Business Funding Secrets

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Low Collateral Loans

Collateral  is an asset pledged to assure the repayment of a loan. Assets used to collateralize a debt are typically real estate, or equipment. Traditional lenders may require collateral of more than 100% of the loan due to the fact there are expenses when a loan goes into default, and the asset must be repossessed by the lender, and then sold to recoup the amount for the loan and expenses.

Many Clients looking for funding do not have the asset base to qualify for traditional collateralized lending. No collateral - no loan. However, there are specific lenders who can structure financing for certain types of businesses in a “low collateral” situation.

Companies offering professional services are one target that some Funders will lend money to when there is not the asset base to secure the loan. Medical practices, law practices, and accounting firms are examples of professional businesses, which often have balance sheets without extensive long-term assets. Many professional businesses conduct business in a leased location. The value for furniture, fixtures, and equipment is minimal, and these items may be old enough to have already been fully depreciated. Yet these businesses may be generating millions of dollars of revenue - little to no collateral, but great revenue. There are other types of professions that fall into this Low Collateral category too.

 Even with great cash flow, a professional company may be in a situation where they want or need a business loan to accomplish:       

1. Partner/Shareholder Buyout
2. Equipment Purchases
3. Leasehold Improvements - The improvements to leased property made by   the lessee.  Under common law, improvements constructed by the lessee on   the leased premises would revert to the landlord at termination of the lease.
4. Business Acquisition - Often it is easier to expand a business through   acquisition of a competitor than through attempts of capturing more market   share through other means.  More on acquisitions in up coming issues of Business Funding Secrets.

When lenders accept transactions with minimal collateral they will, in exchange for the business collateral, want the owner to offer security through other means. The borrower must possess a proven track record showing strong historical cash flow for at least 3 years. Contracts and customer files provide documentation of the strength of the business. General management must have 2, or more, years of experience in the industry.

Credit is always a consideration for all finance situations. When there is a lower credit score, this provides the lender with the perception of higher risk, which results in higher interest rates and the need for additional security. In lower credit situations the business owner may be required to provide additional security through personal guarantees, cash values of life insurance policies, or equity in their personal or vacation residencies.  

Clients who are pursuing a low collateral type of loan may have already approached their local bank and have been turned down. When a low collateral lender shows interest in a project the business owner needs to provide the required documentation and be prepared to offer security for the business loan through personal assets.

Although a big factor of low collateral loans is the strength of the businesses cash flow, understand these are loans and should not be confused with factoring. Low collateral loans can have competitive interest rates, up to 90% financing, and terms of 7-10 years. Loan sizes are usually between $250,000 and $5,000,000. 

Due diligence must be completed to assist the lender in verifying the strength of the contracts and customer files. Business valuations, accounting audits, and other expenses to prove the soundness of the transaction are the responsibility of the borrower.

As in all lending circumstances - basic finance applies - the higher the risk, the higher the rate of return. Clients with credit issues will still have those hurdles to jump. Start-up firms without the historical data to prove their abilities will have difficulties with most types of funding, including low collateral loans. These loans are based on strong cash flow, so companies reporting zero to minimal cash available, again will have difficulties.

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 Link Partners

As you know there are millions of web sites competing for traffic. One strategy to increase traffic to your website is through Link Popularity. Link popularity is the number of other sites which are linking to your site. Google and other search engines use Link Popularity to evaluate and rank your site, making this a strategic traffic generating tool.

There are a number of different link popularity elements including the quantity, quality, and relevance of inbound links pointing to your site. Getting links from other sites will increase your Link Popularity, and will definitely help boost your site's organic search rankings and increase your traffic and sales. All other things remaining the same, the more links pointing to your site, the higher ranking your website will receive.

We want to offer all subscribers to Business Funding Secrets Newsletter a linking opportunity. E-mail me your request today at:  LinkPartners@BusinessFundingSecrets.com  to have your domain name added to our Link Partners page. Don’t forget to include your domain name in your e-mail

In exchange, somewhere on your web site, I ask that you add the link: www.businessfundingsecrets.com.

The search engines don’t care what page the links are on. Links can even be on hidden pages. Meaning - web pages that are part of your web site, but not necessarily linked with the home page or other pages of your web site, so these pages are basically hidden from the public. The search engines don’t evaluate where the link is located on a website, so hide my link if you want.

We will place your link on our Link Partners page. www.businessfundingsecrets.com/linkpartners

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 Business Funding Secrets on occasion will be publishing supplemental Special Edition Issues. These Special Editions will provide information on specific industries.

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Professional Representatives are needed for a targeted project in the continental U.S. For more information: click here.

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Are You Using the Internet
to Expand Your Consulting Business

There have been some major changes in using the Internet for marketing. If you are using, or want to learn how to use, the Internet for marketing your business these changes are critical and something you need to know about.

Changes include: 

1. How Google, Yahoo! and MSN have changed and how to get (or even just maintain) top 10 listings! 

2. Maximizing your profits from email promotions and making sure they get to your customers' inbox and not get you labeled as 'Junk'! 

3. How to make money in the Pay-Per-Click search engines... even after the big guys keep changing the rules and most business are losing big! 

4. What web design strategies and sales copy techniques are working in 2007 (many of last year's strategies don't work anymore... do you know which ones?) 

..... the list goes on.....

Companies that are expanding their online presence need to be aware of the realties happening with Internet marketing.

The good news is you can receive tools, tips, and strategies about Internet marketing from one of the most successful Internet Marketing companies in the world.

To find out who and what I am talking about click here to read what others are discovering.  

This is valuable information. 

While you're reading about marketing tips, pay attention to how many people are using this system. There are some incredible stories that you can learn a ton of valuable information from! 

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Business Loans & Venture Capital
Funding Assistance

For assistance in funding a project please review information from
The Project Corporation, a professional consulting firm with expertise in business funding.

For more information on obtaining funds from the capital marketplace please visit www.businessloansandventurecapital.com

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visit our web site at: www.businessfundingsecrets.com and sign up today.

 Until next time,

 Brad MacLiver

Copyright Business Funding Secrets  2008