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It’s no secret that things aren’t like they used to be in today’s economy. With people seeing the benefits of cutting back on expenses wherever possible, the idea of entertaining at home has made a comeback. What used to be considered the norm in the 50s and 60s faded with the expansion of our economy, the progress of technology, and the continued availability of cheap oil. People used to entertain family and friends at home, but it fell out of fashion during the boom times. With good jobs and the economy expanding, everyone could go somewhere to do other things for entertainment. Amusement parks, movie theaters, shopping malls, fun centers, all became the new way to have fun, host parties, and have get-togethers with friends and family.In today’s economic climate, everyone wants to stretch their dollars as far as they will go. Gone are the days of driving to the entertainment hubs like malls and theaters just to be amused. We have come almost full circle back to the days of the 50s and 60s. After all, you pay your mortgage or your rent and the space you have is yours to use, so why not use it for entertainment? If you have a yard behind your home with a small patio, you can host parties and family reunions, entertain friends from work with old-fashioned cocktail parties and cookouts, and even go camping right in your own backyard. It takes some imagination and creativity, but one thing it doesn’t take is a lot of money.Saving money may be the best reason to begin using your backyard more completely, but in the long run there are other, better reasons to do your entertaining there. Yes, it’s good that you’re not using the car as often and you’re not spending money on going out for all the reasons you used to. But think of the way your family time will be better spent. Playing games, having meals together and doing other activities as a family is more fun and healthy in the backyard. With the right accessories for fun and comfort, it can become a family space where everyone gathers to enjoy themselves. You can use some of the money you’re saving by not going out to spruce things up and provide a nice environment for everyone to enjoy. And speaking of the environment, you’ll be doing it a favor by not using as much non-renewable fossil fuel driving to the mall and all those other places you used to go for entertainment. You will also be helping the environment by doing more cooking at home – it’s much more fun to cook outside at home, and you won’t be using and throwing away all those fast food containers like you used to do. Finally, a slower pace of life is a likely outcome of your decision to do more entertaining at home. You can relax, enjoy the outdoors, and know that you are doing something good for yourself, your family and your friends.As mentioned, the cost of getting your backyard ready for entertaining isn’t great, but there are a few items that will make it more fun and comfortable for your family members and your guests. Patio furniture is a necessity, and nowadays you can get a nice-sized set for a fairly reasonable price. For larger groups, buy some plastic stackable chairs – they are actually quite comfortable – and tables to match. Of course you will need a good gas grille for cooking out, but don’t try to impress the neighbors with the biggest. Just get one that has enough surface area and side burners to cook for the kinds of groups you’ll be feeding and you’ll be fine.Another good idea is a screened room for those summer nights when the outdoor pests get to be a little too much to take. With a lantern and a card table you can have all kinds of fun in one of these inexpensive pop-up rooms. For cooler nights you can get small propane heaters for the screened rooms as well, and keep the party going after it cools down. Another great idea is the portable fire pit. It’s like having a campfire in your own backyard. People love a campfire for the warmth and the good-all-over feeling it gives, and with a small, efficient fire pit you can have them enjoying the benefits of a campfire under the stars on your own patio. Add some inexpensive outdoor speakers to the backyard area to provide some music and you have all the entertainment you’ll need for your loved ones and friends.They say that everything changes, and we know it’s not always for the best. But by making the most of your investment in your home and using the backyard for entertaining and enjoyment, you’ll be making a change for the better.

