Grants –Option for Small Business Funding

Money rules in the business world. Even if you have great idea, it can not be brought to fruition until or unless you have money to back it. Forget the start ups, even well running businesses particularly small ones run into rough weather if their funding life line suddenly prohibitionists up.One path that you can use to get the money you need is to look for a business grant. These grants are available for financing small businesses if you fulfill certain criteria.

Here are the some great tips to getting that grant approved.

1) Find out if there is any grant available in your area. Your local grant agency, local council economic development officer are good source to do that. Some business in the same line of business can also give you needed information.

2) Find out the reason for your funding requisite, whether it is for working capital, to meet running expenses, or some capital add-on. This is very important because grants won’t be provided for general running costs; they will support a particular outcome.

3) To help grants one has to fulfill quite strict selection standards such as ethnicity, gender, age, unemployment or to those having a specific purpose such as research and development or innovation. If your idea doesn’t fit into it don’t try to force it. You can always go for Small Business Funding provided by banks and other loaners.

4) Do make personal contact by phone or ideally meet the grants officer personally. Whatever you do don’t just send in your practical application cold. Find out your idea is appropriate and it is worth applying in the first place.

5) Set up a thoroughgoing business plan to bring with it but make sure it stands out from the crowd. Most significantly you will need to present an idea provoking vision, a passionate commitment, clear benefits and robust cash flow forecasts.

Planning To Buy A Start Up? Read On Before You Do

Exact evaluations, no matter you are big or small company or you are Man or Woman seeking Small Business Funding, then it becomes more important when you are planning to buy out a small business which is not into trading operations for long i.e. a start up. A new organization which has just commenced its trading operations, does not necessarily gives open picture by numbers alone, and there is not much past to go by.

Apart from actual evaluation you need to evaluate the viability of the idea and of the industry it is dealing in.

So how should one assess a startup? It’s pretty complex, because the company doesn’t really has any assets, revenue or perhaps established industry to accurately reach at a price.

The method enlarged below is one of the most widely used. At the very least, this method provides a starting figure to be adjusted according to a diversity of external factors.

Terminal Value:

Terminal value of a company is the value at some point in the future. This point may be an expected liquidity event or a point where the company starts gaining profits. The easiest way to do this is to comparison with a similar company.

 

Another method is to go over the price/earnings (PE) ratios for the existent companies in the industry, and factor in the expected earnings in the terminal year.

Note: this terminus value is the best case script– everything goes right. Discount rate method acknowledges the possible negative events to arrive at a figure.

The Venture conservatives necessitated ROI:

In this method a VC decides upon the one time investing figure and its expected annual rate of return, and then using the expression [(1 + IRR)^years x Investment] arrives at final figure at the end of the time period.

Apart from above described method acting there are two other methods of valuing a start up. They are multi-stage financing and discount rate method. I will discuss them in my next post.

While it is out of context of use here, but it is important to know that if you have bad credit evaluations and you want Small Business Loans for your working capital necessarily, you can always opt for cash advances. Companies like MerchantCashDirect provide Fast Business Loans if you have done certain amount of money of business in credit card revenue over some time even if you have bad credit valuations.

Basics of Business Valuation

So you want a small business Funding to purchase a new business. You need to know some outlines of how the professional personl hired by you would arrive at the value to right apply for funding for that small business you want to purchase. A valuation professional person may use the technics talked about below to develop a range of values. Different technics might result in different values.

Valuable Quality Based Valuation:

Book value—It is the difference between total valuable quality and total liabilities, better known as net worth. But it does not truly indicate market value of the business.

Net adjusted value—In this method firm’s assets and liabilities are graduated to current marketplace value, giving corrected book value. Again, it doesn’t check to actual market value.

Liquidation value—The estimate of the company possession worth, when sold at auction or a distressed sale.

These methods are seldom used because they don’t factor in future potentiality earnings and more often than not produce lower limit values.

