The 80/20 Of Business Finance
    • You are here:
    • Home »
    • business financing options

    Tag Archives for " business financing options "

    Bird In The Hand

    “Business Financing Or Commercial Financing Aligns
    With A Bird In The Hand Philosophy”


    One thing that business owners and managers have a hard time understanding is that business financing or commercial financing is not typically very pliable or flexible or even predictable and getting funding arranged that is within your strike zone or acceptable to you is or should be the primary goal versus trying to get the best deal.

    Sure, we’re all interested in the best deal, but to be considered for such, there are a few things you’re going to need.

    First and foremost, you are going to need time. Especially when you’re going after the lower cost funds out there, remember that lower rates relate to lower risk which takes more time to assess, approve, and fund.

    Second, you’re going to need a highly competitive financing scenario where several lenders would be eager to fund the deal so that you have leverage to command lower rates.

    Third, you will need to be able to meet all the requirements that “the best deal” out there is going to throw at you before any funds are going to be advanced.

    This type of perfect scenario where the borrower has a considerable amount of leverage is few and far between in the world of business finance.

    The rest of the time, the lender has the upper hand and will dictate the process, requirements, costs, and so on, leaving very little bargaining power for the applicant.

    Lenders tend to be in a stronger position because businesses typically are in a rush and don’t have the time necessary to carve out a position of strength in the financing process.

    But despite their apparent disadvantage when negotiating business financing arrangements, business owners and managers will still push their luck to try and get the best deal without sufficient time or resources to pull it off. This can happen as anything is possible…its just not likely most of the time.

    This is where the bird in the hand comes in.

    Because of the inflexibility and unpredictability of business lenders, when you have one of them interested and lined up to provide you with the capital required, you have to seriously look at accepting their offer, even if you believe there may be a slightly better deal out there.

    While a better deal may exist, are you going to find it and wrestle it to the ground in time to take advantage of it? And how long are you going to have to delay making money while the search for the better deal marches on?

    And if you can’t find a better deal and return to the original offer, there is no guarantee it will still be on the table.

    Lining up business capital is almost always a challenge and getting optimal rates and terms even more so.

    Once you have something lined up that can meet you needs and is acceptable to you, even if not preferred or ideal, you are likely better off in many cases to take the money and get making money versus the risk of going back into the market looking for a better deal.

    Over time, this approach allows the business to take advantage of opportunities on a timely basis.

    If the optimal financing approach is taken, there will likely be as many miss steps as successes over time, which is not likely to get you any further ahead, but will be much more frustrating to deal with when things aren’t coming together they way you expect or require.

    Click Here To Speak With Business Finance Specialist Brent Finlay For All Your Business Financing Requirements

    Commercial Financing Assessment

    “Commercial Financing Success Is Born In The Initial Assessment Process”

    If you’re looking to locate and secure commercial financing for your business, regardless of the form of financing, then you may want to consider how important starting off in the right direction can be.

    First of all, when I say different forms of financing, sometimes there can be a variety of different ways to leverage your assets and cash flow to get the business financing you’re looking for. The different forms of financing will also vary in how they are applied by any particular lender, so the combinations of potential solutions can be considerable at times.

    On the flip side, the potential combination of solutions can also be a real smoke screen in that many of what you might consider to be potential options are not options at all due to the way you’re financing request and business financing profile align with a particular lender’s requirements at any given point in time.

    Enormous amounts of time can be wasted chasing the wrong solution, and in many cases a suboptimal solution is selected because of time constraints or due to the business owner or business manager’s lack of understanding with respect to what was available to them in the market place.

    So the first step towards commercial financing success starts with an accurate assessment of your business financing requirements and your financing and credit profile.

    Each lender will have lending/funding criteria that you’re going to have to meet to get approved and funded.

    If you’re financing and credit profiles do not meet these requirements for specific lenders, then they need to be quickly eliminated from the selection process of sources of commercial financing to pursue.

    Therefore, it becomes critical to business financing success that you understand where you financing request fits into the market before you start applying to commercial lending sources.

    But this initial assessment process can be hard to self assess if you aren’t actively involved in the market and aren’t grounded in what the current lending/funding requirements are for a given lender or lending category.

    To avoid making the whole process a hit a miss approach, you would do well to consider the services of a business financing specialist who can perform the key initial assessment with you to best determine the financing target you need to be focusing in on.

    This can not only save you months of time, but also allow you to successfully locate and secure financing in the time period you have to work with. Too often additional costs are incurred or transactions are lost due to the inability to get commercial financing in place when required.

    If you are in need of commercial financing for your business, regardless of the application or the assets and cash flow you have to leverage, I suggest you give me a call so I can quickly assess your situation and provide relevant commercial financing options for your consideration.

    Click Here To Speak With The Business Financing Specialist For All Your Business Financing Needs

    Strategies For Reducing Risk

    “Getting and Keeping Your Lenders and Investors Comfortable With Your Business Has a Lot To Do With Risk Management”

    In the lending and investing world, the people providing the funds are always looking at how risk can be removed, reduced, or off loaded.

    Most business financing requests, at least on the surface, propose a viable strategy that requires capital when applying for a business loan or approaching an investor.  What separates 90% of all applications (or more) is the failure of the applicant to identify risk and find a way to remove, minimize, or neutralize it from the business.

    In the standard “field of dreams” application where you give me the money, everyone will come from all over to buy stuff from me, and nothing will go wrong along the way, only tends to work in the movies.

    But in the real world, all deals have risks and the better you are at proactively identifying them and doing something to mitigate their occurrence or impact, the more likely you are of always being able to secure  the capital you require.

    The larger, more established the business, the less intensive risk management overall needs to be as financial strength and equity in the business will provide the means to deal with things that can and do go wrong in most cases.

    But when you’re smaller, or in a start up or growth mode, there can be many more things that can work against you that individually or collectively can put you out of business.

    So lets get into more concrete examples to further make the point.

    Anything that is new(er) and less established has more risk. The most obvious first area of concern is Sales.  The sales orders, defined letters of intent, contracts, etc., that you can procure or show are available to you when seeking money, the more attention you’re going to receive.

    The same holds true for collecting the money once the sale is made.  If terms are required, is there a solid credit granting policy in place, does the business have any experience in collecting money, can the accounts receivable be insured or financed directly?

    On the supplier side, is there well defined purchasing agreement for price and quantity?  Can the price be hedged in some fashion?  Is there more than one source of supply lined up?  What is the stability of the local suppliers and do you need to go further a field for better pricing and more certainty of supply?

    These are all risks.  Established businesses get established because they have been able to figure out how to deal with all the relevant risks to them as they developed their business over time.  In many cases they were lucky that lurking risks did not impact them and as they went along, systems and processes and expertise were either developed or put into place to make sure key risk areas were kept under control.

    For developing businesses who haven’t got everything figured out, the standard position is to push forward and figure things out as they go.  If that truly is the approach, then you’re going to need to have a fantastic opportunity in tow to offset risk, or enough of your own money to make things go as its highly unlikely that people with money are going to part with any for business proposals that are just as likely to lose it as pay the money back.

    Click Here To Speak To Business Financing Specialist Brent Finlay