Tag: Finance

Small Business Investors – Funding – Finance for UK Businesses #introduction #to #business


#small business investors

#

Funding for Small Businesses

Where does someone look for funding if they are a small business? Business loans are only possible if the company has been in business for some time, but most young businesses are looking to expand and so they need other options to raise business capital.

Government grants are another possibility. However, the process of obtaining funding this way is notoriously difficult. The UK government has claimed that this is a sort to test to see how much they need the funding, but the reality is that it is regulated by EU legislation. On the other hand, the EU itself does not fund anything beyond public sector ventures.

There are also sites that offer local grants to small businesses around the UK, including local councils and large companies such as BT and O2, but the latter are usually competitions. Sites such as Business Zone UK list various business grants and awards available to UK entrepreneurs, but the number of proposals and funding amounts are usually quite limited.

More common options for business funding are Angel Investors and Venture Capitalists, both of which will invest significantly higher amounts in your start-up or small business. However, both Angel Investors and Venture Capitalists will want some control of your business and guarantees of a good return on investment in exchange for their money. But at the same time, they offer the experience which could be that factor which allows your business to succeed in the first place.

Remember, the investor is looking to make money just as you are, and so it will be a venture that both sides enter together as a partnership. This means that anyone who invests in a small business will do everything possible to ensure that they are making a sound investment. They will check your business plans thoroughly, and make sure that they themselves believe in your business idea and future plans.

Finding funding for your small business or start-up can take a long time, but the Angel Investment Network can help you make vital contacts with experienced angel investors who are looking to make an investment.

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How finance companies differ from credit cards, banks #good #business #names


#finance companies

#

How finance companies differ from credit cards, banks

Whether it’s buying a car, paying medical bills or purchasing furniture, if you’ve had to finance one of life’s big-ticket items, you’ve probably been offered the chance to take out a loan from a finance company.

They’re the less-regulated alternative to getting a loan from your bank or putting the charge on your credit card. Usually, a finance company offers a secured or unsecured personal loan. Before signing on the dotted line with a finance company, understand exactly what you are getting into.

What finance company loans are (and aren’t)
Sometimes these products are marketed as credit cards, when they really aren’t.

Medical credit cards, in particular, can be very loosey-goosey about the term, says Linda Sherry, spokeswoman for Consumer Action, which in 2014 released a survey of medical cards.

Such products are not subject to the same regulations as credit cards.

Borrowing money from a finance company isn’t necessarily a bad idea, but you should first learn what these companies are, how they operate, who regulates them, and what protections you have if you run into problems.

What are consumer finance companies?
Unlike a bank or credit union, finance companies do not accept deposits. They just loan money, sometimes with fixed terms and sometimes not. Some offer a big range of products, some specialize, says Chris Kukla, senior counsel for government affairs with the Center for Responsible Lending.

The most well-known issuers of these products are automobile finance companies, such as Toyota Financial Services or Ford Credit. These are owned by auto manufacturers and make loans to consumers purchasing vehicles from those particular brands.

If you have strong credit, you have a good chance of getting a low-interest auto loan through an auto finance company.

If your credit is not stellar, an auto finance company that specializes in the subprime market may offer you a loan, but at a much higher interest rate.

CarePayment of Lake Oswego, Oregon — which works with health care providers nationwide and provides a way for people to pay medical bills — is another example of a finance company. It offers consumers a revolving line of credit at a 0 percent annual percentage rate.

Furniture and appliance stores, such as Seffner, Florida-based Rooms to Go, also offer consumers a line of credit through a finance company.

Who regulates finance companies?
Consumer finance companies are licensed and regulated by the state in which they operate. Depending on the size of the company, it may be licensed in one state or dozens of states, says Danielle Fagre Arlowe, senior vice president of the American Financial Services Association, a trade association for the consumer credit industry that represents traditional installment lenders, such as the big auto finance companies.

That is different from credit card issuers, which generally are regulated by federal authorities. The Office of the Comptroller and the Currency (OCC), a division of the U.S. Treasury Department, regulates national banks that issue credit cards, while the National Credit Union Administration supervises federal credit unions.

