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Money-Management Articles >> Is a Business Loan Really Your Best Option?
By Marco Terry If you own a
business and you need money, who is the first person you call? Your
banker. Most owners think that when they need money, they must need a loan
or a line of credit. And therefore, they must call their banker.
However, this may be a mistake. You really need to understand your long
term cash flow needs before getting a loan. By focusing on solving the
short-term need, many owners paint themselves into a corner and eliminate
(or at least really limit) their chances of getting financing later on. A
loan or line of credit can paint you into a corner unless you know what
you are doing.
When you buy a house, the bank that gives you a mortgage also takes first
position on your house. When you get a business loan, the bank wants first
position on your business assets. When you get a business loan, the bank
will almost always file a UCC lien (also known as a commercial lien) that
encumbers your business assets. Although getting a second mortgage may be
easy in today’s market – getting secondary business financing is almost
impossible.
So chose very, very carefully.
If you need a product that grows with your business, is easy to qualify
for and leverages your strongest asset, you should consider either invoice
factoring or purchase order financing. They have many features that loans
do not have.
Invoice factoring is a financial product that provides you with financing
using your strongest asset as collateral – your slow paying invoices from
strong commercial customers. Factoring financing provides you with an
advance on your invoices, giving you money to pay suppliers and business
expenses.
Your second option is purchase order financing. PO financing is ideal for
distributors who are growing too quickly and have exhausted their bank
financing options. Purchase order financing provides you with financing to
pay your suppliers, enabling you to fulfill the order and make the sale.
As opposed to bank loans, both products are easy to qualify for and can
usually be set up in days – not months. So if you need business financing,
be sure to explore all your options before going to the bank.
About Commercial Capital LLC We are a business financing company that
provides business loan alternatives through factoring and purchase order
financing. For a quote, please call (866) 730 1922.
This article was added on: April 16, 2006.
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