Many business owners try to finance their growing businesses by going to venture capital or angel funding groups. Although both financing options provide a great way to finance a business, they are usually hard to qualify for. And furthermore, they all require that you give up some business equity in exchange for funds. That, needless to say, can be a very steep price to pay.
There are some business financing alternatives that can allow you to finance your business, almost as effectively, without having to give up any equity. As opposed to venture funding or angel funding, these options are easy to qualify for and do not require the endless documentation and due diligence that venture money requires. .
However, these can only help you if you meet the following criteria:
1. Your business is established and has commercial (not consumer) clients
2. Your business invoices between $40K and $900K per month
These alternatives will help you if:
1. You need money to meet payroll, pay rent or pay supplier
2. Your customers pay you in 15 to 60 days
3. You need (or wish) your customers to pay you sooner
Your first option is called factoring (also known as invoice factoring). Factoring is ideal for businesses that cannot afford to wait 15 to 60 days to get paid by their clients. Factoring provides you with financing that is tied to your invoicing. Basically, the more your company invoices, the more financing you qualify for. This enables you to grow your company – many times exponentially – without having to give up equity.
Your second option is called purchase order financing. It works well for re-sellers, distributors, traders and wholesalers. Purchase order financing is ideal for business owners that have a large purchase order in hand, and who cannot afford to pay their suppliers to deliver the product. PO financing enables you to get a letter of credit, backed by the financing company, to pay your suppliers. This allows you to deliver on the purchase order and effectively make the sale. Usually, very little – if any – of your money is required for the transaction.
Both alternatives are easy to qualify for, take days (or a couple of weeks at most) to set up, and when used correctly allow you to grow your company exponentially.
Posts Tagged ‘Options’
Can’t get Venture Capital Financing. Look at These Options
December 22nd, 2009Posted in Articles
Tags: Angel Funding Backe Business Financing Business Invoices Business Owners Can't Capital Consumer Clients Due Diligence Financing Financing Business Financing Options First Option groups Ideal Invoicing Letter Of Credit Look Options Payroll Purchase Order Financing Steep Price These Venture Venture Capital Financing Venture Money Wholesalers
How Are The Options About Automobile Financing
December 21st, 2009You have found the car that makes your heart race by 120 beats per minute. Now only one thing stands between you and the car of your dreams: financing the purchase. In a perfect world, you would pay the full price in cash without blinking. But if you are like the seven out of ten car and truck buyers who don’t live in a perfect world, chances are you would be paying for your car through one of several financing schemes.
Understanding the basics of each car financing option is key to choosing the automobile financing strategy that best suits your situation. Here is an overview of auto financing options that may be available to you.
Auto Loans from Lending Institutions
You can get a car loan from a bank, credit union, or other lending institutions. The car that you purchase will serve as collateral for the auto loan. This means that the lender can repossess your vehicle if you default on the car loan. Auto loans are a popular car financing option because they generally offer reasonable interest rates and are relatively easy to get.
Two factors are likely to affect the total cost of the car loan. One is the term or duration of the loan. Generally, the longer the term of the loan, the lower your monthly installment will be. But you will end up paying more towards interest and this will increase the total cost of the auto loan. If you can afford it, get a short-term loan. Your monthly installment will be higher, but you will be paying less money over all. The second factor that may affect the total cost of your car loan is your credit rating. Creditors with less-than-stellar credit history are usually charged a higher interest rate because of the elevated credit risk.
How can you put a limit on learning more? The next section may contain that one little bit of wisdom that changes everything.
Dealer Financing
Like traditional auto loans, dealer financing is reasonably easy to get. Most dealerships have relationships with numerous lending institutions, so they can arrange car loans even for car buyers with blemished credit histories. To compete with traditional bank loans, many dealerships offer zero percent or very low interest on dealer loans. However, such loans are available to car buyers with stellar credit ratings. Consumer experts advise car buyers to get pre-approved on an auto loan from a bank or credit union before approaching the dealership for possible financing. By getting loan pre-approval from another lending institution, a car buyer gets the upper hand when bargaining for a lower rate on a dealer loan.
Home Equity Loans and Home Equity Lines of Credit
If you own a home and have accumulated substantial equity on your property, then you may consider getting a home equity loan or a home equity line of credit. Home equity loans are fixed or adjustable rate loans that you repay over a predetermined period. Home equity lines of credit are open-ended, adjustable-rate revolving loans with a maximum credit limit based on the equity of your home. Home equity loans tend to have lower interest rates than credit cards and other types of personal loans. Interest payments on home equity loans may also be tax-deductible up to a certain extent. Home equity loans and home equity lines of credit use your home as collateral, so make sure you are financially capable of paying the monthly installments if you don’t want run the risk of losing your home.
