If you’re looking for a method of getting paid faster and more efficiently than the typical invoice structure that takes 30 to 90 days to settle, truck factoring may be the solution for you. You can get access to the money that is already due to you, just much faster. If you need cash right away, you don’t have to worry about taking out a loan or charging up your credit cards. You just need to find a factoring company that is able to purchase your accounts receivable. The factoring company will deal with collecting the payment from your customer, and you simply can focus on your business. This type of funding can give you quick money for fuel, can help you fuel the business for faster growth and can grow your organization to higher levels than the competition.
Money for Fuel
One of the biggest expenses for owner-operators of a trucking business is the cost of fuel. As oil prices fluctuate from season to season, you can never get comfortable in knowing what to expect when it comes to gas or diesel costs. If there is a sudden increase in the price of filling up the tank, truck factoring can be a way to help cover the costs without taking out a traditional loan. You can get this vital cost of business taken care of by signing off on your customer’s accounts that have yet to be paid. Let your lender continue to wait for accounts to be settled, while your vehicles continue to deliver orders.
Fuel for Growth
As an owner and an operator, you may have started out small, or even on your own with a sole truck. When you start taking more orders and planning more routes, you may find that you need more resources, more trucks and more employees in order to achieve the level of success that you know is right for your transport business. Truck factoring gives you a way to slowly grow without having to search for growth capital fund sources. Instead, your business can continue to fund itself.
Grow Against the Competition
If you are looking to expand your trucking operation, funding sources like factoring can help your fleet stand out against the competition. When you’re throwing all of your financial resources into the function of your company, it can perform better than all of the rest.
Tractor-trailer owner operators can use truck factoring to help make their entrepreneurship’s operations run smoothly. This cash flow solution gives owners and operators more money for fuel, growth and ideal market share.
As a supplier, you are probably constantly trying to find ways to increase your sales and maintain good relationships with your clients. Since these two goals are not mutually exclusive, it can be beneficial to discover a method that can accomplish both. While there are plenty of different tactics that can be attempted, it can be a good idea to take time to explore what trade finance can do for your supply company. Here are a few of the details to help you to understand exactly what this service entails and how it can help you out.
Trade finance is a form of financing that a supplier can offer customers in order to present an alternative to traditional payment methods. With this service, your consumers will have a specific line of credit that can be used through your establishment. This can be helpful for all customers, but specifically can help you to help those that might need a bit of assistance. The world of business can be tricky. When your customers own businesses that are not doing as well as they should, it can mean that your sales will take a hit. In order to encourage customers to continue buying their inventory from you, it can be helpful to offer incentive. Trade finance can be just that incentive.
Since customers will not have to pay the full amount right away for their purchase, there is no need for customers to cut back on what they may be buying from your supply business. On top of that, a customer that might not normally make large-volume purchases can feel that it is worth it when there is a longer period to repay the full amount. On top of all of this, you will not have to concern yourself with losing business due to the hardships of your customers. What’s more, you will be able to explore different incentives by creating specific terms and conditions that can help encourage consumers to sign up for your trade finance option.
There are plenty of ways for your supply business to stay on top. When you explore your finance options, you will have no trouble seeing how a service like trade finance can get you ahead and simultaneously help your customers out of a bind. For further information about how this financing option can be the right choice for your supply business, be sure to reach out to a credit company that can help you to set it up and find out the specifics.
Providing financing for your clientele can be a bit of a conundrum. While you want them to purchase your products, you certainly don’t want them doing so at the expense of their personal credit and livelihood. The beauty of consumer credit is that it actually is a good option for customers. As long as they can comply with the terms provided by the lender, having a line of credit allows buyers to purchase what they need and pay for the items in installments.
If the financing came with high interest rates, most consumers would view it as a scam. To avoid that and add incentive, lenders will typically offer the credit with an interest-free grace period of six months or so, giving customers a chance to pay down the balance without incurring any fees at all. While the lending company doesn’t make money off of this model, they do come away with free advertising through your company. It’s important that your customers are made aware of the financing terms, because rates tend to skyrocket at the end of a grace period. As long as people understand the fine print, consumer credit is usually very helpful for people making a big purchase.
Since everything is prearranged between the retailer and the creditor, customers don’t have to jump through many hoops to secure the financing. They fill out a form or two, get approved and are free to buy what they want. It’s likely the easiest loan application process in existence, something consumers surely appreciate.
