How Much Should You Borrow When Taking Out A Business Loan?

Some people look at debt as a bad thing however there are not many companies (including the largest organisations) that do not have some level of debt. Getting into a level of debt and investing this in growth could be more beneficial in the long-term. Commercial real estate lending is an option that a lot of people consider. However, if you are going down this path, how much should you actually borrow and under what terms?

Company Growth

Sometimes people take extra cash just for the fact that that they want to invest it in something where they will see a level of growth. Some people have good concepts and ideas in this respect, however, in order to turn this into something meaningful they then need to justify why this money will be well spent. If this is spent on things that just consume debt, then you could then find yourself in the same situation very quickly where the money is repaid, and you still don’t have the level of growth you were looking for. In order to get commercial real estate loans, they will want to see this level of detail in some type of plan  This should be pretty detailed to show that the lender is not at risk of not receiving the repayments back. How much you then borrow for company growth needs to be defined in this plan in totality.

Debt Issues

If you are struggling with debt in the company or you have invoices that you just cannot pay, then the option of a short term loan may be what you need.  If, however by taking this loan you have no real plans in how you will eliminate the debt and not look for more, you could struggle to get the loan you need. Justification is always looked at from lenders. The amount that you request may include refinancing the debt you have (potentially moving it all together and onto a lower interest rate) or it could be to pay some of this but having more up your sleeve for a rainy day. The general guidance is that companies should have 3 times their normal monthly income saved away to ensure that if something drastic happens they still have funds sitting away to cover normal payments and salary.

What Will The Lender Give Me?

Lenders are sometimes keen to give away money as if they know it is low-risk then they will get a much better interest rate from the repayments than by putting it in a normal bank account. Don’t be caught up in the enthusiasm to take out more money than is needed as remember that you are paying interest on this. People look at this money as their own, but the mindset needs to be that this is not money that is theirs to waste and something that will need to be paid back.

Think carefully about how much you need to borrow when taking out a business loan.

Business Loans: 10 Questions to Ask Beforehand

If you own a small business, it’s essential to understand your alternative sources of finance when it fails to raise enough funds. Many business owners opt for business loans as a way of boosting their business finance.

Entrepreneurs borrow business loans for various purposes. One of the main reasons for borrowing funds is to take care of the unforeseen expenses (emergencies). Potential entrepreneurs also take out small business loans to get capital for starting businesses.

Before taking out a business loan, there are several questions that you should ask your lender or yourself. Asking questions is an effective way of evaluating various loan options to find the most suitable one.

Questions You Should Ask

1.      Why Do I Have to Borrow Extra Funds?

When taking out a business loan, it’s vital to understand why you need the money. That will give you a sense of clarity regarding your financial needs. For instance, the loan purpose can help you determine if your needs are long-term or short-term.

Business loans with a long-term repayment plan have low monthly payments. Short-term business loans, on the other hand, have higher monthly payments. However, the total cost of a long-term business loan is more than that of a short-term loan.

2.      Can I use a Business Loan for My Personal Use?

When borrowing funds, you have to explain to the lender why you need the loan. Business loans are used to finance business activities. But what if you end up with extra cash? Should you spend it on your personal needs, or return it to your lender as part of payment?

Some lenders don’t restrict you from using loans to take care of other financial needs so long as you make payments on time. However, some loans have a specific purpose. They include home loans, business loans, auto loans, and student loans.

3.      How Much Money Should I Borrow?

The amount of funds you should borrow depends on your business financial needs and the loan purpose. You ought to take out enough business loan that will increase returns on your investment. However, you should not borrow more than what your business need.

Knowing the amount to borrow can also help you to identify the right lender to approach. That is because different lenders offer varying loan ranges. For instance, if you need a business loan worth $500,000, you should borrow from the bank.

If you want a smaller business loan amount, you can borrow from lenders who specialize in such loans. Unlike banks, such lenders offer small business loans of up to $50,000. An example is an online business loan lender.

4.      What Do I Need to Qualify for a Business Loan?

When reviewing your loan application, lenders look at various factors to determine if you are eligible for a business loan. Such factors include your business revenue, personal or business credit score, financial history, financial reputation, and collateral.

You must have a good credit score to qualify for large amounts of money and better loan terms. If you’re using your business credit score, it has to be 75 or more (out of 100). Your business must be generating enough revenue to repay the loan on time.

