The next day maybe you received a phone call or a curt email letting you know you had been declined. It’s frustrating, especially when you need working capital. Your cash flow has been depleted and it’s making it difficult for you to pay employees, get inventory, and keep the lights on.

When you don’t understand why your small business loan was declined, even though you have almost stellar credit, it can be even more frustrating. Here are a few simple reasons why this might have happened to you at this time.

1. You don’t have enough cash flow.

One of the reasons you needed a small business loan was because of limited cash flow, but it’s like a Catch-22; if you don’t have cash flow, some lenders don’t want to loan you more. If you have low revenue and are not making many deposits, these are often considered red flags for lenders.

2.You haven’t been in business long enough.

If you’re a relatively young business (even though you’re not young yourself), that’s not going to work in your favor when seeking funding through a small business loan. Maybe your business has been successful for the first six months of its operations, but that’s not enough for a financial institution to ‘take a chance.’

3. It could have something to do with industry restrictions.

There may be industry specific restrictions that limit your ability to get a small business loan. If your business operates within an industry that has specific restrictions on loans, you may need to seek alternative funding sources.

4. Your business plan was not clear or focused.

A business plan will tell a prospective lender exactly what’s been going on, what your goals are, mission, and plan to achieve those goals. If the business plan is not well written, is not concise, or does offer clarity, there would likely be numerous questions from the approval committee about how this loan would work in their favor.

The more you understand about why you might have been declined for a small business loan, the more effective you may be moving forward and getting the funding you need.

The post Top 4 reasons why your small business loan application was declined appeared first on Par Funding.

Unfortunately, not enough business owners are intimately familiar with their cash flow or even understand all the various components it entails.

Let’s talk about cash flow metrics.

Your cash flow is basically defined as your current assets minus your current liabilities. What are current assets? They are defined as the money you have on hand, in the bank, current Accounts Receivable, inventory, the building itself (if you happen to own it outright) and other equipment you use every day for operations.
Now, liabilities are Accounts Payable and other long-term liabilities you have on hand. This could include various business debts, including a direct business loan or line of credit.
When you divide your current assets by your current liabilities, you will be left with a ratio of assets to liabilities. This is your cash flow metric.

What should be the goal?

A healthy business should aim for at least twice as many assets as they have in liabilities. In other words, this would be a 2:1 ratio.

What about for small, relatively new businesses?

Most small, new businesses struggle to even come close to a 2:1 ratio. That’s because their liabilities often outpace assets and Accounts Receivable, at least in the beginning. However, by keeping a closer tab on these cash flow metrics, it can help a business owner or manager notice trends, whether their ratio is going up or down, or when they begin operating below 1:1 limits.

If a business is operating below 1:1, then they are operating at a loss.

Now, how can you address a cash flow problem?

The first thing to do is understand exactly where all of your expenses are. You need to be clear on where your money is spent.

Second, take a look at how other businesses are spending, especially within your industry. You may discover there are certain expenses you thought were necessary that other competitors are simply not focused on.

Third, become a micromanager, of your spending that is. The strongest and most successful leaders understand micromanaging is a poor idea, but when it comes to your spending when you want to increase cash flow, micromanaging is crucial.

The more you understand about cash flow, the more effective you can be at helping your business not just survive, but thrive.

The post How Much Do You Understand About Your Business’ Cash Flow? appeared first on Par Funding.

There are ways to capitalize on this and take full advantage of what these holidays have to offer most businesses. One of the first things is to be prepared.

Offer deals both online and in store.

More and more consumers are shopping online these days than ever before. Neglecting or even discounting online business is often done at the peril of the business owner or manager. While it’s important to have incredible deals, especially for Black Friday, which is the day after Thanksgiving in the United States, it’s also crucial to remember to add those deals online as well.

It’s also a good idea to consider different types of deals for in-store and online, rather than just running same special at both places.

Analyze last year’s data.

If your business has been around for several years, you should have quantifiable data for not just last year, but years previous also. Look at what worked. Analyze the sales offers you ran at different years, positioning of merchandise, staffing on hand, etc.