If you are thinking of starting a business online, there are important considerations you have to make. Of course not all businesses online become successful thus it is also important that you plan it very well from the start to make it a success.To help you have a good start, here are some things that you will need in starting a business online.1. A good business plan. Business plans are important part of any business and even if you want to venture into the online world, it helps a lot to have a concrete plan on how you can go about with your business. Write down your business plan before even thinking about investing money. This will save you from the losses of a business that is not carefully planned.2. An easy to remember domain name. Your domain name is your unique web address and you can get one for a minimal fee. This will help make your business easy to remember and gives your business a established identity online.3. A professional looking website. Your website will be your online store and you have to make sure that your website is something that people find interesting, easy to navigate and use, and pleasing to the eyes as well. It is important also to customize your website according to what pleases your online readers as well as the search engines. Make sure that photos load easily, and that your colors and fonts are not distracting. If you are selling something online, you also have to consider putting a secured website where customers can have confidence in paying online. Make sure also that you accept easy and convenient mode of payments such as accepting credit cards and other online money transfer mechanisms to encourage easy sales from your customers.4. A shopping cart software that allows your online customers to select the products they want and pay it in bulk later. This will also take care of your electronic catalog and makes online ordering easy and convenient for people online.5. Security tools in your website to ward off virus, malwares and spywares that may attack your site or your customer’s computers. Putting up security tools in your website is indeed important to also gain the confidence of your online customers.6. Shipping and delivery. One of the biggest considerations in online businesses is the delivery and shipping of products all around the world. Pick a courier services that allow you to deliver goods in good condition and on time. These are two of the most important things you have to consider with your delivery. Also make sure that you have products that are not breakable, or too fragile to be shipped to other parts of the world. This can be a lot of risks especially during shipment and may solicit more arguments with your customers.7. Stable internet connection. If your online business is not just about delivering goods to customers but delivering services, make sure you also have a stable internet connection that will allow you to deliver your services on time.8. Good customer service. Of course, a good business today should always take care of the needs of their customer and that businesses should be backed up with good customer service.

Money always plays the most important role in human lives. The desire to fulfill personal needs come to everybody’s mind but affording for that is not always possible. But in a country like India, that can’t be a barrier to fulfill your and your family’s desires. Because, there are hundreds of banks and other financial organizations in the country who provide loans for personal reasons. These kinds of loans are known as personal loans. India is situating on one of the top positions in terms of providing these types of loans.Personal loans are simply those retail loans which are provided for the purpose of fulfillment of personal needs and expenses of individuals (prospective loan borrowers). The personal loans in India primarily are provided under five major categories. Though the loan amount and the rate of interest vary from bank to bank, but the purposes of providing these loans are same. Apart from the personal purposes, if someone possess the desire to establish his own business then also the Indian banks always welcome by providing the business start-up loans. Here, we will discuss about these kinds of loans.Consumer Durable Loans : – These kinds of loans are being provided for purchasing consumer durable products like television, music system, washing machines and so on. These are one of the unique kind of loans that are provided by the Indian banks to attract more and more people towards them. Under this category of personal loan, you will get an amount ranging from Rs.10,000 to Rs.1,00,000. But there are several banks which provides a minimum amount of Rs.5,000 and the maximum amount of Rs.2,00,000 under this loan. Banks provide this loan for maximum of a time period of 5 years.Festival Loans : – This kind of personal loan is provided to help people to fulfill their personal and family’s desire during the festival time. Usually, leading banks of India provide this loan on the festive season at cheaper or discounted rate. This is the best type of loan for those people who want to avail a small amount of loan. Under this category of loan, banks do provide an minimum amount of Rs.5.000 and you can get an maximum amount of Rs.50,000 under this type of loan. But the festival loan is restricted up to 12 months. Repayment is to be done by equated monthly installments (EMI). The rate of interest on this loan varies from bank to bank.Marriage Loans : – Nowadays, this type of personal loan is equally getting popular among the people of urban and rural sectors. The loan amount depends on various factors including age of the applicant, security pledged by the applicant (if secured loan), repayment capacity of the applicant etc. Under the marriage loan, the rate of interest is governed by the prevailing market rate at the time when the loan is disbursed.Pension Loans : – There are several banks in India which take care of the old aged people as well. That’s why the people who have retired from their jobs will also be able to avail personal loans. This type of loan is called a Pension loan. Under this kind of loan, the banks provide the maximum amount which is up to 7 to 10 times of the amount which was received as the last pension.Personal Computer Loans : – In this age of Information technology revolution, having an owned computer almost becomes a necessity. There are several Indian banks which offer loans that fulfill that desires of people. Under this category of loan, up to Rs.1,00,000 of amount can be borrowed. Banks also provide separate loan for purchasing of software and that can be provided up to an amount of Rs.20,000. The rate of interest is being charged according to prime lending rate and there are some banks who charge extra 2% on the loan amount.So, from the above discussion, one thing is quite clear that whatever your purpose is and whenever you need to meet your financial expenses, the Indian banks are always ready to spread their helping hands to you.