Financial Gain Based Valuation:

Capitalisation of earnings— This method arrives at the assumptive value of the business by dividing previous year(s) normalized net earnings by assumed capitalisation rate. The perception of risk ascertains the cap rate used.

Discounted future earnings—In this method, present value is calculated brushing aside several years’ (perhaps five) future net earnings approximations. The sum of the present values may equal the assumed value of the business.

Again, the discount rate used reflects perceptual experience of risk associated with the purchase.

Generally risk, profitability, size and liquidity affect capitalization and discount rates.

Marketplace Comparison Method: In this method the subject small company you want funding for is measured against the marketing prices of similar companies on numerous parameters, such as industry, size and location.

 

Rules of Thumb Method: In this method recommended marketing price is arrived by calculating the firm’s yearly sales/earnings (usually normalized) multiplied by an assumed multiple.

These are some usually used business evaluation methods. Purpose or reason for determining value may result in use of one or more technics. The size of business is good index of the method to be used.

You must get the professional person to clearly explain the evaluation method used and its consideration. The concluding behind the pricing is critical for evaluating the personal risk involved and to successfully apply for New Business Loans.

Before You Buy Out a Business

In my last posts I discussed about the essentials and basics of Small Business Start up Loans for your capital or working capital financing requirements. This time I will discuss some of the absolute prerequisites before even thinking of going for a loan.

If you want financing so that you can buy out a small running business or a start up you need to know exactly the state of that business to negotiate a bargain if any, or to avoid paying more than the business is worth, or whether or not to go for it at all.

 

Following steps should be taken to understand the current state of a business:

 

Visit the Facility:

Check the facility and see it in action. Don’t be swayed by the super numbers on paper, visit the business. In fact, get an appointment with the seller to check out the business and then go again by yourself. This is the best way to find out the ground realities.

 

Decide on Professional Help:

Get some professional to do the valuation. If you don’t want to hire anyone for the evaluation, at least get an attorney to help you on many legal issues involved in such deals.

 

Request financial information.

The minimum you must insist upon:
– Financial statements for three years.
– Corporate Tax returns for three years.
– List of capital assets
– List of equipment.
– Inventory listing
– Accounts receivable aging.
– Accounts payable aging.

Check out the price of comparable businesses and the industry:

The professional you would hire might give you some information, but the best place is Internet. Check out the forums; articles; ask the industry experts.

Obviously none of these steps are required if your requirement is just working capital or if you are looking for financing small business loan for start ups.

In both the cases steps provided in my previous posts should be taken or for working capital financing requirements you can go for business cash advance.

The cash advance will be repaid from the credit card sales that the business does in a specific period, usually through automatic debit. Organizations like Merchantcashdirect provide such cash advance.

How My Small Flower Business Became Big With A Click……

Hi all. Here I want to share my story with all of you. I can’t resist it man, it is so damn amazing.

Well, in short it goes like this: I wanted some money to add variety to my florist shop, and I got it online after nearly going mad looking around for funding.

You must be wondering; what’s the big deal in getting a loan? People with small business get funding from banks and all….day in-day out. Well read on………

I am a New Yorker. This city eats, breathes, and sleeps money, dude. But God help you, if you are not a good enough deal as per the money guys here. I own a small florist shop here, and by nature florist business is not considered as good investment especially for working capital funding, as flowers perish quickly. You just might get funding for the capital expansion, as banks take the establishment as collateral.

That apart, those perfect suits make me really uncomfortable.

I wanted to add some exotic South East Asian variety to my offerings. They cost a bomb if you want them fresh enough. Obviously, I needed money, and banks and other lenders were out. Not that I didn’t try but they were big time skeptical and asked for guarantees, security, hell lot of documentation and what not. On the top of it–that outrageous interest rate!