By analyzing previous years’ data, you might even notice certain items were best sellers consistently year after year; you will certainly want to add these in quantity.

Make your store layout efficient.

You don’t want tight quarters or to force your consumers to squeeze around other shoppers because that only leads to frustration, tension, and anxiety. Instead, create a more efficient layout. Place your bestselling items towards the back of the store so your consumers who come in just for those will pass a number of other great deals on the way.

Boost security.

Shrinkage is a major concern for most retail businesses and that includes stolen items. You not only want to make sure your customers are happy and safe, you also want to minimize fights breaking out over discounted items and shoplifters slipping away with valuable, high ticket items.

When you boost security, it’s also a great idea to consider it for your online shop.

When you put some or all of these ideas to work, you will be able to better take full advantage of the end of the year holidays.

The post Prepare your business to take Full Advantage of the End of the Year Holidays appeared first on Par Funding.

To be more efficient means a business could save a tremendous amount of money through the years and that could lead to more lucrative investment opportunities. The right combination of apps, effective use of those apps, security programs, and even Internet browsers, can be a boon to most small businesses.

We’ve put together a list of the top 25 apps specifically designed for small businesses that can help them run more efficiently.

We’re broken these into main categories, such as:

• Finance and Accounting
• Project Management
• Business Productivity
• Collaboration
• Communication
• Email Marketing
• Security and Data Backup
• Social Media Management
• Internet Security
• Time/Travel Management
• Payment Options
• General Benefits

Finance and Accounting

Intuit Quickbooks Online – Managing invoices, payments, payroll, inventory, and much more are all streamlined with Quickbooks. The quintessential powerhouse program for bookkeeping and record keeping, it’s perfect for businesses of any size, especially when using the online version ‘in the cloud,’ which offers a more robust and cost-effective option than its closest competitors.

Freshbooks – Making the process of invoicing simpler for the average freelancing professional or small business, Freshbooks offers an easy-to-use online feature that means you could rely on it, even when traveling.

Project Management

Basecamp – Taking on a new project can be difficult, especially with so many different people working on various components. Basecamp allows your team to be spread out wherever they are and still function like a smooth unit.

Trello – Managing teams is made easier with Trello. It is a visual project management tool that can help you break down larger goals into more manageable tasks that are easier to keep track of.

Business Productivity

Todoist – When you don’t know how to accomplish more each day, Todoist is the answer. It’s a powerful productivity tool that can be learned quite easily.

Evernote – Keeping track of various tasks can be difficult, especially when you have dozens upon dozens every day. Evernote puts you in the driver’s seat and allows you to easily enter information, track it, and have quick access whenever you need it.

Polaris Office – With Polaris Office, you will be able to edit, create, and sync all Microsoft Office files on any device, no matter where you are. This is great for employees or business leaders who are constantly on the go.

Collaboration

Dropbox – Sharing files can be an integral component of keeping track of various projects and helping team members collaborate. Dropbox is one of the quintessential tools businesses today rely on for staying connected, sharing documents, files, pictures, videos, and more.

Slack – Slack is an enabler for companies to collaborate more effectively, especially when they have remote employees or freelancers. You can search, archive, and chat in real time.

Communication

Gmail – Google’s Gmail service is a great asset for small businesses. In fact, 92% of small companies and startup businesses rely on Gmail for email hosting.

Outlook – Of course, Outlook is one of the kings of email. With Outlook, you can have access to a calendar, task manager, journal, notetaking, contact manager, and even web browsing capabilities.

Addappt – If your main contacts, including business associates, partners, and maybe even some family and friends, also use Addappt, they can update their contact information whenever it needs updating, thus taking a great burden off your shoulders.

Email Marketing

MailChimp – Email marketing is vital to many businesses today, and MailChimp is one of the leaders. It’s completely free for up to 500 subscribers and that still includes basic marketing features.

Crashplan – Backing up your files and other data can be essential. Doing so in the cloud is commonplace today and Crashplan helps to keep your data safe.

