Many companies engaged in the export business sometimes have a need to secure a substantial amount of export working capital. This is a short-term working capital provided to exporters to cover various financial requirements needed in the export business.

If you are engaged in an export business and you need additional working capital, usually the first thing that comes into your mind is to go to the bank and seek their help in your financial requirement, right? The problem is that most banks in the United States do not provide working capital advances on export orders, letters of credit or export receivables.

This is why many small businesses lack the needed export working capital to support their business operations.  If you have an export business and you are in this situation right now, have no fear because there are better alternatives than going to the bank if you want to get that export working capital you need.

Different Methods of Raising Export Working Capital

There are various methods of securing the export working capital that your company needed to pay for materials and other inventory for export. Many exporters are not actually aware that there is an SBA program designed to help businesses that are engaged in export activities. SBA gives lenders up to 90% guaranty on export loans by way of a credit enhancement in order for these lenders to make the necessary funds available to exporters.

The SBA provides its export loan program through a group of SBA Senior International Credit Officers situated in U.S. Export Assistance Centers all across America. These professionals have in-depth knowledge about trade finance and can explain the mechanics of the export lending programs of the SBA, as well as answer any question regarding the applications process and can also guide exporters in choosing the best payment methods.

For those exporters who wanted a quicker way of getting their needed additional export working capital, they can always have their invoices factored. This will eliminate the month-long wait for foreign invoices to get paid. Also known as international factoring, it is a very useful tool, particularly for new export businesses, as well as those who are looking to expand their operations in the near future.

When you factor your foreign invoices, what happens is that the factoring company will advance you an amount representing a considerable portion of your invoices. While the factoring company waits for the foreign clients to pay, your company will already be making use of the funds, which has been advanced by the factoring firm, in various aspects of your business operations. This will eliminate the cash flow problem that usually happens when you extend terms to foreign clients.

Bear in mind though that export factoring is a specialized area of financing and very few factoring firms offering this type of service. This is why it is always a good idea to ask specific questions with regards to export factoring and if this financing option is being offered by your preferred financing firm.

There are also factoring companies that provide purchase order financing. They can provide the additional export working capital your business needs using the purchase orders from your foreign clients as collateral. This way, you will be able to pay your suppliers and fulfill the purchase orders of your foreign clients.

How to Calculate Working Capital:

Working capital measures how much in liquid assets a company has available to build its business.

The working capital ratio is calculated as:  Working Capital = Current Assets – Current Liabilities

The number can be positive or negative, depending on how much debt the company is carrying.  If a company’s current assets do not exceed its current liabilities, then it may run into trouble paying back creditors in the short term. The worst-case scenario is bankruptcy. A declining working capital ratio over a longer time period could also be a red flag that warrants further analysis. For example, it could be that the company’s sales volumes are decreasing and, as a result, its accounts receivables number continues to get smaller and smaller.

Working capital also gives investors an idea of the company’s underlying operational efficiency. Money that is tied up in inventory or money that customers still owe to the company cannot be used to pay off any of the company’s obligations. So, if a company is not operating in the most efficient manner (slow collection), it will show up as an increase in the working capital. This can be seen by comparing the working capital from one period to another; slow collection may signal an underlying problem in the company’s operations.

Working Capital is the life blood of most small businesses. Access to working capital provides the ability to support and grow a healthy cash flow for a business. If you have the opportunity to build your business by investing in additional equipment, supplies, or more advanced technology, it may be in your best interest to take it. A short-term loan will allow you to act quickly. Working capital loans may also be used to pay for things like advertising costs, salaries, rent and monthly bills while you wait for the funds to come in.

When you conserve cash flow, you would be able to avail of a lot of benefits. In today’s hard times, cash is very important and if you don’t have the available cash when you need it the most, then you would surely find yourself in big trouble.

What Does It Mean to Conserve Cash Flow?

When you conserve cash flow, you are actually lengthening the life of your cash. This means that you are maximizing any available cash on hand, making sure that every cent is put to good use and only for important matters. You could also deem conservation as making your cash flow last longer. In fact, it is making sure that cash lasts for a really long time.

