Small Business Banc, Small Business Questions

GLOSSARY

Accounts Receivable Factoring
Accounts Receivable Factoring Companies
Accounts Receivable Financing
Accounts Receivable Funding
Accounts Receivable Loans
Business Acquisition Financing
Business Acquisition Loans
Business Development Loans
Business Equipment Financing
Business Equipment Loans
Business Equity Loans
Business Financing Loans
Business Financing Options
Business Line of Credit
Business Line of Credit Loans
Business Loans
Business Loan Applications
Business Loan Brokers
Bridge Loan Lenders
Business Term Loans
Factor Accounts Receivable
Financing A New Business
Small Business Financing
Small Business Financing Options
SBA Loans

Accounts Receivable Factoring

Accounts receivable factoring--also known as accounts receivable funding--is a way for small businesses to obtain fast working capital without the need for a loan or repayment. A company's accounts receivable--invoices sent to clients for goods, or services rendered--are listed on a balance sheet as an asset. The small business can then sell these invoices to a larger company, which then takes on the risks of collecting the money owed by clients and provides the small business with immediate funds.
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A small business will usually be required to "age" its invoices before receiving accounts receivable factoring. For accounts less than 30 days old, a provider may pay around 75 percent of the value of the invoice. But for accounts that have been outstanding for a longer amount of time, the provider will typically pay less. Some providers are unwilling to take on accounts that have been outstanding for longer than 90 days.
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Accounts Receivable Factoring Companies

A small business looking for a convenient way to raise immediate working capital might consider employing the assistance of an accounts receivable factoring company. Companies of this nature will purchase the invoices (accounts receivable) of other businesses at a discounted price (usually 60-75 percent of the value of the invoice, depending on how old it is), and take on the risk and responsibility of collecting the money owed from the smaller business's clients. The small business takes a slight loss, but receives a lump sum immediately to use as working capital.
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Accounts receivable factoring companies are different from loan companies, and in many cases more convenient for small businesses. Accounts receivable factoring is not a loan, but an outright purchase of a business's accounts receivable. Therefore, there is no interest, no need for repayment, and no going through the yearly loan review process. The small business also no longer needs to worry about collecting the money for goods or services rendered, since the accounts receivable factoring company takes on that responsibility with the purchase of the invoices.
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Accounts Receivable Financing

Accounts receivable financing is a type of loan for securing fast working capital that uses a business's accounts receivable as collateral against the loan. It should not be confused with accounts receivable funding/factoring. Accounts receivable financing is a business loan, not an outright sale.
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With accounts receivable financing, the company purchasing the accounts receivable then takes on the responsibility of collecting them directly. However, with accounts receivable financing, loan payments are due as the business's accounts receivable are collected. The small business is still responsible for collecting on those invoices and for making its loan payments. If payments are not made, the business's accounts receivable can be seized.
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Accounts Receivable Funding

Accounts receivable funding (also known as accounts receivable factoring) is a quick and easy method of raising working capital for small and medium-sized businesses. By selling their invoices (listed as accounts receivable in the assets section of a balance sheet) for goods or services rendered to a larger company at a discount, a small business is able to secure immediate funding while the larger company assumes the credit risks of taking on the accounts and collecting the money owed.
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ibank.com makes it easy for a small business to obtain working capital with accounts receivable funding. By registering with ibank.com, a small business can instantly find a host of local lenders who are interested in providing them with an accounts receivable loan. The client can then compare proposals, negotiate with the lenders, and ultimately choose the lender who will best benefit them.
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Accounts Receivable Loans

Accounts receivable loans are loans taken out to provide working capital for a small business, with its accounts receivable (invoices sent out to clients for goods or services rendered) as collateral. Depending on the ages of the various accounts receivable invoices, a company can usually borrow between 60 and 75 percent of their total value. Older accounts receivable invoices are considered higher risks (the older they are, the less likely they are to be repaid) and so are worth less. Some lenders will not loan on accounts receivable invoices that are over 90 days old.
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Accounts receivable loans are short-term loans, repaid as the company collects the accounts receivable from their clients. Unlike accounts receivable factoring/funding, the business still maintains ownership of the accounts receivable and is responsible for collecting them on time and making payments on time.
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Business Acquisition Financing

There are a number of reasons why a business owner may want to get business acquisition financing. They may want to acquire another business, or simply merge with it. Merging with another company and taking on a business partner can help to diversify a business's management strengths and shoulder a bit of the burden of the burden of running a company.
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Acquiring another company, on the other hand, is the quickest way to expand business, and taking on additional products or services may help a business balance its portfolio. Acquisition financing can help a business in any of these situations and many more. This type of transaction can help the company grow and thrive.

