Advantages Of Non-Bank Financing

The Advantage
Using a Business Finance Consultant provides you with substantial advantages that traditional mortgage brokers do not have.

These advantages can be seen in four important categories: Training, Product Knowledge, Customer Service and Pricing. Lets talk about TRAINING first.

To fully understand this advantage you must first know how our Business Finance Consultants differ from a mortgage broker. Our Business Finance Consultants are the elite of the mortgage industry. Our Business Finance Consultants are thoroughly trained and certified by the nations oldest and largest loan broker training company. Most people would be surprised to find out just how little formal training the average mortgage broker / loan officer actually has received. Business Finance Consultant training helps to ensure that the person handling your loan has access to the most current information and lending techniques available in the market. Also, unlike traditional bank loan officers, our Business Finance Consultants receive substantial training on how to help borrowers whose credit is "less than perfect, as well as those with good credit". Because of this training, our Business Finance Consultants are often able to close loans that other mortgage brokers could not. Whether you've had trouble paying your bills, are new on your job or just a little short on the down payment, our Business Finance Consultants are your best opportunity to get the loan you need.

Providing you with a superior level of customer service is equally important to our Business Finance Consultants. For this reason our Business Finance Consultants will spend all the time necessary to provide you with a custom financing solution that is right for you. Once your application is started, our Business Finance Consultants will represent you throughout the transaction so that you can focus on more important things. Our Business Finance Consultants also maintain contact with you throughout the loan process so that you never feel "out of touch" with your own loan. In fact, our Business Finance Consultants regularly provide their clients with status reports to help keep you informed. At every step throughout the transaction, you will know the status of your loan. If you have ever been through the mortgage loan process, then you know that this is not normally the case. Most borrowers will endure the entire loan process wondering what exactly is going on, or trying to get answers from other people involved in the deal because their loan officer is never available. Our Business Finance Consultants understand the value in providing a superior level of customer service and are focused on keeping you involved every step of the way.

In addition to their knowledge and desire to make your loans go smoothly, our Business Finance Consultants will give you access to the most aggressive rates and terms available in the market. Since Business Finance Consultants have the ability to work with hundreds of lender programs nationwide they can offer you more options than you may have thought possible. Also, because Business Finance Consultants access "wholesale money" they can provide the same programs that major banks offer and pass the savings on to you. It is also important to note that ours Business Finance Consultants do not get paid unless they are successful in funding. This means they will review your request and present it in a manner that poses the greatest probability of funding. As such, Business Finance Consultants have a tremendous motivation to ensure that there are no hidden costs or fees that other mortgage brokers often charge you at the last minute. By choosing to work with our Business Finance Consultants, you are working with the elite of the mortgage lending industry.

About Business Loans
Every business has five major components necessary to operate.

The deregulation of the banking industry has made new choices available that never existed before. One of these is the availability of money through non-traditional lending sources.

The types of business loans vary to your specific business needs. Here are just a few of the loans that can be arranged by our Business Finance Consultants.

If you are considering a purchase or construction of commercial real estate, we can offer you up to 90% financing whether it's owner/user or strictly an investment. We have access to some of the most aggressive programs in the industry and with loan terms up to 25 years you'll be surprised at how easy owning commercial real estate can be.

If you are planning to start a business, your best opportunity to obtain financing may be the assistance offered by our Business Finance Consultants. Our network has provided capital for hundreds of start up businesses nationwide.

A line of credit can be one of the most useful financial tools for a small business. Our Business Finance Consultants can help you determine if this is the right transaction for your business. Our experts will guide you through the transaction every step of the way.

If you are considering the purchase of a franchise business, our Business Finance Consultants can help. Whether it is a restaurant, retail or service related business, our Business Finance Consultants can help you achieve the dream of owning your own business.

Our Business Finance Consultants can give your business access to all of these types of financing and more. With one phone call you, can have dozens of lending sources competing for your loan. Once you have experienced the high level of customer service, competitive pricing and wide selection of financing options you will understand why many business owners view Business Finance Consultants as their most important asset.

Factoring Accounts Receivable
Factoring, also known as "cash for receivables," is the conversion of a business accounts receivables into immediate cash by the outright purchase of its receivables, at a discount by a factor.

