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A Step by Step Guide on How to Get a Business Loan

On December 17, 2008, the prime rate in the United States was dropped from 4.00% to 3.25%, the level that it currently stands at right now. The lower interest rate was initiated by the Federal Reserve to stimulate lending to individuals and businesses, the first salvo in the war to combat economic recession. On the surface, it appears to have made very little difference. The economy in the United States still declined and unemployment rose to a record high rate of over 10% in some states. Despite that, there’s no way of knowing how much worse things would be, were it not for the lower prime rate. Today, as the nation crawls out from the hole it’s been in, businesses are beginning to look for funding to expand or in some cases just to stay afloat.

There is a process involved in getting this funding, requiring a step by step approach and some knowledge of exactly how to get a business loan. That process begins with an evaluation of needs, continues with an examination of loans and funding options available, and hopefully culminates in a business loan which will help your company achieve its goals. It’s not as simple as it once was, when all you had to do was show up at your bank and put some collateral up to get a loan. Credit score is now a factor, as is credit and payment history. The nature and success rate of businesses in your industry will also be taken into account. After what was a horrific three year period for banks and lending institutions, you’re not going to be approved for a business loan without some heavy duty footwork on your part.

Evaluating Your Needs for a Business Loan

Just because you can do something doesn’t mean that you should. Before you apply for a business loan, evaluate the reasons why you need one. The economy is improving. Are you running in the red right now or are you managing to pay your bills and make a small profit? Taking out a loan to increase profit margins is one thing, but is the debt you’re taking on worth the return you’ll get back from it? Make sure when you calculate these numbers that you include the interest payments and any fees the bank charges. Add up total cost and then project returns and how exactly those returns are going to be realized. There has to be a plan of some kind and the bank will want to see it before they give you anything.

Where to Go for a Business Loan

A Treasury report released at the end of last year showed that major banks had decreased business loan balances by $1 billion in the last quarter of 2009. These were the same banks that received TARP funds from the federal government’s bank bailout. Justifying the cuts as prudent management, they nonetheless all pledged, after some pressure from the Obama administration, to increase lending in 2010. Some of those pledges of more business lending came from major players in the banking industry. Bank of America (5 billion more), Wells Fargo (25% more), and JP Morgan Chase ($4 billion more) have all increased their lending this year, though much of the JP Morgan Chase lending is in the form of business credit cards.

There are also online resources available, including sites that will shop your loan request around to various banks, financial institutions and private lenders. There are different types of business loans, including working capital loans, merchant account advances, secured and unsecured loans. You can borrow against money that is owed to you and you can use your credit card receipts from recent months as proof of your ability to pay. You can even sell your future credit card sales or accounts receivables, an act that doesn’t technically qualify as a loan, but bears mention here. No matter which way you go you’ll be facing the same questions and need the same set of numbers to back up your request for funding.

What do Lenders look for in Business Loan Applicants?

A simple rule of thumb when doing a self-evaluation of what the bank will look for is to look at the five C’s: Character, Capacity, Collateral, Capital, and Conditions. Character is about you and your credit score and history. Capacity is proving your ability to pay. Collateral and Capital are very similar. They both offer a guarantee to the bank that you’ll pay them back. Conditions refer to your knowledge of your own industry and the plan that you have for use of the money you’re going to borrow. If you did your homework in the earlier step “Evaluating Your Needs for a Business Loan” this should not be a problem. The bank or lending institution will see that you have a definite plan for the improvement of your company and look upon that favorably.

Communicating with the Lender: How to finally get a Business Loan

Once you’ve evaluated your needs for a business loan, asked yourself all the difficult questions about credit-worthiness, and chosen a lender to apply to, it’s time to walk through the door and present your case. Communication is the most important element at this stage of the loan process. You need to have the ability to explain what you want, why you want it, and how you plan to pay it back. Have a solid business plan in hand, with a detailed explanation about how you will use the money from a business loan and what you plan to do about paying it back. The financial information you present about your company should be current and accurate. The bank will turn you away of you try to rely on the successes of yesteryear. You’ll also want to present alternate sources for repayment should the first plan not succeed. Remember the climate you’re running a business in right now and what the banks have been through recently. If you cross all your t’s, dot your I’s, and anticipate any questions you’ll be asked, there’s no reason why you shouldn’t be approved for a business loan.

Copyright (c) 2010 Trey Markel

Top 10 Free Online Business Directories in New Zealand

Having your business listed in online business directories is important for local businesses. Not only it helps potential customers to find your business, it also informs Google that the business is NZ based resulting into better rankings in Google New Zealand. Based on research & analysis over the past few months, I have made a list of TOP 10 NZ Online Business Directories which are important for SEO purposes. However, this list is certainly not exhaustive. I encourage to list the business in all the directories if possible. At Last count there were a total of approximately 20-30 useful NZ online directories. If not all, make sure business is listed in the following 10 directories:

1. Google Places

Not a traditional directory, but the most crucial place to list a local business. This is great from local business point of view to get on first page of Google without putting a lot of effort on SEO campaigns. Furthermore, recent changes to Google results has given local business enhanced visibility in natural search results. Google is definitely driving the local & personalized search results forward.

2. Finda

Definitely the best NZ online directory. With a Page Rank of 7 at top domain and PR of 4 at business category level, it is easily the most authoritative NZ directory from SEO perspective. Great User Interface. Ranks on Google Searches consistently. Gotta be there.

3. NZS

Comes very close 2nd. With a Page Rank of 6 at top domain and PR of 3 at business category level, it is 2nd most authoritative directory. Great user interface. Easy to create listings. Includes regular blog posts, scrolled headline news, regional weather, etc. Also ranks regularly on Google.

