dwablnd.info

There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.

In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.

But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.

Different Types of Financing

One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.

Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.

But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.

Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.

Alternative Financing Solutions

But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:

1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.

2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.

3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.

In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:

It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.

A Precious Commodity

Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).

Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.

Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?

Credit scoring is a complicated process and each of the 3 major credit
repositories have their own credit scoring models in place to determine a
borrower’s credit score. The 3 main credit repositories are Equifax, Experian,
and TransUnion. Equifax has credit scores that range from a lowest possible
score of 300 and a highest possible score of 850. Experian has a range of
340-820 and TransUnion 150-934. Just like computers have upgraded operating
systems over the years such as, Windows 98, Windows 2000, and Windows XP, the
credit scoring system versions update periodically also. Not all lenders use the
same version or the most updated version when obtaining a credit report and
credit score for a borrower. Therefore, this is one reason why you may have
varying credit scores between one lender and another.There are five major components or factors that help to determine your credit
score. Roughly 35 percent of your credit score is derived from your payment
history, 30 percent from how much you owe compared to how much you have
available, 15 percent comes from length of credit history, 10 percent from new
credit and recent inquiries, and the final 10 percent comes from various other
items such as the mixture of credit you currently have. Next we will discuss
each of the five components in further detail and explain the basic principals
as to how credit scoring works. This information is to be used only to help
educate and as a guide to assist with the basic ideas involved in credit
scoring.Payment History (35%)Your payment history is the most important factor of credit scoring.
Bankruptcies, collection accounts, slow pays and late payments, foreclosures,
judgments, and liens can negatively affect your credit score. However, an
established history of on-time payments and a clean credit history will
positively impact your credit scores and help to increase them over time. The
older any negative credit history or adverse credit factors are, the less they
will negatively affect your credit score. Therefore, recent late payments or
other derogatory credit will negatively affect your credit much greater than
aged bad credit.Revolving Credit Balances to Maximum Limits (30%)The second biggest factor in credit scoring comes from how you utilize your
revolving credit. The credit scoring models are going to look heavily upon how
much revolving credit you have available compared to how much you have used. For
credit scoring purposes, having all revolving credit or credit card accounts
maxed out to their limits is not a good thing, nor is it going to help better
your credit scores. You don’t want to pay off all of your revolving credit
accounts because that will not show the credit bureaus how well you manage your
credit. Your ideal credit ratios should be roughly 20-40 percent usage. What
this means is that if you have a credit card with a $1000 limit you do not want
to max. out the credit card balance, but you would want to maintain a balance
between 200 and 400 dollars. If you do realize that you have borrowed more than
50% of your available credit limit on your card or your balance is getting close
to your limit, you should either try to pay your balance down to the 40% mark or
call your credit card company and see if they are able to raise your limit. The
biggest mistake you can make is to let your balance exceed your maximum credit
limit. This will negatively affect your credit score a great amount.Length of Credit History (15%)The longer and more established your credit history is, the better and more
positive of an impact it can make. Someone who pays their bills on time for a 10
year period of time is a much better risk than someone who only has a 1 year
history of paying their bills on time, even if they both carry the same credit
score. When you pay off credit card accounts do not close them, keep them open
and use them periodically in order to continue to build an established length of
credit. Closing your accounts can actually have more of a negative affect on
your credit score due to limiting the length of time that particular account was
open for. The longer you have established credit accounts, the better it is for
you. It is possible to still have a good credit score with a short credit
history; however lenders may not approve you for optimal financing options due
to the lack of history still.New Credit and Inquiries (10%)The amount of new credit you have opened, will have somewhat of a minor impact
on your credit scores. If you have numerous inquiries resulting from applying
for a lot of new credit and add many new trade-lines in your credit report, this
can have a damaging effect on your credit score. First, it may negatively affect
your scores because you have a lot of new, un-established accounts. Second, it
can negatively impact your score because you have a lot of inquiries with
various lenders for various types of financing over a short period of time.
Credit inquiries can affect your credit score, not a ton, but enough to lower
your score. This is not to say don’t shop around or don’t have more than one
firm pull your credit when looking to buy a car or a home. You definitely should
use due diligence and shop between a couple of lenders to make sure you are
getting a good deal. When you are comparing quotes however, you should try to do
all of your shopping within a 30 day max. period of time. All inquiries that are
made when applying for an auto loan or a mortgage loan are treated as only one
inquiry when they are done within a 14 day period of time. Therefore if you are
ever told to not have anyone else pull your credit or else your scores will
lower, this has little truth to it. There is only one type of credit inquiry
that counts toward your credit score. That one type of inquiry is when you are
making an application for credit: such as a home loan, auto loan, credit card,
etc… When you pull your own credit, a creditor you already have an account with
pulls your credit, and/or a prospective employer pulls your credit, these do not
have any impact on your scores. Understanding this can help you make sure that
you do not fall victim to all of the urban myths regarding credit inquiries.Types & Mixture of Credit (10%)Having a mixture of the various types of credit will have a small impact on your
credit scores. For a person who has a good mixture of credit such as a home
loan, auto loan, 2-4 credit cards and maybe a personal loan this could be deemed
a good mixture of credit versus a different person who has 15 credit cards and
no other credit. The ideal number of credit cards to maintain is 2-4. Also,
other types of liabilities are important to have, such as installment loans and
a mortgage loan.”Knowledge is power” and the most important step to applying for a loan is to
understand your credit report, your credit scores and how credit scoring works.
It is highly recommended that every person checks their credit report at least
once per year to help protect themselves from inaccurate information and from
identity theft. A new law was recently passed that permits a borrower to have
access to their credit report one time each year for no charge to allow them the
opportunity to review their credit history and verify the accuracy of all items
listed. You are permitted to obtain a credit report from each of the three
credit repositories, TransUnion, Equifax, and Experian. You can obtain your
free report by logging into the annual credit report and following
the directions. When you obtain your free report it will not contain your credit
score, but you can pay a small fee if you would like to find out what your score
is when you are ordering your free report. It is also highly recommended that
you pull a report from each repository individually as opposed to all of them
together so that you can dispute any erroneous information to each bureau
separately. If you report a problem to only one of the bureaus it will not be
fixed among all three of the bureaus. Remember the bureaus are separate of each
other and have no communication amongst each other either. Some creditors report
to only 1 bureau, some report to 2 bureaus, some report to all three bureaus and
some don’t report to any. This is why you must make sure that you check all
three credit repositories when you are utilizing your free annual credit report.
In conclusion, your credit is very important and understanding the basics of how
your credit scores are obtained is equally as important.Credit scoring is a complicated process and each of the 3 major credit
repositories have their own credit scoring models in place to determine a
borrower’s credit score. The 3 main credit repositories are Equifax, Experian,
and TransUnion. Equifax has credit scores that range from a lowest possible
score of 300 and aHere is a quick contact list for the 3 main credit repositories:Equifax Credit Bureau P.O. Box 740241 Atlanta GA 30374-0241 * (800) 685-1111http://www.equifax.comExperian (Formerly TRW Credit Bureau) P.O. Box 949 Allen TX 75013-0949 * (888)
397-3742http://www.experian.comTrans Union Corporation (Credit Bureau) Consumer Disclosure Center P.O. Box 390
Springfield PA 19064-0390 * (800) 916-8800 * (800) 682-7654 * (714) 680-7292http://www.transunion.com

