You’ve found some gas stations for sale and now you need financing. Many misconceptions exist about which is better for financing, SBA or conventional financing. Many people are under the misconception that SBA is somehow sub-standard financing or is expensive financing. Many people also assume that conventional loans are cheaper than a government backed business loan.The good thing is that your calculator never lies. You can always figure out which one is the best by using cost of funds and return on investment calculations.Conventional financing for gas stations and convenience stores frequently offers the advantage of an interest rate that is typically a little lower than SBA rates and normally the speed of approval and closing is usually a little quicker than that of SBA financing. There is also normally a little less paperwork involved in the process. With conventional financing, most of the time a borrower will approach a local or regional bank and the borrower will many times establish a depository relationship with the bank.The disadvantages of conventional financing are that you normally can not finance working capital, inventory and frequently you can not finance the good will. The amortization periods are usually shorter also. These notes are normally due in five to ten years. This means at the end of the note you will need to refinance.Again, your calculator will not lie to you.SBA financing usually will do a higher loan to value (LTV) than conventional financing and frequently with SBA you can finance good will or business value where many conventional lenders will only finance the actual real estate and machinery/equipment value.The disadvantages of SBA financing are the guarantee fee that you will be required to pay (which normally is 3.5% of the guaranteed portion of the loan, which is typically 75%) and it also can take longer for approval, but this typically is with banks and lenders that do not have a Preferred Lender status (PLP) but have to submit their transactions through local district offices. The interest rate you will pay will typically be higher than conventional financing.Other options are available. Stated Income financing is frequently available for this asset class, but the Loan To Values (LTV) are typically lower. You normally can not do larger loans (greater than $1,000,000)also. Most stated incomes program advertise that they will do 65% financing, but in reality it is closer to 55% because they do not lend against good will and frequently will only lend a portion against machinery and equipment. It is typically faster with minimal paperwork compared to something fully underwritten, but you also will pay at least a few points higher in rates and fees to obtain this type of financing.Private financing is also available for gas stations and convenience stores. Advantages are speed and minimal paperwork. Disadvantages are significantly higher rates, fees and lower LTV’s (typically 50-60% max).What is best for you all depends on your hot button. If all you are looking at is rate, conventional may be the best deal, assuming you have a bank or lender that will do it conventionally. If you are looking at minimal out of pocket, SBA is probably your best bet. Cost of funds can go down if the Loan To Value is higher. The return on your investment also goes up if you are spending less money out of pocket. If payment is your hot button, you’ll have to evaluate both options to see which is best for you. Conventional financing usually will have a shorter amortization period than SBA and frequently will have a higher payment. If the pre-payment penalty is the most important, SBA may or may not be the best option for you. SBA has a three year pre-payment penalty, 1st year 5%, 2nd year 3% and 3rd year 1%. Conventional pre-payment penalties will vary from bank to bank and lender to lender. Also look to see if the conventional loan is assumable as it may be easier to sell a site if the loan is assumable. Most SBA loans are assumable if there is a qualified borrower. If speed is your hot button, stated income or private financing is the way to go, but you probably will have a significantly lower LTV and will pay higher fees.If you haven’t figured it out by now, you can’t have it all, i.e. rate, fees, term, speed, pre-payment penalty. You can though most likely obtain a good loan if you are a qualified buyer. In all cases, presentation goes a long way to obtaining the best possible loan.
Choosing the Right Money Generating Home Based Business
Starting a new home based business can be exciting and scary. Deciding on the right business and learning how to run it profitably are just a couple of the tasks new home based business owners must tackle. Most of the people starting a new business from home have never run a successful business before and it’s not as easy as most people think.The first question most grapple with is, “What is the best business?” Most try to decide based upon what they feel they can earn the most money with. Others start by looking at the funds they have to invest and then look to find a business that fits their budget. Making a decision based on either of these factors will almost always lead to business failure.Most people never make a profit with a new home based business. The three main reasons for all these failed businesses are as follows.(1) Most people choose a business that is a poor match for them.
(2) Most people are marginally committed to their business success and fail to perform the tasks they are required to do.
(3) Most people who try to stick with their new business complain that they did not get the support they needed to be successful.Choosing a business is a bit like choosing a mate. A successful relationship is not based on choosing the potential partner who makes the most money or who can be bought cheaply. There has to be a match there and it is the same with choosing a home based business. Novice business owners should choose a business they have a passion for.The right business will match up with the owner based on his or her interests. The successful business owner will also choose a business based on the available business models available. For example, someone who does not like the idea of calling strangers on the phone should not choose a business where those activities are required. If the business owner does not like performing the basic tasks required, they will soon fade away from performing them and hence, will kill their business.Novice home based business owners need to tap into an extensive support system. They need to learn what to do, how to do it and they also need to learn the pitfalls so they can avoid them.Written manuals are a good start. Live group training over the phone is also good. Group training lets you feel that you are part of a community with others who are starting new businesses.More and more models are offering live web-based video training. This is more effective than audio only phone calls. It’s almost like being in the classroom with the fellow students. Those attending can see exactly what the instructors are doing and they can ask questions if something is not crystal clear.Some models record training so novice business owners can watch segments over and over again. Video-on-demand training is also a great backup if the new home based business owner is unable to attend training live. The training may originate from a different time zone that is not convenient for some students to attend live.All of the support described here is more than most novice home based business owners have available to them. Group training is great, but for those who can’t afford to be without the best support available there is one more thing they should have—a mentor.People need group training and documents, but there is nothing like having direct access to an experienced mentor who is already doing what the novice hopes to do. Being able to get quick answers to questions that come up in the day to day operation of a business is priceless.Business failure statistics are staggering. However, with the right one dedication and support system novice home based business owners can persevere and rise to the top.