Meanwhile, state banking regulators oversee state-chartered banks or credit unions.

Finance companies have to adhere to the laws in the states in which they are licensed, Kukla says

That means a finance company can do things that are not expressly prohibited by law in the state in which it operates, Kukla says: It may be abusive, but if it’s not prohibited by law, there’s nothing the state can do.

Because of variations in state laws, a finance company may have different loan terms in different states, Arlowe says. So a consumer in Georgia may be charged a different interest rate or have a different loan payoff schedule than a consumer in Texas.

One big segment of finance companies has a new regulator. The Consumer Financial Protection Bureau (CFPB) — which supervises and enforces federal consumer financial protection laws, including those surrounding credit cards — is taking over the supervision of major auto finance companies.

Under a rule issued June 10, 2015, the CFPB will have authority over companies that make, acquire or refinance at least 10,000 auto loans or leases per year. The bureau estimates that 34 auto finance companies would fall under that regulation, and these account for about 90 percent of all auto loans and leases not made by banks. Together, these companies provided auto financing to nearly 7 million consumers in 2013.

The rules mean auto finance companies will be not be allowed to use deceptive practices to market loans or leases, or mislead consumers about the loan benefits or terms. The companies also must provide accurate information to credit bureaus.

Auto finance companies also will be prohibited from discriminating against consumers when lending based on factors such as someone’s race, gender, and age, or based on whether the person receives public assistance. Illegal debt collection practices are banned, and the CFPB will review automobile repossession processes.

The new rule is scheduled to take effect in August 2015.

What are typical finance company practices?
Unlike credit card companies, finance companies are not required to give consumers the same payment due date each month. While many require you to pay your bill by the same date, in other cases it is a moving target. So your bill may be due on the 22nd one month and the 21st the following month.

If you don’t pay on the proper date, you might be charged a late fee or required to pay a higher interest rate, Kukla says.

There also might be other risks. For example, imagine you are shopping at an appliance store offering 0 percent financing for 24 months. It may sound like a good deal, but if you read the fine print, you may see that it is a deferred interest deal. If you miss a payment or fail to pay the loan off in 24 months, you could end up paying a steep interest rate, and have interest added in from the time you took out the loan, Kukla says.

Many finance companies report your payment record to the three main credit bureaus, helping you build a credit history, Arlowe says. However, they are not required to report such payments.

Complaints are the only real way to tell what kind of lender they are.


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The Enterprise Finance Guarantee Scheme #how #to #finance #a #business


#guaranteed business loans

#

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The Enterprise Finance Guarantee Scheme

The eligibility criteria specified by the Department for Business, Innovation and Skills website states that EFG is open to businesses that:

  • Operate in the UK
  • Have a group turnover of no more than 41 million
  • Are seeking finance of between 1,000 and 1.2 million
  • Wish and can afford to repay over a period of between 3 months and 10 years for term lending and between 3 months and 3 years invoice finance
  • Require the finance for an eligible purpose (most business purposes are eligible the most significant exclusion is the financing of specific export orders as alternative forms of assistance for that purpose are provided by UK Export Finance)
  • Operate in a business sector that is eligible for EFG (almost all sectors are eligible where exclusions apply they arise from EU State Aid rules)

Other details

  • The ability to request a Capital Repayment Holiday (subject to approval). Interest will be charged to the current account
  • Loans are available from 3 months to 10 years for loans from 1,000 to 600,000, and 3 months to 5 years for loans of 601,000 to 1.2 million
  • EFG loans require customers to pay a fee of 2% per year on the outstanding loan balance to the government
  • All bank fees can be added to the loan to help with your cashflow

Please note, you ll be responsible for repayment of 100% of the EFG facility, not just the 25% outside the coverage of the government s guarantee. Where defaults occur, we follow our standard commercial recovery procedures, including the realisation of security, before we make a claim against the government s guarantee for any shortfall.

Ready to apply or want to find out more?

