Do Not Forget To Ask If The Lender Is Licensed

Always make sure that your hard money lender has a state license. License is always a proof of reputability and history of complying with guidelines set by government. Being similar to banks, while not being so closely monitored by government officials, hard money lenders have to have a license. While license is not a panacea, it is definitely an added layer of protection from illegal lending and scams.

Always Perform Due Diligence

Checking your potential hard money lenders is important no less than checking any other business you are planning to deal with. Many people think that since they are to be the recipients of the loan, the lender experience, reputation, and connections are of lesser importance. Always check how long potential lenders have been in business, how experienced the employees are, and what their funding sources are. Collect any references they may have. Such background check may ensure you will get the best deal possible.

Check Your Local Real Estate Market

Well, real estate market is doing badly nationwide; however some areas are better than the others. This is quite important, since generally the better the market is, the lower interest you may get on your hard money loan. Sometimes this difference may be as high as 10 points on your annual percentage rate. Therefore, make sure you know what you may be facing in advance.

Try To Deal With a Reputable Broker, Or, Better, With Direct Money Lender

It is always better to get straight to the source, saving money by eliminating any middlemen. While this may not always be possible, it is highly advisable to look for direct money lenders first. Should you find a few, choose the one that is most reputable. Should your direct money lender search bring no results, it is time to look for a broker. Knowledgeable and competent brokers are as not easy to find, as you may think. Therefore, do as much research as possible before making a selection.

Always Read The Fine Print

Hard money loans mostly feature an extensive fee structure, besides interest rate itself. They usually come loaded with points, sometimes as high as 4-8, and heavy prepayment penalties. While these may be tolerable if you intend to keep your hard money loan for a full duration, they are true money wasters once you decide not to keep your loan for a full term. If that sounds like your situation, and you only need the money for a short period of time, then proceed with caution: always try to find lender that charges minimal points and prepayment fees, if any.

Mary Wise is a personal loan consultant who has been associated with Bad Credit Loans and has more than thirty years of experience in finances. She has helped a lot of people to obtain Fast Unsecured Loans, and many other products regardless of their credit situation. If you want to learn more about Personal Loans you can visit her at BadCreditLoanServices.com

Author: Mary Wise
Article Source: EzineArticles.com
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Business investors funds usually used to accommodate the additional funds needed. The investor can be a group of private individuals or one individual who invest in a business for a return of a piece of the profits.

There are several kinds of investor funds you can use to take your business to the next level. These types of funds can come from an institution like a bank or a private investor. Not all of the following may apply to you, but you must always weigh all of your options, especially at the early stages of business.

One of most common types of investors funds come from ones family. Asking the help of family members can be something that works. As long as you can provide a decent enough return to your investor and have good relations with your family then you can ask for their help. The most fundamental benefit of asking for investment from your family is that the business will always remain in your family.

Another commonly used source is venture capitalists. Venture capitalists buy into businesses all the time primarily because they are looking for returns on their investments and because they can mobilize and inject large amounts of capital fast.

Keep in mind that they are one of the most stringent investors fund sources when it comes to screening. Typically, venture capitalists deal only deal with businesses that offer very high rates of return, such as those that offer rare products, inventions, new medicines and technology, or cutting-edge research.

Another common source of investor funds are angel investors. These investors are commonly wealthy individuals that are interested to take on a percentage of your profits by providing you with the appropriate capital.

As you can see there are many ways to get some investment in your business. Before you proceed with engaging in negotiations with these people you should keep in mind that you will need to have a solid business plan or else no one will invest.

Author: Gus Smitherson
Article Source: EzineArticles.com
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Your ticket to industry leadership

Be grateful to those who cause you difficulty, they offer the greatest opportunity for learning. - The Dalai Lama, Ethics for the New Millennium

We’re not talking about the customers from hell, the ones who are never satisfied no matter what you do.  The best advice I’ve heard for dealing with these customers is “Refer them to your competitors!”

