Business Loan Option Blog

Business financing in tough economic times can be a graduate level course in learning creative business financing techniques. In good times, business owners may be content to rely on their bank for all their financing options, but it tough times their local bankers just aren’t as friendly and credit isn’t as readily available, and your credit report may have suffered some dings. That’s why business owners who learn how to survive, and even thrive, in tough times build a repertoire of creative financing techniques that gives them an advantage over their competition who doesn’t bother to learn new ways of doing business. If you’re having trouble financing your business or experiencing cash flow problems, you will want to explore alternative business loans, bad credit not withstanding.

Types of Bad Credit Lending

Bad credit isn’t a death sentence to borrowing. It just means that you won’t get the best rates for conventional loans, making alternative loans more appealing. Some bad credit loans require some assets to secure the loans, and others do not. If you fail to repay a business loan, the lender will seize the asset to repay the loan. Other types of loans are unsecured, like credit cards don’t require any form of asset, but the credit lines and interest rates can be modified in a short period of time. Merchant cash advances don’t require a good credit score, and they don’t require an asset. What they require is the ability to repay the loan using a portion of the credit card receivables that your business already processes, for as long as it takes to repay the loan. For restaurants that are profitable, but may have trouble getting funds from conventional lenders, merchant cash advances offer an alternative way to finance a loan, even with bad credit.

Trading

Creative financing isn’t just about finding money, but about getting the services you need when you need them. That’s why many companies in tough times brush up their bartering skills and begin to trade with each other, when cash is short. If you have a relationship with a business that is reciprocal, it can offer a great opportunity to barter. Without a trading partner, though, the concept is limited and approaching others for barter can be problematic when they expect cash for their services. If you can’t locate just one trading partner, seek out multiple businesses who are open to the concept. Bartering boards have sprung up online that allow the process to be even more flexible, letting businesses earn trade hours for services rendered that can be banked until their own need for something arises that is offered as a trade for time hours. Before you decide to give too much of your time, make sure that the services your business requires are available to trade for, instead of giving your own services for things you won’t need anyways. However, bartering is still a creative financing strategy that can help your business in tough times and good.

If you have a business to run, you know that if you don’t have enough cash flow your company will be in trouble.  One of the reasons that businesses go under is because they don’t have enough working capital to sustain them when payments to them are delayed.  A working capital business loan is one way that many businesses can get past this cash flow problem.  While your accounts receivable is trying to increase the speed with which you get paid, your company can take out a business loan for extra capital until the funds flow more evenly.

The recent recession has seen a slow down with a working capital business loan, but they are starting to loosen up a little bit.  Normally a bank wouldn’t have problems making this short term loan because they knew they would have the loan repaid.  A company may find that the interest rates on this type of loan have risen into double digits where previously they would have been around the four or five percent level.  However, if your company needs a working capital loan the interest rates will still be better than a short term merchant cash advance which is another option.
When your business is applying for a business loan it will need to show a detailed report on several aspects of your company.  You will be expected to provide projected income figures, the expenses that will occur, your current sales, and other monthly or quarterly reports.  You may have one figure in mind, but the current and future status of your business will dictate the amount of money you will be able to borrow.

The amount of time that your company will need the loan for should also be taken into consideration.  The usual time frame for a working capital business loan is about three years.  If your business grows as expected you should have raised enough capital to have a cash flow cushion and pay off the business loan.

Where can you find a loan like this to sustain your business?  There is of course the bank. If you have developed an honest working relationship with a lender you may stand a good chance of getting approved for this type of loan.  Companies can get information at online sites that link up businesses and lenders.  Some of the sites will actually help you prepare documents to submit to the lender.  As a business owner you will want to review all the terms and conditions of the loan before committing your business to the repayment plan.  Small businesses are using merchant cash advances to help them get through a cash flow problem.  The interest rates can be high with this offer of money so it pays to look into every aspect of this type of loan.

Devoting enough time to researching any business loan is the only way you can be sure you are getting the best possible loan for your business.  Your company needs to know the interest rate, the length of the loan, if there is a prepayment penalty and how much the entire loan will cost if your company keeps it for the duration.  If your computer doesn’t have a program that can calculate this for you, look for a business loan calculator to do the work for you.

What can you do to have a better than average chance of getting the business loan you are applying for?  Be sure you are a good credit risk.  This means that you should be paying your bills on time and in full.  This will increase your credit rating and your company will look more attractive to a lender.  It can also help get a better interest rate, perhaps a higher loan amount and show the bank or lending institution that you are a good risk.

