff must wait for IT assistance, key business operations may grind to a stop, causing frustration and wasting valuable time.  Cloud based accounting software includes a round the clock team of IT professionals, who are able to address your needs as needed, and who often do so before you even know there is a problem.

How Small Businesses Benefit From Commercial Lending

En route to launching your startup, you may have already had a few dealings with lenders. There are dozens of sources that business owners can borrow from, some better and some worse. When it comes to financing your small business, there are certain benefits that come from commercial lending that aren’t available through regular bank loans. If you have the credit and the collateral, you might be able to get secure funding with terms that can really set your company up to thrive.

Short Repayment

In some instances, having to repay a loan quickly doesn’t sound particularly helpful. When your business just needs a quick rush of cash, however, loans with shorter terms can actually benefit you. Say, for example, you own a commercial building that needs a minimal amount of work done before it will be ready for tenants. The lender knows what you plan to use the money for and, in theory, how long it will take you to pay it back. Armed with this knowledge, that lender is more likely to expedite your advance instead of making you wait through a long processing period.

Depending on your situation and that of the lender, it’s possible to have these terms extended if there’s a hiccup in repayment. Commercial lending is often done with small businesses in mind; the terms should work to your advantage instead of causing any sort of financial strife. Nonetheless, It’s important that business owners have a straightforward plan for creating the revenue needed to repay the loan. Since many commercial loans require collateral, any indecisiveness in spending and reimbursement can cost your business more than money.

Low Interest

Some business loans can have very high interest rates. If the lender has reason to consider your company a risky investment, your financing will likely come with a substantial APR. However, when your company is in a position to put forth an asset to secure the funding, the lender has less of a reason to attach a high interest rate. Every loan has inherent risk, for both the borrower and the lending company, but using the appropriate asset in the right situation can mitigate that risk and help you secure a loan with better-than-average terms.

Small businesses need a little monetary help when first getting off the ground. Commercial lending isn’t the only way for a young company to get money, but it might be the best way to get the funding within in a reasonable time frame and without unreasonable terms.

How Construction Factoring Helps Subcontractors

Work is never dull for a construction subcontractor. You spend all day making endless decisions, completing labor-intensive projects and trying to schedule future jobs so you and your team can rely on a relatively steady income. The really hard times hit when you realize it may be three months before you will get paid for the project you just finished. This problem is all too common in the construction industry and it has two common solutions: apply for a bank loan or find a construction factoring company.

Applying for a bank loan requires quite a bit of paperwork and time for approval. If you are new in the field or do not have stellar credit, you are unlikely to be approved for loans large enough to impact your business in a significant way. Also, you will be responsible for paying back the loan in the future, which can cause you unnecessary stress.

On the other hand, construction factoring is a great option for subcontractors because it allows you to receive payment for your work in around 24 hours after approval. A factor buys your open invoices and quickly pays you around 70-90% of the total. They are then responsible for receiving the payment in full from your client. As soon as the bill gets paid in full, the remainder of what is owed to you is deposited into your account, minus a factor fee of about 2-6%. Factoring services do not require long-term contracts and their terms are flexible.

The primary benefit of hiring a factoring company is that you will get your money upfront rather than waiting several weeks or months for the general contractor to get paid so you can get paid. Having a more steady cash flow allows you to pay your suppliers and employees more regularly, accept higher-paying jobs that require an initial investment from you and cover your bills during the slow months that are common in the construction industry. Also, you are more likely to receive your payment in full because factoring services that specialize in construction loans use proven methods to convince clients to pay you in a timely manner, such as obtaining lien releases and providing courtesy collection calls.

Subcontractors can benefit greatly from developing a good relationship with a construction factoring company. You can have more access to working capital, which you can use to cover a wide variety of your business expenses. Having more consistent access to your money will help you avoid constantly living with the stressful feast or famine mentality. You will quickly receive the money that you earned and can spend your time developing a successful company rather than worrying about staying up-to-date with collection tasks. Let the professionals handle it.

Using Fitness Franchise Financing for Entrepreneurs

Career trends are changing as more people strike out on their own to start a business and become franchise entrepreneurs. Owning a franchise allows up-and-coming business owners the chance to eventually expand and become successful in their chosen fields. If you are ready to start your own fitness business and need fitness franchise financing, there are several ways to secure the funds you need without putting yourself into debt.