This is helpful for both the customer and the retailer. Credit lines aren’t just issued for a single-item purchase; you can sell 20 different things and finance it all in one lump sum. While this doesn’t directly save consumers any money, the option to pay in monthly installments enables people to budget for what would otherwise classify as overspending. It’s much easier to budget $100 per month over the course of several months than it is $500 in five minutes. You’re not upselling the customer or trying to convince them to spend more money than they want to. Consumer credit simply allows them to pay for products over time and in smaller amounts.
It’s important to have your customers’ best interests at heart. That’s what will make for repeat clients and give your business a good reputation. Consumer financing is a great way to encourage people to buy your products while you maintain integrity and do right by your clients.
Entrepreneurs these days are seeking alternative ways to fund or sustain their business ventures. This isn’t limited to smaller entities, either. Many Fortune 500 companies are jumping on the non-bank funding bandwagon, because they, too, need a quick source of cash for a business need. Even they can see that big business and small business loans are not limited to traditional financial institutions and here are the top non-bank financing options.
The Small Business Administration
The SBA was created in 1953 to give those looking to open a small business a resource they can turn to that helps to ensure their success. Alongside guidance, the SBA offers small business loans to those who qualify. The loan types include:
- Equipment and real estate
The loan approval process through the SBA is much the same as a bank, but more forgiving. You will submit an application alongside your business plan and financials, but the lenders that work directly with the SBA tend to excuse poor credit or other setbacks more than traditional financers. They will also offer longer payback terms and lower interest rates.
Other Government Loans
If the SBA doesn’t work out for you, there are other government agencies—federal, state, and local—that are willing to offer loan programs for small businesses. These programs are especially helpful to those who are a minority-owned business, including a disabled, veteran, or woman-owned company. Check government funding programs at all levels, and you’ll likely find small business loans under which you might qualify.
If you do not qualify for a loan through any of the SBA or government-sponsored programs, you can always approach alternative lenders for your financing needs. Some examples of alternative loans include merchant cash advances and peer-to-peer financing. A merchant cash advance works much like a payday loan, only in this case the lender is giving you cash in return for a percentage of your future debit and credit card sales. Peer-to-peer loans are those in your business demographic who are willing to lend you money under the guise of a payback schedule and interest. Both options work well for those who do not qualify for traditional financing.
These are the top non-bank options, but small business loans are not limited to outside sources. Many entrepreneurs also seek funding from their inner circle or turn to their own personal assets for financing. If you have family and friends willing to support your venture, or you have the liquid assets that you can convert to immediate cash, this funding alternative will also support your small business cash needs.
Selling a home can be difficult, especially in a buyer’s market. At other times, you may have plenty of interest, but few buyers who can obtain the financing to purchase your home. When it becomes difficult to sell a home, sellers often find that they must make concessions in order to sell their home. If paying closing costs or putting on a new roof doesn’t appeal to you, then seller carry back financing may be an option that makes more sense.
What is Seller Carry Back Financing?
If this term is new to you, take a few minutes to become familiar with seller carry back financing. This arrangement basically means that the seller acts as the lender and the buyer makes monthly payments directly to the seller who gives up a lump sum total in exchange for monthly payments. The seller benefits because the home can be sold and the seller often enjoys receiving the interest that would otherwise have gone to a bank. The buyer benefits because they are able to obtain financing even when banks have denied them. For the situation to be truly beneficial to both parties, the seller should research the buyer’s credit history and the buyer should pay attention to the amount of interest that the seller hopes to establish.
What Are the Benefits for a Seller?
As a seller, if you are secure in the value of your home and you believe that the buyer will be consistent in making mortgage payments to you, then you may find that seller carry back financing is an advantageous investment. You’ll probably find that offering this financing alternative makes your home a little more enticing to a larger number of buyers. You may even find that you can sell your home for a higher price than you would otherwise. Naturally, the amount of money you may in the long run will be higher because you’ll be receiving interest from the buyer.
How Is the Interest Rate Established?
One of the most important factors of setting up seller carry back financing is the establishment of the interest rate. Both the buyer and the seller take part in this negotiation. The amount of the down payment and the credit standing of the buyer will be taken into account. For example, a buyer with a troubled credit history can usually expect to pay a higher interest rate, even when they have a large down payment. On the other hand, a borrower with a stable credit history and a sizeable down payment should be able to expect a lower interest rate.
