Financing Your Small Business

If there were only two reasons for a business to fail they would be poor financing and poor management or planning. You can’t over-emphasize the importance of financing your business. Financing the business is not a one time activity as some might think. It is necessary whenever the need arises such as when expanding, modernizing etc. At this stage you need to understand the importance of exercising extreme caution and plan the utilization of capital. A wrong decision here can haunt your for the life of your business.

Are You Sure You Want To Raise External Funds?

For start-ups, it’s understandable that you need to raise capital through loans. But what about expansions and upgrades? Make sure that external financing is an absolute must before you apply. It is critical that you organize your finances at transitional stages but only after you make sure that you can’t do it yourself, either permanently or for some time. Equally important are the criteria of risk, the cost of not financing and how well it contributes to specific and overall goals of the company.

FINANCING TYPES

Equity Financing: Equity financing involves selling off of your shares (mostly partially) in return for cash and giving away that portion of ownership and rights to profits. Equity financing can be sought from private investors or venture capitalists. This brings about proper capitalization opening access to debt financing. Equity finance doesn’t need to be returned like loans unless your partner wants to withdraw.

Debt Financing: Debt financing is loan financing against some kind of guarantee of repayment. The guarantee can be collateral, a personal guarantee or a promise. Lenders restrict the use of debt finance to inventory, equipment or real estate. You need to properly structure the debt and the rule of thumb for doing so is giving long term debt for fixed asset loans and short term for working capital. The reason is that fixed assets generate cash flow over their lifetimes and have the benefit of lower interest rates as opposed to working capital loans.

Sources of Finance:

You can choose finance sources depending on your circumstances and the amount required.

1. Family and Friends: Small and short-term working capital requirements can be financed quickly through your own resources or through family and friends. The benefit here is the absence of the interest component (mostly.) This method of raising finances is handy even in early stages of business. You should be mindful, though, that disputes over money are the main reason that close relationships turn sour.

2. US Small Business Administration: This is the most prominent source for debt financing. The SBA doesn’t lend money directly but organizes and guarantees loans through various lenders and sources under its umbrella. Local governments, banks, private lenders, etc. disburse loans immediately to businesses approved by the SBA. SBA loans are available for various business purposes and at the lowest interest rates available.

3. Venture capital: Raising venture capital is organizing financing through selling shares whose value equals the finance you require. Essentially this means selling a portion of the ownership and control rights. It is essential that a proper valuation of your business’s worth is made before the deal is done.

Financing a business shouldn’t be hard provided you have established your credentials as a good manager, have collateral/assets, a convincing cash flow statement, genuine need, a proven track record, good credit history and a robust plan. This should not just save your business from collapsing but also allows it to grow and succeed.

Lawsuit Financing: A Viable Option for Those Struggling to Pursue Justice

Are you and your family suffering financial hardship while you’re fighting a pending lawsuit? If so, don’t get discouraged and settle early for a lower amount. Consider using lawsuit financing to meet your financial needs.

Lawsuit financing is a cash advance, provided to injured parties in return for a promise to repay the advance after they win their case. The advance typically covers living expenses, medical and health care costs, expert witness, research, and attorney fees. But you can use the funds for anything: house and car payments, college tuition, car notes and daily living expenses. With lawsuit financing, you can continue your case and get the settlement you rightfully deserve.

Because lawsuit financing is non-recourse funding, not a loan, there are no monthly payments to make. Therefore, repayment of the advanced funds isn’t required until after your case has been settled. And if you fail to win your case, you don’t have to repay the advanced funds. The company that provided the funds as an investment bears the full risk. But if you win, the funding company will have a legal right to part of your award.

How Lawsuit Financing Works

Lawsuit financing can provide a financial float to floundering litigants involved in cases ranging from medical malpractice and personal injury to worker’s compensation and sexual harassment. When an injured person receives lawsuit financing, he or she takes a lien on their future proceeds in exchange for cash today. The lien is for the amount of the cash advance and a specified monthly interest rate and is deducted from the settlement or judgment received from the outcome of the suit.

Generally, the lawsuit should be at least six months old, with settlement likely to take place within at least 18 months. Lawsuit financing companies will provide you with up to 20 percent of the expected judgment in return for a lien against the entire award remaining. This lien follows any claims placed on the case for attorney or medical fees. By minimizing the funded amount and time remaining on the case, lawsuit financing companies are able to keep litigant’s costs small relative to their increased gain.

As investors, lawsuit financing companies will assess your case and estimate the value of the case and the risk involved. That estimate will determine how much cash you’re advanced. This amount will actually depend on the nature of the case, insurance company involved, how long the case has been active, and the expected settlement date. The company’s fee may be a flat fee or a percentage fee that accrues monthly. But, remember, you only have to pay the fee if you win.

