Even With Bad Credit Small Business Loans Aren’t Out Of Reach

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There are dozens of reasons you might be considering looking at a small business loan.  If the only reason keeping you stalled is that your credit is less than stellar then you’ll want to consider some of the following pieces of advice.

Consider Secured

You might take this route at first but if you’re worried about your credit keeping you from a small business loan then you don’t want to rule out getting a secured loan.  For these loans you may place your inventory and even your equipment up as collateral.  Secured loans are easier to come by because if you go into default there is collateral.

Unsecured Business Loans

Getting an unsecured business loan can be similar to a cash advance. These can be based on future credit card sales and often are and because of this they may only be available to certain types of businesses.  Some records may need to be provided and then you’ll be ready to use the cash to further your business.

Interest Rates

When looking for either secured or un-secured business loans even when you have bad credit you should still shop for the best interest rates.  Loans where you don’t get a good rate can make it that much easier to get your business of on the right foot.

Try A Credit Card

If you’re having trouble with getting a loan with traditional banking you might like to look into getting a credit card and using that as a way to build the credit back up.  These are often much easier to get than a standard loan through the average bank and they are powerful tools for the business world.  Once you have the credit card, make small purchases on it and then pay it off so that you are able to build up a good credit standing.

Three Practical Ways To Manage Your Accounts Payable

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When you own or operate a business, it is vital that you keep up with your accounts payable.  Not doing so can result in difficulty obtaining goods you need to run your business, and delinquency can damage the reputation of the business.  Paying your creditors on time can help keep you in business.  Follow these tips to manage your accounts payable to avoid delinquency.

Take Advantage of Technology

Technology can help you stay on top of your accounts payable.  Make sure that your accounting software has the ability to manage your accounts payable; if it doesn’t, upgrade your software so that you can get rid of paper ledgers and spreadsheets and maintain your accounts by computer.  You can also hire a virtual, part time accounting assistant to help with managing your accounts payable.  A part time virtual accountant will need just a few hours per week to manage your accounts.  Having someone to assist you outside of the business is also beneficial for eliminating theft from your business, which often occurs through accounts payable.  

Opt For Auto-Pay

For recurring payments, consider opting for an auto-pay function that will automatically debit the amount you owe on the due date each month.  This way, you won’t have to spend any time on managing these accounts, other than to enter the debit into your accounting software.  Utilities, mortgage and insurance companies, and other large payees often offer this feature, which helps ensure that the creditors that you must maintain each.  Make sure that auto-pays are entered accurately into your accounting software each month. 

Make Your Accounting Software Work For You

Generate a report for your available cash flow if you have to juggle your accounts payable.  With a few simple clicks of your accounting software, you should be able to determine the balances of your checking account and your credit lines.  If you must pay some of your creditors late, give them a courtesy call to let them know before the payment becomes overdue.  This can help salvage your relationship with the creditor. 

What Can Debt Do For Your Small Business

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All too often the small business person thinks that debt is a universally bad thing.  The truth is there are a lot of ways you can use debt to work for you and your business.  Consider some of the following ways debt can be good for you and your business.  

Building Credit

There are just a few ways to build your credit and one of the most critical is accruing manageable debts.  When you have a small business it is likely there will come a time when you will need a loan and if you have no credit you will find it exceedingly difficult.  When working to build this credit you should start with small debts that are manageable.  You’ll want to get a debt that you can pay off within a few months and make several payments to make it work best for your credit.  

Making Large Purchases

Most businesses will run up against a time when they will need a large purchase; new equipment, a move or a promotion.  This means you’ll likely have to go into debt to cover the expense.  This is the perfect opportunity to also build your credit by creating a small, manageable debt.  

Supplementing Cash Flow

Some businesses are seasonal; in fact most businesses have busy seasons and slow seasons.  If you haven’t learned the trick of budgeting through the slow seasons it may be the right time to go into manageable debt.  The most important thing to do is carefully consider what you spend and how much you go into debt.  

Making Repairs

It always seems that something breaks down when you have no extra money.  In this case, having the opportunity to extend a little by way of going into debt can help your business through a rough patch. 

How to Manage Your Debt More Effectively

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As the economy continues to change, experiencing ups and downs constantly, it is important to stay ahead of your company’s debt so that it doesn’t end up harming you down the line.  Managing debt is the single most important aspect for a company to stay in business because without proper debt management, there will be no company for long. 

