Invoice Factoring: A win-win?

Invoice factoring, depending on your situation could be a great way to plug gaps in your revenue stream. It is low risk, easy to qualify for and can even smooth out your business operations.

First how does invoice factoring work? Invoice factoring involves selling your outstanding invoices to a factoring company or a “factor.” The factor buys your outstanding invoices and gives you a percentage on the amount owed to you in advance. The percentage given is usually 70 to 90 percent of the outstanding invoice. After the customer pays the invoice, the business receives the payment minus a fee charged by the factor. Essentially invoice factoring is debt free, as you are borrowing against money already owed to you. This makes invoice factoring a great way for certain types of businesses to raise money.

How do you qualify? First most factors are more concerned with the credit rating of your customers. You as a business owner only need outstanding invoices to qualify. But there are some basic terms and conditions many “factors” consider before you can be approved. You must have customers with outstanding invoices. The invoice your borrowing against must be due within 90 days. Obviously you cannot sell a single invoice to multiple factors and you should have a relatively clean business record. Depending on the factor your credit score may also be an issue. But if you as a business can meet these basic conditions you can likely borrow against your outstanding invoices. This can help you take advantage of immediate opportunities or plug gaps in your revenue stream.

Invoice factoring is helpful for particular businesses that need cash quickly or that have lags in payments by customers.

If you need funding quickly to take advantage of immediate opportunities or to pay for an unexpected expense then invoice factoring is a great way to raise the necessary funds. The traditional financing process can take awhile and depending on your situation you may not even qualify. Additionally if your business is seasonal, invoice factoring can smooth gaps in your revenue stream. This advantage also applies If your customers don't pay their bills quickly. Invoice factoring can shorten the payment cycle and help you get the money you are owed faster. Some factors can even manage outstanding accounts, thereby easing your business operations and saving you the difficulty of collecting payments from your customers. In short, invoice factoring is a low-risk way to raise money quickly, in specific situations and for specific types of businesses.

Potentially all parties involved could benefit from invoice factoring.

The borrower, the lender and the customer could all potentially reap the benefits of invoice factoring. You the borrower get the money your already owed. Additionally if you outsource your collections to your factor, your customer could find it easier to pay their bills. The factor also benefits collecting a fee at the end of the process. Invoice factoring may not work for every business. Evaluate your situation carefully. But if you have many outstanding invoices, need money quickly or have slow paying customers then invoice factoring may be right for you.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Is There a Danger of an Alternative Lending Bubble?

Online “alternative lenders” have emerged as a vital source of capital for small businesses. But some of these lenders may be predatory and rising defaults may put the entire industry at risk.

Following the Great Recession small businesses have faced increased difficulty getting loans from traditional banks. According to the Federal Deposit Insurance Corporation, loans under one million dollars have been declining every year and are twenty percent below pre-recession levels. A plethora of alternative lenders have emerged online, in order to meet the demands of small businesses that need financing. The loans such lenders offer are easy to qualify for but oftentimes can be very expensive. Furthermore this online marketplace is in essence completely unregulated. A lack of regulation and transparency puts many small business owners at risk of taking out loans from predatory lenders.

Unscrupulous lenders can avoid regulation simply by packaging their loans as advances. Because of this usury protections do not apply to these “advances” and there is no ceiling for what can be charged in interest. Triple digit APR is not uncommon in these cases. Many borrowers may be unaware of the total coast of the loan they are being offered. This is because there is no legal standard of disclosure when it comes to commercial lending. This enables predatory lenders to disguise the amount they charge in interest rates and fees. For example a lender may quote a ten percent interest rate, in reality this is only the monthly rate for the loan. The total interest on this loan amounts to one hundred and twenty percent annually. The lack of clear legal standards in the alternative lending industry could lead to a dangerous trend.

The explosion in online lending to small businesses could be following a familiar pattern, with alternative lenders issuing loans to unqualified borrowers in the pursuit of rapid growth.

Some liken the online commercial lending industry to the Wild West The fact that such loans are easy to qualify for ensures consistent demand from small business owners. Securitization of these loans and merchant cash advances in particular ( generally the riskiest and most expensive type of business loan available), could result in a pattern where online lenders issue loans to unqualified borrowers in the pursuit of rapid growth. In addition there is speculation that many online alternative lenders are overvalued, potentially forcing some organizations to justify their value by issuing new loans at all costs

Online alternative lenders are an invaluable resource for small businesses. However more needs to be done to protect both lenders and borrowers.

To begin with the rates on commercial loans issued online need to be competitive and fall within a reasonable standard. There needs to be a minimum amount of disclosure on the part of lenders to inform borrowers what the total cost of the loan will be. This will help borrowers avoid taking out loans they cannot afford. These basic protections will help protect borrowers from default, help lenders manage risk and protect the industry as a whole.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Micro-loans: The Help You Need?

Micro-loans are small loans often issued by non-profit community development organizations. Micro-loans are an excellent option for new business owners who are passionate about their idea, but who may not qualify for financing elsewhere.