5.      Can I Qualify for a Business Loan with a Bad Credit Score?

While a credit check is an essential part of the underwriting process, it may not contribute to the final decision. Some lenders offer small business loans to people with bad credit. However, it is difficult to get a loan with a traditional bank if you have a poor credit score.

6.      How Much Collateral Should I Use?

When taking out a business loan, you must provide collateral. The value of the property you use as collateral depends on the amount of money you are borrowing. It has to be worth the business loan because it acts as the security.

For instance, if your business is borrowing $40,000 for marketing and advertising, the cash value of the property you use as collateral should be at least $40,000. If you fail to pay off the debt, the lender will seize the property and sell it to recover the money.

7.      What is the Interest Rate of the Business Loan?

Before setting out for a business loan, you should compare the interest rates of several lenders to find the most favorable one. You don’t have to do that manually because there are many comparison tools here that can help you analyze difference financing options.

Besides interest rates, you should also consider the total cost of the business loan. One of the best ways of comparing the overall expenses is by calculating the annual percentage rate of every lender. That should even include all the loan upfront fees.

8.      What Payment Schedule Would Suit Me?

Different business loan lenders offer various repayment plans ranging from daily, weekly to monthly payments. While monthly payment is the most popular plan, most lenders have adopted the daily and weekly schedule to reduce debt burden at end-month.

If you choose the daily or weekly repayment plan, you must ensure that your business has a consistent flow of cash throughout the entire month. The payment plan is unsuitable for companies that depend on the monthly inflow of money.

9.      How Long Will It Take to Process a Business Loan?

Today, most lenders process business loans within a few days or weeks. However, some lenders like traditional banks have a lengthier underwriting procedure that may contribute to late approval and disbursement of funds.

With an understanding that borrowers need quick funding, online lenders offer loan approvals within 24 hours. You can also get the cash within two days after approval.

10. Must I Have a Business Plan to Get a Business Loan?

Most lenders that offer business loans require evidence showing that you’ll use the money for a business. A business plan is one of the documents that can serve as proof, especially when starting up a business.

If you have an existing business, some lenders may ask you to provide a summary of its nature. If you are planning to expand the company with the loan, you may have to issue an expansion plan.

Bottom Line

Since lenders consider numerous factors before giving out business loans, it is essential to research such elements before taking out a loan. That will help you avoid additional costs that you didn’t expect. Remember to compare various loan options to find that which will suit your business needs.

Corporate Class – 5 Secrets to Polishing Your Company’s Image

The way in which people perceive your business can play a significant part in how prominent and successful it is. You can’t put your branding on a shack and call it a multi-million-dollar corporation. Nor can you bowl down a children’s orphanage then call yourself a corporation that cares about “the little guy.”

Everything you do in the public eye is all for the sake of polishing your company’s image. If it has been some time since you pulled out the branding Brasso, then it might be time to check these points below and see if you’re doing everything you can for your company image:

Don’t Skimp on Your Head Office

How the general public views you can mean everything, which is why you should always take great care in the selection of a commercial property to house your venture. When the time comes to lease or buy a new premise, ensure it’s one that falls in line with your company direction and values. For example, if you are all about “leading the way” or “shaping the future” then your head office needs to reflect that. It should also offer the perception that your corporation is at the pointy end of success.

Invest in Your Marketing & Advertising

If you want your current and future customers to remember who you are and continue using your services, then you need a reasonably big marketing and advertising budget. You then need to use the correct avenues to get your company in the public eye.

Facebook and other social media platforms tend to be the most popular at the moment, but more traditional methods such as newspaper and radio still have their place in the modern world. What’s more, email marketing campaigns are making a comeback. If you are considering social media to advertise look at various facebook ad design companies that know what they are doing.

Better Branding

If you’re trying to polish your company image, consider whether a brand refresher could be in the pipeline. Depending on the years you have been in business for, your current logo and slogan may no longer be relevant to the masses.

However, it’s important to put a lot of time into any branding changes to avoid making a dreadful to mistake. What’s more, you will need to spend a significant sum of money advertising any branding changes to ensure your customers know you’re the same company.

The Feel-Good Factor

A lot of people choose to shop or do business with corporations based on their moral values or who they support. If you want to appear favorable in your customers’ eyes, then look at sponsoring or supporting a good cause. While there are several things worth considering to avoid impacting your bottom line, being socially responsible or charitable can do wonders for your company’s image.

