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Revised: 4/5/2009 More info – http://getfinancing.revuer.org/
Business Lines of Credit – Immediate Financial Leverage
Are you looking for a job? Do you have a problem to secure funding for your businessideas? There are several problems where adequate funding could help, they are togenerate a basic income, start a business, buy property, expand a business, keep a business going or explore new business ideas. The biggest constraint is always to findenough available funding to achieve these objectives.Today, we will explore a very simple means to get this funding with minimal work. Thekey to build business and personal investments is the concept of leverage which meansyou use a small means to make significant gains. Most successful business persons wouldsay that regardless of what you are doing, you should aim to use other people’s money(OPM) as much as you can. This is even truer if you don’t have much money in the first place.Let’s look at the options you would normally have.1.Good Credit – Typically, if you have good personal credit, you can only borrowso much especially for unsecured investments. Examples are buying a franchise,research company or service company. You maybe able to get away in the area of real estate but not easily.2.Business Partners – Assuming you have a great idea but little capital or credit towork with. The next best option is to find suitable investment partners. This is stillvery good option but the downside is that you most likely have to give upcontrolling interest in the business so that the partners can protect their investments. There is a way to do this and still come out on top that we willdiscuss later.Looking at those two options, they are still very important and can move you faster intoyour business investment, but lets look at a another lucrative idea that could give youcontrol and returns quickly.The idea is the concept of
unsecured business lines of credit
. This works by forming acorporation then build a credit profile over time that would allow the business to loanmoney on its own without any real assets as such except a good credit record. Thisapproach will take about six months and still good to pursue regardless. Now, let’s say you want to move on your idea as soon as possible, there is one other option based on the above approach. The idea is to acquire a Shelf Corporation with anestablished credit profile. This means you would save the time required to build the credit profile and have cash in hand within about two months are less.Larkland Morleyhttp://getfinancing.revuer.org/
Revised: 4/5/2009 More info – http://getfinancing.revuer.org/
How does it work?
Most providers of Shelf Corporations with Credit lines would charge an upfront fee. Inthe case I know it’s about $12.5K and they get you the corporation with about a $150K credit line attached within two months. They then charge a back-end fee of 10% whichleaves you with approximately $135K. Depending on how you look at it, you are
turning$12.5K into $135K of cash
. You can then use that $135K to acquire more Shelf Corporations and associated credit lines as you see fit.Definitely one use is to look at real estate first as a stepping stone then your other ventures could be funded consequently. Now, let’s go back to getting started. The source that I have worked with it has twooptions. The first one we discussed above with $12.5K upfront cost. The second option isto put in $25K upfront and get about $400K in the same time frame.I always like to think for the person with very little cash in hand and maybe not muchcredit options. Here are a summary of what has worked for others in the past:1.Use own existing cash of $12.5K or $25K to get started – This is the best case2.Apply for a personal Credit line at your bank for $12.5K. If loaning money thesmaller amount is advisable3.Work with other providers who may get you a credit card with no personalguarantee for up to $50K at less than $3000.00.4.Borrow money from associates and pay them a fee from the LOC proceeds. Thismeans you need to offer a good incentive for them to lend this to you.5.Find a means to earn cash based on your skill-set. This could mean onlinemarketing, e-bay, second job, seminars or whatever you can use quickly.Assuming you can move forward with one of these approaches, I will give two realisticexamples with details on how this could make you very successful in a short period of time. The two areas are Real Estate and Franchising.
Real Estate Funding
There are many ways to invest in real estate but for this example, I will focus onCommercial lease properties. Many of the big name brands will not necessarily own store buildings in local markets (this includes banks, pharmacies and others). They would enter into long term leases with building owners to accommodate their businesses. These typesof leases are referred to as
NNN/absolute leases
. This means the tenant takes care of allmaintenance and other expenses relative to the building. The building owner basicallygets a check each month.Most of these leases are generally long term, meaning ten (10) years or more. The other factor is the issue of credit ratings for the tenant. The lease term would cover paymentsLarkland Morleyhttp://getfinancing.revuer.org/
Revised: 4/5/2009 More info – http://getfinancing.revuer.org/for the lease period in case the tenant company decides to move out. This is where therewould be a corporate guarantee on the lease.Let us run some example numbers. Assuming a property for sale at $4M with a CAP rateof 11%, this means the property is paying $440K per Annum gross. That’s good but now,you need to purchase and hope to keep a significant portion of that money as profit.If you were to get a balloon loan to cover 100% financing at 7% interest per year.Balloon loan means that you pay interest only and then the full principal at the end of theterm. Typically at the end you could re-finance or sell the property which could be worthmore then as well.With a loan at 7% interest, your profit would be (11-7%) which is 4% and $160K profit per year.Where the Business LOC does come in here? One way to get the
100% financing
would be to put up at least 10% of the loan amount on some bank instrument for the loan to be process. Once the loan is processed and funded, you would get your LOC (10% for theBank Instrument) amount back which means you remove that debt and can look at other properties to
repeat
the process.This means, getting the Business LOC for $450K within two months would have you onthe way to making $160K per year. Of course it could be less and could also be more butthe bottom line is that you would make way more than $20K per year with all of thiscombined.
Franchise Financing
A Franchise is basically an established business providing a license to another business touse its business model and brand for marketing/sales in a specific location. Franchiseformats can vary depending on the nature but in general you could term it as a business ina box.Typically, when you acquire a franchise, you need to pay upfront fees, monthlymaintenance fees and follow the specific formats as outlined in the agreement. The basicidea is that you would have all the leg work done to start a business and you just focus on building the business in your location.
Opportunity
The current economic climate has created unemployment for many skill professionalswho would love to exercise their business instincts especially with the possibility of things picking up in the future. Franchising is a great way for someone with no businessexperience to explore the business world with less risk as the relevant training andguidance are normally provided with the package. The opportunity is there to fund theLarkland Morleyhttp://getfinancing.revuer.org/
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