Merchant Cash Advance: Right for Your Business?

"Earth to the Wall Street Journal..."
When it comes to business funding, are we all living on the same planet? The question arises because today's Wall Street Journal seems to have drifted off into a world of its own. It says:

To prevent crumbling housing and credit markets from sinking the broad economy, the Bush and Obama administrations and the Federal Reserve spent, lent and invested more than $2 trillion on one initiative after another. If you owned a credit card or a money-market fund, had a savings account, bought a Dodge pickup or even a hunting rifle, or borrowed to buy a home or finance a small business, odds are good that the U.S. stood behind you or the firm that served you.

Well, yes. Maybe. If you did "borrow [to]... finance a small business", then maybe "the odds are good that the U.S. stood behind you." But what were the chances of your being able to borrow?

Small Business Loans--The Reality
Back in the real world (in Birmingham, Alabama, to be precise), people seem to have a firmer grasp on the facts. Last week, the Birmingham Business Journal ran a piece about business loans.

And, under the headline, "Small business advocates: Tight bank lending is 'dire'", it reported:

Banks are still pulling the rug from under local small businesses, even though the economy appears to be headed in a positive direction, small business advocates say.

Commercial Loans Dry Up
And the piece went on to quote Bob Dickerson, who's the executive director of the Birmingham Business Resource Center. He said: "The banks – who raked in money from the national bank bailout program – pulled lines of credit and declined to provide new lending opportunities to credit worthy businesses... The small business sector is what’s going to bring the economy back. However small businesses haven’t received anything close to a bailout. Banks’ retrench in lending has had a dire impact.”

Merchant Cash Advance Offers a Way Forward
For all too many small businesses, this lack of available credit threatens their very existence. If you're in that position, and need to find alternative sources of finance--including a merchant cash advance--try clicking here.

Merchant Cash Advances Aren't Cheap. But What Capital Is?

Loans for Business All But Disappearing from the Mainstream

Last week, this blog mentioned a CNN Money report that small business loans from mainstream banks had been cut by a billion dollars in October, 2009. But what wasn't--but should have been--said here was that the CNN piece went on to talk more about business funding:

The 22 banks that got the most help from the Treasury's bailout programs have decreased their small business lending by a collective $11.6 billion since April, when the Treasury began requiring them to file monthly reports. The banks' total lending has fallen 4.3% in that six-month period, to $257.7 billion.

So, all those tax dollars that the big banks hoovered up in bail-outs have benefited, er, the big banks--and nobody much else. No wonder small entrepreneurs can't find the business funding they need.

Merchant Cash Advance: Not for Every Business

Back in August, AdvanceMe, Inc. published a white paper entitled 'Merchant Cash Advance: Not for Every Business. Is it Right for Yours?'

AdvanceMe describes itself as 'the nation's leading provider of Merchant Cash Advances to small and mid-sized businesses' so you might expect this to be a self-serving document. And it certainly isn't beyond criticism. But it also makes some good points.

Small Business Loans Aren't Cheap Anywhere

Of course, merchant cash advances (MCAs) are expensive. But if mainstream bank loans are rarer than hens' teeth, then what's the alternative?

The AdvanceMe white paper gives a few examples of when it makes sound business sense to sign up for an MCA after your bank has turned you down, or when its loan application processing is too long-winded. Here are two:

1. Your nearest competitor goes bust, and you have the once in a lifetime chance to buy up its stock for next to nothing. Do you pass up that chance--and lose real money--because you're not prepared to pay MCA rates?
2. You own a restaurant somewhere very hot and steamy, and your air conditioner finally packs up. Do you close down while you wait for your bank's small business loans department to get its act together (or, more likely, to change its lending policies so you qualify), or do you find a lender who wants to do business with you?

Speaking of lenders who want to do business with you, you can merchant cash advance providers all over the web. Why not start here?

Merchant Cash Advances Set to Grow

Few owners of small businesses choose to take out a merchant cash advance (MCA). It's far from being the cheapest form of borrowing, and most businesspeople will have been to a bank before applying to an MCA provider.

But banks routinely turn down small and medium-sized enterprises that--just a few short years ago--they'd have been falling over themselves to lend to. And things are actually getting worse.

Just yesterday, CNN Money reported that small business loans from mainstream banks are rarer than ever. Indeed, the major banks actually cut their lending to small businesses by a billion dollars in October, 2009.

The White House press office reports that President Obama met a dozen CEOs of major banks Monday, and urged them to provide the business funding that SMEs so desperately need. He said afterwards:

So my main message in today's meeting was very simple: that America's banks received extraordinary assistance from American taxpayers to rebuild their industry -- and now that they're back on their feet, we expect an extraordinary commitment from them to help rebuild our economy.

That starts with finding ways to help creditworthy small and medium-size businesses get the loans that they need to open their doors, grow their operations, and create new jobs. This is something I hear about from business owners and entrepreneurs across America -- that despite their best efforts, they're unable to get loans. At the same time, I've been hearing from bankers that they're willing to lend, but face a shortage of creditworthy individuals and businesses.

Meanwhile, today's New York Times carried a highly sympathetic report about the challenges of small business cash flow.

But until banking practice catches up with public, political, and commercial sentiment, merchant cash advance providers will remain an expensive, but necessary, and welcome lifesaver for many SMEs.

Merchant Cash Advance: Easy to Find and Use, but Danger Does Lurk

It doesn’t take long for a financing secret to spread, particularly in a challenging economic environment. That may explain the recent increase merchant cash advance (MCA) business. This form of financing bucks the modus operandi of traditional lending in several unique ways. But choose an MCA vendor wisely. Here’s why.

MCA Qualification a Breeze
The first difference between a merchant cash advance and traditional loan is the qualification process. MCA vendors will take you on when many big bank lenders won’t. According to the Techspice blog, credit history has no bearing on whether or not you qualify for an MCA. Because you’re trading a portion of future sales, all you need to show is that your business is profitable. MCA vendors will do the rest.

MCA Versatility Confirmed
The MCA can be used for just about anything related to growing your business. And repayment is on a sliding scale that’s sensitive to the seasonal ebb and flow of your particular industry. AllBusiness reveals these features of the MCA that attract a wide range of companies:

• Repayment tracks the revenue trend of the merchant's business
• Promotes healthy cash flow within the business
• Payback is automatic based on a set percentage of sales

MCA Pitfalls Exist
Just like with any financial arrangement, you should take care as to who you align yourself with. There are unscrupulous MCA vendors out there who know how to take advantage of you. The Dallas News reminds you to take the time to filter out the notable merchant cash advance vendors to avoid costs that can reach 28 percent of every dollar.

Unsecured Business Loans: Leaving the US and Heading to China

The unsecured business loan is entering into a unique period of its development. This familiar form of business financing is leaving the country that made it famous and moving to the Orient. Perhaps because we’ve abused it for so long. Or perhaps because China has a financial infrastructure to handle its consequences. Whatever the reason, unsecured business loans are changing before our very eyes.

Goodbye, Red, White and Blue
BusinessWeek blogger John Tozzi explains an interesting conundrum. In his post ‘What’s the future of small business credit?’, he describes the movement of business from ‘brick and mortar’ to online--and the financing difficulties this trend creates. Big banks are far less apt to grant a $20,000 unsecured business loan for online add placements than for tangible pieces of equipment that can be liquidated if the business fails to make payments.

Hello, Country of the Rising Sun
Unsecured business loans may be disappearing in North America, but they’re just gaining a foothold in China. Citibank (China) has launched unsecured loan programs in Beijing. First launched in Shanghai in May 2008, this non-collateral loan offering has caught on and is spreading. And the best part of the program is that the APRs on these loans will stay steady even through a volatile market.