The Best in Press

Polishing your company image can be as effortless as hiring an excellent PR manager or agency for your firm. Such a person or team can be a valuable asset as they have contacts in the media who can show you off in public in the best light. They can cover special things you are doing in the community, display you in the public eye, and even help with marketing stunts and events that lift your brand and image.

Whether you’re trying to rejuvenate your business, change public perception, or dust off the cobwebs and inject life into your brand, then you will quickly discover there are several ways to go about it. Hire the experts, invest in quality commercial property, and play on the feel-good factor to show social responsibility. Once you put all these steps in place, your company image will be sparkling clean in no time.

Boss Costs – 5 Simple Changes Small Business Owners Can Make to Save Money in 2019

Running a small business is hard; most of your competition is already well established, you’ve probably had to go into debt to cover your start up costs and managing employees is a constant reminder of why the saying “not my circus, not my monkeys” exists. While we can’t help you with staffing or the competition, we can give you some pointers on how to save money in your business this year:

Location

We’re constantly being told that location is everything in business. However, in the internet age, your product or service might not require customers to come directly to you, meaning you can keep your office pretty much anywhere. This gives you a distinct advantage, as you can either house your company in an area where rent is cheaper or capitalise on the extras offered by a serviced office. While it may seem counterproductive to have someone else manage your office for you, it can, in fact, be an easy cost saving measure as it means you won’t have to worry about expenses such as reception staff and cleaning.

Utilize Technology

How a business uses technology is arguable one of the most important factors regarding whether they will succeed or fail. Depending on your current knowledge of what’s available you may need to undergo training but once you’re across the available software and platforms for your industry, technology can really give your business a boost.

Firstly, the more you can automate, the fewer task your staff are required to perform. Not only does this allow you to reduce headcount but it also allows those who you choose to employ to be more productive. Advanced unified communications technology can also benefit you in a myriad of ways, as can electronic payment systems and cloud-based freight management software among others so it is highly advisable to look into what will work well for your business and implement it.

Go Green

An environmentally friendly workplace will help save your back pocket as well as the planet.

Going paperless will save you a surprisingly large chunk of cash, as will utilising energy saving products throughout your office. While this is mainly because a more energy efficient office means lower usage and therefore less associated costs, there may also be a scheme in your area which offers incentives for businesses to look after the planet.

Keep Receipts

Unless you’re on top of every single business account and expense, you’re probably missing out on numerous tax refunds. You should always aim to keep track of all outgoings wherever possible. If you’re struggling to keep up, then a small business accountant or bookkeeper will be able to assist you. If the IRS ever comes knocking, and trust us, it’s definitely a when not an if, it’s going to be a lot easier to deal with if you have accurate, well maintained, records.

Cost saving measures can be applied to almost any situation but this doesn’t always mean that they should be. While the tips outlined in this article can be safely implemented into pretty much any business, you should always look into what kind of impact any large decision will have on your operations.

Review your books and see where you are spending unnecessary funds. Saving money could be as simple as holding less catered meetings but if you’re really struggling you should never be ashamed to seek counsel from a financial advisor, if so many businesses didn’t need help they wouldn’t exist.

Choosing The Perfect Office Space For Your Start-Up Business

While location, location, location might still be important, it is no longer a limitation to many start-ups finding traction in a location. In addition to the increased industry in many of Australia’s CBDs, newer office space formats have made it easier for businesses to slide into a workspace in some pretty nice markets. Melbourne, Sydney, and Brisbane are just a few of the places where affordable office space is available to businesses of all sizes.

Furthermore, office space for rentals come in all types of plans, so businesses no longer have to consign themselves to protracted leases that tie them to one location. For one, the whole commercial real estate scene is growing to include different versions of the serviced office. In fact, the serviced office in many ways has drastically reduced overhead for many start-ups making it one of the go-to places to find comfortable, affordable office space.

Keep reading to learn about some of the workspace formats that can be the perfect office for your start-up.

Standard Office Plans

When going with a serviced office, prospective renters can expect, in most cases, to be fitted out with office space that is fully furnished. These offices offer a variety of plans that range from your conventional office, the executive suite, to the virtual office, which is an online format that allows businesses access to office space. The monthly rates are not only streamlined, but they are also much less expensive than conventional leasing. Furthermore, the lease itself is much less complicated offering businesses scalability and leasing terms that can be short as month-to-month.

