Finance Options for Business Growth

Finance Options for Business Growth

he process of obtaining a small business loan is a complicated one. However, military veterans have access to special programs through the United States SBA. Before you decide to pursue funding to grow your small business, it’s important to understand your options and the requirements for qualification.

VA Small Business Loan Explained

As a former member interested in starting a business, you are going to need some business funding. While you may be able to obtain funding through a traditional lender, you also have access to VA small business loans through the SBA. The Department of Veteran’s Affairs has nothing to do with these small business loans.

Just like traditional funding, these loans are provided by a lending partner and require repayment with interest. The difference is the SBA works with lenders to establish guidelines to reduce risk to the lender. This typically means lower interest rates and longer terms.

Types of VA Small Business Loans

There are several options available for veterans who are interested in a small business loan, including:

  • Standard 7(a) loans
  • Military Reservist Economic Injury Disaster Loans
  • Micro-loans
Qualifications for VA Business Loans

The qualification requirements vary based on the loan type, personal credit score of the applicant, and other factors. The basic requirements for the 7(a) loan program are:

  • Business exists for profit
  • Engaged in/propose to do business in the United States or it’s territories
  • Business owners have invested equity
  • Other alternatives have been exhausted
Other Financing Options for Veteran Business Owners

If the above options do not match your needs, there are other programs available for veteran business owners, including:

  • Street Shares
  • Service-Disabled Veteran-Owned Small Business Program
  • Hivers & Strivers
Resources for Veteran Business Owners

If you plan to establish your own business, there are several resources available to help, including the following:

  • National Veteran-Owned Business Association
  • Regional Business Associations
  • Veterans Business Outreach Centers
  • American Corporate Sponsors
  • Entrepreneurship Bootcamps
Do You Need Finance Options for Business Growth

If you are a United States military veteran interested in starting or growing your small business, you have options. Contact Abundant Wealth Financial to learn more about these options and more.

A Guide to Business Acquisition Financing

A Guide to Business Acquisition Financing

If you are a business owner who is pursuing an acquisition, there are certain things that you need to keep in mind, including:

  • Growth opportunity offered by the target company
  • Purchase price
  • Financing terms

If these things do not align, there’s a chance that the acquisition will fail. One of the most common mistakes is to focus on the purchase price without considering the present and future growth plans of the target company. Two of the most challenging aspects of a business acquisition is securing the required capital and the most ideal financing terms.

Acquisition Financing Options

When it comes to business acquisition financing, there are several options available and each will have its own unique set of eligibility criteria, cost, expectations, terms, and covenants. These options are:

  • Bank Financing
  • Seller Financing
  • Asset-based Financing
Bank Financing

If the business you are trying to acquire has a lot of assets, a strong profit margin, and positive cash flow, you should be able to obtain traditional bank financing. On the other hand, if your goal is to acquire a service company with a lot of receivables and short-term assets, it can be harder to obtain traditional financing.

You can improve your chances of getting a loan by finding a lender that has historically financed the type of business you are trying to acquire. If the seller has a relationship with a financial institution, try talking to them. Also, you don’t have to accept rejection- just find another lender to discuss your options with. After all, different lenders use different qualification criteria.

Seller Financing

For small- to middle-market transactions, the seller may be willing to finance a portion of the transaction. The easiest way to do this is for the buyer to make a down payment and the seller holds the promissory note for the balance of the purchase price. The business, as well as its assets, act as collateral.

The terms vary based on the specific agreement between the parties.

Asset-Based Financing

Recently, asset-based financing has increased in popularity as a viable funding source for business acquisitions. An asset-based loan is a revolving loan secured by the assets of the business. Typically, the loan is 65% to 80% of the value of the asset class.

The primary difference between traditional financing and asset-based financing is what the lender considers when underwriting the loan. In the case of traditional financing, the lender looks at the cash flow first and then the collateral value. On the other hand, in the case of an asset-based loan, the lender considers collateral, debt load, and quality of earnings.