Credit Cards
A credit card advance or credit card draft from your credit card company can help you drive your dream car home. Like home equity lines of credit, credit card advances or credit card drafts are revolving lines of credit with variable interest rates. To entice existing customers to avail themselves of credit card drafts, credit card companies waive cash-advance fees, guarantee low rates during the initial period of the loan, or offer high credit limits. However, because credit card drafts are unsecured, they generally have higher interest rates than home equity loans, traditional auto loans or dealer loans. Financing your auto purchase through credit cards could also leave you vulnerable to hefty penalty charges if you make a late payment or exceed your credit limit.
You can’t predict when knowing something extra about automobile financing will come in handy. If you learned anything new about automobile financing in this article, you should file the article where you can find it again.
Posted in Articles
Tags: About Auto Financing Auto Loan Auto Loans Automobile Automobile Financing Beats Per Minute Car Financing Car Loan Car Of Your Dreams Collateral Credit History Credit Rating Credit Risk Creditors Financing Financing Option Financing Options Heart Race Interest Rate Lending Institutions Options Perfect World Short Term Loan
Automobile Financing – your Options
December 21st, 2009You’ve found the car that makes your heart race by 120 beats per minute. Now only one thing stands between you and the car of your dreams: financing the purchase. In a perfect world, you’d pay the full price in cash without blinking. But if you’re like the seven out of ten car and truck buyers who don’t live in a perfect world, chances are you’d be paying for your car through one of several financing schemes.
Understanding the basics of each car financing option is key to choosing the automobile financing strategy that best suits your situation. Here is an overview of auto financing options that may be available to you.
Auto Loans from Lending Institutions
You can get a car loan from a bank, credit union, or other lending institutions. The car that you purchase will serve as collateral for the auto loan. This means that the lender can repossess your vehicle if you default on the car loan. Auto loans are a popular car financing option because they generally offer reasonable interest rates and are relatively easy to get.
Two factors are likely to affect the total cost of the car loan. One is the term or duration of the loan. Generally, the longer the term of the loan, the lower your monthly installment will be. But you’ll end up paying more towards interest and this will increase the total cost of the auto loan. If you can afford it, get a short-term loan. Your monthly installment will be higher, but you’ll be paying less money over all. The second factor that may affect the total cost of your car loan is your credit rating. Creditors with less-than-stellar credit history are usually charged a higher interest rate because of the elevated credit risk.
Dealer Financing
Like traditional auto loans, dealer financing is reasonably easy to get. Most dealerships have relationships with numerous lending institutions, so they can arrange car loans even for car buyers with blemished credit histories. To compete with traditional bank loans, many dealerships offer zero percent or very low interest on dealer loans. However, such loans are available to car buyers with stellar credit ratings. Consumer experts advise car buyers to get pre-approved on an auto loan from a bank or credit union before approaching the dealership for possible financing. By getting loan pre-approval from another lending institution, a car buyer gets the upper hand when bargaining for a lower rate on a dealer loan.
Home Equity Loans and Home Equity Lines of Credit
If you own a home and have accumulated substantial equity on your property, then you may consider getting a home equity loan or a home equity line of credit. Home equity loans are fixed or adjustable rate loans that you repay over a predetermined period. Home equity lines of credit are open-ended, adjustable-rate revolving loans with a maximum credit limit based on the equity of your home. Home equity loans tend to have lower interest rates than credit cards and other types of personal loans. Interest payments on home equity loans may also be tax-deductible up to a certain extent. Home equity loans and home equity lines of credit use your home as collateral, so make sure you are financially capable of paying the monthly installments if you don’t want run the risk of losing your home.
Credit Cards
A credit card advance or credit card draft from your credit card company can help you drive your dream car home. Like home equity lines of credit, credit card advances or credit card drafts are revolving lines of credit with variable interest rates. To entice existing customers to avail themselves of credit card drafts, credit card companies waive cash-advance fees, guarantee low rates during the initial period of the loan, or offer high credit limits. However, because credit card drafts are unsecured, they generally have higher interest rates than home equity loans, traditional auto loans or dealer loans. Financing your auto purchase through credit cards could also leave you vulnerable to hefty penalty charges if you make a late payment or exceed your credit limit.
Posted in Articles
Tags: Auto Financing Auto Loan Auto Loans Automobile Beats Per Minute Car Buyers Car Financing Car Loan Car Loans Car Of Your Dreams Credit Histories Credit History Credit Rating Credit Risk Creditors Financing Financing Option Financing Options Heart Race Lending Institutions Options Perfect World Short Term Loan