Once you have been approved for the working capital loan make sure you use the money wisely.  Set up a budget for the money, keep your expenses down as much as possible and make sure that the money you borrowed in the loan makes you more money.  You goal is to become financially sound with this business loan so use it to expand your business.

Online businesses are a great place to learn the art of the back end offer. Unlike a regular brick-and-mortar store, there is no friendly sales associate following up on customers to see if they can sell them more. Instead, a visitor to your site is likely to come with an idea of what they want to purchase, and whether they find what they want or not, the moment the order form completes, they’re off to another site – unless you have a planned back end offer in place.

Why Back End Offers Work

Back end offers work due to the state of mind the buyer is in when they’ve already made the decision to buy. If they’re already pushing the button to buy, they are very susceptible, at that moment, to adding more to their cart, or upgrading their offer to something even better. At that point, the money is less important, they’re not even concerned whether they’ll need a business loan later. The resistance to purchase has already been overcome. They are indicating their willingness to trust your company, when they click on that “Buy Now” button, and that also tells you that’s when they want to be presented with more offers. Just like the candy and magazines placed near the front of the cash registers at grocery stores, once a buyer is in a purchasing mood, they will be more likely to spend more without thinking about it too much.

The Up Sell and Cross Sell Online

Since you don’t have a sales associate online watching when someone places an order and is checking out, you have to place automated messages to up sell and cross sell your buyers. That means that you have to plan your lines of inventory, typically with three tiers – one low end, one mid range, and another high income range. If they buyer chooses a low end product to buy, they should be told that other similar products with more features exist, before they finalize the sale. After all, they’re not standing in a store where they can look at multiple items at once on a shelf. They usually type in what they want in a search engine on your site, and it pulls up that item. If you don’t tell them other offers exist, then they won’t know. If they would have liked the upgrade, but just didn’t know it existed, are you’ve lost a valuable opportunity to increase your bottom line because you weren’t prepared properly for the sales event.

Another way to make money is by offering compatible items upon check out, with a promotional or limited time offer. For instance, if someone buys a pair of shoes off your site, why not offer them three sets of socks for a special deal, just for adding them at that time to their cart? It doesn’t take special insight to figure out people who are buying shoes want socks. However, without an automated message that allows them to click and add socks upon checkout, they would have to go into your site again and specifically pick that item. Instead, have that option available upon your electronic checkout for specific products and their compatible partners.

The Limited Time Offer

This back end offer works well on a thank you page, after a person has bought something, checked out, and is receiving confirmation on their order. To thank them for patronizing your online store, you can offer them an exceptional limited time offer that is only valid until they move off the thank you page. Let them know that once they navigate away from the thank you page, the offer will no longer be available the price will go back to whatever it was regularly. If it’s matched to the items that have been purchased and can help the visitor in some way, you’ll make more money this way, just by programming a limited time back end offer on your thank you page.

It’s Not What You Sell, But How Much

Back end offers don’t require special merchandise to work. They don’t require special knowledge to implement. They do require attention to your demographics buying habits and a bit of awareness to ask for the sale at the right time. The key here is not about inventory, it’s about increasing your sales from that one person who is already buying. Let’s face it, it’s much easier to get someone who has previously made the decision to buy from you, to buy again. New customers are far more resistant to making purchases, as they don’t have any reason to trust you. That’s why back end offers work to market people who are already more likely to buy and increase your sales from purchases at the point of check out.

Innovation is one key to success when you consider opening a new business. In many ways, the things that set you apart from other businesses can lead to your success. Many companies have researched their market and have come up with ideas that set them apart and this differentiation can lead to a large client base. Some of these ideas are great and have led to revolutionary products and services, while others have fallen to the wayside over time. The discovery of new and innovative ideas has become a high priority with small and large businesses alike as everyone is scrambling to find the newest, greatest new innovation to maintain profits and grow their business.

The Internet has really broadened the horizons for many companies as they slowly learn the ins-and-outs of using the Internet for business. Many companies have gone full bore online and have innovated their industry by doing so. As time progresses, more and more new companies crop up offering things never before seen in the marketplace.
One such innovative website is Fiverr.com, where you can pay a small fee, $5, to have a task performed for you. It is a community where people offer their services and consumer’s can pay them $5 for whatever it is they do. Tasks range from simple drawings to people posting tweets for another’s products. You can even post your quirky ability and sell it for $5. The company keeps a dollar from every sale, so you would end up with $4, so don’t oversell it or you may end up working several hours for that money.

