Alternative to Commercial Rehab Or Rehabilitation Loans
Commercial Rehab Loans have historically been the "territory" of either commercial construction loans or commercial hard money. Neither option is ideal for the borrower. The negatives with hard money are obvious; they are expensive and often carry harsh terms.
Traditional commercial construction loan also carry negatives. From a traditional banks perspective Commercial Rehab Loans are essentially the exact same as construction loans. Banks require the same type of documentation on commercial rehab financing, (plans, permits, lien wavers, etc) as on ground up construction. Although fees and rates on bank construction loans are much better compared to commercial hard money, commercial construction borrowers "pay" for these loans with their time and intense documentation/reporting requirements.
Borrowers that own other commercial property should look into using equity from other property, via the new Commercial Second Mortgage, to potentially finance the rehabilitation costs. Some benefits of this approach include:
o Reduce or no reporting to bank.
o No waiting for capital/draws while city and bank approve work.
o No 3rd party or upfront fees.
o Commercial Second Mortgage comes in a Fixed Rate Second or Equity Line of Credit.
The commercial second mortgage can be a solid alternative; however borrowers should be aware that the loan program does have limitations. Most common complaint is that the rate is typically 1% -2% higher rate when compared to first lien position traditional bank loans. Also, lending banks adheres strictly to max combined loan to value cap of 75% and will not lend beyond $500,000.
However for the borrower that owns an existing commercial property with ample equity this new option can certainly lessen the burden of the construction loan process.
How to Woo Banks Into Giving Loans
When people think of starting a small business of their own, one of the first things to strategize for is how to get a loan from the bank. Getting business loans from banks are far different from getting an instant payday loan from a trusted financial lender. Owners of small businesses attest that when their business is taking off, a business bank loan is what keeps things moving, and this means covering greater ground and making it grow. With that, small business owners should know how to get the best business bank loan and it depends on what kind of business they have.
For example, owners of food business like food carts and even small dining places should have these three things working for them: good marketing, good pricing, and personalized customer service. Food business owners are likely to be hands-on in the operations. They have to make sure that the customers are served well and that the business is running well, too. Even when starting small, starting entrepreneurs and business owners must offer the best things they can to their customers. If they have these three things in place in their business, they would definitely attract a good number of clientele.
The same is true with applying for bank loans. Business owners and entrepreneurs must have a good credit history to give banks a solid picture of their being responsible with their money-whether in business or personal finances. The owners' credit history is pertinent to the small business loan, particularly if the small business is starting out and does not have a long operating history. Banks would look into their financial portfolio and see if everything is in order. They also have to be responsible enough to monitor their credit and this means having the proper documentation for transactions made. When applying for a business bank loan, it is important to bring the financial statements of the business in order to show its financial standing. Banks would need to know how much the business is worth and how much money the owners are moving. Lastly, small business owners and entrepreneurs should have an updated and detailed business plan when they go over to the bank. It is more likely for banks to grant business loans to those that have everything spelled out and planned.
However, if owners and entrepreneurs have a hard time applying for a small business loan, maybe it is time to look for alternative sources. Again, depending on the nature of the business, a good suggestion would be to get online payday loans which could range from $300 to $1500. These loans have quick processing times and the requirements are easy to get and submit.
Small Business Grants – Money You Never Have to Repay
Small business grants are another finance option that new and existing business owners should not overlook. These programs offer the opportunity to receive government assistance for start ups and established companies that can use a little help.
In the governments eyes, small business is what fuels the economy. Without there success, America would crumble, which is why they are so willing to help. But don't think they don't see some financial gain themselves from this.
Armed with the job of keeping America running smoothly, the government is selective with where they spend their money. What economic advisers know is that when a business succeeds, more money is spent, more jobs are created, and additional tax streams are produced.
In other words, small business grants create more tax income. When your business grows, more people are doing business with you and more employees are hired, which leads to additional income tax and sales tax. It's very cyclical and a good investment for the government.
For small business owners, it's a great investment. Unlike private or bank loans, this is money that never has to be paid back. As long as you use the fund in accordance to the terms of the grant, the money is yours to spend freely on your business. You benefit, your company benefits, and America benefits. It's a win-win situation all around.
Which is why billions of dollars in small business grants are made available. The Wall Street bailout received press because of the scale of this program, but the government has made grant money available to for decades. It just takes the savvy small business owner to ask for it.
