by dorraadmin | Jun 15, 2023 | Blog
Getting a fast influx of capital by utilizing your company’s accounts receivable could strengthen your financial outlook. Here are a few key things that you should consider about this funding.
How Does Invoice Factoring Work in Practice?
There are a few different formats of factoring models, but the nuts and bolts are fairly similar throughout the various iterations of this accounts receivable financing. You can sell your receivables to a factoring company in exchange for compensation representing a fixed percentage of their amount. Instead, you could obtain financing in exchange for an agreement to pay a fixed percentage or flat fee after you have received payment on outstanding receivables.
Factoring is most common among businesses that do not require customers to pay for products or services in advance. Many invoicing structures give customers anywhere from thirty to ninety days to tender payment. This is particularly common in business-to-business industries. Ultimately, an invoice that you have just issued but a customer has not paid you yet is exactly what factoring companies are looking for.
What Is Factoring Companies’ Upside?
To make the purchase of receivables worthwhile, businesses have to be willing to settle for compensation that is less than their face value. In general, factoring companies will pay in the range of seventy to ninety percent of an invoice’s value to buy it outright.
Age is a key factor in determining invoices’ worth, and an individual customer’s payment history may also be relevant. In addition, the amount that a factoring company is willing to pay for an interest in accounts receivable may partly depend on whether they are assuming responsibility for collections or responsibility for collections remains with the business from which they have purchased receivables.
How Does Factoring Benefit Small Businesses?
Accounts receivable financing through a factoring enterprise can keep your cash position healthy while you wait on payments from customers. Using the proceeds from a factoring transaction could give you instant cash on hand, allowing you to afford your ongoing operating expenses and investments in new assets to drive growth without overextending yourself.
One of the most appealing benefits of factoring for small businesses is that it can get them capital much more quickly than they would be able to by pursuing traditional small lending programs. Moreover, they can get working capital without having to borrow it from a lending institution they will have to make payments on a recurring basis. Resultantly, their debt-to-asset ratio remains intact, and a transaction will not inflict any damage on their credit score.
by dorraadmin | Apr 25, 2023 | Blog
As a small business owner, you will likely need to seek funding at some point. There are many options available from credit lines to invoice factoring and more. Each comes with advantages and disadvantages. You need to determine why and when you need the funding to determine which one is best for you.
In this blog, we’ll explore some of the most popular business loan options.
Top 10 Business Loan Funding Options
Term Loan
The first funding option we’ll explore is term loans. This option provides you with a lump sum of cash which will be re-paid with interest over a period of time. Alternative lenders can offer up to $1 million and provide funds faster than a traditional bank.
Advantages
- Cash upfront
- Allows you to borrow more than other loan options
- Funding is fast with alternative lenders
Disadvantages
- Often requires collateral or a personal guarantee
- Costs vary, alternative lenders charge higher fees than traditional lenders
SBA Loan
The SBA does not provide the loan but provides a guarantee to lenders on a portion of the funds in case the borrower defaults. Repayment periods are determined by how you plan to use the funds:
- Working capital: 7 years
- Equipment: 10 years
- Real Estate: 25 years
Advantages
- Offers lowest rates
- Can borrow up to $5 million
- Longer repayment terms
Disadvantages
- Long, rigorous application
- Difficult qualification standards
Business Line of Credit
A business line of credit provides your business with funds up to a certain amount. You draw what you need from the line and only pay interest on the money used. As you pay down the loan, the funds become available again. This funding option offers more flexibility than others.
Advantages
- Flexibility
- Unsecured, no collateral or personal guarantee required
Disadvantages
- Often has additional fees (maintenance and draw fees)
- Strong credit and revenue requirements
Equipment Loans
An equipment loan is a funding option that can help you cover the equipment needed to run your business. Typically, the equipment is the collateral for the loan, and the terms are matched with the life expectancy of the equipment. Rates depend on the strength of your business and the value of the equipment.