Instead, let’s look at good customers who exhibit annoying behaviors, things that make your life difficult and cost you money.  These behaviors could be slow pay, unusually high returns or delays in providing information you need.  Whatever the source of your frustration, these behaviors offer an opportunity to eliminate headaches for yourself and your customers.  Here’s how it works.

Balancing the Scales

We live in a reciprocal world.  If you treat me nicely, I’m going to treat you well.  If you treat me poorly, I’m going to find a way to balance the scales.  When you see annoying customer behavior, you’re seeing your customers balancing the scales.  You’re doing something they don’t like.  Doing something to your detriment is their way of expressing their displeasure.

Eliminate the source of their dissatisfaction and you’ll:

• Eliminate your problem

• Eliminate your customer’s problem

• Build customer loyalty

• Distinguish yourself from your competitors

• Attract new customers

Example

One of my clients was experiencing slow pay from otherwise good customers.  What we discovered is that 80% of these delinquencies resulted from the same situation.  The customer’s field superintendent would request changes to the work, but refused to sign a change order.  That left my client with a dilemma.  Do they pack up all the equipment and a ten-person crew and moving to another site, assuming one was available, or make the changes and hope that they would be paid?  They chose the latter.

Of course, the people at the customer’s headquarters were surprised by the bill.  It didn’t coincide with the contract and there were no change orders to support the additional work.  The result was a lot of time lost to negotiations which resulted in neither party being completely happy with the experience.  How did we solve this problem?

When a customer’s field superintendent requested a change, my client:

• Had our foreman contact our estimator with the requested changes
• Had our estimator type a two paragraph memo listing the changes requested, the cost of these changes and a sentence stating “we will proceed with these changes unless you stop us”
• Then faxed the memo to the customer’s corporate headquarters

This approach not only eliminated the slow pay problem, it’s afforded my clients other significant advantages.

Multiple Benefits

My client’s original approach was the industry practice; changing to the new procedure helped them:

• Differentiate themselves from their competitors

• Set a new standard for customer service, one that has not yet been adopted by their competitors

• Discover solutions to other frustrations the customer was experiencing

• Attract new customers

All of these benefits have positioned my client to become the leader in their industry.  A migration from their competitors has already begun and is gaining momentum.  In addition, my client’s reputation is also attracting a higher caliber worker which will enhance their ability to provide even greater service in the future.

If you want to gain industry leadership you need look no further than your customers’ annoying behaviors.

Copyright © 2006, Dale Furtwengler, all rights reserved

Dale Furtwengler is a professional speaker, internationally-acclaimed author and a business consultant who uses counter-intuitive thinking to help his clients increase profits without adding resources. For more information on how counter-intuitive thinking can work for you visit www.furtwengler.com/theinvaluableleader/.

Article Source:http://www.articlesbase.com/strategic-planning-articles/annoying-customer-behavior-1360657.html

Savings and Investments

The first source you should consider is your own savings and investments. One disadvantage though of self-financing is that if things did not turn out the way you want them to be it will be your money that goes down with the ship.

Angel Investors

Angel investors are affluent individuals who provide capital for a business start-up, usually in exchange for ownership equity. These individuals are looking for a higher rate of return than would be given by more traditional investments (typically 25% or more).
Angel investors are an excellent source of early stage financing and high-growth start-ups. They are often willing to tread where there is too much risk for banks and not enough profit potential for venture capitalists. And since angel investors are often retired business owners and executives, they can also provide valuable management advice and important contacts.

Peer to Peer Lending

Peer-to-peer lending is a means by which borrowers and lenders may transact business without the traditional intermediaries, such as banks. It can also be known as social Lending, ordinary people lending money. The process may include other intermediaries who package and resell the loans–examples are Prosper.com and Zopa-but the loans are ultimately sold to individuals or pools of individuals. Prosper.com, which is available in the US only, offers business loans for small companies.

An enabling technology for peer-to-peer lending has been the internet, which connects borrowers with lenders, for example through an auction-like process in which the lender willing to provide the lowest interest rate “wins” the borrower’s loan. (wikipedia.com)

Money pool

Instead of a bank loan, borrow smaller sums from several family members, friends, or colleagues. The lenders have no legal ownership in the business, but can act as advisors and cheerleaders for your venture. Remember though that nothing causes tension in a family like lending money that is never paid back.