Unsecured Business Loans for Your Business
AllBusiness discusses unsecured business loans for those brave enough to seek them out. Lenders look at the credit history because the responsibility to repay the loan will fall on the owner. Carefully determine what the loan is for, how it will benefit the business and how you’ll repay the principal.

Merchant Funding Offers Options for Seasonal Businesses

Restaurants. Holiday boutiques. Sports stores. All are seasonally-bound businesses and all require special financing options to remain solvent. Merchant funding is certainly a fave with these and other non-seasonal businesses looking for start-up or expansion capital. Here’s how merchant funding financing works.

Merchant Funding and Other Options
AllBusiness reveals the characteristics of merchant funding that make this form of financing so attractive to those businesses that disdain the traditional lending process. The money advance is based on potential credit card sales. That means no down payments, no APRs and no credit checks. The downside is that you’ll probably have to open up a merchant account with your vendor.

Canadian Merchant Funding Streamlines
Canada has made the merchant funding process even easier to attain by tying in their lending with a collection of small business banks. Businesses no longer have to change banks--or even account numbers--when they apply for merchant funding. All requests go through a central processing entity that dispenses capital through existing accounts.

Refining the Merchant Funding Strategy
As the merchant funding process ages, the process is beginning to mold to the needs of small to mid-sized businesses. One way to illustrate the change is through flexible lending criteria. Businesses must simply show up to a year of credit card sales receipts and proof that the business isn’t bankrupt or in serious financial disarray.

Merchant funding has been around for ages in some form or another. But recent developments in the industry are making it an increasingly attractive way to earn financial backing.

Business Cash Blues: Sources of Cash Scarce and Where Yours Might Be Hiding

The Small versus Large Business: Cash Flow Reveals A Glaring Divide
According to Cortera, a community-driven business information company covering businesses with less than 500 employees, there’s a growing gap between the payment behaviors of large and small businesses. In fact, small businesses are paying invoices 25 percent slower than a year ago and 20 percent slower than the overall business average. While that may be good news for large businesses, analysts believe the growing divide signals a clear warning that the average small business owner is in trouble.

Some Small Businesses Stop Accepting Cash Altogether
As scary as that sounds for the consumer, it’s actually happening with small business all across the country. For example, Twin Cities Business writer Hans Eisenbeis reveals that restaurants in the northeast are restricting sales to customers with plastic exclusively. While the practice encourages flexibility and privacy, the movement weakens the value of the dollar in theory and practice--something that the country can hardly afford.

Find Your Hidden Business Cash Sources
Susan Ward, About.com’s Guide to Small Business: Canada, suggests looking to outside help in raising your business’ cash flow. For example, cloud computing leverages existing technology resources to lower your tech expenses. Also, bartering services with other businesses encourages welcomed exchange without tying up business cash in the process. And finally, peer-to-peer lending takes traditional big banks out of an already complex economic network-- a trend that should continue in the near future.

Venture Capital and Equity Funding Tap Out--But Business Funding Options Do Exist

The Venture Capital Industry Takes It on the Chin
If CEOs have their minds on venture capital, they better come up with a contingency plan--and fast. Michelle Meyers, cnet news associate editor for media, entertainment and politics, reveals that venture capitalists saw a 50 percent decline in investments over a single quarter. The drop from $7.78 billion to $3.90 billion demonstrated just how little interest there is in backing US companies.

High-risk EU Equity Funding Lures Outside Interest
If companies could finance themselves, high-risk funding wouldn’t even exist. Instead, business owners count on capital for start-up and expansion from such sources as business angels, venture capital, and stock markets that specialize in high growth companies. In the EU, the European Commission is strategizing to improve equity investments. The EUbusiness blog states that business funding from angel investors shows the most promise of the three types.

Business Funding Options to Consider
If you’re taking inventory of your business’ credit worthiness, allBusiness lists these small business loans options worth considering:

• Small Business Loans. Such as banks, credit unions, the U.S. Small Business Association, or angel investors
• Merchant Cash Advance. Based on potential credit card sales and typically requires a merchant agreement
• Unsecured Business Loans. Not secured against the borrowers assets and can have double-digit APRs

Considering how much money you need, how it will be spent, how long it will take to be repaid and “Plan B” are all indicators of the business funding type that will fit your organization.

Loans for Business: Is the ARC Making It's Farewell Tour?

The government’s ARC loan program has helped businesses across the nation get loans for business start-up and expansion. But it hasn’t been without its hitches--and now it may be on the way out. Here’s a quick look at the ARC loan program in its swan song.

What is ARC? Why Haven’t I Heard of It Before?
The Small Business Administration’s America’s Recovery Capital Loan Program provides up to $35,000 in short-term relief for small businesses that face immediate financial hardship. The money is intended to help business through the current uncertain economic times and begin the process of returning to profitability. Funds are delivered over six months and repayment begins twelve months after the last disbursement.

What Issues Have Affected ARC’s Success?
While the loan strategy is built on a promising concept, business owner’s in the trenches say that the loans for business are coming too little, too late. CNNMoney.com staff reporter Catherine Clifford reveals that big banks have been reluctant to participate. According to the Small Business Administration:

• The ARC loan program has backed 2,715 loans
• The total business loan amount equals just over $88 million
• The average commercial loan size is $32,425

Is ARC Sailing Away?
According to Sam Thacker, partner in Austin Texas based Business Finance Solutions and AllBusiness columnist, time is running out on several of the temporary SBA commercial loans programs. Many are scheduled to be phased out by December 31. For business getting in on the tail-end of the program, that just might be too late.

Restaurant Financing: Thawing Credit, Frozen Hiring, and How the MCA Can Get Everything in Synch

On the restaurant financing scene, mixed signals have some stalwart eateries calling it quits while a new generation of lean up-starts jumps in the mix. It finally appears credit is thawing at a slow-but-sure rate. However, it’s the hiring belt that’s freezing-up this time. Perhaps MCAs can get everyone in line.

Credit Drips Slowly Back to Its Former Self
A couple of recent developments have positively affected restaurant financing. According to QSR Magazine’s Operations expert blogger Nick Diulio, the American Recovery and Reinvestment Act includes more than $630 million in funding to improve and strengthen SBA loan programs. Also, the Federal Government is expected to purchase up to $15 billion of loans from the SBA 7(a) and 504 lending program to encourage new small-business lending.

Hiring-timid Owners Stall Initial Progress
But it seems that all of the restaurant loan news isn’t always on the up-and-up. Restaurant News Resource reports that a general aversion to hiring new staff members as the recession slowly recedes is hampering the growth progress. In fact The NPD Group, a leading market research company, all segments of the U.S. restaurant industry experienced traffic declines in the first half of 2009.

Merchant Cash Advance Might Satisfy Everybody
Vendorseek, one of the fastest growing business resources online, reveals that the merchant cash advance financing is still ideal for organizations that depend on receipts--such as restaurants. No APRs and repayment based on monthly volume is an attractive arrangement for these businesses. Plus, immediate access to funds is another critical benefit.

Merchant Cash Advance Potpourri: Why It Beats Traditional Lending, the Downside, and How to Choose

The merchant cash advance has gained notoriety as of late, particularly in these challenging economic times. While the requirements to obtain an MCA are tightening, this financing vehicle still holds the edge over the traditional loan.

Increasing Criterion Make MCAs More Challenging to Get
Small and mid-sized business looking for financing via merchant cash advance will be met with additional hassles. According to a report from Access My Library, merchants experiencing the difficulties of inflation and available credit are passing them on to potential customers. However, merchant cash advances still hold all of the benefits that made them popular in the first place: no APRs, no down payments and no collateral.