Security and Data Backup

iDrive – Basic 5 GB of backup storage is free with iDrive and it’s available on PC, Mac, and Android devices.

McAfee – Avoiding viruses, malware, and even adware can not only keep your business from being taken off-line, but also protect your valuable investment in this small business. McAfee is one of the leaders.

Social Media Management

Hootsuite – Managing all of your social media outlets in one place would be great, wouldn’t it? HootSuite allows you to do that. It makes it easy to keep track of every social media page you have, schedule posts, reply to comments, and much more.

Sprout Social – This robust social media management platform can help you find potential leads, analyze whether it’s going to be worth the investment, and even manage your social media content across multiple platforms.

Internet Security

NordVPN – A Virtual Private Network helps to protect your personal information, reduce spam, and protect vital aspects of your business. NordVPN is a must-have for those who understand the value of these VPNs.

HotSpot Shield – Another great VPN service is HotSpot Shield. With powerful encryption, it offers protection across all of the devices you use for your business, no matter where you are.

Time/Travel Management

Clear – Time management is one of the most overwhelming issues many small business owners face. Clear makes it easy to separate lists, schedules, and reminders to keep on top of daily tasks.

OmniFocus – If you have a lot of projects and deadlines, OmniFocus makes it easy to keep track of them, thus reducing the risk of missed deadlines.

Tripit – For those small business owners who have to travel a lot, Tripit consolidates travel plans into an easy to use app that can be synced up across multiple devices.

Payment Options

PayPal – Sending invoices, managing invoices, receiving payments, and much more are made easy with the PayPal app. Some features will even allow you to accept payments directly by swiping a credit card into your device.

Square – An alternative to PayPal is Square. It’s great for retail businesses and provides a small, portable card reader that can easily attach to just about any smartphone or other mobile device.

The post 25 Best Apps/Tools to Help Businesses Be More Efficient appeared first on Par Funding.

The main difference between loans and these other options.

Cash advances and factoring are not loans. Some companies, especially those more interested in tricking small business owners into making bad deals, will certainly pass some of these off as being ‘loans.’

So, what are loans?

Loans for small businesses will report to the major credit bureaus. They will report the amount of credit a small business received, as well as record payments, whether they are on time or not. A good FICO score is required to obtain a loan from a legitimate company.

With a loan, some or all company assets could potentially be used as collateral, depending on how much is required, the loan agreement, and other factors. Funding for the small business usually takes between 3 and 7 business days upon approval. A small business loan is a better option for companies that are on a solid and stable footing, but are looking for a long-term investment opportunity.

Keep in mind that with a small business loan, a missed payment will likely be reported and recorded on the business’s credit.

What about merchant cash advances?

There are plenty of reasons why a small business could benefit from cash advances. Seasonal businesses, like retail and those operating in a high-tourist destination, may need cash advances to not just to get set up for the new season, but to also make payroll, cover utility bills, purchase merchandise, and much more.

A merchant cash advance is a great solution for those companies that are relatively stable, at least to some degree, but if a business is on a downward trend, sliding toward potential bankruptcy, this is not going to help.

Factoring is more ideal for B2B operations.

Business to business companies may benefit from factoring. For example, if a manufacturing company provides a specific product and has numerous clients purchasing those products, but they only pay their invoices every 60 days, 90 days, or even at a longer length of time than that, it can make it extremely difficult for the manufacturing company to make payroll, pay their bills, and stay afloat.

Factoring is basically an advance on the invoices that are submitted to those other businesses, and the company relying on factoring will submit those invoices to the financial lender in exchange for the advance.

By understanding the differences between loans, cash advances, and factoring, it makes it easier for small business to determine the financial solution that will best suit their current needs and situation.

The post Understanding the Key Differences Between Loans, Cash Advances and Factoring appeared first on Par Funding.