Factoring is not a loan and is not based on a business ability to repay the money advances. The length of time in business is NOT a consideration. The debt to equity ratio is NOT a consideration. Instead, it is based on the ability of your customers to pay what they owe. Once a factor purchases the receivable invoice, they assume the responsibility for its collection. The factor is also responsible for accounts receivable management functions, such as credit investigation, accounting and bookkeeping. As compensation for these activities, the factor purchases the receivables at a discount.

The discount fee is usually dependent on the amount purchased, the credit worthiness of the debtors, and the turn around time. Fees can vary substantially but are usually less than most business owners expect.

Frequently, a commercial bank cannot provide all the loan funds a growing company needs. A balance sheet is not liquid enough, or it can't clear off the bank debt every 6 or 12 months. A factor can provide funds to clear off bank loans periodically or make additional bank credit possible by guaranteeing accounts or replacing accounts receivables with cash.

Once a factoring contract is entered into, you will submit orders to the factor for credit approval before shipping. The factor's credit department becomes your credit department. When the order is approved, you will receive up to 80% of the proceeds with the remainder retained by the factor as a reserve against loss from complaints and returns. This is withheld to protect against credit losses, since the factor purchases the accounts without recourse. Usually the factor will settle the account each month and pay the proceeds due, less cash discount.

One of the biggest advantages of factoring is that businesses get immediate cash (from 70 -80% of the face value of the invoices) within 24-48 hours, which means you can accelerate your cash flow by speeding up payment of the receivables. You will have an immediate source of funds for operating expenses and future growth. You will be able to use your own, hard earned cash without having to wait 30, 60, 90 or 120 days to collect from customers. Additionally, since only receivables are used as collateral for the cash advance, other assets (such as real estate and equipment) can be used for future borrowing.

Cash flow is probably the most important element in the success of a business. Accounts receivables may be the biggest asset on a company's balance sheet. They also represent the business best source of operating capital that is in permanent disuse. Factoring improves cash flow. A business can use cash currently tied up in receivables to increase sales and take advantage of supplier discounts. Factoring accelerates cash flow by eliminating the time lag between the delivery of goods or the performance of a service and the payment for it. Most businesses have to pay their expenses before they can collect their receivables, disrupting cash flow. Our Business Finance Consultants can help you determine if factoring your company's accounts receivable is the right option for you.

Once you have come to a decision to factor, your Business Finance Consultant will package the transaction in accordance with the factors requirements. Our Business Finance Consultants will select from a wide variety of investors to find the right match for your company. Whether your company is in the start-up phase or you have out grown your cash flow, our Business Finance Consultants can help factor your invoices and get the cash you need.

Points And Interest Rates
Even the most experienced business owners have difficulty understanding the relationship between the interest rate and the points or fees associated with their loans. The reality is that the two are directly related in that "points" are nothing more than interest that is charged up front. The actual rate and number of points a borrower pays is largely dictated by the quality of the borrowers credit. As the credit quality decreases, the interest rate, points and fees increase. This is because these loans are more difficult to fund and pose a greater risk of default to the lender.

Here are some issues to consider:

Often the price of a business loan is stated in terms of an interest rate, points and other fees. A point is a fee that equals 1 percent of the loan amount. Points are usually paid to the lender, Business Finance Consultant, or both, at the settlement. Often, you can pay fewer points in exchange for a higher interest rate or more points for a lower rate. Ask your Business Finance Consultant about points and other fees.

A document called the Truth in Lending Disclosure Statement will show you the Annual Percentage Rate (APR) and other payment information for the loan you have applied for. The APR takes into account not only the interest rate, but also the points, mortgage broker fees and certain other fees that are associated with your loan. Also, ask if your loan will have a charge or a fee for paying all or part of the loan before payment is due (prepayment penalty).

A lender may require you to obtain certain settlement services, such as a new survey, mortgage insurance or title insurance. It may also order and charge you for other settlement-related services, such as the appraisal or credit report. A lender may also charge other fees, such as fees for loan processing, document preparation, underwriting, flood certification or an application fee. You may wish to ask for an estimate of fees and settlement costs before choosing a lender. Some lenders offer no cost or no point loans but normally cover these fees or costs by charging a higher interest rate.

