SSSG Builders and Dealers

Different circumstances require different financing options. Having spent 10 years as a financial adviser, I realized that each business is worthy of individual attention. There are several financing options available

 that can make a business competitive, provided they suit its needs and match its profile.

Here are the options to consider:

1. Debt Financing

Raising working capital through debt financing implies borrowing money from retail or institutional investors, who, in return, expect you to repay the principal and the interest on your debt within the repayment schedule. To receive this line of credit, you have to show strong cash flows, high liquidity and a coherent business plan to explain why debt refinancing may be an option for your business.

Pros – No need to relinquish equity.

Cons – High interests involved. Need to put personal assets as collateral. If you go bankrupt, the debt has to be repaid by your personal funds.

2. Equity Financing

Funding your business through equity financing implies selling your business’s stocks to retail or institutional investors and offering them ownership stake. You can borrow money through friends and family, angel investors or venture capitalists.

87% of equity financing is from friends and family. However, you have to protect your business by actually asking for a business loan. Draft a loan agreement and construct a repayment plan.

Pros – Equity is immediately available. No need to pay back the money. No collateral required.

Cons – You give ownership stake.

Angel investors are individual investors, willing to undertake the risks of your business provided it has high growth potential and sustains a competitive advantage. Alternatively, they can assist with early-stage financing. Their investment horizon is typically 5 years, and the funds supplied range from 0,000 to million.

Pros – Interested in adding value to your business.

Cons – May be hard to find.

Venture capitalists usually have a 3-year investment horizon and expect 25% ROI. They specialize in high-growth industries, invest more than million and are mostly interested in the potential rate of

 return your business can provide.

Pros – Savvy and wealthy investors.

Cons – Your business must be fast growing. Need to share control and consider the option of selling your business or going public in 3 years.

3. SBA Loans

SBA guaranteed loans are government-sponsored loans for financing your business. Funds supplied range from 0,000 (SBA Express) to million (7(a) Loan Guarantee Program or Preferred Lender Program).

Pros – Quick process. Money is guaranteed. Longer repayment schedule.

Cons – Need to put collateral, typically your property. High fees. Your business should not have credit history.

Options to Avoid

Cash advances – Credit card cash advances are convenient to obtain and immediately available. However, they incur high interest rates and typically charge more than 3% over premium that a bank loan would charge you.

Home Equity Loans- Home equity loans are cost-effective because they incur lower interest rates than other types of loans currently offered in the market. However, putting your property as collateral makes home equity loans a high risk financing option.

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Article by Mary E. Tomzack

Managing your business finances can be stressful and time consuming. Doing the following will work wonders.

1. Store your bills in one place

Be consistent with where you store these. Misplacing bills can cause you to waste time looking for them. Time is money. Set up a suitable means bearing in mind the amount of mail you receive.

2. Plan to pay your bills on schedule

Set up a schedule to pay your bills at set times each month. It is worth time doing this rather than simply paying just as you receive them. Check how much time is allowed to avoid late payment.

3. Examine your credit card statements

Examine how much interest you are paying. Watch out for increases. If you get transaction fees or your interest rate rises, check with your credit card company. If necessary switch to someone else for a better rate.

4.

Use automatic payments

Most banks offer automatic payments to your creditors. Some creditors will give reductions if one agrees to sign up for these. Keep track of these and record the deductions. This can help save time and effort.

5. Go digital with your Checkbook

There are a number of computer programs that can make the process easy for you. These include Microsoft Money and other similar ones. They make your payments and reconciliations easy. Computer checks can be ordered and will fit into most printers. Your software can automatically record all your transactions. Many banks have links to the software and deposits and withdrawals are taken care of. Also when it comes to do your taxes, it is so much easier.

6. Get protection for overdrafts

Most banks can offer a service, where if you were in danger of bouncing a check, money can be taken from another source for example a credit card or savings account.

They can arrange this service for a nominal fee.

7. Cancel your unused accounts

If you have any accounts such as bank or credit card that you are not using, arrange to cancel them. This will improve your credit score. Avoid being enticed into opening new accounts, by low interest rates or discounted prices.

8. Consolidating

If you have a number of credit card accounts with balances outstanding, try consolidating them into a single combined one. Take care with transfer fees. Also if you have other kinds of accounts like savings, IRA’s or mutual funds consider consolidating these too. Keeping your money in fewer places can make life easier.

9. Put money aside

Consider setting up regular deductions from bank accounts automatically, into a savings fund. Avoid touching this. Over a period of time, this can generate substantial funds.

10. Sort out your files

Go through your files from time to time and dispose of old receipts and bills that you no longer need. Check with your IRS office for details of how long you should keep them.