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Getting a Small Business Loan
Are you in need of financial resources in order to start or even
maintain your small business? Most of us are. The fist step is
to take a look at the vast number of commercial loan sources
that offer help in this area such as Chase, Citibank, etc. Also,
with the Small Business Administration (SBA), you should be able
to arrange a connection with one of these banks. This is one of
many organizations that specialize in loans to small businesses.
Contrary to the belief that bankers actually look for reasons to
turn down prospective clients in need of a loan, they are in the
business to lend money. This means that every time a banker is
sitting in front of a potential client, they are hoping to make
the deal work just as much, if not more than the client wants it
to work.
A bank's primary role in the small business lending area is
funding growth. An example of this would be to finance the
expansion of small business with a proven track record. Most
banks can offer a wide variety of loan packages designed to
finance expansion of an already existing small business.
Below are a few examples bank loan packages :
1. Asset Based Financing. Asset Based Financing is a general
term describing a transaction whereby a lender accepts
collateral and assets of a company in exchange for a loan. Most
asset based loans are collateral against other accounts
receivable, inventory, or equipment. Accounts receivable is the
most favored of the three because it can be converted into cash
quickly. Banks will only advance funds on a percentage of
receivable or inventory, typically being around 75% of the
receivable and 50% inventory.
2. Line of Credit. A line of credit involves the bank's setting
aside designated funds for the business to draw against for the
cash it needs. As the line of credit is used, the credit line is
reduced and when payments are made the line is replenished. One
major advantage of a line of credit is that no interest is
accrued unless the funds are actually used.
3. Floor Planning. Floor Planning is another form of asset based
lending in which the borrower's inventory is used as collateral
for the loan. Car dealerships are a prime example of a business
that often uses floor planning as their primary financial tool.
About the author:
For more great business, marketing and mind power ideas to
develope your business visit the Higher-Profits Blog at
www.higher-profits.com
Written by: Dave Ryan
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