Sample 1 - Blog #small business loansSample 1 - Blog #small business loanshttps://lololol.zohosites.com/thoughts/tag/small-business-loansThu, 01 Aug 2024 20:42:37 -0700http://zoho.com/sites/<![CDATA[Fueling Business Growth: 6 Ways to Finance Your Working Capital]]>https://lololol.zohosites.com/thoughts/post/Fueling-Business-Growth-6-Ways-to-Finance-Your-Working-Capital

How to Finance Your Working Capital for Business Growth

Running a successful business means efficiently managing your working capital. Working capital is the amount of money you have available to pay your bills and buy stock. Without enough working capital, you won't be able to grow your business and attract big customers. That's why it's important to consider how you can finance your working capital for business growth. In this article, we'll explore how small business owners can access the funds needed for successful business growth.

With the right strategy and the necessary funding, you'll be able to take your business to the next level.

Working capital is the money that a business uses to fund its day-to-day operations, such as paying bills and buying inventory. It is essential for the smooth functioning of a business, and having enough working capital is crucial for business growth. In this blog post, we will discuss some ways to finance your working capital for business growth.

1. Invoice Financing

Invoice financing is a form of short-term borrowing that allows businesses to receive cash advances on their outstanding invoices. This type of financing can help businesses free up cash to pay for operational expenses, purchase inventory, or invest in growth opportunities.

2. Business Line of Credit

A business line of credit is a flexible financing option that provides businesses with access to funds up to a predetermined credit limit. Businesses can draw on the line of credit as needed, and interest is only charged on the amount borrowed. This type of financing is ideal for businesses that need quick access to funds to finance working capital.

3. Equipment Financing

Equipment financing allows businesses to finance the purchase of equipment or machinery they need for their operations. The equipment itself acts as collateral for the financing, which makes this type of financing easier to obtain than other types of financing.

4. Merchant Cash Advances

Merchant cash advances are a type of short-term financing that provides businesses with an upfront cash payment in exchange for a percentage of their future credit or debit card sales. This type of financing can be useful for businesses that have a lot of credit or debit card transactions.

5. Loans to Buy New Stock

If you need working capital to buy new stock, you may be able to take out a loan. Loans can provide you with the funds you need to purchase inventory, and you can spread the cost of the loan over time. This can help you free up cash to reinvest in other areas of your business.

6. Loans on Existing Stock

Another option for financing your working capital is to take out a loan on your existing stock. This can provide you with the funds you need to pay for operational expenses or invest in growth opportunities. The loan amount will be based on the value of your existing stock, and you will need to put up your stock as collateral for the loan.

Conclusion

Accessing the funds you need to finance your working capital is essential for business growth. There are a variety of financing options available to small business owners. By understanding your financing options and selecting the right one for your business, you can ensure that you have the funds you need to grow your business.  

]]>Tue, 14 Feb 2023 04:02:46 -0800<![CDATA[Why do SMEs default their business loans?]]>https://lololol.zohosites.com/thoughts/post/Why-do-SMEs-default-their-business-loans

Top Reasons for Business Failure: The Financial and Managerial Analysis

The reasons for businesses defaulting on their debt obligations can be manifold and complex. In this article, we'll explore some of the more common reasons that lead to loan defaults, in the hopes that understanding these reasons can help businesses avoid them in the future.

Businesses will default on their finance obligations if they aren't able to keep up with their repayment schedule. This can be due to several factors, such as unexpected expenses, a downturn in business, or simply mismanaging their finances.

If a business is struggling to make their payments on time, it's important to reach out to their lender and try to work out a new repayment plan. Otherwise, the business may eventually default on their loan.

Another reason that business borrowers may default is that they take on too much debt. This can happen when a business expands too quickly or takes on too many projects at once. As a result, the business may not be able to generate enough revenue to cover all of their expenses, including their loan payments. If a business is taking on too much debt, it's important to scale back and focus on generating cash flow. Otherwise, the business may default on its loan.

While businesses may default for any number of reasons, lenders also must consider their own risks when making a loan. These risks can include the following:

1. Business Risk: There are a few distinct types of business risks that can affect a company's ability to repay a loan. 

The first is market risk. This is the risk that the business will not be able to sell its products or services at a price that covers the cost of the loan.
The second is operational risk. This is the risk that the business will not be able to produce its products or services at a profit.
The third is financial risk. This is the risk that the business will not be able to generate enough cash flow to repay the loan.
The fourth is reputational risk is the risk of a business damaging its reputation. 
The fifth is compliance risk is the risk of a business not complying with laws and regulations.

Each of these risks can be mitigated by taking out insurance or by diversifying the company's products and services. However, there is always some amount of risk that the business will not be successful and will default on the loan. This is the risk that lenders must take when making business loans.

