Asset Based Loans

Asset based loans are any kind of loan secured by an asset. If the loan is not repaid, the asset is seized by the lender. A mortgage is an example of an asset based loan. However, the term is used more commonly to describe business lending.

Terms for asset based loans are usually for a short period of time and interest rates may be higher than conventional financing. However, these loans are often needed by companies that would not have their required funding needs met by a conventional loan process.

Real estate, accounts receivable, inventory, machinery and equipment are the typical assets that secure the loan. However, assets such as things like the value of pharmacy script files, a trademark, or whole assets of intellectual property may also be considered in an asset based transaction. The loan may be secured by a single asset or a combination of assets.

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Angel Investors and Venture Capitalists Can Help Small Businesses Raise Capital

Starting or expanding a small business is now more challenging than ever before. After the market crashed, most banks tightened their standards for lending. Small business owners are finding that their biggest challenge is obtaining the business working capital they need to get started or expand an existing business.

Angel investors are individuals who are willing to provide the business financing that is needed in the marketplace. They are willing to help start-ups by providing them with the funds they need. They will typically look for convertible debt or a certain level of ownership equity in exchange for the funds. 

More and more investors are recognizing that a group of private investorshave more power and leverage than an individual. This is why investors are starting to organize themselves into groups or networks, allowing them to pool their money. They are able to provide a greater level of funding while also increasing their chances for seeing a healthy return on investment.

While there are other ways to get the funding you need, few offer the advantages that come with a venture capitalist. When a bank provides the finances, they expect you to quickly start making payments on that debt. The funds from an angel investor are a little more flexible, providing the business with a little more time before the money has to be paid back. The investors will have some say in how quickly the company should go public, but the start-up will have a larger grace period than they would receive at a bank.

Click here to read complete article on how Angel Investors and Venture Capitalists can help small businesses raise capital

 

Alternative Financing Business Notes

In today’s financial climate there has been many articles written concerning the tight credit crunch being felt worldwide. Both business owners and financial consultants need to be looking for alternatives to traditional financing in order to close business funding transactions.

When acquiring or selling a business, one alternative is to have the seller originate the financing and carry back a business note. At first glance many business owners will not want to take this approach. They want their cash and their exit. If an owner looking to sell a business will look at the benefits and not just the perceived costs, they may find that offering Private Finance in the form of a Business Note will be their best course of action.

Advantages of Creating and Selling a Business Note, click here to read more.

No Loan? Then Generate Cash With Affiliate Programs

Business loans for start-up companies have always been difficult to find and often wasn’t accomplished without family or friends contributing. Small main street businesses, usually located in leased locations, have also had difficulties finding funding. This will continue.

Today’s businesses are faced with:
1. The world wide capital crunch continuing.
2. The likelihood of numerous bank failures.
3. Small businesses that have a line of credit in good standing at a bank that fails may have difficulty getting a new line of credit at another bank.

Considering the business financing difficulties that will confront small businesses for at least the next several years, instead of hoping for the banks to provide financing, it is time for small businesses to look for alternatives.

If there is real estate or equipment owned by the company sale leaseback financing could be an option. Selling the companies accounts receivables would be an option when the increased access to cash allows the company to decrease expenses is another option. Another way to go is to increase sales. Yes, even in this economy. A simple, cost effective, but powerful sales tool is an – Affiliate Program.

Click link to read what an Affiliate Program is?

Acquisition Finance

When a business is being sold, seldom does the buyer pay cash for the acquisition. Even when cash is available, buyer strategies usually involve financing the transaction.

Typical acquisitions take 6-9 months to complete, so the seller will need the buyer to provide some proof up front about their ability to close the transaction. Acquisitions will involve many hours of due diligence, and negotiation. Along with the buyer and seller the acquisition will involve attorneys, accountants, lenders, valuation companies, industry specialists, along with others. No one wants to pursue 6-9 months of work involving a variety of highly paid professionals without having some confidence of the buyer’s ability to close the deal.

