Product Knowledge

To fully understand this advantage, you must first know how a Business Finance Consultant's training differs from other business lenders. A Business Finance Consultant is thoroughly trained and certified by the nation's oldest and largest loan broker training company. Most people would be surprised to find out just how little formal training the average loan broker actually has. This training helps to ensure that the person handling your loan has access to the most current information and financing techniques available in the market. Also, unlike traditional bank loan officers, Business Finance Consultants receive substantial training on how to help well-established businesses, businesses that are in the start-up phase, or those that are "less than perfect" because of minor credit problems. Because of this training, Business Finance Consultants are often able to help business owners when other, more conservative lenders cannot. Whether you've had trouble meeting payroll or just want to upgrade your equipment, a Business Finance Consultant is your best opportunity to get the financing you need. In addition, Business Finance Consultants are not restricted to handling only the traditional bank style financial product. If you are in need of more creative financing, a Business Finance Consultant can also factor your accounts receivable, provide purchase order financing, government guaranteed loans, and even finance your business contracts. In other words, a Business Finance Consultant is the only source you will need for almost any type of business financing.

Customer Service

Our desire to provide you with a superior level of customer service is just as important as training and knowledge. For this reason, a Business Finance Consultant will spend all the time necessary to provide you with a custom financing solution that is right for your business needs. Once your loan package is initiated, a Business Finance Consultant will represent you throughout the transaction, so that you can focus on running your business. They also maintain contact with you throughout the loan process, so that you never feel "out of the loop" with your financing needs. In fact, Business Finance Consultants will regularly provide you with status reports to help keep you informed. At every step throughout the transaction, you will know the status of your loan or lease. If you have ever dealt with traditional business lenders, you know that this is not normally the case. Most business owners will endure the entire loan process either wondering what exactly is going on, or trying to get answers from other people involved in the loan because their banker is not available to talk them. However, Business Finance Consultants understand the value of providing a superior level of customer service and are focused on keeping you informed every step of the way.

Cost

In addition to their knowledge and a desire to make your transaction progress smoothly, a Business Finance Consultant can give you access to the most aggressive rates and terms available in the market. Since they have the ability to work with hundreds of lender programs nationwide, they can offer you more financing options than you may have thought possible. In addition, because they have access to "non-bank lenders," they can place your financing with lenders who specialize in different areas of business finance. This allows them to provide you with the same programs that major banks offer, without the restrictive lending criteria that commercial banks often impose on business owners. Since the lender usually compensates a Business Finance Consultant, it costs you nothing to use their services. By using a Business Finance Consultant, borrowing for a business has never been easier.

Equipment Lease and Loan

If you don't understand the difference between a lease and a loan, you are not alone. Many business owners continue to finance their equipment the "old fashioned way" (through loans) because they don't fully understand the potential benefits of leasing their equipment. These benefits can be seen in four important areas: Initial cost, equipment obsolescence, tax benefit, and off balance-sheet financing. Because of these benefits, many business owners are realizing that they do not need to own their equipment in order to conduct business. They only need to use it.

Initial Cost

The first thing you need to know about equipment leasing is that it is 100% financing. Because a lease is essentially a "rental" of equipment, there is usually no down payment required to access the equipment your business needs. This directly contrasts most commercial bank equipment loans, which require a minimum of 10% and as much as a 50% down payment. By comparison, most equipment leases will require only the first and last payment in advance of delivery. Even if you only need a small amount of equipment, this can result in a tremendous reduction in the "out of pocket expense" necessary to upgrade your equipment. This gives you the opportunity to put thousands of dollars of working capital back into your business, instead of giving it to your banker.

Equipment Obsolescence

Another benefit of leasing your equipment is the ability to avoid "equipment obsolescence." This occurs when business equipment either cannot keep up with the demands of the market, or lacks the technology to help the business remain competitive. Leasing your equipment helps to avoid obsolescence by allowing you to upgrade every few years. In other words, if the equipment appreciates, buy it. If the equipment depreciates, lease it.

Tax Benefit

In addition to the initial cost and obsolescence, leasing your equipment can also provide your business with a substantial tax advantage. While you should always consult with your tax advisor first, most equipment leases can be structured so that you can write off 100% of the annual lease payments. By contrast, current tax laws only allow a business to write off the interest paid on loans. However, because a lease is a rental and the business is only using the equipment, the business can usually write off all of the monthly lease payments just like any other legitimate business expense. Once again, this can result in thousands of additional dollars in working capital being put back into your business.

