This article provides an overview of several business finance factors that commercial borrowers should understand before attempting to obtain a Small Business Administration loan (SBA loan) to buy either commercial real estate or a business opportunity investment. There are many commercial mortgage and business loan misunderstandings involving the use of an SBA loan due to the complex nature of this approach to business financing.
Two of the most difficult business loan and commercial mortgage situations for a business owner involve obtaining a Small Business Administration loan and refinancing an SBA loan. There are practical business finance solutions for both of these common business investment problems.
Are SBA Loan and Business Finance Programs Difficult?
There are usually two schools of thought about getting a Small Business Administration loan to buy a business:
(1) Avoid this kind of commercial loan at all costs.
(2) Use such a business finance loan whenever possible.
These conflicting investment financing viewpoints are due to a commercial mortgage business loan process that is perceived as complex and difficult by many commercial borrowers.
In reality SBA loan programs are more practical than they often appear. It is critical to the success of a Small Business Administration loan program to be working with a business finance advisor and lender that is proficient at this difficult commercial mortgage and commercial loan process. There are many potential commercial financing problems to avoid when attempting to obtain a small business loans, and very few lenders are skilled in this business financing area.
Anticipating Business Investment Problems Before They Occur: Business Loan Refinancing
One of the major investment drawbacks of an SBA loan has historically been the difficulty of refinancing the Small Business Administration business financing later. Current options have revised the situation and it is more feasible to arrange refinancing. It is still accurate to say that refinancing is not routinely available, but more importantly it is much easier to obtain than it was in prior years.
Advance commercial real estate loan and commercial loan planning can avoid some of the SBA loan refinancing problems. First and foremost, if the original business financing is arranged without a small business loan, this will make later business refinancing easier than if a Small Business Administration loan is involved. This means that commercial borrowers should at least consider if the initial business loan requires this form of commercial financing before proceeding.
Finalizing Small Business Financing: Two Common Commercial Loan Misunderstandings
One of the most frequent criticisms of an SBA loan program is the amount of paperwork required to complete the business loan and commercial mortgage process. What many commercial borrowers fail to understand is that any business financing process is likely to involve substantial paperwork and formal documentation requirements. In the end the key is working with a business finance advisor that understands what is required and can facilitate the submission procedures.
Beyond the paperwork concerns, a more critical and real problem is working with an SBA lender that is not very good at successfully completing Small Business Administration loan requirements. Even though there are many commercial lenders that publicize their ability to process these complicated and specialized commercial loans, in reality there are very few lenders nationwide who are consistently successful at completing the complex loan process in a timely manner.
Alternatives to SBA Loan Financing - Conventional Real Estate Investment and Business Opportunity Loan Options
Conventional business finance options should always be considered simultaneously with the possibility of obtaining an SBA loan. As noted above, the feasibility of refinancing a business loan or commercial real estate loan in the future will depend heavily on the choices made by a commercial borrower when obtaining the initial commercial mortgage.
A conventional business loan or commercial mortgage might be more feasible than many borrowers realize. Refinancing is likely to be more successful if an experienced business finance lender and advisor are involved.
Friday, March 28, 2008
Finance a Business for your Future
First, how not to go about it:
A cash loan is not the way to go.
Neither is signing as surety for a bank loan
A gift of the amount required? Again, not the best approach
But these are the three most common but wrong ways by which parents try to help their children get started in business.
So what is the best way?
For US residents and citizens, Internal Revenue Code 1244 provides the answer.
If you give your daughter $50,000 say to start a new venture, and the business goes belly up with the loss of the $50,000, there is no way that the IRS will allow you to claim this loss as a deduction.
Or suppose you loan her business $50,000. Again, if things do not work out, the business will keep paying you the interest until it runs out of cash, leaving you with a worthless note.
Tax-wise, you have a capital loss, which is deductible at the pitiful rate of only $3,000 per year against your ordinary income. Or you can use the loss to offset capital gains.
The same sad tax fate, a capital loss, results if you sign as surety and must pay Sue's $50,000 loan from the bank.
