With the way things are in the country right now, many people who think that they can get an unsecured loan from a bank aren’t really thinking at all. It’s more accurate to say that they’re dreaming an impossible dream. In today’s lending environment, getting unsecured bank loans in Canada is virtually impossible.
What is an Unsecured Bank Loan?
Most loans today—especially from Canadian banks—are secured loans. That means there’s some form of collateral involved. For example, when you get a mortgage or a home-equity loan you use your house as collateral. This means that if for some reason you are unable to pay the loan then the lender is legally allowed to take possession of the collateral (your home) to help pay back what you owe. It’s the same principle that applies to car loans and pawnshops.
With an unsecured loan, there’s simply no collateral at all. All you can offer is your word that you will pay back the loan on time. And that’s why getting unsecured bank loans in Canada is next to impossible; banks will not take that sort of risk. While it is theoretically possible to apply for an unsecured bank loan by proving that you have a stable income, that you have a superb credit history, and that you carry very little debt, in reality these aren’t enough.
The Remote Possibility of Getting an Unsecured Loan
Perhaps the one possible way to get an unsecured loan from a Canadian bank is to have a long history with that bank during which they made a lot of money with that relationship. For example, you have a long history with a particular bank of borrowing money from them and then paying the loan on time. Not only must you be able to prove that you have a steady income, but must have a spectacular credit rating as well.Today, even that scenario isn’t a sure thing, unless the bank also recognizes that you will also be borrowing money from them a lot more in the future.
Alternate Sources of Unsecured Loans
In the likely possibility that you are denied from getting an unsecured loan from a bank, there are still other sources to get the money you need without a need for any collateral. You can use your business credit card or even your own credit card to get a cash advance. Credit cards are probably the most commonly used type of unsecured loans. Another method is to take advantage of invoice factoring. If you have accounts receivable, a factor can give you as much as 90% of the value of the invoice upfront. Once your client pays the invoice in full, you get the rest of the amount minus the factor’s fees. Finally, you can ask money from your friends and family. With this option, you may be able to get a loan without any interest at all!
Working with Factoring Brokers: What You Need to Know
For many businesses today, the traditional method of securing a loan from a bank is becoming less popular. Fortunately, there are alternatives to choose from, although choosing from among these methods can be quite confusing. One of the more popular forms of financing today is a method called factoring, in which your accounts receivable are exchanged for cash of up to 90% of your invoice value. Again, this raises the question as to which factoring company to choose and what kind of terms would be most appropriate for a particular business and situation. Working with factoring brokers, however, can be a way to solve this problem.
What is a Factoring Broker?
A factoring broker is essentially a person or a company that helps to quickly find the most appropriate factoring company for you. A broker has the training, experience, and the network of contacts that can help the search for a factoring company go much faster and with better results.
In a way, they’re like a real estate broker. When you’re trying to buy real estate, you have to look for the right properties, inspect them yourself, and then negotiate the right terms. But a more efficient way is to simply tell a real estate broker what type of property you’re looking for, and then the broker can guide you to the right properties with the best terms.
The Services of a Factoring Broker
Once you find a good factoring broker, you can benefit a lot from the services you receive.
·Working with factoring brokers will enable you to present the best side of your business. This will increase your chances of getting the financing you need, and it may also result in getting much better terms for your company.
·A broker can clearly explain what each factoring company is offering. The problem with a few factoring companies is that some of them are unable to explain their fee structure more clearly, which often results in a borrower being saddled with unexpected and unwelcome fees. As a factoring client, you need to have a clearer picture of how much the entire factoring agreement will cost you. When your understanding doesn’t match the details in a factoring agreement, it can be a costly mistake on your part. With a factoring broker, you know for a fact which factoring company is offering the best option for your business.
·Factoring brokers are also more knowledgeable about the various strengths of specific factoring companies. They may be able to identify which factoring companies have the best track record in general, which ones are the best for your specific industry, and which ones are better in providing the amount you need. For example, some factoring companies do best when they offer relatively small amounts of less than $50,000, while other companies may specialize in offering funding for up to a million dollars.