Periodic review of finances
One of the most important aspects of ensuring that you succeed in your business endeavor is staying on top of your finances. It is natural for even the strongest and most successful businesses to go through periodic lulls, and keeping a track of your regular income and expenses will help you understand the market better. Most successful business owners regularly review their company finances to identify any potential pitfalls and fix them before they take up an ugly shape. They always keep an eye on their business cash flow.

Ensure a secure footing
Smart entrepreneurs are acutely aware of the fact that things are bound to go terribly downhill at some point in their careers. That being said, most successful business owners not only keep track of their regular cash flows but also ensure a secure backup plan in anticipation of financial emergencies that might come their way. Not only do they have a solid emergency fund to cover any unexpected losses but also are great at building strong relationships with their bankers who they might have to turn to in times of distress.

Push themselves out of their comfort zone
Some of the greatest entrepreneurs of all time have at least one characteristic in common- they are not afraid of pushing their limits and taking calculated financial risks in the anticipation of reaping gains along the way. Apart from ensuring adequate savings for a rainy day, successful business owners regularly invest in lucrative financial opportunities and also are bold enough to negotiate everything that they can get a profit on.

Willing to learn more
When Socrates remarked that “True knowledge exists in knowing that you know nothing”, he wouldn’t have known how relevant the statement would be thousands of years later as well! The fact is that most successful entrepreneurs possess the insatiable hunger to learn more about the intricacies of finances and incorporate their financial literacy to instill better money management practices and build the company’s wealth.

Setting their financial goals
If you do not know where you want to go, you will most probably end up deviating from your course. Successful entrepreneurs have the habit of setting realistic financial goals for their companies to ensure that suitable strategies are formulated and implemented in the right direction. Only when you have a proper action plan in place would you be able to work on it and succeed in your corporate endeavors.

Most importantly, successful entrepreneurs are willing to think differently from the others and question the conventions to ensure that their financial practices are aligned with the ever changing trends in the market.

The post 5 Financial Best Practices Of Successful Entrepreneurs appeared first on Par Funding.

That being said, most entrepreneurs find it exceedingly mundane to regularly analyze their financial records, and choose to procrastinate as long as trouble is out of sight. And before you know it, you might find yourself in serious peril, deeply regretting your decision of neglecting your business’s cash flow model. However, if it seems like a challenge for you to keep a tab on your cash flows, you might want to check out our secrets to better cash flow management for your business. Here they are.

Keep an eye on your burn rate

Negative cash flow or burn rate as it is commonly referred to as is an important variable that accounts for your business’ regular expenditures. A high burn rate might be indicative of unstable finances and an early warning suggesting that you might be in for a major budget shortfall in the foreseeable future. It is imperative that you keep an eye on your business cash flow.

Liquidate your assets

If you have excess inventory or equipment that is no longer in use or has become obsolete by current technological standards, it is a good idea to sell it off and free up your capital tied up in a non-profitable component of your company. Hoarding non-functional inventory or equipment not only take up valuable office space but also keeps depreciating in terms of its resale value.

Establish your breakeven point

Your break-even point is the amount of revenue your business needs to achieve in order to cover for all the fixed and variable costs to the company. It is important to find out your breakeven point to have a good idea of your short-term financial goals and manage your profits well.

Forecast your future cash flows

While most business owners find it rather irrelevant, forecasting your future cash flows is a sure shot way of succeeding in the corporate world. By setting realistic future goals for your business, you are not only deciding an acceptable benchmark for your company’s performance but also allowing yourself to strategize a better cash flow model in case things do not go as predicted.

If everything else fails, borrow

While it is natural for the business owners to be hesitant at the prospect of borrowing and allowing more credit to pile up, you must actually weigh your pros and cons before shunning the very idea of procuring a loan. Look at the bigger picture and analyze whether or not it is a smart decision to turn down a massive business opportunity just for the sake of not having to deal with loan interests!

Also, hiring an accounting expert for bookkeeping purposes will go a long way in ensuring that your cash inflows and outflows are well taken care of and you do not encounter any financial glitches on your way to entrepreneurial success.

The post Manage Your Business Cash Flows with these Smart Financial Strategies appeared first on Par Funding.