Often while purchasing a new car, obtaining an auto loan that is equal to the value of your car can be tricky. The whole point of applying for a loan is to ease the financial burden in acquiring your new car. Therefore, it is best when the maximum amount of your cost is covered through the loan. Therefore, any auto loan with an impressive loan-to-value percentage is sought after.So, what is loan-to-value percentage and how does it work?Technically, a loan-to-value percentage is the amount of the loan financed, relative to the value of the car. It is usually calculated by dividing the loan amount by the current value of the vehicle.Under an ideal scenario, the loan-to-value percentage is below 100%. However, on a situational basis, lenders can extend loans up to 150% of the value of the car. For instance, assume you want to buy a car worth $50,000 and the loan-to-value percentage on the auto loan is 120%. It indicates that you still have $10,000 to spend on other expenses while you can easily cover the cost of your new car.A lower loan-to-value percentage means a lower risk for the lender. However, there are a few ways to obtain a loan-to-value percentage which is higher than the value of the car you want to purchase.What should you keep in mind to obtain a Higher Loan-To-Value Percentage?· A Clean Credit HistoryA squeaky clean credit history is by far the most essential factor in not only getting an auto loan, but also getting higher loan-to-value percentage. Without a good credit history, accessing an auto loan can be difficult and it might cost you a tad bit more. Therefore, it is imperative to maintain a good credit record as it is exceedingly important in acquiring a higher loan-to-value percentage.· Type of CarWhether you are buying a new car or a used car, your repayment options and loan-to-value percentage can greatly vary. Surely, buying a new car has its own set of benefits as you are backed by a warranty for a few years. Additionally, the loan-to-value percentage on used cars may not be absolute as against new cars. Therefore, an auto loan for a newer car can cover your loan completely and in some cases even extend it to an amount more than the cost of the car that you want to purchase.· Steady IncomeThe primary criterion for qualifying for an auto loan includes a steady income. For any lender, a steady income stands as proof that you are capable of repaying the loan amount in the given time period. Usually, lenders ask for payment stubs or bank statements to validate your income. With a steady income of the past few years, obtaining a higher loan-to-value percentage is possible.Taking the above points into consideration, you get a clearer picture on how a loan-to-value percentage on an auto loan works and the factors you should consider so that you can bargain for a higher amount on your auto loan. Always carry out an extensive research and read the loan agreement meticulously before you decide on choosing an auto loan.

Summary
SPDN is not the largest or oldest way to short the S&P 500, but it’s a solid choice.
This ETF uses a variety of financial instruments to target a return opposite that of the S&P 500 Index.
SPDN’s 0.49% Expense Ratio is nearly half that of the larger, longer-tenured -1x Inverse S&P 500 ETF.
Details aside, the potential continuation of the equity bear market makes single-inverse ETFs an investment segment investor should be familiar with.
We rate SPDN a Strong Buy because we believe the risks of a continued bear market greatly outweigh the possibility of a quick return to a bull market.
Put a gear stick into R position, (Reverse).
Birdlkportfolio

By Rob Isbitts

Summary
The S&P 500 is in a bear market, and we don’t see a quick-fix. Many investors assume the only way to navigate a potentially long-term bear market is to hide in cash, day-trade or “just hang in there” while the bear takes their retirement nest egg.

The Direxion Daily S&P 500® Bear 1X ETF (NYSEARCA:SPDN) is one of a class of single-inverse ETFs that allow investors to profit from down moves in the stock market.

SPDN is an unleveraged, liquid, low-cost way to either try to hedge an equity portfolio, profit from a decline in the S&P 500, or both. We rate it a Strong Buy, given our concern about the intermediate-term outlook for the global equity market.

Strategy
SPDN keeps it simple. If the S&P 500 goes up by X%, it should go down by X%. The opposite is also expected.

