Virtual Accountant | How To Increase Cash Flow Through Financing
One problem that business owners often bring to virtual accountant is that they are running out of cash, and they desperately need operating capital which is difficult to finance for new businesses. However, when they were brand-new in their business, they used up significant amounts of cash buying hard assets itís easier to finance. Since half of all entrepreneurs fail in business before five years, and out of those failed entrepreneurs, 29% of them say running out of money was the reason for their business failure. Business owners can avoid this fate quite easily, by utilizing financing as a way to increase cash flow. As Robert Kiyosaki, author or Rich Dad, Poor Dad says ìGood debt is a powerful tool, but bad debt can kill you.î By utilizing financing this way, business owners can significantly increase the fortune in their business and succeed where they may not have before.
Many business owners are unable to get approved for financing, due to a number of factors including already being overextended for loans, being older in business and therefore having a cash crunch potential in their business that makes them less attractive to loan money to buy banks, being in a risky business, or being new in business and having no financial history. If this applies to any businesses, they may be relieved to hear that the Canada small business finance program can help them. Virtual accountant says that this is a federal government program that is designed to help small businesses qualify for loans. Businesses that qualify to apply are ones that make less than $10 million in revenue per year. The government purposely set the threshold for qualifying businesses hi, in order to help as many businesses as they can.
Businesses can get up to $1 million in order to fund real estate and assets, but if business is only interested in financing assets, they can get up to $350,000. Itís up to the business and their virtual accountant to figure out how much money they want to apply for. This is not a guaranteed loan, they still need to qualify through traditional means, says that the government acts as guarantor, which makes it much more easy to qualify. Business owners cannot apply and get more money than is what is within their means.
Just like any traditional loan, itís always in business ownerís best interest to create a formal business plan. There virtuals accountant can help them do that, so that they have a plan in place on how to qualify for the loan but as well how to pay back once they succeed. This can be very positive in helping business owners get approved for financing. A great business plan can go a long way in helping entrepreneurs secure the loan that they want.
By utilizing the Canada small business financing loan, entrepreneurs can help increase the cash flow in their business, and avoid one of the most common reasons for businesses to fail in Canada today.
Business owners may not know how to use debt as a powerful tool in their business says virtual accountant. If businesses finance assets in their business instead of purchasing it with cash they have their business, business owners can still that the assets, but also have the money in their bank account that they can then use for operating capital. The reason this is so important, is because itís far easier for businesses to qualify for asset loans then it is to qualify for operating capital loans. If business owners running into cash flow problems, chance of them being able to get an operating line of credit, is much smaller than financing assets. By financing assets, business owners keep the cash flow in their business positive, which can help them avoid the second most common reasons why businesses fail today.
One advantage of utilizing financing, is that business owners can keep the money in their business. This also means that they have to qualify for loans. If business owners are having a hard time qualifying for loans through their bank, working with their virtual accountant can help them find programs such as the Canada small business financing program. This is a program that the federal government created to help small businesses qualify for loans. In order to qualify, business owners need to have less than $10 million in revenue and then the federal government will act as the business guarantor. This is extremely great news for businesses that fund risky projects, if they donít have a loan straighten their business, or if they have been business for a while and the cash crunch potential in their business means that the banks donít want to loan to them.
The disadvantage of this, is that large banks often donít want to touch loans by Canada small business financing program. The reason for that is because banks often have to work outside the way they typically do their work, it takes far more time than their typical loans, and they have to coordinate with the federal government. All of these reasons mean that they are less excited to work with entrepreneurs on this type of loan. They either ensure that the security they request for the loan is so high that no business owner will agree to it, or they just outright refuse. By communicating with their virtuals accountant, business owners can find that if they are large bank has also denied business loan, they can go to a credit union or small bank because their mandates are different, or they are fine with working outside their typical scope of work.
Business owners that qualify can then finance as long as itís in the range for up to $1 million for real estate, or real estate and assets, or $350,000 in order to qualify for hard assets. Business owners must there virtual accountant to ensure that thatís what their financing, certain things cannot be financed such as websites, paying payroll, operating capital and advertising.