A Guide to Business Finance ? Dream Thrum

Article by Troy Degarnham

A Guide to Business Finance ? Finance ? Loans

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business financing is term that means exactly what it says, finance for businesses. It deals mostly with bank loans, overdrafts, factoring, invoice discounting, leasing and investment. It is something a business takes part in to acquire and convert capital funds to meet the monetary needs of the business. The main part of the equation focuses on bank loans. Getting a loan is an integral part in keeping a business up and running. If a company has just started operation, it may be hard to secure a loan, as banks usually want to see a history of operation before giving out any money.

When applying for a loan, remember the main reason why banks will deny a business a loan is because they have determined that the business is at a high risk of not being able to repay the loan. In the world of business finance, this is known as risk assessment, something any lending institution will do before handing out a loan. A bank will need to look at many things including credit history, operation history, experience and education to decide whether a business poses little to no risk or if a business is at high risk of not paying back the loan.

Perhaps the most important factor looked at by a bank is a company?s business plan. A lender will analyse a business plan and can find out all kinds of information that will help them decide if they will give the business a loan or not. A bank needs to use good judgment when looking at a business plan, as making a wrong decision could cost the bank a lot of money if a loan is given out and not repaid. With business finance, a bank will use a business plan as well as numerous other factors to determine if a business is going to be a high risk or a low risk in terms of paying back the loan.

The business plan will show the lender many things including just how much money the business needs to borrow. It will also show how the business plans on paying back the loan, and when it should be paid off completely. In terms of business finance, the bank simply needs to make sure that the business has sound plans in place to keep its business running and operational so that it will remain profitable enough so that it can pay back the loan.

About the Author

If you are enquiring about unsecured business loans please visit http://www.business-trader.com.au.

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Troy Degarnham

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Source: http://www.dreamthrum.co.uk/2012/07/a-guide-to-business-finance/

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