Proprietary ETF Grades
Offense/Defense: Defense

Segment: Inverse Equity

Sub-Segment: Inverse S&P 500

Correlation (vs. S&P 500): Very High (inverse)

Expected Volatility (vs. S&P 500): Similar (but opposite)

Holding Analysis
SPDN does not rely on shorting individual stocks in the S&P 500. Instead, the managers typically use a combination of futures, swaps and other derivative instruments to create a portfolio that consistently aims to deliver the opposite of what the S&P 500 does.

Strengths
SPDN is a fairly “no-frills” way to do what many investors probably wished they could do during the first 9 months of 2022 and in past bear markets: find something that goes up when the “market” goes down. After all, bonds are not the answer they used to be, commodities like gold have, shall we say, lost their luster. And moving to cash creates the issue of making two correct timing decisions, when to get in and when to get out. SPDN and its single-inverse ETF brethren offer a liquid tool to use in a variety of ways, depending on what a particular investor wants to achieve.

Weaknesses
The weakness of any inverse ETF is that it does the opposite of what the market does, when the market goes up. So, even in bear markets when the broader market trend is down, sharp bear market rallies (or any rallies for that matter) in the S&P 500 will cause SPDN to drop as much as the market goes up.

Opportunities
While inverse ETFs have a reputation in some circles as nothing more than day-trading vehicles, our own experience with them is, pardon the pun, exactly the opposite! We encourage investors to try to better-understand single inverse ETFs like SPDN. While traders tend to gravitate to leveraged inverse ETFs (which actually are day-trading tools), we believe that in an extended bear market, SPDN and its ilk could be a game-saver for many portfolios.

Threats
SPDN and most other single inverse ETFs are vulnerable to a sustained rise in the price of the index it aims to deliver the inverse of. But that threat of loss in a rising market means that when an investor considers SPDN, they should also have a game plan for how and when they will deploy this unique portfolio weapon.

Proprietary Technical Ratings
Short-Term Rating (next 3 months): Strong Buy

Long-Term Rating (next 12 months): Buy

Conclusions
ETF Quality Opinion
SPDN does what it aims to do, and has done so for over 6 years now. For a while, it was largely-ignored, given the existence of a similar ETF that has been around much longer. But the more tenured SPDN has become, the more attractive it looks as an alternative.

ETF Investment Opinion

SPDN is rated Strong Buy because the S&P 500 continues to look as vulnerable to further decline. And, while the market bottomed in mid-June, rallied, then waffled since that time, our proprietary macro market indicators all point to much greater risk of a major decline from this level than a fast return to bull market glory. Thus, SPDN is at best a way to exploit and attack the bear, and at worst a hedge on an otherwise equity-laden portfolio.

Your stocks to watch for the week ahead are Cheniere Energy (LNG), S&P 500 biotech giant Vertex Pharmaceuticals (VRTX), Cardinal Health (CAH), Steel Dynamics (STLD) and Genuine Parts (GPC).

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While the market remains in correction, with analysts and investors wary of an economic downturn, these five stocks are worth adding to watchlists. S&P 500 medical giants Vertex and Cardinal Health have been holding up, as health-care related plays tend to do well in down markets.

Steel Dynamics and Genuine Parts are both coming off strong earnings as both the steel and auto parts industries report optimistic outlooks. Meanwhile, Cheniere Energy saw sales boom in the second quarter as demand in Europe for natural gas continues to grow.

Major indexes have been making rally attempts with the Dow Jones and S&P 500 testing weekly support on Friday. With market uncertainty, investors should be ready for follow-through day breakouts and keep an eye on these stocks.

Cheniere Energy, Cardinal Health and VRTX stock are all on IBD Leaderboard.

Cheniere Energy Stock
LNG shares rose 1.1% to 175.79 during Friday’s market trading. On the week, the stock advanced 3.1%, not from highs, bouncing from its 21-day and 10-week lines earlier in the week.

Cheniere Energy has been consolidating since mid-September, but needs another week to forge a proper base, with a potential 182.72 buy point formed on Aug. 10.

Houston-based Cheniere Energy was IBD Stock Of The Day on Thursday, as the largest U.S. producer of liquefied natural gas eyes strong demand in Europe.

