Small Business Borrowing on the Rise at the End of 2013

by Crestmark 28. January 2014 08:25

The borrowing for U.S. small businesses increased near the end of 2013, which has analysts optimistic about the economic outlook for 2014.

This increase, reported by the Thomson Reuters/PayNet Small Business Lending Index, measures the volume of finance lent to small companies. At 120.4 in October and 111.4 in November, this level is the highest since August 2007—right before the financial crisis set in. Additionally, November, which only had 20 working days, saw the highest per-day borrowing rate out of the entire year.

This kind of increase points to an optimistic U.S. economy. Normally, a high level of small business borrowing is correlated with overall economic growth because small companies produce more goods and increase assets, ultimately resulting in more money infused into the economy as well as the creation of more jobs.

"It's another sign of continued expansion," PayNet founder Bill Phelan said, according to Reuters. Small businesses "are seeing more demand for goods and services, and that's all good for GDP."

Fewer Delinquencies

With lighter financial burdens, small businesses have been able to not only borrow more, but also pay back those loans in a timely manner.

The percent of small business loans unpaid at 31 days past due and 180 days past due was down to 1.43 percent, which according to Reuters, is a new record low. For a little perspective, the number of delinquent loans reached a high of 4.73 percent in August 2009 and has steadily declined since then.

Looking to the New Year

Because PayNet's lending index has typically correlated in the past to more overall economic growth for the next one to two quarters, analysts believe the US economy should continue to improve in 2014. Some factors in improving the outlook will be actual financial infusion—such as more business production—but the attitude of the American consumer will also play a key role. 

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Small business loans

Winning Over Lenders by Being Prepared: What You Need as a Small Business Owner

by Crestmark 25. October 2013 04:11

Getting a small business loan can be a challenging task when presenting a valid case for lending. So what information and paperwork are you going to need when applying  to a lender in hopes that they will not only set you up with a loan, but will also get you a favorable one?

First, be confident in your loan request. Know the amount you will need to fund your growth, be prepared to discuss what opportunities and income will come from this loan, and go in prepared with statements and research to explain the costs of everything from raw materials of new product to marketing expenses. Be as detailed as possible

Whether you’re applying to a traditional or alternative lender, the following materials should be prepared ahead of time:

  • • Proof of a good income record
  • • Any necessary loan applications
  • • Personal Background and Financial Statement
    • • Statement of Personal History
    • • Personal Financial Statement
  • • Business Financial Statements (for the last two fiscal years)
    • • Profit and Loss Statement
      • • Current within 90 days of your application.
  • • Projected Financial Statements
    • • Projected income and finances for the next year with an explanation of how you will attain that goal.
  • • Ownership and Affiliations
  • • Business Certificate/Licenses
  • • Loan Application History
  • • Income Tax Returns (for the last two years of filings)
  • • Business Overview and History
    • • Bring a brief statement highlighting the history of your business and its successes and/or challenges.
    • • Explain in this why you need a loan to continue its success.

When meeting with an alternative lender, you will need to prepare a few additional documents beyond those listed above. An alternative lender like Crestmark can offer more flexible funding options, and has the ability to work with businesses that would not otherwise qualify for traditional bank financing. If you’re looking to win over an alternative lender, they may be interested in also seeing the following:

  • • Accounts Receivable Aging/Detailed (current month-end)
  • • Customer Contact List, including city and state
  • • Accounts Payable Summary (current month-end)
  • • Invoices and Supplementary Back-Up
  • • Purchase Orders/Contracts
  • • Detailed Inventory Report, showing raw and finished goods, as well as work in process
  • • Marketing brochures, informative business overview

Keep in mind that while this is a list of commonly-required documents, it’s important to check with each lender before meeting with them. Also, documentation is a good start, but it’s really only half of it. You’ll also need to be prepared to sell your business and yourself as its leader. Prove that you’ll be a valuable and trustworthy investment by showing a plan to pay back the loan, strong credit statements showing you have creditworthiness and several reasons why you believe your business has a solid chance at success with this funding. 

Are you in the process of looking for a lender? We want to help, and have professionals ready to discuss your business capital needs.

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Small business loans

Documents You Need To Apply for a Small Business Loan

by Crestmark 19. September 2012 05:22

 

When you apply for a small business loan, you'll be required to provide several items regarding your company and its financial situation. While it may seem difficult to get this various paperwork together, it’s good for both parties that this documentation is required: it helps ensure that the final loan you're offered is what's best for you, something that you can afford and that really fits your needs. While the exact documents needed may vary between loan types, everything on this list is virtually guaranteed to be useful during the application process.

Business Plan

In order to be granted small business capital through the SBA, you'll need to show evidence of a solid business plan to show future steps and goals. In many cases, the required information could go well beyond the business plan. Additionally, you'll need to show personal information to identify yourself, and sometimes include a resume that shows your leadership and management experience.

Credit Reports & Tax Returns

Expect the prospective lender to pull your individual credit report and the credit report for your business, if you have already started it. Before you apply, it's smart to pull your own report(s) and check them for inaccuracies. It's not uncommon for the reports to have an error or two, , and even a slight problem could have a big impact when you are applying for credit or a loan. By the same token, most lenders will want to see three years of personal and business tax returns (if you have them).

Financial Statements

You will likely need to show your personal and business financial statements to the lender. This helps them determine your small business capital needs and how much debt you can realistically afford to carry. Expect to present both financial statements of your own and documents from your current bank.

Agreements, Leases, and Licenses

If you've had to fill out any kind of official form or agreement, you'll likely need to present it as part of the loan. This applies to articles of incorporation, any kind of local business licenses or accreditations required in your area, franchise agreements, and lease arrangements. And in some cases, you may be asked to provide information on who your customers are.

This is not an exhaustive list covering every potential situation for every lender. You should always check and ask them what, specifically, they'll want to see so that you can be prepared. But if you're just starting the process and want to have some idea of what they're looking for, this list is a good starting point. 

 


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