For most small business owners, there are already way too many things on their plate. There is payroll, employee issues, sales, marketing, and taking care of your existing clients. Often, it's very easy to just look past any kind of financing options that might be available to you. Small business finance is just an area that doesn't get too much attention and gets put to the side in place of more important things. Business owners take care of more pressing needs and don't step back to look at some of the solutions that are in the market that can help their company grow to the next stage. They don't educate themselves and instead let their banker tell them what's right for their business. This will give you a quick rundown of the main financing options that are available, think of it like a cheatsheet for meeting with your banker.

Most people are familiar with home equity lines of credit, and a business line of credit is pretty much the same thing. It's used to pay for short term expenses that are incurred by your business. So, for example, let's say your biggest customer hasn't paid you yet and you don't want to put too much pressure on them, but you really need to pay your employees this week. A great option would be to draw in the RLOC to make payroll for your company. This keeps both your customer happy because you are not hounding them for payment and your employees happy. When the check from your customer comes in a week or ten days later, then you simply pay back the RLOC and then you pocket the profit. The great thing about RLOC's is that they are really a savior for any small business owner. They are meant to ease the crunch of cash flow needs that typically result from waiting on receivables. Something that a lot of small business owners do as well is to take advantage of steep discounts by purchasing large amounts of inventory in bulk on the RLOC. An example would be a company that sells roast beef and their busy time is in the summer, but the low prices are in the winter. In this situation, a business owner might purchase the inventory in the winter, thus locking in low prices, and then freeze it until he needs it. This is the perfect situation where you would draw off the line of credit and take advantage of the steep discounts. When the time comes when you sell off the inventory than you pay back the line. Its a great way for business owners to be able to quickly act on great deals. A lot of small business owners misuse lines of credit by using them to purchase equipment. Really, the line must be used only for easing the pain of the short term cash crunch. By using a small business line of credit, You can greatly improve the cash flow situation in your business.

As companies grow, most owners realize that its silly to throw their money away in rent and it might be a good idea to invest their profits into a signifant asset. Purchasing your own building is a great way to invest in a long-term asset that will continue to pay dividends long after you've sold your business. In most cases this will be the biggest purchase of somebody so getting a good deal is important. Banks will try to offer you the standard terms of 5 year fixed rates and 20 year amortization on your commercial mortgage, but with some negotiation you should be able to do better than that. As bank competition has increased and banks are buying market share, you should be able to get more aggressive terms than you were able to even 5 years ago. It is not uncommon to see fixed rates up to 10 years and amortization up to 25 years. You can actually use a program called the SBA 504 loan program and get a fixed-rate for 20 years. This is perfect for the long term investor because they are locking in a very competitive rate for a long time that's sure to save them money. The only word of warning is that for this loan program you need to be in it for the long haul because the longer the fixed rate, the longer the prepayment penalty. Generally, banks will priced these loans at a spread above the corresponding treasury. An example would be aon a ten-year note, you can generally guess that your loan would be priced at 2-2.75% over the 10 year treasury. It's not uncommon to see banks asking for points when they're financing your building, but if the shop around you should be able to get away from paying much in points or fees.

Small business startup loans are something that most business owners need at some point and also something that banks generally aren't too excited about. The most painless thing that you can do when you want to fund your startup is to either find some investors (like friends or family) or to gain access to funds by way of a Home Equity Line of Credit. The reason I say this is that banks have the process for HELOC loans down pat and it's generally pretty easy to get approved as long as you have equity. For startup loans, if you can show the bank some kind of track record or collateral then they will ask for your home as collateral anyways so you might as well go with the HELOC. This will be far easier and you'll end up paying a lot less in the long run. It's quicker to get approved, there are less questions, and you can generally get a much lower rate than you would if you went the commercial route. The one objection that most business owners have to doing a HELOC is that they want to build up business credit. It comes as a surprise to most to hear that there is no such thing as building business credit. The only thing that a bank will look at when you request your first loan is your company's financial statements. So as long as you could show the ability to repay the loan based on your past financial statements, you have no problems getting a loan, and that is why I recommend a home-equity line as a means for getting the funding to start up your business.

Do yourself a favor and just learn the basics. They'll take you a long way in your business and it's worth it to learn a little bit in order to put you and your company in a better position to take advantage of loan products that will help take your business to the next level. For something that's a little out of the box, there are also SBA loans that can assist you and give the bank the assurance it needs to make the loan. Borrowing shouldn't be something you are afraid of, it's the means to growing your business and taking it tto the next level.