For businesses that are seeking assistance in their growth potential, SBA 504 loans offer the flexibility and convenience of traditional loans and the support and resources of the Small Business Administration, or SBA. The SBA is a government organization that specializes in offering assistance to small sized businesses when they start up or look into expansion. It provides various programs to entrepreneurs such as financing and other types of advice. A 504 loan product is a helpful tool for small businesses due to its low, long-term fixed interest rates, lowered fees and less stringent qualification requirements.
Lower, Long-Term Interest Rates
Because of the fact that SBA 504 loans are originated through a government organization, business owners can get a much lower, long-term fixed interest rate compared to a loan solely from the private sector. This type of loan has specific requirements when it comes to what the funds may be used for. Typically, a business may use this kind of loan for either real estate financing or equipment financing. Depending on the nature of the loan, money used for property may have a 20-year fixed rate term, and money for equipment could have a 10-year fixed rate term.
Reduced Fees and Down Payment Requirements
For business owners, SBA 504 loans also offer the benefit of having a reduced amount of fees and a lower down payment requirement. Traditional loans from a private bank may require an entrepreneur to put down at least 20 percent of the final sum to be borrowed. A 504 loan only requires 10 percent as the down payment, so that a business can continue to use its cash to fund new opportunities. The SBA makes closing the loan a little more convenient and allows borrowers to bundle the closing costs back into the final amount of money being financed.
Easier Approval Process
To get approved for a loan, typically a business must demonstrate strong profits, history and a strong portfolio of documentation that shows a successful track record. For SAB 504 loans, the program consciously seeks businesses that wouldn’t traditionally be represented due to location, ownership or other hardships. Local community organizations can work with business owners and help guide them through the easier approval process. For the most part, there is no collateral required on these types of loans. Companies that may not have a large stock of assets can get included in the way to better their organizations.
SBA 504 loans offer smaller companies many different benefits when more funding is needed for property or equipment upgrades. A business can get a lower interest rate, put down less money and have less of a hassle when it’s time to qualify for the loan.
The current economy makes finding new sources of additional capital tricky. Banks are less willing to lend money than they have been in the past, and many businesses are finding that they must turn to less-traditional lending avenues in order to gain the funding they need. Private equity financing is one such avenue.
Private equity financing is a process whereby an invests in a private company. This can be accomplished by way of mezzanine capital. Mezzanine capital is a form of subordinate debt, which means that in the event the business fails, senior debts are paid off before mezzanine financings. This investment allows the private company to continue doing business with no change in leadership, ownership, or direction. The income provided via this arrangement can be used for many things, including management buyout, new acquisitions, growth capital, and more.
So the question becomes – why would a company choose to use private equity financing? The availability of this kind of financing is the primary reason for its popularity. It’s often used once traditional means of funding have been exhausted. This financing is still available once you’ve reached the point that banks will cease to loan you additional funds. It’s particularly effective in real estate finance in order to secure the financing required to develop land that has been purchased via a mortgage. The bank is unwilling to offer additional funds on top of the mortgage loan they’ve already extended, but the developer needs to borrow the money to advance the property in order to market it. Financing in the form of mezzanine capital will allow the developer to build as needed, with repayment terms that are suitable to the transaction.
Another motivation for choosing to use mezzanine financing over traditional financing means is the larger amount of available funds. A bank will limit its loans to what collateral you have to offer, or to what you can pay off based on historical revenue data. A private investment company will consider the growth impact that their investment will have, and offer funds based on that possibility.
If you’re hoping for advice and some involvement in the decisions you make once the funds have been transferred, then private equity financing is a good choice. Generally, a mezzanine financing arrangement will allow the investor to have a more hands-on approach, sitting on the board and assisting in directing the future of your business. You’re gaining more of a partner, one with experience and leadership capability.
One of the most exciting aspects of being a startup company is launching a product that is good, popular and highly profitable. In those situations, the phone calls begin coming in from major retailers or distributors wanting to sell your product. However, the biggest hurdle new companies must overcome is obtaining enough cash in order to fulfill a large purchase order. Many entrepreneurs, who are in this situation, must scramble to get capital to complete the transaction. This leaves them with a few options, such as securing a conventional loan or taking an alternative route with PO financing.
A bank loan is a suitable choice for business owners who have a long established relationship with a banking institution. In most instances, startups either don’t have this kind of relationship or have no relationship with a banker at all. This makes it difficult to secure traditional financing.