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Acceleration Clauses in Business Loans And Commercial Leases

A provision, or covenant, of many business loans and commercial leases is an acceleration clause. The acceleration clause in the loan/lease agreements allows the lender to accelerate their collection of payments contingent on an event occurring – usually lack of payment by the borrower. Failure to keep the property adequately insured, failing to pay tax assessments, not maintaining the property, selling the property/asset, etc., can also be events that start the process of the acceleration clause.

Lenders view the acceleration clause as an important tool in their business loan and commercial lease programs. Loan/lease documents might not specifically address the foreclosure of a property or repossession of an asset, but this is where the acceleration clause comes into effect. Without the acceleration clause the lender would only be able to foreclose on one missed payment at a time. With the acceleration clause, despite whatever event kicks the clause into gear, the lender can demand immediate and full payment of all remaining balances and fees.

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A provision, or covenant, of many business loans and commercial leases is an acceleration clause. The acceleration clause in the loan/lease agreements allows the lender to accelerate their collection of payments contingent on an event occurring – usually lack of payment by the borrower. Failure to keep the property adequately insured, failing to pay tax assessments, not maintaining the property, selling the property/asset, etc., can also be events that start the process of the acceleration clause.

Lenders view the acceleration clause as an important tool in their business loan and commercial lease programs. Loan/lease documents might not specifically address the foreclosure of a property or repossession of an asset, but this is where the acceleration clause comes into effect. Without the acceleration clause the lender would only be able to foreclose on one missed payment at a time. With the acceleration clause, despite whatever event kicks the clause into gear, the lender can demand immediate and full payment of all remaining balances and fees.

How to Submit Your Initial Funding Request

When submitting a Funding Request for review, provide clear concise information in an Executive Summary. Present facts about the business and it’s current financial position allowing a Funder to quickly determine whether or not the project is something that makes sound financial sense.

Before submitting a Funding Request it is recommenced you read the following articles, which can also be found with other information in the Business Funding Secrets article and newsletter archives.

Funding Requests

Breaking Down the Funding Request

Due Diligence Fees

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Pharmacy Financing for Franchise Agreement Buyouts

Pharmacy franchise owners may have started their franchised pharmacy business during times when the profits margins were higher than what the industry is currently experiencing. During this period of history economic factors have sprung up and the pharmacy market conditions have changed.

Although gross sales may be on the increase, nationwide net profit margins for pharmacies and drug stores have been experiencing a decline leaving some franchisees in a difficult position of paying the franchise royalties and having enough remaining funds to properly operate their business. This situation has added to the steady decline in the business values of pharmacies.

Some pharmacy franchise agreements have very strict impediments to changing with the current market conditions. Therefore, pharmacy franchise owners who may not survive the tightening profit ratios only have the options of bankruptcy, or buying out the Franchise Agreement.

Buying out the pharmacy franchise agreement allows the pharmacy owner more flexibility in the decision making for their business and family. Funding the buyout can be less costly than the franchise fees. Being free and clear of the franchise agreement permits the pharmacy owner to sell the business without restrictions from the franchisor.

Those who do not have the cash to buy out the remaining years of the franchise agreements have options of financing the buyouts. There are internal financing opportunities from franchisors. However, franchisees may now find more favorable terms when financing the pharmacy franchise agreement buyout through the consulting firm Washburn & Associates.

Read more about Pharmacy Financing for Franchise Buyouts

 

Funding Buy-Sell Agreements

When a business is owned by two or more people the stockholders should have a Buy-Sell Agreement in place. There are various types of buy-sell agreements and they are sometimes considered a type of a Business Will or a Buyout Agreement.

A buy-sell agreement is a written document that provides the procedures and governs the future transfer the businesses stock. These agreements created to protect the interest of the parties who own the business. It also directs the actions triggered by a stockholder leaving the business due to death, disability, divorce, dissolution, or retirement.

The buy-sell agreement will govern how and when the shares of the business can be sold, or transferred, and how those shares will be valued. When the shares are transferred between shareholders and an estate the stockholders need to make sure the funds to complete the transfer are available. To ensure that the funding required is available, buy-sell agreements are often funded with a life insurance policy. Should the death of one of the co-owners occur, the life insurance settlement will provide the funds for the remaining shareholders to buy the deceased partners shares from the estate.  Click the link to read more on Buy-Sell Agreements

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