Choosing a factoring company can be a crucial decision that can determine the course of your business. In order to make the right choice, you’ll need a professional perspective, and that can be provided by a good and experienced factoring broker.
Working with Factoring Brokers: What You Need to Know
For many businesses today, the traditional method of securing a loan from a bank is becoming less popular. Fortunately, there are alternatives to choose from, although choosing from among these methods can be quite confusing. One of the more popular forms of financing today is a method called factoring, in which your accounts receivable are exchanged for cash of up to 90% of your invoice value. Again, this raises the question as to which factoring company to choose and what kind of terms would be most appropriate for a particular business and situation. Working with factoring brokers, however, can be a way to solve this problem.
What is a Factoring Broker?
A factoring broker is essentially a person or a company that helps to quickly find the most appropriate factoring company for you. A broker has the training, experience, and the network of contacts that can help the search for a factoring company go much faster and with better results.
In a way, they’re like a real estate broker. When you’re trying to buy real estate, you have to look for the right properties, inspect them yourself, and then negotiate the right terms. But a more efficient way is to simply tell a real estate broker what type of property you’re looking for, and then the broker can guide you to the right properties with the best terms.
The Services of a Factoring Broker
Once you find a good factoring broker, you can benefit a lot from the services you receive.
·Working with factoring brokers will enable you to present the best side of your business. This will increase your chances of getting the financing you need, and it may also result in getting much better terms for your company.
·A broker can clearly explain what each factoring company is offering. The problem with a few factoring companies is that some of them are unable to explain their fee structure more clearly, which often results in a borrower being saddled with unexpected and unwelcome fees. As a factoring client, you need to have a clearer picture of how much the entire factoring agreement will cost you. When your understanding doesn’t match the details in a factoring agreement, it can be a costly mistake on your part. With a factoring broker, you know for a fact which factoring company is offering the best option for your business.
·Factoring brokers are also more knowledgeable about the various strengths of specific factoring companies. They may be able to identify which factoring companies have the best track record in general, which ones are the best for your specific industry, and which ones are better in providing the amount you need. For example, some factoring companies do best when they offer relatively small amounts of less than $50,000, while other companies may specialize in offering funding for up to a million dollars.
Choosing a factoring company can be a crucial decision that can determine the course of your business. In order to make the right choice, you’ll need a professional perspective, and that can be provided by a good and experienced factoring broker.
Purchase Order Financing ($500,000-$5 million) Whether you have a large order to be produced in the U.S. or overseas, as long as the goods are pre-sold and the purchase order is non-cancellable, Neebo Capital can finance up to 100% of your cost.
If a business is just starting out, there are many limitations and challenges to be faced. For instance, you may have gathered enough capital to set up your business, but sustaining it is another story altogether. A startup business usually has very limited working capital, because the revenues haven’t come in yet and there’s really not much to work with. This means that whatever capital is left will have to be budgeted properly to fund things that will make the business grow. It leave little room for operational expenses, especially if these expenses are unforeseen.
Purchase order finance services are the perfect solution for startups, because it gives them the ability to stretch their working capital without having to prove their creditworthiness or get into even more debt.
The fact is that startups usually have a hard time with traditional financing methods, and this is a challenge especially if you’re still trying to establish your business. The good news is that purchase order financing is here to save the day. Here are some of the most important reasons why startups will truly benefit from a purchase order financing arrangement:
Startups usually have no track record to speak of YET.
Before banks grant loans, they will look at your credit history and track record. For startups, this is a challenge because they have barely anything to show. Purchase order financing solves this problem because it focuses on the creditworthiness of the customer placing the order, not the supplier or the startup that needs additional capital.
The purchase order finance will therefore be granted based on your customer’s ability to pay. Customers who place large orders are usually government agencies and other credible commercial entities, so their credit worthiness should not be a problem.
Startups will have a hard time showing collateral.
Collateral is another requirement before loans get approved, and this is why startups will find applying for loans difficult. With purchase order financing, you don’t have to show collateral because again, it’s not your credit worthiness but your customer’s that matters.
Startups have more important expenses to prioritize.
