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Wednesday, March 19, 2008

Getting Your Startup Paperwork in Order

Entrepreneurs aren't known for being lazy, but most entrepreneurs I know are notoriously lazy about doing legal paperwork. But there's no place for laziness when it comes to getting licenses and permits for your business. It might seem like an insignificant detail or a waste of money, but it's necessary. This article provides some information on the types of licenses and permits that small businesses need and how to go about getting them cost-effectively.

The majority of small businesses in operation today are required to have one or more permits to ensure that they meet government-mandated guidelines for safety, soundness and tax. Generally, there are licenses and permits that you need to be aware of on the federal, state and local levels.

Federal Registrations and Licenses

Small businesses typically don't have to worry about safety and soundness licenses on the federal level, but every business should be aware of federal tax registrations. The first tax registration is the application for an Employer Identification Number. This is done on Form SS-4, found on the IRS's website, and should be filed by every business. If you're a sole proprietorship, you can use your social security number instead of getting an Employer Identification Number; however, this is not advisable if you want to keep your personal and business affairs separate. If you like the idea of separating business and personal but are concerned about the impact this separation will have on your taxes, consider incorporating as an S corporation, which will allow you to flow certain business losses to your personal income. You can learn more about how to register as an S corporation and how this varies from other forms of incorporation here. If you decide to register as an S corporation, you'll need to file Form 2553with the IRS.

State Registrations and Licenses

Besides the licensing of professional occupations such as doctors and lawyers, many states require licenses for people such as hairdressers, mechanics, private investigators, real estate agents, tax preparers and more. Since the list changes across the different states, you'll need to check with the state you live in to find out the specific requirements. If you have the funds to consult with an attorney, this is the safest course of action. The least expensive way to get this information is to check with your local SCOREchapter or local SBDC, since the individuals who work in these offices will have guidebooks on licensing for your state. For example, the Pioneer Institutehas produced a detailed guidebookon licensing procedures and regulations for small-business owners in Boston. It's useful to read through this free guidebook to get a sense of the types of regulations and permits you might need, particularly if you're starting one of the following types of businesses: day-care center, barber shop, beauty salon, caterer, cleaning service, sewing shop, shoe repair, flower shop, livery, small grocery store, street vendor or TV repair shop.

Some permits are registered under the name of the business, while others, such as permits for hairdressers or accountants, place obligations on the individual entrepreneur to register in his or her name. Generally, permits for the individual are needed for occupations and trades that require specific skills, examinations or ethical guidelines that are linked to the individual providing the services-such as standardized testing for accountants or proof of training for doctors. Keep in mind that both individual and business licenses expire and may require retesting before renewal is allowed.

State tax registration is another issue you'll have to make arrangements for, unless you live in one of the few states that don't assess income taxes. Otherwise, you'll need to register under your state's income tax laws. Check the website for your state's Treasury Department or Department of Revenue for details and forms for doing this.

If your business needs employees, your state's Labor Department can grant you the appropriate registration as an employer. Generally, if you use a payroll company to process checks to employees, this registration is provided. Even if you do your own payroll, once you file a tax return, your state's Labor Department will usually send you a form.

Local Licenses and Permits

Although usually not a huge concern, local taxes can be thorns in your side when you're trying to start a company, particularly if you don't address them right away. The city or town may leverage property taxes on the equipment and other assets that your business owns. Some cities charge taxes on inventory, gross receipts and income. Be careful about avoiding these taxes by claiming ignorance. You may be liable for back taxes.

In addition to the Department of Revenue, there are other departments on a local level that grant licenses, including:

- The Health Department: If your business is a restaurant, catering service or other establishment that provides food preparation or sales, you'll need to be licensed through your local Health Department.

- The police or fire department: If your business attracts large amounts of people, you may need to obtain a license from the local police or fire department.

-The building and safety department: Renovation of any kind almost always requires a permit that states you're complying with local building ordinances and codes.

There's no doubt it's cumbersome to track down all the relevant licenses and permits you may need for your business. Despite my advice, I know that most of the entrepreneurs reading this column will sidestep the licensing process and consciously take on the risk of having to pay back taxes or penalty fees for noncompliance. I suppose that's better than ignoring licensing because of laziness.

Asheesh Advani is president ofCircleLending, a loan administration company that facilitates personal loans, small-business loans, and mortgages. He and his company have written theSmall Business Financing Guidefor startups and have helped small businesses in more than 30 states launch and finance their growth.

The opinions expressed in this column are those of the author, not of Entrepreneur.com.