2. Interest Rate Risk: The risk that interest rates will increase, and the business will be unable to keep up with the payments.
One of the biggest risks that businesses face is interest rate risk. This is the risk that interest rates will increase, and the business will be unable to keep up with the payments. This can lead to the business defaulting on its loans, and the collateral for the loan (usually the business's assets) being seized by the lender.

Interest rate risk is a major concern for businesses, as it can have a significant impact on their bottom line. Higher interest rates can eat into profits, and make it difficult to meet financial obligations. This can ultimately lead to the failure of the business.

There are a few ways to manage and mitigate interest rate risk. One is to hedge against it by taking out contracts that protect against rising interest rates. Another is to have a strong cash position, so that the business can weather a period of higher interest rates. Finally, a business can try to negotiate with its lenders to get more favorable terms.

Interest rate risk is just one of the many risks that businesses face. Others include market risk, credit risk, and operational risk. Managing all of these risks is crucial to the success of any business.

3. Economic Risk: The risk that the economy will decline, and the business will not have the income to repay the loan. 
As businesses experience a decline in income, they are forced to make cuts in order to stay afloat. This often includes cutting back on staff, which can lead to high unemployment rates. In turn, high unemployment rates can lead to social unrest, as people become desperate for work.

Economic risk can also lead to a decline in government revenue, as businesses are forced to pay less in taxes. This can result in cuts to government services, which can further add to the social unrest.

It is clear that economic risk can have far-reaching consequences. Businesses need to be aware of the risks and plan accordingly.

4. Industry Risk: The risk that the borrower's industry will decline, and they will not be able to repay the loan.

How does industry risk affect small businesses?

While industry risk is often thought of as affecting large businesses, it can also have a significant impact on small businesses. Small businesses generally have less diversification than large businesses, and therefore are more susceptible to industry-wide changes. A decline in the borrower's industry can lead to decreased revenues and profit margins, and ultimately inability to repay the loan.

What industries are most at risk for industry risk?

There are a number of industries that are particularly susceptible to industry risk. These include commodities, construction, and retail. Commodities are subject to price fluctuations, which can lead to declines in demand and revenue. Construction is susceptible to changes in the business cycle, as demand for new construction declines during economic downturns. Retail is also susceptible to economic changes, as consumers may cut back on spending during tough economic times.

5. Geographic Risk: The risk that the business's geographic area will decline, and they will not be able to repay the loan.

The decline of a business's geographic area can not only put them at risk of not being able to repay their loan, but also at risk of having to close their doors for good. This is especially true for small businesses who may not have the same resources or financial cushion to fall back on as their larger counterparts. When the area around a business starts to decline, it can be a domino effect of sorts, with customers no longer coming in and spending their money, leading to a decrease in revenue, which can then lead to issues with being able to pay bills and ultimately having to close up shop. While there are always risks associated with owning a business, the decline of a businesses' geographic area is definitely one of the more significant ones that should be taken into consideration.

6. Political Risk: The risk that the business's country will experience political instability and they will not be able to repay the loan. There are two types of political risks- country risk and sovereign risk. Country risk is the risk that the business's country will experience political instability and they will not be able to repay the loan. Sovereign risk is the risk that the government will not honor its debt obligations.

Oftentimes, political and economic risks are correlated. For example, if a country is experiencing political instability, it is likely that the economy will also be weak.

When making a loan, lenders must carefully consider all of these risks before deciding whether or not to extend credit. If the risks are too high, the lender may refuse to make the loan. Otherwise, the lender may charge a higher interest rate to offset the risks.
]]>Fri, 18 Nov 2022 01:30:45 -0800<![CDATA[Managing Cash Flow, Improving Business Margins and Stretching SME Budget. How? ]]>https://lololol.zohosites.com/thoughts/post/Managing-Cash-Flow-Improving-Business-Margins-and-Stretching-SME-Budget.-How
A frequent question as a small business owner, finance manager or financial director you should be asking is, "How best can I/we efficiently and cost effectively use our existing funds and available lines of credit to stretch them further whilst generating the maximum return for capital employed?" 


Below are examples of strategic financial management changes small businesses and even large corporates alike can make to improve cash-flow, margins and make the best use of existing resources or budget.  

"It is not the lack of resources" that is the culprit in most cases but rather, "the lack of resourcefulness!" that most small businesses need to focus on and improve!

Like in the case of Guerrilla Marketing, "achieving conventional business goals, using or via unconventional methods", whose main ingredient or input is not Cash but rather.. Time & Imagination. 

Michael E. Gerber in his book title, "Emyth" talks about the Emyth Small Business. A business where the system is the solution rather than trying to find and hire extraordinary people whom are very few . Great businesses, he goes on to explain, are built by leveraging ordinary people with extra-ordinary systems and managing the system & processes rather than trying to manage people. 

We aim to deliver much needed capital for SME’s and Property Developers.

