What Type of Lender is Right for My Business?

by Crestmark 10. July 2014 05:54

When business owners or executives first realize the need for working capital, it can be difficult to know where to start. People often ask, “Should I call my local bank? What about non-traditional lenders? What’s the difference between the two?” We hear this all the time, and wanted to provide a resource to help! 

We recently released an Infographic titled “What Type of Lender is Right for My Business?” This provides a quick and easy reference piece for prospective borrowers to determine whether they’d be better suited pursuing a traditional bank line of credit, or to look into alternative financing. Each lending option has unique characteristics, and this infographic helps clarify how different business situations are best suited for certain lending options. 

The infographic follows a flow-chart format, and leads users through a series of yes / no choices about their business. Key points that determine the right fit include: 

- Does your business have three or more years of positive business history?

- Do you have limited or negative equity?

- Do you have limited or inconsistent profitability?

- Do your assets exceed your liabilities?

- Does your business have positive trends?

- Are there opportunities for growth?

By answering each of these questions, it’s easy to see whether your business may qualify for traditional or non-traditional lending. We are excited about this release, and hope that many businesses find this useful! 

              is alternate lending right for my business

Are you in the market for a business loan? If so, ask yourself the questions on this infographic and then give us a call to discuss! We’d love to help walk you through the process of figuring out what lending option would be best for you and your business. 

 

 

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Four Ways to Know if a Business Line of Credit is Right for You

by Crestmark 11. September 2013 11:05

crestmark lending

Starting a new business is not the only time an entrepreneur may look for help with financing. Some small business owners—especially those who operate seasonally—experience fluctuations in cash flow throughout the year. A line of credit can help to smooth over the ebb and flow of sales and cash flow throughout the year. 

A business line of credit provides on-demand funding, and there are a number of different types of lines of credit ranging from unsecured, meaning that it is not backed by any kind of assets; to secured, backed on a general basis by all assets of the company, or by specific assets that are structured into the funding formula of the line of credit.

Here are four questions to ask yourself before approaching a lender:

1.) Does your business have uneven cash flow? The best use of a business line of credit is for paying off expenses in the short term that can be easily paid off in the long term. This works well for short term expenses such as payroll and inventory.

2.) Are you able to pay off the balance of your credit line? It can be tempting to carry a balance on a line of credit, but this will ultimately damage both your relationship with the lending bank and your company's financial health. Unless you are able to pay off the balance quickly, you should not run the risk of borrowing against a line of credit, but possibly consider a term loan for long term items like buying equipment.

3.) Would a business credit card be more appropriate for your needs? A line of credit will have a lower interest rate and higher credit limit than most business credit cards. It will not, however, provide line by line tracking of expenses along with date and location of purchases. This can be very valuable for record keeping and future planning, and also allows you the flexibility to provide individual cards to key employees/staff for travel or other day to day business expenses.

4.) Are all business owners available to apply? If your business is a partnership or has multiple owners, at least 80% of the owners must be represented in the credit application. This makes applying for a line of credit a decision that must be made across all owners of your business.

If you are just starting out, looking to obtain working capital for your existing business, or want to grow from your established base, Crestmark’s business development team can work with you to determine which type of financing solution is the best fit for your current business situation.

 

 

 

 

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