Tax-wise, a gift to your daughter is even worse. The $50,000 is hers. As a result, the tax loss is hers, not yours. Under the circumstances, chances are that Sue has little or no income, and the loss is almost totally wasted.
Note too that a loan or a bank surety is often questioned by the IRS. Why? The IRS contends that the $50,000 was a gift because you never intended to try to collect in the first place. You had no reasonable expectation of being repaid is the way the IRS puts it.
But now let’s look at IRS Section 1244 – the right way.
Section 1244 allows you to claim an immediate deduction for a loss on stock in a small business corporation. Your loss is fully deductible against ordinary income, rather than a limited capital loss.
And you can claim a maximum Section 1244 loss of $100,000 (joint return) in a single year or $50,000 on a single return
The maximum amount you can claim as a Section 1244 loss in a single year is $100,000 on a joint return or $50,000 on a single return.
So instead of a gift, a loan or a bank surety, you and your daughter set up a corporation for her new business. You get $50,000 of stock in the corporation that qualifies for Section 1244 treatment. Your daughter, who runs the business, draws a salary
If the business succeeds, your daughter can gradually buy back your stock (or, better yet, you can gift it to her) over time. Any profit you make on the buyback will be a low-taxed capital gain.
If the business fails, your loss will be fully deductible under Section 1244 (up to the $100,000/$50,000 limits).
Here's another nice thing about Section 1244: The tax benefits are easy to get. The beneficial tax treatment is automatic and no written plan is necessary.
A final point: Section 1244 is the way to go not only for your kids, but also for your spouse who might want to start a new business. And the same strategy applies if you want to venture into something new while keeping your present business.
A cash loan is not the way to go.
Neither is signing as surety for a bank loan
A gift of the amount required? Again, not the best approach
But these are the three most common but wrong ways by which parents try to help their children get started in business.
So what is the best way?
For US residents and citizens, Internal Revenue Code 1244 provides the answer.
If you give your daughter $50,000 say to start a new venture, and the business goes belly up with the loss of the $50,000, there is no way that the IRS will allow you to claim this loss as a deduction.
Or suppose you loan her business $50,000. Again, if things do not work out, the business will keep paying you the interest until it runs out of cash, leaving you with a worthless note.
Tax-wise, you have a capital loss, which is deductible at the pitiful rate of only $3,000 per year against your ordinary income. Or you can use the loss to offset capital gains.
The same sad tax fate, a capital loss, results if you sign as surety and must pay Sue's $50,000 loan from the bank.
Tax-wise, a gift to your daughter is even worse. The $50,000 is hers. As a result, the tax loss is hers, not yours. Under the circumstances, chances are that Sue has little or no income, and the loss is almost totally wasted.
Note too that a loan or a bank surety is often questioned by the IRS. Why? The IRS contends that the $50,000 was a gift because you never intended to try to collect in the first place. You had no reasonable expectation of being repaid is the way the IRS puts it.
But now let’s look at IRS Section 1244 – the right way.
Section 1244 allows you to claim an immediate deduction for a loss on stock in a small business corporation. Your loss is fully deductible against ordinary income, rather than a limited capital loss.
And you can claim a maximum Section 1244 loss of $100,000 (joint return) in a single year or $50,000 on a single return
The maximum amount you can claim as a Section 1244 loss in a single year is $100,000 on a joint return or $50,000 on a single return.
So instead of a gift, a loan or a bank surety, you and your daughter set up a corporation for her new business. You get $50,000 of stock in the corporation that qualifies for Section 1244 treatment. Your daughter, who runs the business, draws a salary
If the business succeeds, your daughter can gradually buy back your stock (or, better yet, you can gift it to her) over time. Any profit you make on the buyback will be a low-taxed capital gain.
If the business fails, your loss will be fully deductible under Section 1244 (up to the $100,000/$50,000 limits).
Here's another nice thing about Section 1244: The tax benefits are easy to get. The beneficial tax treatment is automatic and no written plan is necessary.