Advantages
- Strong credit and business finances get competitive rates
- You own the equipment and payments build equity
Disadvantages
- Typically requires a down payment
- Equipment may become obsolete before the term is over
Invoice Factoring
Invoice factoring may be a viable funding option if you have unpaid invoices and need fast cash. This process involves selling your invoices to a factoring company that will advance you 80% to 95% of your invoices’ value and collect payment from your customers. Once the invoice is paid, you will be given the remainder of the funds, minus the company’s fees.
Advantages
Disadvantages
- Can be expensive
- Lose control over collections efforts
Invoice Financing
This funding option is similar to invoice factoring. However, instead of selling your invoices, you use them as collateral to secure a cash advance. You retain control of the invoices.
Advantages
- Fast funding
- Customers will never know
Disadvantages
- Expensive compared to other options
- You are responsible for collecting from customers
Merchant Cash Advance
A merchant cash advance provides your business with funds upfront to fund your business. However, instead of making monthly payments, you commit a percentage of your daily credit card sales or agree to a fixed daily/weekly withdrawal from your bank account.
Advantages
Disadvantages
- High costs
- Cash flow issues due to frequent payments
Personal Loan
This funding option is ideal for startups since most banks won’t extend a business loan to a business with no history. Approval is based on your personal credit score/history and typically requires good credit.
Advantages
- Ideal for startups
- Fast funding
Disadvantages
- High costs
- Smaller funding amounts
- Failure to repay can damage personal credit
Business Credit Cards
A business credit card is similar to a line of credit. You can use the funds and repay as needed, as long as you don’t exceed the limit and make minimum monthly payments.
Advantages
- May earn rewards on purchases
- No collateral
Disadvantages
High-cost, rates may increase
Extra fees may apply
Microloan
The final small business funding option we’ll explore is microloans. A microloan is a small loan, typically $50,000 or less. This type of funding is available to startups, new businesses, and those that are located in disadvantaged communities.
Advantages
- Low costs
- Services such as training and consulting often included
Disadvantages
- Smaller amounts
- Stringent eligibility criteria
Does Your Small Business Need Funding?
If your small business needs funding, keep these options in mind. If you want to learn more, let Dorra Financial Group help!
by dorraadmin | Apr 18, 2023 | Blog
Every successful entrepreneur has a unique story, but they almost always have a strong sense of their mission, customer profile, and goals. To help you define those, this blog poses three guiding questions you should consider.
Who Are Your Customers or Clients?
If you want to become a successful entrepreneur, it’s essential to know who you want your business to cater to. That’s because, without someone who needs it, even the best product will struggle to capture the market’s attention. A good approach is to identify a problem certain people have, then come up with a marketable solution to that problem. Alternatively, you can look at how preexisting companies are already solving that problem for customers, then offer an alternative that is better in quality, price, or both.
What Are Your Company’s Unique Selling Points?
Along with knowing their customers and the problem they’re solving, a successful entrepreneur must differentiate their company from competitors. That means developing selling points, or reasons a customer should choose your business over others. One way to do that is by collecting success stories from customers who’ve adopted your product and seen the benefits. You can also seek out media coverage and submit your offerings for award consideration.
What Are Your Values?
There is some overlap between a company’s selling points and its values, but values are worth considering on their own. It’s hard to be a successful entrepreneur without them. Values can both guide your leadership decisions and entice customers and potential employees who learn about them. For instance, companies that prioritize environmental friendliness will have an easier time drawing in eco-conscious consumers, while those that position themselves as employee-friendly will have a leg up when it comes to recruiting and retention.
Funding can help you along the path toward becoming a successful entrepreneur. To hear about your potential financing options, just speak with Dorra Financial Group.
by dorraadmin | Apr 14, 2023 | Blog- Marketing
The basics of a remarketing campaign involve continuing to advertise to customers who have purchased your products. Some businesses apply this to people who have visited your website even if they haven’t bought anything yet.
Remarketing in a Nutshell
This concept takes advantage of the fact that you’ve already invested significant money in advertising to get someone to the point of visiting your website or store. Why waste it? It’s better to keep marketing to people who have already shown interest in your products than spend all of your marketing budget advertising to the general public.
