Landlords can be a source of financing. It is not uncommon for a landlord to contribute dollars or rent concessions to development of a tenant’s space. For this loan, landlord may require a Percentage of Gross Sales Clause in lease as repayment. Extended vendor terms for purchase of product may provide short-term operating capital loans.

In event that additional credit strength is required, loan guarantors or borrowing someone’s credit may help borrower qualify for less expensive financing. Be flexible. Your final package may be comprised of several lending solutions

PRESENT A CLEAR AND UNDERSTANDABLE PROPOSAL Lenders need to know who you are personally, professionally and financially. The lender needs to evaluate Income Tax returns (Corporate and Personal), financial statements (income statement and balance sheet) and a cash flow projection. The balance sheet has to look a specific way. The Current Ratio should be at least 1:1, and Debt to Equity Ratio should be at least 4:1. Be specific as to how money is going to be used and how it will be paid back. Lenders want to know what is securing their debt. Lenders evaluate quality of collateral, and want to insure that it is adequate to secure debt in case of default. A secondary source of repayment is required prior to granting standard financing. The personal guarantee of borrower is often required. In some situations, a lender may seek secondary collateral. Secondary collateral is simply some other asset in which you have equity or ownership, i.e. equipment, property, inventory, notes. Business funding is not difficult if borrower is creative and realistic. Know how much money you need and how you are going to use it. Be prepared to defend your needs and anticipate lender’s questions. In event that a lender cannot grant your request, perhaps it is way a loan is packaged. Find a lender who is willing to make recommendations that will help you find financing. A good lender will tell you quickly if they can help you or not. If an intelligent and organized package is presented, a timely response is warranted

Forecast your payroll. List your current and anticipated employees and categorize them as Cost of Sales labor or Overhead labor. Cost of Sales labor may be projected in part by a target labor cost percentage. Estimate payroll expense per employee (average hours worked, rate of pay) over next twelve months. Evaluate Your Profitability With monthly sales and expenses projected, business profitability, feasibility and value can be determined. Total Sales minus Total Cost of Sales Expenses (including Cost of Sales payroll) minus Total Overhead Expenses (including Overhead payroll) equals Monthly Cash Reserve. This is also your profitability. Is there any money left?

What debt are you servicing? Evaluate this debt separately from your profitability. Debt takes many forms including notes, loans, credit cards, leases, and lines of credit. When businesses must restructure their debt in order to improve cash flow, lenders expect business’s Balance Sheet to look a certain way in order to qualify for financing.

So, What’s Next? Once this working budget is assembled, a break-even sales volume can be determined that generates enough profit to cover debt load and have no cash loss. Your cash flow objectives are now clarified and strategies can be implemented. Any issues that caused a cash flow problem will now be corrected. With your Cash Flow mapped out, you have beginning of control.

Cash Flow Planning brings financial stability to a business through pro-active budgeting, monitoring and adjustments. You will understand where you are today and what your options and priorities are. You will be able to forecast your cash needs and gain control of your business. With use of a Cash Flow, your business will have more money and a road map for future.