Executive Suite

The first type of office you might encounter is the executive suite, which is fully furnished office space that comes with access to conference rooms and other common areas. This space is not shared space and typically comes as a private office. The executive suite is usually located in or near business centres but not always, and they are great for businesses who need a lot of privacy. As a part of the office plan, many also do offer additional office support.

Coworking Spaces

The more popular coworking space is shared space and has a community platform, though. Businesses can essentially find a fully-furnished workspace that provides them access to all of the amenities and equipment provided by your standard office. However, the coworking space provides businesses with a platform for building teams by including social interaction as a part of the office. This office style is ideal for the start-up because it provides them with a marketplace of resources in terms of industry and opportunities to make business connections.

Incubators/Accelerators

Then, there are supped coworking spaces that are designed to provide your business with workspace but that function as cocoons in helping your business grow. Many provide the same access to people and resources in the space but businesses benefit from the expertise of others who help guide them through the process of opening a business. While these coworking spaces might be slightly more expensive than others, they can actually be a catalyst for business growth.

Virtual Office

Finally, another great workspace format for start-ups is the virtual office. The virtual office provides businesses who want to skip the daily commute an internet connection and access to office space. The office style is probably one of the most flexible and gives start-ups a lot of leeway in overhead.

The Perfect Space To Start

These are just a few of the places your start-up can look for a workspace that provides a lot of value for the monthly costs. Start-ups will find that the serviced office plans are very flexible and can offer more than just the basic amenities for your business’s needs. More importantly, their scalability can help you transition into new space, regardless of where you are at in the process of growing.

 

How Information Systems Are Beneficial To Business Operations

There are a number of different factors that contribute to a business’s success. If the business in question requires that information flows in a prudent and efficient manner, then the establishment of information systems can help provide a more productive work environment. Information systems simplify the work process of diverse departments within an organization by making relevant data easily available. Let’s examine a few of the ways these systems positively impact a business.

Organization Of Data

Good organization is necessary for all aspects of a business to be successful including the systems that deal with data. Being able to access needed data is a key component that allows employees to make accurate decisions and solve problems. When that data is organized and readily accessible, employees are able to complete tasks in an accurate manner which improves overall productivity. Good information systems have built-in features that aid in the creation of databases. This, in turn, helps locate relevant data when needed based on numerous searchable criteria.

The Decision Making Process Is Made Easier

Information systems also prove beneficial when the time comes to make business-related decisions or when data is needed to solve problems that arise. Without easy access to relevant information, the numerous decisions that must be made daily for a business to function properly become a time-consuming waste of effort and energy. Information that illustrates patterns, trends, and eventualities are required for strategic planning and problem-solving. Good information systems are able to correlate data to pinpoint the best possible conclusions.

Aids In Information Governance

Information systems are a component that makes information governance easier to achieve. Within the business environment, information is a valuable commodity. As such, it is important to ensure that it is accurate, secure, available, and useable. Information governance is the means by which organizations can oversee and manage data to make sure these aspects remain true. Information systems aid in this process by segmenting data by department and establishing what data is necessary for job functions. This helps to organize information by work needs and also to set parameters to who actually has access to that data. In this way, security and usability is established as well as which information needs to shared between various departments.

Regardless of the size of a business, information systems should be implemented if multiple departments are tasked with divergent functions that require both exclusive and shared information. It is the best way to remain proficient as the business grows and becomes more complicated. Companies, such as Mitratech, offer solutions that provide information governance which will help determine if the implemented information systems are functioning as they should.

5 Simple Budgeting Tips To Help Any Business

In order to protect the financial future of an organization, it is mandatory to use a budget. The problem is that most business owners do not have the financial experience to properly handle budgeting. This can so easily lead to many different problems, especially in organizations that rely on services that have no connection with accounting or financing. Here at Summit Gutter Systems we fully understand how important budgeting is so here are the simple tips that helped us reach financial stability and constant growth.

Learn What A Business Budget Actually Is

Contrary to popular belief, the business budget’s purpose is not to spend everything. It is basically a guide that assists you to make smart spending decisions. It helps you to identify improvement areas, problems and good financial investments.

As the budget is created, you need to have a good mindset. Those that have a negative attitude when they start working on their budget will not create a good one. Budgeting is not a hurdle. It creates opportunities and is meant to track financial performance measures.