Off Balance-Sheet Financing

The last major advantage of leasing your equipment instead of buying is that leasing allows you to not show the equipment on your balance sheet. Once again, this is because the equipment is being rented, and therefore actually belongs to a different company than the one that is using it. For this reason, leases are often referred to as "off balance-sheet" financing and this can be a tremendous advantage to many businesses, both large and small. Big businesses prefer this option because they don't want to own millions of dollars in equipment. This equipment will depreciate substantially with the day-to-day usage. Whoever owns the equipment is responsible for the depreciation on their balance-sheet. Also, large corporations may require that the board of directors approve any new loans to the business, making it difficult for the management of the business to operate efficiently. But, a lease is not a loan, and therefore may not require approval by the board for the managers to get the equipment they need. In smaller businesses, this can also be an advantage because they will not show additional debt on the balance sheet that will affect their ability to borrow money in the future. If you are considering selling your business, this may also make your company more attractive to potential buyers, since you will be showing less debt on the balance sheet.

Because your Business Finance Consultant works with many leasing companies nationwide, they can help you determine if leasing your equipment is right for your business. If you should decide to lease, they can usually get the equipment you need with just a simple, one page credit application. In many cases, they can have the new equipment on site in as little as a few days.

FACTORING ACCOUNT RECEIVABLE

Factoring, also known as "cash for receivables," is the conversion of a business accounts receivable into immediate cash by the outright purchase of its receivables, at a discount by a factor.

Factoring is not a loan and is not based on a business ability to repay the money advances. The length of time in business is not a consideration. The debt to equity ratio is not a consideration. Instead, it is based on the ability of your customers to pay what they owe. Once a factor purchases the receivable invoice, they assume the responsibility for its collection. The factor is also responsible for accounts receivable management functions, such as credit investigation, accounting, and bookkeeping. As compensation for these activities, the factor purchases the receivables at a discount.

The discount fee is usually dependent on the amount purchased, the credit worthiness of the debtors, and the turnaround time. Fees can vary substantially, but are usually less than most business owners expect.

Frequently, a commercial bank cannot provide all of the loan funds a growing company needs. A balance sheet is not liquid enough, or it can't clear off the bank debt every six to twelve months. A factor can provide funds to clear off bank loans periodically or make additional bank credit possible by guaranteeing accounts or replacing accounts receivables with cash.

Once a factoring contract is entered into, you will submit orders to the factor for credit approval before shipping. The factor's credit department becomes your credit department. When the order is approved, you will receive up to 80% of the proceeds, with the remainder retained by the factor as a reserve against loss from complaints and returns. This is withheld to protect against credit losses, since the factor purchases the accounts without recourse. Usually, the factor will settle the account each month and pay the proceeds due, less cash discount.

One of the biggest advantages of factoring is that businesses get immediate cash (from 70–80% of the face value of the invoices) within 24–48 hours, which means you can accelerate your cash flow by speeding up payment of the receivables. You will then have an immediate source of funds for operating expenses and future growth. You will be able to use your own, hard earned cash without having to wait 30, 60, 90, or 120 days to collect from customers. Additionally, since only receivables are used as collateral for the cash advance, other assets (such as real estate and equipment) can be used for future borrowing.

Cash flow is probably the most important element in the success of a business. Accounts receivables may be the biggest asset on a company's balance sheet. They also represent the business' best source of operating capital that is in permanent disuse. Factoring improves cash flow. A business can use cash that is currently tied up in receivables to increase sales and take advantage of supplier discounts. Factoring accelerates cash flow by eliminating the time-lag between the delivery of goods or the performance of a service and the payment for it. Most businesses have to pay their expenses before they can collect their receivables, disrupting cash flow.

A Business Finance Consultant can help you determine if factoring your company's accounts receivable is the right option for you. Once you have come to a decision to factor, your Business Finance Consultant will package the transaction in accordance with the factor's requirements. The Business Finance Consultant will select from a wide variety of investors to find the right match for your company. Whether your company is in the start-up phase or you have outgrown your cash flow, a Business Finance Consultant can help factor your invoices and get the cash you need.

FIXED AND VARIABLE RATES

One of the most common questions a Business Finance Consultant answers is, "Should I choose a fixed or adjustable rate mortgage (ARM)?" The answer depends on many different factors, including your income at the time of qualifying, the lender with whom you are working, current market conditions, and how long you plan to stay in the house.

