Your business plan is the document lenders go-to when evaluating the request you’ve made for funds in your loan application. Bank records and another method of measuring creditworthiness through quantitative methods are all cut and dried, and they can’t tell a loan officer if your plan for the money is sound once you get it. Since so many businesses wind up falling short of their goals even when their finances are in order, this document is essentially how banks and other lenders get a look into the practices that will inform your decisions once you get the money. There are a few ways to make sure you’re being clear in ways that help you convince a reader, but you’ve got to know what parts of the plan to bring into focus to make good use of them.
A summary is more than just an introduction or an overview, it’s a short pitch for the company that also explains where the rest of your business plan is going. Ideally, after reading your summary, the loan officers should have a clear idea about whether you have all your bases covered. The expanded sections that follow serve to fully document and support the overall strategy explained here. Making your goals and methods clear in the summary without over-explaining or getting bogged down in numbers you can break down later is the key, and a good way to make sure you’ve done that is to get multiple beta readers to go through the document before you submit it.
It’s not enough to show that you’re operating within your means or that you’ve got a good plan for reinvestment. Accurate projections can assure a lender that you’re set up for success as long as your operation continues being as successful as it generally has been, but it doesn’t do much to assure anyone about what you will do when faced with unforeseen challenges and earnings shortfalls. One way to work around that is by including projections for your ability to operate off just reserves. By documenting this burn time, you’re able to show a worst-case scenario for your projections that demonstrates you will have a window large enough to allow for a turnaround strategy before your business runs into trouble. It’s best for your application if you can show this burn time is over six months.
Be clear and don’t get bogged down with too much explanation, but remember that your reader needs details. Whoever evaluates your business plan will be competent to draw a lot of their own conclusions if your methods and operations are clear and you’ve got the numbers in place, so trust them and focus on providing the information they need to draw the right conclusion.
The right machinery and tools are vital for business growth. After all, without equipment, you can’t get the job done. High-quality tools let you deliver excellent results to your customers, and they often speed up work times. That way you can take care of more customers and provide a boost to your revenue.
The key to getting the equipment your business needs is equipment financing. How can this awesome financing option breathe life into new startups and small businesses?
There are many different types of equipment you need, depending on the industry your company operates in. With access to financing, you can purchase a wide variety of necessary items. Construction equipment includes backhoes, loaders, skid loaders, cranes, compactors and other machinery. Restaurant equipment includes food prep surfaces, ovens, fryers, POS terminals, computer systems and drive-thru systems. Even offices benefit from the right equipment, such as desks, chairs and other furniture, in addition to IT systems, laptops, security cameras and printers/copiers.
All of these business needs are covered by financing for equipment. In fact, most of the main things your company requires to operate fall under equipment loans and leases. Even manufacturing equipment such as production lines and industrial ovens are compatible. How can you choose the right type of financing?
One way to finance business equipment is through a lease. When leasing, you don’t actually own the equipment. Instead, a trustworthy lender purchases the equipment and lets you use it in exchange for monthly payments. Leases are a great way for new startups and companies with poor credit to obtain equipment. It’s easy to qualify for this type of financing, even if your credit score isn’t great. Another advantage of leases is that they make it easy to upgrade every few years.
Equipment loans are similar to vehicle loans. The bank extends you capital so you can purchase the equipment. The amount of the loan doesn’t exceed the value of the equipment, which is used as collateral. You may also need to make a down payment of around 20% of the purchase price. This option saves you money thanks to low interest rates, but you need to have excellent credit and solid company financials.
Find a lender with experience in equipment loans and leases. They can help you weigh the specific circumstances of your business and make an excellent decision. Financing is a great way to boost business growth.
A multifamily real estate investment property is an exciting opportunity to expand your real estate portfolio and provide elegant house options for more than one family. Once you’ve scoped out the possible real estate opportunities in your area, learn the basics of receiving the financing you need to make your investment dream a reality.
Also known as a multi-dwelling unit, these properties are typically apartment complexes. However, duplexes, townhomes and separate, adjacent living spaces can all be classified in this category. There are a number of advantages to choosing a multi-dwelling complex. First, it allows you to earn more income. When you have multiple rental units, multiple tenants will rent out your unit. This is particularly true if your location is in a high-demand area, as you can be confident you’ll consistently rent out two or more units.