Credit Cards

Many business owners use their credit cards to fund their businesses. Credit cards offer the ability to make purchases or obtain cash advances and pay them at a later time. But as a long-term financing method, they can be expensive. Most credit cards will charge you 2% to 4% of the face value of a cash advance as a “fee” making this method of financing very risky.

Bootstrapping

Another source of capital for setting up a business is bootstrapping. It is a way to finance a business by saving rather than borrowing money. It’s being as frugal as possible so your business can be started on as little cash as possible.

The use of private credit cards is the most known form of bootstrapping, but a wide variety of methods are available for entrepreneurs. Other forms of bootstrapping include owner financing, minimization of accounts receivable, joint utilization, delaying payment, minimizing inventory and subsidy finance.

While bootstrapping involves a risk for the founders, the absence of any other stakeholder gives the founders more freedom to develop the company. Many successful companies including Dell Computers were founded this way.

Venture Capital

Venture capital is not suitable for all entrepreneurs. It is an option for small companies that have a seasoned management team and very aggressive growth plans; however, venture capitalists will rarely invest in small businesses that have no intention of going public. If a company does have the qualities venture capitalists seek such as a solid business plan, a good management team, investment and passion from the founders, a good potential to exit the investment before the end of their funding cycle, and target minimum returns in excess of 40% per year, it will find it easier to raise venture capital.

The venture capitalist objective is to invest in a company for a short period of time say 5 years and then cash out of the business while making a significant return on their investment.

Author: Amy Grace Remollata
Article Source: EzineArticles.com
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Venture capital firms and individuals are interested in many of the same factors that influence bankers in their analysis of loan applications from smaller companies. Though banks look at the immediate future of a small company, they are most heavily influenced by its past. Venture capitalists look at the long-term future of the company. Banks are creditors while venture firms are owners. They hold stock in the company, adding their invested capital to its equity base. Therefore, they examine existing or planned products or services and the potential markets for them with extreme care. They invest only in firms they believe can rapidly increase sales and generate substantial profits. Venture capitalists look more closely at the features of the product and the size of the market than do commercial banks.

Venture capitalists invest in long-term capital and not for interest income. They look for three to five times their investment in five or seven years. The job of the venture capitalists is to find venture projects with this appreciation potential to make up for investments that aren’t successful.

It’s difficult to forecast the productivity of an early stage company. Hence, these venture capitalists set rigorous policies for venture proposal size, maturity of the seeking company, requirements and evaluation procedures to reduce risks, since their investments are unprotected in the event of failure.

Most venture capital firms’ investment interest is limited to projects proposed by companies with a sound operating history. Profits made by those companies aren’t given much precedence before an investment decision is made. Companies that can expand into a new product line or a new market with additional funds are particularly interesting. The venture capitalists provide funds to enable such companies to grow in a spurt rather than gradually as they would on retained earnings. There’re a large number of “start up” companies that get financial help from venture firms. Venture capitalists see that capital investment analyses and capital source studies are planned 5 years ahead. The investment analyses should compare rates of return for product, market, or process investment, while the source alternatives should compare the cost and availability of debt and equity and the expected level of retained earnings, which together will support the selected investments. These analyses and source studies should be prepared quarterly so you may anticipate the financial consequences of changes in the company’s strategy.

But a structured financial planning doesn’t guarantee that you’ll be able to get capital from a venture firm. Not making them, will virtually assure that you won’t receive favorable consideration from venture capitalists.

Author: James Marriott
Article Source: EzineArticles.com
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Large companies have always had a number of options that they could depend on to raise capital for their businesses. The have always had access to a number of alternatives such as selling stock, issuing bonds, bank loans and accounts receivable financing among others. Looking at the other side of the coin, smaller companies, those that have between $20,000 and $500,000 of yearly revenues, have always had a challenge trying to find capital to operate their businesses.

