The Small Business Administration announced on Thursday, April 16th all federal funds set aside for the Paycheck Protection Plan (PPP) Loans have been allocated to those business owners who were persistent (and fortunate) enough to get through the application process and receive an official registration number from the SBA via its bank. In simple terms, the PPP Loans are out of money to assist business owners.
On Friday, March 27, 2020, the Paycheck Protection (Loan) Program (PPL) for small businesses was approved as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This new law is intended to help small business owners in an unprecedented way. First, while the Paycheck Protection Program Loan will be initially set up by banks and approved by the SBA under section 7 (a), unlike other SBA loan programs, the PPL is guaranteed 100% by the SBA. Second, if the proceeds of the loan are used by business owners as Congress, the Senate and President Trump intended, the loan will be forgiven.
Doing deals can be expensive. A lot of entrepreneurs want to save money by not hiring an advisor or they don’t know when they should make the investment on an advisor. It’s important to understand the roles of the broker and other advisors, especially legal counsel, and to know when to bring in a professional. Here are some milestones in a deal, and how to know when to hire a business advisor.
v Have a Question? Add it to the bottom of this post! As a business broker in North Carolina, I’m focused on seller representation. But I need great buyers to match with my great seller’s opportunities. In our office, we receive a lot of buyer inquiries, but few are...
Without cash flow, a business cannot pay its employees, make debt payments, or invest in its future growth – making cash flow a critical focal point in every business, regardless of size. Yet searching for the correct small business financing can be overwhelming,...
Business debt and equity are central to the operations of any company. The amount of debt and equity a business carries has a major impact on how the business operates, and on how it is positioned for success. Business capital is the money a company uses to purchase...
v Have a Question? Add it to the bottom of this post! Business Lending from Banks Whether you’re a Main Street small business, an Entrepreneur growing a business from start-up, or a Middle Market Business about to embark on an Initial Public Offering (IPO),...
Sufficient cash, otherwise known as business capital, is necessary for any business to pay vendors and employees on time and to invest in real and intangible assets that enable growth. That’s why, as a business owner, it’s critical to understand what business...
Whether you’re growing a business organically or searching for ways to jump start business growth with a large cash infusion, don’t allow the large number of capital sources for your business become overwhelming. This post identifies several...
v Have a Question? Add it to the bottom of this post! What Are Loan Covenants? A covenant is simply a fancy term for the word ‘promise’. Banks include covenants in their loan agreements to preserve their position as the lender and to improve the likelihood a loan...
Business debt consolidation refers to the practice of taking out a new loan to pay off any number of other business debts (generally unsecured debts). Multiple separate debts are combined into one new loan, often with more favorable loan terms and conditions....
Book Value is defined as the total value of a company if it were to liquidate its assets and pay back its liabilities, or the value of the company according to the financial statement. Book value (BV) is also sometimes referred to as “shareholder’s equity.” Business...
Once you’ve successfully assessed your financial needs for a business loan, you’ll want to follow these guidelines to determine what, if any capital funding you may need, and the best type of business loan for your business. What are the best reasons for a small...
v Have a Question? Add it to the bottom of this post! As a small business, it is imperative that you understand your financial needs. Knowing your projected annual expenses, having a business plan in place, and assessing your need for funding sets the foundation for a...
v Have a Question? Add it to the bottom of this post! Crowdfunding is an alternative method of financing for the small business owner who wants to raise business capital from a large number of people or organizations. Today, crowdfunding has become an...
The effective annual rate – also called the effective interest rate, the effective rate, or the annual equivalent rate – describes the amount of interest paid or earned on an investment or loan as the result of compounding over the period of a year or some...
Capitalization Rate, more commonly referred to as Cap Rate, is the rate of return on a real estate investment based on the income the property is expected to generate. In other words, the Capitalization Rate is used to estimate an investor’s likely return on...
v Have a Question? Add it to the bottom of this post! There is a significant difference between “working capital” and “change in working capital.” Working capital is a snapshot of a moment in time which measures the level of assets a business has available to meet its...
The term “dry powder” is financial slang and refers to a company’s or investor’s highly liquid securities which are kept on hand to finance future obligations, purchase assets, or invest in opportunities. Such capital also may be kept on hand to provide emergency...
The investment banking market is made up of two sides – the buy-side, and the sell-side, both of which are responsible for researching and assessing stocks and other investments. The buy-side refers to advising institutions concerned with buying investment services....
Subordinated debt (sometimes also referred to as a subordinated loan, junior debt, subordinated bond, or subordinated debenture) is a debt that ranks below other, regular debt on a company’s balance sheet. In the event the company faces bankruptcy or liquidation,...
An asset-based loan (also sometimes called “asset-based financing” or “commercial finance”) is a type of business financing secured by an asset (or multiple assets) of the company. Often, these loans are structured to function like revolving lines of credit, allowing...
The term ‘rule of thumb’ generally refers to the idea of a principle with a broad application – something that is not intended to be exact or strictly accurate. In the business world, the term ‘rule of thumb’ refers to a guideline that provides simplified advice about...
Meaning ‘for the sake of form’, the term pro forma refers to a document that is often provided as a courtesy and satisfies predetermined minimum requirements in an effort to best predict the future outcome of a transaction within a business. One of the most common...
There are several types of loans available to business owners — so many, in fact, that the options can seem overwhelming and confusing, especially to smaller business owners without a lot of experience raising capital. This guide will help educate you on the options so you can make a more informed decision about financing your growing business while limiting added risk.
Unfortunately, owning a business does not make someone an expert in financing. The lenders are the ones who know the ins and outs of rates and terms and documents. To even out the playing field, it is important for a small business owner to ask the right questions and consider the following factors when deciding whether to refinance:
Many small business owners borrow money to start and grow their business. And is often the case those same business owners find themselves hitting credit limits established by banks and other lenders causing enormous growing pains for the business. Simply stated, running out of business capital when you’re growing a business is difficult at best.
Debt Service Coverage Ratio compliance often is required or necessitated by covenants in a bank loan agreement. A bank loan covenant regarding the debt service coverage ratio will specify the amount of income a business and/or its guarantor must generate relative to the debt principal and interest payments on an annual basis to remain in compliance with the covenant. The business owner, or his or her CFO or Controller, should monitor this ratio carefully on a monthly basis so the covenant is not unintentionally broken.
As markets recover post-recession, business owners are presented with growth opportunities. However, a business owner may not have access to the capital needed to execute on a growth strategy. Where does a business owner turn?
Entrepreneurs often face the need for alternative sources of business capital to traditional bank financing but are often unable to find them. Similarly, they can find themselves at a loss to understand how this form of capital differs from traditional bank...
The Bank Workout Group is a department in a bank that handles what is known as the bank’s special assets. Banks send their troubled loans to this department to handle negotiation and management of the bank’s forbearance agreements.
Often entrepreneurs find themselves in a situation where their commercial bank considers their existing line of credit too risky to extend or renew. This places the entrepreneur and their banker at odds, and many times pushes the business owner to take drastic steps to keep their company’s doors open and paychecks coming. Has this happened to you or one of your fellow entrepreneurs?
Many people discuss the importance of pivoting in the context of a startup business. And I agree, once a business launches, the entrepreneur must be mindful of what is working and what is not. That’s when it is time to pivot the startup.
Bankers and Entrepreneurs rarely see eye-to-eye. Recently, my observation of this unfortunate reality caused me to chuckle as I sat with one of my clients and her business banker. What made me laugh was how two extremely accomplished individuals could define the term “special assets” so differently.
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