Barclays customers

Lines are open Monday to Friday, 8am-7pm 6

0345 605 2345

New to Barclays?

Lines are open Monday to Friday, 8am-7pm 6

0800 515 462

Other products that may interest you

Business credit cards

Get the cashflow support your business needs, whether you re just starting out, growing or established.

Business overdraft

If you need flexible short term borrowing, chat to us about an overdraft.

Cashflow finance

Release cash in your invoices within 24 hours and keep your business running smoothly.

Important information

  1. For fixed rate loans, if you decide to pay early or cancel the fixed interest rate, you may have to pay breakage cost in addition to other fees such as prepayment fees.
  2. You can choose your loan terms providing the loan term doesn t exceed the life of the asset.
  3. Capital repayment holiday available (during this time interest will be charged to your current account).
  4. Loans are available from 3 months to 10 years for loans 1,000- 600,000 and 3 months to 5 years for loans of 601,000 to 1.2million.
  5. Subject to status and application. We offer a fair appeal process should you feel we ve not taken all your circumstances into consideration. To find out more click here .
  6. Lines are open Monday to Friday, 8am to 7pm. To maintain a quality service, we may monitor and record phone calls. Call charges

Barclays Bank PLC. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register number: 122702). Barclays Bank PLC subscribes to the Lending Code which is monitored and enforced by the Lending Standards Board. Further details can be found at www.lendingstandardsboard.org.uk. Barclays Insurance Services Company Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register number: 312078).

Barclays Bank PLC. Registered in England. Registered no. 1026167. Barclays Insurance Services Company Limited. Registered in England. Registered no. 973765. Registered office for both: 1 Churchill Place, London E14 5HP. ‘The Woolwich’ and ‘Woolwich’ are trademarks and trading names of Barclays Bank PLC. Barclays Business is a trading name of Barclays Bank PLC.


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How finance companies differ from credit cards, banks #better #business #bureau


#finance companies

#

How finance companies differ from credit cards, banks

Whether it’s buying a car, paying medical bills or purchasing furniture, if you’ve had to finance one of life’s big-ticket items, you’ve probably been offered the chance to take out a loan from a finance company.

They’re the less-regulated alternative to getting a loan from your bank or putting the charge on your credit card. Usually, a finance company offers a secured or unsecured personal loan. Before signing on the dotted line with a finance company, understand exactly what you are getting into.

What finance company loans are (and aren’t)
Sometimes these products are marketed as credit cards, when they really aren’t.

Medical credit cards, in particular, can be very loosey-goosey about the term, says Linda Sherry, spokeswoman for Consumer Action, which in 2014 released a survey of medical cards.

Such products are not subject to the same regulations as credit cards.

Borrowing money from a finance company isn’t necessarily a bad idea, but you should first learn what these companies are, how they operate, who regulates them, and what protections you have if you run into problems.

What are consumer finance companies?
Unlike a bank or credit union, finance companies do not accept deposits. They just loan money, sometimes with fixed terms and sometimes not. Some offer a big range of products, some specialize, says Chris Kukla, senior counsel for government affairs with the Center for Responsible Lending.

The most well-known issuers of these products are automobile finance companies, such as Toyota Financial Services or Ford Credit. These are owned by auto manufacturers and make loans to consumers purchasing vehicles from those particular brands.

If you have strong credit, you have a good chance of getting a low-interest auto loan through an auto finance company.

If your credit is not stellar, an auto finance company that specializes in the subprime market may offer you a loan, but at a much higher interest rate.

CarePayment of Lake Oswego, Oregon — which works with health care providers nationwide and provides a way for people to pay medical bills — is another example of a finance company. It offers consumers a revolving line of credit at a 0 percent annual percentage rate.

Furniture and appliance stores, such as Seffner, Florida-based Rooms to Go, also offer consumers a line of credit through a finance company.

Who regulates finance companies?
Consumer finance companies are licensed and regulated by the state in which they operate. Depending on the size of the company, it may be licensed in one state or dozens of states, says Danielle Fagre Arlowe, senior vice president of the American Financial Services Association, a trade association for the consumer credit industry that represents traditional installment lenders, such as the big auto finance companies.