Conserving cash flow may not be easy for those who have been used to having the money to spend every time. However, when the time comes that some belt-tightening would be necessary, some practical cash flow conservation methods will be necessary.

Simple Tips to Conserve Cash Flow

• Spend wisely. This may be an overused term in households, but this does not only pertain to personal finances. This is also applicable for businesses. It does not mean that when the business is earning, it could splurge on both essentials and non-essentials. It is therefore necessary that a business must be able to spend wisely. Make sure that you make purchases that have really good use for the business, and not things that are simply products of a wild and carefree imagination. This is why spending wisely is surely one way of conserving your cash flow.

• Limit number of employees. One of the things that could literally drain your business’ cash is the salary of employees. This is why as much as possible, it is best to maximize the potential of all of your employees instead of hiring permanent ones. If indeed you need to have an additional employee, then you need to weigh the pros and cons of doing so. If you feel that the benefits that you would be getting from hiring an additional employee far outweighs any difficulty that you would be facing, then hiring one will be great. However, if the difficulties associated with such an act outweigh any perceived benefits, then you could delay hiring new employees.

• Lease equipment needed. Yes, leasing is one surefire way that you could conserve cash flow. Buying an equipment is superbly expensive and would truly create a dent in your cash reserves. But if you opt to lease, you would be able to enjoy the functionality that an equipment would give your business, without sacrificing a large part of your cash.

• Have foresight. This means that you have to make financial projections for your business. That way, you would be able to carefully plan your finances and make plans on how to sustain your current and future business’ needs.

Unsecured working capital for medical practices is needed by doctors in order to meet their existing obligations, as well as to fund some business ventures. However, the question of where to get it may sometimes be difficult to answer as there are only a few banks that offer such opportunity. In fact, a lot of commercial banks have even become stricter with their loan requirement, with many of them requiring potential borrowers to provide collateral to secure the loan.

Nevertheless, there are still other financial institutions that offer doctors unsecured working capital for their medical practice. For those in the medical profession, such loans are very essential, particularly for doctors who are just starting to venture out on their own. These commercial credit companies offer various unsecured loan packages to doctors, dentists, veterinarians, and other healthcare specialists.

Purpose of Seeking Unsecured Working Capital For Medical Practices

Unsecured working capital for medical practices can be availed of for a variety of purposes. This type of loan is offered only for those who are in the medical profession, such as doctors, dentists, physicians, veterinarians, chiropractors, as well as specialists of all kinds and many other healthcare practitioners.

Commercial lenders that offer these types of loan packages usually feature easy application processes and high approval rates. While lending companies do not normally require medical practitioners to provide them a business plan of how they plan to spend the proceeds of the loan, most doctors who apply for this type of loan use them in a variety of purposes, such as:

• Expansion of their practice or services
• Upgrading of their facilities or equipment
• Venturing out on other business opportunities related to their profession
• Using them as starting capital or revolving fund to keep their private practice afloat
• Buying out a partner
• Payment of outstanding obligations like taxes
• Renovation of their clinical office and many more

Features of Unsecured Working Capital For Medical Practices Loans

1. Medical professionals can avail of up to $150,000 in unsecured working capital
2. The application process is very easy
3. Collateral is not required
4. Loan application results may be known in as little as 24 hours
5. Once approved, funds are available in 3 days time

Aside from having no collateral requirements, unsecured working capital for medical practices loans also feature flexible payment plans. In fact, there are some commercial lenders that allow payments to be spread out to more than five years.

Another great thing about unsecured working capital for medical practices loans is that the rates are very competitive and are designed to fit the financial capability of medical practitioners. This is to help the medical professionals attain their cash flow goals and at the same time, be able to repay their financial obligations in a timely manner. So if you are a medical practitioner who is currently in need of funds, try to check out the unsecured working capital for medical practices loan packages that are being offered by some commercial centers. For all you know, it could be the answer to all your funding woes.

