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Credit InformationGetting a Small Business Loan
by:
Dave Ryan
Are you in need of fiscal resources in order to start or even as maintain your small business? Most of us are. The clenched fist step is to take a look at the huge number of commercial loan sources that offer help in this area such as Chase, Citibank, etc. Also, with the Small Business Administration (SBA), you should be able to arrange a connection with one of these banks. This is one of galore organizations that specialize in loans to small businesses.
Contrary to the belief that bankers really look for reasons to turn down prospective clients in need of a loan, they are in the business to lend money. This means that every time a banker is sitting in front of a potential client, they are hoping to do the deal activity simply as much, if not more than the client wants it to work.
A bank’s primary role in the small business loaning area is funding growth. An example of this would-be be to finance the expansion of small business with a proved track record. Most banks can offer a wide variety of loan packages designed to finance expansion of an already existing small business.
Below are a few examples bank loan packages :
1. Plus Based Financing. Plus Based Funding is a general term describing a dealing whereby a loaner accepts collateral and assets of a institution in exchange for a loan. Most plus based loans are collateral against another accounts receivable, inventory, or equipment. Accounts due is the most favored of the three because it can be born-again into cash quickly. Banks wish only advance funds on a percentage of due or inventory, typically being about 75% of the due and 50% inventory.
2. Line of Credit. A line of credit involves the bank’s setting aside selected
funds for the business to draw against for the cash it needs. As the line of credit is used, the credit line is reduced and once
payments are ready-made the line is replenished. One major advantage of a line of credit is that no interest is accumulated unless the funds are really used.
3. Floor Planning. Floor Planning is another form of plus based loaning in which the borrower’s inventory is used as collateral for the loan. Car dealerships are a prime example of a business that often uses floor planning as their primary fiscal tool.
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