I was at my wits’ end. I almost postponed the idea. Then my banker, God bless him, asked me to go for Business Cash Advance. Business cash advance is not a loan and you can repay it directly from the credit card sales, and the terms and conditions to qualify are quite simple. You can get funding even if you have piled up bad credit ratings.

So I looked around, and guess what……I got cash in nine days flat. I qualified as I was constantly making sales worth $5000 per month, much more than the minimum $4000. All I needed to do: to fill up an online form on www.MerchantCashDirect.com.

Within next few months sales almost doubled and now I am thinking of expanding into a chain. And I got myself a super expensive suit, just the kind bankers respect. So; Mr. Banker………now try to deny me loan.

Want Funding For Your Small Business, Well…Options Galore

In my last posts I discussed the types of loan, funding options available, and documents essential for the successful loan application. Now I will discuss the financial institutions providing small business funding.

You should approach your bankers first to apply for a commercial borrowing. You and they have worked together. The resultant familiarity will go a long way in mitigating doubts and insecurities. Also banks charge less for commercial loans than others.

But banks are a little more circumspect, and stickler of rules and guidelines regarding the borrower.

There are quite a few other types of business lenders. The main separating factor is the type of loans they offer: secured or unsecured loans.

Banks usually deal in secured ones, while independent financial organizations favor unsecured loans more. These independent financial organizations are ready to take more risks on startups and smaller businesses than banks. Often they look for particular industries, types of loans, or business sizes.

There are a third kind of lenders who mostly provide working capital funding. These lenders offer business cash advance.

The cash advance will be repaid from the credit card sales that the business does in a specific period, usually through automatic debit. Organizations like Merchantcashdirect provide such cash advance.

Small Business Loans…How Not To Bungle

In my last post I discussed the types of loan and funding options available. Now I will discuss the essentials of successful loan application for small business funding.

Applying for the commercial credit demands a lot of preparation documentation wise. The thoroughness and accuracy of the documents are absolute musts for successful borrowing, so it pays to prepare them carefully. Some of the must have documents are:

 

• Financial statements: balance sheet, profit and loss statement, and tax returns of the company
• Personal financial statements and tax returns for last three years
• Cash flow estimates on the monthly basis
• Comprehensive business plan
• Precise loan utilization detailing
• Profiles of decision making people i.e. top management

Before actually going to the banks or any other financial institution don’t forget to have your financial documents reviewed by a qualified accountant, certainly in case you require capital funding.

You can avoid all those cumbersome paperwork if you just want working capital funding. In this case you can opt for business cash advance.

The cash advance is to be repaid from the credit card sales that the business does in a specific period, usually through automatic debit. Organizations like Merchantcashdirect provide such cash advance.

Know your Basics- Types of Loans

Hi all….. Being a financial consultant I am usually flooded with the inquiries regarding funding process, especially for small businesses. I am surprised by the lack of awareness in most of the people making inquiries; mind you some of them are very successful at what they are doing.

It seems there is some sort of uneasiness amongst the small business owners who are seeking either capital loans or working capital loans. May be it is those power suits………

Never mind………….The process is very smooth, provided you are well prepared and well informed. Through this blog, I will discuss different aspects of process involved in small business funding.

To start with, let’s discuss the types of loan and funding options available:

Long Term loans are the most common loans. They are mostly used as a capital funding source. Repayment is monthly over a term agreed.

Short term loans are for both capital and working capital finance, and are to be repaid in one year or less in a lump sum at the end of the term, instead of monthly.

Loan against equipments is easier to secure. The equipments bought through the funds are the direct collateral for the loan. Used for capital expenses only.

Credit lines are generally for working capital funding. Instead of granting the full amount of loan, a certain amount per year is loaned.

There is one great option other than going for loans from banks and financial institutions: availing business cash advance.

The cash advance is to be repaid from the credit card sales that the business does in a specific period, usually through automatic debit. Organizations like Merchantcashdirect provide such cash advance.

In my next posting I will discuss the financial institutions providing loans, and essentials of a good loan application.