Because you are just starting out in the entrepreneurial game, you may want look into loans that are sponsored by the Small Business Association. A portion of these loans are guaranteed by the SBA, which makes lenders more confident about lending to inexperienced businesspeople. While the SBA does not loan money to entrepreneurs directly, it does work with a number of banks to back up small business loans. These loans usually mature after five or six years and are paid back from the profits generated by the franchise. Before you seek fitness franchise financing, look into which banks in your area offer SBA loans.

When it comes to choosing a fitness franchise, you may want to consider one that has a familiar brand name and a history of success. While small franchises can be successful, first-time franchise owners should come to the table with a name everyone can recognize. If possible, choose a business that has many locations all over the country (or even the world) to make your business plan look more attractive to lenders.

As a new entrepreneur, it is important to remember that having good credit will not instantly allow you to get the financing you need. While clean credit is a factor lenders look into, they also take others into account, such as how much you will be investing into the business. Most lenders recommend that you should be able to offer at least twenty percent of the funding you need to increase your chances of securing the rest from the bank. Before you visit the bank, consider what kind of collateral you can offer or whether your family and friends would be willing to invest in your business. The more money you put up front, the less of a lending risk you will typically be.

While securing fitness franchise financing can be challenge for you as a new entrepreneur, careful planning and a thorough understanding of the lending process may increase your chances of success. The more prepared you are to talk about your business plan, the more confident you will appear in the eyes of lenders.

5 Top Sources of Franchise Financing

If you are considering opening a franchise of a beloved chain, then it is likely that one of the biggest obstacles you are facing is determining how you will fund your business. There are several options available for franchise financing, and the best ones are outlined below.

Bank Loans

Bank loans are a common choice for new businesses, and they can be an especially smart decision for franchise owners. If your parent company has a good reputation, then it can be helpful to your case when the bank is deciding whether or not it will lend to you. As long as you can prove that you are financially responsible, you will probably have no problem acquiring a bank loan. One downside of bank loans is that the application process can be rather lengthy.

Franchise-Specific Lenders

Franchise-specific lenders are financial groups that deal exclusively with franchises. Because franchise financing is their main focus, the turnaround time for acquiring capital is often much shorter than it is when dealing with a bank. These groups can also offer expert guidance about running a franchise. In return for their expertise and fast dealing, these lenders often require higher payments or interest rates.

SBA Loan

The Small Business Administration 7(a) Loan Program makes it easier for small businesses to acquire financial backing from lenders. This program guarantees the lender that the federal government will make the payments if the business owner cannot. This motivates lenders to provide assistance. The SBA Loan is a particularly good option for franchise financing because SBA has a registry of approved franchise brands. If your franchise falls under one of these approved brands, then the process will move more quickly.

Government Programs

Aside from the SBA loan, there are several other government programs in place that offer grants or incentives to new business owners. The programs available to you may vary by state. Some offer incentives to minorities and women, while others are meant to assist veterans.

Your Company

Of course, you should always look to your franchise brand for support. Many franchise companies promote their businesses by offering franchise owners a boost during the difficult early stages of running the store. They may offer franchise financing themselves, or they may connect you with a lender with good interest rates. Other assistance may come in the form of discounts or help with specific items like equipment purchases. The specifics will vary by company, but it is definitely worth investigating.

Any of these choices could be a good fit for your situation depending on your needs and priorities. Be sure to research each one in greater depth in order to lay the best financial foundation for your company.

Bringing In Goods From Overseas? Consider Import Financing

Do you have friends or colleagues that live in another country and want to do business with you? Do they have inexpensive products that you can buy, dramatically mark up the price, and make a nice profit? The problem is that you don’t have the money to bring the goods here. The solution to your problem is at hand. If you want to import products from overseas, you may want to look into import financing as a way to grow your business.

Starting a small import business can be profitable for you and your overseas business contact. Especially if the goods will be coming from a country where it literally costs pennies to make the product. There are alternate ways to get funding for your import venture since it can be difficult to get bank loans. You may want to factor your accounts receivable. This means that you would sell your accounts receivable accounts to a third party, otherwise known as a factor. The factor could be a commercial finance company or an accounts receivable financing company. Your company could receive 80 to 90 percent of the face value of the accounts minus a two to three percent service fee. You will receive a check in advance from the factor that you can later use for import financing.

You also have the option of purchase order financing, which is similar to accounts receivable factoring. In this scenario, you would sell your purchase orders to a commercial finance company. They would get the money from your customers after the products are made, keep a portion of the money, and pay you the rest. Purchase order financing can be expensive, but it works very well. It’s more expensive than bank loans, but when banks aren’t lending money, this is the next best thing. If your profit margin is high enough on the products that will be imported, purchase order financing is the import financing option for you.