The lack of access to capital has prevented many small businesses from growing and capitalizing on the many opportunities that are available to them. It is not uncommon for small companies to reject large deals or opportunities because they do not have the necessary capital to obtain the resources to service the account. However, even when small businesses do take on large contracts, they find that they are never paid immediately upon delivery of services. Most contract terms demand that the supplier provide 30 to 60 days for the customer to pay their invoice – in effect, forcing them to extend them with supplier credit. The lack of adequate capital resources, along with the necessity to offer commercial credit to clients, creates a perfect storm that prevents small businesses from growing and that is very difficult to avoid.

A number of these issues could be sidestepped if the company had immediate access to working capital. Working capital could enable the business to add employees and resources to serve new clients and larger contracts. It also enhances a companys ability to extend 30 to 60 day payment terms to their customers.

This paper outlines the most common sources for working capital and provides an evaluation of each source. Each source has also been assigned a score, which summarizes the availability and flexibility of the source.

Scoring System

Each working capital source that has been evaluated has been given a score from 1 to 10. The following features where considered when assigning a score:

A higher score indicates that the source of capital has a positive outlook on a number of these criteria and is available to small businesses. A lower score indicates that a particular source of capital may not be best suited for most small businesses.

Financial Options

Many books and publications tout the benefits of obtaining venture capital to finance a new or ongoing operation. Venture capital is an option for small companies that have a seasoned management team and very aggressive growth plans, however, venture capitalists will rarely invest in small businesses that have no intention of going public. The venture capitalist objective is to invest in a company for a short period of time say 5 years and then cash out of the business while making a significant return on their investment.

An Angel investor is a wealthy individual or group of individuals that typically invest in pre-venture capital companies. That is, companies that dont meet the current requirements of a venture capitalist but that could meet their requirements with a capital and management influx. However, you should not rule out angel investors completely since there are angel investment groups who focus on the growth of certain communities and will invest in small businesses. The best way to find an angel investment group near to you is to search them on the Internet using a search engine such as Google (www.google.com).

Most small businesses owners will first approach their bank to try and obtain a loan or line of working capital. However, unless the business has been in operation for a number of years, has substantial assets and all the appropriate financial records, their chances of obtaining any financing are minimal. Banks, however, can provide lines of credit if the business owner personally guarantees them. This means that the business owner will be personally liable for the repayment of these loans. These lines of credit can provide the business with the needed working capital; however they can be very risky, especially if the business does not produce the expected results and the owner is unable to repay the bank. Business owners should use this method of financing very cautiously.

Much like bank lines of credit, many business owners use their credit cards to fund their businesses. Credit cards offer the ability to make purchases or obtain cash advances and pay them at a later time. It should be noted that credit cards can be a very expensive source of funding. Although most credit cards have reasonably low interest rates for purchases, their cash advance rates can be as high as 17% to 19% due to greater delinquency rates. Furthermore, most credit cards will charge you 2% to 4% of the face value of a cash advance as a “fee”. Much like bank lines of credit, the business owner personally guarantees payment of a credit card. Thus, this method of financing can be very risky if the business does not produce the expected results and the business owner cannot repay the credit card company. Business owners should use this method of financing very cautiously.

Business owners who are also homeowners have the option of tapping into their home equity to finance their ongoing business operations. Home equity loans and lines of credit have many advantages, such as low interest rates and the possibility of having some portion of it deducted from taxes . This method of financing gained a lot of momentum between the years 2000 and 2004 when interest rates where at their lowest point in decades and real estate was appreciating in value. A major disadvantage if this financing method is that it directly places the business owners home at risk. In fact, the business owner is placing a bet – with their home as the potential wager – that the business will succeed and will be able to repay the loan. Much like lines of credit, business owners should use this method of financing very cautiously.

The US Small Business Administration (www.sba.gov) provides a number of very viable options to finance business operations. Although the whole scope of SBA services is beyond the scope of this paper, the SBA provides a Microloan program. The program objective is to stimulate micro-enterprises and provides loans of up to $30,000 to small businesses. These loans are usually provided through a financial institution or a bank. They have higher interest rates than traditional loans, but their requirements are more flexible, making them more accessible to small business owners.