That is different from credit card issuers, which generally are regulated by federal authorities. The Office of the Comptroller and the Currency (OCC), a division of the U.S. Treasury Department, regulates national banks that issue credit cards, while the National Credit Union Administration supervises federal credit unions.

Meanwhile, state banking regulators oversee state-chartered banks or credit unions.

Finance companies have to adhere to the laws in the states in which they are licensed, Kukla says

That means a finance company can do things that are not expressly prohibited by law in the state in which it operates, Kukla says: It may be abusive, but if it’s not prohibited by law, there’s nothing the state can do.

Because of variations in state laws, a finance company may have different loan terms in different states, Arlowe says. So a consumer in Georgia may be charged a different interest rate or have a different loan payoff schedule than a consumer in Texas.

One big segment of finance companies has a new regulator. The Consumer Financial Protection Bureau (CFPB) — which supervises and enforces federal consumer financial protection laws, including those surrounding credit cards — is taking over the supervision of major auto finance companies.

Under a rule issued June 10, 2015, the CFPB will have authority over companies that make, acquire or refinance at least 10,000 auto loans or leases per year. The bureau estimates that 34 auto finance companies would fall under that regulation, and these account for about 90 percent of all auto loans and leases not made by banks. Together, these companies provided auto financing to nearly 7 million consumers in 2013.

The rules mean auto finance companies will be not be allowed to use deceptive practices to market loans or leases, or mislead consumers about the loan benefits or terms. The companies also must provide accurate information to credit bureaus.

Auto finance companies also will be prohibited from discriminating against consumers when lending based on factors such as someone’s race, gender, and age, or based on whether the person receives public assistance. Illegal debt collection practices are banned, and the CFPB will review automobile repossession processes.

The new rule is scheduled to take effect in August 2015.

What are typical finance company practices?
Unlike credit card companies, finance companies are not required to give consumers the same payment due date each month. While many require you to pay your bill by the same date, in other cases it is a moving target. So your bill may be due on the 22nd one month and the 21st the following month.

If you don’t pay on the proper date, you might be charged a late fee or required to pay a higher interest rate, Kukla says.

There also might be other risks. For example, imagine you are shopping at an appliance store offering 0 percent financing for 24 months. It may sound like a good deal, but if you read the fine print, you may see that it is a deferred interest deal. If you miss a payment or fail to pay the loan off in 24 months, you could end up paying a steep interest rate, and have interest added in from the time you took out the loan, Kukla says.

Many finance companies report your payment record to the three main credit bureaus, helping you build a credit history, Arlowe says. However, they are not required to report such payments.

Complaints are the only real way to tell what kind of lender they are.


Tags : , , , , , , ,

Finance company #loan #for #small #business


#finance companies

#

Finance company

finance company, specialized financial institution that supplies credit for the purchase of consumer goods and services by purchasing the time-sales contracts of merchants or by granting small loans directly to consumers. Specialized consumer finance agencies now operate throughout western Europe, Canada, the United States, Australia, Japan, and some Latin American countries. Although they existed in the early 1900s, their greatest development came after World War II.

Large-sales finance companies, which operate by purchasing unpaid customer accounts at a discount from merchants and collecting payments due from consumers, were a response to the need for installment financing for the purchase of automobiles in the early 1900s. Ally Financial. for example, was established as the General Motors Acceptance Corporation (GMAC) in 1919 to purchase automobile accounts receivable from car dealers who were themselves unable to finance time purchases. Many companies in both Europe and the United States continue to specialize in financing purchases of particular commodities and remain closely associated with specific manufacturers. Some also extend credit for wholesale purchases by retail dealers.

Consumer finance or small-loan companies also arose in the 1900s. Until then the need for consumer loans had been met primarily by illegal “loan shark” activities because it was unprofitable for banks to make small loans at rates below legally set usury levels. In 1911 several states in the United States began adopting small-loan laws that authorized loans to consumers at rates above usury levels, making it financially practical to operate a consumer loan business. Today many companies engage both in the sales-finance business and in making loans directly to consumers.

