Resolving the Working Capital Issues of Start Ups

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In an economy that is strained by recession, small business enterprises, particularly the startups are gasping for capital. According to the Federal Financial Institutions Examination Council, bank lending to the small business sector has been registering a steady decline since 2008. The issue has threatened to snowball into a full blown crisis considering the fact that startups are mainly responsible for boosting employment in the US economy. The problem is that banks are increasingly viewing small businesses as a risk prone sector and banks are not lending unless a business is absolutely credit worthy, turning a blind eye to the fact that such wealthy well established companies don’t really require bank help!

The subsidized loans overseen by the US Small Business Administration have also registered a decline mainly because of paucity of stimulus money. Besides, these subsidized loans require a personal guarantee backed up by a large asset from owners having more than twenty percent stake in their business, which is discouraging many entrepreneurs. Small businesses that happen to overcome these issues and source much needed capital still face the problem of augmenting their ever expanding working capital requirements-the expenses that go into financing the nitty-gritty of daily business operations and administration. This is one area where loans for vehicle title can make a solid contribution to small businesses.

The entrepreneur would have invested a considerable sum of money to purchase cars and commercial vehicles for warehousing and transportation, and this money need not become a dead investment. A cash loan for title offers the opportunity to unlock the equity in a vehicle that could be fruitfully channeled into the business activity in the short term as much needed working capital.

Being high interest bearing, installment loans in California are definitely more expensive than bank loans but overall there are many other considerations that outweigh this factor and make title loans the number one choice for tackling financial emergencies. The foremost consideration is speed, these auto collateral loans can be availed in the twinkling of an eye, and this is mainly because title lenders have cut short many formalities to make their product readily available. This means that there are no bundles of paperwork to waste your valuable time on, and no background checks by the lender to ascertain the firm’s credit standing. In fact one’s credit worthiness (or lack of it) is not an issue with pawn car title loans. Bad credit or existing bank loans will not prevent you from accessing title loans. This can be a breather for small businesses as they are prone to run into repayments problems every now and then.

Collateral is another advantage; the fast car title loan requires the borrower to pledge only the vehicle title in favor of the lender while retaining custody and use of the vehicle. This ensures that his commercial activities don’t suffer in the short term. Besides, the borrower need not put up valuable collateral like his home or 401(k) to get pink slip loans. The fact that the home may already be under mortgage does not stand in the way of the collateral loan.

Yet another advantage is that the title lender is concerned only with the level and quantum of your current income and whether that constitutes adequate means to repay the car equity loan. The firm’s Federal tax returns and the business income declared therein are sufficient proof for a title lender to extend finance. The business stands to gain substantially as more than 60% of the commercial value of its vehicle can be taken as title loan.

The purpose or end utilization of the auto equity loan amount is never questioned and the entrepreneur enjoys full freedom to plough the money back into his business. The silver lining in the collateral loan is its repayment strategy, and lenders (particularly the reputed and more established players) are falling over themselves in a competitive market to extend bank loan styled twelve month title loan repayments in amortized installments that don’t strain the budgets of small businesses.

 

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