The primary disadvantage of asset-based financing is the interest rates, which range between 12% to 28%.

Equity Financing

Equity financing involves securing equity from sources such as angel investors, private equity firms, and venture capitalists in order to raise the capital to pay the seller as well as to put working capital into the business.

At this time, most private equity firms are looking for deals with $2+ million in earnings and $10+ million in revenues. However, the owner must be willing to give up 51%+ of the company. So, the buyer won’t have debt but will have to give up control of the company.

In addition, most of these firms are looking for a 25% minimum rate of return on their investment. While each has its own expectations and exit strategy, generally they hope to sell the business or take it public within a certain period of time.

Mezzanine Financing

Mezzanine financing is a combination of debt and equity, involving a variety of technical terms such as equity investment, senior/subordinated debt, and private-placement transactions.

In recent years, the size of the mezzanine industry has grown over the past year and is expected to continue to grow as we move into the future.

Ensure Your Deal is a Success

In order to ensure the best chances for success in any deal structure and the best terms, make sure that your offer and/or business plan is well structured. You should base your plan on the combined business- not just the current one. The plan should show how combining operations will improve collateral and cash flow, as well as increase growth. If you need more help with your business acquisition financing, contact Abundant Wealth Financial today.

Annuity Financing: What is it?

Annuity Financing: What is it?

If you have an annuity and have short-term funding needs, you may want to consider annuity financing. This is the process of taking a loan directly from the annuity or using its value as collateral for a loan from an outside source.

Why Consider Annuity Financing?

There are a couple of reasons you might want to consider annuity financing, including:

  • Emergency needs such as a down payment on a home, supporting a family member, home repairs, or medical expenses
  • You don’t want to give up your annuity due to tax and surrender penalties that would lower its value
How Does Annuity Financing Work?

Before we explain how annuity financing works, we’ll explain the basics of deferred and non-qualified annuities.

A deferred annuity has an accumulation period in which it grows. At the end of this period, you can annuitize it, which converts it to an immediate annuity. This is when your payments start. This type of annuity can only be used for a loan during the accumulation period.

A non-qualified annuity is funded with post-tax dollars, while a qualified annuity is funded with pre-tax dollars. You may be able to borrow money during the accumulation phase on your non-qualified annuity. However, financing with a qualified annuity may be more complex.

Here are your financing options:

  • Take a loan directly from the annuity
  • Use the annuity as collateral
Advantages & Disadvantages of Using Your Annuity for a Loan

Annuity financing has several advantages and disadvantages, which we will explore below:


The advantages of annuity financing are:

  • Annuity financing allows you to avoid surrender charges. If you surrender a portion or all of the annuity for cash, you’ll be required to pay a fine. In some cases, these may cancel out any gains you’ve accrued.
  • Annuity financing allows you to avoid paying taxes and early distribution penalties. If you liquidate an annuity before you are 59.5 years old, you’ll be charged a 10% penalty on the amount that you withdraw.

The disadvantages of annuity financing are:

  • You may have to pay an early distribution penalty if you do not pay it back within the specified period of time. In addition, the amount withdrawn is subject to income tax by the federal government.
  • You reduce the amount that is available to earn interest, which reduces the growth of the annuity.
  • There are certain restrictions, which means this may not be the best use of your tax-deferred status.
Is Annuity Financing a Good Idea?

As a general rule, using your annuity for financing, selling it for a fraction of its worth, or surrendering it are the last resort. If possible, its best to have emergency funds set aside in flexible products such as an online savings account. You may also want to consider meeting with a tax advisor or other financial professional to discuss your goals and get some advice. If you need help, contact the experts at Abundant Wealth Financial. We can help you examine your options to get the funds you need.

How to Improve Your Web Development Abilities

Like most technology, web development adapts and changes seemingly at the speed of light. As a coder, you may be concerned with keeping up with new methods and industry trends. Therefore, these are a few ways you can maintain and improve your coding skills.