Know Your Business

Understanding industry and organization risks is a priority. As an example, in the event that your business is seasonal in nature, there is a pretty good possibility that the annual budget has to be broken down into a monthly approach. If it is not, a quarterly one is more appropriate.

Before you start to create the budget, think about regulation changes and anything that might impact operations in the future. Basically, you want to identify the areas where results can significantly vary so better spending decisions can be made.

Good Budgets Cannot Be Created By One Person

Small business owners often find themselves creating budgets alone but this can lead to huge problems. Whenever there are people that are accountable for the newly created budget, they have to be taken into account as the budget is written. Budget creation is often restricted just to management members but involving those that are actively involved in the business is a very good idea. As an example, an experienced factory employee can easily identify when equipment replacements are needed. Thanks to his input, you can create a better budget.

Realism Is Vital

One of the main reasons why budgets are often built to fail is that they are not realistic. Always develop budgets based on future projections and pasts results. The financial results that appeared in the past years have to be taken into account since they are the starting point of a good project. Think about costs that are inevitable and fixed. These have to be the first ones added. Then, you need to see where fluctuations can appear.

Being Conservative

Last but not least, in your budget you have to put in some safety in terms of events that could happen and that you have no control about. It is practically impossible to anticipate absolutely all factors and costs that impact projects. Because of this, being conservative is just as important as being realistic. A part of the budget absolutely always needs to be put aside to deal with unexpected events.

What Is Freight Factoring?

Freight factoring has become an increasingly popular form of financing in the trucking industry because it is a great fit for the average trucking company’s business model. Essentially, the factoring company advances you the value of your unpaid invoice, minus a small factoring fee, so that you can continue to run your business rather than following up with customers for payment. This allows you to focus on chasing leads and growth opportunities rather than chasing customers.

If you run a trucking business of any size and routinely face cash flow crises, learn what every truck driver needs to know about invoice factoring and start streamlining your available cash on hand by selling your invoices upfront at a discount. This type of financing has fast become a major advantage that American carriers of all sizes have been incorporating into their overall financial toolkit for years.

If you have customers that take 30 to 60 to 90 days to pay on deliveries you’ve already made, freight factoring becomes a very helpful tool because it allows you to secure the money you need upfront by selling unpaid invoices that are simply sitting and collecting dust in the meantime.

Also, the factoring company that buys the invoices from you then collects on your behalf, which frees up your time and energy to focus on more important things such as running your company.

When you ‘sell’ your invoices to a third-party factoring company, here’s what happens:

  • If a customer is approved, the factoring company first sends a notice of assignment to let them know that you, the carrier, have authorized collection on that invoice
  • Your factoring company will then pay you up to 97% of the value of the invoice in the form of an advance (less a nominal factoring fee)
  • The factor will keep the remaining 3% in reserve
  • They will then collect on the invoice, and the reserve will be remitted once they do

Once they receive their advance, trucking companies can use the money on whatever they need. They can purchase new equipment, they can put the money toward covering overhead, or they can use the cash on anything they deem appropriate to keeping their trucks on the road and increasing their profitability.

While some may argue that the trucking industry is in deep trouble, by speeding up cash flow through factoring invoices, thousands of U.S. trucking companies have seen their businesses double or even triple in size and revenue.

Factoring has become such a mainstream financing option for trucking businesses because it offers several key advantages:

1. Keep your balance sheet clean — Because factoring is not a loan, your accounts receivable are is converted into a liquid asset instead of adding a new liability that might adversely affect your creditworthiness.

2. Fast approval — Customers are approved quickly, and cash advances are often deposited the same day the invoices are factored.

3. Funding available regardless of size — Whether you are a small startup, or you own dozens of trucks, there is a freight factor that can help you.

4. Creditworthiness — Factors, unlike banks, base their approval in part on your customers’ creditworthiness. You may qualify for factoring even if you have poor personal credit, as long as your invoices are not committed elsewhere.

5. Back-office support — Factoring allows your freight factor to handle collections on your behalf, and provides other much-needed back-office support, so you can focus on providing quality service for your customers.

When you are suffering from a lack of cash on hand, a top-tier freight bill factoring company such as Accutrac Capital can offer the help you need. Application often takes as little as 3 to 4 days, and once they’ve been approved, you can start to receive same day advances on customer invoices. Melt away those cash flow freezes and warm up to freight factoring today.