Why Lawsuit Financing?

Litigation can be slow, stressful and extremely expensive. In fact, lawsuits cost America $246 billion a year, according to the President’s Council of Economic Advisers. Cases may drag on for months and years, producing mounting legal and other expenses in the process. During this time, litigants–many of whom are unable to work–still must have enough money to live on and support their families. Often, they face the threat of losing their home, car and well being. The strain on their finances and emotions may force them to consider settling out of court.

However, lawsuit financing can enable them to hold out long enough to receive a much larger settlement. In short, lawsuit financing can fill a vital need for litigants who have no other viable option. And the fees involved in this type of funding may be a small price to pay for the larger gain they can enjoy.

Eligibility for Lawsuit Financing

Lawsuit financing may be the best resort if you are suffering financial hardship and have exhausted all other means of getting financing help. Qualifying is relatively easy, compared to traditional types of financing. In fact, the standard requirements, such as good credit and employment, don’t apply.

Instead, eligibility is based strictly on the merits of your case. If you have a solid case with a high chance of winning, lawsuit financing will be easier to obtain. People who may be able to secure litigation funding include those who:

- Were injured in a car, boating or amusement park accident

- Are involved in a medical malpractice case with a doctor, nurse or paramedic

- Have been injured on the job or by dangerous products

- Are litigants in a wrongful death case

- Had a serious slip-and-fall accident

- Suffered from breach of contract

- Were discriminated against

- Were wrongfully terminated

Lawsuit financing can provide critical financial support for you and your family while you pursue justice.

Car Finance Company

Having a new car is one of the biggest achievements that most people can have. Other than financing education and buying a home, there is really nothing else that can compare to the huge expenditure that comes with purchasing a new car.

Therefore, only a few people can really afford to pay for a car outright. Most people rely on car financing in order to purchase a new car. But with the many car financing options available nowadays, it is wise to research thoroughly for a car financing company that offers the best rates.

Most car financing companies offer better deals compared to local car dealers. While it is convenient to have your car dealer provide you with the loan and plan, it is still better to get pre-approval from a car financing company because they offer more reasonable interest rates and payment options. To choose the car financing company with which to conduct your transactions, you have to consider two things: their rates and reliability.

Car financing companies vary on the interest rates they offer to customers. If they have seen that you have good credit history, the interest rate on your car financing loan may not be as high compared to a person with bad credit history. And if you really want to secure car financing with low interest rates, you should try looking for an online car financing company. By applying for your loan online, you save the company time and money, thus the savings from the cost of doing business are passed on to you.

In addition, you should also check the credibility of the company, especially if you want to do your transactions online. You have to make sure that the company you choose has been in operation for years. Aside from this, you can also ask your colleagues and friends who have already secured car financing from a car financing company about their experiences in loan application. They can recommend a suitable company to you.

Finding a car financing company for your loan application can be difficult if you do not know what to consider and where to start your search. But if you go online and ask trusted sources for their recommendations, you can easily compare car financing rates and select the best deal for you.

Lawsuit Financing

Lawsuit financing is usually misunderstood as loans. In reality lawsuit finances or lawsuit funds are advances or investments made to avoid state laws against making excessive charges of interest. These lawsuit finances are available for appellate funding, attorney funding, expert witnesses and plaintiffs. Lawsuit finance helps those who have lost their jobs, have met with accidents, had personal injuries, faced sexual harassment, or are charged with malpractice.

When clients sometimes cannot even meet their basic requirements like rent and expenses, lawsuit financing helps them. Under such cases the lawsuit financing companies help by providing advances to the clients. Lawsuit finance is non-recourse in nature. Unlike a loan it is retrieved by the lawsuit financing company only when the verdict is in favor of the client. The lawsuit financing company can claim for the settlement of the money only after the final verdict or statement is known.

The lawsuit financing company has options like flat fee, where the lawsuit financing company decides beforehand what amount or share the client would pay after the final verdict is known. The lawsuit financing companies charge the plaintiffs with recurring fees that they have to pay until the verdict is made final. This recurring fee varies according to the case. It is usually collected on a monthly basis. The fee could be as low as 0.5% or could be as high as 15%.

Attorneys, their witnesses, and testimony can together convince the judge or jury to take your favor. In these situations, use expert witness funding. The attorney funding becomes essential when the plaintiff runs out off capital or the litigation costs exceed the expected amount. Then funding or financing becomes essential. The plaintiff funding is made as investments and not mere loans. If the plaintiff has received a monetary verdict but a trial is pending, then appellate financing is suggested.