Looking for a flexible line of credit to help with your working capital shortages? Many funding companies will use your credit history, sales history and even in some circumstances they can use your business equipment to bring in some working capital and provide a line of credit for your company.

What is a working capital line of credit?

A working capital line of credit is a source of money via a credit from a lending institution. These lines of credit work much like a normal credit card, you are backed by a large financial institution. Some of the most common uses for this line of credit would be;

• purchase inventory
• buy new equipment
• payroll
• expand company abilities

Terms of Conditions of Working Capital Lines of Credit

Usually a line of credit will rely on your credit history and sales history. Sometimes lending institutions will place the lein on your business rather than against a personal asset such as your home.

How to get a working capital line of credit:

Apply. Simple as that. A working capital line of credit is exactly what it says it is, a credit line. Make sure you have good credit at a bare minimum, the higher your credit score the more likely you will be to obtain the loan. Feel free to contact us if you need help.

Business capital is basically just money that is used for investing into projects or a business. Business capital is extremely important for any business and ultimately will determine a businesses success.  If your business has easy access to business capital then you have a serious advantage over your competitor. One of the great ways to get capital for your business is through loans and financing. Any business owner can tell you, the way to get approved for a loan is usually through the path of assets and more importantly, building business credit. Without assets or great business credit you basically stand no chance of getting a business capital loan.

Non-traditional funding and sources of business capital are usually the resort of many a business. There is nothing wrong with trying to get a working capital loan or even specialty financing. In fact, sometimes those programs can be better than a traditional bank loan. There are so many alternative funding solutions out there that many businesses actually have trouble choosing one!

Debt, debt and more debt. Everyone has the point of view that Doctors and medical professionals are rolling in the dough. While for some that may be true, but many entrepreneurial Doctors run into working capital shortages. That’s where these specialty working capital loans will come in handy. The application is very quick and painless, which is good for a busy doctor. Keep reading for more information about these working capital loans.

What is a Medical Practice Working Capital Loan?

The medical working capital and medical practice financing programs are uniquely designed for both start-up and well established medical practices. These loan programs are for professionals in the medical field operating their own practice. These loans can  be used to enhance the core value of private medical, physical therapy, or veterinarian practice.  Doctors have the freedom to choose how to best use the funds and the limits on spending are virtually non existent. You can use the loan to upgrade facilities, expand your practice, update equipment, pay taxes or for any purpose you really want.

Financing Amounts and Terms

Typically, one page applications have a lower max loan, ranging around $250,000.  The funding can happen in as little as 24 hours but will usually take place around 3 days.

• Terms to 72 months on loans over $50,000
• A minimum 650 credit score is required, although each lender will vary
• Doctors must be licensed a minimum of 2 years in most cases
• Veterinarians and Physical Therapists must have at least 2 years in business (usually)
• Stated Income allowed to $75,000

Who qualifies?

Medical professionals looking to expand or acquire a new practice in an existing location. These loans can be fixed term or variable rate, secured by your practice assets or personal guarantee. Degreed Medical Professionals and Certified Specialists can be helped and usually extended to professionals with proven credit record and who are personally responsible with a good FICO credit score of 680 or above. Business credit scores will need to be 75 or higher with assets.

Very Fast Funding

Medical professional can get up to $250,000 in working capital with a one day approval and funding in just 3 days.

How to get the Financing

Working capital financing for doctors is just as straight forward as a normal working capital loan. Look to specialty lenders as they will have the best rates for your practice. The applications are extremely light, most consisting of only one page!  You will need to provide documentation on income statements and prove time in the business. Other than that, it’s a cake walk.

To continue on the topic of working capital, I would like to explore the little known industry of heavy equipment financing. Many contractors and labor type companies run into the need for expensive machinery that is necessary for their business. Sometimes, the banks they normally deal with will not finance those large amounts for a piece of equipment.  Suppose you really need that piece of heavy equipment to keep your business moving forward, but you are not ready to take on that upfront debt. Maybe the bank won’t loan you the money you need. No matter what the case, or business credit score, financing your heavy equipment makes sense.

