Commercial finance is one of the many options available to entrepreneurs seeking capital to start or grow an existing business. This sort of financing is also referred to as asset-based lending, meaning that it is a secured business loan. The borrower guarantees the loan by giving up business assets as collateral for the loan. Another popular phrase for commercial finance is asset-based finance.
Account receivable factoring is one form of commercial finance. This consists of selling open invoices for cash that can be used right away in the business. There are many benefits to this financing option including not giving up equity, being able to take advantage of early payment and volume discounts from your suppliers, you can actually purchase in greater volume from suppliers, and you also accrue no additional debt in your business.
Another popular commercial finance option is purchase order financing because it offers quick cash flow reserves. When any business is growing or expanding their business the cash flow simply isn't there because of the money it takes to market and produce products. Suppliers also want to be paid with C.O.D. and your customers are on Net-30 terms; so you run into a cash flow problem. Purchase order financing solves this issue by paying for the costs of your goods directly to the supplier, thus giving you more cash to use on more critical business expenditures. To begin with purchase order financing simply obtain a purchase order from your customer, find an approved supplier, place the order through that supplier.
Asset based loans, an additional commercial finance option, provide a short term approach to maximizing cash flow within a business. This form of financing is used as test for a business to show how they would perform with a long term loan. The business who is receiving the asset based loan has a short window to prove that with the proper financing their business model is effective, and that a long term loan would ensure business growth over a long period of time. This form of financing is perfect for the business that can't afford to wait to establish their business credit. The assets that are accepted as collateral for this type of loan include real property, accounts receivables, and completed inventory.
Other forms of commercial finance include bankruptcy reorganization, expansion financing, import and export financing, inventory loans, secured lines of credit, and merchant account advances. Financing a business is a difficult process, but if you utilize the financing resources available, your business have a much greater chance of success.
It is also good to work on establishing your business credit, ensuring that you separate your personal credit from your business credit. With good business credit scores obtaining large loans and other forms of capital is very simple, and you won't be one of the 97 percent that actually have a loan application denied. One other strategy that is easy to do and beneficial on your quest for business capital is to use a free business capital search engine.
Showing posts with label Business. Show all posts
Showing posts with label Business. Show all posts
Friday, September 7, 2012
Friday, August 31, 2012
Learn How to Write Short Letter Proposal for Small Business Grants
Canada government grants can provide funding for different types of projects or business proposals. So, whether you need ,000 or 0,000, the federal government of Canada and its funding institutions and agencies will surely have the right small business grants for you. In fact, there are entrepreneurs who were given more 0,000 up to million for large business expansion. But if you are just starting to seek grants from the government, then you will have better chances of success if you go for small one time grants. For this reason, you have to know how to write short letter proposal instead of writing full project proposals.
Learning how to write short letter proposals is very important if the scale of your project is small. For example, if you simply need ,000 for the purchase of small equipment, then writing a full project proposal will just be a waste of time. Besides, small business grants reviewers will categorize your application based on the scale of the project and will expect that you will submit a short letter proposal. You will also be given a free application form for getting micro funding through Canada government grants. So with the short letter proposal and the application form, your funding request can already move forward. Your task therefore would be simpler and less complicated.
So how do you write a short letter proposal in order to get Canada government grants? First, a letter proposal should not exceed three pages. The letter should include most of the major elements of a full project proposal but the content should be very concise. That is why some business owners find it hard to write letter proposals. You need to write a strong and well articulated letter in just a few paragraphs. So you should never underestimate the level of difficulty in writing short letter proposals. You have to spend time composing such letter to make it more forceful and compelling. But once you grasp the essentials of writing letter proposals for small business grants, then you will be able to send more small scale funding requests to several government agencies, departments, and financing institutions.
Basically, the flow of information on the letter proposal should also follow the format of full project proposal. But because you are writing a letter, the tone can be a little informal but not casual. You still have to follow the tone of a standard business letter. First, you should convey your request for small business grants. Then describe your project or the purpose for the grant in a very concise manner.
You should also include the reasons why you need Canada government grants and briefly provide information about the capabilities of your company in implementing the project. A short budget matrix should be included in the letter. If your budget projection will not fit into a single page, then it would be best to make it as an attachment. These are the basics of writing short letter proposal. If there are other documentations that are needed, then make sure that you will attach it to your letter request for government grant.
Learning how to write short letter proposals is very important if the scale of your project is small. For example, if you simply need ,000 for the purchase of small equipment, then writing a full project proposal will just be a waste of time. Besides, small business grants reviewers will categorize your application based on the scale of the project and will expect that you will submit a short letter proposal. You will also be given a free application form for getting micro funding through Canada government grants. So with the short letter proposal and the application form, your funding request can already move forward. Your task therefore would be simpler and less complicated.
So how do you write a short letter proposal in order to get Canada government grants? First, a letter proposal should not exceed three pages. The letter should include most of the major elements of a full project proposal but the content should be very concise. That is why some business owners find it hard to write letter proposals. You need to write a strong and well articulated letter in just a few paragraphs. So you should never underestimate the level of difficulty in writing short letter proposals. You have to spend time composing such letter to make it more forceful and compelling. But once you grasp the essentials of writing letter proposals for small business grants, then you will be able to send more small scale funding requests to several government agencies, departments, and financing institutions.
