Please ensure Javascript is enabled for purposes of website accessibility

Tag: small business financing

6 Tips for Starting Your Small Business Finances on the Right Track

Running a small business can be fulfilling — you make major decisions, you can make an adaptable timetable for yourself, and as a rule, you’re accomplishing something you’re passionate about. However, it’s additionally accompanied by its reasonable share of difficulties.

As entrepreneurs and banking administrations will often tell you, even though business proprietors recognize monetary administration as their greatest concern, most battle with accounting — yet, important in overseeing their finances. This is the way toward beginning your business on the right track, and assuming powerful responsibility for your money.

Make a Financial Plan.

Financial plans aren’t fun, however they’re critical for dealing with your income. They’re fundamentally a rundown of your projected monthly or yearly income and costs. Expecting the costs of your business assists you with keeping away from shocks, planning for the future, and recognizing and addressing areas of concern.

It’s vital to be as exact as possible with your projected income. Contrast your financial plan with your real income and expenses to get a genuine image of your small business’ finances.

Set Up Your Bookkeeping.

Tracking your pay and costs are basic measures. You’ll have the option to settle on better monetary decisions about charges, drawing a pay, financing, and then the sky’s the limit from there. There are so many free or low-cost bookkeeping programs that permit you to make the reports you want to assist you in better dealing with your income and finances.

Project Your Income.

Income issues — for example, delinquent receivables or surprising duty-related costs — can be a major torment and prompt a greater number of businesses to come up short rather than benefit. An income projection that incorporates your start-up expenses, finances, and deals forecasts, will assist you with keeping away from these issues and assist your business in flourishing. Follow up your projection with an income explanation, which is a real record of the money that enters and leaves your ledger consistent.

Make a Benefit and Misfortune Proclamation.

Make certain to track your productivity on a monthly premise. Get ready by surveying a benefit and misfortune articulation monthly, and on a financial year-to-date premise. It lets you know how well you’re dealing with your business and incorporates deals, cost of products sold, net benefit, upward and net benefit.

Capitalize on bookkeeping programming, for example, QuickBooks or FreshBooks, which naturally produces a benefit and misfortune proclamation for any timeframe as indicated by the boundaries you enter.

Conduct Banking in the Countries Where Business is Being Established.

Opening bank accounts in the countries where the business is being established can be very beneficial. Hong Kong, for example, is considered one of the monetary focuses of the world, with a strong financial framework and a business-accommodating monetary environment. Seventy of the best 100 banks on the planet have some form of operations in Hong Kong banks, and 29 multinational banks have their regional base camp in Hong Kong. The best Hong Kong banks, including their international counterparts in some cases, are:

  • HSBC
  • Hang Seng Bank
  • Bank of China, Hong Kong
  • Citibank, Hong Kong
  • Standard Chartered, Hong Kong

There are also an enormous number of foreign banks in Hong Kong. Hong Kong banks are managed and directed to guarantee banking solidness, which is an element in the general monetary security of the country.

Plan for Charges.

Set up charge accounts when you lay out your business and keep steady over them so that you’re not scrambling during charge season. Depending on your income, you might have to consider sales taxes specific to locality, for example GST/HST in Canada. See whether import charges concern you. Assuming you’re running a sole ownership, explore keeping duties and whether they apply to your business pay.

The Future  

Understanding your business finances can provide you with a reasonable image of your organization’s monetary well-being and assist with informing significant business decisions, such as recruiting representatives or putting resources into gear. Once you’ve dominated the rudiments of small business bookkeeping, you’ll be better positioned to set up your business for future development.

Is an SBA loan right for your business?

Many business owners look at outside financing as a way to manage and grow their business. Small Business Administration (SBA) loans are one avenue to assist business owners with growth plans, including business purchases, partner buyouts, business expansions, owner-occupied real estate purchases, construction, renovations, buildouts, refinancing business debt, start-up franchising and working capital needs.

If you think an SBA loan may be right for your business, it’s a good time to connect with your banker or a local lender.

Are you preparing to buy or expand a business? Acquire a building or renovate an existing space? Start a new business? Many of these growth opportunities require capital or business financing and an SBA loan may be a suitable option.

SBA loans can be more flexible and favorable than conventional lending and are designed to assist borrowers who cannot get financing elsewhere. The 7a loan program is the SBA’s most common loan program, although other options may be available or more suitable for your business needs.

What many business owners don’t know if that the SBA utilizes banks as partners to facilitate SBA loans. These loans are partially guaranteed by the SBA, which allows banks to provide financing for businesses on terms that may not be attainable elsewhere, but the SBA itself does not lend.

Here’s a list of the top eight items to compile so your banker or lender can quickly and efficiently assist in your reviewing business financing options, securing the best rates available and ensuring a smooth transaction.

1. Use of Funds: Your lender will need to understand and collect a detailed description of what the funds will used for. For example, a letter of intent or a contract for a purchase or a budget detailing purchase costs, equipment, working capital expenditures and more.

2. Current Financial Statements: If you own your own business(es), or are looking to purchase an existing business, we will need to review the financial statements of that business(es). Prepare to send an income statement and balance sheet, dated current within the last 90 days.