Income

Many first time buyers who are in the beginning stages of their careers will choose an adjustable rate over a fixed rate. The main reason is that, while the interest rate on the adjustable will likely increase over the coming years, the borrower's level of income can outpace the increased monthly payments. For this reason, adjustable rates tend to be the loan of preference for new college graduates who are beginning work in the field they studied. On the opposite end of the spectrum are high-income borrowers and real estate investors. These people tend to prefer adjustable rates because of the opportunity to make reduced monthly payments. High-income borrowers will then either invest the difference between the fixed rate and ARM payments, or use the starting period when the rate is very low to apply large amounts of money to the principle balance. This will enable them to pay off the loan faster and minimize future payment increases, since they will be financing less money.

Because of the lower initial interest rate, adjustable rates result in a lower mortgage payment than the standard fixed-rate mortgage. This lower monthly mortgage payment can assist a borrower with high debt ratios in qualifying for a larger mortgage. This allows a borrower to increase their purchasing power in order to buy a more expensive home.

Your Lender

If your income is not an issue, the next thing to consider is the lender whom you choose for your loan. Some lenders actually prefer to write adjustable rate loans because, over the long run, it will provide them with more interest income. Seeing that there is an additional profit in the loan, ARM lenders may make it easier for you to qualify. This is where your Business Finance Consultant can be particularly helpful. Since Business Finance Consultants work closely with many lenders, they know which lenders prefer to do fixed or adjustable rate loans and can steer your loan in the proper direction.

Current Market Conditions

When interest rates are down, many lenders are apprehensive about offering ARMs because it is more difficult to find investors. The opposite is also true when interest rates are higher. This is also an area where a Business Finance Consultant can be particularly helpful, since they are actively engaged in the real estate market and know the current trends.

Occupancy Time

The last issue to consider in deciding between fixed and adjustable rates is how long you intend to occupy the property. As a general rule of thumb, most people will be better off with a fixed rate if they plan to be in the property for more than five years. At that point, your interest rate for an ARM will usually have increased substantially, so your payment will be much higher than if you had taken a fixed rate. On the other hand, if you are planning to stay less than five years, then the thought of buying 30 year money is probably not very appealing. Also, as we have already discussed, if you put extra money to principle when your interest rate is low, it will help to keep large payment fluctuations in check. You should also consider that adjustable rate mortgages have built in safety measures known as "caps" that will help limit how high your interest rates can rise per year. Most adjustable rates are structured so that the annual interest rate cannot rise by more than two percent per year, although some loans have caps that are even more conservative. Other loans will not regulate the interest rate at all, but instead limit how high the payment can rise each year. You should consult with a Business Finance Consultant to help you determine if a fixed or adjustable rate loan is right for you.

Type of Business Loans

Every business has five major components necessary to operate. These are personnel, equipment, housing, products, services, and last but most vital, capital. It takes capital to get the other five. Business owners often fear banks and commercial finance companies. This fear is founded in a lack of lender knowledge. A Business Finance Consultant knows the ways of these lenders, and has the contacts to secure financing for virtually any type of business.
 
The deregulation of the banking industry has made new choices available that never existed before. One of these is the availability of money through non-traditional lending sources.
 
The types of business loans vary to your specific business needs. Here are just a few of the loans that can be arranged by a Business Finance Consultant.
If you are considering a purchase or construction of commercial real estate, we can offer you up to 90% financing whether it's owner/user or strictly an investment. We have access to some of the most aggressive programs in the industry and with loan terms up to 25 years. You'll be surprised at how easy owning commercial real estate can be.
 
If you are planning to start a business, your best opportunity to obtain financing may be the assistance offered by a Covington consultant. Through their network, they have provided capital for hundreds of start up businesses nationwide.

A line of credit can be one of the most useful financial tools for a small business. A Business Finance Consultant can help you determine if this is the right transaction for your business. These experts will guide you through the transaction, every step of the way.

If you are considering the purchase of a franchise business, a Business Finance Consultant can help. Whether it is a restaurant, retail, or service related business, our Business Finance Consultants can help you achieve the dream of owning your own business!
 
A Business Finance Consultant can give your business access to all of these types of financing and more. With one phone call, you can have dozens of lending sources competing for your loan. Once you have experienced the high level of customer service, competitive pricing, and wide selection of financing options available, you will understand why many business owners view Business Finance Consultants as their most important asset.

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