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.