In some countries, including Belgium, Denmark, and Norway, commercial banks have also become important as a direct source of consumer credit. In many other countries, they are important as a source of capital for specialized finance companies. Many finance companies in Great Britain, Australia, and the Netherlands, for example, have become closely affiliated with commercial banks because of the banks’ role as capital subscribers. In other cases, commercial banks play an important role in their extension of credit to finance companies.

More About This Topic

Article History

MLA style: “finance company”. Encyclop dia Britannica. Encyclop dia Britannica Online.
Encyclop dia Britannica Inc. 2016. Web. 03 сен. 2016
https://www.britannica.com/topic/finance-company .

APA style: finance company. (2016). In Encyclop dia Britannica. Retrieved from https://www.britannica.com/topic/finance-company

Chicago Manual of Style:Encyclop dia Britannica Online. s. v. “finance company”, accessed сентября 03, 2016, https://www.britannica.com/topic/finance-company.

These citations are generated programmatically and may not match every citation style rule. Refer to the style manuals for more information.

Thank you for your feedback

Our editors will review what you’ve submitted, and if it meets our criteria, we’ll add it to the article.

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Online investing, equity crowdfunding, business finance: Crowdcube #designer #business #cards


#business investment

#

DISCLAIMER

THE MATERIALS YOU ARE SEEKING TO ACCESS ARE BEING MADE AVAILABLE BY THE COMPANY RAISING FINANCE AS IDENTIFIED ABOVE (THE COMPANY ) IN GOOD FAITH AND FOR INFORMATION PURPOSES ONLY AND SUBJECT TO THESE TERMS AND CONDITIONS. CROWDCUBE CAPITAL LTD IS AUTHORISED BY THE FCA AND CARRIES OUT DUE DILIGENCE ON EACH COMPANY THAT LISTS ON CROWDCUBE AS SET OUT HERE .

This investment opportunity is not an offer to the public and is only available to registered members of Crowdcube.com who have qualified and categorised themselves as able to invest. The investment opportunity is not directed at persons located in the United States, Canada or Japan. Any person resident outside the United Kingdom who wishes to view these materials must first satisfy themselves that they are not subject to any local requirements that prohibit or restrict access.

In particular, unless otherwise determined by the Company and permitted by applicable law and regulation, it is not intended, subject to certain exceptions, that any offering of the securities mentioned in such materials (the Securities ) by the Company would be made, or any documentation be sent in or into, the United States, Canada or Japan. There will be no public offering of the Securities in the United States.

In order to access the pitch you must first become a qualifying member of Crowdcube on the basis of your status as either (i) self-certified high net worth investor , (ii) certified sophisticated investor , (iii) self-certified as a sophisticated investor or (iv) certified as a restricted investor , in each case in accordance with the FCA s Conduct of Business Sourcebook Chapter 4.7. Potential investors are encouraged to cross examine the Company by interactive due diligence and use of the available online forums to bring the wisdom of the crowd to bear. Accessing the pitch also means you agree to Crowdcube s most recent website terms and conditions and investor terms and conditions. which include Crowdcube s limitation of liability.

If you are not permitted to view materials on this webpage or are in any doubt as to whether you are permitted to view these materials, please exit this webpage. Crowdcube s or the Issuer s press announcements and this information page do not constitute an offer to sell securities of the Company. Further, it does not constitute a recommendation by the Company, Crowdcube or any other party to sell or buy securities in the Company.

By registering or logging into Crowdcube.com to view the investment opportunity, you certify that you are legally entitled to view the investment opportunities, are an authorised investor and you agree to all applicable terms and conditions on this website, including this disclaimer.


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How to Get a Small Business Loan – Finance a Business – Wells Fargo

#getting a small business loan

#

Financing a growing business

Learn about financing options for small businesses.