A final point: Section 1244 is the way to go not only for your kids, but also for your spouse who might want to start a new business. And the same strategy applies if you want to venture into something new while keeping your present business.
Thursday, March 13, 2008
Small Business With Healthy Cash Flows
The important part of a small business is its healthy cash flow, which can be maintained by small business loans and finance. Healthy cash flow is the keystone to the success of any small business stability and ultimately growth.
Most finance companies focus on the start-ups and provide them with the required finance to get their business up and running, however, once you are in a finance crunch or are struggling for some immediate cash flow its difficult to convince any of those financers to offer a loan. A few of them who care to offer loans under such situation would also ask for a collateral. This is again a big problem for small business entrepreneurs. They often do not have the suitable collateral to get the loans. Under such conditions, “unsecured cash advance” are the smart solution for them to meet their finance needs.
“Unsecured Cash Advance” as the name suggests, is secured on nothing at all. The collateral required for any secured loan is absent in unsecured cash advance. Question arises, then on what basis are this cash advances given? Cash advances are mainly given based on your existing business volume and also other factors like Credit history and repayment potential of the entrepreneur are taken into consideration.
Alternatively, unsecured business loans also provides for easy availability of money, as the process of approval does not involve any verification of collateral. Each borrower has to pay interest against the amount borrowed. Unsecured business loans are usually provided at higher rate of interest as no collateral is put against the money. You can either choose to pay a fixed interest rate or variable interest rate on the amount borrowed.
Credit score is the most important factor considered by lenders while lending unsecured business loans. Higher the credit score, higher is the possibility of getting a large amount of loan quickly and that too at comparative low interest rate. A borrower can get his credit score evaluated from any of the credit rating agencies.
Unsecured loans can be borrowed from any financial institutions or banks, also there are companies online that provide easy to get unsecured cash advance.With Internet access its just few clicks away from your required loan.
Profit maximization is the sole desire for any business. Accomplishment of this desire requires a lot of hard work and commitment along with adequate supply of capital. Unsecured cash can provide you with this.
Follow your dreams, be committed and dedicated, you never know, you might be the next Bill Gates in the making..
Most finance companies focus on the start-ups and provide them with the required finance to get their business up and running, however, once you are in a finance crunch or are struggling for some immediate cash flow its difficult to convince any of those financers to offer a loan. A few of them who care to offer loans under such situation would also ask for a collateral. This is again a big problem for small business entrepreneurs. They often do not have the suitable collateral to get the loans. Under such conditions, “unsecured cash advance” are the smart solution for them to meet their finance needs.
“Unsecured Cash Advance” as the name suggests, is secured on nothing at all. The collateral required for any secured loan is absent in unsecured cash advance. Question arises, then on what basis are this cash advances given? Cash advances are mainly given based on your existing business volume and also other factors like Credit history and repayment potential of the entrepreneur are taken into consideration.
Alternatively, unsecured business loans also provides for easy availability of money, as the process of approval does not involve any verification of collateral. Each borrower has to pay interest against the amount borrowed. Unsecured business loans are usually provided at higher rate of interest as no collateral is put against the money. You can either choose to pay a fixed interest rate or variable interest rate on the amount borrowed.
Credit score is the most important factor considered by lenders while lending unsecured business loans. Higher the credit score, higher is the possibility of getting a large amount of loan quickly and that too at comparative low interest rate. A borrower can get his credit score evaluated from any of the credit rating agencies.
Unsecured loans can be borrowed from any financial institutions or banks, also there are companies online that provide easy to get unsecured cash advance.With Internet access its just few clicks away from your required loan.
Profit maximization is the sole desire for any business. Accomplishment of this desire requires a lot of hard work and commitment along with adequate supply of capital. Unsecured cash can provide you with this.
Follow your dreams, be committed and dedicated, you never know, you might be the next Bill Gates in the making..
