The XBanker
Business Financing eXpert
Fast Cash For Your Business!
June 10th, 2008
Do you need fast cash for your business? Want a small business loan with no personal guarantee? Are you looking for immediate business financing? Chances are that you answered “yes” to all three of those questions. We all want cash for our business and we want it as soon as possible. Unfortunately, the financing world doesn’t always tell us what we want to hear. If you are properly prepared and have a proven track record (as demonstrated by your revenues and your credit) you can probably get more money – and faster than you think. If you are not prepared … well, you reap what you sow.
Most people don’t start looking for capital for their business until it is too late. “Too late” can mean a lot of things: damaged credit, out-of-line ratios, too short of a time frame, etc. These oversights, plus the procrastinator’s itch for a quick fix, are two of the most common ailments we deal with. I wish every entrepreneur understood this truth: accessing capital is a process.
First, you start by setting up the right corporate structure. You need a corporation or LLC. Garrett was talking about the benefits of S Corporations, when to use a C Corporation, and the advantages of an LLC. To access capital under the best terms, you need to separate yourself from the business as much as possible. Having a corporation or LLC is a step you cannot afford to skip.
Once you have a corporation, you need to build a business credit profile. Building business credit is a process too many entrepreneurs want to skip or are so busy that they don’t have the time to dedicate to it. But, you need to find a way to establish a business credit score. In the past, banks relied exclusively on personal credit to approve business loans, business credit cards and unsecured lines of credit. The recent credit crunch is changing all of that. We are seeing business credit becoming a factor in most applications now. Even if the business credit score isn’t used, building business credit will help ensure your business is compliant with the numerous legitimacy checks that banks and vendors will use before granting credit. It’s unfortunate to see business owners skip this critical step.
With a business entity and a business credit profile in place, you’re now ready to start acquiring a mix of financing products. Every business owner needs a couple of business credit cards (a form of cash credit). The right business credit card will give you working capital that won’t report your balances on your personal credit report – this is key to keeping your credit ratios in line for future financing.
It is also important to start accessing vendor credit. Just about everything manufactured or sold by a business can be obtained with business credit. Vendor credit comes in many forms, with net terms (30-90 days to pay invoices) and revolving lines being the most popular. You need to get in the habit of preserving your cash and your cash credit.
Once you have a good mix of cash and vendor credit you’ll be better prepared for bank financing: loans, unsecured lines of credit, and equipment leases. You’ll be prepared because you’ll have strong business credit – multiple lines with a positive payment history and with sufficiently high credit – to warrant larger loan limits from the banks.
If you follow the process, you’ll be rewarded; if you wait until the last minute, you’ll get what you deserve.
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June 13th, 2008 at 5:33 pm
I am the last person who would like to listen to lectures, however to all of us out there, you may want to read this post many times over & over and really, follow the proces…
If you rush and skip any step, further ahead on the journey you will be forced to get back and take it anyway !
Very good post Mr. X
June 16th, 2008 at 10:03 am
[...] or a bank loan, that may well be the case, as The XBanker recently pointed out in his advice for getting cash fast. On the other hand, many vendors are eager to keep selling their goods and services, and may be [...]
March 2nd, 2010 at 8:27 pm
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800-763-3021 ex. 172