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E-Myth – “Why most small businesses don’t work & what to do about it”

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Outsourced CFO | Want To Learn About Obtaining Business Loans?

Outsourced CFO | obtaining business loans

Business owners either canít qualify for a loan, canít get a loan quick enough, or canít pay the loan once they get it says outsourced CFO. If business owners can understand the loan process a bit better, they can make better decisions for their business. Since 29% of all businesses that failed said running out of money was the reason their business failed. Business owners can make better financial decisions about loans, they increase their odds of success.

Business owners may wonder about the difference between obtaining a loan, and leasing assets. While outsourced CFO says that leases can sometimes be a good secondary choice, financing hard assets through a bank is always the best first choice. When considering leasing companies, business owners need to be very aware of lease rates or finance charges. Often the lease rates end up not being what the advertised rate is. If business owners are aware of this when they enter into lease negotiations they can be better prepared.

Many business owners often make the mistake of only seeing one bank at a time when they are pursuing loans recommends outsourced CFO. Best practices say that business owners should submit loan applications to a minimum of two banks at a time. The reason for this is the length of time it takes to get a business loan is usually 60 days. This length of time goes up if the bank requires additional information such as formal appraisals or environmental assessments. Since the additional information can take upwards of 60 days, that brings the loan time to 90 days. If at any point during the due diligence phase, the bank the clients alone, if the business owner has a second loan being processed, they donít have to start over again.

Business owners may want to partner with great bankers who are problem solvers says the CFO. All bankers have to adhere to the rules of their bank while approving loans. A great banker will tell you what terms in your loan did not satisfy the requirements, and help you fit your loan into those requirements. The bankers you want to be working with are the ones that can help you make adjustments to ensure that the loans close.

As good as bankers may be, business owners need to also remember that loan underwriters eventually have the final say in whether the loan gets approved or not. Loan underwriters will never meet with the loan applicant, and often has limited contact with the banker themselves advises outsourced CFO. This is in order for the underwriter to have an unbiased opinion. They are tasked with looking just at the facts to see if the facts meet the bankís requirement for the loan. Even if a banker thinks the loan will be approved, itís the underwriter that has the final say.

By understanding the loan process, business owners can make better decisions about how to proceed with the loan and how to go about obtaining one. Then making better financial decisions, business owners can increase the odds that theyíre businesses will not run out of cash.

Outsourced CFO | obtaining business loans

Many business owners do not understand the difference between good debt and bad debt says outsourced CFO. Robert Piasecki, the author of Rich dad poor dad says good debt is a powerful tool, but bad debt can kill you. Knowing the difference between good debt and bad debt can help increase the odds of business owners succeeding in their business. Since 29% of failed businesses is a running out of cash was akin to reading factor to their business failure.

Something that business owners will want to consider when looking at bank loans is understanding the amortization period. A longer or shorter amortization period affects the cash flow in the business because a longer amortization period takes longer to mature, whereas a shorter amortization peropd may cause the business to come under the cash crunch early on in the business which may be detrimental to that business. Considering the length of amortization in a loan can help the business owner avoid having an unnecessary cash crunch in the early years of their business, and can help free up cash if there is a longer amortization.

One of the best solutions to getting loans for business owner may be finding 100% financing for some purchases. Business owners wonder if this is possible, and outsourced CFO says it absolutely is. 100% financing is available but business owners need to know that it is usually only for hard assets such as equipment, vehicles and buildings. Itís much less likely that a business owner is going to find financing for operating capital.

When business owners are considering loans, they may not realize that the length of time for business loan is much greater than the timeline for personal loan. Personal loans can close in 30 days, business loans rarely close in 30 days. A more common length of time is 60 days. And that timeline increases if the banks require additional information. Some examples of that additional information says outsourced CFO is formal appraisals and environmental assessments. Not only does the bank requiring the additional information time, but the appraisals and assessments themselves can also take upwards of 30 days to complete, which can change the timeline from 60 to 90 days. Business owners need to take that timeline into consideration when applying for loans so they donít run out of time.

These are some of the things business owners can take into consideration and learn about when they are ready to proceed with getting a loan for their business, outsourced CFO of a more than happy to help business owners completely understand business loans in their business and whether it is a good risk to take in their business or not. As long as business owners can understand the difference between good debt and bad debt, theyíll be further along in making better business decisions. Please feel free to check out our websit at or you can just call us at 780-665-4949!