Raising Funds For Your Invention

Fund raising is an important step in the invention process, and one that should not be taken lightly. Accepting money from outsiders often comes with strings attached. Therefore, it is important to A) decide the absolute lowest amount of money you can work with, and B) take not a penny more.

That said, there are several potential funding sources that are worth discussing. We will begin with the most glamorized (and also least understood) source: venture capital.

A venture capitalist is someone who invests large sums of money (usually $500,000-$2,000,000 at a time) into a business in exchange for a significant equity stake. In effect, they are "buying" a piece of the company. Venture capital often seems like a very attractive financing option because, entrepreneurs reason, "with all that money, how can we go wrong?" However, there is more to a venture capital investment than the dollar figures involved. Many of them are extremely controlling and insist upon inserting their own personell into the company. Take this quote from a 2002 Wall Street Journal article, written by Barnaby Federer:

"If you ask a VC what value they add, and you get them after a few drinks, they'll say, 'We replace the CEO' ", he said. And that, he indicated, does not vary with the economic climate.

Clearly, this is something to be mindful of when seeking VC funding. Still, there are definitely situations where VC funding makes sense and is beneficial to use. If your invention is very capital-intensive, for example, there is often no other way. Many venture capitalists also have invaluable industry connections that will make your life easier. Still others (like Y Combinator) reject the typical controlling mindset and more or less let the founders man the controls. So how can you increase your chances of getting funding from them? In a word: cash flow. If you do not have cash flow from your business already, you want to demonstrate, as concretely as possible, how you will get it and get it soon. To a VC, cash flow is king: it separates dreamers from doers. Therefore, this is what you want to emphasize in your business plan. The more clearly you can illustrate how their investment will lead to significant profits, the more likely you are to get funding. You should also only target venture capitalists in your sector. No matter how great your pitch is, it wont get funding if the investor in question does not work in that field.

The following website is an excellent resource for anyone seeking venture capital. It explains what it truly takes to get funding, drawing on first-hand accounts from real founders who have already done it. Additionally, it is a splendid refutation of the many "layman's myths" people have about venture capital. This, in turn, will make you smarter about what venture capitalists look for and find important. SRC: http://www.antiventurecapital.com/venturecapital.html

Another (less stressful) way to raise funds for your invention is to get an angel investor on the team. An angel investor is a private individual who makes smaller investments (typically $150,000-$1.5 million) to new businesses. They are often a bridge between self-funded stage of the business to the point where your funding needs reach the level a venture capitalist would offer. In addition, angels also provide expertise and industry contacts to help you along. One major advantage of using angels over venture capitalists is angels, generally, take more of a hands-off posture. They will provide money and guidance, but for the most part let you run the business as you see fit.

If angel investors are something you would like to look into, there are directories of them available for free online. This one, from INC.com, is segmented by geographic locations so you can find angels in your own area.

The other way to raise money is as old as money itself: getting it from friends and family. While this is often the easiest method, it should not be done on a whim. You should only accept money from friends and relatives if they fully understand and accept the risks, as well as the rewards. New business ventures are far from a sure bet, and it would be dishonest to take money from people who think they are. It could also lead to lawsuits if the business tanks and the friend in question feels cheated. As long as these issues are addressed, however, friends and family are a terrific source of funding for new inventions. The best way to make it happen is to promise them a certain percentage of future profits. The more they give you, the higher the percentage. This way, they can feel that their investment has purchased a tangible claim on future returns.

Of course, which funding option you pursue depends largely on your needs. If you only need a few thousand dollars or so to get started, it would be foolish to seek venture capital funding. By the sake token, if you need to open a factory, there may be no other way. The best approach is to think long and hard about your financial needs and let that determine how you raise money.

Eric Corl is the Founder and CEO of Idea Buyer, a marketplace for new technology and products that allows inventors to showcase their intellectual property to consumer product companies, entrepreneurs, retailers, and manufacturers at http://www.IdeaBuyer.com You can email him at EricCorl@IdeaBuyer.com

Small Business Loans - Get Wings For Your Creative Ventures

Innovation is the name of the game when it comes to the commercial field. Setting up a business and being successful requires conviction in oneself. If you too have some innovative idea that you want to give shape to but are lacking the finance, you can take up small business loans to assist you in your feat.

The borrowers who are interest in setting up a new venture may like to put their idea into practice without putting any of their assets into risk. So for this, these loans seem to be the perfect idea. Since these loans involve small amounts, there is no requirement for the borrowers to pledge any assets with the lenders. This would mean a completely no risk situation for the borrower and thereby be very suitable.