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Business Acquisition Loans

Business acquisition loans are funds borrowed for the purpose of purchasing or merging with another business, either by stock purchase or by private equity. There are many factors a lender will take into consideration when a borrower applies for a business acquisition loan. The borrower's credit history, as well as the cash flow of both the acquiring business and the acquired business, are important.
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Whether or not the borrower has the necessary management experience to maintain the acquisition is also vital to the lender's decision, as is the condition the acquired business is in at the time of purchase. This is because business acquisition loans are long term. If the acquisition includes real estate, the term for a business acquisition loan may be up to 25 years.
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Business Development Loans

Businesses develop in different ways and need various types of loans to fund that development. The reason for a business's development is as important to a lender as its creditworthiness and ability to repay. The type of development a business is doing affects not only the kind of loan it should get, but to which lender it should go.
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A new business that is starting from scratch might opt for a venture capital loan for start-up capital to get business underway. A company looking to purchase or merge with another company needs an acquisition loan: funds to facilitate partnership. If a business wants to upgrade, an equipment loan might be the way to go to obtain the funds to lease or purchase updated technology.
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Business Equipment Financing

Every business has equipment needs, and obtaining necessary equipment requires financing. Most companies choose to lease their equipment rather than purchase it for a variety of reasons. But there is still the question of which type of lease to get. There are two different types of lease financing to be aware of, each with different benefits for different companies and situations.
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A finance lease allows a business the option of purchasing the leased equipment for a nominal fee of one dollar or so once the lease agreement is up. They are useful for businesses who wish to keep their equipment. However, lease payments usually last for the expected life of the equipment. A true lease is shorter, after which a business can leave the lease or purchase the equipment for its market value.
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Business Equipment Loans

Business equipment loans are loans taken out by a company specifically to buy or lease the equipment necessary to the company's functioning. Companies need different types of equipment: a warehouse may need forklifts and shrink-wrap machines, whereas an office building may require computers and photocopiers. Equipment loans can be used to furnish a new business, replace broken equipment, or upgrade to a higher standard of equipment.
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Vast amounts of equipment are necessary to keep just about any company running smoothly, and obtaining all of it runs into a lot of money. Many companies prefer to lease their equipment rather than purchase it. It is generally cheaper to lease than to buy, which allows them to get better quality equipment. A lease also requires no down payment, and lease payments are entirely tax deductible.
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Business Equity Loans

Business equity loans are mortgages placed on a business's property in exchange for funds. The equity (total value of property and assets) of a business can be a good source of financing for a company in need of cash. Business equity loans are taken out in a percent Loan To Value (LTV) ratio.
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A business that has a property value of $500,000 might take out a loan at 80 percent Loan To Value, which would provide the company with $400,000 cash. In exchange, a lien is placed on the property as security of payment. Many lending institutions will take interest-only payments for a predetermined period of time. The borrower should be made aware that during this time, interest compounds each month.
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Business Financing Loans

Financing a business can be a complicated and costly process. There are business loans that can be taken out for different aspects of business financing. It is important for a business owner to not only be able to understand each type of loan and the areas where financing is needed, but also to be able to ask the right questions and understand how different lending institutions handle loans.
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Some loans are short-term financing, meant to be paid off within as little as a few weeks. These loans are usually fast cash to fund specific business projects. Some lending institutions will require collateral on these loans, while others only need good credit references to assure repayment. For long-term loans, interest is the main variable.
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Business Financing Options

For businesses in any stage or situation, there is a myriad of business financing options available. First, a business must determine whether to secure financing from loans or from investments. There are pros and cons to each, depending on the individual financial needs of the business.
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Businesses in their early stages, or looking to expand and branch out, might consider securing capital through investment: venture capital and angel capital being the two most common types. Venture capital is not easy to obtain, but it has distinct advantages. Investors make money when the company makes money, so there is no need for a repayment plan or to worry about interest accrual.
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Business Line of Credit

Business line of credit is offered by most banks and functions like a credit card for businesses. A business will have a predetermined amount of credit with a bank and can use it over time as needed for working or growth capital. Collateral is not usually required unless the business has poor credit when they apply. The amount issued for a business line of credit depends on the business's credit rating and cash flow.
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In order to be approved for a business line of credit, a company must first demonstrate financial responsibility and an ability to repay. As with a credit card or loan, payments on a business line of credit are made monthly. Some banks will require interest-only payments for a period of time, in order to keep payments small.
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Business Line of Credit Loans

Business line of credit loans work more like credit cards than regular loans. Though a line of credit is technically a type of loan, there are distinct differences in how they work. A traditional loan is taken out for a specific and defined purpose, with the funds disbursed all at once.
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With a business line of credit, funds are disbursed as needed, to be used for whatever the business's current needs may be. A bank will give a business a predetermined amount of credit, and that business may use some of it for equipment purchase one month, some for inventory the next month, and so on. Interest will usually accrue only on the amount of money spent so far.
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Business Loans

There are many different types of loans that a business might apply for, depending on the type of business and its particular needs and assets. A well-established business, for example, might take out an unsecured working capital loan, based only on the good credit of the borrower. A smaller business without a good established credit line will need some collateral to take out a loan.
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A business's accounts receivable might be used as collateral in some cases. Equipment the business may have--or intends buy with the loan--can also serve as collateral. A business may also sell their equipment to a lender for cash, then lease it back from them, to acquire fast cash.
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Business Loan Applications

