|
|
|
An Upside to the Downturn
Whether it's borrowing
money to fund expansion
plans or leveraging the
down market to negotiate
better lease terms, savvy entrepreneurs can
readily capitalize on what others might view
as challenging.
Because demand is generally down for
goods and services, prices are depressed as
well. That means everyday business costs
are lower, providing great opportunities for
businesses to rent additional or more luxurious
office space or get a good deal on that
long-desired computer consultant, not to
mention attracting highly skilled talent to
come onboard for less. There may also be
strategic opportunities for small businesses
during a downturn. Competitors who
might be struggling can become prime
acquisition targets or even possible allies
for a partnership that can increase sales. It's
also a great time, experts say, for small-business
entrepreneurs to invest in inventory
and equipment since there are many
deals to be had.
Of course, making these types of long-term
investments requires capital. Yet even
in this tough economic climate, small
businesses may have an edge. Interest rates
on bank loans are still low, although by
some indications, they may start to rise.
Government-sponsored Small Business
Administration (SBA) loans are also more
readily available for borrowers undeterred
by what some say is a daunting and paperwork-laden administrative process. SBA
Express was launched in an effort to lessen
any paperwork hassles; under this program,
bank-qualified business owners can
borrow up to $150,000 without going
through the standard SBA application
process and are guaranteed a loan decision
within 36 hours.
According to recent figures released by
the SBA, the number of loans granted in
the fiscal third quarter increased by nearly
36 percent over the same time period a
year ago, with sharp spikes in loans to
minorities, women, and veterans. Total
dollar amount for loans approved by the
SBA during the quarter rose by 2 percent,
to $10 billion, according to the
Washington-based government agency.
Leveraging home equity is another
vehicle for funding that small businesses
can leverage pretty successfully today.
Historically low mortgage rates mean
lenders can borrow against their homes,
oftentimes now for less than taking a
standard small business loan. Owners can
opt for a home equity line of credit, where
they only pay interest on money borrowed,
or a second mortgage on their
home. Both typically require interest-only
paid each month or quarter, and in many
cases, this interest is tax deductible on the
business owner's personal taxes. There are
risks, however, in tying the success of
one's business so closely to personal
assets. Yet, as a short-term strategy for
raising cash, it's a smart choice for some.
So take a look at the state of your
business. It might just be the right time to
get out of hunkered-down mode and
embrace expansion before the opportunity
passes you by.
Dollars & Sense
These resources can assist small businesses with the do's
and don'ts of raising capital:
www.sba.gov/financing
This site has soup-to-nuts information on financing options
available for small business. There are basic tutorials on the
various forms of financing and calculators for helping estimate
necessary startup costs.
www.onlinewbc.gov/docs/finance
A treasure trove of information on financing and business basics
written for and prepared by women entrepreneurs.
www.businessfinance.com
A comprehensive funding directory, which covers over 4,000
|
 |
|
|
sources of business-funding options, complete with definitions
and explanations.
www.bankrate.com
Frequently updated information on which banks and credit card
companies are offering the best rates. Also breaks information
down by city and offers advice on cleaning up your credit and
how to choose the right credit card.
www.businessownersideacafe.com/financing
The site, which bills itself as a "fun place for serious business,"
offers a bounty—a self-proclaimed 40-plus pages of tips and
tools, specifically on financing options available for small business.
There are Q&As with financing experts, a section on business
grants, calculators, and a glossary, as well as discussion
groups and features covering all angles of this topic.
|
|
Back
|
|
|
|
|
