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During tough economic times, Finance is a huge challenge for business owners.  In the “Going Forward” section of the January ’09 Entrepreneur Magazine, Mark Hendricks quotes some sobering statistics which frames up the extent of the recession we are experiencing. Banks have really tightened up their lending purse strings.

My best advice to meet these recession finance challenges is have a well developed Business Plan, and a Financial Strategy which effectively proves your Cash Flow Model, determining which finance sources and structures closely match and fit that model.  To accompany that Funding Business Plan, I highly recommend a solid Loan Package.  With these funding tools in hand and funding strategies highly-developed, here are some real world funding options and strategies to regard when Lenders’ purse strings become increasingly hard to access.

Increase Your Network: This is a big one and can be very effective! Work on increasing your networking groups and activities. Join morning executive meetings, chamber of commerce networking events, lions/rotary/kiwanis club meetings, business networking clubs and the like. This can be a great way to find private finances as well as find good bankers who are willing to listen to a business owner’s finance needs. Other business owners can be very helpful in your business finance quest- just need to ask! You will find that local area investors are a lot more approachable in hard times as they feel that connection to the local business community even more. Use networking to increase the odds of finding that finance mix that will meet your funding strategy needs.

Supplier and Trade Credit Finance: According to Rosalind Resuick, CEO of Axxess Business Consulting, no outside party has a bigger interest in your company’s success than your trade partners and suppliers.  Having your supplier as an Equity Partner can be very advantageous when you are having difficulty making payments or want to prompt develop a new market.  The participating Equity Stake is assigned to your past trends, present and future orders.  Start-up Consultant, Joe Fulvio, suggests your Business Plan “show not only a direct return on investment, but also the value of future business to be gained”.  By making your supplier a partner in your business, the supplier is better suited to understand your Finance needs

Lease Finance: If your cash is tight, then lease finance can be the answer. The advantages of leasing include a smaller deposit, lower payments and great flexibility. And at the end of the lease term, you can easily upgrade your equipment and roll right back into lease payments, making your out of pocket costs a lot less than a typical business loan. Carefully consider whether lease finance will meet your finance needs and have the right cost and tax structure for your business.

Local and Community Banks: Amy Loera, owner of Tio’s Mexican restaurant chain, was denied at nine different banks, for a loan to open a new restaurant, although she ran a very successful business.  These Lenders cited the Nation-wide downturn of restaurant sales due to the current recession as the chief reason for the loan declination.  There is no doubt a year ago, these banks would have lent to her.  Instead of throwing in the towel, Ms. Loera turned to a local, community lender, Arrowhead Credit Union, and she was approved for a $643,000 loan.  What was the difference?  The Credit Union was based in her business region, and she could make a strong case for the health of her restaurant chain.  Reasons Ms. Loera cited for her success in obtaining her expansion loan:

• Low overhead costs
• sensible Prices
• Family-Style restaurants picking up the slack from people by the Fancier establishments in the area.
• Smaller, localized lenders are typically in better shape during an Economic Downturn
• Community Banks are more cognizant of the local economy’s health and vigor
• Larger / Regional / National Banks are more reliant on Credit Scores and cookie cutter Applications.  Local Banks rely more on a Business Plan.
• Niche Market:  Suburban market that likes an affordable meal at the end of a busy day
• Historical Financials showing track record
• Debt-free
• 12 month Realistic Projection for the new restaurant
• Comprehensive Business Plan; every detail about the business
• Received approval from the Credit Union due to:
  • Experience
  • Existing locations cash flowing well
  • Affordable meals in a recessionary environment
  • Detailed, well-thought-out Business Plan

– What the Local Bank Looks For…The Inside Story…

• Not Credit Score Driven
• Look behind the scenes of the business
• Cash Flow is Key:  An important indicator of the ability to pay off the loan.
• Believable, forward-looking Cash Flow Projections for the new business.  Realistic Financial Statements.
• offering Best & Worst Case Scenarios on your Financial Projections
• Small, Community Banks assess a business loan on a case by case basis.  This is a huge advantage over Regional Bank Loan decision making, especially, in an economic down-turn.
• In recessionary times, certain industries will be hit harder than others, like Construction Companies or Auto Dealerships; therefore, it is very important to have a well developed Business Plan and a forward looking Strategic Plan that includes a well researched 12-18 month industry outlook, based upon a believable Marketing Plan.
• Small Bankers can see successful pocket areas in a struggling local economy.  These pocket areas often have a Strong Niche Marketing Offering
• Financial problems are best disclosed to the bank early on so a mutual solution can be implemented
• Small Banks do loan to Companies showing past financial “hiccups” if they can show they were proactive and overcame the issue

Consider hiring an experienced Business Consultant to develop that Business Plan and Loan Package that will help you obtain finance in this tough lending market. It is money well worth spent and make sure your business consultant has a background and experience in business finance.

About the Writer – Frank Goley of ABC Business Consulting

Frank Goley is a business consultant, business turnaround consultant and business plan consultant for ABC Business Consulting. Frank is considered an expert in writing, developing and implementing business plans, business turnaround plans, business funding plans, marketing plans, strategic plans and web marketing plans. Frank offers comprehensive business consulting, business coaching, business turnaround consulting, along with web seo, web development and web marketing consulting, to small and medium size companies. Frank is the author of a business plan book, The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning, and he has over 50 published articles and e-books on business success strategies. He also writes the Business Success Strategies Blog.

Having the need to start a home business opportunity and being in the position to really do that can be two different things.  There are a few questions you should consider before you leave your job and begin a online business of your own.  Be real with yourself before you start setting things up as well as building your business.

Take the time to ask yourself a few questions when you make a decision.  The very first thing to ask your self is do you think you will be ready to start a home business opportunity?  Self confidence will have a big part in your success of your home based online business.  You have to believe that the home based business will probably be worth starting in order for this to perform properly.

Would other people say that you’re a excellent candidate for self-employment?  Sometimes we can be a bit overconfident about our own skills.  Even so, when it comes to whether or not you will do well with self-employment, you need to be honest with yourself.  Think of how you work at your present job?  Are you somebody who completes tasks no matter what?  Do you work just as hard at work regardless of whether your boss is in the office or not?  If so, you may have what it takes to get a home business opportunity off of the ground.

There are other questions you should ask yourself.  Have you ever taken classes or seminars about starting and controlling a small business opportunity?  For those who have not, think about doing this when you begin a home based business.  You will learn important lessons about some of the underside of owning a business that you manage on your own.

Do you think you’re ready to decrease your standard of living while the business gets off of the ground?  Business owners are great ventures however the majority of small business proprietors begin working a ton and generating only a little bit of profit.  You should ensure that you have some form of back up revenue to help keep you a float while you build the work from home business.

Will you be ready for long hours that usually will generate no immediate income?  Working long hours in a job where you might be getting overtime or a stable salary is quite different form working long hours at your start up home based business.  You won’t necessarily see a profit from the long hours that you put in.  Of course, there is a bitter sweet feeling for working long hours.  At the end of the day, after the long hours, you will have a home based business that’s yours.

Have you called a small business coach or counselor about your business plan?  There are so many different issues with owning your own private business.  There are legal issues such as what type of home business you would like to have, the break even point for the company, how a business loan impacts your credit and if you need a special license or permit for your home business opportunity. Getting valuable advice about these types of things will help save you money and time.

Also read working from home jobs, Make Money Fast and Earning Money Online