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Outsourced CFO | lending literacy
Business owners are facing many challenges when it comes to being successful since outsourced CFO. In fact 50% of all businesses actually close their business within five years. 29% of those businesses say that they failed because they ran out of cash. Helping business owners understand how to maximize their finances using loans can help mean the difference between success and failure. Itís easy to understand, just need to remember some simple things when it comes to arranging finances for their business.
When it comes to obtaining business loans, not all banks are the same. Every bank has different risk tolerances when it comes to lending money. Not every single bank is going to be a good fit for all entrepreneurs. Itís important that entrepreneurs need to be prepared to submit multiple loan applications in order to find the bank that will be the best fit for them. Outsourced CFO says that best practices are to submit applications to more than one lender simultaneously. The reason for this is very simple. If a bank is to decline a loan application at any time. If they entrepreneur has only submitted one application at a time, to get declined they have to start the process over from the beginning. Since business owns can take several months to approve, itís very important that in order to not lose precious time, business owners need to submit or the one application to different banks at the same time.
As not all banks are the same, not all bankers are the same either says outsourced CFO. Itís important for an entrepreneur to be able to work with their banker, and for great bankers to be great problem solvers. Sometimes getting approved for a loan is a little bit like solving a puzzle. Knowing what pieces are missing, or pieces need to be changed is vital. Some bankers may just say that the loan is to client. Great bankers will be able to tell entrepreneurs in what ways their application did not fix the banks tolerance. And what an entrepreneur needs to do in order to make it fit. Great bankers can help entrepreneurs make adjustments to their loan to ensure that deals can close. A great banker can mean the difference between a business owner actually getting the loan or not.
Something else to understand when it comes to obtaining business loans says outsourced CFO is despite how good your banker might be, a loan underwriter can limit the authority of your banker. The reason for this is a loan underwriter is a person who assesses your loan by just looking at the facts only. A loan underwriter will never meet the entrepreneur, and may have extremely limited contact to the banker. The reason for this is so that the underwriter can be as unbiased as possible as they look at only the facts so that they can determine if this is in the best interest of the bank. If an underwriter declines the loan for any reason, the banker is usually unable to overturn that decision. Therefore itís even more important that you have a great banker that will help you create the best loan application possible.
Outsourced CFO | lending literacy
Business owners are often very good at running their business and less skilled and understanding their business finances says outsourced CFO. As a result, 29% of businesses who have failed has said that running out of cash was the primary reason their business did fail. As Robert Kiyosake, the author of Rich dad poor dad says that good debt is a powerful tool but bad debt can kill you. Helping businesses understand the difference between good debt and bad debt is extremely important to helping them learn how to succeed in business. There are several things that business owners can keep in mind when deciding if they need to finance, and how they should go about financing. Here are some best practices about business financing.
Knowing what has the ability to be financed, and how soon financing needs to be obtained are two very important things all business owners need to learn. It is much easier to finance hard assets been operating capital. In fact says outsourced CFO itís almost impossible to finance operating capital, because if an entrepreneur cannot pay that loan back there is virtually nothing for a bank to repossess. If a bank has financed hard assets, and a business owner canít repay the loan, at least the bank has something to show for it.
Itís also easier for entrepreneurs to obtain financing on those hard assets during the initial purchase of their business. Due to a cash crunch potential that almost every single business faces, itís a lower risk for a bank to qualify businesses for loans at the initial onset of their business purchase then later. Tapirs can use this fact to maximize their cash earlier on in the process, because obtaining financing later on is much harder to do says the CFO.
Another important piece of information that entrepreneurs need to keep in mind when they are considering financing is the amount of time it takes. Business owners should be prepared for 60 days minimum threshold to process a business loan. That 60 days goes higher if the bank comes back and requires more information. If they require formal appraisals of the business or environmental assessments, then that number goes significantly higher as those reports can often take upwards of 30 days to create says outsourced CFO. Being prepared to wait 60 to 90 days is a crucial aspect of deciding on obtaining financing.
By keeping these important distinctions in mind when planning the finances of their business, outsourced CFO says entrepreneurs can leverage finances to the best of their ability to ensure that they can qualify for a loan, they will be able to get the loan in the amount of time that works best for them and that they will be able to pay that loan back once they are approved, which will help them achieve business success.