One of the best ways to properly manage your debt effectively is to review your interest rates on your loans.  If your current loan interest rate is significantly higher than a typical loan for your business size and credit rating and history, consider refinancing it to lower your monthly payments and possibly even lowering your interest rate.  It is extremely important that your credit history is solid for this to work.  By having a solid credit history, you are going to be more likely to see a fair interest rate because it shows that you and your company are great at handling your finances.

Next, take a look around at your company.  Is there any waste?  Is there equipment or a whole area in our building that we are not using?  One good way to manage debt is to sell or rent out things that the company doesn’t need or use.  If you have a machine sitting around catching dust, consider selling it to help pay off some of the company’s debt.  If you have a whole second floor in your building that you are not using, consider renting it out to bring in more money for the company.

Managing debt smartly and effectively is the name of the business game.  If you are unable to handle your finances properly and make payments on time, you will not have a business for long.  Be smart with your money and pay off liabilities as soon as possible.  You will be glad you did.

How an Unsecured Line of Credit Can Work for You

As is the case with many small businesses, having an open line of credit is a must in order for a company to succeed.  There are many different options for financing a company and one of those options is an unsecured line of credit.  Applicants with good credit are typically able to use their personal credit history to obtain a line of credit for their company. 

How it works is that instead of offering up something you own as collateral for the credit, such as a house or a car like a secured line of credit would, you simply are charged a fee.  When you begin receiving the line of credit, you will be charged a pre-set annual fee in place of collateral. 

One major benefit of having an unsecured line of credit is that you are able to borrow more as needed and pay it back whenever you are able to.  This can benefit small businesses greatly because as long as you continuously pay it off when you can, the money is always there.  This can help you fulfill purchase orders and pay bills while you wait for your receivables to be converted into cash on hand.  Another benefit of a line of credit is that they typically have a better rate than a credit card would offer.

While having an unsecured line of credit can be great, it is not going to be a solve-all to your company’s money problems.  Typically with unsecured lines of credit, the risk of default is high so lenders protect themselves by limiting the amount one person can borrow.  If you make consistently pay off your balance, your credit amount will go up.  Ensuring your company never borrows more than you can pay off is one way to increase your company’s limits.

Unsecured lines of credit can be very beneficial for companies that have money in their receivables that will shortly be turned into cash.  It provides cash on hand that you know can be paid back on time. 

 

 

What is purchase order financing?

When Your Organization Needs Specialized Financing

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There’s more to corporate economics than debt restricting and finding solutions for unfortunate worst-case scenarios. When your business is entering a time of growth dependent on receiving the right financing then you will need to work with professionals who can assure you the funds your organization requires. Working with professionals to help you establish your financing is essential, especially if your organization has a negative mark or two on its lending history.

The main reason to work with a professional company to help arrange your financing is a simple one - the company you work will provide you with information on, and access to, funds you didn’t even know existed. Some of these specialized forms of financing include merchant cash advances, equipment leasing, asset based financing, purchase order financing, and accounts receivable factoring. The financing option you ultimately choose to pursue depends a lot on your current economic situation and your upcoming needs.

For example, equipment leasing offers a great way to increase the size and capacity of your business even when you don’t have a whole lot of cash to spend on expansion. By leasing equipment for when you need it you will save significant sums compared with purchasing money outright, and you’ll be able to spread those remaining costs out over a long period of time.

On the other hand, your expansion plans may require having a lot of cash on hand - cash your organization doesn’t currently have to spend. When that’s the case, you can use a merchant cash advance. This form of financing is easy to understand. A merchant cash advance is a big lump sum lent to your organization with the agreement that your organization will serve up a certain percentage of your future credit and debit card sales to the lending institution.

As you can see, most organizations have significantly greater and more varied financing options than they may have originally believed. By selecting and acquiring the right form of financing to meet your needs, we’re happy to help your company grow to the next level - even if you’ve already written growth off as impossible.

What You Don’t Know about Purchase Order Financing

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Purchase order financing is often thought of as little more than a shortcut for small companies looking to expand rapidly in order to achieve a more favorable market position. Most business owners think purchase order financing is only a viable option for small companies without the cash-on-hand to pay for the supplies and infrastructure they need. Yet purchase order financing is available, and a good idea, for any company looking to complete an essential order they can’t afford within the boundaries of their current financial position.