Even though natural gas prices are plunging in the U.S. and Europe, investors still see strong LNG demand for Cheniere and others.

The U.K. government confirmed last week that it is in talks for an LNG purchase agreement with a number of companies, including Cheniere.

In the first half of 2021, less than 40% of Cheniere’s cargoes of LNG landed in Europe. That jumped to more than 70% through this year’s second quarter, even as the company ramped up new export capacity. The urgency of Europe’s natural gas shortage only intensified last month. That is when an explosion disabled the Nord Stream 1 pipeline from Russia that had once supplied 40% of the European Union’s natural gas.

In Q2, sales increased 165% to $8 billion and LNG earned $2.90 per share, up from a net loss of $1.30 per share in Q2 2021. The company will report Q3 earnings Nov. 3, with investors seeing booming profits for the next few quarters.

Cheniere Energy has a Composite Rating of 84. It has a 98 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share price movement with a 1 to 99 score. The rating shows how a stock’s performance over the last 52 weeks holds up against all the other stocks in IBD’s database. The EPS rating is 41.

Vertex Stock
VRTX stock jumped 3.4% to 300 on Friday, rebounding from a test of its 50-day moving average. Shares climbed 2.2% for the week. Vertex stock has formed a tight flat base with an official buy point of 306.05, according to MarketSmith analysis.

The stock has remained consistent over recent weeks, while the relative strength line has trended higher. The RS line tracks a stock’s performance vs. the S&P 500 index.

Vertex Q3 earnings are on due Oct. 27. Analysts see EPS edging up 1% to $3.61 per share with sales increasing 16% to $2.2 billion, according to FactSet.

The Boston-based global biotech company dominates the cystic fibrosis treatment market. Vertex also has other products in late-stage clinical development that target sickle cell disease, Type 1 diabetes and certain genetically caused kidney diseases. That includes a gene-editing partnership with Crispr Therapeutics (CRSP).

In early August, Vertex reported better-than-expected second-quarter results and raised full-year sales targets.

S&P 500 stock Vertex ranks second in the Medical-Biomed/Biotech industry group. VRTX has a 99 Composite Rating. Its Relative Strength Rating is 94 and its EPS Rating is 99.

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Cardinal Health Stock
CAH stock advanced 3.2% to 73.03 Friday, clearing a 71.22 buy point from a shallow cup-with-handle base and hitting a record high. But volume was light on the breakout. CAH stock leapt 7.3% for the week.

Cardinal Health stock’s relative strength line has also been trending up for months.

The cup-with-handle base is part of a base-on-base pattern, forming just above a cup base cleared on Aug. 11.

Cardinal Health, based in Dublin, Ohio, offers a wide assortment of health care services and medical supplies to hospitals, labs, pharmacies and long-term care facilities. The company reports that it serves around 90% of hospitals and 60,000 pharmacies in the U.S.

S&P 500 stock Cardinal Health will report Q1 2023 earnings on Nov. 4. Analysts forecast earnings falling 26% to 96 cents per share. Sales are expected to increase 10% to $48.3 billion, according to FactSet.

Cardinal Health stock ranks first in the Medical-Wholesale Drug/Supplies industry group, ahead of McKesson (MCK), which is also showing positive action. CAH stock has a 94 Composite Rating out of 99. It has a 97 Relative Strength Rating and an EPS rating of 73.

Steel Dynamics Stock
STLD shares shot up 8.5% to 92.92 on Friday and soared 19% on the week, coming off a Steel Dynamics earnings beat Wednesday night.

Shares blasted above an 88.72 consolidation buy point Friday after clearing a trendline Thursday. STLD stock is 17% above its 50-day line, definitely extended from that key average.

Steel Dynamics’ latest consolidation could be seen as part of a larger base going back six months.

Steel Dynamics topped Q3 earnings views with EPS rising 10% to $5.46 while revenue grew 11% to $5.65 billion. The steel producer’s outlook is optimistic despite weaker flat rolled steel pricing. STLD reports its order activity and backlogs remain solid.