In addition, the approval process for a loan is lengthy. This is a drawback when you need a quick influx of funds. Most purchase orders have a 60 to 90 day deadline. It can take several weeks before a decision is made regarding your loan application. Also, there is no guarantee you will be approved. When it comes to business, time is money. The longer it takes to access the capital you need, the less time you have to fulfill a customer’s order.
A popular alternative to conventional loans is PO financing. With this funding solution, the finance company uses your purchase order as collateral. They, in turn, will pay the supplier or manufacturer. This way the product is made and delivered to your customer in a timely manner. This is a key benefit for business owners, because suppliers and manufacturers require money up front before they begin work on your product. With this finance option, you can avoid costly delays with the deliverables.
Unlike banks, there is no need to prove the financial strength of your company in order to get approval. The purchase order itself is good enough when you have a viable customer and a reliable supplier. Because of this, you can get funding within a couple of days to two weeks.
PO financing is ideal for startups and entrepreneurs who need to meet tight purchase order deadlines and lack the capital to complete the order. Simply put, it is a practical financial solution that provides you with the capital you need, when you need it, in order to grow your business.
If you’re new to business ownership, a franchise may be just what you’re looking for. Owning a franchise offers many of the same benefits as having an independent business, while also providing external support and guidance that may prove invaluable. However, there are also certain issues that arise in franchise ownership that do not apply to other new businesses. Knowing more about the pros and cons of franchises will help you in deciding whether to go for it, as well as choosing the right franchise for you to invest in.
A franchise can be contrasted to a chain store. While the latter operates under the direct ownership of a parent company, a franchise belongs to the individual business owner. However, a franchise licenses the royalties from its overarching company, including trademarks, logos and marketing content. In turn, franchisers are able to disseminate their brand widely, while reducing some of the risks of opening new branches.
Because it is in their best interests to spread, franchise companies often provide significant aid to new owners to help them get their business off the ground. This can include training in both management and technology for employees and owners alike. They also can provide advice, offering their business expertise to new owners. Some franchise companies also assist with financing, most often in the form of loans to cover startup costs, which can be more expensive for franchises than for other types of new businesses. Many franchises also have preferred or dedicated suppliers, allowing franchise owners to get their business up and running as soon as possible.
Most importantly, franchises benefit from the brand recognition of the parent company. Owning a franchise means that much of your work finding and securing a customer base is already done, and your business can participate in nationwide advertising campaigns from its inception.
In exchange for these advantages, franchise owners must obey the policies of the overseeing company, with only limited control over their local marketing and promotions. Employees will wear company uniforms, and general business practices have to follow the guidelines set down by the corporation. Moreover, major problems impacting the parent company will usually affect the franchises as well.
These limits in control can be as much help as hindrance to a new business owner, as they establish clear principles that are often essential to successful business management. For this reason, as well as the support and brand name advantage offered by the parent company, business beginners are recommended to look into owning a franchise.
Small business owners face some significant challenges when it comes to staying afloat those first few years. One of these is maintaining a cash flow that is enough to cover the bills and keep the employees paid. This task can be so frustrating for some business owners that they have to work another job to make enough money to fund the new business. Another way, and one that allows you to focus your energy on your own business, is through merchant cash advances.
How does this resource work? The cash advance provider is willing to offer you a lump sum. In return, you promise to pay a percentage of your future sales. Even if your start-up has no credit, bad credit, and/or no collateral, you may qualify for this type of funding. In many cases, the businesses who work with cash advance providers have already tried to obtain conventional funding and have been turned down. If your business relies on credit card payments and the credit card side of your business is strong, this option could be a business-saving solution. In fact, if you’re repeatedly being turned down by banks, this may be the only solution available to you.
Merchant cash advances are not loans and you won’t be tied to a specific monthly payment. Instead, your payments will be determined by the amount of credit card sales you make each day. A percentage of those payments will go toward the advance and the premium charged by the cash advance provider. This is generally accomplished in less than a year, but if your credit card gains are small, you’ll enjoy a certain amount of leeway because you don’t have a due date or fixed payments.
The specific percentage of credit card sales taken by the cash advance provider can vary. Responsible advance providers make an effort to keep the retrieval percentage low enough that a small business can survive. In some cases, this means pulling a smaller percentage of the credit card sales. The well-being of the advance provider is actually tied up in the success of the small business; if the business fails, the cash advance provider loses out on the rest of their advance.
Merchant cash advances could be the source of lump sum cash that you need as you struggle to keep your small business operational. If you’ve been turned down by banks because you don’t have the credit history or collateral to obtain a loan, this resource could be the option you need to keep your doors open.