MCAs Still Trump the Traditional Financing Options
Francisco J. Acosta, Executive Vice President of Internal Business Consulting, emphasizes the power of the MCA over traditional lending. Acosta reveals the following big bank policies that make borrowing difficult:

• Banks loan money based largely on FICO score; anything under 680 usually results in a decline, a rate that is up to 98%
• Banks demand repayment on a fixed schedule; miss a payment and interest rates will go through the roof
• Banks typically will not lend you any more money during a repayment period

How to Choose a Reputable MCA Lender
Los Angeles Times blogger Karen E. Klein advises several tactics for choosing the right merchant cash advance vendor. Her top suggestions for picking correctly include choosing a strong franchise brand and reject any offers that require an application fee of any kind.

You can get more management advice, including financing support and direction, from AllBusiness. "Managing in the new millennium: managing in an economic downturn" discusses the challenges facing CEOs and why a merchant cash advance may be one piece of the puzzle.

Unsecured Business Loans: Mixed Signals from the Front Lines

To use unsecured business loans for start-up or expansion--or not to use? That's the question facing many small business owners who find themselves capital-hungry but short on collateral. And mixed signals from lenders aren't helping.

The Brits are Shying Away from the Unsecured
The UK can be seen as a microcosm for tanking unsecured business loans trend. According to Online Loans, there has been a 37 percent drop in the number of providers offering unsecured loans since July 2007. In addition to the drop in activity, the fees for this financing vehicle have grown considerably. To make matters even worse, those that are still lending are moving the unsecured portion to a different branch, such as the Barclays Bank brand.

The Feds are Embracing the Unsecured
The Personal Money Store blog is quick to point out that the Federal government has not turned its back entirely on unsecured business loans. Federal Reserve Chairman Ben Bernanke is of the opinion that the health and viability of small businesses depends entirely on access to sufficient operating funds. Unsecured business loans may be required to do that, as owners find themselves with little collateral to offer other than future business.

More Changes that Effect Unsecured Borrowing
Andrew Freiburghouse, a writer, businessman and blogger for Rebuild.org, summarizes several new changes to unsecured business loans that will no doubt affect the way owners borrow in the immediate future. They include a simplified application process, the inclusion of a solid repayment plan, and the virtual disappearance of credit card lines.

Could Commercial Loans Collapse Major Banks and Small Businesses Along With Them?

The recent rash of commercial loan losses is threatening not only traditional lenders, but the small businesses that rely on them for start-up and survival. Could this be the trend that brings everything to a head? And what role does cash flow management play in the equation?

Commercial Loan Losses Pile Up
A Stand & Poor’s article in Seeking Alpha warns of the looming disaster as unresolved commercial loans continue to grow. Lower profit margins are forcing many banks to reserve stockpiles of cash assets that they would normally extend to small businesses for start-up and expansion.

Businesses Still Can’t Borrow Money
The New York Time Small Business section summarizes the conundrum facing small businesses across industries. Despite billions of dollars of bailout and stimulus money, timid lenders are tightening credit standards to the point that small businesses without a sterling track record are left in the lurch.

How to Control Cash Flow
A PowerPoint presentation authored by the Small Business Administration (SBA) suggests that controlling your cash flow could be the key to surviving the credit crunch. The future of commercial loans could depend on these factors:

• Ratios to Watch. Days receivable, days payable and days inventory
• Program Mods. The SBA is temporarily suspending loan fees and increasing the insurance rate to 90 percent
• SBA Coverage. Credit-worthy businesses can borrow up to 6 months of payments, or $35,000

The commercial loan industry is making a fragile comeback. Small businesses that mind cash flow will improve their chances of remaining solvent.

Merchant Funding: What to Expect, What to Avoid and How to Choose

Merchant funding is fast becoming the alternative financing option of choice for small businesses seeking start-up or expansion capital. However, as with most financial vehicles, it’s not without its hitches. Here’s more on merchant funding activities from several consumer fronts.

How Merchant Funding Works
The GreenDOC blog offers a fairly robust explanation of the merchant funding agreement. Perhaps the most alluring benefit is that it requires no collateral or personal guarantee by the borrower. In fact, if you've owned a business for at least 6 months and process at least $3,500 in monthly credit card sales, chances are that you can secure a merchant funding agreement.

The Ugly Underbelly of Merchant Funding
Despite the seeming innocence of this funding source, there are always pitfalls of which you should be aware. DIRECT Mag reveals the seedy side of merchant funding deals that come with illegible fine print and outrageous annual percentage rates. For example, the FTC recently cracked won on several merchant lenders who charged as much as a 4.981% annual percentage rate--hidden in extremely fine print.

Evaluating a Potential Merchant Funding Partner
BusinessWeek offers several techniques for evaluating a choosing a merchant funding partner that will ensure that you don’t get the short end of the stick. These include checking with potential lenders for quality, asking for and following-up with referrals from former clients, and signing an ironclad contract that your personal business attorney reviews for accuracy.

Business Cash: How to Handle “The King” of Small Business Growth

We all know cash is king. You learn that on your very first day of Economics 101. Even in these uncertain economic times, cash is the great equalizer. Here’s more on how investors, small businesses and newbie CEOs secure cash for start-up and expansion.

As Cash Popularity Goes Up, Stock Performance Goes Down
PhilStar.com presents an interesting conundrum with respect to the availability of cash and the health of the market. It seems as though the more cash investors scoop up for themselves, the more the reverb can be felt throughout the stock market and the economy in general. As stock investors see their cash flow squeezed, it fosters a feeling of insecurity that can be felt across markets.

How Small Businesses Will Respond to the Cash Jam
In short, furloughs and layoffs. Small business owners holding IOUs in the form of bad debts are creating contingency plans to keep their businesses afloat. CNN Money reports that the California state legislature’s failure to close a $26 billion gap may leave many in the lurch. The resulting rhetoric forces CEOs to brace for the future.

Business Owners Learn to Manage Cash Flow
It could be the single most important skill to master. Knowing what your cash balances are today and during the next six months is important to remaining solvent in a sea of failures. Small business owners are encouraged to take formal business cash classes in managing money to avoid missteps in operations.

Business Loans: How is the ARC Being Received and How Can I Get One?

ARC. America's Recovery Capital program. It’s the Obama Administration’s outreach to struggling small businesses and it’s dominating the financial headlines. But is it really helping? Let’s examine the latest updates on ARC business loans and how you can get one for your struggling small business.

The ARC is On, But Banks Aren’t Participating
At least not without careful scrutiny of the applying business, that is. According to CNNMoney Small Business, the 10,000 loan mark by 2010 should be met--but progress is slow and deliberate. Here is ARC business loans by the numbers:

• Participating Lenders. About 400 out of 8,200 FDIC-backed US banks
• Actual Lenders. Wells Fargo, PNC Financial and Zions Bank--3 out of 10 of the SBA’s most active lenders
• Default Forecast. The SBA figures around 56 percent
• The Offering. $35,000 in interest-free money

What’s Causing the Delays?
The Sacramento Bee offers several reasons why the ARC business loans program is slow to reach its full potential, outside of timid lenders. The acceptance guidelines are a primary affecter, as business must show at least two years of steady profit growth. Another problem is the issue of how lender guidelines mesh with the Federal government.

How to Get Yours
The New York Daily News offers this advice for small business owners interested in applying for ARC business loans in the near future.

1. Gather financial records, both professional and personal
2. Present a strategic business plan that covers all bases
3. Find the right loan and lender for the business

Owners are encouraged to look for loans that cater to their specific market as opposed to applying for blanket business loans. Niche lenders understand the particular challenges of the industry and can work with applicants in that regard.