The Fort Wayne, Indiana-based company is among the largest producers of carbon steel products in the U.S. It engages in metal recycling operations along with steel fabrication and produces myriad steel products.

How Millett Grew Steel Dynamics From A Three Employee Business

STLD stock ranks first in the Steel-Producers industry group. STLD stock has a 96 Composite Rating out of 99. It has a 90 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement that tops at 99. The rating shows how a stock’s performance over the last 52 weeks holds up against all the other stocks in IBD’s database. The EPS rating is 98.

Genuine Parts Stock
GPC stock gained 2.8% to 162.35 Friday after the company topped earnings views with its Q3 results on Thursday. For the week GPC advanced 5.1% as the stock held its 50-day line and is in a flat base.

GPC has an official 165.09 flat-base buy point after a three-week rally, according to MarketSmith analysis.

The relative strength line for Genuine Parts stock has rallied sharply to highs over the past several months.

On Thursday, the Atlanta-based auto parts company raised its full-year guidance on growth across its automotive and industrial sales.

Genuine Parts earnings per share advanced 19% to $2.23 and revenue grew 18% to $5.675 billion in Q3. GPC’s full-year guidance is now calling for EPS of $8.05-$8.15, up from $7.80-$7.95. The company now forecasts revenue growth of 15%-16%, up from the earlier 12%-14%.

During the Covid pandemic, supply chain constraints caused a major upheaval in the auto industry, sending prices for new and used cars to record levels. This has made consumers more likely to hang on to their existing vehicles for longer, driving mileage higher and boosting demand for auto replacement parts.

Fellow auto stocks O’Reilly Auto Parts (ORLY) and AutoZone (AZO) have also rallied near buy points amid the struggling market. O’Reilly reports on Oct. 26.

IBD ranks Genuine Parts first in the Retail/Wholesale-Auto Parts industry group. GPC stock has a 96 Composite Rating. Its Relative Strength Rating is 94 and it has an EPS Rating of 89.

US Markets were trading in the green on Friday with Dow 30 trading at 30,678.80, up by 1.14%. While S&P 500 was trading at 3,701.66, up by 0.98% and Nasdaq Composite 10,690.60 was also up by 0.71 per cent

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US Markets in green on Friday; Dow 30 up over 345 points, Nasdaq Composite, S&P 500 up nearly 1%
Earlier today, Indian stock markets ended the week on a winning note. It was the sixth straight gains for equity markets. Source: Reuters
US Markets were trading in the green on Friday with Dow 30 trading at 30,678.80, up by 345.25 points or1.14 per cent. While S&P 500 was trading at 3,701.66, up by 35.88 points or 0.98 per cent and Nasdaq Composite 10,690.60 was also up 75.75 points or 0.71 per cent. A Reuters report said that today’s strength was on the back of a report which said the Federal Reserve will likely debate on signaling plans for a smaller interest rate hike in December, reversing declines set off by social media firms after Snap Inc’s ad warning.

Source: Comex

Nasdaq Top Gainers and Losers

Source: Nasdaq

Earlier today, Indian stock markets ended the week on a winning note. It was the sixth straight gains for equity markets. The BSE Sensex ended at 59,307.15, up by 104.25 points or 0.18 per cent from the Thursday closing level. Meanwhile, the Nifty50 index closed at 17,590.00, higher by 26.05 points or 0.15 per cent. In the 30-share Sensex, 13 stocks gained while the remaining 17 ended on the losing side. In the 50-stock Nifty50, 21 stocks advanced while 29 declined.

There are several potential financing options available to cash-strapped businesses that need a healthy dose of working capital. A bank loan or line of credit is often the first option that owners think of – and for businesses that qualify, this may be the best option.

In today’s uncertain business, economic and regulatory environment, qualifying for a bank loan can be difficult – especially for start-up companies and those that have experienced any type of financial difficulty. Sometimes, owners of businesses that don’t qualify for a bank loan decide that seeking venture capital or bringing on equity investors are other viable options.

But are they really? While there are some potential benefits to bringing venture capital and so-called “angel” investors into your business, there are drawbacks as well. Unfortunately, owners sometimes don’t think about these drawbacks until the ink has dried on a contract with a venture capitalist or angel investor – and it’s too late to back out of the deal.