This model is great for a business as it creates a constant revenue stream. Many other types of businesses could benefit from their research and visibility and use a similar model. Rather than take a business loan, you could just as easily open up your own website that sets yourself apart like Fiverr.com to generate revenue in a down economy to use for expansion or growth of your main business.

Many financial experts still discuss the horrible tech bubble that occurred at the turn of the Millennium. In the March of the year 2000, the NASDAQ was just over 5000, but soon plummeted and has not been anywhere near that high ever since. It is amazing to see how overvalued the technological stocks were at that time. AOL and Microsoft dominated the landscape and valuations of their companies from independent sources were simply incorrect and more and more investors bought into all of the hype, resulting in a steep rise in the NASDAQ. When these companies started to see profits go down due to insecurity in the technology craze, the investors started to sell their very valuable stock, causing a crash the like no one had seen in many years. The ones valuing these companies thought that many consumers would embrace emerging technologies when in reality, they were just not ready and many companies lost money on products they spent millions on to develop.

Ten years is a long time when it relates to the implementation of new technology. Since the latest meltdown in March 2009, many tech stocks such as Apple and eBay have rebounded quite nicely, but nowhere near some of the insane values seen in March 2000. The NASDAQ is roughly half of what it had been ten years earlier, but current salaries are increasing and technology is booming. So it goes to show that we have learned not to overvalue and be cautious when it comes to new technologies. Once they have been around long enough to get a gauge of their ramifications on society, you can then truly call them a valuable asset. Hopefully, the stock market forecasters and those who buy and sell these items do not artificially inflate the values like they have done in the past. Now that we have somewhat rebounded from the horrible stock downturn in 2009, we can learn from that and be truly cautious.

With new companies such as Facebook, Twitter and the popularity of cloud-computing, it may turn out that we begin another cycle that lends itself to the tech bubble, but experts insist that consumers can learn from the past. Instead of buying without restraint, these investors will enter the tech waters logically and without some trepidation but allow for companies that thrive to also prosper along with their investors. Once companies like Google and Microsoft entrench themselves into the conscience of the consumer and provide us with proven products that we can tangibly value, the NASDAQ may return to its previous glory, only for real this time.

With so many people trying to find ways to cut living expenses, the U.S. post office has decided to cut Saturday service for the same reason. The only problem with this is that they can’t do it unless Congress approves the measure. Unlike other companies that can set their own policies and hours, the U.S. postal service has to pass everything by Congress first. This limits their ability to adapt to a changing marketplace. In addition, they are not funded by the U.S. government, which means that they have to try to be profitable on their own despite these restrictions.

A Lack of Flexibility

What is obvious is that life has changed from snail mail to email and electronic transactions. Many consumers have learned how to bypass the post office all together for bill paying through online banking. Others are corresponding via email instead of snail mail. In addition, advertisers have found it much more effective and cheaper to advertise online instead of sending out circulars, postcards, and flyers. This leaves the post office trying to scramble to make up the lost revenue. Barring that possibility, they have to make cuts. Then, again, they’re back to having to get those cuts approved by Congress.

A Bailout for the Post Office

In order to maintain the same quality and level of services, with a falling revenue pattern, cuts have to be made or some other funding has to be developed. It could be the post office might turn into a government-funded and run organization as it does provide a valuable social service. A bailout for the U.S. post office is not as expensive as the one given to Wall Street, and would only amount to approximately 8 million. Compared to trillions already given away, there are some folks asking if the post office doesn’t deserve a bailout of its own.

Google has revolutionized computing in the modern era and as it rolls out new and innovative products, it also allows others to build applications that work well with the programs that they have created. This collaborative computing is now known as cloud-computing and has become increasingly popular as more and more companies have begun to see the advantages of this form of communication. It is an easy way to get information and share it with many users at one time. It works well as it streamlines the process so that employees can access data about customers without having to open various software packages, which is great for small businesses as well as large ones. Previously, companies always seemed to turn to used Microsoft products that had limited compatibility, but when Google released its applications five years ago, users were able to share information among groups of users as well as with clients and suppliers when appropriate.