Small Business Loans: Government versus Big Banks, and Why They Can’t Synch-up

The Feds are offering small business loans that hardly any businesses are taking advantage of. The big banks are clamoring for more local control of their government-funded loan offerings. Both groups seem out of touch with what owners really need to respect to start-up or expansion capital. Why can’t everyone get on the same page?

$255 million at No Interest: Any Takers?
Gazette.net reports that we have the Obama administration offering short-term, interest-free loans to the tune of up to $35,000 to cash-strapped small businesses--and it doesn’t seem like anyone is interested. It’s called America's Recovery Capital Loan program, funded with $255 million by the American Recovery and Reinvestment Act. To date, only three loans have been processed in the Baltimore district, with only two in the Washington, D.C., district. The newness of the small business loans program may be partly to blame.

British Small Businesses Say “Let Us Decide”
Across the pond, big banks are begging for the chance to have more flexibility in their lending. A UK press release cites bank officials contending that, because their closer to the ground, they have a better feel for those small businesses that have a good chance of making it.

Obama Pushes for Big Banks to Open Up
Almost as a response to big bank excuses for the turmoil, President Obama chided 21 federally-funded banks for not doing enough to stimulate borrowing. Fox News reports that Obama believes federal bail-out money is going toward institution debt as opposed to small business owners--the original intention.

Business Funding: Disappearing VC, the Microloan, and Impressing the Loan Officer

The business funding world has literally been turned on its ear by the current economic situation. Venture capital opportunities are vanishing before our very eyes. But microloans are on the rise and dazzling your loan officer increases your chances of getting one.

Venture Capital Funding on Life Support
Cnet news reveals a stark impression about the absence of venture capital for businesses from start-ups to the majors. According to Dow Jones VentureSource, venture capital investment in US companies is down nearly 50 percent in a single year--from $7.78 billion to $3.90 billion. The IT industry has been hit particularly hard, with its VC at the lowest point since 1997. In effect, interest in unproven business models just isn’t there.

The Microloan Makes a Comeback
Financial guru Pat Gage, author of The "10 Steps To Money®" system and expert on acquiring business funding for small businesses, raves about this type of loan vehicle for start-ups and expansions. Microloans typically come in amounts of between $13,000 and $35,000--and entirely backed by the Small Business Administration. Support from the SBA gives you much more clout when dealing with traditional banks and lenders.

How to Impress Your Loan Officer
This is critical. So much so the US News and World Report offers some basic advice on what to do--and not to do--when you walk into the loan application meeting.

• Come Well Equipped. Have your finance package filled out completely and bring a copy of your business plan
• Have the Numbers. Be ready to present financial projections and explain how you got them
• Get Your Financial House in Order. In order to get business funding, you’ll have to show that you can manage your own personal finances

Loans for Business: From Private Equity to Traditional Lending, the Outlook is Grim

Despite the signs of an economy attempting to pull itself out of the mire, loans for business just aren’t materializing as you might expect. Traditional lenders are a literal no-show and private equity is in a virtual deep freeze. Setbacks like these have small businesses looking internally for capital.

A quick look at the numbers says it all. USA Today reports that the National Small Business Association has revealed 42 percent of small-business owners aren’t getting the loans for business they need to become competitive--or even remain stable. The worst news is that the figure is up from 33 percent just last December. These statistics seemingly fly in the face of proposed economic stimulus packages.

The news from GOP USA is similarly bleak. The government was left holding $2.1 billion in write-offs of small business loans it had guaranteed last year. That’s a new record and one that has sent the process of acquiring loans for business is a continually downward spiral. The Small Business Administration purchased $2.1 billion in bad business loans that have placed a strain on the SBA’s ability to offer better financing vehicles.

With respect to the noticeable absence of private equity--such as venture capital, business angel capital, management buy-ins, management buy-outs, and mezzanine arrangements--small business owners must consider in-house financing opportunities. These include merchant cash advances and equipment leasing. Those businesses that can capitalize on inside resources have a distinct advantage in a challenging economy.

Restaurant Financing: Four Things You Must Know

Despite the uncertain economic times, some service industries are doing remarkably well. As consumer save more cash, they’re able to spend more on entertainment--meaning it just may be the right time to start an eatery. Here are four things you must know about restaurant financing.

1. Restaurants Can Beat The Recession
According to a new survey by Franchise Times, 9 of the Fast 55-- the 55 fastest growing, young companies-- are sit-down or fast food restaurants. The list was compiled using the percentage of growth experienced over the last fiscal year. The surprise showing by these restaurants echoes expert opinions that restaurants opened in the right location and serving the right market can resist the negative impact of a lingering recession.

2. The Start-up Capital Search Isn’t Easy
QSR Magazine has some sobering news for those looking to acquire restaurant financing for start-up or expansion. Getting the needed capital requires a strong history of performance and the right numbers on the balance sheet. These standards are forcing newer restaurants to investigate less traditional financing vehicles, such as merchant cash advances and internal liquidation sources.

3. Obama’s Legislation Will Affect Restaurant Financing
Larry Summers, director of the US president’s National Economic Council, relays the developments within the Obama legislation that will affect restaurant financing in the coming four years. In an interview with Financial Times, Summers points out that fixing the current banking system requires tougher management of credit. This partly explains the difficulty some restaurateurs will experience in securing financing.

4. Franchises May Be The Way to Go
Morningstar reveals the recent tendency of large franchises to convert corporate-owned resources into more locally-owned franchises. This could be an opening for potential restaurateurs to move into management with established companies.

Merchant Cash Advance 411: Why You Should, Why You Shouldn’t, and Why It Matters

The merchant cash advance is one of those interior financing sources that many businesses shy away from. Some do so because they’re uninformed--some feel more comfortable with traditional financing options. But some businesses appreciate the value of an MCA--and they’re taking advantage of its power for start-up and expansion activities.

The Skinny on the Merchant Cash Advance
BusinessWeek offers a timely overview of the merchant cash advance industry for those considering getting their feet wet. Some industry highlights to become familiar with:

• The Deal. Merchant cash advance lenders offer businesses a lump sum payment in exchange for a share of future sales, actually based on a percentage of past receipts.
• The APR. According to Leonard C. Wright, "Money Doctor" columnist for the American Institute of CPAs, annual percentage rates can range from 60% to 200%.
• Noticeably Absent. Unlike traditional lending vehicles, with MCAs there is no due date and there is no fixed payment.

Why Some Averse to MCAs
Inc., the daily resource for entrepreneurs, points out some of the drawbacks of the merchant cash advance. Despite its seemingly quick cash-flow provisions and favorable terms, the annual percentage rate is viewed to be a bit pricey. Also, more unscrupulous lenders have been known to extend more money than they know the client is able to pay in an effort to launch a cycle of indebtedness. However, industry watchdogs are quick to point out that new Federal regulation is leveling the playing field.

The Bottom Line
Internal Business Consultant Francisco J. Acosta, EVP, says it best: The only way to beat a cash advance is to get the bank’s absolute best rate and put up everything you own as collateral. Otherwise, MCA wins every time.

Unsecured Business Loans: Separating the Good from the Bad and Asking Direct Questions

Unsecured business loans are proving unsettling in the current economic situation. SmartMoney’s Small Business Site presents two side of the coin: the problems associated with small business loans and the investors who are ignoring the red flags. Also, small business advocate and consultant Sue Malone offers specific questions to ask when seeking out an unsecured business loan.