Supporting both the operation and expansion of a growing small business often requires some additional financial support. Getting a small business loan or grant can help you bridge the gap when you need to make capital investments, increase your workforce, or move to a larger space. To help you decide which type of funding might be right for you, here are a few great small business-financing options:

Line of credit. Using a line of credit as working capital can make it easier for you to manage your cash flow as your income or expenses fluctuate. It allows you to borrow only the funds that you need giving you more control over the amount of interest you will accrue.

Business loans. For larger investments, it may be time for a term loan. Like a mortgage or personal loan, term loans come with fixed interest rates and monthly payments over a period of years. Unlike a line of credit, a business loan will provide you with a large sum of cash upfront. These loans can be ideal for expanding your space or funding other large investments.

Commercial loans. For established businesses that own commercial real estate, a commercial loan is another option. Like a home equity loan, a commercial loan allows you to borrow against the equity you’ve built in your business property. Depending on the value of the property and the equity you hold, this could mean more borrowing power.

Equipment loans. If you’re specifically looking for cash to fund the purchase of new equipment – including vehicles, manufacturing or production machinery, farming equipment, or other necessary equipment – then an equipment loan or leasing program may be what you need. Like business loans, equipment loans offer fixed interest rates and payment plans over a period of time.

SBA loans. Wells Fargo is the nation’s #1 provider (by dollar volume) of loans guaranteed by the US Small Business Administration – or SBA 7(a) loans. SBA 7(a) loans have longer repayment terms and lower down-payments than most conventional bank loans, and can be used for the purchase of owner-occupied real estate, business acquisition, equipment, or working capital. Wells Fargo also offers the SBA 504 program for larger, fixed asset purchases or construction.

Federal or state grants. Small business grants – money that does not need to be repaid – are limited and harder to secure than loans. State and federal business grants are funded by taxpayer dollars, and the money is awarded through a complicated legislative process. For more information on how to get a small business grant, visit www.grants.gov.

By knowing which small business financing options are available, you’ll have a better idea of where to turn when you’re ready to take your business to the next level.

Business insights from experts

Discover our comprehensive resource library, offering guidance and information to help you start, run and grow your business.

Wells Fargo Works for Small Business ®


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Finance company #getting #a #business #loan


#finance companies

#

Finance company

finance company, specialized financial institution that supplies credit for the purchase of consumer goods and services by purchasing the time-sales contracts of merchants or by granting small loans directly to consumers. Specialized consumer finance agencies now operate throughout western Europe, Canada, the United States, Australia, Japan, and some Latin American countries. Although they existed in the early 1900s, their greatest development came after World War II.

Large-sales finance companies, which operate by purchasing unpaid customer accounts at a discount from merchants and collecting payments due from consumers, were a response to the need for installment financing for the purchase of automobiles in the early 1900s. Ally Financial. for example, was established as the General Motors Acceptance Corporation (GMAC) in 1919 to purchase automobile accounts receivable from car dealers who were themselves unable to finance time purchases. Many companies in both Europe and the United States continue to specialize in financing purchases of particular commodities and remain closely associated with specific manufacturers. Some also extend credit for wholesale purchases by retail dealers.

Consumer finance or small-loan companies also arose in the 1900s. Until then the need for consumer loans had been met primarily by illegal “loan shark” activities because it was unprofitable for banks to make small loans at rates below legally set usury levels. In 1911 several states in the United States began adopting small-loan laws that authorized loans to consumers at rates above usury levels, making it financially practical to operate a consumer loan business. Today many companies engage both in the sales-finance business and in making loans directly to consumers.

In some countries, including Belgium, Denmark, and Norway, commercial banks have also become important as a direct source of consumer credit. In many other countries, they are important as a source of capital for specialized finance companies. Many finance companies in Great Britain, Australia, and the Netherlands, for example, have become closely affiliated with commercial banks because of the banks’ role as capital subscribers. In other cases, commercial banks play an important role in their extension of credit to finance companies.

More About This Topic

Article History

MLA style: “finance company”. Encyclop dia Britannica. Encyclop dia Britannica Online.
Encyclop dia Britannica Inc. 2016. Web. 03 сен. 2016
https://www.britannica.com/topic/finance-company .

