Budget basics for business loans: you should talk to your financial advisor even before you need that business loan.

• Author: Barbour, Tracy

Managing cash flow is one of the most important aspects of operating a business-- especially during times of growth, says Ron Veltkamp, business development director of the Alaska Small Business Administration.

As a company grows, so does its need for working capital or cash for ongoing expenses. Without adequate funding, a business can spin out of control. "I've seen many businesses go broke trying to grow too fast," Veltkamp said.

If you need money to successfully grow your business-and don't have a rich uncle-lender financing may be the solution. Financial institutions in Alaska offer a variety of loans and other financing options to help businesses meet their cash flow and expansion needs.

The type of financing you pursue will depend largely on the unique needs of your business, says Ron Kukas, president of Alaska First Bank & Trust. There are loans for a wide range of reasons: buying equipment, furniture and buildings, as well as covering inventory, accounts receivables, working capital and seasonal gaps.

A company's financing needs are often based on its industry, says Kukas, a 34-year veteran of the banking business. For example, a retailer might have a short-term need to borrow to cover inventory until it is sold. He will repay the loan when he collects the receivables. On the other hand, a restauranteur won't have a receivables base. His need may be for new equipment or a larger facility.

If you're not sure which financial product is most suitable for you, don't worry. Your lender will assess your needs and recommend the best option. "That's our job to try to determine what is the best type of credit the business needs," Kukas said. "You can't cookie cutter it; you need to evaluate each need and look at the right type of loan for that need."

ALTERNATE FINANCING OPTIONS

A business line of credit is another method companies can use to finance expansion efforts. The typical line of credit lets you borrow, repay and re-borrow funds. Collateral is minimal and payments are flexible.

With KeyBank's Responsive Line of Credit, for example, no collateral is required on lines $50,000 and under and borrowers can opt for interest only payments.

Sometimes lines of credit are asset-based. And normally, the assets used are short-term in nature, such as inventory or customers accounts. "You match up the assets with what you're trying to finance," explains KeyBank Alaska District President Brian Nerland. "As inventory is sold... customers pay down the...