Business Systems & Technology 

With the advancement in technology and wide spread use of Software As A Service (SAAS), small business can and MUST reduce expenses as well as enhance efficiency in all areas of business and data capture, processing as well as reporting are a great 1st starting point. 


Business must embrace technology as well as,  not only have a presence online, but, be fully engaged using the online medium as a cost effective platform to acquire new customers, as well as for continual engagement with existing customers, to ultimately not only satisfy their needs, but more importantly, delight as well as anticipate future needs and trends. 


Simply put, "produce more with less". 

Raise Your Prices 

" Are you crazy!  Do you realize what's going on in the world!? " Is the first and standard reaction of all businesses across the globe. " We can't raise our prices as we will lose business to our competitors" 


Pricing alone is rarely a long term , "sustainable durable competitive advantage", as Warren Buffet would put it.  This is Berkshire Hathaway's number #1 value investing criteria. 


Unfortunately in most small businesses, only 20% of the customers make up for 80% of the profits meaning the larger portion or 80% of existing customers are more hassle than the time and effort small businesses invest. Yes! Counter intuitive it is, but, by raising your prices, you will weed out the non-profitable and more than likely non-loyal customers. 

Improve Your Outstanding Debtors Collections Process 

Ensuring  prompt customer payments if not upfront payments is one simple way to manage and improve small business cash-flow.  Having a invoice online payment option is a must.

Focus on ROE/ROI for  Every Pound Spent 

Small businesses need to focus and ensure that every penny is spent on business aspects or areas that generate the most or protect revenue. Results or performance based expenditure means expenses are tied to revenue and or profit generating centres. 


Eliminate marketing activities that are not producing any quantifiable results to your bottom line; extra staff that the business doesn't really need or not fully leveraging and this includes internal as well as external. Externally this may be professional advisers not producing quantifiable business results that actually matter. 

Cash flow finance (Invoice Finance, Invoice Factoring) 

Whilst there’s never one size fits all policy when it comes to business finance across business sectors, invoice finance or invoice factoring can go a long way in alleviating cash flow tied up for business use. 


Example sectors suited to or ideal for Invoice finance are...

  • Product Wholesale 
  • Manufacturing 
  • Engineering / Fabrication 
  • Transport / Haulage 
  • Recruitment 
  • Marketing / Advertising 
  • Printing 
  • Security / Man Guarding 
  • Reactive Maintenance 
  • Cleaning 
  • Telecommunications 
  • Food/drink 
  • Breweries 
  • Computers / Technology 
  • Recycling / Waste management 
  • Clothing / Fashion 
  • Events management 

By CEO, GIC Capital 

]]>Mon, 05 Oct 2020 02:33:06 -0800<![CDATA[How to use your SME overdraft to your advantage]]>https://lololol.zohosites.com/thoughts/post/How-to-use-your-SME-overdraft-to-your-advantage


SMEs often find that no matter how hard they try, it’s not always possible to guarantee how much money you’ll have in the bank account on any given date. There are a large, varying number of factors which mean that an overdraft might just be an essential lifeline.

 

In our extensive experience in providing financial solutions for SMEsthroughout the UK, we know that an overdraft that is always there just when you need it is a safety net that comes in handy at a pinch. Here’s how to use your SME overdraft to your advantage.

 


Late invoice payments

 

While any business would love to guarantee that everything will run smoothly, there are some things which just end up going slightly wrong. Inevitably, one of the things which most commonly arrives late is an invoice payment. If a business in your supply chain is maybe not as organised as they could be, this can have a huge knock-on effect. Even if your books are perfectly balanced and in order, that doesn’t mean that you can 100% guarantee those invoice payments will clear by the time you really need them. Should this happen, it’s a great benefit to know that your overdraft will be there to ensure you’ll remain in the black.

 


Delay in imports

 

Similarly, depending on the type of services you offer, you could find your business unable to deliver your end product due to a delay in imported items, meaning that you might not be able to receive customer payments when you need them the most. This can make managing finances difficult, but an overdraft like those we offer hereat GIC Capital can be invaluable.

 


Projects exceeding expectations

 

When a project exceeds expectations in size and scope, you might find that they go over budget. Whether you’ve wildly stretched your budget or you’ve just been nudged slightly too far, the money all has to come from somewhere. Luckily, you can rely on an overdraft to ensure payments aren’t bouncing.

 


Short-term investment options

 

Aside from negatives like late payments or projects outgrowing their budget, there are plenty of positive ways you can use your loan to help your business. Should you come across a short-term investment option which would be of great financial benefit to your company in the long run, an overdraft is a perfect tool to utilise when funds are low.

 

To find out more about how we can help SMEs get off the ground, take a look at the services we offer.

We aim to deliver much needed capital to start-ups and SMEs

Call Now +44 (0) 203 2909019

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