Business Cash Advance – Business Funding Made Easy!
There is one question that haunts each and every small business owner: "How do I get enough cash to run my business smoothly?" The question is not as easy as it appears to be. While people who are new to this might be thinking of those nice bank loans and SBA funds, ask someone who has actually tasted the water! Most banks would have a long list of terms and conditions that you will need to fulfill besides the hefty collateral that they would demand before issuing a loan. Talk about SBA funding, well that's too little for the total number of entrepreneurs applying for it. So what other alternative do we have?
Business cash advance is probably the best alternative in such a situation. A cash advance is nothing new, the concept has been around for a while, but with the increasing use of Internet, it is becoming more popular and easier for people to get a business cash advance.
It is pretty easy to get a business cash advance. You can fulfill some easy conditions and easily have a decent fund at your disposal. The most important factor that determines whether you qualify for a business cash advance is whether your business accepts credit card sales. Business cash advance providers provide cash against your credit card receipts.
The typical conditions that any business cash advance providers would ask for are:
The business should be in existence for at least 1.5 -2 years
The business should have a minimum amount ($1500) of credit card sales per month.
Credit card statement or bank statement of 12 months (3 months for seasonal business)
Most small business owners can satisfy these conditions, which makes it a lucrative option for funding their business.
In addition, the application process is very simple. Most good cash advance providers would not charge you any application fee and you can apply for a business cash advance by simply filling out the online application form on their websites.
As a bonus, business cash advance doesn't come with a fixed repayment schedule; hence there are no late fees. Also, in most cases, you don't need to guarantee the cash advance personally.
A small business loan is not just hard to get but often its use is tied down by certain conditions put forward by the lender. Business cash advance frees you from any such bindings - it's your money and you can spend it the way you like. So if you need money for your business now, be it for the recurring expenses, for business expansion, to buy a machinery, purchase inventory, advertising or for any other business expense, don't get frustrated by the NO's you get from the banks. Just say YES to Business Cash Advance to let your business have a smooth sailing.
Start Up Funding – Tips to Get Your Business Going
Start up funding is critical to the success of any business. While some companies can be started on a shoestring budget, most require some investment by the owners. There are several kinds of start up funding available.
The most common is the entrepreneur using their own savings to get their business going. Or using cash from their credit cards or from a home equity loan. The benefit is that the entrepreneur doesn't have to worry about investors looking over their shoulder or disappointing friends and family who may have provided the funds. The disadvantage is that if the business fails, the entrepreneur's home may be at risk or savings lost.
A small business loan is often used to purchase equipment, supplies, and inventory to get the company going. If the entrepreneur has a good credit history and a relationship with a bank that does business loans, the money can often be obtained with a simple application form. Unfortunately most banks require that unless the loan is personally guaranteed the business has to have been operating profitably for at least two years. Banks look at two factors: the risk in not getting the principal paid back and whether the company can generate enough funds to pay the monthly interest. Bankers are not interested in the growth potential of the company.
Venture capital is glamorous and gets lots of press. The reality is that it is difficult to obtain and very few start up businesses actually are successful in obtaining venture capital. Less than 20% of the venture capital invested is invested in early stage companies. The average venture capital funds invested per company per investment is nearly $10 million. Very few of the 600,000 businesses started in the United States and 400,000 in the United Kingdom each year qualify for venture capital. Less than 1% are appropriate for venture capital.
Angel investors or private individuals who invest in start ups, is another alternative. Angel investors usually invest in high tech companies that have the potential to quickly grow and return that investment at the end of a three to five year period with at least a ten fold return. In other words if the angel invests $100,000 in year one they expect to get $1,000,000 at the end of three years. Private investors sometimes work together in groups called Angel Networks. You can find Angel Networks in your area by talking to your local Small Business Development Center Office, local chamber of commerce, or searching through local newspapers, and of course through search engines.
Vendor financing and store credit are two more ways to find money for a start up company. Vendor financing is when the vendor you buy your supplies from gives you from 30 to 90 days to pay. Even if the vendor doesn't offer payment terms you can ask for them and in return offer a 1% or 2% premium. You might be able to stretch out the payments for up to six months, with the vendor's permission of course. Store credit is available for most businesses, even new ones by completing a store application. This can be helpful to buy office supplies and even computer systems.
Start up funding is available to start a business but it isn't always easy to find.