When a business is just starting out, you have to focus your cash flow on important things like R&D and marketing. After all, you have to make sure your products can really meet the needs of your prospective customers, and you have to constantly innovate to stay in the game. Marketing is another expense you need to prioritize. After all, you need to create hype for your business and find customers that will patronize it. Both of these require money. Lots of it.
So when a customer places a big purchase order, you can’t risk not being able to deliver on that order simply because you don’t have enough cash flow. This is why it’s important to get purchase order finance.
For more information about how you can avail of purchase order finance, please check out our website: www.neebocapital.com.
If you own or manage a small business in Canada working capital should always be monitored. Just about every business in the world has to make sure that they’ve got access to sufficient working capital all year round. This is how they stay ahead. And this is how they survive.
But let’s define working capital for a moment, so that we’re all on the same page. Working capital is when you take into account all your resources that you can easily turn into cash within a year (current assets), minus all the debts that must be paid back with the year (current liabilities). In short, working capital refers the efficiency and current health of your business. If you lack sufficient working capital, you may encounter several serious problems:
It’s more difficult to find investors for your business. Without sufficient working capital, you demonstrate that your business doesn’t have the ability to earn a positive return for investors or pay back a loan to lenders. As a small business in Canada working capital deficiency may prove too much of a risk. And without investors and creditors, you seriously hamper your business’s ability to acquire crucial resources.
You miss out on great hires. Finding the right employees to work for you can really help your business grow considerably. It’s not just that the superstar employees may not work for you because you don’t have the means to pay them a fair compensation. Sometimes you may even have to forgo hiring staff that you really need. When your employees are using too much time and effort on jobs in which they don’t have the skill (typing reports, figuring out Excel, selling products, etc.), the lack of sufficient working capital can be truly detrimental.
You can’t run day-to-day operations efficiently. You need to purchase equipment and inventory, you need to buy supplies, and you have to pay your employees. If you make do without the necessary supplies, equipment, and inventory you can affect your profit margins, and any trouble with salaries can affect employee morale and efficiency.
Emergencies can be terrible and even fatal to your business. What if some unforeseen circumstances not covered by your insurance cause you to lose your inventory? How will you replace them, if you don’t have the working capital to make the necessary replacements? This is just one possible emergency that can happen. In the business world, emergencies tend to happen on a regular basis, and the lack of working capital can end your business permanently.
In Canada working capital must always be overseen so that they remain sufficient for all the company’s needs. If they’re not, steps must be taken to correct it. Perhaps sales revenues can be boosted, or some long term assets can be converted to cash to solve cash flow problems.
If you have some difficulties with your working capital, do check out our services at www.neebocapital.com.
Some small business owners seem to think that there’s really no difference between working capital lines of credit and business loans they can get from a bank. They’re basically both money that you can get for your business which you have to pay back with interest. But actually, these are two very different forms of financing, and if you’re contemplating on boosting your cash flow you should be aware of some of the key differences so you can make the best choice for your business.
Purpose
Business loans can be used for a whole variety of purposes. But essentially, all these possible reasons can be categorized in two distinct categories. Either the loan is used to cover operating expenses to keep the business afloat, or they can be used for some sort of growth or expansion for the business.
Working capital lines of credit are usually used to cover regular working expenses, such as overhead and salaries.
Interest Rates
Usually, a business loan involves a fixed interest rate. It’s different with the line of credit, as they’re usually tied to a specific variable rate like the prime rate or the Treasury bill rate. This interest rate may range from 1% to 6% over the tied-in rate. This means that every month the interest rate may change for the line of credit.
Fees
The interest isn’t the only thing you need to pay for when you take out a loan or a line of credit. Loans may involve a variety of fees, such as the loan processing fee and the credit fee. There may even be a fee if any collateral needs to be appraised. With the line of credit, there may be a processing fee at the start and then an additional transaction fee whenever you draw from the line of credit.
Draw
Receiving the credit amount also differs among these two financing options. With a business loan, you get the entire amount of money right at the start when the loan documents are signed. You don’t get any additional money from the loan. But with a line of credit, the loan works very much like a credit card. You have a limit, and then you can borrow as often as you want as long as you don’t exceed the specified limit. If you pay back the amount you’ve used, then you can continue borrowing as often as you need to as long as it doesn’t go over your limit.