Friends and family are one of the most conventional ways of financing small businesses. Many entrepreneurs have been able to leverage existing relationships and obtain funding, either as a loan or as a capital investment, for their businesses. Although this source of funding can be easier to obtain that others, it does have some inherent problems. First, the business owner runs the risk of placing the relationship in jeopardy if things do not go as expected and the business defaults. Furthermore, these transactions are usually done with little formality and without written agreements, further complicating matters. If you elect to use this funding option, you should consult an attorney and draw some formal documents that describe the intent and responsibilities of each party.

Accounts receivable factoring, also known as invoice factoring, has been a source of working capital for large companies for many decades. It is now becoming mainstream and available to mid-size and small businesses. Factoring enables a company to sell their slow paying accounts receivable to a financial company, who in turn pays for the invoices within a day or two. After the sale, the financial company waits to be paid for the invoices. A key feature of factoring is that the factor will take the credit strength of the business customers, as its main consideration. Until recently, accounts receivable financing was out of the reach of the small business owner. However, enhancements in technology have now turned this method of financing into a viable alternative for small businesses. This means that a small company with little or no credit can leverage a strong roster of clients, sell their invoices and get funding very quickly. Factoring should be considered as an option for businesses that sell products or services to other businesses, rather than to consumers.

Conclusion

Obtaining working capital for their businesses is one of the most important decisions that a business owner can make. Like all important decisions, it should be carefully thought out and deliberately executed. The old adage that the best time to look for capital is when you dont need it is still true. You should spend some time researching the all available options for your business ahead of time, so that you can be ready to tap your war chest when the right opportunity arrives.

DISCLAIMER

This paper is written to provide small business owners with an overview of the financial options that are available for their businesses. However, this paper does not intend to provide financial or legal advice as only qualified professionals can do so. The author and Commercial Capital LLC disclaim all liabilities arising from the use of the information on this paper. Please consult a professional before making an important decision about your personal or business finances.

Author: Marco Terry
Article Source: EzineArticles.com

If you are doing basic or pre-product research, take the time to submit for grants. Although this is time consuming and certainly not the fastest way to raise money, the government and other grant funding agencies do not want ownership in your company. SBIRs provide a six month phase I grant for $100,000, followed by a significantly higher grant for Phase II, from $500,000 to $750,000. If you apply for and win two of these grants, you can get a good start towards funding your company.

If your company only needs a small infusion of cash, you can get a SBA loan, or if you have a good relationship with your bank, a line of credit. Also, a bank will lend against your receivables, if your customer base is reliable. Many people are afraid to tap into debt sources because they don’t want to be burdened with the debt if the enterprise fails. However, if you don’t believe in the company enough to place your own credit behind it, why should anyone else.

If you are looking for less than $1 million, tap into a local angel network. If you don’t know any rich people, find them. If you can’t raise $1 million in angel investment, your idea may not as good as you think… or you may not be the right person to sell it. Seek help through local business development agencies, SCORE groups, or technology incubators. These folks are all tied into the fund-raising network in the state.

Consider taking on contract work to fund your product development. If you have the right equipment or people to handle small contracts on a part time basis, use this revenue as a funding source. Use creative means to keep your costs low. Join an incubator to take advantage of the services they offer for a lower price. Bartering is another great way get the use of space or equipment that would be prohibitively expensive.

Part of being an entrepreneur is being creative. Use that creativity in financing your company and save the venture capital for the growth stages.

Author: C. Worrall
Article Source: EzineArticles.com
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Even in established or semi-established businesses raising capital is strenuous and needs correct timing. Following certain tips can help to mitigate some of the surprises that come along with the baggage, though it still does not guarantee a smooth ride:

1. Raise money when you don’t need it. The process of raising capital (in businesses that are already up and running) should be initiated when you are not desperate for it, so that it gives you elbow room to think and steer the deal to your benefit.

2. If you are out of cash when you seek to raise capital, chances are that suppliers of capital will try to deal a superior hand and take undue advantage. Therefore appropriate timing of the deal is of great consequence. The irony of the situation is that when revenues are flowing in even investors show a keenness to invest.

