Financing Options for Import Companies
Financing Options for Import Companies
Whether you are starting an import business or have an established importing business, it can be a very profitable venture if you have the right financing to grow your business. Imports are defined as: a good that crosses into a country, across its border, for commercial purposes; a product, which might be a service that is provided to domestic residents by a foreign producer; or a combination of the two.
Starting or running an import business has never been more profitable because of computers, the internet, and the availability of low cost imports from countries such as China and Mexico. These imports may be resold for up to ten times their cost depending on the competition in your field of operations.
It is essential that you have good, honest suppliers plus creditworthy customers with purchase orders for your imports. If you have the right financing, your business can grow exponentially. But how do you finance growth if your own resources or bank lines of credit are not sufficient to take advantage of big opportunities? A combination of purchase order financing, accounts receivable financing with inventory financing may be the solution.
Definitions:
Purchase Order Financing
Purchase Order financing is the assignment of purchase orders to a third party, a commercial finance company, who then assumes the obligation of billing and collecting. Purchase order financing can be used to finance all current and subsequent orders to improve your company’s cash flow. The process works as follows: 1) Your company obtains a purchase order for products to be sold another company; 2) A letter of credit may be issued, based on a finance companies’ credit, to guarantee payment to suppliers or factories producing the goods; 3) The order is shipped, delivered and accepted by your customer; 4) The customer receives an invoice for the goods; 5) The Purchase Order Company pays the supplier/factory; 6) a commercial finance company or Accounts Receivable Finance Company pays the Purchase Order Financing Company after the products are delivered to your customer; 7) The customer pays the commercial finance company for goods received; 
The accounts are settled and the profit is paid to you.
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Accounts Receivable Financing
Accounts Receivable Financing is the selling or pledging of your company's account receivable, at a discount, to a Factor, a Commercial Finance Company or to an Accounts Receivable Financing Company who may assume a risk of loss. You receive a portion, usually 80% to 90% of the face value of your receivables in advance of payment from your customers in return for a fee, or interest, to be paid to the commercial finance company. When the commercial finance company is paid by the customer, the appropriate fees are deducted and the remainder is rebated to you. “Accounts receivable financing” is also called accounts receivable factoring, factoring financial services, invoice factoring and cash flow factoring. The terms are used to convey the same meaning.
Inventory Financing
Inventory financing is a loan secured by the inventory of your business. Inventory finance enables import companies to hold more stock without cash flow strain and to generate more sales. Inventory finance is often part of a Purchase Order and Accounts Receivable Financing commercial finance package.
These three types of financing can enable an import business to increase purchasing capabilities dramatically; you can accept larger orders and grow your business exponentially. You can use your inventory to leverage your purchasing power. You can use your customer’s credit to obtain these three types of financing; and you can use the commercial finance company’s credit to obtain a letter of credit.
The concept of financing your import company with “other people’s money” is part of a safe and sound business plan. Add strong product quality controls, inventory controls, and good accounting to maximize the success of your import company.
Copyright © 2007 Gregg Financial Services
www.greggfinancialservices.com
How does owner financing work?
How does owner financing work?
Owner Financing
Owner Financing: Making home ownership a
reality!
In today's housing market, it is a great time for a buyer to purchase a home for sale at a great price. If you are able to buy a home but don't qualify for a traditional mortgage, there is an abundance of opportunities in creative financing. With the recent catastrophe in sub-prime mortgage lending, the collapse in banking and insurance, and a plummeting stock market" more and more buyers who are saying "we can buy with owner financing, are being considered.
Owner Financing – What is it?
Owner Financing or Seller Financing is a case where the buyer obtains a partial or full loan from the seller instead of a traditional lender or bank. Seller financing is simple enough to understand and comes with many benefits. The seller takes on the responsibility of a lender and the buyer makes direct payments to the seller over the loan period. This option may be used if the buyer for some reason may not qualify for a traditional mortgage.
Owner Financing- How does it Work?
This is a general outline of how owner financing functions. The seller accepts a down payment and provides a loan to the buyer directly. The details of this loan are included in a legal contract called a promissory note which promises the seller monthly payments for a fixed period of time. With the promissory note in hand the buyer is now in possession of the property; there are no lenders or banks involved.
In this situation, the buyer is the 100% owner of the property contrary to a "lease option" or "rent to own" where the deed (shows ownership) does not transfer to the buyer until a later date.
Owner Financing- Why is it becoming so Popular?
Owner financing has become popular due to a recent "tightening" of credit markets. It has become difficult for buyers with both good and bad credit to get a traditional bank loan. This kind of financing may ensure a quicker and easier road to home ownership.
Owner Financing – Why is this sometimes the best Option?