Basically, the flow of information on the letter proposal should also follow the format of full project proposal. But because you are writing a letter, the tone can be a little informal but not casual. You still have to follow the tone of a standard business letter. First, you should convey your request for small business grants. Then describe your project or the purpose for the grant in a very concise manner.
You should also include the reasons why you need Canada government grants and briefly provide information about the capabilities of your company in implementing the project. A short budget matrix should be included in the letter. If your budget projection will not fit into a single page, then it would be best to make it as an attachment. These are the basics of writing short letter proposal. If there are other documentations that are needed, then make sure that you will attach it to your letter request for government grant.
Sunday, May 27, 2012
Three Major International Business Risks You Need To Be Aware Of
Companies rapidly expanding to the global marketplace may have the great opportunities for profit, however, if unable to carefully evaluate the international business risks involve, the golden opportunity perceived may soon turn into an expensive mistake.
Doing business in the domestic marketplace may involve looking only as far as the potential customer's ability to pay and willingness to pay. When doing business internationally however, the definition of risk expands beyond customer commercial risk that includes country risk. In fact, the first thing that should be analyzed before evaluating the elements of risks associated to individual customers, is the country risk. If the country risk shows of great risk then it is senseless to continue information on the customer, but if the country risk is acceptable then the nature and extent of the country risk can help formulate the method of customer risk analysis.
International Business Risks #1 Country Risk
Approving and accepting credit to a foreign customer is also accepting the risk of the customer's country. Country risk analysis means being decisive of the country credit-worthiness in terms of the willingness and ability of a foreign government to make available to local companies' foreign exchange essential to service their foreign currency denominated responsibility or debts to foreign suppliers.
Evaluation of country risks takes into account the possibility of delayed payment or credit loss which can result from any one or a combination of four wide risk conditions such as the resource base, external accounts, political risks, and government policy. Always remember that these factors are interrelated and often overlap with each other.
International Business Risks #2 Political Risks
Analyzing the political outlook of a country maybe more important than analyzing the financial and economic matters of the country. In political risk analysis, one should look into reasonable assurance that if ever political change comes, as it always does, the change will be orderly and there will be practical continuity in basic economic and financial policies.
The possibility of suspension on external debt or even rejection should be carefully assessed. Leadership changes can also change the way in which international investment community views the economic future of the country. Wide fluctuations in currency markets can occur as well as government policies threatening to destroy investment and property of commercial investors in a country. Capital flight is inevitable usually resulting to restrictions of the country's government on the flow of currency and disruption in international trade.
International Business Risk #3 Foreign Exchange Risks
Like any other commodity, currencies also follow the law of supply and demand which is subject to economic as well as political conditions. Exchange rates can fluctuate uncontrollably, sometimes a lot of times in a day, harshly complicating a company's short-term and long-term financial strategic decisions.
The importance of analyzing international business risks should never be underestimated as all these risks have a tremendous impact on the trade of goods and services between nations and thus affecting the failure or success of a business internationally.
Doing business in the domestic marketplace may involve looking only as far as the potential customer's ability to pay and willingness to pay. When doing business internationally however, the definition of risk expands beyond customer commercial risk that includes country risk. In fact, the first thing that should be analyzed before evaluating the elements of risks associated to individual customers, is the country risk. If the country risk shows of great risk then it is senseless to continue information on the customer, but if the country risk is acceptable then the nature and extent of the country risk can help formulate the method of customer risk analysis.
International Business Risks #1 Country Risk
Approving and accepting credit to a foreign customer is also accepting the risk of the customer's country. Country risk analysis means being decisive of the country credit-worthiness in terms of the willingness and ability of a foreign government to make available to local companies' foreign exchange essential to service their foreign currency denominated responsibility or debts to foreign suppliers.
Evaluation of country risks takes into account the possibility of delayed payment or credit loss which can result from any one or a combination of four wide risk conditions such as the resource base, external accounts, political risks, and government policy. Always remember that these factors are interrelated and often overlap with each other.
International Business Risks #2 Political Risks
Analyzing the political outlook of a country maybe more important than analyzing the financial and economic matters of the country. In political risk analysis, one should look into reasonable assurance that if ever political change comes, as it always does, the change will be orderly and there will be practical continuity in basic economic and financial policies.
The possibility of suspension on external debt or even rejection should be carefully assessed. Leadership changes can also change the way in which international investment community views the economic future of the country. Wide fluctuations in currency markets can occur as well as government policies threatening to destroy investment and property of commercial investors in a country. Capital flight is inevitable usually resulting to restrictions of the country's government on the flow of currency and disruption in international trade.
International Business Risk #3 Foreign Exchange Risks
Like any other commodity, currencies also follow the law of supply and demand which is subject to economic as well as political conditions. Exchange rates can fluctuate uncontrollably, sometimes a lot of times in a day, harshly complicating a company's short-term and long-term financial strategic decisions.
The importance of analyzing international business risks should never be underestimated as all these risks have a tremendous impact on the trade of goods and services between nations and thus affecting the failure or success of a business internationally.
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