If you see advertisements for lenders offering extremely low rates, don't be misled. Most of the time these very low rates refer to the starting rate on an adjustable rate mortgage or graduated payment mortgage. In other cases, the rate advertised may be for a balloon loan. This is a loan where the remaining balance will have to be paid off early. An example of this is called a 30 due in 5. In this type of loan your payments are based on a 30-year term to make them affordable. The remaining balance of the loan however, must be paid off at the end of the 5 th year. This means that you will probably have to refinance the loan or sell the house at the end of 5 years to satisfy the debt. Locking in your rate or point at the time of application or during the processing of your loan will keep the rate and/or points from changing until settlement or closing. Ask if there is a fee to lock-in the rate and whether the fee reduces the amount you have to pay for points. Find out how long the lock-in is good, what happens if it expires and whether the lock-in fee is refundable if your application is rejected.

Finding business financing that you can operate with for the next 30 years is a serious business. Ask about alternative kinds of business loans in your area. Compare rates, down payments, and closing costs among different types of lenders. Here is where our Business Finance Consultants can save you time and money. There is no single nationwide finance rate; interest rates can vary according to the amount of the business loan, the length of the loan and from lender to lender. Look at the entire package that's being offered, including the fine print about penalties and assumptions. The more knowledgeable you are about the loan process, there will be fewer surprises in store for you at closing.

Equipment Lease And Loans
If you don't understand the difference between a lease and a loan, you are not alone. Many business owners continue to finance their equipment the "old fashioned" way, through loans, because they don't fully understand the potential benefits of leasing their equipment. These benefits can be seen in four important areas, initial cost, equipment obsolescence, tax benefit and off balance sheet financing. Because of these benefits, many business owners are realizing that they do not need to own their equipment in order to conduct business. They only need to use it.

The first thing you need to know about equipment leasing is that it is 100% financing. Because a lease is essentially a "rental" of equipment, there is usually no down payment required to access the equipment your business needs. This directly contrasts most commercial bank equipment loans, which require a minimum of 10% and as much as 50% down payment. By comparison, most equipment leases will require only the first and last payment in advance of delivery. Even if you only need a small amount of equipment, this can result in a tremendous reduction in the "out of pocket expense" necessary to upgrade your equipment. This gives you the opportunity to put thousands of dollars of working capital back into your business, instead of giving it to your banker.

Another benefit of leasing your equipment is the ability to avoid "economic obsolescence". This occurs when a business equipment either cannot keep up with the demands of the market or lacks the technology to help the business remain competitive. Leasing your equipment helps to avoid obsolescence by allowing you to upgrade every few years. In other words, if the equipment appreciates, buy it. If the equipment depreciates, lease it.

In addition to the initial cost and obsolescence, leasing your equipment can also provide your business with a substantial tax advantage. While you should always consult with your tax advisor first, most equipment leases can be structured so that you can write off 100% of the annual lease payments. By contrast, current tax laws only allow a business to write off the interest paid on loans. However, because a lease is a rental and the business is only using the equipment, the business can usually write off all of the monthly lease payments just like any other legitimate business expense. Once again, this can result in thousands of additional dollars in working capital being put back into your business.

The last major advantage of leasing your equipment instead of buying is that leasing allows you to not show the equipment on your balance sheet. Once again, this is because the equipment is being rented and therefore actually belongs to a different company than the one that is using it. For this reason leases are often referred to as "off balance sheet" financing and this can be a tremendous advantage to many businesses both large and small. Big businesses prefer this option because they don't want to own millions of dollars in equipment. This equipment will depreciate substantially with the day-to-day usage. Whoever owns the equipment is responsible for the depreciation on their balance sheet. Also, large corporations may require that the board of directors approve any new loans to the business since. This can make it difficult for the management of the business to operate efficiently. But a lease is not a loan and therefore may not require approval by the board for the managers to get the equipment they need. In smaller businesses this can also be an advantage because they will not show additional debt on the balance sheet that will affect their ability to borrow money in the future. If you are considering selling your business, this may also make your company more attractive to potential buyers since you will be showing less debt on the balance sheet.

Because your Business Finance Consultant works with many leasing companies nationwide they can help you determine if leasing your equipment is right for your business. If you should decide to lease, they can usually get the equipment you need with just a simple, one page credit application. In many cases they can have the new equipment on site in as little as a few days.

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