Payment
With a business loan, some items are specified. You have to pay an exact amount on a regular basis until you pay back the loan and the interest. With the line of credit, the amount you have to pay depends on the agreement you have with the lender. For example, you may only be required to pay the interest due, or you may also have to include partial payment of the principal.
So if you are a small business owner, consider these differences carefully so that you may make the right choice as to which is the right option for your business. For some, loans may be very useful, but for others the availability of working capital lines is the best option.
We offer Business Loans $25,000 – $500,000 Across U.S. & Canada!
Visit our site to get a free quote for Unsecure Business Loans
Neebo Capital is your low cost bank alternative!
We offer Unsecured Business Loans $25,000 – $500,000 Across U.S. & Canada!
For most businesses, taking out a traditional loan from the bank is often the first thing they do when they need a quick infusion of cash into their business working capital. But many small businesses are starting to realize that getting the money this way is increasingly becoming more difficult. Banks are becoming more tight-fisted lately when it comes to approving loans and if you or your business have bad credit or you don’t have sufficient collateral, then you may be out of luck.
Luckily, you have another option, and that is to take out a Unsecured Business Loan. Technically, it’s not even a loan. You just get the money you need right at the onset of the agreement, and in return the lender gets a percentage of your sales until you pay back the cash advance and the premium. Among most lenders, this percentage is commonly pegged at 8%.
There are a number of ways in which a Unsecured Business Loan can be beneficial:
Your application is much more likely to be approved. If your bank loan application was denied due to your low credit, you may be relieved to know that your credit in this case is irrelevant. What’s more important is the actual stability and performance of your business. Banks need to assess your business plans, tax returns, and your financial statements. But those who provide Unsecured Business Loans check only how long you’ve been in the business and how much you generate in monthly credit card sales. If you’ve been in business for at least 9 months, for example, and you generate at least $5000 in monthly credit card sales, you’re likely to get approved for a Unsecured Business Loan.
The entire process is quick and easy. Banks can take time—weeks or even months—to process a loan. But you may need only a week to receive your Unsecured Business Loan. This can be a crucial difference, especially if your business is in dire need of additional business working capital.
Your credit and collateral is protected. Unlike commercial loans, a Unsecured Business Loan won’t affect your credit rating. That’s because it’s technically not even a loan. It doesn’t get reported to the credit bureaus because it’s technically a sales transaction. You don’t even risk losing your collateral, because there’s no requirement for it.
You only pay back the loan when you’re also paid by your customers. Loans in general require regular (as in monthly) payments in fixed amounts. But with Unsecured Business Loan, the rate of collection varies depending on how strong your credit card sales are for the month. This can be a boon for businesses in which the revenues are seasonal or wildly fluctuating, such as hotels.
So in the end, even if banks will not grant you a loan you need, there’s still hope. You can still save and even nurture your business by increasing your business working capital with a quick Unsecured Business Loan. For more information about this service, check out www.neebocapital.com.
We provide cash flow in all 50 States and to over 140 different industries including Canada – Click the image to see deals we’ve made recently.
Factoring is one of the solutions that companies can turn to when they suddenly need to free up their cash flow. To understand how factoring works, we first need to look at one of your company’s most important assets: Accounts Receivable. When you have a lot of receivables, this means that you already have sales but you don’t have the cash yet. You already sold your inventory, spent for the operating expenses, but your client is not yet obliged to give you cash for the time being.
What this does is that it drains you of working capital. You have no cash to spend for other expenses because you’re still waiting for your client to pay you.
When you turn to factoring as a solution, you’re selling your Accounts Receivable to a factor or a third party. The ‘factor’ usually advances a percentage (70% – 90%) of the receivables and this solves your problem of cash flow.
By selling your receivables, you now have cash to use for other aspects of your business. This also effectively transfers the risk of these receivables to the third party. The ‘factor’ will be the one to ensure that these receivables are collected, so any risk of your clients not paying is effectively transferred to them as well.