3. Start-up entrepreneurs should know that suppliers of capitals are seasoned players who do this every day for a living. Selling your idea to them is the most important thing; for this ensure that your idea has the capability to mature into something meaningful and profitable and only then approach investors with it.

4. Learn as much of the process and its management as you can so that you don’t make rookie mistakes.

5. Know your relative bargaining position. Do not be caught off-guard if a situation throws up unexpected concerns.

6. Clinching a deal regarding capital is much more than just money. It involves an understanding between two parties, which includes trust and the support of much legality. If all you are getting is money, then it’s not much.

7. Try to have a backup source of capital in case a particular does not come through.

8. When negotiating important deals, do not leave the details to legal and other experts. Be thoroughly informed and involved in all significant details.

Author: Shilpi Ganguly
Article Source: EzineArticles.com
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It should be noted that venture capitalists are not suitable for everyone and they are typically very selective in deciding what they want to invest in. Venture capitalists are most interested in ventures with high growth potential.

A venture capitalist can be used as a financial tool for development within your business. They provide long term committed share capital and the return that a venture capitalist will receive is dependent on the growth and profitability of the business.

The first example of a venture capitalist dates back as late as the 18th century and a venture capitalist will look to retain their investment for around three to seven years. Venture Capitalists are used globally and Europe has a large and growing number of active venture capital firms. Figures from 2003 showed that about three million people in the UK are employed by companies that are backed by venture capital and over half of all the business within the UK that are backed by venture capital are high tech firms.

If a company has the qualities that a venture capitalist seeks such as a structured and detailed business plan, a good management team and a good potential to exit the investment before the end of their funding cycle, as well as the target minimum returns in excess of 40% per year; they will find it easier to raise venture capital.

Venture capital also acts as a source of job creation and improves the corporate governance and accounting standards of a companies. So how does a business go about attracting the help and investment of a venture capital firm? Well it should be noted that venture capitals typically invest in businesses that have:

A minimum investment need of around 2 million, though many smaller regional VC organisations may invest from 50,000

An ambitious but realistic business plan

A product or service that provides a unique selling point or other competitive advantage

Large earning potential and offering a high return on investment within a specific time frame, e.g. five years

Sound management expertise – although venture capitalists tend not to get involved in the day-to-day running of the business, they often help with a business’ strategy

A proven track record – for this reason start-ups are generally not considered by venture capitalists for investment

As well as all of the initial help that a venture capitalist can provide to your business such as risk capital, management expertises and experience they also make it easier to gain funding in the future for your business.

Before you start looking for the financial help of a venture capitalist you need to ensure that your business plan is thoroughly arranged and that everything about your business is detailed and made clear to potential investors.

Author: Helen Cox
Article Source: EzineArticles.com
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Decide on where and how to source for funds to pay employees, rent smart office, sales and marketing, equipment and related operating cost. You should decide either to source for loans from banks, friends, relatives, club or personal savings. You can get money by way of overdraft and other investors to start your trade.

Angel investors can help you to get income for your business enterprise. Angel investors are private financiers that invest in starting firms that are likely to make huge money within the short time. The investors foresee receiving about tenth of the amount invested in few years.

Before you get a bank loan, you must prepare an in depth business plan to prove your business is capable of generating enough money. It provides an overview of the business structures, the amount required to fund the business organization, projected cash flow and sales analysis. The proposal will includes trading, profit and loss account forecast, earning projection and returns on investment for at least three years. The bank may demand for your business credit card and personal guarantee. Your stock, bonds, real estate and investment, mutual funds and life assurance coverage can be used as collateral to acquire capital for business opportunities. You may get some financial institutions or private investors that are interested in funding your business concern.

In conclusion, if you need small capital to start a business you may choose angel investors. Ensure you research to get the best way to acquire capital for business opportunities. You can get free information on the internet that will show you how to finance your business, how to start a business and how to manage your business risk. You can also join some free business organization online.

Author: Indah Mohammed
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