Asset Capital Finance – What Else Do You Want

For a businessman or even for a person involved with other things the one way to increase one’s worth is through our business or by the asset we possess.

With that some people get a head start whereas others have to work for it. What it means is that some have financial backing and others need financial backing from the outside. That is where we can use asset capital finance for your business.

As the name suggests asset capital finance is the financial help that is provided to people to either buy or go in for the improvement of the asset.

Capital asset finance can be the most appropriate way by which you can fund your business as with this you can equip your business without the restriction of an outright purchase.

Asset capital finance can be taken from many creditors which are willing to provide the loans, however the following documents would be required for you to get the finance:

·Tax returns

·Through and detailed business plan

·Personal financial statements

·Plan of how loans would be used

·Management profile

The organization and timely presentation of these documents plays a critical role in whether and how much asset capital finance we get so we should pay close attention to these details.

Asset capital finance is easy to get and the finance can be applied for one of the following or other uses:

·Cars and Commercials

·Trucks and Plants

·Production equipment

·Business equipment

·Farming equipment

·Venture capital

·Factoring

The loans can be applied for the following uses and then got for as well.

Asset capital finances have the following features which the borrowers must be aware of to ensure that they get the best deal according to their requirement.

·The borrowers can choose their own loan terms i.e. interest rates.

·The borrowers can choose the repayment schedule choose the method by which they intend to pay.

·The borrowers can also choose the overdraft facility as well.

·The loans can be approved quickly sometimes as quickly as 24 hours.

·The borrows can choose between either a secured asset capital finance or an unsecured asset capital finance depending upon their credit requirements or financial standings.

·Bad credit usually does not create many problems when it comes to asset capital finance the only difficulty could be that you may be charged a higher rate of interest.

With that many features it is pretty hard to overlook the asset capital finances. These loans help us in many ways and make it easy for anyone to achieve the intended target without much hassle.

Working Capital Financing – Commercial Financing Solutions

Working Capital Financing is forever a major challenge for small and medium sized business in Canada. And that is certainly not to say that larger corporations don’t have that challenge, it’s simply a case of having more assets and resources to deal with the same challenge.

As a business owner or financial manager the level of funding that you need, and the method in which you achieve that financing is really what drives the solution to your challenge. It is important, in understanding your cash flow needs and solutions, to determine if your working capital financing is required due to the capital intensive nature of your business – or if you in fact simply need to ‘ monetize’, or ‘cash flow ‘ your assets in an effort to generate more working capital and faster turnover of those funds.

Your focus on cash and business financing becomes even greater if your sales and profits are increasing. However, at the same time the ability to obtain business credit in Canada remains a challenge.

Bank financing has become more difficult to acquire, and many firms are looking at non traditional or alternative sources of financing to secure the funds they need for working capital.

Another hard reality of working capital financing is that most small and mediums sized business are searching for more cash flow on an unsecured basis. This type of financing is very difficult to achieve in the Canadian marketplace, certainly in the Chartered bank environment.

So what are the sources of financial capital that Canadian business owners and financial managers can investigate and potentially utilize? Let’s cover off some of the basic options – These include:

Personal savings (not high on a business owner’s priority list!)

Business Credit Cards

Factoring

Government Working Capital Term Loans – Financing Business Loan (These are cash term loans with fixed payments and rates)

Factoring financing

Asset Based lines of credit

When you are looking for working capital financing one of the key areas you can start with is your own key financial metrics. You don’t need to be a seasoned financial analyst to determine at what rate your receivables are turning over. The bottom line if you haven’t realized it yet (we are sure you have) is that receivables and inventory ‘ eat ‘ cash.

One key point needs to be made here, if your sales are growing at 15% and your receivables are growing at 15% that’s not a bad thing. (To calculate simply measure the ratio of these two data points) However, if your sales are growing at 15% and receivables are growing at 30% your cash flow and working capital is being consumed by the investment you have made in A/R and inventory that is not turning over. Collections and inventory turnover are a key aspect of working capital financing.

Commercial financing from a bank is the optimal solution for small and medium sized business – as have noted that is difficult to achieve. Funding a business can be complex and we urge clients to seek the advice and guidance of a respected, trusted and experienced commercial financing expert to ensure they pick the right tools to solve working capital challenges.

Some Methods of Working Capital Financing

A successful company cannot rely upon the good nature and patience of its personnel and creditors for eternity, and so vague promises that the company will be able to meet their current financial obligations once it turns the corner in monetary terms are not likely to make much impact. With that in mind then, a business must ensure that it has a sufficient level of working capital available at all times in order to ensure that the settlement of debts and liabilities such as the cost of raw materials and wages are met in full and in a timely manner.

A common business error is whereby a company is unable to settle its outstanding debts by virtue of excessive amounts of cash being tied up in fixed assets, such as structures, stock, vehicles etc. Whilst these items are without a doubt, an integral part of the production cycle of the business, the fact that the company has no money to hand will cause problems for them. If the company does not have the money to purchase the supplies and raw materials needed to make the stock, how can they turn a profit?

Therefore, most companies will at sometime or another during their lifetime will need to contemplate and take advantage of working capital financing methods in order to bring their current level of liquidity up to a suitable standard. This dilemma will be particularly acute and prominent in those businesses where the stock they produce is high value, has a prolonged production requirement, and will only appeal to a niche market. Whilst the gross profits that will be earned from such stock maybe significant indeed, such businesses will find that working capital financing really takes the edge off.

There are a number of different working capital financing methods and options available, each with their own respective benefits and drawbacks. Whilst by no means exhaustive, the following list is intended to provide a brief overview of some of the more common methods of securing capital financing, in order to empower the business owner with their ultimate choice.