APA style: finance company. (2016). In Encyclop dia Britannica. Retrieved from https://www.britannica.com/topic/finance-company

Chicago Manual of Style:Encyclop dia Britannica Online. s. v. “finance company”, accessed сентября 03, 2016, https://www.britannica.com/topic/finance-company.

These citations are generated programmatically and may not match every citation style rule. Refer to the style manuals for more information.

Thank you for your feedback

Our editors will review what you’ve submitted, and if it meets our criteria, we’ll add it to the article.

Join Britannica’s Publishing Partner Program and our community of experts to gain a global audience for your work!

Email this page


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How to Finance Your Start-up Business #business #banners


#how to finance a business

#

How to Finance Your Start-up Business

Making Your Dream a Reality: Finance Your Start-up With the Right Mix of Capital

If you’re planning on starting a business, chances are you’ll need some form of capital, which simply refers to the money that finances your business.

One reason for the failure of many small businesses is that they undercapitalize their business. Therefore, it is important that you know how much money you will actually need to start and to run your business until you reach your break-even point—the point when your sales revenue equals your total expenses.

Ask yourself:

  • How much money is required to start this business ?
  • How much of your own money do you have for this business?
  • Do you already own any of the assets needed to start this business?
  • Do you have family, friends, acquaintances, or others who are willing and able to invest in this business?
  • Do you have a strong personal credit rating or lines of credit available?

Equity Investment

Equity means ownership. With equity investment, an investor makes money available for use in exchange for an ownership share in the business. If you use equity investment, be sure to consider how much ownership you’re willing to give up, and at what price. Once you sell 51 percent of your shares, you lose control of your company.

Equity investment includes any money from individuals, including yourself, or other companies in your business. This money may be from personal savings, inheritance, personal loans, friends or relatives, business partners, or stockholders. These funds are not secured on any of your business assets.

But, before going down this road, it is important to know the BC laws that apply to any company or other entity that raises money from investors. To find our more read our article: Seeking Equity Investment? Know the Rules

Personal Savings: The Most Common Form of Equity Investment

You’ll likely get most of your start-up funding from your personal savings, inheritances, friends, or family. In fact, according to Statistics Canada’s Survey of Financing of Small and Medium Enterprises 2007, 76% of small businesses in British Columbia financed their business with personal savings.

Aim to fund 25% to 50% of your business from your own pocket. This shows prospective lenders and investors that you are personally assuming some risk, and are committed to your business success. It’s also a requirement for many small business loans, which are usually secured (i.e. backed by assets).

Throughout the course of your business, try to keep a personal investment of at least 25% in your business to increase your equity position and leverage. The more equity your business has, the more attractive it makes you to banks that can loan you up to three times your equity.

Debt Financing

1. Government Funding

Typically, the most sought-after type of financing is government grants because it’s free money that you don t have to pay back. Unfortunately, a grant might not be an option for your business because not only are there very few grants available, most are geared towards specific industries or groups of people such as youth, women, or aboriginal owners.

The majority of government funding programs are typically loans, for which you ll be required to repay the principal amount plus interest.

In 2007, only 2% of businesses obtained some sort of government funding or assistance. You can find information about government funding programs for free:

  • Search the Canada Business Grants and Finances section. which lists available government programs across Canada.
  • Contact your industry association to find out if they know of any grants you might be eligible to receive.

Since the application process varies from program to program, you should contact the coordinator of the program that you’re interested in to find out what the specific application requirements and process are.

2. Commercial Loans

Commercial or personal loans from financial institutions account for the second most common form of financing at 44%.

  • Long-term loans. Use long-term loans for larger expenses or for fixed assets that you expect to use for more than one year, such as property, buildings, vehicles, machinery, and equipment. These loans are generally secured by new assets, other unencumbered physical business assets, and/or additional stakeholder funds or personal guarantees.
  • Short-term loans. Short-term loans are usually for a one-year term or less, and can include revolving lines of credit or credit cards. These are generally used to finance day-to-day expenses such as inventory, payroll, and unexpected or emergency items, and can be subject to a higher base interest rate.

