Eight considerations when looking for funding options

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Eight considerations when looking for funding options

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Many people are looking for fast sources of low cost money to build their business, buy investment
properties, acquire machinery, expand staff, secure office or manufacturing space, increase inventory of
supplies, or for whatever reason. And usually, that money needs to be available in a hurry. Opportunity
may knock on busy business owners’ doors often, but when it does, it is advisable to be ready with funds
before you answer.

Here are eight considerations for funding options:

1. Understand your Credit Score

Credit rating bureaus have started collecting more and more information about a person than in
the past. In addition to counting on-time payments for revolving loans, the bureaus will also
report civil actions, address changes and how many inquiries a person has made for new credit.
All of these items supposedly give clues to stability and creditworthiness of an individual.
However, like all simplified formulas, those indicators only tell some of the story, and can be
flawed or even erroneous.

Unless one completely understands what their report contains from all three major credit
reporting bureaus – TransUnion, Equifax and Experian, it will remain a mystery to know what is
restricting financing unless the applicants acquires an expert to help translate the report, and
provide strategies for improving the scores.

Therefore, to really understand the impact of information contained on a credit report, and how
best to present that information to lenders, the best results come from associating with a
company who – just like every Fortune 500 company – knows everything about a deal before
they make it. A preferred funding company should provide experts who have knowledge and
connections, who know which lender looks at which bureau for verification, and consequently
will submit your credit application only to those in which your highest scores are reported by
that bureau.

2. Nothing Remains the Same

Conditions change – a valuable new contract after a long term of adversity can turn a business
around from hardship to hero, from scraping by to harvesting a bounty, but that new status will
only show up on credit bureaus scores after many months, even years have passed. That means
that a business which is much healthier than their credit score suggests will be restricted by
outdated information.

In conjunction, in a company that begins to experience faster growth, there will be more need
for funds. And, often, a company experiencing a growth bubble may not be prepared to finance
that growth by themselves. So then, begins the search for unsecured funding.

3. Timing is everything

When a business grows quickly, new work often requires investment in infrastructure, assets,
materials or talent. If a business has been austere for a while, and the credit score reflects that
condition, lenders may feel obliged to make decisions on the historical but inaccurate picture.
Yet, fast funding is now required to capture and maintain a higher work flow usually prior to the
increased income arriving.

Most business people only realize that they have a tiger by the tail when their business is
jumping up and running. Once the need for funding arises to meet the opportunity, the cash is
required immediately, if not sooner. Thus, priorities for the fastest money resource become

4. Secured v Unsecured – Bureaucracy or Expediency

There are conventional sources like banks and government agencies still lending money, but
those choices came with a lot of constraints. Small business loans from agencies like the Small
Business Administration (SBA) require pages of paperwork, and consequently a lot of time to
prepare, and even more to review. If even one claim is unverifiable or incorrect, the process
stops until that information can be corrected.

Banks require historical performance statistics; months of bank records to showcase a healthy
cash flow and a good payment habit. They will ask for tax returns – three or four years’ worth,
please. And, unless their credit is spotless, the applicant may be denied at the end of the

For secured loans, where the bank holds the title to the borrower’s home, office building,
vehicles, aircraft, machinery, stocks and bonds or technology, the paperwork is still inescapable.
The threat of losing your processions if something goes wrong, and the borrower has to give up
assets as part of the default is undeniably worrisome. Secured funding binds an asset like a
machine, vehicle or real estate. If the company needs to sell off those assets and/or replace
them, the original loan has to be paid off, which can add complications to a transaction and slow
its completion.

In many cases, unsecured funding will be preferable to long term secured funding because
financing through credit lines, credit cards and other financial instruments can be more flexible,
and therefore faster to close. Further, the paperwork, due diligence and regulations for secured
funding that adds weeks to an approval process is bypassed when applying for unsecured

Unsecured lenders such as major credit card providers are better equipped to do their approvals
quickly, and often, the restrictions are less stringent than that of a mortgage or vehicle loan. The
funds can be used for whatever the business needs, and once paid off, can be used again the
next time a business needs capital. Better yet, as the borrower meets his obligations, his credit
line can rise, allowing more room for future projects.

5. Proper Credit Cards Provide an Answer

When the banks turn their cold shoulders on good people who need money, credit card funding
is a good option. Credit cards give flexibility to buy what is needed, without having cash on
hand, and can be paid off either quickly or slowly, depending on circumstances, without
penalties. Most consumer credit cards, however, do not have a high credit limit, and many have
a high interest rate. There may also be limits as to how much cash you can take away each day.

These challenges are surmountable. The best solution is to partner with a company such as
FastUnsecured.com who has found specialized credit unions and major brand credit card
accounts willing to fund people with relatively good credit for large amounts, low interest, and
access to large sums as needed.

6. The Three Golden Keys to Unsecured Funding

Credit cards are only helpful business tools if they meet three key criteria; a relatively low
interest rate; the ability to turn an entire credit line into cash immediately, and the speed at
which a business person can acquire the funds.

7. Taking Care of Business

The key factor in using unsecured loans is to continue to care for them, make payments on time
or early, and when the business picks up, pay these loans down or off quickly. Doing so will
continue to improve a credit rating score, and make one eligible for a second round of financing
at higher lending limits.

If you are looking for advisors or companies to help you secure unsecured funding fast, watch
for those who are interested in getting you through the first round, getting your business reestablished
at a higher level, and getting you ready for the next round. Going with a company
which does not have a plan for advancing into future growth opportunities is an indication that
they only see you as a one-time source of fees for them.

8. Buyer Beware: There are Big Differences in Funding Companies

There are many companies online who offer a variety of solutions for finding fast funding for a
business, but there are caveats in comparing the services; warning signs include requiring an
upfront payment (scammers figure this is the only money they will get from you, so after they
get it, you won’t see results), companies who look like they just appeared with primitive and
unprofessional websites, lack of customer testimonials and reviews, and a lack of history.

When looking for a funding partner, it will be important to select a company which has had an
online presence for a long time, displays many customer reviews and success stories, has
services carefully spelled out in a way that educates the potential customer, and maintains an
online chat and/or telephone service that connects to real people who are willing and able to
help. If that company also can show a surety bond that you can inspect, and an insurance policy
that protects both parties, then this is an honorable resource.

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