Virtual Accountant | Can Entrepreneurs Get Loans When Their Bank Denies Them?
Entrepreneurs that as a tool in their business says virtual accountant. How they would do this, is by financing asset purchases whenever possible, even if business owners have cash in their business in order to make that purchase. The reason why they do this, is so that they can keep the cash that they have on hand in their business. This way, the financing options allows business to pay off those asset purchases a little bit every month, and keep the money that they have in their business to use as operating capital. The reason why this is so important, is because business owners are far more likely to get approval for financing for asset purchases than they do operating capital. This can help a business owner stay cash flow positive in their business, and avoid a cash crunch. Since 29% of entrepreneurs who fail list the reason that they failed in business as running out of money by using financing, business owners can avoid this. As Robert Kiyosaki, the author of Rich Dad, Poor Dad said ìGood debt is a powerful tool, but bad debt can kill youî.
As business owners operate their business, they become less likely to qualify for loans, and this is where the Canada small business financing program can help out. By utilizing their virtual accountant, business owners can apply for this federally backed program that is designed to help small businesses qualify for loans. What does that, is the federal government effectively acts as a guarantor for the loan. Banks are more likely to approve the loan, knowing that the government is guaranteed their money back. The disadvantage banks see in this, is that there is a lot of people work they have to do in order to qualify and process the loan. This often means that the bank has to coordinate with the government, work outside of their typical bank processes, and not something that many large banks donít want to Accommodates. Small credit unions and small banks are more likely to work outside of the processes, and work longer hours in order to qualify and process the loan. Business owners should approach a TV or Servus credit union to apply for these loans.
The disadvantage of this, is that there is only a certain amount of things that can be financed. The hard assets, leasehold improvements and land. This means but cannot cost are things such as websites, advertising and marketing, people and operating capital. Virtuals accountant says there is also On the amount of money that a business owners can apply for. A maximum of $350,000 for assets and leaseholds, or a maximum when you dollars for real estate, or a combination of real estate and assets. Business owners should work with their virtual accountant in order to figure out what mixture of the two they need to apply for.
Business owners who are serious about using financing is a way to increase the cash flow, and utilize this Canada small business financing program to help them achieve that in their business.
A significant problem that businesses face says virtual accountant is that 50% of entrepreneurs close their business within five years, and 29% of them say that the reason their business failed is because they ran out of money. Business can increase their cash flow by not using the cash they have in their business to purchase assets, but finance those asset purchases whenever they can, in order to help keep their cash flow positive. Instead of using the money they have bank to pay for assets, they use it for operating capital. The biggest reason for this works, is because it is much easier to qualify for loans for assets is to qualify for operating capital.
Business owners who strategy in their business, we discover that the more their business ages, the cash crunch potential in their business means that banks become less likely to approve them for loans. By working with their virtuals accountant, business owners can explore some traditional options such as the Canada small business financing program. This is a federal program that helps small businesses qualify for loans.
Business owners can apply for loans up to $50,000 for hard assets such as equipment and vehicles, and leasehold improvements. Business owners can get a maximum of $1 million if they are looking to purchase real estate, or real estate and assets. If business owners are going to apply for this loan, they should determine what mixture works best by consulting their virtual accountant.
Even though this is a federally backed, that doesnít mean that business owners are going to get an ultra low interest rates. The good news is itís not an extremely high interest rate either. Canada small business financing loan has is that interest rate of print plus 3%. In addition to the interest, business owners should also factor in their will be a 2% application fee That is applied in the first year.
This doesnít mean that business owners are automatically going to be getting the loan, they still have to qualify through typical processes, and working with their virtual accountant in order to come up with formal business plan can significantly increase the business owners chance of being approved for the loan. There are many benefits business owners have to doing a business plan, including be able to have a solid plan in place on how business owners are going to pay back the loan once they get approved for it. Entrepreneurs can work with their virtuals accountant in order to come up with a great business plan prior to applying for the loan.
Business owners shouldnít consider themselves out of luck if there bank does not approve their loans for asset purchases. There are nontraditional entrepreneurs can ask is that can them get the loan they need in order to help them stay cash flow positive in their business.