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Getting a Small
Business Loan |
by:
Dave Ryan |
Are you in need
of financial resources in order to start or even maintain your
small business? Most of us are. The fist step is to take a look
at the vast 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 many
organizations that specialize in loans to small businesses.
Contrary to the belief that bankers actually 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 make the deal
work just as much, if not more than the client wants it to work.
A bank’s primary role in the small business lending area is funding growth.
An example of this would be to finance the expansion of small
business with a proven 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. Asset Based Financing. Asset Based Financing is a general term describing
a transaction whereby a lender accepts collateral and assets of
a company in exchange for a loan. Most asset based loans are
collateral against other accounts receivable, inventory, or
equipment. Accounts receivable is the most favored of the three
because it can be converted into cash quickly. Banks will only
advance funds on a percentage of receivable or inventory,
typically being around 75% of the receivable and 50% inventory.
2. Line of Credit. A line of credit involves the bank’s setting aside
designated 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 when payments are made the line is replenished. One
major advantage of a line of credit is that no interest is
accrued unless the funds are actually used.
3. Floor Planning. Floor Planning is another form of asset based lending 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 financial tool.
About the author:
For more great business, marketing and mind power ideas to develope
your business visit the Higher-Profits Blog at
www.higher-profits.com
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