What Kind of Financing is Right for Your Business? | Banking ...

Most businesses need funding. Unless you?ve won the lottery or inherited a fortune most people start a business, either with their own funds or a combination of funds and financing. Even a company needs financing in place at one time or another.

Cash flow is different from earnings and benefits is not guaranteed money in the bank. Entrepreneurs need finance for inventory, payroll, expansion, development and commercialization of new products, new markets, marketing, or moving to a new location.

Identify and select the right funding for your business can be a complex and difficult task. Incorrect operation performed can lead to a number of problems. We must understand that the way to finance is not clear and predictable. The financing strategy should be guided by specific goals and companies, based on financial need, and ultimately by the available alternatives. However, the bargaining power of the entrepreneur and investors regarding management skills and organize the financing process of drilling, which is actually the end result. Be prepared to negotiate with a funding strategy and comprehensive financial services.

Here is a brief description of some types of financing for commercial enterprises.

Asset-Based Lending

Loans secured by inventory or receivables and sometimes by assets such as property, plant and equipment.

Bank loans

A loan is repaid with interest over time. The company have strong cash flow, strong management and a lack of things that could throw the defaulted loan.

Prefinancing

A short-term loan for a financial company in a rut and achieve a new round of venture capital funding or by completing another proper funding to complete an acquisition.

Equipment rental

Finance teams rent instead of buying. Is provided by banks, subsidiaries of equipment manufacturers and leasing companies. In some cases, investment banks and brokers for the parties to a lease together.

Factorization

This is when a business sells its accounts receivable aa reduction. Buyer assumes the risk of collecting on these debts.

Mezzanine debt

Debt to equity-based options, such as warrants, which give the holders to purchase a specified number of securities at a price in a selected time period. Mezzanine debt that usually guarantee or has a lower priority, which means that the lender is much more in line in bankruptcy. This debt fills the gap between senior lenders such as banks and investors.

Loans

Loans-new properties that are short-term loans for the construction or existing improved properties. This usually involves buildings, shopping centers and buildings that are at least 2 years and 85% rented.

Sales / Leasing Financing

The sale of an asset, such as a building, and the rent for a specified period of time. The assets are typically sold at market prices.

Startup Financing

Business loans in its first stage of development.

Ready to roll

A short-term loan for the acquisition of assets that generate income. The capital is used to run the daily operations, and is defined as current assets less current liabilities.

It is always better to be without going into debt. But on the other hand, most companies need to obtain financing at one time or another. A home office is less likely to need financing from a place of business that you rent. Operation of a person is less likely to need financing with employees.

Source: http://www.nuncnow.org/what-kind-of-financing-is-right-for-your-business

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