Archive for November, 2010
It is very hard these days to watch the news or read your daily newspaper without being constantly bombarded by predictions of doom and gloom and worse days to come due to the current credit crunch. Large banks are falling like flies after a lengthy fanatical high fuelled by a long greedy lending binge. With an increasing number of large businesses collapsing and the promise of many more to come, people find themselves constantly battling with feelings of uncertainty about the future were catastrophe seems to be looming just around the corner. However, we conveniently forget about the many perks that might result out of all this misery and we seem to have a strong tendency to push aside any optimistic ideas in keeping with the general doomsday mood that the media keeps inflicting upon us. The following points might help add a pinch of salt to our general perception of life and project a flicker of light towards the end of the tunnel.
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Even at the best of times, the job of the salesperson isnât easy. There is work to be done to generate leads, qualify those leads, build a relationship, present, overcome objections, and close â and thatâs just a single sale! That needs to be repeated dozens of times, or perhaps more, every quarter in order to meet quota and get paid, and many salespeople feel like theyâre selling into a storm of ânoâ and âmaybeââ as if no single person would want the product or service being offered.
Adding to that challenge is the reality of todayâs economy â the credit crunch. The impact on personal and corporate income has been felt everywhere, so the salesperson needs to sell more to satisfy their own organisationâs need for revenue, they need to sell into a more competitive sales environment (because competitors are sending their hungry salespeople out as well) and they are trying to sell to organisations that have less to spend.
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How Successful Salespeople Can Thrive During the Credit Crunch
Unfortunately for small business owners banks continue to “say no” when it comes time to ask for a loan or credit facility. We had expected this to change in early 2010, but business credit is still very hard to get from banks. Factoring companies and other non bank sources continue to provide a nice alternative to all the bank loan headaches and often provide more working capital in the long run. The cost of funding is higher, but often not out of line when all the benefits of receivables financing are considered within the business model.
Most banks continue to act like they want to provide lines of credit for growing businesses, but a very high percentage of these potential loan customers end up wasting a lot of time and effort for nothing. After completing a 4 or 5 page application and providing stack after stack of documents which often include 3 years of tax returns for the business and personal, financials, bank statements, and more. Then the customer is told we are working on it for up to 6 months before getting a rejection letter from the bank. If this sounds like your experience you should take a look at other sources of working capital. If your business sells to other business’s then factoring your accounts receivable may provide the working capital you need.
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If You Need A Small Business Loan You Better Take A Look At Factoring
If you watched Presidents Obama’s first State of the Union you could tell he is just as frustrated as the small business owners across the country with today’s business lending environment. Banks, national and regional, are no longer providing loans to the small business units that drive the economy and keep people working. Factor financing has become leading way for business owners to get a working capital facility when the bank declines the loan. Solid financial statements and good personal credit is being turned down by some banks, when in the past this would be a slam dunk deal. Now, if you have even the smallest issues with the financial statements or personal credit you can forget about it with the banks.
These types of working capital transactions are now largely being funded by secondary lenders and factor financing. In past these lenders and factoring companies were thought of as more of a last resort kind of financing for a business. Now companies that have rapid growth and a nice looking balance sheet are using accounts receivable financing companies to fill the void that banks have left behind. The only real down side is the cost of capital is higher than a traditional bank. Most of these lenders and factor financing companies charge a discount fee that ranges from .5% to as high as 5%. The available credit is typically 80% to 90% of the accounts receivable that is in good standing. Companies that move to this higher cost, but available, working capital facility typically build the cost of funding into the business model when possible so everyone ends up paying for it.
Few people have the ability to purchase properties through cash. Most purchases in real estate are done with the aid of loans. For example, most homebuyers obtain mortgage to finance the difference between their down payments and the purchase price. When investors want to purchase investment properties, they would always resort to loans. They do this to manage their funds wisely.
Mortgage is one of the most common financial transactions property buyers would obtain. However, what will happen to these potential buyers in an economic situation like this?
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The Real Estate Market and the Credit Crunch
Lately we have been hearing a lot about the âGlobal Credit Crunchâ. This Credit crunch started in the American Mortgage Markets. So lets begin by trying to understand how the mortgage market works in America:
Like in other countries, American home buyers approach banks and non banks for money. To lend to the home buyers, these banks and non banks get hold of money in two places :
Looking for business financing generally refers to entrepreneurs searching for funding resources for a business. Businesses need capital for start-up and operating expenses, and many financial institutions provide loan programs to fulfill that need.
When looking for business financing, most entrepreneurs go to the Small Business Administration (SBA) first. This government agency supplies funding to business that employ fewer than one hundred workers and that have been denied by traditional lenders, such as banks. Their most common loan program is the 7(a) loan, which guarantees a certain percentage of a loan provided by a traditional lender. The loan requirements for start-up and existing businesses differ somewhat, but both require applicants to supply personal and business financial documents along with a written business plan. If a business meets the criteria for a 7(a) loan, it can download and print the application available on the SBA’s website to give to a lender who participates in the SBA’s guaranty program.
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Small Business – Looking For Business Financing And Business Funding