The Statistics Stack Against Unsecured Small Business Loans
According to Marshall Eckblad of SM Small Business, steady losses are having an anchor affect on the US economic recovery. Rising commercial real estate delinquencies handcuff banks and sates continue to face dwindling tax revenues. Some statistics of note include:

• SBA losses more than doubled in 2008 to almost $1.3 billion
• SBA took permanent losses of nearly $504 million in loan amounts

But Don’t Hang your Head Just Yet
SM Small Business’ Diana Ransom paints a rosier picture of the ability for businesses to obtain unsecured business loans from investors. According to Ransom, although they’re not handing out money hand over fist, investors are lured by the lean qualities of today’s burgeoning start-ups.

Here’s How to Handle the Banks
If your business is searching for unsecured business loans, business advocate and consultant Sue Malone shows you how to dodge the rhetoric of lenders by asking a few basic questions.
1. Are you actually entertaining small business loans at this time?
2. How many loans have you personally made in the last 30 days?
3. What are the typical loan terms for the amount of loan I’m seeking?
4. How long will it take before I get a decision?
5. Who will be responsible for final approval?

Holding on to Business Cash: The Trends to Define 2009

Although this year is very nearly half way over, there’s still much in store for businesses looking to accumulate and preserve business cash. For start-ups and expansions, fiscal savvy will be extremely critical to success. For established companies, navigating the perils of a credit crunch may mean the difference between profit and liquidation.

Business Cash from Unlikely Sources
Companies on the move are constantly searching out new ways to generate financing for new projects. The Small Biz Trends blog discusses several key issues that should affect business cash in the second half of 2009.

• New Financing Options. Keep an eye out for peer-to-peer lending, bartering, and helpful contributions from the Small Business Association.
• Credit Card Financing. Small Biz Trends cites a National Small Business Association survey that shows 44% of companies use credit cards to finance their business operations.
• Ignoring Setbacks. While many business owners will throw up their hands at financing challenges, the ones who make it will find a way to win.
  

New Industries to Strike Financing Gold
Green and social technologies. Mobile capabilities. Generation Y ideas. These are the young industries that will turn the heads of investors with money to lend and an eye for what sells. According to the Ohio Small Business Development Centers, the economic downturn will actually catalyze new opportunities for some businesses. And CNN Money says keeping more business cash can be accomplished through savvy tax tips--creating profit from losses at every turn.

Business Loans: Hitting Rock-bottom, Affecting Personal Credit, and Getting a Lifeline

Old-fashioned business loans going bad. Lenders attacking the personal credit of borrowers. The bottom of the credit crises seems not to have one. Here’s a quick and dirty summary of the latest business loan news and a glimpse of hope provided by a new stimulus program piloted by the federal government.

Bank Lows Hit Record Highs in First Quarter 2009
Bad news continues to dominate the financial landscape. The New York Times reports the overall quality of American loans is at its worst in 25 years. What’s more, they’re deteriorating at an unprecedented rate. Distressed loans make up 7.7.5 percent of all loans and leases at all banks. And the double-edged sword means that banks are becoming increasingly hesitant to offer the additional loans that could pull us out of the predicament.

Lenders Begin Taking Debts a Bit Too Personally
Traditional banks refusing to lend out more money is one thing. But when they begin attacking personal credit profiles in an effort to secure repayment, the financial landscape becomes downright dangerous. A BusinessWeek report outlines new bank practices that dictate responding to delinquencies by reporting to the consumer credit bureaus. In defense of the lenders, most business loans operate under the understanding that some personal responsibility exists for repayment. But it’s certainly something to keep in mind when seeking financing.

On a Lighter Note--Government to the Rescue?
Starting in the middle of June, struggling businesses can apply for up to $35,000 in emergency funding dubbed ARC loans. The loans are open to business with at least 2 years and have shown some level of profits. In other words, start-ups are not invited to the party. However, the stimulus package features interest covered by the government and a five-year repayment schedule.

Small Business Loans: Help on the Horizon, Courtesy of Your President

Just when you thought it couldn’t get any worse for small business finance, a ray of sunshine breaks through. The federal government has kicked a new plan into action that will release small business loans to businesses less than 24 months old. Is this the savior we’ve been waiting for? Or is it another string-laden compromise that will leave CEOs clamoring for additional help?

ARC and the Emergency Loans Program
CNN Money’s Small Business site trumpets the efforts of the federal government to make small business loans more accessible. Starting mid-June, America's Recovery Capital (ARC) will back short-term loans of up to $35,000 that business owners can use to cover existing debt. Applicants will deal directly with banks for the loans that are 100 percent backed by the Small Business Administration. Although the loans have been labeled as risky, companies with demonstrable financial hardship and a record of financial success should have no trouble acquiring them.

A Rigorous Application Process
Despite the promise of these new small business loans, the application process is stringent. A host of information will be required, including performance numbers and a thorough credit history examination. A PRLog release reveals some of the requirements:

• 700 credit score on all owners
• Business is under 2 years old
• Have sufficient collateral to pledge
• Current debt-to-income of less than 45%
  

A Final Word: About.com Business Law/Taxes guru Jean Murray has some reservations about the plan. In her view, the apparent “goodwill” of the business funding is hampered by the low cap, an issue that will have to be dealt with as the price to buy a business or get it out of debt increases.

Maximizing Business Funds: Creative Financing for Start-ups and Expansions

If you're a business owner, you already know about two events that require some financial backing: the start-up and the expansion. However, it’s tough to keep an eye on operations while jumping through the necessary hoop[s to acquire business funding. Let’s take a look at why it’s tougher to acquire capital, some creative ways that entrepreneurs find it, and how to keep your head throughout the process.

Business Funding is Tough to Come By
That may be an understatement, but it’s something you need to realize from the start. According to an article from CNET News, a drop off in valuation of assets has done little to ease the financial needs of start-ups and expanders. Experts are seeing valuations at just half of what they expected early in the summer. And that’s forced deep budget cuts, layoffs and a comprehensive rethinking about business strategy in general.

Business Funding on the Creative Tip
Start-up capital may be down, but it is out there. Just ask any of the newbie entrepreneurs featured in The Wall Street Journal Business Financing Section. CEOs are selling portions of their business to their customers, affiliating with similar (and not so similar!) ventures, and maximizing charitable contributions. Take note that the method featured aren’t run of the mill options and may not fit all businesses. But the lesson to take away is this: get creative with what you have and you’ll improve your prospects exponentially.

How to Remain Even-keeled
Forbes blogger Dileep Rao offers some timely suggestions for keeping your head while chasing business funding:

• Do the Grunt Work Yourself. This means working nights and weekends to get your prototypes together, a prerequisite for financing.
• Profitability is King. Don’t rely on an angel investor to buy your flailing business idea--make it profitable and the suitors will show.
• Be Stage-minded. You can’t do everything at once, so don’t try--a journey of a thousand miles begins with a single step.

Loans for Business: Credit Cards Looking Less Favorable Still

What can small business owners expect with respect to credit card lending in the coming years? How about 20% less credit--a drop of $1 trillion-- by 2010. In fact, if the current trend continues, the ability of companies to utilize loans for business to fund operations and establish safety nets could be seriously hampered. Here’s why.

Ever-tightening Standards Leaves CEOs Bewildered
According to CreditCard.com’s small business news forum, the latest Federal Reserve survey results paint a bleak lending picture. Credit card borrowing continues to be the toughest avenue for businesses to navigate, particularly in the first three months of 2009. Over 60% of all banks surveyed revealed that they instituted stricter requirements on approvals and repayment in reaction to a sluggish economy.