Once the ‘factor’ collects the entire amount, you also get paid the rest of the amount you were originally owed, minus transaction fees taken by the ‘factor.’
Factoring is a common practice especially with companies that have overseas transactions. It’s also one of the most effective ways of getting additional cash flow.
Spot Factoring – You get to choose which of your receivables you sell. If you’re not comfortable selling all of your invoices, this is the option for you.
Export Factoring – This is a solution for exporters, allowing them to cater to international customers without having to wait so long for the payment and without having to deal with the many challenges associated with overseas transactions.
Freight Bill Factoring – If you’re a transportation company, you can make use of your freight bills and get additional cash even before the goods are completely delivered.
Construction Factoring – Contractors and those in the construction industry know that it takes time for a project to be completed, so with this solution, you get the cash needed to start on your next construction project without having to wait for the current one to be completed.
5. Government Receivables Factoring – It’s exciting to win a contract from a government agency, but the problem is that such agencies usually take time to pay their dues. Also, a project with the government takes time to get paid. What you can do is sell your government invoices to a ‘factor,’ and this will give you cash flow without having to wait for, and rely on, the timelines of the government agency you are working with.
Approval within 48 hours from the time the application is submitted
Where can a small business turn to for working capital in Canada, especially in today’s brutal economic environment? Lenders are beefing up their loan requirements, and they’re only lending to corporations and individuals with top-notch credit. However, some Canadian financial institutions are not as strict, and more understanding, when it comes to getting your small business the working capital it needs.
What Is Working Capital?
Working capital is the cash that companies need to carry out short-term things. It is this concentration on short-term things that sets apart working capital from long-term investments in R&D and fixed assets.
Working capital is the division between current liabilities and current assets. “Current”, once more, means that these things tend to go up and down in the short-term, decreasing or increasing in concert with operating activities. Current assets include inventories, accounts receivable, short-term investments, and cash. Current liabilities include a business credit line from a financial institution, accrued liabilities like taxes payable, and so forth. All of these things turn over and change on a regular basis.
Businesses don’t usually go bankrupt because they’re not profitable. They enter into bankruptcy because their funds get depleted, and they cannot keep up with their payment obligations when they come up. Growing, profitable companies can also just run out of funds, because they need larger volumes of working capital to support new investment in accounts receivable and inventories as they grow.
Working capital financing has helped many small businesses get ahead when nothing else could. It is up to you, as a competitive small business owner, to get the working capital lines you need to move your business forward. Whether you’re developing new products, launching new products, adding e-commerce features to your site, or enhancing your promotion and marketing strategy, working capital lines can help take your business to the next level.
What Are The Terms Typically Like For A Working Capital Loan?
Loans that range from $5,000 and on up
Extremely competitive rates
Terms that can span up to 60 months in duration
Approval within 48 hours from the time the application is submitted
Funding within five to 14 business days of the receipt of signed documents
Programs available for businesses, individuals, and professionals with poor credit
Funds can be used for whatever purpose the businessman wants
What Are The Benefits Of Procuring Working Capital Loans?
Start-up capital needed to start, maintain, and expand a business
Cash flow & operational funding
Expansion funding
Machinery & equipment
Loan consolidation
How Do Working Capital Loans Function?
Financial institutions that issue working capital loans and business lines of credit often do so against the security of personal guarantees or current assets. The amount of credit will depend upon a number of factors, and the financial institution’s loan officers will carefully analyze those factors. The factors include the build up of inventory, the outstanding receivables, and the work in process.
Need Working Capital in Canada? Click here to visit our lending site.
Accounts Receivable along with Inventory Finance is a fundamental form of commercial lending.
Accounts Receivable Inventory Finance is a fundamental form of commercial lending that is collateral based. This type of financing combines elements of short term business loans with secured lending. In the purest form a commercial borrower will use the value of their receivables and their working assets or inventory as collateral to secure financing as a way to produce and market their services and products. Financing is repaid when the inventory is converted to cash. This is done either from direct sales or through collecting accounts receivable notices. Depending on the borrower’s risk profile, the lender will exercise different degrees of control over collateral in order to minimize the risk of the transaction.