Through these loans, the borrowers can take up money for any purposes that arise in the business of the borrowers. any needs like payment of labor, packaging of finished goods, getting raw materials, purchase of new machines etc can all be fulfilled with the money that is borrowed through these loans.

The borrowers while taking up these loans should rather research well for the lenders of these loans. It is very important to determine the reputation of the lender as there should be no problem in the way of the business of the borrower. Also, this research can help the borrower in getting lower rate deals as there are numerous lenders in the market who are ready to lower their rates.

The borrowers with adverse credit can also take up these loans for their needs easily. The rates that are charged for them on the borrowed money are higher than usual but it is still worth taking up the loans as there is a great chance to restore your good credit by timely repayment. Moreover low rate deals can be researched for easily through the online mode.

With small business loans, the borrowers can get money for their plans and aspirations easily. No collateral is required for the money and bad credit is also not an obstruction.

Michael T. Brian is the author of this article. He is Masters in Business Administration and expert in finance. He writes about various finance related topics.

How To Finance New Business Equipment

Every business requires equipment at some point. Your business may need computers, vehicles, manufacturing machines, factory equipment and is entirely dependent on the type of business you are running.

Imagine the business equipment needs of a simple business like a coffee shop, for example. You'll need to acquire, in addition to business premises, one or more good quality coffee makers or espresso machines, tables and chairs for your customers, refrigeration units, storage units, a dishwasher and mugs and serving ware. That's quite a list, and quite an outlay for a new business - all before you open your doors. There are, however, a number of different ways that you can acquire equipment and other assets for your business without having to part with your liquid assets by making payments up front.

Operating Lease

An operating lease allows you to acquire the equipment you need for your business without a large initial outlay. In addition, you get up to 90% of the resale value.

The advantages of an operating lease include:

-lower rental fees
-the ability to use the equipment without owning it
-there is no need to dig into other lines of credit to finance a purchase
-your rental fees may be deductible from taxes as operating expenses
-there are other tax advantages, including avoidance of depreciation

Asset Finance Lease

A finance lease allows you to use the equipment you need without owning it. When the lease ends, you may get a percentage of the resale profit in the form of a rental rebate.

The advantages of a business asset finance lease for your equipment include:

-Low initial expenses
-Easily arranged through many vendors
-Monthly fees are a fixed expense
-Leased equipment is a balance sheet asset
-Maintenance contract is often included as part of the monthly rental fee
-Use of equipment without ownership
-Rental fees may be deducted from taxes as operating expense
-Frees up or preserves other lines of credit for other uses
-A percentage of resale price may be available as a rental rebate

Hire Purchase

Hire purchase represents an excellent way to acquire equipment without paying the entire cost up front. The advantages of hire purchase include:

immediate use of the equipment that you need
fixed or variable rates of interest available on loans
the interest on your commercial loans may be tax allowable
consistent monthly payments make bookkeeping easier
ownership of the asset at the end of the payment term
can often be tailored with payment holidays or stepping payments to allow the equipment to start generating profits
balance sheet asset

Most manufacturers and suppliers will work with you in many different types of finance and purchase arrangements. Once you know the type of equipment you need, shop around to find out what finance and purchase arrangements are available to you. A trained business consultant may be of use in helping you decide between asset finance and hire options.

Discover how your business can purchase new assets and equipment without affecting working capital using UK asset finance leasing. Visit Cash4Business at http://www.cash4business.co.uk to find out how your business could benefit.

Business Fundraising - Network With Your Capital Providers Before You Need The Money

Often entrepreneurs will be in the process of building their businesses and suddenly be struck by a need for cash. The business wins a big contract or general growth has increased in speed. On the down side, the slower economy slows sales growth or customers slow down their payable cycle. Either way, this is not the time to go looking for capital.

If you ever believe you may need capital, the time to start the process is now, be it debt or equity. Take the time to get to know your banker. If you bank at a large bank, such as Bank of America, get to know the local branch manager. Find out how they process business loans. If there is a local loan officer, ask to meet with him or her. Find out what the lending standards are.

Large banks may allow the branch to approve loans up to a certain amount. Higher amounts may be kicked up to the regional or corporate offices. It would be a shame if you were denied a $60,000 loan by a corporate office, but you could have gotten a $50,000 loan approved by the local branch.

Finding a smaller local bank that focuses on commercial accounts will also improve you chance of getting a loan. You can get to know the lending officer personally and keep them informed of your business on a regular basis. If you are meeting your expected revenue milestones, your lending officer will be more likely to believe your plan in the future.