What is heavy equipment? What can you finance? Well, there are different requirements and rules for each lender, but usually things like the ones listed below are covered under heavy equipment.

What are the Benefits of Heavy Equipment Financing?

When you finance or lease you do a variety of valuable things for your business. The first one being the tax deductions. (We are not lawyers or accounts at Start up Loans, we must encourage you to seek professional consultation. We are not giving you legal or tax advice, just making you aware that it exists.) Many small businesses can instantly deduct up to $250,000 worth of new and pre-owned equipment in the year it’s first placed in service. The name of this generous break is the Section 179 depreciation deduction, and it can reduce your federal income tax bill. (You may get a state-tax deduction too.) Without it, you’d have to depreciate most business equipment gradually over five to seven years.

Second, your cash flow will become more predictable. As we talked about in the working capital post, it is always a good thing to have a predictable flow of cash flow for more accurate fiscal planning. When you are on a set lease or financing agreement you will be able to see what the payments will be every month (and I believe you can deduct the interest, but check with a lawyer on that one).

Finally, when you finance the equipment you will start to build equity in it, almost like a house. After you have a certain amount of equity if you want to borrow against your heavy equipment, there are programs for that. So, not to get too fundamental, as an example:

Your business starts up, you see a need for a bulldozer, so you shop around and then finally finance a $150,000 bulldozer for your land excavation company.

The company grows and pays most of the bulldozer off. The owner starts to see an immediate need for another bulldozer but the business just can’t afford to buy it cash.

The owner locates and secures an equipment equity loan on the first bulldozer and buys the second one with the cash from that. Now the owner has one completely paid off bull dozer and the original bull dozer with the lean and financing.

Of course, this may not be an ideal way to go about this particular situation, it is just an illustration of how this could be incredibly valuable to a growing small business. So, for all the contractors and small business owners in need of heavy equipment, keep this in mind.

Whether you know it or not, your company needs to establish a business credit profile. There will always be a need for it, small businesses and big multinational corporations alike can use it to leverage business relationships, acquisitions and working capital. We will examine the differences between business credit and personal credit. We will talk a long walk down the road of establishing great business credit, what you can do with it after you do establish it and the common mistakes to avoid. But first, let’s ask the question what exactly is business credit?

What is Business Credit?

Business credit  is a measure of an organization’s ability to obtain goods or services based on a promise to pay for them later. I’ll take this for $10,000 and pay you back later, deal?  This term can refer to the ability of a business to be loaned money; be it an unsecured business loan or a secured business loan. The goods, services, or cash obtained using business  credit  are usually not personally guaranteed by the owner or representative of the organization. Essentially, business credit  allows for borrowing against the assets of the organization, instead of the owner’s personal property.

What is the difference between business credit and personal credit?

The major difference is in the reporting and scoring.  When an individual uses their social security number to apply for their first credit card, a credit profile will be create for them. Everyone has heard of a credit report and a credit score. Individual credit relies on a scoring system, FICO, which can place you between 300 – 850 based on your history. The latter score of 850 being flawless credit. The credit score is a numerical expression based on a statistical analysis of that person’s credit files to represent them to a business with no prior history with them. A personal credit score is primarily based on credit report information, typically sourced from credit bureaus like Equifax, Transunion, or Experian.

Business Credit on the other hand does not miraculously start when you start a business. Your score will be on a scale of 0 – 100 (75 and higher is considered excellent). For those of you who have tried to establish a business credit profile, understand that it actually takes some work. It can be classified as trade credit, in the sense that an arrangement between businesses to buy goods or services without making immediate cash payment. The selling business will provide the purchasing business with an agreement to bill them later (accounts receivable), stipulating a fixed number of days or other date by which the customer should pay (accounts payable). If you manage your business credit properly it can be an essential element of capitalization in an operating business. You can reduce your upfront obligations, keep your working capital positive and forecast your over all finances. Information about your businesses payment history will be recorded by the other business. Those businesses do not have to report. That’s where it gets further from personal credit. Information about all your trade history will be collected from business credit bureaus (voluntarily) then compiled into a report and applied to your businesses name, address and EIN (employer identification number, you can get one for your business at the IRS official website). We highly suggest that you be proactive about your credit profile and contact one of the major bureaus for help with establishing a positive business credit profile.

