Virtual Accountant | How Business Owners Can Increase Cash Flow Using Financing
Utilizing financing is a great way that business owners can increase the cash flow in their business, as long as they work with their virtual accountant. How this works, is that business owners donít use cash in their business in order to purchase assets, instead secure financing. Even if business owners have the money in their bank account, they should avoid using it for asset purchases. The reason for this, is so that they can keep the cash that they have in their business, but still get the assets that they need in order to grow their business. The author of Rich dad poor dad Robert Kiyosaki wrote in his book, ìGood debt is a powerful tool, but bad debt can kill youî. By utilizing financing in this way, business owners harness that as a tool to help them stay cash flow positive. This is extremely important, since half of all entrepreneurs fail in business within five years, and 29% of those failed entrepreneurs say that the reason why they failed is because they ran out of money.
Business owners may wonder how they can utilize this method if they can no longer qualify for traditional loans. This is a great reason for business owners to work with a virtual accountant, in order to explore all of the options that are available to them. There is a program called the Canada small business finance program, which helps small businesses qualify for getting loans by acting as their guarantor. This is a federal government program, and can be an extremely good resource for entrepreneurs who are looking for financing methods.
Business owners can get financed up to $350,000 for assets like vehicles or equipment, and leaseholder improvements. Business owners can also get up to $1 million in order to purchase real estate, as long as that real estate is being used in an active business. Business owners will be able to purchase rental properties, or their homes this money. Entrepreneurs should work with a virtually accountant to help them figure out what makes of financing they need to, and exactly how much they should apply for. Itís extremely important that business owners know that those of the only things that they can financed through this program, certain things are not allowed to be financed such as what creating websites, paying payroll, using it for operating capital, or advertising with it.
Business owners may believe that since this is a government program, that itís no risk and thatís actually not true. Virtual accountant says that banks can still request securities on the amounts that theyíre loaning, even if the bank is acting as the guarantor. Business owners can be asked to put up a personal guarantee on the entire amount of the loan, which means if an owner defaults, they still may be on the hook for the entire amount.
By working smart, business owners can tap into different financing programs that can help them keep cash flow positive in their business.
Itís possible for business owners to increase the cash flow in their business by utilizing financing suggests virtual accountant. As indicated in his book Rich dad poor dad, author Robert Kiyosaki had famously said, ìgood debt is a powerful tool, but bad debt can kill you.î Since 29% of all entrepreneurs that fail say that the reason why their business failed was because they ran out of money, itís extremely important that business owners use financing to their advantage to help their business grow. One way that businesses can do that, is by accessing the Canada small business financing program. This is a government program that can help small businesses qualify for loans acting as their guarantor.
The main disadvantage to this program, is that many large banks are not likely to want to proceed with this type of loan due to the amount of paperwork. It takes a lot of time, it takes the banks working outside their typical methods to qualify and process, as well banks must also coordinate with the federal government. Business owners who work with a virtual accountant can find out that while large banks are less likely to want to work with business owners on this loan, small banks and credit unions are more than happy to work with their clients. A business ownerís best starting point is to talk to ATB or Servus credit union.
Regardless of what bank businesses choose to go with in order to secure this loan, business owners need to understand that one thing that they can do that will significantly increase their chances of success is to create a business plan. Many business owners think that they can do this after they get the loan, but actually if they work with a virtuallly accountant, they should be proactive and use the business plan in order to qualify for the loan. In addition to that, itís extremely important that a business owner has created in that plan of how theyíre going to pay back the loan once they get it. This will help the bank see that they are being proactive, and be more likely to loan them the money.
Business owners can then start wondering about how much money they will be able to secure with this loan. Business owners can secure up to $1 million in order to finance a mixture of real estate, hard assets and leaseholder improvements. If a business owner only wants to purchase assets or assets and leaseholder improvements, they can secure up to $350,000. Entrepreneurs should work with their virtual accountant in order to figure out which is the best mixture of financing is best for them.
By utilizing known financing month, business owners can avoid running out of money in their business and stay cash flow positive in order to succeed. By doing this, business owners can avoid the second most common reason for businesses failing in Canada today.