You see, purchase order financing plays a very important role in the business world, a role which doesn’t always have anything to do with assisting small, cash-strapped businesses. Purchase order financing provides a viable option for companies with bad credit who aren’t able to receive a traditional loan or extension from their bank. A bank may turn down a company’s request for a larger loan for a number of reasons, even if that company is well established. Sometimes a bank will no longer provide any extra credit to a company who already finds itself heavily indebted; other times a bank simply won’t provide enough extra credit to a debt-laden company to complete a necessary order.

Even companies who restructure their debt in order to improve their cash flow occasionally find themselves unable to borrow the additional money they need to complete their essential orders. In these situations purchase order financing will provide those companies with the ability to buy what they need through less conventional channels and on increasingly favorable terms.

The Ugly Truth about Business Bankruptcy

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Too many business owners believe as long as they avoid business bankruptcy they won’t have to worry about the health or reputation of their credit. They believe as long they restructure their debt they won’t suffer any of the negative side effects of their poor financial history. Unfortunately, this isn’t the case. The ugly truth about business bankruptcy is the fact it’s nothing more than the end result of a long line of actions which have already devalued your business’ credit.

Should you avoid business bankruptcy? Absolutely. A business which has gone bankrupt looks even worse than a business which merely fell into delinquency. But there’s nothing attractive about a business which fell into delinquency. The moment you are seriously considering credit restructuring it’s likely already too late to keep your credit looking good.

That’s the bad news. The good news is you can minimize the damage to your credit and make sure your suppliers will continue to work with you after you return to solvency if you work with the right professional representation. Hiring representation to negotiate with your creditors will help you arrive at a mutually beneficial restructuring plan, keeping your business operational and providing them with revenue they weren’t previously receiving. When you hire on an outside negotiating team you will also improve your relationship with both your creditors and your suppliers.

Regardless of whether you file bankruptcy or not, if you need to restructure your debt than your credit already sits in bad standing. The first step to rebuilding your credit is restructuring then repaying your debt.

Should I Outsource Freight Bills?

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 Prior to 1980 the transportation marketplace was very heavily regulated. The National Association of Freight Payment Banks was established to keep track of all the freight bills and to ensure banking requirements were being met by the shippers and the carriers. There were regulated parameters for credit extension in accordance to which the freight bill settlement was based upon.

In 1980, the transportation industry was deregulated, which allowed for the carriers and shippers to negotiate credit payment terms. Even though this deregulation added to the flexibility of firms to negotiate credit payment period, it also required them to follow a vigorous process of pre-auditing before freight payment is conducted. The process generally requires a verification of freight rates, accounts of previous payments, liability checks of shippers and validation of freight payment requirements. 

In order to avoid the hassle of going through this process, many companies outsource freight bills. Outsourcing generally saves the company money in three major areas:

• Reduction in cost of payment to account payables department and
• Cost of processing
• Reduction in accounting errors

There are various companies which offer the outsourcing of freight billing and auditing. By shifting the responsibility and hassle to these firms offering such services, this allows the business to focus on their core competences and not waste time and resources on processes that can be better managed by others at lower costs.

These outsourcing companies can reduce the occurrence of errors which ultimately costs the business considerable outlay. There will be reduction in duplicate entry of bills incorrect freight rates. Moreover, they will provide additional services apart from the basic freight billing like customized information regarding your accounts management. Periodic reports, carrier usage information and extensive professional information on freight related issues will facilitate the business in making informed decisions.

Regardless of the advantages, there are aspects which need to be kept in mind before outsourcing your freight bills. The company who is providing the services should be ISO certified and have proper certification and expertise in the field of accounts payable management. Also the firm should provide good customer service and efficiently resolve issues related to freight payment. 

Please note that the one of the main issues concerning outsourcing freight bills is that to insure a cohesive carrier-shipper relationship. In order to establish this point, companies, before outsourcing, should make sure that the service providers also ensure good carrier relationship management. To conclude, please keep in mind the possible issues that can be encountered along with the positive aspects of outsourcing freight bills. After weighing the pluses and minuses, it is clear that the smart decision is to outsource the service and focus time and resources on the core competencies of the company.

You can visit me in American Corporate Turnaround.