The Small Business Administration defines a micro-loan as a commercial loan for less than 50,000 dollars. They are often issued SBA backed organizations, however not all micro-lenders are sponsored by the SBA.

Micro-loans usually have less stringent qualifications than traditional loans. They can be an excellent source of financing for business owners without good credit or collateral. Micro-lenders are generally not for profit organizations, seeking to develop businesses within their communities. Often these organizations are looking for a good idea instead of a good credit score. These organizations invest time and energy in supporting borrowers in order to help them develop their businesses. They may even go so far as to contact a borrowers personal references in order to help them qualify. This personal touch means micro-loans may be easier to qualify for than traditional financing.

Micro-loans are also relatively inexpensive compared to other types of start-up financing. Interest rates are generally between 5 and 18 percent. Micro-lenders also offer educational resources. SBA backed micro-lenders must offer training for borrowers in subjects like money management and business planning. These educational resources can translate into long term success for new businesses.

Micro-loans present the opportunity to new business owners to secure the financing they need, learn strategies for long term success and improve their business credit score.

As borrowers pay down the balance of their micro-loan they build up their businesses credit score. This improvement can help new businesses qualify for more traditional financing in the future. This coupled with the education micro-lenders offer helps ensure new businesses succeed. All these factors translate into micro-loans being an excellent type of commercial loan for new business owners.

Micro-lenders offer a personalized approach not often found at traditional banks. The loans themselves are inexpensive compared to other types of financing available to new businesses . Education helps new businesses plan for future success. Above all micro-loans present the opportunity for new business owners to build their business credit score.

Micro-loans may be the safest type of commercial loan available to new business owners.

If your uncertain about the nuances of starting or running a business, but a have a great idea, a micro loan may be right for you. The education offered by micro-lenders will potentially equip you with knowledge and strategies for long term success. The borrower-focused approach of these organizations means micro-loans may be easier to qualify for than other types of financing. Above all getting a micro-loan gives you the opportunity to build credit and can help you avoid pursuing more expensive methods of start-up financing.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

How Preparing a Business Plan Can Help You Obtain a Commercial Real Estate Loans

Commercial real estate loans may seem hard to get approval for, but not if you have one of the key components lenders look at — a strong business plan. Here are some simple tips for creating a strong business plan.

Start with a summary — strong statements that serve as the outline of your plan. This should inform the reader of exactly what you truly want to do with your business, what you are requesting and how it will be used to grow your company. This should come directly after the title page.

Next include a description of your company and the industry in general. Don’t assume the banks have an in-depth knowledge of your particular niche. Include information about current trends and future opportunities for growth and revenue. In addition, noting specifics about the markets in your specific industry and some of the new developments that you can use to leverage your own business is beneficial to a strong business plan.

A market analysis should be included in your business plan. Hard numbers that show all aspects of the market that can be defined in a way to position your company as a strategic player in this field. Include your own unique market strategy approaches and ideas here too. In addition to market analysis, including an analysis of your direct competition — and their strengths and weaknesses — is another critical element of a strong business plan. This shows your ability to pinpoint problems, and an opportunity to present solutions. You can explain here how your company would avoid these same pitfalls or build upon these same areas of strength.

How will a business plan determine whether a bank or lender will approve my commercial real estate loan?

Additional factors such as your business development strategies, how you will chart and track production, market the company, create and stick to a budget, managing the day-to-day business operations running smoothly, any specific logistics, and charting the responsibilities of your management team all point to your ability to run your company successfully. Banks and lenders need to feel confident that they will see a return in their investment. It’s your job to sell that to them and ultimately get them to approve your commercial real estate loan.

Making your business plan stand out is almost as important as what your business plan includes.

Using the proper tools to present your business plan is crucial. Presenting in a clean and easy way with real numbers, facts, and any hard data you have to “prove your case” can be beneficial to your commercial real estate loan approval.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

What to Consider Before Seeking a Commercial Loan

There are many factors to think about when you are contemplating applying for a Arizona commercial loan – from what type of loan you need to the best financial institution or lender to help you get that loan. Before sitting down with an expert, there are a few things you should have prepared.

A business plan is an important element that banks and lenders look to when reviewing a commercial loan application. Ultimately, there money is going to be backing this plan, so they want to make sure it’s indeed a solid one that has legs. Spend some time putting together a well researched and detailed business plan that outlines your past successful approaches, and exactly how to plan to take the business to the next level – with the help of this loan, of course.

Proof of a steady cash stream is also key to be able to show the lender – how do you plan on making a return on the investment… so that then the lender will see their return on investing in you. Being able to showcase how you plan to make revenue for your business will go a long way to ensuring you can repay the commercial loan. Most organizations will want to see you up and operating within a year.

Last but certainly credit score is of course a big one. Banks want to see your history and feel confident that you will be able to wisely and properly manage the finance that they will in essence be entrusting you with. If you are just starting out and don’t have much of a credit history established, don’t be afraid to build a little credit in order to start establishing a base of good credit – ensuring you don’t go too far into your limit.

