Solving the Cash Flow Problem for Business Owners
April 10, 2024
By Edwin Asetre
Hello Everyone,
Spring has sprung! Just like the flowers are blooming, it's the perfect time to make your business blossom too.
We've got some exciting news: we've revamped our newsletter to bring you even more helpful content.
Think actionable tips and insightful ideas – all designed to boost your bottom line. So buckle up and get ready to grow!
**Please share your thoughts at the bottom of this article**
Inside this Newsletter, within 5 minutes you will learn:
• Don't be fooled by profits: Cash flow is king
• Why Positive Cash Flow is Important?
• Common Solutions: SBA Loans, Refinance Cash Out Loans, HELOCs
• Is there a Faster, More Effective Cash Flow Solution?
Don't be fooled by Profits: Cash Flow is King
Cash keeps a business running, even profitable ones. While a company may be selling well and have a lot of assets, if they can't convert those sales into actual cash, they could be in trouble.
Cash flow is the true measure of a business's health so keeping a close eye on it and having access to fast cash is crucial.
Why Positve Cash Flow is Important?
Cash flow problems can wreak havoc on different businesses in specific ways.
Builders and developers might struggle to pay for materials and subcontractors on time, potentially delaying projects.
Manufacturers could face disruptions in production due to a lack of funds for materials or delayed payments to suppliers.
Retailers might find it difficult to keep shelves stocked with merchandise or meet payroll obligations.
Similarly, restaurant owners could face challenges paying vendors for ingredients and their wait staff.
Common Solutions: SBA Loans, Refinance Cash Out Loans, HELOCs
SBA Loans for
Working Capital
This government-backed option provides a loan specifically for small businesses. Be prepared for a lengthy application process (90-120 days) requiring various documents: past tax returns, business financials, and an appraisal. There's also a borrower cash injection requirement (10% of the loan amount) and a funding fee (3-4%).
Cash-Out Loans for
Residential Property
If you own a home, you can leverage it for cash by taking a loan against its equity. This option offers a quicker turnaround (30 days) but requires documentation from both the business and owner, including tax returns, financials, and an appraisal.
Refinance Cash-Out Loans for Commercial Property
This involves replacing your current commercial mortgage with a new one, potentially with better terms (hopefully). The process takes 60-90 days and requires financial documentation like property operating income/expenses, tax returns, and business financials. An appraisal is also required.
Home Equity Line of Credit (HELOC)
This line of credit uses your primary home's equity as collateral. It has historically been attractive due to its variable low interestrate tied to the Prime Rate. However, with the current Prime Rate at 8.50%, the effective rate can be quite high (8.75% to 11%). While an appraisal may not always be required, the loan amount is capped (typically $300,000-$500,000) and takes around 30 days to close.
These common solutions might address your immediate cash flow needs, but be prepared for a long wait.
The loan approval process can be slow and cumbersome, often requiring mountains of paperwork and a lengthy valuation process with an appraisal.
On top of that, you're looking at waiting anywhere from 30 to 120 days to finally receive the funds.
Is there a Faster, More Effective Cash Flow Solution?
Yes. At PrivateFunding.pro, we can help!
We offer fast and effective cash out programs through Private Money Bridge Loans.
Get a loan up to $20 million for 1, 2, or 3 year terms, to purchase, refinance, or cash out on real estate. We offer various mortgage lien positions (1st, 2nd, or even 3rd) and don't require tax returns, financial statements, or a minimum credit score.
Our loans can be used for business purposes on many collateral types, including residential properties (single-family homes, 2-4 units, condos, and townhomes) or commercial properties (multifamily, mixed-use, retail, office, and industrial).
Plus, we make the process quick and easy with same-day underwriting and approvals, no appraisals needed, and closing as fast as 5-10 days.
Let us help you “bridge loan” your cash flow gap today!
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