Equity capital is also a relationship business. If you think you may need some friends and family capital in the future, ask your potential candidates to sit on your advisory board. You get their advice and allow them to see you in action. Additionally, you get the experience of working with them, which may lead you to decide that you would not like them to be an owner in your business.

If you are interested in venture capital, make it a point to get to know some venture capitalists. Although reputed to be stand-offish, they are most afraid you are going to ask them for money. If you are just networking, many VCs will be thrilled to meet with you and give you advice and the benefit of their experience.

You can start with networking events put on through your local technology council (or similar state/city entrepreneurship group). You might try presenting at a venture forum. This gives you both practice and gets your name into the venture community. Volunteer to be a mentor in local entrepreneurship organizations. They often hold group meetings and you will get the chance to meet VCs on an equal footing.

Getting a bank loan can take four to eight weeks and raising venture capital can take six months to a year, sometimes more, so having your foot in the door can really help move the process forward. Don't wait until you need money to start looking, it will be too late.

Ms. Worrall is the President of Worrall Consulting, LLC. Worrall Consulting is a finance and business strategy consultancy providing professional services to high growth, early stage companies. The company provides capital formation assistance, market research and business intelligence, and business planning strategy. More information about the company can be found at http://www.worrallconsulting.com . Additional financial and strategy advice can be found at http://www.cfoyourself.com

Business Fundraising - Network With Your Capital Providers Before You Need The Money

Often entrepreneurs will be in the process of building their businesses and suddenly be struck by a need for cash. The business wins a big contract or general growth has increased in speed. On the down side, the slower economy slows sales growth or customers slow down their payable cycle. Either way, this is not the time to go looking for capital.

If you ever believe you may need capital, the time to start the process is now, be it debt or equity. Take the time to get to know your banker. If you bank at a large bank, such as Bank of America, get to know the local branch manager. Find out how they process business loans. If there is a local loan officer, ask to meet with him or her. Find out what the lending standards are.

Large banks may allow the branch to approve loans up to a certain amount. Higher amounts may be kicked up to the regional or corporate offices. It would be a shame if you were denied a $60,000 loan by a corporate office, but you could have gotten a $50,000 loan approved by the local branch.

Finding a smaller local bank that focuses on commercial accounts will also improve you chance of getting a loan. You can get to know the lending officer personally and keep them informed of your business on a regular basis. If you are meeting your expected revenue milestones, your lending officer will be more likely to believe your plan in the future.

Equity capital is also a relationship business. If you think you may need some friends and family capital in the future, ask your potential candidates to sit on your advisory board. You get their advice and allow them to see you in action. Additionally, you get the experience of working with them, which may lead you to decide that you would not like them to be an owner in your business.

If you are interested in venture capital, make it a point to get to know some venture capitalists. Although reputed to be stand-offish, they are most afraid you are going to ask them for money. If you are just networking, many VCs will be thrilled to meet with you and give you advice and the benefit of their experience.

You can start with networking events put on through your local technology council (or similar state/city entrepreneurship group). You might try presenting at a venture forum. This gives you both practice and gets your name into the venture community. Volunteer to be a mentor in local entrepreneurship organizations. They often hold group meetings and you will get the chance to meet VCs on an equal footing.

Getting a bank loan can take four to eight weeks and raising venture capital can take six months to a year, sometimes more, so having your foot in the door can really help move the process forward. Don't wait until you need money to start looking, it will be too late.

Ms. Worrall is the President of Worrall Consulting, LLC. Worrall Consulting is a finance and business strategy consultancy providing professional services to high growth, early stage companies. The company provides capital formation assistance, market research and business intelligence, and business planning strategy. More information about the company can be found at http://www.worrallconsulting.com . Additional financial and strategy advice can be found at http://www.cfoyourself.com

Business Angels vs Venture Capitalists

Have you these amazing ideas which you're sure you can put into practise and make a living out of your ideas. If so you're more than likely looking into financial help to put these ideas into practise. You may think bank loans, credit cards and loans off family and friends are the only options but Business Angels and Venture Capitalists are also a good option to consider.

Business Angels what are they you may ask, they often work as individuals who themselves are entrepreneurs and have made their dream come true in whatever business sector they chose. They have now have the experience and financial backing to help other entrepreneurs to start their own business just like themselves years ago.

Venture Capitalists are very similar to Business Angels they are often from an entrepreneur background have made a successful business and now would like to give back to other entrepreneurs and help them with finance for their new start-up business.