If you have current inventory, then you can get a loan to fund your import venture. Just like purchase order financing, inventory financing is also expensive. When you use your inventory to get a loan, you’ll be able to buy the imported products that your customers have been clamoring for. This type of financing allows you to increase your inventory without having to dip into your cash flow.

Importing products to resell to your customers can be very rewarding for everyone involved. Having the necessary funds to finance your enterprise can take your company to the next level. Import financing enables your company to grow to the size that you have envisioned.

Why Take Out A Bank Loan When You Can Lease Equipment?

Over the years, technology which helps a business can become obsolete. So can the methods used in order to obtain this equipment. While business owners traditionally take out loans in order to fund the purchase of the necessary items, there is now another option available to practically any business in any industry. The ability to lease equipment makes the old methods almost entirely obsolete, and solves most of the problems associated with them.

For starters, when a business owner decides to lease equipment, more often than not they are making a decision of optimize the cash flow within their business. Because this option normally requires no up-front costs and charges a flat, insurance-free rate every month, the existing cash flow within the business is by and large left to move freely, ensuring that the money gets where it needs to go in order for proper growth and development to happen. This can make all the difference for a company that is still relatively new and attempting to find its footing in the market.

Next, this option relieves a huge headache which many business owners must deal with when obtaining their equipment. With large ticket items such as manufacturing machinery, the risk associated with the purchase is high. This is because technology is constantly evolving, and something that is top-of-the-line this month could be entirely obsolete next month. If the owner chooses to lease equipment, at the end of the contract’s time period, they can decide to upgrade their equipment to the newest and best version in order to ensure that the business can offer customers the best products and services available. Owners also have other options when the contract ends, such as simply renewing it or even purchasing the equipment in question, oftentimes at a negotiated price.

Leasing can be a great option for a business of any shape or size, but there may be some potential pitfalls for owners in the beginning of the process. The key to making this decision a simple and profitable one is paying close attention to the terms of the contract before signing. If these work for the business, then there should be no problem. However, if the terms are a bit too stringent or the business in question cannot support them for any other reason, renegotiation is always an option.

The decision to lease equipment can be a great one, and can give any business a boost in the modern market. The ways of the past are fast fading, but leasing is here to stay and to help business owners everywhere make their company a household name.

How Businesses Save Money by Leasing Commercial Vehicles

Businesses all over the country are building and renewing their fleets by leasing commercial vehicles. Although each company needs to decide what’s best for them, there are distinct advantages to lease agreements. The following will review some of those benefits.

Lower Up-Front Costs

When you purchase an automobile, typically you have to pay 100 percent of “soft costs” up front. These can include freight and other charges, which can quickly add up. Leasing commercial vehicles usually allows for financing a portion of these fees, allowing your business to keep that capital to use for further growth. Another advantage is that they often don’t require a down payment. This keeps even more money in the business bank account.

Smaller Monthly Payments

Lease agreements tend to come with lower monthly payments than with a loan on a purchased automobile. This helps keep cash regularly available for other business costs.

Shielding from Depreciation

What they say is true – a car’s value goes down as soon as you drive it off the lot. Trucks and vans used in the trades, delivery or other heavy industries can take a beating through daily use, further losing value. Leasing commercial vehicles protects your business from the losses due to wear-and-tear and depreciation. Every few years, you can turn in your automobile and start a new contract with a brand new one.

Maintenance

Trucks and vans tend to have larger engines and, therefore, higher servicing costs when compared with small cars. When failures occur, repairs can be costly. Specialty shops and dealerships may be the only option when it comes to such maintenance, where hourly labor tends to be high. Leased vehicles typically have a comprehensive warranty and service schedule. Peace of mind comes from knowing that unexpected failures won’t incur a large cost. Skilled mechanics are likely to be most familiar with newer automobiles, as training is fresh in their minds, and because parts are often on hand, repairs are handled speedily.

Tax Benefits

The tax code allows for the monthly payments of leased vehicles to be deducted as an expense, reducing your business’ tax burden. Additionally, just like with a purchased automobile, you can deduct fuel, parking, tolls and other business costs related to your vehicle on your return.

Although some companies aren’t run very conservatively, the more money that a business can save, the more opportunity it has to grow. Additionally, the more profitable a business is, the more chance there is for workers to enjoy a good salary and the occasional bonus.