Creating your own fashion blog can be the easiest and at the same time, the toughest of all writing assignments. The task can be both intimidating at times and exciting too. There is probably no other subject on earth that makes you as jittery as the subject of fashion when you start creating a blog dedicated solely to the aspects of looking great.Do Not Focus Solely on Earning Money: Like most of the other bloggers, fashion bloggers are also allowed to make money through proper marketing of their blogs. But, earning money should not be the sole purpose of the blog. A number of fashion blogs these days are interested in generating revenue through advertisements of different fashion brands. This makes it way too difficult to build a heart to heart connection with the readers.Invite The Reader to Your Fashion World: People do not visit a fashion blog just to check out what clothes the bloggers are wearing. They want to have a complete fashionable experience by receiving knowledge about what they should wear and why. Moreover, the visitors would like to get into the complete runway fashion experience or would love to imagine themselves to be in the part of the world that a particular trend of fashion belongs to. This is the best way to gift the ordinary blog readers with a nice “almost” fashion show like experience without intimidating their taste for fashion. In fact, that is what most of them turn to a fashion blog for.Engage The Readers with Excellent Write-ups: It is true that the nice and catchy photographs are prerequisite to bringing more traffic to your fashion blog. That does not mean you can forget keeping an eye on the quality of posts on your blog. Remarks interwoven with witty and intelligent fun keeps the readers hooked and makes most of them coming back, again and again. No matter how beautiful the images are and how much your knowledge and sense of fashion helps the visitors, you cannot expect them to wait for a few minutes before leaving, until the information in black and white does not seem to be enlightening and appealing enough.Reach Out to Readers by Imparting Confidence: Fashion blogs are a tad different from the usual fashion magazines and the lifestyle channels on television. Writing for fashion blogs is beyond mere advising about what to wear and what not to. But, the readers love to see in the fashion blogs how ordinary people actually dress. Unlike, popular fashion magazines and TV channels, such blogs tell its target readers how to wear whatever they want to, confidently. Some widely popular fashion magazines cannot impart the same confidence that the wearer needs to carry along with the dress.Do Not Suggest Buying Expensive Products: The dream of buying expensive clothes, accessories, bags and shoes from big fashion labels often pursue people to end up adding them to their stock. Still, a large number of people cannot afford such brands. Does that mean, those people cannot really reach out for what is called fashion in true sense? Fashion bloggers can bridge the gap by relying equally on low-budget products as they do on expensive brands.Image is The Heart of Fashion Blogs: High quality photographs are a must for the success of a fashion blog. Fashion is one subject, blogs on which requires to cater to the ocular sensory nerves a lot. So, it becomes very important for the blogger to look for the right kind of pictures to validate the subjects of blog-posts. The readers will definitely like to have a look at what they are being suggested to wear. It is very important to put up very clear and professionally taken photographs that will also help them visualizing themselves in such clothes. It is very important for the blogs to become fashion inspirations for the readers. Otherwise, they will not come back to the blog again.Creating a fashion blog involves loads of diligent efforts to make people believe that they can look fashionable even in the most low-priced and ordinary clothes already present in their closets. So, make them understand that there is no need to burn a huge hole in their pocket to look fashionable. It is their confidence and attitude that can make all the difference.