So you're asking what is the difference between them both, they are:

Business Angels - Give you the financial help you need when you need it, and invest their own money in your business. If it works within an angel network the angels will pool together with their investment as well as sharing research they each do. Angels understand the needs of a new business as they have been there themselves and therefore they not only offer financial help but they can offer good advice when no one else will.

Venture Capitalists - Give you the financial help you require when you need it but uses pooled money them and others have in a professionally managed fund. Venture Capitalists like to take an active role in the business they are investing usually being a director or on the management board of the business.

So if you're looking for some financial help for your new start-up business or even your struggling business you don't just have the options of:

• Family
• Friends
• Banks
• Loans
• Credit Cards

You have the option of using a Business Angel or a Venture Capitalist. Which ever one you decide to use the only way you're going to show your serious in wanting their help is to have a well planned and thorough business plan.

A business plan will not only be used to show your investor what you planned ideas are and your predicted returns in the next few years will be it will also be used for you to run your business well. It will show others what your initial goals were and if you succeeded in these as well as any risks you planned for and if any of these actually occurred and if they did, did you cope ok with rectifying the risk.

It shouldn't just be placed in a drawer and forgotten about it should be regularly updated. Your business will continue to change and usually out of your control and you should reflect on these changes within your business plan. You should have contingency plans to deal with any external influences that would affect your business and the way in which you run it.

You should now be a little wiser of the facts of the difference between these and how they can help you.

Jene Pedder is the Webmaster of Angelstartups who specialise in helping you find a Business Angel or Venture Capitalist.

Please feel free to republish this article provided a working hyperlink remains to our site.

Starting a New Business Requires More Than Just A Good Idea

The most important thing you can do to prepare for starting and operating your own business is to develop a business plan. This can take time and energy, but it forces you to really solidify your business idea. You can carefully plot exactly what your business, financial and expansion goals are. And this will help you progress in all other areas of starting your business as well. Without funding for startup costs, many successful businesses would never have been able to even open their doors.

Once you've done this, you will realize the significance of unsecured start up funding. Rarely does an individual have the savings or personal resources to put a business plan into action completely on their own. Often, even when one thinks this is the case, deeper development and planning dissuades this initial thought.

Small business funding can be a rather involved subject, filling shelves upon shelves of books at libraries and bookstores. The truth is though, you don't need a how-to book to get good funding. You simply need a good lender. Being able to determine once is what really counts.

A unsecured small business start up loan gives you the startup funding you need, but getting a startup business loan can sometimes be more difficult than it seems. Most lenders today require collateral for small or large start up business loans, but collateral may be something you have never thought of before. When you obtained a mortgage, your home served as the collateral. When you got a car, the vehicle was the collateral. But when you're seeking a new business loan, you probably don't have the commercial collateral you need yet. Your only option then is to offer your personal assets as security for the loan-which is a risk you understandably may be hesitant about.

Collateral is often the biggest obstacle to the prospective business owner. Not only does a new business not yet have any commercial collateral to provide; but it is asking a lot for an entrepreneur to put his hard earned personal assets at risk in order to start a new business venture. Yet, without collateral, getting a unsecured business loan can sometimes seem impossible.

The good news is, though rare, some companies have specialized programs for exactly this scenario. An unsecured business start up loan can get a new business owner the funding he needs to cover initial business costs, without having to provide collateral and place his or her assets risk. With this type of financing plan, the lender utilizes something the borrower has worked hard for and should be able to take advantage of - his good credit. With this approach, the lender can still an unsecured business start up loan at great rates and with a variety of programs.

The small business loan application process can also be made difficult by the imposition of restrictions on how the loan proceeds can be used. This takes away the borrower's freedom to use the funds as he or she may have seen fit. You can escape these hassles by using an online application for a unsecured small business loan.

Today, web lenders offer a new window of opportunity for small businesses and individuals that need a fast start up loan approval process. Time is money! Lenders now offer cash in as little as 72 hours, with no tax forms, no business plans, and no collateral! Such lenders offer the straightest line to unsecured business loan funding, at great rates. In the modern world, financial products as efficient and dynamic as the business world must be available.

Applying for a unsecured small business loan is easy, all the business owner need to do is just go on line and submit their loan details. Then the lenders will refer back to you with the loan decision in a few days.