Even Credit Card Reform Leaves Out Small Business
The latest Senate session was dubbed “a great day for consumers” after congressmen voted to reign in on unexpected fees and soaring rates. The problem? Small business owners were astonishingly left out of the regulatory good will. The Truth in Lending Act only offers protections to consumer, while companies must continue struggling to keep heads above water. And with over 74% of small business owners using credit cards for day to day operations, that’s a great deal of paddling.

So What’s a Small Business to Do?
WTHR Indianapolis offers several suggestions for businesses left out in the lurch. One idea that’s gaining popularity is the use of nontraditional lending vehicles. Merchant cash advances, factoring and equipment leasing are three ways to use the internal resources of the business to generate operating income. And in most cases, these alternative loans for business are void of such difficulties as minimum monthly payments and annual percentage rates.

The Food Industry Shows Signs of Rebound; Restaurant Financing Sure to Follow

Despite a perilous past year, the restaurant business is finally showing signs of life. More people are eating out, and more establishments are opening. Here’s a brief synopsis of the turn-around, plus how the recovery will improve financing options for aspiring owners.

Activity in the Industry is Encouraging
Several key indicators in the restaurant industry are encouraging, relays the Advance Restaurant Financing blog. For example, the National Restaurant Association’s comprehensive index of restaurant activity is showing an increase for the third straight quarter. Also, the U.S. Traveler Sentiment Index rose in February 2009 from October 2008, according to a February TravelHorizon’s survey.

Restaurant Financing is Possible
Banks and other lenders are giving more consideration to restaurant opportunities simply because it’s the type of business that stimulates the economy. A National Restaurant Association press release reinforces the notion that restaurants generate jobs and careers. With 2009 sales forecasts strong and the demand for employment opportunities at its highest point, financers realize that green-lighting restaurant financing vehicles is the right thing to do.

MCAs Enter the Equation
For those that can’t get restaurant financing, merchant cash advance opportunities abound. Vendorseek recommends MCAs for businesses that do heavy receipt volumes, such as restaurants and retail stores. Money is ‘advanced’ the business up-front for a portion of monthly sales. It’s also an ideal financial vehicle for stores that experience a seasonal ebb and flow of sales, allowing them to avoid minimum monthly payments and outrageous APRs.

Merchant Cash Advance Financing Goes Under the Microscope

The credit crunch is on and alternative financing models are under scrutiny. The merchant cash advance is being touted as the invoice-driven businesses’ answer to expansion financing. But is it really worthy of so much attention? Here’s the 411 on merchant funding and why you should take notice.

Not a Loan, So Credit is Not Typically an Issue
Vendorseek explains why a merchant cash advance arrangement beats traditional lending hands-down. First, because the vehicle is based on future credit card sales, credit scores aren’t as much of an issue. Past sales are more important; so a company with a history of strong transactions has a good chance. Also, because there’s essentially no money being loaned, the business doesn’t have to worry about APRs or minimum monthly payments.

Who’s Keeping Watch Over the Industry
The merchant funding industry has operated largely unregulated since its inception. This might scare some businesses that are used to accountability and monitoring. However, the North American Merchant Advance Association reports that the feds have taken an increasing interest in these transactions and are pushing for transparency. In fact, the NAMAA is focusing on fraud in an effort to clean up the trade and bring in new clients.

How to Evaluate an MCA
According to BusinessWeek, understanding and comparing the terms are everything. In the early days, businesses attracted by the prospect of no monthly minimums often signed at exorbitant rates. However, new contract language has forced MCAs to be upfront with their terms, making comparing offers infinitely easier. And, as always, the Better Business Bureau is still a quality contact for additional info on potentials vendors.

Unsecured Business Loans: Sterling Credit Required for Loans by Signature

If you’re a budding CEO or considering launching a new business venture, a term you’re sure to hear is unsecured business loan. Many lenders will promise the world, but very few will give you the low-down on one of the toughest forms of business financing to secure. So here it is.

Just What is an Unsecured Business Loan?
Acout.com describes an unsecured loan as a form of business financing that requires no collateral. It’s sometimes referred to as a signature loan, because your signature is all that’s required to close the deal. It’s also one of the highest forms of lending risk that a bank can assume. That being said, your credit and repayment history must be above reproach. And that’s just not the case for most borrowers.

So What are the Alternatives?
Business Credit Services, Inc. offers two popular, albeit unorthodox, forms of business financing that you can consider beyond the unsecured business loan.

• Equipment Sale Lease Back. This obviously only works for established businesses. Business equipment is sold to the lender and then leased by to the company. Cash is immediate, repayment is gradual.
• Merchant Cash Advance. Primarily for receipt or invoice-driven businesses. Lenders advance cash on future sales.

For those interested in the Merchant Cash Advance, Vendorseek reveals that this form of business financing is coming out of the dark with respect to regulation and oversight. New federal guidelines have made the merchant cash advance even more attractive.

The Commercial Loans Nightmare and How to Avoid It

Believe it or not, there are several options for starting or expanding a business outside of applying for commercial loans. And that’s music to the ears of many entrepreneurs and CEOs. Commercial loans have been taking a hit as of late. Here’s what you need to know.

Commercial Property Loans Forecast Bleak
Recent news from Reuters doesn't paint a flattering picture for commercial loans in 2009. A perfect storm of lack of credit, falling property values and reduced cash flow is making acquisition and repayment of these financing vehicles difficult at best. What’s more, faltering values will continue to pressure businesses who can’t mean loan-to-value ratios on loan apps.

If You Have Equity--Use It
For those who have commercial property already, using the existing equity in the property just might be a way to fund growth. According to Jeff Rauth, President of Commercial Finance Advisors, Inc., those who are looking to pull cash out of an existing mortgage can go the equity route without such bothers as appraisal, title, or environmental fees.

Getting Ready to Apply
For some business owners, commercial loans will be their only option. If that’s the case, Vendorseek offers a comprehensive list of pointers to keep in mind before you apply. Strategies such as applying to several lenders, keeping accurate balance sheets on hand, and consulting the Small Business Administration (SBA) can significantly improve your chances of uncovering a loan with terms you can live with.

The Top Merchant Funding Myths Expelled and Explained

Just like any trend that bucks the mainstream, merchant funding has a swirl of myths that surround the concept. A true departure from traditional lending, arrangements such as the merchant cash advance can be intimidating until you understand the true value. Here are three of the most prevalent merchant funding myths and the reality behind the beliefs.

Myth #1 - Merchant funding arrangements are expensive in the short/long term.

The Truth - Merchant funding is perhaps the cheapest form of financing available to businesses because they’re the opposite of the traditional loan.

According to the US Business Finance Blog, the business transaction is not a loan but a sale. That means no collateral, no down payment, no APR, and no minimum monthly payments. Financing is advanced to you as a percentage of your future invoices or accounts receivable. And the sliding scale repayment means seasonal ebbs and flows can be accounted for.

Myth #2 - Merchant funding arrangements are too complicated to understand for the lay person.

The Truth - Merchant lenders take the time to go over every aspect of the financing agreement.

Western Independent Bankers reveal that more merchant funding banks are creating incentives for new businesses using such financial vehicles as debit cards and linked accounts. In fact, merchant activities are driving the thinking with such lenders as Capital One and other major players.

Myth #3 - Merchant funding arrangements are largely unregulated.

The Truth - The industry is cracking down.

Vendorseek points to the arrival of The North Merchant Cash Advance Association as evidence that the merchant funding and merchant cash advance industries are becoming increasingly safer realms to do business. Federal rules also assist business owners in securing legal, ethical financing.