ARIF Variations
There have been many variations of ARIF developed over the years. There are some forms of ARIF that will include assets other than inventory and receivables. In addition, the controls over the collateral have been changed and repayment sources are expanded to not only include the conversion of working assets.
This type of loan used to only provide funds to finance inventory, but now can be used for financing acquisitions, restructuring debt, and to hold companies through times of distress. Service organizations, importers, retailers, distributors, wholesalers, and manufacturers all use Accounts receivable inventory finance to meet the needs of their business. While there have been several changes made to this form of financing, it still remains one of the most essential ways for a borrower to leverage their assets in order to get financing.
Why Use Accounts Receivable Inventory Finance?
Many ARIF relationships have a moderate to high risk. A borrower will turn to this type of financing when they are unable to get another type of financing. Borrowers using this type of financing are typically not as financially strong as another commercial borrower. There are some reasons for this, perhaps their company operates in an industry where there is significant seasonality or has a high volatility. Some companies are experiencing a rapid growth and need the money quickly. This type of borrower exhibits a higher risk of default characteristics including:
High leverage
Marginal profitability
Limited cash reserves
Limited working capital
Collateral pools that are constantly changing and whose value could fall quickly.
ARIF Structure
ARIF transactions that are properly structured will limit the risk of default by imposing certain controls on both cash and collateral of the company that has borrowed the money. When the loan is margined properly and prudent control processes and monitoring is applied by the bank, the risk of loss can be less than some of the other types of commercial lending that is available. The key is to minimize the risk. When a borrower poses a significant amount of risk, the lender will need to implement more control over the loan. Lenders have to have a large amount of management expertise including a great understanding of the business that the borrower is in and good reporting systems. In addition, the lender must keep ongoing supervision of the relationship and collateral of the borrower.
Need Inventory Finance combine with Accounts Receivable Finance? Click Here
Unsecured business loans are a perfect way to fund buying a business or expanding a business.
What is an unsecured business loan? An unsecured loan is a funds advance that doesn’t make the borrower use any collateral in order to ensure that they can repay the loan. They won’t have to lose any of their own personal property or assets if they default on the loan. When you are a small business owner, and you are risking a lot to get your business going, there’s no worse feeling than thinking you’re going to lose your house or your stuff if your business doesn’t pan out and you can’t repay the loan.
What are the Advantages of Unsecured Business Loans?
Collateral is not Necessary
Unsecured business loans are a perfect way to fund buying a business or expanding a business. Even though interest rates are a little higher because the lender has a lot more risk, the process is usually simple as long as you or your business has a decent credit score. You just have to persuade the lender that you’ll be able to repay the loan.
Criteria for Borrowing
What does it cost to apply for an unsecured business loan and how much money can you borrow? These loans usually range from $10,000 to $100,000, depending on different factors like previous credit limits, residence status, income, and credit history. If you see a small business loan chance, but it has a lot of big application fees, then stay away from it. Credible firms won’t charge big upfront fees.
Quick and Simple Process
Obtaining an unsecured business loan, and applying for one, is often a quick and simple process. For instance, if you discover a business that you want to purchase, you can often fill out a form online or call a number to go through a process for pre-qualification. Usually within a couple of hours on an ordinary business day, you can see whether or not you meet the qualification criteria. If you meet the criteria, then the process will continue until you get approved for the loan. It may take a couple of hours or even a week before the wire transfer goes through to your bank account.
How do you Apply for an Unsecured Business Loan?
You can find a lot of sites where you can apply for unsecured business loans easily and quickly.
Interest Rates
The interest rates can be a little higher for unsecured business loans. Interest rates actually vary based on the particular circumstances and credit history. Repayment terms usually range from one to seven years.
Conclusion
You may be able to reduce your interest rates if you have a good credit history, good business income, and you have a stable business with stable income. You could also find better interest rates if you shop around at different lenders and look for the one that is going to give you the best deal. There are even different kinds of lenders for different kinds of companies. Some cater to small businesses, and some cater to mid-size businesses. Some cater to business in certain industries. Some cater to businesses who are just starting out. Some cater to businesses who have a long business history.
