Get the working capital you need
Many small to medium businesses faced tough times when the economy took a turn in 2009. Some reinvented themselves and recovered, some closed their doors, while others may still be dealing with the after effects.Banks being what they are, have to comply with FDIC regulations and maintain certain ratios on their balance sheets relating to % of loans outstanding and their available capital. These are primary drivers that cause banks to be so conservative in lending practices.
Today's reality is that if you're not an "A" borrower, (meaning in industry terms) that your loan would be what's referred to as A paper and you cannot over-collateralize, or your LTV (loan to value) being requested is too high, most banks will not make your company a loan.
Private capital groups offer less stringent underwriting standards, but your capital request still has to make sense.
You will have a higher cost of capital, but for those that can be realistic about their options, and are prepared with the necessary documents, you will most likely get the capital your company needs.
I tell my B or C clients to view their current situation as a temporary one. The focus should not be that you're paying a higher cost of capital than what you may have had in the past with a bank loan.
Your primary concern should be your ability to service the debt at the higher rate. If you can, then take the terms being offered, get the capital you need and grow your business.
Later when a borrower can refinance at more favorable terms is the time to be more selective, not when you are under time restraints and have a deadline looming that will have a negative financial impact on your company.
Many borrowers don't know where to turn and go to the Internet. Navigating all of the choices available online can be a time-consuming and costly undertaking for some. Why costly? Because commercial lending is not regulated in the same manner residential or consumer lending is.
What does this mean to you?
It means that if not careful, you can fall victim to (fee brokers), those who call themselves (direct lenders), or other unethical firms that charge upfront fees with the promise of providing the financing you need.
The Internet is littered with stories of who lost what and never received their financing. You pay their fee and suddenly you can't reach them by phone and your emails are not returned.
I always tell new clients that have lost money paid in upfront fees to do some online searches to see how many times clients of Critical Mass Capital have complained of losing any upfront fees paid.
The results of those searches is always ZERO. Critical Mass Capital does not require any upfront engagement fees when representing a client. A back end fee is only paid at closing once a client receives their financing. Always research a source of financing to determine if any complaints exist.
For more information on all of the various types of commercial finance that can be arranged for your business, please visit our blog and other pages online at CriticalMassCapital.com.
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