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When you're running your own company, there are so many things that you have to think about. Keeping track of payroll, keeping your employees happy, and taking care of your existing customers is already a handful in itself. 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 level. They trust their bank to tell them what is best for them instead of learning about the options available. We've outlined some very quick tips on different financing options that every owner should know about, this will give you just enough to be dangerous.

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. You would simply borrow on your line of credit to pay payroll. It helps you maintain a good working relationship with your customers because you aren't calling them on the days leading up to payroll and it also keeps your workers happy tha they are getting a paycheck this week. 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 idea is that you use the line to ease the pain of a short term cash crunch. 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. Warning. It's easy to want to use available funds to purchase pieces of equipment or vehicles since its availble but you definitely want to only use the LOC for short term needs. Really, the line must be used only for easing the pain of the short term cash crunch. By learning how to use the RLOC correctly, you will be amazed at the advantage you can have over your competitors and how quickly you can grow your business and take it to the next level.

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. A commercial building is a great way to do that. This can help you diversify your business and invest in an asset that will continue to pay long after you've retired. In most cases this will be the biggest purchase of somebody so getting a good deal is important. The most common terms for acommercial mortgage is a five-year fixed-rate loan that is amortized 20 years. In recent years banks have gotten more aggressive, in both are pricing in terms of the loans. Most banks in competitive environments are willing to extend the amortization up to twenty-five years and give you a fixed rate term of possible up to 15 years. There are even some government options where you can put less down than a bank will typically require. This is a great option if this is going hold onto the building for more than 10 years, because there are significant prepayment penalties. The way banks will price these loans is usually some kind of spread over the treasury. For example, a five-year loan at somewhere between 200 basis points in 275 basis points above the five 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. That's why typically, the easiest thing to do is to either borrow funds from a trusted family member or to finance your start up with the use of something like a home-equity line of credit. Typically, since you have no track record and no collateral the bank will request to use your home as collateral for the loan, so the easiest thing to do is to utilize the streamlined process that banks have in place for HELOCs. You'll save yourself a lot of trouble and time going this route than trying to get the bank to buy into your business. Home equity loans typically have a lower rate, more flexible terms, and a quicker approval process. 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. Banks look at companies financial statements when making loans and that's it. If you can repay the loan based off your companies history than that's all they want to see. 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.

Dealing with the bank can be a frustrating issue that you don't want to deal with, but it does make sense to educate yourself and the various products you have available to help grow your business. In addition to bank loans are also SBA loans that can be used if your business doesn't quite fit the qualifications that the bank is looking for. While many people are fearful of borrowing money from the bank, it is smart borrowing that allows companies to grow to their full potential.