Different Types of Financing

One problem with bringing in equity investors to help provide a working capital boost is that working capital and equity are really two different types of financing.

Working capital – or the money that is used to pay business expenses incurred during the time lag until cash from sales (or accounts receivable) is collected – is short-term in nature, so it should be financed via a short-term financing tool. Equity, however, should generally be used to finance rapid growth, business expansion, acquisitions or the purchase of long-term assets, which are defined as assets that are repaid over more than one 12-month business cycle.

But the biggest drawback to bringing equity investors into your business is a potential loss of control. When you sell equity (or shares) in your business to venture capitalists or angels, you are giving up a percentage of ownership in your business, and you may be doing so at an inopportune time. With this dilution of ownership most often comes a loss of control over some or all of the most important business decisions that must be made.

Sometimes, owners are enticed to sell equity by the fact that there is little (if any) out-of-pocket expense. Unlike debt financing, you don’t usually pay interest with equity financing. The equity investor gains its return via the ownership stake gained in your business. But the long-term “cost” of selling equity is always much higher than the short-term cost of debt, in terms of both actual cash cost as well as soft costs like the loss of control and stewardship of your company and the potential future value of the ownership shares that are sold.

Alternative Financing Solutions

But what if your business needs working capital and you don’t qualify for a bank loan or line of credit? Alternative financing solutions are often appropriate for injecting working capital into businesses in this situation. Three of the most common types of alternative financing used by such businesses are:

1. Full-Service Factoring – Businesses sell outstanding accounts receivable on an ongoing basis to a commercial finance (or factoring) company at a discount. The factoring company then manages the receivable until it is paid. Factoring is a well-established and accepted method of temporary alternative finance that is especially well-suited for rapidly growing companies and those with customer concentrations.

2. Accounts Receivable (A/R) Financing – A/R financing is an ideal solution for companies that are not yet bankable but have a stable financial condition and a more diverse customer base. Here, the business provides details on all accounts receivable and pledges those assets as collateral. The proceeds of those receivables are sent to a lockbox while the finance company calculates a borrowing base to determine the amount the company can borrow. When the borrower needs money, it makes an advance request and the finance company advances money using a percentage of the accounts receivable.

3. Asset-Based Lending (ABL) – This is a credit facility secured by all of a company’s assets, which may include A/R, equipment and inventory. Unlike with factoring, the business continues to manage and collect its own receivables and submits collateral reports on an ongoing basis to the finance company, which will review and periodically audit the reports.

In addition to providing working capital and enabling owners to maintain business control, alternative financing may provide other benefits as well:

It’s easy to determine the exact cost of financing and obtain an increase.
Professional collateral management can be included depending on the facility type and the lender.
Real-time, online interactive reporting is often available.
It may provide the business with access to more capital.
It’s flexible – financing ebbs and flows with the business’ needs.
It’s important to note that there are some circumstances in which equity is a viable and attractive financing solution. This is especially true in cases of business expansion and acquisition and new product launches – these are capital needs that are not generally well suited to debt financing. However, equity is not usually the appropriate financing solution to solve a working capital problem or help plug a cash-flow gap.

A Precious Commodity

Remember that business equity is a precious commodity that should only be considered under the right circumstances and at the right time. When equity financing is sought, ideally this should be done at a time when the company has good growth prospects and a significant cash need for this growth. Ideally, majority ownership (and thus, absolute control) should remain with the company founder(s).

Alternative financing solutions like factoring, A/R financing and ABL can provide the working capital boost many cash-strapped businesses that don’t qualify for bank financing need – without diluting ownership and possibly giving up business control at an inopportune time for the owner. If and when these companies become bankable later, it’s often an easy transition to a traditional bank line of credit. Your banker may be able to refer you to a commercial finance company that can offer the right type of alternative financing solution for your particular situation.

Taking the time to understand all the different financing options available to your business, and the pros and cons of each, is the best way to make sure you choose the best option for your business. The use of alternative financing can help your company grow without diluting your ownership. After all, it’s your business – shouldn’t you keep as much of it as possible?