Whilst the US economy continues to pick up steam in the Great Recession, businesses are seeking growth capital and thus, commercial banks are starting to be IN STYLE yet again. If something we know of both as consumers and producers in the US, business cycles can be a given reality that requires wisdom and discipline to foresee and adequately prepare for… but much more about this in another article. The main objective of this post is on having legitimate and profitable reasons for obtaining 企業貸款.
Inside my experience as both an industrial banker and business financing consultant, the “purposes” for finding a business loan have already been both for ‘good’ and ‘bad’ reasons. First off, debt capital or else leveraged properly gets to be a quick and fast technique for any organization to travel bad. Utilizing a bank loan for business purposes will not be bad; it’s the key reason why that explains why a business owner needs it. In one’s preparation to have a business loan, the telephone number one question that deserves a reasonable response is, ” could it be a complete necessity for the business to get this loan?” Quite simply, in the event the business will not obtain the loan, will this cause any material adverse consequences on the business?
Let’s deal with the very first observation: exactly what are the bad and good reasons for finding a loan? Mentioned previously before, business owners look to acquire a loan for just about any and each and every reason in the sun. Primary reasons I noticed were for deficiency of positive cash flow and / or refinancing of existing debt which in additional situations than not were personal loans used to finance business expenses (notice here that we did not say EXPANSION). Here’s an ironclad rule for having a very good reason for getting a loan for virtually any business: Guarantee that income is positive, stable, and healthy to the foreseeable future. Debt capital is supposed to supplement and grow income, to never replace it. In case the industry is 68devvpky1 cashflow problems then your company owners or principals need to dig deep and analyze operations as well as the market… not have the problem WORSE by permitting into debt. Next. let’s have a look at one or two metrics that can help make the right mentality for acquiring a business loan.
The very first metric we’ll disclose is the return on equity. With regard to not receiving into any CNBC finance technical jargon, let’s keep it simplistic: the return on equity metric lets you know if you are creating any money to hold for your own in the market. To calculate, go ahead and take profit (if any) remaining after accounting for expenses, and divide this into how much cash you invested in the industry. Expressed as a percentage, the better the number, the better mainly because it states that the organization is a money maker. Also, the ROI metric is a good indicator as to if the organization is cash flowing positively. Remember, profit is nice, but a healthy, positive cash flow IS KING!
The very last metric we’ll discuss will be the debt to equity ratio. Again for sake of simplicity, the debt to equity ratio tells you how ‘leveraged’ or indebted this business is. To calculate, divide total debt by total equity. The underlying reason this ratio is really powerful is that it ‘forces’ this business owner or principals to truly ‘know’ and ‘understand’ your debt and equity that makes up the business capital structure. A reasonable share of businesses rich in debt to equity levels experience marginal cashflow levels due to interest and other mandatory debt payments which are naturally fixed (predetermined repayment schedule). Being a eliminate here, do not incur any unnecessary debt just with regard to incurring it; have a plan that discloses just how the business will never only pay off the debt, but be in a better position financially and operationally after repayment.
In conclusion, we discussed the value of using a solid and valid reason for obtaining business debt which happens to be to make certain that it’s for legit business purposes which the business ALREADY carries a positive cash flow. Also, we highlighted two powerful metrics to provide you with added peace in your pursuit to getting 公司信貸: the return on equity and debt to equity ratio. Aside from the computations these metrics require, additionally, they ‘force’ one to intuitively ‘know’ and ‘understand’ the risk and stability of your business capital structure rather than obtaining debt capital.