Getting Your Loan Approved: What do Potential Lenders Look For?

Many lenders will look for the four “C’s of Lending” when evaluating a loan application:

  1. Cash flow. Your ability to repay the cash you are borrowing. This is measured using the cash flow forecast that you created for your business plan.
  2. Collateral. The value of assets that you are willing to pledge for assurance that you will repay your loan. A dollar amount will be placed on these assets and that will be compared to the amount of the loan you requested.
  3. Commitment. The amount of money that you re committing to your business. You can’t expect to obtain a loan without contributing a fair share yourself.
  4. Character. Your personal credit score and history with the financial institution. Your credit rating or score is calculated from your history of borrowing and repaying bank loans, credit cards, and personal lines of credit. Without a good credit rating, your loan prospects decrease significantly.

A lender might determine how much to lend you by evaluating your cash flow, collateral, and commitment. They will then subtract your existing debt to arrive at a final amount. Note that lenders look at the limit on your credit cards, not the amount you re currently using.

Typically, start-ups are not rich in assets so you may be required to secure your business loans with personal collateral such as your house or vehicle(s).

The difference between a private lender and a government program is the relative importance of these four C’s. A bank might place more importance on “collateral” and “commitment”, whereas a government program can often decrease the need for these by providing a government guarantee to the lender.

Make a Good Impression With Your Lenders

You can increase your chances of securing a loan by:

  • Having strong management and staff
  • Showing steady business growth potential
  • Showing reliable projected cash flow
  • Offering collateral
  • Having a strong personal credit rating
  • Always making your loan and interest payments on time, and never missing a payment

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Small Business Finance Markets Report 2015/16

The Small Business Finance Markets Report 2015/16 shows that the market for small business finance is improving, however a number of challenges remain:

  • A lack of businesses scaling-up is hampering UK productivity – there remains a need to stimulate a greater volume of scale-up businesses and SME exporters to counteract the UK’s lagging productivity. OECD data shows that Britain is near the bottom of the table for the percentage of businesses that grow to more than 10 employees after three years.
  • A need to delivery further diversity in the small business finance market – there is an ongoing need to accelerate the evolution of a diverse and accessible range of finance options to drive competition and choice for smaller businesses. The four largest banks still account for 80% of the small business loan market in 2014, with many small businesses not looking at alternative finance options beyond their main bank.
  • Supporting growing SMEs across all UK regions – the finance landscape remains uneven across the UK. To help rebalance growth, an increased availability of finance for smaller businesses across the UK is required. 71% of total SME equity investment is accounted for by London and South East based companies.

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2015 Business Finance Survey: SMEs

This survey, undertaken by BMG Research for the British Business Bank, follows on from the previous 2012 and 2014 “SME Journey” surveys to explore SME awareness of different types of external finance and their experience of raising finance. We have extensively used the findings from this survey within our new Small Business Finance Markets 2015/16 report to assess how finance markets have changed.

Amongst the findings, this survey shows a continued increase in business awareness of alternative finance types, including peer-to-peer lending and crowdfunding. The research also shows that a higher proportion of SMEs are aiming to grow in the next 12 months (56%), compared to 46% in the previous 2014 survey.

2015 Business Finance Survey: Mid-caps

This survey, undertaken by BMG Research for the British Business Bank, assesses the characteristics of mid-caps (businesses with £25m-£500m annual turnover) and their experience of raising external finance. The survey finds that mid-cap businesses are more likely to use and seek external finance compared to SMEs, and are also more likely to obtain finance. In addition, a high proportion of mid-cap businesses (79%) are aiming to grow in the next 12 months.

Methodology Consultation: Assessing the Unmet Demand for SME debt finance

The British Business Bank would like to consult with interested stakeholders on appropriate methodologies for assessing the unmet demand for SME debt finance. The consultation seeks views on our proposed methodology and suggestions for alternative methodologies or additional data sources.


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