Business loans

Benefits

The business will be provided with a capital sum of cash of a fixed amount, which can then be used to help expand the business, or purchase additional raw materials.
Adherence to the terms of the loan will ensure that the credit rating enjoyed by the company will increase and improve.
If the company currently faces litigation for nonpayment of debt and or breach of contract concerning their non-payment, then a business loan can ensure that a lengthy and costly legal battle can be ultimately avoided.
Drawbacks

Non-compliance with the repayment schedule means that the company will run the risk of having the assets secured as collateral being seized by the lender.
Defaulting on the loan will damage the credit rating of the company, thereby making it more costly and difficult to secure additional finance.
Interest rates can be rather high, and effectively leech the company of money that could be better spent and utilized elsewhere.

Small Business Financing Goes Into Intensive Care

An earlier article noted that business financing is effectively on life support based on recent reports of reduced business loans made by banks throughout the country. There are several reasons why intensive care comparisons might help to explain what is wrong with working capital financing and at the same time provide a healthy prognosis for impacted businesses. Because commercial financing is proving to be a serious challenge for most small business owners, this analysis should be reviewed by any borrower about to obtain or refinance commercial loans.

During the past two years, banks have lost much credibility and good will. Until the federal government provided massive bailouts for many of them, most of these lenders were on life support themselves. While some of the banks have recovered, others are effectively still in the intensive care process. But whether we are reviewing the healthy banks or ones still recovering, working capital financing for most small businesses is predominantly in what appears to be long-term intensive care. Banks are generally reducing or eliminating a large portion of their business financing activities, as indicated from most ongoing public and private reports. For example, with little or no advance notice, most banks appear to be closing commercial line of credit programs for small businesses regardless of profitability or length of the lending relationship. This is apparently not a temporary move to the sidelines but rather a permanent reallocation of resources to more profitable activities based on the manner in which this is being accomplished.

Lending activity has also decreased significantly for other forms of business financing such as commercial mortgage loans. Commercial loans have essentially been downsized or laid off just as many workers have. The realization that banks are rarely announcing publicly that these cutbacks have occurred is what makes this situation different. Perhaps bankers like to think that when they stop making small business loans nobody will notice. When it becomes public knowledge that their small business lending window is effectively closed, the bankers who placed commercial financing into intensive care are astute enough to realize that their public image will suffer even further damage.

Before they realize that the business financing world has changed before their eyes, it is possible that small business owners might need to connect several dots. As this article and other reviews indicate, banks are simply no longer providing the commercial loan services that they once did. Commercial borrowers should primarily rely on extensive candid discussions with other small business customers of the bank to confirm whether their bank is one of the few exceptions to this new reality. Even in the rare instances in which banks are truly lending “normally” to small businesses, the prevailing trend of less working capital financing coming from traditional banks should not be ignored.

While business financing patients (commercial borrowers) might be in serious condition when they find that their bank will not provide needed commercial loans, experienced small business finance specialists can frequently help in restoring financial health that will facilitate a business getting out of an intensive care situation. In some cases, this involves finding a healthy bank that is willing (and able) to provide “normal” commercial loans and working capital financing. For successful commercial funding it will be necessary to explore non-bank solutions in many other instances.

Business Finance Training and Effective Business Solutions

Business finance training refers to programs that teach individuals how to handle various financial duties. Finance training is similar to finance tips in that both help business owners make better monetary decisions, but training programs offer a more detailed explanation of finance strategies. Training programs vary in price and can be used by the owners and employees of a business.

The most basic business finance training provide information on budgeting, preparing financial statements, managing cash flow, strategizing, forecasting, improving performance, and applying basic procedures and concepts to more effectively manage a business. These programs are recommended for new business owners to help them understand standard business practices. Once these basic methods are mastered, more specific financial training may be looked into.

Advanced business finance training delves more deeply into a certain financial procedure or concept, usually at a higher cost than basic programs. Advanced programs may teach business owners how to set up effective business models, make decisions based on quantitative analysis, manage and control accounts, practice due diligence, measure productivity, and strategize concerning mergers and acquisitions.

Taking part in any kind of business finance training gives a business owner the resources to make more intelligent business decisions that result in increased productivity and profits. Many different types of courses are available either online or at a specified location. Some programs may even offer the option to train at the business. Taking into consideration the needs and abilities of a business is the key to finding the best business finance training.

A business finance solution generally refers to methods of funding and maintaining the finances of a business. Most solutions involve ways of obtaining working capital, but others also offer ways of protecting and increasing that capital.

To obtain working capital, business owners look to finance solutions that offer funding by several different means. The most common means are loans and financing. Asset-based loans use a business’s assets, such as inventory and equipment, as collateral. A business may also opt for a property loan in order to acquire commercial space. Invoice financing, such as factoring, involves liquidating or selling a business’s accounts receivables in exchange for quick funding. Some businesses look to trade financing to supply their inventory. The business will tell its financer the amount and cost of goods needed, and the financer will pay for the goods. The business then repays the amount financed over a specified period of time.

Most companies that provide business finance solutions also offer ways to protect and increase a business’s capital. Credit protection safeguards a business from daily risks, such as customers not paying on time, so that the business does not suffer incredible losses. This makes it much easier for the business to borrow money in the future, and it protects the balance sheet. A finance solution may also offer business insurance plans that increase the stability of a business. The most common types of business insurance are employee and public liability, car, property, and health insurance. These business finance solutions are designed to protect businesses against potential losses.

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