Practice Regularly

If you want to improve your basketball skills, your coach will tell you to increase your practice and do it regularly. The same strategy works for many other types of skills, and coding is one of them. The more you practice, the better your coding will be. Therefore, sit down and practice every day.

As you continuously use your skills, you will begin to see mistakes easier, your typing and analysis will be accelerated and you will learn about new practices early in their development.

Pursue Education

You can also take courses on new coding processes, and you should continuously learn about internet security and any new strategies that can help you secure your programming. Test out code editors, and when you find the one you like best, learn it inside and out. Some of these tools have features that can accelerate your productivity as well.

Also, don’t just stick with the programming language you know. However, don’t worry about learning every coding language that is out there. You can gain a general knowledge of those that are regularly used in web development while mastering the fundamentals of programming in general.

Challenge yourself. Find tutorials on new languages or build plugins that can help you and others. However, don’t get discouraged if you struggle with a concept or project. Remember that you may be working on projects developed by individuals with decades of coding experience.

Take Regular Breaks

Regular downtime is also valuable. You should not spend all day every day focused on improving your coding skills, especially if your regular job involves coding. You can actually lose productivity if you don’t spend time away from your projects and practice time.

Share Your Knowledge

The best way to learn and solidify your knowledge is to teach someone else. Therefore, you can improve your web development skills by sharing your knowledge with others. As you develop lesson plans, you will improve your organizational skills and teach your mind to put your instructions in the right order.

Remember, you don’t have to write about code, especially if you aren’t a strong writer. Instead, develop a video course or slide presentation that details different tips and tricks with a specific type of programming language or code editor tool.

It will take a bit of time and dedication, but you will find that by implementing these tips, your programming skills and productivity will increase. Contact Abundant Wealth Financial to learn more about effective web design services.


Is Private Equity Financing Right For You?

Is Private Equity Financing Right For You?

If you were to ask a small business owner where to get financing, they would probably be able to immediately list a few options. Chances are, they have a bank account somewhere, so the bank may be their first suggestion. Then, they may recall where they got their financing when they needed it.

However, if you were to ask them where to access private equity financing, they may not be so sure. Most of the time, when this topic is mentioned, they will suggest that you check with an attorney or accountant, or they may mention a private equity investor that approached them at one time.

Unfortunately, small business owners who are seeking capital and private equity investors don’t connect due to a variety of factors. This is typically because small business owners don’t know where to turn or there is a shortage of capital providers in their area. In addition, most private equity investors are only interested in businesses in a specific industry, certain cash flow profiles, and of a certain size.

Private equity investors look for companies they understand, with a management team they can connect with. They also prefer to invest in companies where they can add value. Beyond that, they place priority on transactions that benefit their fund.

In order to determine if private equity financing is right for your business, you must understand that there are advantages and disadvantages:

Advantages: Private equity financing provides you with capital beyond what you would get through traditional financing, as well as the chance to pursue a growth/acquisition initiative.

Disadvantages: Private equity financing can be expensive- traditional financing is almost always going to be cheaper.

The biggest problem isn’t financial but allowing an outsider in as a business partner. In traditional financing, the lender isn’t involved with the day-to-day operations of your business. They need regular statements and payments, and need you to abide by the terms of the agreement- but that’s all.

A private equity investor, on the other hand, is hands-on. If you do not have a board of directors, they will make one. If you do, they will take a seat on it. Then, they will set a strategy and create rules for future infusions of capital.

Private equity investors want to work with entrepreneurs that will be good partners and accept advice and feedback for growing the company.

If you’re interested in pursuing private equity financing for your business, take your time and do your research. Don’t wait until you need the money to get started with your search but build relationships and bridges ahead of time. Ask your accountant, lender, or attorney if they know of any private equity investors in your industry and area. Additionally, contact Abundant Wealth Financial for more information. We can help you determine if private equity investing is right for you.