Business financing is a challenge anytime, from the entrepreneur's dream of a small start up to major corporate needs.
The current economic downturn makes the above noted challenge even more daunting. Whether a firm is established and doing well, or experiencing financial distress or working capital or growth needs - the challenge remains the same.
What is the 'challenge'? Simply speaking it is identifying the proper financing solution , determining whether the solutions is a short term fix or a long term solution , and then, most importantly executing with experience the proper financing solution.
The business owner must be able to properly position the current shortcoming as both an opportunity and risk appropriate.
Proper financing begins with the owners and his advisors ability to identify the current financing challenge. The owner and advisors must provide a compelling reason for the lender to assist in an appropriate financial solution.
Who are these 'advisors'? Typically they are internal financial staff, i.e. CFO/Controller, etc, or alternately third part accountants and experienced financial intermediaries with a track record of success.
Business Financing is complex - However at the end of the day the financing solutions are actually very well defined - They are as follows:
Leases and Term Loans
Working Capital Loans
Asset Based Lines of Credit
Bank credit lines
Non bank credit lines
Inventory Lines of Credit
Purchase Order Financing
Tax Credit financing
The business owner, and their advisor, should have a very clear focus - That focus is as follows: What is the best financing solution on either a short term or an intermediate/long term basis for the business. Does the business owner or executive clearly understand all the financial options available - what are the criteria for these different options - what are the rates/terms and structures for each option.