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Outsourced CFO | loans in your business
One of the biggest problems that business owners have is they canít qualify for a loan says outsourced CFO. And if business owners can qualify for a loan, they either canít get the loan quick enough, or canít pay the loan once they get it. By helping business owners understand the loan process, the odds of business success can be increased. Since 29% of failed businesses say that they ran out of cash, by understanding this process can go a long way to increasing the success of entrepreneurs.
One of the first things that business owners need to understand when it comes to loans is that it is much easier to finance hard assets then finance operating capital. The reason for this is itís much easier for a bank to collect on that loan and the business owner fails to pay it back, by seizing the assets. Operating capital is much harder to collect on therefore itís a greater risk for banks to loan for. Therefore business owners will want to get as much financing as they can for assets in their business such as equipment, vehicles and buildings. By securing financing for materials, they can free up other sources of money as their operating capital. Another thing business owners should take into consideration says outsourced CFO is itís possible to get 100% financing. The 100% financing is most likely on hard assets as well. Therefore business owners should try to finance as much hard assets as possible and get as much financing as possible for them. Even this little bit of information, can be enough to make a big difference for businesses.
Business owners may also wonder about the difference between loans and leases. Leasing may be a good secondary choice suggests outsourced CFO. However business owners will want to be careful with leases. Often lease rates and depth being more than the advertised rate or financing companies will add on financing charges, making the rates higher for the business owner in the long run. By understanding the difference between leases and loans, business owners can make the best decision for their business.
Business owners will also want to understand amortization periods. By understanding the differences of a long period versus short period, business owners can decide to have a longer amortization to help free up cash in the long run. Shorter amortizations can affect cash flow sooner in the business. By understanding that the amortization period will often be more important than the interest rate, businesses can make an informed decision.
Robert Kiyosaki the author of Rich dad poor dad was quoted as saying good debt is a powerful tool, but bad debt can kill you. My understanding these differences in loans, leases and interest rates, business owners will be able to make the best decision for their business which will increase the odds of success. Since 50% of all businesses are out of business within five years, this information is vital to the success of several businesses.
Outsourced CFO | Loans in your business
Business owners are often in the dark when it comes to understanding the finances of business says outsourced CFO. But understanding some simple differences in loans and banks, business owners can start to make better decisions for their business. 50% of all businesses are out of business in five years and 29% of them failed because they ran out of cash. Increasing financial literacy business owners is a huge tool to help them succeed. Many business owners wonder if they need a loan, and that sometimes keeps them from pursuing loans as quickly as they should. Also business owners may want to avoid getting alone because they think all debt is bad debt, so they opt for leases. There are definitely good ways and bad ways to go about getting loans. Here are some tips.
Since accessing money in a timely manner can make all the difference to businesses, business owners should understand how long it takes for a business loan to get approved. Almost all business owners will have had experience getting personal loans for a variety of reasons such as car loans or getting approved for a mortgage. Personal loans are often completed in under 30 days, so business owners make the assumption that business loans take that long as well. Nothing is further from the truth unfortunately says outsourced CFO business loans require a great deal more information as well as more things to consider. Thereís also a higher risk to the bank, so it takes longer for the bank to process the information. An entrepreneur will need to know that a business loan will take about 60 days to complete, and that is if there is no additional information that the banks decide they need once the process is underway. If business owners understand that it will take a minimum of two months they may pursue loans quicker, which increase the chance of the business owner getting the loan in a timely fashion, which will increase the businesses chance of success.
Some of the additional information that the banks require is formal appraisals. The appraisal may be on equipment, on the building, or on the business itself. Makes may also require environmental assessments in order to see if the business is a viable, or of risk they are willing to take says outsourced CFO. Since these additional reports can take a long time to complete some of them as long as 30 to 40 days, business owners need to be prepared for their loans taking upwards of 90 days.
Because of the length of time it takes to close a loan, entrepreneurs should approach more than one bank at a time for loan. The reason for this is if at any point in the process, the bank decides to decline the loan, a business owner does not want to have to start over at the beginning with the new bank says outsourced CFO. The bank may take the full 90 days to make their decision and then decide not to grant the loan. To avoid having to start over from the beginning, entrepreneur should submit to loan applications to two different banks at the same time. If one bank declines the loan, the business owner is no worse off since they still have an active loan being considered by another bank. If for any reason both banks approve the loan, then the entrepreneur is in an even better position of being able to choose the best loan terms for their business, which is a great position for an entrepreneur to be in.
