Category Archives: Finding Funding
Businesses seeking borrowed funds need to be cognizant of the cost of leveraged money. Understanding how lenders determine and assess borrowing costs, or interest, gives the owner a tool with which to further evaluate the feasibility of borrowing money. Read More
Businesses seeking debt financing need to be cognizant of the cost of leveraging money. Understanding how lenders determine and assess borrowing costs, or interest, gives the owner a tool with which to further evaluate the feasibility of borrowing money.
Knowing how interest rates are determined is also useful for developing strategies to lower interest costs where possible and for knowing when the best rate has been negotiated for your situation. Read More
In the today’s globalized world, ease of movement has never been greater, and it is sometimes difficult for persons of different origins to communicate effectively. America has always had a multicultural social fabric, with the historic swelling ranks of immigrants growing our population since the very founding of the 13 colonies.
Today our cultural mix continues to be a blur of a faces with many different features. Distinguishing Burmese from Vietnamese, Austrian from German, or Nigerian from Ghanaian can be challenging for the average American without practiced interaction. Read More
Lenders have many criteria to consider when deciding whether to provide financing for your business operations, and all start with the traditional examination of capacity, capital, credit, collateral, and character. But, make no mistake. Regardless of the other relative strengths you may possess, it all comes down to character.
Lenders have to be assured that prospective borrowers have the ability to perform well enough to generate profits to repay their financing. They will ensure that the borrower has a vested interest in the operation with their own money, and that there is always a secondary source of repayment from which they can ultimately get out of a deal. Read More
Many lenders have had the unfortunate experience of negotiating loans with a borrower who was using false, exaggerated, or misleading information to obtain credit. Whether or not the ploy succeeded, the effects are often felt by legitimate borrowers, whose applications are scrutinized with even more suspicion due to the experience. While under normal circumstances there is a natural inclination toward trusting people, be prepared to confirm everything.
Unless actual loan losses have been incurred, many lenders may be hesitant to prosecute loan applicants found to have used false information to obtain their loan. But when they do, they may get assistance from the federal government, who insures depositors and regulates banks. Read More
Starting a new business is one of the riskiest, yet exciting decisions you will make in your life. While over sixty percent of the new jobs in the United States are created by small businesses annually, a significant number of them are not sustained due to failure.
There are relatively low barriers to entry for starting up many businesses: adopt a name, maybe incorporate, get a business license and away you go. Dreams and schemes are cheap, but before you get too far down the road, you need to set your sights on reality. Read More
Don’t worry about it, it’s no big deal. Those are famous last words in any business negotiations, particularly coming from a lender to a borrower (or vice versa, to be fair). A savvy borrower who understands the terms that the lender wants in a loan agreement, must be ready to make some hard choices.
Borrowers must try to imagine the worst case scenario in their business ahead and reflect on how the lender’s terms will impact the business. Sometimes there can be ways to give the lender adequate protection without the full- scale surrender that is often described in the loan agreement. Read More
Incredibly, thousands of loans are made each day to borrowers who don’t know anything about their deal except that payments are due and the collateral will be sold if they aren’t. There is so much more the borrower should know.
Loan agreements are full of fine print which provide for many potential situations which may befall the borrower. Naturally these terms are designed to protect lender at the borrower’s unlimited expense.
Knowing about these terms does not mean that any of them will be changed or negotiated away, but the loan terms hidden in the fine print can be quite devastating if things don’t work out right. Knowing the consequences of your actions or the risks you take can sometimes make decisions easier to decide. Read More
Sometimes when negotiating a loan, the lender tries to either stretch to make the deal work by enlarging the playing field. Or more sinister, they see an opportunity to reduce their risks by testing the idea of more personal guarantees on the loan than may be necessary. The personal guarantee of a wealthy, albeit uninvolved family member, is not easily ignored by many lenders.
Just say no.
Mixing business and family is a difficult proposition when all parties are voluntarily involved. Letting the lender reduce you to begging a family member to borrow the money for you is the wrong way to start a relationship. If your deal won’t be approved with only you, the business owner, endorsing it, just don’t borrow the money. Read More
Many small business owners seeking financing have recognized the value of using professional advice of an intermediary to help navigate the path to financing. But caution is needed when you make this choice, because many business people have become victims of inept or unscrupulous loan brokers – loan brokers who either waste valuable time to conduct a hopeless search for capital or who collect fees that are undeserved and never earned.
Loan consultants play an important role in today’s banking environment. With the consolidation of hundreds of banks and the introduction of many of new financing products, entrepreneurs cannot be expected to keep track of the constantly changing financial marketplace. Read More