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.

Restaurant Financing: Getting Creative and Thinking Outside the Bank

Getting restaurant financing is very similar to solving problems in your actual restaurant. Sometimes you’ve got to abandon the norm to get things accomplished. Go with a new supplier. Try that new steak tartar recipe that the other joints turn their noses up at. Hire that untested rookie chef to spark renewed interest in your sushi bar. It’s the same with financing.

Traditional Banks are Closing Their Doors
The Advance Restaurant finance Blog reveals some disheartening news about the traditional outlets for restaurant financing. SBA loan volume for August and September 2008 fell more than 50% from a year earlier, a trend that is likely to continue its tailspin. And since banks can’t “resell” SBA loans for a profit, more and more small business owners are turning to alternative lending institutions for their restaurant financing.

MCAs to the Rescue
The Small Business Restaurant Financing Blog touts the benefits of merchant cash advance/loan programs. Some cash merchant advance companies will fund up to $750,000 per location if your monthly numbers are where they need to be. All you need is proof that you can pull in enough to make the MCA happy and you’re literally in business. This is perfect if your considering expanding your staff, your property, or even your menu.

How to Shop for an MCA
Vendorseek puts looking for a merchant cash advance in the proper context. Look for an MCA provider that will allow you to repay financing on a non-fixed payment basis. This will ensure that you can continue on the right side of repayment when business is bad. For seasonal restaurants, this option is a must.