This year at Campfire One, a meeting held every so often to have developers out to the Google headquarters to discuss new products and initiatives, the company unveiled its Apps Market for developers to sell enterprise software. Enterprise software is an application developed to work with the current line of Google Apps including Google Calendar and Gmail, two of their more popular offerings, which will draw Google even more into the cloud-computing realm. This marketplace will allow third party developers to market and sell applications that work in conjunction with Google Apps and this process may lead to a developer explosion as well as huge profits for the companies as well as Google. There is a modest fee to setup a merchant account and you can sell as many applications as you wish. You also must pay a 20% charge on all profits after your costs are recouped.

One strong advantage is that these applications can be targeted to current Google users as a way to increase productivity without having to sacrifice efficiency. These new enterprise applications work seamlessly with any Google application and they can be manipulated through the same menus as other Google created applications, giving the user a very easy job of figuring out how to use the new third-party application. They also have included a way to incorporate access to the enterprise applications through the toolbar and you will not have to log in every time you use of the third-party programs as Google will use Open-ID, which allows the user to only have to log in once to use any of the applications associated with Google Apps.

The world economy has been in a decline since the subprime mortgage crisis of 2007.  The crisis started slowly in the US and quickly spread to the UK, Europe, and finally into Asia.  Following the mortgage crisis were several bank closures and bailouts in the US.  The UK had to look towards rescuing a few of their banks as well due to their investments in the US.  Before any country could hit rock bottom a recession occurred.  Since many countries that are a part of the European Union are still suffering it has become necessary to talk about a bailout plan from the EU rather than any countries specific government.

There is nothing concrete from the EU yet regarding a bailout.  Instead the European Union has hinted that they may be willing to help.  The committee has certainly made some changes in the last few months regarding the regulations of the 27 members.  They also want to work towards stabilizing the euro currency, especially in light of Greece’s debt crisis.

Greece is just one of the latest countries to suffer from the economic downturn.  They have hit a place in which their country is poor and unable to help itself.  President Jose Manuel Barroso of the EU Commission spoke to the press stating that they were finding new measures to help generate warnings.  In other words, if they can devise a system that shows a country is about to head down the wrong track it may save countries like Greece from the debt situation they are in now.

The plan is to create a stronger economic coordination and governance to stop any debt crisis from happening again.  It may have started with mortgages, but other loans are being affected as well like business loans.  Any line of credit could become volatile depending on the regulations of the bank.  The EU Commission is to make sure fair trade occurs.  They cannot be worried about bailing out countries like Greece due to bad decisions or wrong moves.

Greece is just one example of the recent credit crisis.  Many have been wondering if Greece needs a bailout from the commission as talks about one increase.  Athens on the other hand has stated they definitely do not need a bailout.  It will take time for their country to be repaired, but a bail is unnecessary.

For now there is an intense debate within the EU regarding whether a bailout should be offered.  Greece was helpful during the early stages of the credit crisis for other EU members, but it seems for right now they are not getting any help and do not seem to think they need it.

The EU on the other hand is still trying to decide if they should offer a bailout and what it could mean if they do.  If other countries falter it would be possible that they would need a bailout just as much as Greece or more.  On the other hand it could spark an undesired effect from countries that need help, but cannot get it.

Leadership, management, and networking skills are some soft skills that all entrepreneurs must learn to increase the size of their business. People skills come naturally for some people, while other learns by doing. Not everyone that is a great leader is also a great manager. Managing the day to day finances takes a lot of knowledge of different business loan options available. Leaders may prefer to delegate the details of day to day operations to managers. Networking can also be a skill on its own. Honing each of these talents will eventually lead you to greater success in business and life.

Leadership

In order to inspire people to work for you and your organization, you have to have some leadership skills. Like the lead goose in a flock of geese on a mission to head north, the people following you are going to look to you for direction. It’s not just about having confidence in your own abilities, it’s about inspiring others to perform at their peak performance because they trust your ability to lead them towards success.

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Starting a business can happen in a variety of ways. It can be a burning desire to be your own boss, a part-time gig to help bring side income for those still employed or in retirement, or it can be due to a passion to provide some product or service. All these reasons are valid, but ultimately, the real winners in business are those that obtain a measure of life satisfaction with their choice. The main goal of business is to be profitable, however, when you’re doing the thing you love, that typically is icing on the cake. Many more people are jumping into business to generate a measure of life satisfaction that is not available through traditional career paths. This doesn’t mean that they can skip the basic understanding of business loan alternatives and financing, it just means that there is an additional component to choosing their niche. Planning to obtain life satisfaction with your business is not as hard as it sounds, and here are a few things to consider when going into business to maximize this potential.

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