Loan applications can be a complicated matter for businesses. The loan application process is a long and arduous one. Lending institutions want to make be sure the borrower will be able to repay the loan, and so will examine a business's background, credit history, and general financial workings before deciding whether or not to approve the loan.
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First, a lending institution needs to know all about the business's financial situation. They can easily obtain the business's credit history from a number of willing companies (including ibank.com), but they will also ask for tax returns for the past several years, as well as the business's current budget, with complete listings of assets and liabilities.
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Business Loan Brokers

Business loan brokers act as a liaison between borrowers and lenders. If a business is turned down for a loan or has trouble getting approved for a loan, a business loan broker will help the company receive funding from alternate sources and make the process as simple and painless as possible.
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A loan broker can also be a considerable asset to a business looking to borrow money. For most businesses, taking out loans is not a regular thing, and so their experience in the field of loans is limited. Loan brokers, however, can help a business choose a loan by finding which is really the appropriate loan for them at the best rate.
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Bridge Loan Lenders

A short-term bridge loan to fund a business project is not typically acquired from a bank. Sometimes a bank will fund a bridge loan, but they usually come from a private lender or funding company, which can expedite the process and distribute funds more quickly. The purpose of a bridge loan is to get things done quickly and keep business moving.
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Therefore, a rapid repayment plan is also an integral part of the bridge loan process. However, some bridge loan lenders may be looking to receive a specific yield from the loan and will therefore enforce a pre-payment penalty if the loan is paid off ahead of schedule. It is important to find out all about a lender's repayment policies before taking out any kind of loan.
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Business Term Loans

Business term loans are the most basic form of loans to take out. They are usually simple and straightforward and have no specially designated purpose, like equipment loans or acquisition loans. Term loans can be taken out for whatever a business needs.
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The interest rate for a term loan is usually fixed, and payments are made monthly or quarterly. The loan lasts for a previously specified period of time, called the term. Term loans are not generally taken out for the short term, but are divided into intermediate and long-term loans. Intermediate loans last between one and three years, and are paid monthly, and may include a balloon payment, a large chunk of the loan paid off all at once, usually towards the end of the term.
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Factor Accounts Receivable

One of the many types of financing available through ibank.com is factoring accounts receivable. If you're not sure what it means to factor accounts receivable, think of it as a loan based on sales you've made but have not yet been paid for. If you are in an industry with clients who pay by monthly or quarterly invoices, then a factor accounts receivable loan can give you capital you need now instead of later.
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Unlike some online lending networks, ibank.com gives its clients the tools they need to custom-tailor their loan packages for specific types of loans. The information on a factor accounts receivable loan application is different than that for a construction loan, for instance. By using the step-by-step guide included in Small Business Banc.com Form's Page, you can give us all the pertinent information about your accounts receivable, so that we can factor the best loan possible.
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Financing A New Business

Financing a new business can be easy or complicated, depending on the business and the level of financing you need. Regardless of how big or small your financing requirements, applying for business loans online will simplify things immensely. By using the tools at an online marketplace like ibank.com, you can eliminate stacks of paperwork and get quotes from multiple lenders at once.
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There are three main areas to cover when financing a new business: working capital, equipment, and real estate (construction, remodeling, or development). A new business needs abundant working capital for things like purchasing supplies, paying employees, buying insurance, and pre-paying suppliers. Skimping on any of these things can weaken the future of the business. Paying too much for a loan will backfire as well, so be sure to compare rates from several lenders before signing a deal.
Most new business owners need some type of financing when it comes to acquiring heavy equipment. Equipment loans and leases are quite popular, as they provide a way for business owners to get the equipment they need without tying up crucial capital. There are several different types of equipment loans and leases, all of which can be found through Small Business Banc.com.
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Small Business Financing

There are currently around 22 million small businesses in the United States. Many of them are thriving, some are experiencing rapid growth, and others are in need of a little financial assistance. No matter whether you're looking for funding to start up a new business or your business is expanding rapidly, ibank.com can help you find financing faster than any other online lending resource.
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Small Business Financing Options

For many people owning a small business is a dream come true. You get to be your own boss, and you get to have complete control of everything from product development and interior design to advertising and setting business hours. As a small business owner your greatest challenge will be figuring out how to sustain your company in this competitive marketplace. One of the best ways to ensure success is to develop a business plan that takes into account the need for smart and affordable financing options.
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There's plenty to think about. You not only need to figure out how you're going to get your business off the ground, but also how you're going to handle emergency situations. If you experience rapid growth, will you have the capital available to invest in expansion and innovation?
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SBA Loans

An SBA loan is a loan for small businesses who are unable to find financing elsewhere. These loans are guaranteed by the United States Small Business Administration. An SBA loan is a private loan and is not loaned directly by the SBA, but by a regular lending institution.
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The SBA can guarantee up to $1 million, but has loan programs that will lend up to $2 million. In the event that a loan cannot be repaid, the SBA can usually recover between 75 and 80 percent of the total loan value. The SBA will only lend to small businesses, though, so any business looking to take out an SBA loan must make sure they qualify according to the United States Small Business Size Regulations.
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