Finance Accounting Solutions For Business Outsourcing
At present, most of the business organization are outsourcing their finance and accounting tasks to offshore destinations. Basically, these businesses hire outsourcing firms, so that their financial and accounting tasks may be organized in a proper manner. In fact, outsourcing combines various supreme benefits and provides the client with an expert and cost effective way to manage financial and accounting tasks. With the help of such business accounting outsourcing services, the client business can better focus on its core business competencies. Since accounting and financial tasks cannot be taken lightly, it is always a sensible decision to manage it through any outsider firm.
Any flaw or ignorance of accounting task can affect the reputation of a business very badly. Moreover, these mistakes or flaws can affect corporate relationships, crucial financial decisions and final statement of the concerned business. Be it any sapling business organization or a well established enterprise, accounting task is important for the appropriate growth and extension for every business. Since managing a proper accounting management system requires extra financial and human resources, getting this task done through an outsider firm can reduce the financial burden of the business owner.
With the help of finance accounting outsourcing the client business can reduce its operational cost, as it provides the client with cost effective accounting services. It is quite true that hiring accounting professionals for accomplishing accounting and financial jobs is an expensive deal for a business owner, as it puts extra financial burden on him or her. However, outsourcing these tasks to offshore destinations can save a lot of money of that business owner because with it there is no need of establishing a separate accounting department. As far as cost effectiveness of financial accounting outsourcing is concerned, a business owner can get a well maintained accounting system just by spending a small amount of money every month.
Since all business organizations are including various HR policies, monitory benefits of all employees have become just double. Involvement of these strategies is beneficial for employees but on the other hand, the employer is finding it very difficult to meet this ever-increasing financial burden. In such situation, hiring new accounting professionals can cause mismanagement in available financial resources. However, accounting is one of those pillars of a business that decides its future and success therefore, entrusting accounting task to financial accounting outsourcing firm is the most suitable option.
Basically, development of a proper accounting management system involves high-tech procedures and up-to-date technology. These technologies and procedures demand firm financial baking, as that system needs to get updated as per the changing business requirement. However, with financial accounting outsourcing, the business owner will never have to worry about these updates, as outsourcing firms take care of these updates and technologies. Therefore, now it is not that much surprising that most of business are outsourcing their accounting operations to offshore destinations, as with them they are getting everything as per their expectations
Any flaw or ignorance of accounting task can affect the reputation of a business very badly. Moreover, these mistakes or flaws can affect corporate relationships, crucial financial decisions and final statement of the concerned business. Be it any sapling business organization or a well established enterprise, accounting task is important for the appropriate growth and extension for every business. Since managing a proper accounting management system requires extra financial and human resources, getting this task done through an outsider firm can reduce the financial burden of the business owner.
With the help of finance accounting outsourcing the client business can reduce its operational cost, as it provides the client with cost effective accounting services. It is quite true that hiring accounting professionals for accomplishing accounting and financial jobs is an expensive deal for a business owner, as it puts extra financial burden on him or her. However, outsourcing these tasks to offshore destinations can save a lot of money of that business owner because with it there is no need of establishing a separate accounting department. As far as cost effectiveness of financial accounting outsourcing is concerned, a business owner can get a well maintained accounting system just by spending a small amount of money every month.
Since all business organizations are including various HR policies, monitory benefits of all employees have become just double. Involvement of these strategies is beneficial for employees but on the other hand, the employer is finding it very difficult to meet this ever-increasing financial burden. In such situation, hiring new accounting professionals can cause mismanagement in available financial resources. However, accounting is one of those pillars of a business that decides its future and success therefore, entrusting accounting task to financial accounting outsourcing firm is the most suitable option.
Basically, development of a proper accounting management system involves high-tech procedures and up-to-date technology. These technologies and procedures demand firm financial baking, as that system needs to get updated as per the changing business requirement. However, with financial accounting outsourcing, the business owner will never have to worry about these updates, as outsourcing firms take care of these updates and technologies. Therefore, now it is not that much surprising that most of business are outsourcing their accounting operations to offshore destinations, as with them they are getting everything as per their expectations
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