If you’re credit score if not where you would like it to be, you can actually improve it fairly quickly so you can show lenders in good faith that you are working to repair it. This can go a long way when it comes to how lenders feel about taking on your loan application.

It’s important to maintain the credit card balances (you should aim to get your balance to 30 percent or lower), always pay on time or early and pay in excess of the monthly payment amount due, if at all possible. If you have old debt that you have paid off, resist the urge to have it removed from your report – it actually shows you have the ability to pay off what you owe, which is a good thing in the eye of the lender.

When it’s time to consider a commercial loan for your business, ensuring you have your affairs in order is important.

Before applying for a loan, put together a solid business plan, ensure your credit is as up to date as possible with the big three credit bureaus — Equifax, Experian and TransUnion — and be prepared to prove how and when you will be able to pay back your loan. Preparing documentation is no place to skimp on time even if some tasks seem daunting or tedious – your efforts will be rewarded once you receive loan approval!

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Commercial Lending: Understanding the Difference Between Short Term and Long Term Loans

There are many terms and definitions in the world of commercial lending, and if you’re new to this world, the language can be confusing. Understanding the difference between short-term and long-term loans can benefit you and determine the choice you make for the best interest of your company.

If you’re considering applying for a loan for your business, you’ll need to be prepared to inform the bank or other lender how you intend to pay back said loan – in specific terms. The two categories loans typically fall under are short term and long term and they can benefit you in different ways depending on the needs of your business.

A short-term business loan can provide you with cash fast, sometimes within a 24-hour period. The application process is rather detailed and repayment is generally required multiple times a year. This can often be for a smaller sum of money, but often have higher interest rates. However, it’s a relatively easy way for businesses to get liquidity right away without taking on more debt than they really need to. You may need to look to alternative lending options for this type of speedy loan, as traditional lending institutions may be apt to pass on a Arizona commercial lending situation like this that may appear to be high-risk.

A long-term business loan can sometimes be more difficult to obtain. The repayment structure can take place in multiyear terms over the course of 10 years or more. Because interest builds up over time in the case of a long-term loan, you may end up paying more in interest over all. More traditional lending institutions such as banks are more likely to offer this type of loan, however.

When it comes to commercial lending Arizona, which loan is right for me: short-term or long term?

Based on your needs and your eligibility, there is no right or wrong answer. If you need “cash fast,” a short-term loan may be the way to go. If you need a larger sum of money and are prepared to repay it over the course of time in a more traditional manner, long-term might be more suited for your business approach.

Seek the help of a professional lender who can offer advice as to which loan is right for you.

It never hurts to talk to a Arizona commercial lending expert of you are confused about the benefits, terms and repayment structure imposed with the various types of loans. It’s important that the lender understands your specific business needs so they can determine the best loan strategy for you.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage

Ways Your Business Can Benefit from a Commercial Real Estate Loan

Commercial Real Estate Loans can help catapult a small business into the next echelon of success and growth. Find out how your company can become more successful with this strategy.

You’ve heard the phrase, “It’s takes money to make money,” right? In business, who hasn’t? But oftentimes small start-ups and organically grown businesses just don’t have the cash flow to make that big step. However, with the help of a commercial real estate loan, small businesses can start producing more efficiently and effectively – making more money than they may have thought possible.

Presentation is everything, and you should always put your best foot forward. Okay, enough with the clichés. But in business, clients and customers base many of their decisions on first impressions — that includes the look of the building, the presentation of products, goods and services. Beyond attracting new potential clients, presenting a workspace that appears success and productive has an added bonus: attractive, spacious workplaces with perks for their employees (think daycare center, break room with games, or even a gym) increase productivity and improves morale. When your employees are happy, they feel invested in their career and they work harder. Talk about a win-win solution!

Even if you don’t plan on making major office improvements, being very tight on cash, creates a stressful environment for you and your employees. A commercial real estate loan can help ease the stress of ensuring employees, vendors and suppliers will get paid and that you can work to invest back into your own company. This type of loan can also help you get through any slow periods or slumps in sales.

With a loan, you can expand your business in a number of ways: reaching new markets, adding a second location, having more liquid assets to brand yourself and advertise. Making the plunge into a new market or taking on an expansion can require a lot of initial capital, but the company will reap the benefits of the investment in the long run.

Not all commercial real estate loans are the same, so choose the one that is right for you and your business.

Talk to a professional lending expert to see what type of program would be best for your business – such as a short- or long-terms financial strategy. There is no better time than the present to invest in the further development and growth of your business, regardless of the type of business or whether you are a start-up or a more organically grown small business.

There are specific requirements to become eligible, but the benefits are worth it.

Consider what you have to lose – and what you have to gain when it comes to your business. Contact a lender to find out what the requirements are to qualify and watch your business take off!

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

Technorati Tags: commercial loans,commercial lending,commercial mortgage