There comes a time when every business must secure financing to cover their growing needs. Whether it’s to buy new equipment, purchase land, improve an existing location, or to just give your business a little breathing room, a loan can sometimes mean the difference between making it to the next level and falling behind your competitors. Unfortunately the world of finance can be a bit tricky, especially when it comes to business loans. So many elements come into play. Knowing what those elements are can mean the difference between acceptance and rejection.
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On their Small Business page CNN.Money.com has published some interesting stories on small businesses in the U.S. who are feeling the credit crunch and how they are responding.
One page has a series of vignettes of small business efforts to cope. Business owners discuss many problems and solutions from moving their business locations, late accounts receivables, stunted growth, evaporating markets, to loss of lines-of-credit.
A longer article also discusses the problems businesses are facing in the current credit freeze. One family business was forced to close, another small business found local funding when big banks balked, and still another has had to turn away sales because no bank will fund their facilities expansion.
For many years home equity provided start-up and working capital for millions of U.S. businesses. In Hurdle: The Book on Business Planning, President and Founder of Palo Alto Software Tim Berry says:
Why do we say that banks are the most likely source of small-business financing? Because small-business owners borrow from banks. A great deal of small-business financing is accomplished through bank loans based on the business owner’s personal collateral, such as home ownership. Some would say that home equity is the greatest source of small-business financing.
However, this may no longer be the case as another article on CNN Money discusses how home equity as a source of small-business financing has recently changed.
All of this points out how absolutely necessary it is for business owners to focus on their planning processes every single month in managing their companies’ cash flow.
Steve Lange
Senior Editor
Palo Alto Software
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