Business Cash: Leveraging Current and Future Resources to Enhance Market Position

In case you’re wondering, there is no substitute for business cash. Of the myriad of resources, cash opens the most doors for start-ups and established brands to make moves in the market. Here’s why cash is everything, how to identify sources of business cash, and a little-known financing option that you never have to pay back (in the traditional sense of repayment, that is).

Why “Cash is King”
SmartCompany.com illustrates why business cash is so vital. A good measure of the strength of your business lies in its valuation. In other words, if you were to sell your business today, just how much would it be worth? To estimate this figure, financiers use a calculation based on a multiple of the businesses earnings before interest and tax (EBIT).

The problem is that too many businesses list a negative return at the end of the calculation. Why? Because cash flow does not consider human resources, equipment, or other assets traditionally weighed when judging the strength of a business.

Find the Cash in Your Business
Believe it or not, there might be several areas in your operations that can be optimized to increase your cash flow. Small Business Trends offers several suggestions for maximizing business cash and positioning your company for mobility.
1. Send Timely Invoices and Get Paid Sooner. The lag time between project completion and payment will eventually cost much more than the balance of the invoice
2. Foster Lucrative Affiliate Relationships. Partner with other businesses that offer complimentary products and services--increase the perceived value of your venture
3. Study Sales History, Identify Patterns. The unexamined business is not worth running; know your seasonal strengths and weaknesses and reverse them

Get to Know an MCA
The merchant cash advance. Financial backing in exchange for a portion of your future invoices or receipts. Perfect for seasonal businesses and far and away better than traditional loans. Merchant cash advance lenders study your sales history (remember those patterns you were supposed to find?) and will offer you an advance as a percentage of your average sales. Vendorseek says the merchant cash advance industry becoming increasingly viable, completed with governing bodies and best practices. An MCA is certainly a financing option to consider.

Business Loans Can Put Your Business in a Hole Immediately

Small business has always rewarded out-of-the-box thinkers; particularly those who do so with respect to finances. In that spirit, entrepreneurs looking to hurdle a potential trap should think twice before applying for secured and unsecured business loans. Both types of business funding have the potential to put your venture in a hole immediately. Here’s why.

The Pitfalls of Borrowing Money
Yahoo! Small Business offers a comprehensive breakdown of the advantages and disadvantages of securing business financing. As you might expect, the latter outweighs the former in several unique categories. Small business loans become an immediate and substantial business expense. Collateral and annual percentage rates cut into profits and lengthen the amount of time it takes for a venture to become profitable.

The Myth of the Standard Loan
According to Business Week, there’s no such thing as a standard business loan. A collection of variables and contingents can provide a stark contrast of one loan to the next. That’s why it’s crucial to meticulously examine each aspect of a potential loan to determine what they will mean toy our business.

MCAs Let You Avoid Small Business Loans
Vendorseek offers an alternative to small business loans: the merchant cash advance. MCA vendors offer up-front cash for a percentage of future credit card sales. The benefits should be immediately evident. It’s not a loan, so there are no minimum monthly payments to make or threats of forfeited collateral. The pressure is off and small businesses are left to concentrate on accessing new markets.

Small Business Loans Not Out of the Woods Yet

Despite bailouts and legislation, the economy seems to be responding at a snail’s pace, if at all. Small and medium-sized businesses continue to miss loan repayments and relinquish collateral, despite the best efforts of tax payers and a thus far understanding federal government. But as one of the primary banks will demonstrate, the small business loans environment threatens to sink deeper into melancholy.

Delinquent Loans: Businesses Under Pressure
Reuters summarizes the current financial atmosphere by relaying some grim statistics. The firm reports that the level of moderately delinquent accounts rose to 4.45 percent in January--accounts in serious delinquency rose to 1.29 percent. What’s more, the stress from the downturn in commercial real estate is creating additional havoc across markets.

Lending According to Wells Fargo
A recent report of expected loan trends from Wells Fargo paints an even bleaker picture of small business loans. Scrutiny and risk-assessment of traditionally safe investments will prevent many from realizing financing. Real estate or equipment-based loans have the potential to dry up considerably. And cash flow loans may become a thing or the past, save for a few specific situations.

Explore the Alternatives
Fortunately for those considering a start-up or expansion project, small business loans aren’t the only options for financing. Vendorseek reminds entrepreneurs of the merchant cash advance--a form of financing that holds a collection of benefits not found in traditional loans. Credit scores and collateral are irrelevant. All that’s typically required for service is a history of sales.

Creative Business Funding When You’re Not All That Creative

Let’s face it, CEOs are business people. Many of them have had no formal financial training, save for a few economics classes in college several years ago. So when it comes time to discover new ways to finance start-ups or expansions, some business owners are simply lost. Here are some creative business funding tips that you should have in your bag of tricks.

Trading Money Now for Money Later
There’s little doubt that raising capital without taking on excessive debt is the ideal situation. Vendorseek points out two strategic business funding options that require no payback and no interest.

• Factoring. Sell your accounts receivable to another entity at a discounted rate, commonly between one and twenty percent (this also relieves you of the hassle of collecting on the accounts

• Merchant Cash Advance. Sell a portion of your future credit card sales to an MCA lender for a cash advance, sometimes up to 90% of your historic sales (retail and restaurant establishments work well here)

Leveraging Other Money Vehicles
Start-up Nation lists several additional resources that can provide start-up capital for your business. Not every business has these resources; those that don’t should certainly consider adding them to the portfolio.

• Savings

• Investments

• Mortgage refinancing and home-equity loans

• Employer buyouts

• Retirement funds

Plastic Spends Just as Well
Helium reveals that creative credit card use is still a viable method of business funding, providing you are able to keep balances in check. Credit cards can fill in the gaps when bills or other commitments are due.

Fighting the Cap on Loans for Business

In the growing credit crunch, no financial entity is immune from regulation. The government is taking decisive steps to effectively curb the number and amount of business loans issued. And that means less start-up and expansion capital for everyone.

So Just What Qualifies?
In its commercial loan FAQ, Vendorseek defines the features of many loans for business, including such variants as lines of credit and qualifying markers like collateral. In the past, the number and amount of the loan was based on such factors as time in business, credit strength, income, previous credit limits, residence status and gross sales. Now the tide is turning. In the face of economic meltdown, acquisition has become increasingly limited.

Even Credit Unions Aren’t Immune
Credit unions have historically shown some of the strongest financial operations on the board. Because they're nonprofit organizations and don't have to pay taxes, they already have the upper hand over traditional banks. But federals laws have limited the amount a credit union can loan to a business based on its size, according to The News & Observer. And that’s hurting everyone.

Plastic May Get a Boost
Business owners and hopefuls that are considering using personal credit cards to fund ventures are also in for a pleasant surprise. The Los Angeles Times Business section reveals that there is new legislation in the works that would impose a 15% cap on rates for all consumer loans, including plastic.

Restaurant Financing: Merchant Resources Bring Food to the Table

In the midst of a credit crunch, there are ways that restaurants can obtain financing. Forget the traditional routes and focus on a merchant cash advance.

The Recession Formula: Capital Minus Control
QSR Magazine characterizes the difficult position that restaurateurs can find themselves in while searching for start-up or expansion capital in the midst of a recession. It all comes down to control. As traditional lenders work to reduce their level of risk, the process often leads to numerous restrictions placed on how the owner can run his or her own business. With requests ranging $500,000 to $1.5 million, for example, owners will find banks want to dictate many of the daily operations based on typical returns on that investment.

How the Merchant Cash Advance Comes into Play
An MCA can be the smartest capital-raising move an owner can make simply because the credit issue is taken out of the equation. According to Vendorseek, merchant cash vendors appropriate their advances based on expected sales receipts. This is good news for those owners with questionable credit histories. Of course, the flip side is that the restaurant should have a history of strong sales. Franchises often benefit the most from this arrangement. But what about start-ups?

