Five ways to finance your business when your credit is not perfect.

GARDEN CITY, N.Y. - Aug. 9, 2013 - PRLog -- -- 1 - When you need a loan or line of credit for your business, the first question you need to answer is: What is your goal, what are you trying to accomplish with the money? Let’s say you need to buy new equipment for your business and you could not qualify with your bank because as a guarantor you have credit issues. There are many companies out there who would finance it regardless of your credit problems, as long as you do not have any open bankruptcy or judgment. They listen to your story, if it makes sense, then they look at the return on the investment (ROI) by acquiring the equipment and use it as collateral.     There are also many tax and accounting benefits with leasing. Consult with your tax advisor for more information. Most everything can be leased these days, computers, software, trucks, heavy machinery, construction tools etc. More information on the benefits of leasing can be found at: www.blpcommercial.com under “Why Leasing.”      2 - If you need the money to do your payroll, catch up with your rent, or purchase inventory and it takes your clients 30, 45 or 60 days to pay after you deliver the goods or services to them, there are companies who will finance your receivables. They give you up to 80% of the value, and when your clients pay them back; they send you the remaining balance minus their fees. They usually charge 1% to 3% a month depending on the amount. This type of financing also called Factoring is not based upon your credit or the strength of your business but instead on the strength and credit worthiness of your client. Factoring can be done for Manufacturers, Doctors, Construction companies etc.     3 - If you are a manufacturer, you receive a large order from a client and do not have the capital to execute it, some lenders will finance the signed Purchase Order. They will advance you up to 80% of the value of the P.O. so you can fulfill your client’s request. Again if your credit was the reason why your bank could not give you a loan or because your company has not been in business long enough, this will not be of much concern for the lenders. They will look at the strength and credit worthiness of your client instead.      4 - You can get a short term loan even with challenged credit, no account receivable, or Purchase Order to finance. If you have been in operation for at least one year and your business generates good cash flow, you may qualify. The term of these loans is usually from 6 to 18 months. The lender will analyze your business bank statements to see if your average balance is around $5K per month or more and how many NSF, returned items you may have before they can make a decision.     5 - You can also use your securities such as stocks, bonds, mutual funds (except retirement account) to get a line of credit usually at a very low interest rate. What is good about this type of financing is the fact that you do not have to sell or transfer ownership of your securities to anyone and you still can collect dividends as you earn them. You only pay on the amount you use and can leave the rest for future needs. Some people use this type of financing to purchase a new business/franchise or for facility improvement to an existing business etc.      When a bank analyzes your credit application they look at two profiles, your business and you as a guarantor. They want the business be in operation at least 2 or 3 years and have revenue of $250K or more the previous year. The guarantor must have a good credit history with no derogatory information and a score of 650 or more. If you meet these criteria the maximum loan/line of credit you could get is only 10% of your gross sales. So in the case of a business having a $250K sales, they may give you up to $25K, it could be less, depending on your debt to income ratio and other factors.    Louis Bejot, Managing Director  BLP Commercial, LLC  www.BLPcommercial.com      Please email any comments to: louis@blpcommercial.com     or phone: 516-406-6238    Louis has over 14 years of banking experience. He is now the founder and Managing Director of BLP Commercial, LLC located in Garden City, NY. an advisory firm specializing in business and commercial lending.

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