Easy Qualification is the main reason. The buyer, in many cases, prefers owner financing to conventional financing because it does not require traditional bank income and credit approval. The buyer may have poor credit because of a divorce or recent bankruptcy. He may be self-employed and cannot prove income. He may be new to his job and cannot meet strict lender guidelines.
Even if he could qualify for a loan, the rate will be astronomical if he has poor credit. Furthermore, few conventional lenders offer fixed interest rate loans to people with a poor credit rating.
As you can see, there are dozens of reasons why a buyer cannot (or will not) qualify for a conventional bank loan. Owner financing becomes a perfect solution for this individual or family!
Owner financing – Benefits for both Buyer and Seller:
- The period until closing may be much faster allowing someone to move in quickly.
- Closing may also be easier since one does not have to wait for the mortgage to be approved by a lender.
- Paperwork is comparatively less extensive.
- Buyer and Seller can work out the terms of the agreement together – a certain degree of flexibility involved.
- Buyer may be able to receive benefits of owning a home such as tax deductions and down payment of equity.
Rent to own TX vs. Owner Finance TX – What's the difference?
Many people confuse rent to own Texas with Owner Finance TX. You will also see advertisements for "lease to own TX", "Lease option TX", and "lease purchase TX". Basically, these terms all mean the same thing- you are leasing and do not get the deed until after a predetermined time period and certain financial requirements have been met. In theory, this sounds great. You have a deal made with the seller, you have a set time to come up with additional funds… Here's the challenge: We see situations over and over where the seller decides that original agreement is not so favorable down the line. Maybe they've found a better offer, bigger downpayment, or mismanaged original funds that the "buyer" put down as deposit. Whatever the case, we hear horror stories all the time about people who were denied the chance to buy their "Rent to Own". With Owner Finance:
- Buyer gets the Deed along with the keys. The buyer is now the actual owner of the home.
Owner Financed buyers are homeowners. There is no wait. Heck, they can move in and paint the walls pink if they want- they own the walls!
Picture courtesy of and work attributed to the-lane-team @ www.flickr.com
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The Facts of Business Financing
The Facts of Business Financing
Your mummy always warned, "Don't put all of your eggs in one basket " and those words of advice can be applied when > financing a business. There are numerous techniques that will help consumers in financing a business. Customers must recognize their available resources eg the seller, banks, and financiers.As a kid, we are inspired to "think big " and told that nothing can stop us, but ourselves.
As entrepreneurial adults, this notion of dreaming giant is typically part of your daily routine, it is inescapable that at some specific point you can come smashing down from those heights into fact. The awareness that financing your special enterprise can immediately moisten even the most impassioned enterprising individual can get you down. To put it bluntly, "do not let it".
Having a fact check on the problem of securing financing for a business may be the primary step towards making your dream a reality. There are countless kinds of financing available, some more unusual or obscure. If you take the effort and time to analyze all avenues for funding you'll be rewarded.
There are 2 main sorts of financing : debt financing and equity financing. It is vital to you and the successfulness of your business that you become familiar with the kinds of financing to select, seek, and ultimately, get the right form for your wishes.Debt financing involves getting a loan that'll be paid back over a certain allocated time with a set rate of interest tacked on.
The time of such financing can be short term or long term. In most situations, short term financing would include repayment inside one year, while long term financing would comprise repayment in a period of time that surpasses one year. An merit of this sort of financing is the undeniable fact that the lender won't gain possession in your business.
You remain in control and your sole requirement to them is to make regular and opportune payments.
In the case of little start ups, an individual guarantee is commonly wanted to help the closing of the financing deal. Financing of equity, unlike debt financing, will involve giving the financing entity a share in the business . Some entrepreneurs hate the concept of losing any amount of control. On an encouraging note, this sort of financing doesn't sustain debt. This type of liberty from debt can give a larger sense of security in beginning an exciting new business.
Additionally, some entrepreneurs find excellent value in their equity financing partners, and see their presence as an asset. The kind of financing you may select is based principally on the wants of your business and the sort of collateral, or available assets you have to give. A good amount of debt financing can end up in bad credit and a shortage of funds in the future due to an incapacity to apply for more financing.An enterprise that becomes overextended, offers nothing collateral, and is drenched in debt isn't an intriguing option for many backers.
As formerly discussed, there are more more unusual techniques of getting funds that may definitely turn out to be useful to your business. Some options can be discovered in your own circle of buddies and family. One advantage of this sort of financing is getting the cash and a silent partner who will very probably not meddle with your business.
It may also eliminate some of the red tape involved with more standard kinds of financing. This doesn't imply you can simply utilize an oral agreement or "shake on it " to signal and bind the exchange. This is still a strategic business move and you need to treat it as such meaning correct paperwork, clear terms, and mutual understanding of those terms.