However, receiving a multifamily loan can be more difficult than a traditional rental location. Lenders see a multi-unit rental as a greater risk because of two main factors. First, the property is typically more expensive than a single-family rental. Next, the additional rental units increase the chance that they may not be rented out consistently. In order to mitigate these factors, search for a property that is in high demand.
There are many types of commercial loans available for a multi-dwelling unit. Traditional commercial banks loans are available but can be difficult to become approved for. Approval typically requires a high credit score, lengthy application, and consistent financial records.
A private money loan is also available for securing your property. A private money lender typically doesn’t require a high credit score, so it’s a perfect opportunity if you have a lower score due to another investment opportunity. Many private money loans are hard money loans, also called bridge loans. These come with high-interest rates and short loan terms. However, they also allow you to invest in your real estate in any way you see fit. This highly flexible financial tool is perfect for multi-dwelling units that require significant renovations.
Finally, some small business owners can receive an SBA loan to start their multifamily real estate investment strategy. An SBA loan is designed specifically for small businesses, so it’s a great option if you weren’t approved for a traditional commercial loan. The application process is lengthy and requires paperwork for both the SBA and your lending institution, so take time to go through the application carefully.
Not all business expenses are huge purchases such as real estate. Many of the things you need to successfully run your small business fall into a more moderate price range: inventory, payroll, marketing, taxes, rent and computer systems. When you need capital to pay for these things, there’s a better option than applying for business loans. It’s called a business line of credit.
Business lines of credit are similar to a business credit card, but they usually offer better interest rates and larger capital amounts. They’re much more flexible than term loans since you can use them for almost any purpose necessary to grow your company.
With this flexible business tool, you get access to a specified amount of credit, such as $5,000, $10,000, $25,000 or another amount. Once you’re approved, this credit is always available for you to use. Think of it like a secondary savings account you can draw on when needs arise. Most lines of credit only charge you interest on the capital you use, so if you make a $2,000 purchase, you only have to pay interest on that amount.
This type of financing is used on a revolving basis. In other words, you can spend the capital up to your cap. Once you repay what you have borrowed, you can access the funds again. This is a major help in securing large inventory purchases or dealing with temporary business needs. For example, you can finance payroll even if you’re still waiting for your customers to pay you. Once you get paid by your clients, you can repay the credit extended and not have to make any more interest payments.
You don’t have to request authorization from the bank when using the funds in your business line of credit. You can use them as often as you need, even for multiple purchases in the same day. Buying computer equipment, paying bills and making vehicle repairs are a few things you can use this capital for.
When getting started with a line of credit, the bank usually runs a credit check to look at your business’s score. They may also look at your personal credit.
There are many differences between lenders when it comes to lines of credit, and the specifics usually depend on your business’s credit score. Interest rates are higher than long-term loans, but often lower than credit cards. Some lenders charge a monthly or yearly maintenance fee, transaction fees or other fees. It’s important to know what you have to pay before signing an agreement.
The retail real estate game is constantly evolving, so studying the current trends can help you stay ahead of the game. Modern shoppers behave very differently than those of the past due to the variety of shopping option types that now exist. To navigate these changes, the retail industry continuously has to change to keep customers coming in the door.
When you are a small business owner, you often have a lot to do. You need to take care of larger tasks but are likely still spending a lot of time doing the work of an employee. While this is to be expected, particularly when you are first starting out, you should make sure that you are balancing your time wisely. The following are a few things that can help you do that.
Part of the small business start-up process involves securing the funding you need to get your business up and running. Small business owners can acquire funds from a number of different sources, but the most common method of funding is through a small business loan from a bank. The ease of getting approved for a loan will depend on your level of risk as determined by the lender. Doing your research in advance can help make the process of small business loan approval more seamless.
Perhaps the biggest obstacle in receiving a small business loan is working capital. Because lenders want to see that you are capable of paying off your loan, you typically need to have working capital available in order to receive a loan. This creates a difficult situation if you have limited cash flow, particularly if you’re looking for cash flow financing. Learn how you can receive a loan despite having limited available cash today.
No matter what kind of business you own, you likely need some kind of equipment to keep it running. For many companies, getting the funds for what you need can be difficult, especially if you are looking to purchase the equipment. Luckily, there is another option. The following are several reasons why you might want to consider equipment leasing instead.
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