4. HotFrog

Fairly authoritative at the top domain level with a PR of 6. However, there is no link juice flowing into the category level which have a PR=0. However, Hotfrog has extremely good visibility in Google Search results for various industries. Awesome interface. Very Clean & Great UI. Also provides integrated Google Maps of the business location.

5. IndexNZ

The user interface is outdated. It feels like a site from 90s with no thought given to visitor experience. However, it has surprisingly high visibility on Google Searches. The Home PR= 5 while the category level pages are PR = 2. Personally, i would not visit this site while looking for businesses but considering SEO i would definitely list my business there because of the directories high authority & PR status.

6. Nz Pages

Top Level PR = 6. Some Category level domain PR = 4 (Rare). Great site structure & high visibility of different categories on the home page. Makes it easy for visitors to dig into the sort of business they are look for. Clean user interface. Easy to navigate.

7. NZ Directory

Top level Domain PR = 5. Very nice, clean & beautiful user interface. Great site structure. Lots of options provided to the visitor to take action. Lot of sharing options using social media, email, etc. No visibility of Google Sponsored links which is beautiful & rare. Extremely easy to navigate. A recommendation would be to convert individual business website links from text to hyperlink.

8. Made from NewZealand

With a Home level PR =6 along with lots of modern features, Made From NewZealand is an upcoming directory with a lot of potential. It consists of business profile videos from various business owners & leaders, database of great blogs & a variety of sharing options including Facebook, YouTube & Twitter. Definitely a directory using latest web tools to make a difference.

9. Yalwa

Yalwa is Global online business directory. however, It has dedicated subdomains to New Zealand cities. The coolest thing about this directory is that it allows you to add an anchor link with your keyword. This is extremely rare & invaluable. With PR=5 and significant number of backlinks, it is a great authoritative directory to list your business in.

10. Dmoz New Zealand

Dmoz is the worlds largest online directory with global presence. Very high authority. Provides free as well as paid listings. Free listing can take months so you might as well do it right away. I would like to argue that it may never get you any traffic. However, it definitely brings a high quality back link improving your search engine rankings.

Get your business listed in these top 10 NZ web directories right away!

Want more help with getting you website on #1 page of Google? Contact us today and we will provide Free consultation on your future web strategies to get more customers online.

Most Important Step to Starting, Running, Buying, or Selling a Business

You are looking to Start a Business. You are Running a Business. You are Buying a Business. You are Selling a Business. What is the most important step in any one of these ventures? And no the answer is not having unlimited deep pockets. To start, run, sell,or buy a business you need to understand that business. You need to understand not only the operational side of your company, you need to understand the financial side of your company. I am a business broker in Florida and I help people buy and sell businesses. (and current and former business owner) This last week I completed a very busy week of helping an out of town business buyer visit several different companies. Our intent of visiting these multiple companies was an effort to understand the businesses. To buy a business you have to understand the business. A small business owner truly needs to understand the financial health of their company.

Many, Many Many small business owners DO NOT understand the financial side of their business. Do you feel as an entrepreneur you need to understand the difference between a debit and credit or if you buy something if it should be a capital purchase or an operating expense. So many small business owners and entrepreneurs run their business using their gut as their guide, they can feel if their business is going good or bad. Other small business owners look at their checkbook- if there is money in that things are ok. On the other side you may have a very successful business, you buy several new truck and new equipment with cash every year, you have very little money in the checkbook and “feel” you have an unsuccessful business. You could be very wrong. And yes it is also very easy to hire a CPA and or accountant and send all the monthly records to them, count on them to sort through them and have them generate a report for you to maybe glance at and file away. Your CPA or accountant is a great place to start the learning process. The more you know, the more effective they can be to you. Your Balance sheet and your Income statement tell your companies story. You may feel your company is healthy, or improving, or getting better, or getting worse- your balances sheet or Income statement (Profit/Loss Statement) will tell you in a factual manner. You need money for your business- you go to a banker or financial institution to get money, do you think they will listen to you tell them about your business and loan you money based on that. they will use your company financials to make that business decision. A few years ago banks I had worked with strongly considered your balances sheet to make loan decision. Now-a- days both Balance Sheets and income Statement both are a strong part of that evaluation. Why is that?. Understanding the “whys” about your company is important to your business. In the preceding scenario a business may have a strong balance sheet due to significant assets like real estate owned or equipment owned by the company. But in current economic conditions the companies Income statement show that the business sales are down 25% and and shows losses for the last year- lending may not occur. The banks may not be all that excited about the fact that you own real estate through your company.

The business buyer I was working with flew in town for 3 days for him and I to visit businesses. Most of the small business owners we visited had good businesses. Without divulging any confidential information, they all showed cash flow in excess of $200,000 per year. They (the respective business owners) all said they didn’t really understand the financial side of the business, but “here our our records for your review”. (after confidentiality agreements were signed) They could speak for hours about their customers, employees, procedures and ideas. Questions regarding financial information were usually answered with 1 or 2 brief sentences.

The buyer I was working with was a very educated buyer, a President of a publicly held $40 Million company, and 30+ years of experience. He had looked through maybe 30 businesses to narrow down visits to less than a handful. He and I both knew that to buy a business, he had to understand the company. We spent hours discussing the financials of the businesses. You as an entrepreneur that is starting a business or running a business may someday want to sell your business. Understanding the true financial condition of your company is the 1st step to improving the financial condition of your business.

Buying a business is a very effective way to expand your customer base and Revenues. knowing how to read and understand the financial statements of others could be the difference of a business acquisition that is a success or a failure.

And when an educated buyer approaches you about buying your business, you provide the business buyer your Balance Sheet, your Income Statement, and your explanation and understanding of the true financial condition of your business may be the difference in someone buying your business at a good price or passing your business over to pursue other businesses to buy