3. Business Tax Returns: If you own your own business(es), or are looking to purchase an existing business, be prepared to send the last three years of business tax returns for all businesses.

4. Business Debt Schedule: If you own your own business(es), please provide a business debt schedule detailing your current business loans, leases, lines of credit and any PPP/EIDL obligations.

5. Personal Tax Returns: Plan to provide your last three years of personal, filed tax returns.

6. Personal Financial Statement: Please prepare a personal financial statement showing your income, assets, and debts. You can ask your lender for a template if you do not have one.

7. Personal Resume: Lenders always want to understand that you have the experience needed to run your business so please provide an updated resume with your loan package.

8. Business Plan & Projections: Lenders want to understand WHY you need these funds – maybe you are building a new facility to host more clients or are buying a plumbing business from a retiring owner. Either way, we want to understand your short- and long-term plans for the business. It is best to include income projections with your business plan to help us understand how funding this loan with help your business grow and thrive financially. You can ask your lender for a template to get you started.

Before any lender approves a loan, they need to understand you have the experience to manage the business, the collateral to cover the risk and enough cash flow to repay your debt. While the list of documents described above is a good launching point for your financial package, be prepared to provide additional items to your banker or lender and answer additional questions around your financing request, as needed. Lenders will also review items such as credit score, history of business owners, financial strength and availability of a cash down-payment into the business.

If you think an SBA loan may be in your future, it is best to start taking any steps necessary to strengthen both your personal and business financial profile and connect with a local banker or lender to find out what options are available for you and to assist as you move towards your business financial goals.

Tomfrancis Tom Francis is a Senior Vice President, SBA and Commercial Lender for InBank. He has over 20 years of experience in the banking and financial services industry as an SBA and commercial banker assisting businesses with SBA 7a and SBA 504 loan products, commercial lending for equipment, lines of credit and other solutions for business acquisition lending, partner buyouts, owner occupied purchase and ground up construction financing. Reach him at [email protected].

How small businesses can prepare for success in a post-pandemic world

There’s no doubt that the Covid-19 pandemic impacted businesses of all sizes across the country, but none more so than small businesses.

In recognition of Small Business Month in May, we wanted to take the opportunity to look more closely at the efforts to help small businesses recover post-pandemic.

According to the National Center for Biotechnology Information, the number of active business owners in the U.S. plummeted by 3.3 million or 22% from February to April 2020.

The drop in active business owners was the largest on record, and losses to business activity were felt across nearly all industries.

Industry impact

Businesses across all industries, especially those with some of the biggest declines of employment include leisure and hospitality (48%), restaurants (48%) and taxi and limousine services (22%).

Even businesses like fitness equipment, landscape, grocery stores and liquor stores that flourished during the pandemic will have to reevaluate hiring practices and supply chain disruptions that are affecting business owners across the country.

Support efforts

To help small businesses stay afloat, the federal government created the Paycheck Protection Program (PPP) as part of the Coronavirus Aid Relief and Economic Security (CARES) Act.

Since April 2021, $762 billion has been distributed to qualified companies and paid out $5.08 billion in unemployment benefits. Today, the federal government has created the Restaurant Revitalization Fund and Shuttered Venue Operators Grant, two small-business relief programs for restaurants and live-event businesses as part of Covid-19 relief options.

Financial institutions like UMB provided support to businesses and customers in a variety of ways. Additional resources included personal loan and mortgage payment deferments and modifications, credit card repayment and payment deferral options, access to additional credit lines as well as options to increase mobile limits and refunds for service fees or charges.

There has also been a proactive push by consumers to support small businesses versus larger corporate entities that were minimally impacted by the pandemic.

According to the 2020 Cox Business Consumer Sentiment Survey on Small Business, 68% of respondents say they want to support small businesses in their community, while 70% say they plan to increase their support of small businesses as Covid-19 lessens.

Current challenges

Despite the positive moves Americans, the federal government and the banking industry have taken to help small businesses stay afloat, they still face challenges.

As business slowly starts to get back to normal and the cities and economy open up, supply-chain disruptions are taking a heavy toll on small businesses that have fewer resources to absorb or push back on price increases, resulting in revenue loss, inflation costs, decrease in a market share and production issues—ultimately impacting a company’s bottom line.

Additionally, small businesses are struggling to fill open positions based on a variety of factors including fear of contracting Covid-19, unemployment benefits outweighing part- or full-time pay and rising cost and/or limited access to daycare.

Shockingly, there are 15 million job vacancies available in the U.S.—10 million more than when the pandemic first began. Without employees to support small businesses, more of these businesses may fail.

Planning for the future

As small businesses continue to feel the impact of the Covid-19 pandemic, it’s important for owners to know they are not alone. In addition to government support and consumer buy-in, small business owners should lean heavily on their financial advisors and bankers to help them navigate these unique times.

In turn, banks need to support their clients and nurture the relationships by offering smart solutions to get them back on track.

From assisting with lending options, cash flow management to employee benefits and everything in between, trusted advisors like those at UMB are here to serve as a partner to help small business find success in a post-pandemic world.

Jacob Hymes, SVP, is the Director of Small Business at UMB Bank.