Can A Franchise Finance Business Loan Be Creative? Here’s How Canadian Franchise Finance Works!
Is it actually possible to get ‘ creative ‘ when considering a franchise finance business loan for you new Canadian role as an entrepreneur in franchise financing? There are some tried and trusted rules we use in the franchise lending area, but a little creativity has never hurt anyone we believe!If you haven’t considered how to finance your new business in the franchise industry then we feel it’s probably a little too late in some ways, as your ability to finance your business properly we think has a lot to do with the ultimate growth and success of your business. There are very focused lending sources for the franchise area of financing in Canada – the trick of course is to know what they are and more importantly how you can navigate the ‘ maze ‘ successfully.The reality is that if you have some industry experience in your new business and a proper finance plan you have a much better chance of financing your business properly.So, who can you turn to in terms of creativity and resources for franchise financing? Clients are amazed when we tell them the most creative partner in franchise financing in Canada is none other than the Canadian government!How could that possibly be? Simply because a program guaranteed by the government and administered by the banks could not be any more creative than this.The program is the ‘BIL’ loan program, and it provides you with financing up to 350k for your new business. Are the terms onerous? Hardly! The essence of the program is a 5-7 year term loan, with great rates, limited personal guarantees, and some other elements of flexibility. If that isn’t creative then we don’t know what is!Naturally all the creativity in a business loan of that type for your franchise finance scenario should not be reliant on just one lender – the other lender is someone you know very well. Yourself. That’s simply because when you look at the total financing of a franchise in Canada the two components are simply debt (the funds you have borrowed) and the equity, or money you have put in yourself. These equity funds, i.e. your commitment to the business, typical come from savings, the proverbial ‘ friends and family ‘ support, and investments or collateral that you have available.Getting back to our key subject of creativity, our above noted BIL loan program only covers certain aspects of a franchise finance scenario. You can augment that loan with flexible equipment financing that has low down payments and extended amortization terms, as well as, in some cases, a working capital term loan.We never forget to remind clients that the franchise financing plan is a two stage process, acquiring the business, and making sure they have some capital and funding to operate and grow their new business.In summary, you can be creative when you are looking for info on how Canadian franchise finance works. You need knowledge on what funding sources are available that are specialized to the franchise industry, and assistance in executing a proper financial plan. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in maximizing that creativity!
Are You Choosing the Right Stock Market Advisory Company
What do you do if you want to learn driving a car? You will try to find an expert teacher, isn’t it? You do not want to avail the services of a novice individual to help you out, but a professional person can provide you the vital tips and most importantly guide you efficiently. Similarly, when it comes to investing in the stock market for the first time, you require a knowledgeable advice to attain your financial goals and get profitable returns.
If you are a beginner, then it is quite obvious that you may be having no information about the process of buying the right shares in the market. In such a situation, getting the right tips from an experienced financial advisor or a registered advisory company will truly prove to be a great blessing in disguise. However, there are some of the important things that have to be kept in mind while choosing the top stock market advisory company, which are as follows:
How much assistance do you actually require?
Before you make up your mind to hire an advisor, it is imperative that you must first decide about the kind of service you require from them. You may need their help at the beginning or during the time of any issues. This is because an advisor has to formulate a map according to your requirements. Hence, it is suggested to ascertain your needs first and then take further action.
Choose a top ranked advisory company
It is a very important point that has to be taken into the consideration. Availing services of the well known advisory company or a financial advisor is an absolute necessity. Make it a point to carry out a proper background or research work about the company. Check out their credentials, reputation, experience, etc before hiring them.
Asking for a sample financial plan initially makes sense
When hiring a financial advisor, then do not forget to ask for sample plan first. It is imperative to note that there is no such thing called the perfect plan. A sample plan will help you to determine whether an advisory company is actually making sense according your requirements or not.
The financial planners or advisory companies can really turn out to be the greatest asset for you if you choose the best one. They are just like the professional sailors who can help you out to sail through stock investment related problems quite efficiently.
Deepak is a financial advisor who likes to provide quality tips to the people facing any issues with regard to investing in the stock market. He likes to keep himself updated about the stock market by reading articles, news and blogs, etc.