These days, remarketing campaigns benefit from high-tech features. You can customize what type of individual to advertise to, how, and when. It’s possible to create focused advertising that looks at keywords, landing pages, and purchase history.
Examples of Remarketing in Action
Online stores use this technique extensively. Do you remember the last you were shopping for an item and the website prompted you to sign up for email reminders letting you know about discounts? This is a subtle form of remarketing. The customer is focused on saving money, and the business benefits by encouraging customers to shop at the same store in the future.
Another way a remarketing campaign works is by leveraging Google Ads or Bing Ads to show people specific ads for your products as they browse online. Cookies on your website can help you suggest similar products to those visitors have purchased before, sometimes with text such as “You might also be interested in this product” or “Other customers also purchased these items.”
Tips for Effective Remarketing
There are many ways to make your online advertising more effective. First and foremost, choose a digital marketing agency with experience in a wide variety of advertising methods, including SEO, email marketing, social media marketing, Google AdWords, pay-per-click ads, and remarketing campaign planning.
Next, take the time to understand your target audience. Who are you trying to reach with your advertising and your products? What interests, problems, needs, and goals do they have?
It’s common for businesses to have several main groups of customers. Your remarketing can be more effective if you develop specific content for each of these groups individually. For example, the keywords and topics that work best for corporate executives are likely going to be very different than those for small business owners. The same thing applies to companies that sell to people of a wide range of ages and circumstances.
by dorraadmin | Apr 11, 2023 | Blog
Starting a business can be an exciting and rewarding experience, but it can also be challenging. In this 15-step guide, we will cover everything you need to know to get your business off the ground.
Step 1: Determine Your Business Idea
The first step in starting a business is to determine your business idea. What product or service will you offer, and who is your target audience?
Step 2: Conduct Market Research
Before launching your business, you need to conduct market research to determine if there is a demand for your product or service.
Step 3: Write a Business Plan
A business plan is a roadmap for your business. It outlines your goals, target market, financial projections, and marketing strategy.
Step 4: Choose a Legal Structure
Your business’s legal structure will determine your tax obligations, personal liability, and ownership structure.
Step 5: Register Your Business
You will need to register your business with the state and obtain any necessary licenses and permits.
Step 6: Open a Business Bank Account
Separating your personal and business finances is essential for tracking your business’s financial health.
Step 7: Choose an Accounting System
Keeping accurate records is essential for managing your finances and preparing tax returns.
Step 8: Secure Financing
You will need funding to start and grow your business. Dorra Financial Group can help you explore financing options that suit your needs.
Step 9: Choose a Location
The location of your business can impact your success. Choose a location that is easily accessible to your target market.
Step 10: Purchase Equipment and Inventory
You will need equipment and inventory to operate your business. Make sure you have everything you need before opening your doors.
Step 11: Hire Employees
Hiring employees can help you grow your business, but it also comes with legal and financial responsibilities.
Step 12: Develop a Marketing Strategy
A marketing strategy is essential for promoting your business and attracting customers.
Step 13: Launch Your Business
Once you have everything in place, it’s time to launch your business.
Step 14: Monitor Your Finances
Tracking your finances is essential for ensuring your business’s success.
Step 15: Continuously Evaluate and Improve
Evaluate your business regularly to identify areas for improvement and adjust your strategy accordingly.
Starting a business can be a daunting task, but with the right guidance, it can be an exciting and rewarding experience. If you need help navigating the process, contact Dorra Financial Group. Our team of experts can provide the guidance and resources you need to start and grow a successful business.
by dorraadmin | Apr 4, 2023 | Blog
Banks are one of the most common sources of business loans, but they have strict requirements to be met before they approve a loan application. Here are the typical requirements for obtaining a bank business loan and help you determine if you are ready to apply.