What business credit bureaus are there?

The business credit bureaus compile data to generate a report about your company’s business credit transactions. Most of the time a companies chance of getting a loan will rely almost exclusively on the credit report of the major bureaus.  There are a couple business credit bureaus, but the major players include:

• Dun & Bradstreet
• Experian Business
• Equifax Business
• Business Credit USA

How does a company establish business credit?

Make sure you are actually a business, or form one

The first step in establishing business credit, is to make sure you are actually a business. This can be done by forming a corporation or LLC to operate your business under an EIN or FIN.  Look to a lawyer and accountant to decide which is best for you. For a short explanation of the differences, head over to Fred Wilsons blog (www.avc.com). This article shows the various corporate entities and why one might be better than the other.

Register Your Company with all the Business Credit Bureaus.

I highly suggest going to www.DnB.com first because they have a bunch of free information and you can call and ask any question you like. They also have a service that will actually establish your profile for you. Give them a call and ask them all the questions you want. You can learn a lot, but be weary of the sale. They will try to make you a customer.

Make sure all licenses and requirements are met

If you run a company that requires certain licenses or certifications, make sure you have them and they are current. You do not want to throw up any red flags to either the bureaus or the company you are trying to obtain credit from. Make sure you have a dedicated company phone line and a city business license as well. You can find out the exact list of requirements at iBank.com.

Prepare a Professional Business Plan

Include financial statements in your business plan, make sure it is professional and complete. If you are having a hard time writing one, then hire a professional to assist you. There are also forums and groups out there that can walk you through every step of a business plan. You can even look to the SBA for business plan templates to guide you.

Manage your debt and Make the Payments on Time

Managing your debt sounds like a bad thing, but it’s not. Sometimes it’s healthy to have debt. In fact, you need to have monthly payments going out to your creditors in order to keep your profile actively. Just don’t fall behind or be late on any of them. Make sure your companies financial sheets are sound and your payments are made on time. You will be well on your way to establishing a stellar business credit profile.

Mistakes to Avoid

• Do not over leverage your companies assets, short or long  term debt can cripple any company.
• Make sure that you do not back any business credit transaction with a personal guarantee on your own credit. Keep the two separate.
• Request that any company you apply for credit with, is actually going to report to the bureaus. Take advantage of everything you can.

Working capital, or net working capital, is a financial metric which represents operating liquidity available to a business. Along with PP&E (property, plant, and equipment AKA fixed assets), working capital too is considered a part of operating capital. Many companies fall short on working capital and when doing so, need to secure a business loan.  A simple formula to calculate your companies working capital is; current assets minus current liabilities.

Working Capital = Current Assets − Current Liabilities

A company can be rich with assets and profitability but short of liquidity if its assets cannot readily be converted into cash. This is a common problem many small to medium size businesses face everyday. There are quite a few things a company can do to combat their lack of working capital, for example, they can borrow against their accounts receivable, take a hard money or bridge loan, they can even borrow against heavy equipment if they want. There are programs for almost every situation and every business credit type, even businesses with bad credit.

Positive working capital is required to ensure that a company is able to continue it’s operations. Without sufficient funds, a business will not be able to satisfy both it’s short-term debt and projected operational expenses. When a company cannot satisfy either of those debts, they inevitably can no longer operate or they must secure a loan. Management of working capital involves many facets of your business, everything from managing inventories, staying on top of your accounts receivable and payable and cash.

The Cash Conversion Cycle

When calculating your working capital, simply put, you will want to know how long it takes your money to go out and come back in.

The cash conversion cycle is the net number of days from the outlay of cash for a specific product, service or raw material to receiving payment from the customer.

This metric of your companies asset management is crucial. This number effectively corresponds to the time that the businesses cash is tied up in operations and unavailable for other business acquisitions or uses. Your companies management will always aim at a low net count to ensure the financial stability of the business- large or small.