Finding financing support

Wednesday, September 28, 2005

It is the dilemma of most self-employed professionals that the ability to obtain financing from lenders of traditional sources are full of obstacles. Income generation is unpredictable, early startup businesses have little track record of viability while banks and finance companies view self-employed professional as more likely to default.

Take a look at this article in the Globe and Mail newspaper entitled Self-employment blues.

Fortunately times are changing, perhaps because workforce employment outsourcing has created a larger pool of prospective self-employed clientele and reduced the lucrative pool of traditional employee based clients. Banks like all businesses have had to adapt. The good news is that the self-employed now have a better chance to access financing than previously available.

The essential criteria is that you need to establish and maintain a good credit history even in times when your income levels have fallen and you are not generating the same revenue streams. It is therefore essential that you manage your cash flow with careful budgeting in place and work with your creditors to keep your record clean.

Today, banks will provide mortgage & other financing but do exercise caution regarding the institution you deal with as not all may provide the same level of service or give you the same degree of support. It is unfortunate that you never know until you have had financial difficulty which institution will provide you with the care, consideration and time to recover from an unexpected loss. The proverbial concept of "good times friends or business associates" need to be kept in mind at all times. Financial organizations can be quick to take steps to recover their money if they feel at risk even if you have equity in your home that more than covers the risk they hold.

The general view in the finance market today is if you have a three (3) year good payment credit history you can finance/refinance a home mortgage of up to 65% of your home value, 90% with mortgage finance insurance without having to provide income verification or detailed financial statements. Times are a-changing.

A website that provides a fairly large list of institutions that provide service to the self-employed can be found at:

http://www.beyourownboss.org/resources/fundfin.htm

For those who need access to financing via the banks for home mortgages, these links are provided for your ease of access.

Manage your line of credit carefully, it is very easy to affect your rating, even the smallest missed payment and failure to pay off small balances will impact negatively despite a good record of paying off large loans.

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