In 3 mins.The Ultimate Guide to Securing a Line of Credit: Don't Miss Out on Funding for Your Business!Read Here...
"You won't believe how difficult it is to get a business line of credit!"
"Are you a small business owner struggling to secure a line of credit? You're not alone. Most lines are nearly impossible to qualify for and have outrageous collateral requirements. But don't give up yet – I've got some insider tips on how to overcome this challenge and get the funding your business needs to thrive!"
In this article you will learn:
Lines of credit and collateral
Lenders don't provide lines of credit because they believe in your business. Instead, they look at whether you can pay back the loan. To qualify for a line of credit, you usually need to have a good cash flow or collateral (something valuable that you can use as security for the loan).
Are “no-collateral” business lines of credit?real?
Some lenders offer lines of credit for small businesses that don't require collateral, also known as "unsecured" lines of credit. However, these lines are often misunderstood. In reality, lenders usually require that the business and the owners have plenty of collateral available, even if it's not pledged specifically to the line of credit. If you can't pay back the loan, the lender may try to collect from your corporate and personal assets. These "no-collateral" lines of credit are sometimes structured as personal lines of credit for business use, and they usually have low limits and require a strong personal credit score and possibly a personal guarantee from the owner.
What if you don’t have collateral?
If you don't have any collateral, your options for borrowing may be limited. One possibility for new businesses in this situation is to apply for an SBA Microloan, which can provide up to $50,000 (USA) and International Finance Corporation IFC (MENA). However, if you need more than this amount, It's also worth considering that sales and purchase orders (POs) can sometimes be used as collateral for funding. As a small business owner, you may not have thought about using these as collateral, but they can be valuable in some cases.
Use your sales as collateral
If you sell products or services to other businesses or government agencies, you may be able to use your invoices (accounts receivable) and purchase orders as collateral for business financing. This can allow you to get financing that's similar to a line of credit, but may be easier to obtain. Three options that offer this type of funding are accounts receivable factoring, purchase order funding, and asset-based financing.
#1 Accounts receivable factoring
Companies that work with other businesses or government agencies often have to wait a while to get paid for their invoices, which can create cash flow problems. This is one reason why small businesses consider getting a line of credit. Factoring your accounts receivable can help you solve this problem and get many of the benefits of a line of credit. It allows you to finance your invoices and get immediate funding, which can help you grow your business and manage your cash flow. Receivables factoring is flexible and can increase as your sales grow. It's also relatively easy to qualify for, as long as your clients have good credit, and your invoices must not be pledged as collateral with another institution, and they pay within 30 to 90 days.?
#2 Purchase order funding
One common problem for small and growing business is getting very large orders. Now, few companies would consider a “large order” to be a problem. However, if you don’t have the financial resources to fulfill the order — it’s a real problem.
This problem leaves you with three options, none of which is good. You can take the order and risk cash flow problems. Or worse, you could take the order and fail to deliver. The last option is to not take the order at all and lose the revenue.
领英推荐
An alternative for some companies is to use purchase order funding. This solution provides you with funds to pay your suppliers, which allows you to process the order, deliver it, and get the revenue.
Purchase order funding does have limitations. It can be used only by companies that resell finished goods at high margins (above 20%). They must purchase the goods from the supplier and sell them to the client without modification or additional services. As a result, only certain companies can benefit from this option.
#3 Asset based financing
Asset based financing is used by more mature companies that can’t get a line of credit, usually due to difficult lending covenants. An asset based line allows companies to leverage receivables, inventory, machinery, and, in some cases, real estate.
The structure of the line depends on the assets that are being funded. Lines backed by accounts receivable and inventory are structured to operate like revolving lines of credit. You can get funding against assets as their values increase and pay it down as cash becomes available. Lines backed by other assets are often structured as term loans.
Most lines require that the client finance a minimum of $500,000 to $1,000,000 per month. They also require that the company have two years of operating history, good accounting controls, and reasonable financial statements.
Which solution is right for your business?
Which solution works best for your business depends on your individual circumstances. However, keep the following in mind:
Now if you want to learn more tips and tricks subscribe to the newsletter.
In monopoly (UK Version) it works out that Pentonville road, Angel of Islington & Uston, the light blue sites on the left give you 159% return and are the best in terms of arithmetical return but the dark green sites which are what people think that are better Oxford Street, Bronze Street, and Regent Street only give you 101% return so they are very bad. The next best sites are the orange ones which are Bow Street, Vine Street, and Malbrough Street. They give you 141% return but they are better than Pentonville Road, Uston & Angel of Islington because there is an increased incidence of landing on them.?You land on them more often and the reason for that is, there is a card in the chance that orders you to go to jail. And if you go to jail, you are past the blue sites and about to land on the orange ones. In addition to that, there is another card in chance, ordering you to advance to Pall Mall which does the same thing, it takes you past the blue sites and another one demanding to advance to Marly Bourne Station.
There’s also another one demanding you to go back three spaces, which in one position will land you on Vine Street. So there’s an overwhelming case for having the orange sites. Now, most people do not know that.??
Quote
"Life is movement and movement in my opinion is represented as a wheel. It may be a car wheel, bicycle wheel,?or even a semi-truck wheel. In the end, you choose the size, width,?and type of rubber. What’s even better, you also have a choice to fill it with more air than the recommended pressure (for some that’s un heard of), however, one thing is crystal clear; to live a full life and have choices you must be willing to transform into a wheel rather than being a spoke on that wheel."
Amer Alamer (aka. Lamar Sidwell) is?venture capitalist and an expert in structuring real estate and business transactions. He is active in the mergers and acquisitions space as well as property development. He has been awarded three Real Estate Development Awards 2019-2020 (Best Developer Europe, Best Fiver Star Developer Turkey, and Best International Developer) by UK members of parliament and 80 other prominent judges at Prince Waleed Bin Talal’s hotel, the Savoy Hotel in London. Amer Alamer also helps small to medium-sized enterprises scale and exit by using public vehicles. He is also the winner of the Gold Stevie Awards 2021 for best innovation in the Financial Industry Middle East.
He is an author of How To 144X Your Options In Life which teaches how to structure real estate and business transactions using options. As well as taking them public on a recognized stock exchange. He has been featured in Smart Investor Magazine with a 4-page story.
Disclaimer: This material provided in this article should be used for informational purposes only and in no way should be relied upon for legal or financial advice. Also, note that such material is not updated regularly and some of the information may not, therefore, be current. Please be sure to consult your own financial advisor and lawyer when making decisions regarding your financial or legal management.?
#agencies #agency #associates #business #businesses #businessman #businessmen #businesswoman #business woman #companies #company #corporation #corporations #enterprise #enterprises #enterprising #establishment #establishments #firm #firms #gmbh #institution #institutions #llc #nonprofit #nonprofits #operation #operations #organization #organizations #partners #partnership #partnerships #program #programs #startup #startups #venture #ventures #lamarsidwell #mygisur