Start-ups are Still Eligible for Financing
A press release form PRLog offers hope for restaurant start-ups without a history of strong sales. Rejections aside (because there will be those, also), many MCAs offer programs expressly customized for restaurateurs looking to get a venture off the ground. Requirements vary according to the MCA, but the bottom line is that it is possible to take advantage of this nontraditional form of financing.

Is Merchant Cash Advance Right for Your Internet Business?

The merchant cash advance has been revealed as an alternative deal to raise valuable business financing. As the traditional lending process tightens, vendors are looking to MCAs to fill the void. But what if your business is virtual? Can you still use merchant cash advances in funding your venture? Here’s a brief run-down of the possibilities.

The 411 on Merchant Cash Advances
BusinessWeek offers a comprehensive breakdown of the merchant funding process. MCA lenders forward businesses a lump sum payment in exchange for a share of future sales. They typically target businesses with high credit card receipts--such as retail, restaurant, and service providers that may not qualify for traditional loans because they have bad credit or little or no collateral.

Internet-only Businesses Must Be Strong
According to MCA forums, internet-based businesses can qualify for merchant cash advances as long as they meet some defining criteria. If the business stocks at least 80% of its inventory and has a generous cash flow, prospects are good. Also, the business type and overall transaction history is considered, as well. Unfortunately, these guidelines will exclude young businesses or ones with fluctuating performances.

The Doors are Opening
Vendorseek is lauding the creation of The North Merchant Cash Advance Association. This industry watchdog is bringing some regulation to a largely unregulated business. Apparently the NAMAA is doing a commendable job of advocating ethical behavior and proper legislation in the industry. This means more opportunity for you to take advantage of this dynamic source of business funding.

Eco-driven Business Loans and How to Get Them

Despite a sordid financial fall by some of the most traditionally-stable businesses in history, the green trend has created a fresh, upwardly mobile industry. On the heels of a new presidential administration committing itself to eco-friendliness, up-start companies are finding green business loans easier than ever to qualify for. After all, green initiatives save the environment--and the profit potential is there, as well.

What are Green Business Loans?
Root Capital--a Cambridge, Massachusetts-based non-profit agency-- targets grass-roots ventures that are too large to benefit from micro-loans but too small to qualify for traditional bank loans. Lending range: between $25,000 and $1 million. Target market: Farming and artisan-type businesses with organic tendencies.

The best news is that there are an ever-increasing number of these organizations looking for promising ideas with the strategy to direct them.

Who Finances Energy-efficient Projects?
Eco-friendly business funding falls into two basic categories. The first is financing and tax credits for an existing business to upgrade its resources to energy-efficient models (THINK: heating and cooling, windows, vehicles, etc.). Business.gov reminds businesses that ENERGY STAR resources are the clearinghouses for information on special offers and rebates for these energy-saving upgrades.

The second is the commercial loan for green start-ups. Small business assistance programs backed by ENERGY STAR, the Environmental Protection Agency (EPA) and Energy Crossroads.

How Do I Apply?
Green loans are still commercial loans at the core. So applying for them is done in a very similar way. Vendorseek offers a comprehensive summary of the primary documents you should have ready to show green lenders.

• Tax Returns. At least three years of individual and business documentation
• Financial Statements. Detail improvements or expenses incurred by the property
• Resources List. Includes human, financial and machinery that will be involved
• Personal Finances. Several years of statements for all partners

Business Cash: Strategies for Investing It Wisely

If your company finds itself with a surplus of business cash, leveraging those resources could take some of the stress off of primary operations (for seasonal businesses in particular). Here are some investment strategies that encourage sound fiscal responsibility and resource diversity with respect to investing business cash.

Identify Your Investment Goals
Corporate investment activities vary widely with the aggressiveness of the goal. Merrill Lynch identifies three distinct investing strategies that generally guide business cash resources and a few examples of their dominant vehicles.

1. Operating Goals. Include money market funds and tax-exempt money market funds
2. Short-term Goals. Include treasury bills, certificates of deposit, commercial paper, variable-rate preferreds and variable-rate demand obligations
3. Long-term Goals. Include corporate notes and bonds, mutual funds, treasury notes, agency notes, preferred stock and managed accounts

Get Expert Help
AllBusiness explains several reasons why investing your business cash is a job best left to the experts. As fiscal rules get even more complicated, companies can avoid a great deal of liability and embarrassment by turning their investing activities over to a professional. When you add in tax implications and other regulatory provisions, it’s almost a no-brainer.

Learn from Investment Insights
In its article “Eleven Investment Insights,” Vendorseek explains your right and authority to know exactly what is going on at all times with your investments. That means not only regular communication between the business and its business cash investor, but the responsibility of the business leaders to do their own online monitoring.

Merchant Funding: The 411 on No Collateral, No Loan Financing

Merchant funding is ideal for the start-up or expanding business looking to get a foothold in a credit-tight economy. Perhaps the best part is that this form of financing places no restrictions on how you can use the money.

What is Merchant Funding?
According to Merchant Advisors, merchant funding is a cash advance paid to you based on your future credit card sales. Merchant funding businesses examine your past sales and will forward you a percentage of those sales. Keep in mind that this is not a loan. There is no money to be paid back. The money you’re getting is a portion of the money you’ll earn in the future

A Wealth of Benefits
Platinum Funding Group reveals a host of unique benefits that merchant funding offers business looking to secure financing.

• Enjoy Discounts. Both volume and early payment discounts
• Unencumbered Growth. Purchase additional inventory with more working capital
• Financial Growth. Reduce bad debt and improve credit rating
• Stress-free Outsourcing. Accounts receivable management, credit checking and collections
• Immediate Publicity. Increase advertising and marketing efforts
• Improve Offerings. Such as extended credit term
• Remain Solid. Keep fixed assets unencumbered
• Retaining Equity and Ownership. Leave the balance sheet unchanged
• Unrestricted Operations. Meet increased sales demands restrictions of conventional credit

No Collateral is a Good Thing
Vendorseek discusses the benefits of merchant funding as opposed to a traditional loan. In their example, a business owner that puts his or her house up for collateral is in danger of losing it if they’re unable to meet minimum payments on the loan.

Commercial Loans: Why Cash Flow Beats Collateral Any Day

Those business owners in the market for a commercial loan typically have one question on their minds. How much collateral will I be required to put down in order to get the financing I need to expand? Truth be told, if you’re cash flow is right, collateral often isn’t necessary. And here’s why.

Defining Cash Flow Reveals Its Power
Perhaps the best way to illustrate the advantage cash flow has over collateral when applying for a loan is to define the term. According to Wikipedia, cash flow is marked by several unique factors that give it the advantage over any collateral that you can offer potential lenders:

• Cash flow is a good indicator of business strength based on past performance
• Cash flow can be used to create models that predict value and net worth
• Cash flow trumps accrual accounting and is a strong validator of business income

Be Prepared to Show Your Numbers
In her comments on eZine Articles, Helen Cox explains that performing a cash flow analysis on a regular basis is key to being prepared when potential lenders judge your business. This means monitoring, analyzing and adjusting your businesses cash flow as needed will keep you on top of the numbers and illustrate your preparedness. It’s not enough to flash cash; you need to be able to identify sources of regular income.

Know the Formula
Vendorseek echoes the cash flow principle with respect to lending and reveals the formula that determines your fiscal health. A "positive net income" considers owner's salary, net income and depreciation, with three years of revenue and cash trends taken into consideration.