Wardell Brooks is a current unsecured small business loan analyst for America Funding Network. He has been working in the financial sector for several years. His experience includes banking, mortgages, and sub prime lending. http://www.venturecapital.20m.com

Raising Venture Capital - The Alternative Golden Rule

The economic translation of the Golden Rule is "he who has the gold makes the rules." If you are raising venture capital, then you need funding. The more you need it, the less control you will have at the end of the day.

A typical entrepreneur scenario I see is: 1) I have a great idea or product and I'm going to start a company although I have no monetary resources myself to put into it.
2) I can scrounge up a hundred or two hundred thousand dollars through loans, grants, credit cards, a few early sales, etc. 3) I've worked on this for a year now and can really see the potential if I only had the money to hire salespeople, build a factory, hire production employees, buy servers...and 4) I've worked for a year and a half and I am tired of being poor, but I don't want to give up on my idea. Hey, I'll raise venture capital.

At this point, the entrepreneur is pretty close to desperate and is willing to give up just about all control to get a decent, steady salary. The other scenario is the company has already raised some amount of money, either friends and family or angel and the money is running out. This entrepreneur is really desperate and is willing to give up just about all control to keep his or her business alive.

Venture capitalists are not really big risk takers. They carefully evaluate every investment and the management team before deciding to invest. Once they have decided that the business has a decent chance of succeeding, they insist on a variety of controls to ensure that they can keep a tight rein on the business, including replacing management if necessary.

Even if the VC owns only a minority of the shares, they will include in their investor rights agreement certain voting rights and protective provisions (see my post on Elements of a Term Sheet for definitions) that will ensure them the ability to protect their investment.

If you are planning to start a business and believe that you might want to raise venture capital someday, you can do several things to avoid losing your company. First, have a plan for growing your company without venture capital. You may not be able to raise it, but if you are and you don't like the provisions in the term sheet, you can walk away.

Second, if you do raise venture capital, be careful with your selection of investor. Make sure that the investor is honest and treats his or her management teams with respect and fairness. Once you have a term sheet, you can ask for a list of their CEOs' contact info. If the VC is reluctant to give references or will only give a couple, you might want to look for another investor. The CEOs will give you the honest opinion of the VC, so make sure you follow up.

If you are going to put your blood, sweat and tears into a company, you don't want it taken away by an unscrupulous investor just for a few investment dollars.

Please visit my website for more small business finance advice: http://cfoyourself.com

Financing Your Company Without Giving Up Equity

Many business owners think that the most effective way to finance their companies is to secure venture (or Angel) financing. Venture capital has a number of advantages, however, there are two major disadvantages that should be considered. The first one is that venture capital is very hard to obtain. The second disadvantage, which is the focus of this article, is that venture capital requires that you give up an equity stake (ownership) and some control to the venture company. Many times, the ownership stakes that VC's require can be substantial, leaving the founders in a minority ownership/control position.

There is an alternative to venture capital that is often overlooked. It's a form of business financing that provides you with the capital you need to cover operating expenses and grow your company. It's easier to obtain than a business loan or conventional venture capital funding. The catch is that it only works for certain types of companies.

Does your company sell its products to other companies or to government entities? If you do, then you are familiar with the fact that most companies pay their invoices in 30 to 60 days. However, while waiting for payment, you still need to pay suppliers and employees. Few startups or growing companies have the necessary reserves to cover expenses while they wait to get paid. This restricts their ability to grow and capitalize opportunities. This is where factoring your accounts receivable can help you dramatically.

Invoice factoring, as it is commonly referred to, provides you with an immediate advance on your invoices. Factoring eliminates the need to wait for payment and provides you with the liquidity to pay suppliers and employees. It gives you a solid financial footing that enables you to take on new business opportunities.

One of the biggest advantages of factoring receivables is that it's fairly easy to obtain. To qualify for it, your company must do business with credit worthy clients, such as large companies or government agencies. This is the most important requirement because your invoices to those clients are used as collateral.

A substantial benefit of receivable factoring is that you will never have to give the factoring company any equity or ownership in your business. Once you meet your business objectives - you can finish your relationship with the factoring company with no further obligation.

The cost of factoring varies based on a number of parameters, such as the amount of financing you need, the credit quality of your clients and the stability of your company. As a rule, monthly rates go from 1.5% to 3% based on these criteria.

If your company sells products and wait up to 90 days to get paid, you should consider factoring as an alternative to finance your company.

About Commercial Capital LLC

Marco Terry is the Managing Director of Commercial Capital LLC, a leading accounts receivable financing company.

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Cathy Harris is an Empowerment and Motivational Speaker, Non-GMO Health and Wellness Expert, Self-Publishing and Business Coach.