BoeFly Logo
BoeFly Transactions
$
0

Tax and Accounting Services Industry Loans

Pre-Qualify for a Business Loan

The Tax and Accounting Service Industry has been growing by leaps and bounds over the past five years. Since the economic crash of 2008, more businesses and individuals are utilizing the tax and accounting service industry to keep track of where their money is coming in from, where it is going, and how much they need to put aside for taxes and deductibles. The tax and accounting service industry is attractive to lenders and banking institutions because it is a necessary service, which means that the revenue is usually steady and there;'s never a shortage of customers.

However, entrepreneurs looking to open a tax and accounting service business often overlook everything needed to run such a business. In addition to office space and equipment, funds are needed to hire licensed and trained staff, the ability to backup client accounts, storage (be it physical or electronic) for your own records, as well as insurance policies for your business.

That may seem like a large undertaking when asking for a tax and accounting service industry loan, there is a wide variety of options available for tax and accounting businesses. From bank loans to non-traditional lenders, there are options for tax and accounting service loans that fit your business. Before you jump in and fill out a tax and accounting service industry loan application, you should get familiar with some of the more popular options available to you and your business.

Tax and Accounting Service Industry Loans: Which Loan Product Is Right For Me?

Merchant Cash Advance

A merchant cash advance is a loan based on credit card receipts. Lending institutions offer merchant cash advances based on the volume of credit card sales a tax and accounting service business generates over a given period.. To qualify for a merchant cash advance, the tax and accounting service business is required to have physical location, as well as an established record of credit card sales. The amount of the cash advance is directly proportional to the volume of credit card sales. Merchant cash advances are typically considered to be short-term funding, and are used to pay off suppliers, cover payroll, or uy new equipment. They can be arranged quickly, but have higher pricing and interest terms than other hair salon and spa industry loans.

Conventional Loans

For tax and accounting service businesses, conventional loans usually offer flexible terms and pricing. Conventional loans are handled by both traditional banks and even non-banking lenders, and the lending institutions are able to offer lower pricing based on the strength of the tax and accounting service industry loan request. Conventional loans typically offer flexible terms and pricing for hair salons ans spa service businesses, and lending institutions are able to give even lower pricing based on the strength of the loan request. Conventional loans are not guaranteed by a third party, so the bank or lending institution assumes the full risk of the loan. Because of this, the credit standards on conventional loans are typically higher than other forms of financing.

Seller Carry Finance

If you are purchasing an existing tax and accounting industry business, it is possible to arrange the terms of the financing with the existing owner. With seller carry financing, both parties negotiate the pricing, the period in which the transaction will take place (typically three to five years), and the rate of interest. The advantage of working directly with the seller is that they will usually assist in the transition, helping with the training of staff, and ensuring that the tax and accounting service will be successful. You success means the seller gets paid in full according to the agreed upon terms of the financing.

Asset Based Lines of Credit

Often, tax and accounting service industry businesses arrange asset-based lines of credit with lending institutions. This allows the tax and accounting business to receive funding based on the value of the assets and equipment used by the business. The higher the value of the equipment (office space, computers, etc.) offered up as collateral, the greater the available line of credit.

SBA Loans

The Small Business Administration's (SBA) 504 and 7(a) loan programs are two of the more popular tax and accounting service industry financing methods. The SBA backs 75% of the loan, which means that banks and other lending parties assume less risk in offering funding to tax and accounting service businesses. In order to apply for an a SBA Loan, the tax and accounting service business owner must meet some very stringent requirements, and the borrower must adhere to the SBA Standard Operating Procedures for loan underwriting. The popular SBA7(a0 uses loan pricing based on the Prime Lending Index plus a maximum spread of 2.75%. Some SBA lenders offer variable pricing for tax and accounting service industry loans, so that as the Prime Index rises and falls, so will the pricing and interest rates on the SBA Loan. SBA Loans are typically structured around the tax and accounting service's assets, which are offered as collateral for the loan.

Unsecured Business Line of Credit

Tax and accounting service industry businesses may not have the initial collateral needed to back a loan. In this situation, it might be wise to seek an unsecured line of credit with a lending institution. Unsecured credit is structured around the tax and accounting service's needs, as well as the financial strength of the business itself, the cash flow history, and the financial records of the tax and accounting business owner. Most unsecured credit loans have strict financial requirements, as the lender assumes 100% of the risk in the initial investment.

Credit Parameters for Tax and Accounting Service Industry Loans

Credit parameters vary widely among banking institutions and non-traditional lenders, depending on the market for tax and accounting service industry loans. Banks and lending institutions prefer to reduce their investment risk and always want a look at the collateral used to back a loan request. This helps to establish a Loan To Value (LTV) ratio. Given the demand for tax and accounting services, combined with the history of success of tax and accounting services, some lenders will arrange loans as low as 55% up to a maximum of 90% of the borrower's available collateral.

Debt Service Coverage Rate (DSCR) is a measure of the cash flow from a tax and accounting service industry business, which is used to make payments on a loan. Most lending institutions require a minimum of 1.25X to 1.35X of the available cash to be used for payments on a tax and accounting service industry loan. Most lending institutions prefer a higher ratio so that there is a buffer zone in case of any turbulence or downturn in sales a business might experience before the loan is paid.

Banks and lenders will also weigh the personal credit and financial history of the primary borrower, which will be detailed in a comprehensive credit report.

Tax and Accounting Services Industry: Economic Impact

The tax and accounting services industry has spikes in business in the first half of every year, but as more individuals and businesses are relying on on tax and accounting services to keep track of everything from payroll to figuring our deductibles, the industry is seeing steady profits throughout the year. Because all individuals and commercial entities need to figure out taxes, and the trend in employing outside services for accounting purposes is on the rise, the tax and accounting service industry is attractive to banks and non-traditional lenders. The tax and accounting service industry is stable, and financing such businesses is not as risky as other ventures.

Apply for Tax and Accounting Services Industry Loans

Tax and Accounting Service Industry loans vary greatly depending on your business model, but it is easy to speak with a consultant to find one that fits your needs. When applying for Tax and Accounting Industry financing, lending institutions will require a detailed list of equipment, collateral, a business plan, and the projected profits. If you are looking to get a start-up off the ground, the banks and lenders will require a detailed credit history of the borrower.

Applying for tax and accounting service industry loans has never been easier, with any of the 5,000 lenders on BoeFly. A single loan request though BoeFly is the most efficient way to get the hair salon or tax and accounting service industry loan that best fits your your business model. BoeFly also has one of the fastest turnaround rates for financing your business. While many banks can get the lending process started, BoeFly helps tax and accounting service industry business owners by by creating competition among lenders, thereby giving you a wide array of financing options, terms, and pricing.

Ready to start? Contact BoeFly at 1-800-277-3158 for a free consultation.