Credit Score and History
One of the primary factors that banks consider when reviewing loan applications is the borrower’s credit score and history. A high credit score and a clean credit history will increase your chances of being approved for a loan. However, the bank may reject your loan application if your credit score is low or you have a history of late payments.
Business Plan
Banks also require a detailed business plan that outlines the purpose of the loan and how it will be used to grow the business. The plan should include financial projections, a market analysis, and a description of the management team’s experience.
Collateral
Banks typically require collateral for business loans. Collateral can include real estate, equipment, and other assets the bank can seize in the event of default. If you are unable to provide sufficient collateral, the bank may reject your loan application.
Cash Flow
Banks will also consider the cash flow of your business when reviewing your loan application. They want to ensure that your business generates enough revenue to cover the loan payments. You will need to provide financial statements, including cash flow statements and income statements, to support your loan application.
Industry Experience
Banks may also consider the industry experience of the borrower. If you are a first-time business owner, the bank may view your loan application as riskier than an application from an experienced entrepreneur.
Obtaining a bank business loan can be a complex process, but it is a great way to secure financing for your business. Before applying for a loan, ensure that you meet the bank’s requirements. If you need help navigating the loan application process, contact Dorra Financial Group today. Our team of experienced professionals can help you secure the financing you need to grow your business.
by dorraadmin | Mar 28, 2023 | Blog
Contract factoring is a financing option that allows businesses to access cash quickly by selling their accounts receivable to a factoring company. Let’s take a closer look at contract factoring, how it works, what businesses should consider when choosing this financing option, and the benefits of using contract factoring.
What Is Contract Factoring?
Contract factoring, also known as invoice factoring, is a financing method where a business sells its invoices or accounts receivable to a factoring company at a discount in exchange for immediate cash. The factoring company then takes on the responsibility of collecting the payments from the business’s customers.
How Does Contract Factoring Work?
The factoring company will typically advance a percentage of the total value of the invoices, usually between 70% and 90%, to the business. The remaining amount, minus the factoring fee, is paid to the business once the factoring company collects the payments from the customers. The factoring fee is usually a percentage of the invoice value.
What Should Businesses Consider?
Businesses considering contract factoring should take into account the factoring fee, which can range from 1% to 5% or more, as well as the factoring company’s reputation, customer service, and collection practices. They should also consider whether the benefits of accessing cash quickly outweigh the cost of factoring fees.
The Benefits of Using Contract Factoring
Contract factoring can provide many benefits to businesses, including improved cash flow, faster access to cash, the ability to take on larger contracts, and reduced administrative costs.
If you’re a business owner considering contract factoring, contact Dorra Financial Group. Our team of experts can help you navigate the contract factoring process and find the best financing solutions for your business needs. We have years of experience helping businesses improve their cash flow through contract factoring, and we can help you too. Contact us today to learn more about our services and how we can help your business grow.
by dorraadmin | Mar 21, 2023 | Blog
Opening a franchise is an exciting step for established and new entrepreneurs alike. To help you decide if a franchising opportunity is right for you, this blog goes over some things you can expect.
Not All Franchises Are Equal
Opening a franchise is a big decision, so before diving into franchising, it will behoove you to research until you find a great fit. As you investigate different options, consider these questions:
- Do current franchisees speak positively of their experience with the franchise?
- Are there already competitors established in the area?
- How burdensome are the franchise’s fees?
- Is the parent company profitable?
Since franchise opportunities are available across hundreds of industries, there’s likely a good fit for you. Don’t rush the process of finding one.
Be Ready for Screening
Just as you’ll evaluate different franchisors, they’ll evaluate you, too. You’ll need to go through a franchising application process, during which the franchisor may delve into your motivations, finances, and background.
You’ll Have Ready-Made Branding
Branding is often challenging for businesses, but successful franchises have already figured that out. Through franchising, you can adopt branding practices that have already proven themselves.
You’ll Have Ready-Made Procedures
Another perk of franchising is that the parent company will likely already have procedures you can follow. While you may not be able to flex your creativity as much, you also won’t have to go through a trial-and-error process to figure out what works.
