When you're running your own company, there are so many things that you have to think about. There is payroll, employee issues, sales, marketing, and taking care of your existing customers. Often, it's very easy to just look past any kind of financing options that might be available to you. Small business finance is just an area that doesn't get too much attention and gets put to the side in place of more important things. Most of the time, business owners are concerned with just taking care of existing customers and employees that they don't take the time to learn about all the options that are available to make their business run smoother. They don't educate themselves and instead let their banker tell them what's right for their business. Below is an outline of some of the more popular loan products that a small business usually runs across. If you are familiar with these, then you should be well on your way.

A small business line of credit is something that you use for short-term funding needs. So, for example, let's say your biggest customer hasn't paid you yet and you don't want to put too much pressure on them, but you really need to pay your employees this week. A great option would be to draw in the RLOC to make payroll for your company. It helps you maintain a good working relationship with your customers because you aren't calling them on the days leading up to payroll and it also keeps your workers happy tha they are getting a paycheck this week. And when that Accounts Receivable comes into your company that you would pay back the line of credit. The purposes to bridge any cash flow gaps from when you pay out money to when you receive the money. Another typical use for the RLOC is when a certain supplier gives big breaks on purchasing inventory in bulk. Or if you can purchase offseason for big discounts and then store the inventory for yourself. In this situation you would borrow on your line of credit in order to purchase the inventory and then once that inventory is liquidated and you've collected your Accounts Receivable, that you would pay back your line of credit. Warning. It's easy to want to use available funds to purchase pieces of equipment or vehicles since its availble but you definitely want to only use the LOC for short term needs. Really, the line must be used only for easing the pain of the short term cash crunch. Using a RLOC correctly is something that can really help grow your business. There are a lot of growing pains involved with growing a company and a LOC can certainly help easy those pains.

As companies grow, most owners realize that its silly to throw their money away in rent and it might be a good idea to invest their profits into a signifant asset. A commercial building is a great way to do that. This can help you diversify your business and put your money in an asset that will continue to pay well after after you've retired. When you're talking about the cost of the building, typicaly just getting a little better deal can make a huge difference. The most common terms for acommercial mortgage is a five-year fixed-rate loan that is amortized 20 years. As bank competition has increased and banks are buying market share, you should be able to get more aggressive terms than you were able to even 5 years ago. It is not uncommon to see fixed rates up to 10 years and amortization up to 25 years. There are also popular SBA loans that will allow you to limit the amount of money you put down and fixed your loan for up to twenty years. This is a great option if this is going hold onto the building for more than 10 years, because there are significant prepayment penalties. The way banks will price these loans is usually some kind of spread over the treasury. An example would be aon a ten-year note, you can generally guess that your loan would be priced at 2-2.75% over the 10 year treasury. Banks or lending institutions will always try to make their money somewhere and its typically in points and fees. It's not uncommon for them to propose for these things, but you can usually get out of paying them if you are a good enough customer and plan to bring enough business to the bank.

Small business startup loans are something that most business owners need at some point and also something that banks generally aren't too excited about. That's why typically, the easiest thing to do is to either borrow funds from a trusted family member or to finance your start up with the use of something like a home-equity line of credit. Typically, since you have no track record and no collateral the bank will request to use your home as collateral for the loan, so the easiest thing to do is to utilize the streamlined process that banks have in place for HELOCs. You'll save yourself a lot of trouble and time going this route than trying to get the bank to buy into your business. Home equity loans typically have a lower rate, more flexible terms, and a quicker approval process. The one objection that most business owners have to doing a HELOC is that they want to build up business credit. It comes as a surprise to most to hear that there is no such thing as building business credit. The only thing that a bank will look at when you request your first loan is your company's financial statements. So as long as you could show the ability to repay the loan based on your past financial statements, you have no problems getting a loan, and that is why I recommend a home-equity line as a means for getting the funding to start up your business.

Nobody likes to add another task to their already busy day, but this is something that can seriously help grow your business and save you money by paying attention to it. In addition to bank loans are also SBA loans that can be used if your business doesn't quite fit the qualifications that the bank is looking for. A lot of small business owners are weary of using the bank's money to grow their business, it's really something that all fast growing companies have employed at some point. Proper utilization of capital at the right time is essential to taking your company from a small business to a large on in short order.