Money makes your business go,and usually banks give loans only to businesses with operating histories.If the target company has a lot of assets,positive cash flow and strong profit margin,the buyer should be able to find bank financing.But if you want to buy a service company that has a lot of receivables and short-term assets,the level of difficulty of securing bank financing increases.To help improve your chances, find a bank that has a history of financing the type of business you are buying.If the seller has a strong relationship,then talk to seller’s banker.Talk to a number of banks in order to secure financing.What most buyers or prospective borrowers don’t understand is that each bank’s requirements are different.So you may go to one bank and get turned down for a convention loan or SBA financing.You are left with the impression that you don’t qualify for a loan.But that could be further from the truth.
Small business funding – Finding small business funding is one of the survival skills needed for small business success.Whether you’re a start up or growing business,learning the basics of raising capital will go a long way to ensure you stay in business.There are a variety of money sources for small business including grants,small business loans,SBA loans,angel investors,etc.The new changes to the small business lending market represent an intensifying competitive industry.Many non-bank players are forcing banks to adapt to the market or lose market share.For the small business owner,this means a greater choice and service as all companies wake-up to the size and power of small business.
Business finance can be short-term or long-term.Based on the need,both these categories have their respective
business finance sources:- Short term finance – A trade credit is a short-term business finance option.Some banks provide short-term business finance by allowing businesses to overdraw money from their accounts.Overdraft facilities are made after a prior agreement by the bank with its customer.
Long term finance – Share capital has been on top of the list for long-term business finance options.A company will sell its stocks to shareholders in return for cash.It can also be defined as a process by which a company raises business finance by issuing common or preferential shares to investors.
Venture capital is germinal business finance,invested purely for long-term results.Investment funds or wealth management companies will identify high-potential companies who are at their nascent stages of development.By investing at the grass-roots level itself,venture funds always have a long-term vision in mind.Venture capital is also given to established companies that have business finance needs for expansion or diversification purposes.