You’ll Have Financing Options
Franchisors often give their franchisees a leg up by providing funding. But if that isn’t available or isn’t enough to cover your franchising needs, you can also approach sources like alternative lenders for additional funds. Some financial products are specifically meant for franchisees, while others are all-purpose funding sources, like lines of credit, that are useful for any business type.
Do you need financing to write the next chapter in your business’s story? Dorra Financial Group would love to hear from you.
by dorraadmin | Mar 14, 2023 | Blog
It can be said that small business is the lifeblood of the American economy with more than 33 million small businesses currently operating, according to the Small Business Administration. The lifeblood of those businesses is certainly small business financing—the capital needed to operate, thrive, and grow. As reported by Bankrate, 43 percent of small businesses applied for a loan last year. Since a business can’t “nickel and dime its way to success,” the question often arises regarding a large loan such as, “how can I qualify for $500K financing?”
How Can I Qualify for $500K Financing?
Getting a loan isn’t necessarily easy, especially a large loan. It takes careful forethought, effort, and choosing the right financing source to qualify for $500K. Consider these tips:
First, carefully define what you need the funding for and how much you will need.
Second, gather documentation that will be required by most lenders including business financial statements, personal and business tax returns, and bank statements.
Third, find and compare lenders. Understand their lending limits, lending requirements, and financing terms.
Fourth, once you know a lender’s terms, find out if you are eligible for a loan.
Fifth, apply for a loan following the lender’s instructions and then remain actively engaged and responsive during the application process.
Sixth, once lending approval is secured, carefully review the loan documents to ensure that the loan amount, interest rate, and repayment terms are exactly as you understood them. Then sign and return the contract. The process to qualify for $500K financing takes effort.
Sources of a Large Loan for a Small Business
Sources to qualify for $500K financing include banks, credit unions, and alternative finance companies. Other financing means include purchase order financing, borrowing against receivables, unsecured lines of credit, merchant cash advances, and inventory financing.
Seek Expert Financing Assistance
Contact Dorra Financial Group, your trusted commercial lending partner in Atlanta, GA. We offer a wide array of business loans to meet the needs of new and established businesses.
by dorraadmin | Mar 10, 2023 | Blog- Marketing
Your online advertising is indeed better when you work with an experienced marketing company, but that doesn’t mean you shouldn’t have any say in it. The more you understand digital marketing and your goals for your online content, the better the finished results will be for your customers. It’s like hiring a catering business for a large corporate event; they prepare the food, but you choose the menu.
What Types of Marketing Are Included in Digital Advertising?
Digital marketing refers to all online advertising. It includes many different types of marketing for your business. Some of these methods are proactive, gathering leads you can follow up on. Email marketing, pay-per-click advertising and social media marketing are like that. Search engine optimization (SEO) helps your web content appear when people are looking for solutions online.
Others are passive, attracting potential clients to your website. Content marketing uses interesting content to get views online and position your business as a good source of information. You might say that people come for the blog articles and stay for your products. Website development is also essential for capturing the interest of visitors.
Why Is Investing Is Digital Marketing Important?
Imagine having a fully stocked store but no lettering outside your business, no sign or business name outside. How would people know about the amazing products you offer? Something similar happens when you want to attract customers online. Even if you have the best website, without digital advertising, no one will find it.
Online marketing is essential for e-commerce. It’s the way you make your business stand out from all the other businesses online. It shows why your brand is unique, what products you offer and how you can help your customers. Smart digital advertising makes an excellent first impression.
How Important Is Digital Advertising for Retail Businesses?
These days, you need online marketing for local customers as well. Whether people are shopping for shoes or groceries, they often go online to narrow down options before visiting the store. The better your digital marketing, the more customers you have and the better your reputation. Your company can get great reviews online and offline, which sends even more business your way.
What Type of Digital Advertising Is Best for Your Business?
You don’t need to choose just one method. Often, effective digital advertising is about using several avenues to reach the largest number of customers possible. Online marketing agencies should put together a customized package for your specific business.
