Business loans-Business financing

Business Loans Rise

2010-02-08T08:32:00.000-08:00

Small businesses at the Shore were approved for more loans at the end of last year, the U.S. Small Business Administration said Wednesday, in a sign that the tight credit standards may be thawing.

Forty-nine Monmouth and Ocean county businesses received SBA-backed loans worth $18.1 million during the last three months of the year, up from 35 businesses that received $16.7 million the same quarter the previous year, the SBA reported.

"We do see trends that indicate the worst is behind us, and we're hopeful this trend we're establishing continues on," said James A. Kocsi, director of the SBA's New Jersey district.

Small-business lending plummeted the past two years as banks, stung by bad loans, tightened their standards. It made it tougher for small businesses to buy equipment, pay workers and fuel the economy.

To jump start lending, the federal government as part of the economic recovery act provided $730 million to the SBA at least partly to eliminate and reduce fees and guarantee up to 90 percent of a loan. (The SBA previously guaranteed 75 percent to 85 percent of a loan.)

The incentives will remain until the end of February. But Congress may extend them through the end of the year.

Small-business owners say the credit market remains tight. Seaside Materials Inc., a Long Branch company that sells masonry building supplies, recently was forced to search for another lender after its long-time bank called in its line of credit, said Anthony Damiano, the company's chief executive officer.

The company saw sales fall 60 percent during the recession. And even though it cut expenses just as rapidly and never defaulted on a loan, it couldn't convince other banks to work with it, Damiano said.

The company, however, caught a break when Basking Ridge-based Affinity Federal Credit Union agreed to lend it about $580,000 — most of which will be guaranteed by the SBA.

"I found (Affinity) to be very communicable, especially in these times, because a lot of banks aren't doing anything right now in terms of looking out for small businesses," Damiano said.

TD Bank remained the biggest SBA lender, both at the Shore and in New Jersey. But three other banks that aren't household names — BNB Bank, Indus American Bank and Innovative Bank — were among the biggest SBA lenders in New Jersey.

Kevin McCloskey, vice president of lending at Affinity, said the credit union became an SBA-approved lender just last year, hoping the banking industry's credit crunch would allow it to make more business loans — and add customers.

All but one of its new customers "are being asked to leave the bank they're at now," McCloskey said.

Small-Business Loans

2010-01-27T07:59:00.000-08:00

Advocates for boosting small-business lending have found lots of support in Washington, from Congress to President Barack Obama. But after a year of jawboning, progress has been hard to come by.

That could change if a proposal backed by U.S. Rep. Gary Peters, a Bloomfield Township Democrat, to generate $50 billion in credit for small businesses becomes part of an expected jobs bill congressional Democrats are likely to launch soon.

In a town hall meeting Friday in Elyria, Ohio, Obama said he was pressing his administration to explore ways to get banks lending again, saying they "are still not lending to small businesses enough" due in part to concerns from regulators.

"There should be a discussion about whether or not we've seen the pendulum swing too far," Obama said. "Used to be they would lend anybody anything; then they lost all this money, and now they won't lend people with good credit anything. That's not good for the economy."

Small businesses, the majority of which have five employees or fewer, account for about half of the jobs in Michigan's economy. Before the downturn, the 26 million such businesses nationwide drew $718 billion in loans a year -- everything from property mortgages to credit cards.

Banks cut small-business lending

The recession clearly has drained some of the credit available for small firms. According to U.S. Treasury data, the 22 largest banks that have taken federal aid under the financial industry bailout have shrunk their small-business lending by $12.5 billion since April, with $1 billion cut in November alone.

The National Federation of Independent Business, the largest lobbying group of small businesses, said in its December survey of members that 15% saw credit standards tightening.

Yet many experts say the problem stems from a lack of demand among small businesses, which don't need to expand in the throes of a recession. Only 8% of the firms in the same poll reported any problem with getting the financing they needed, and just 4% cited financing and credit as their top business challenge.

Business Owners Vie For Loans

2010-01-07T05:44:00.000-08:00

Terrence Gidney moved his business, Affordable Scrubs & Stuff, to Main Place Mall a year ago, with financial help from a minority business loan program.

"I'm still in business, and that says a lot in the middle of a recession," Gidney said. He sells designer and traditional scrubs for the health care industry, as well as medical accessories and chef coats.

Gidney received a $50,000 loan in 2008 from the Minority Entrepreneur Grant and Loan Program. It is run by the Regional Development Corp., the loan division of the Erie County Industrial Development Agency.

Gidney was one of 10 loan recipients in 2008. Now a new group of applicants are being considered for the $500,000 program.

Fifty-five applicants have made the first cut, and they will face tougher scrutiny of their ventures and finances. The program targets high-risk businesses being launched or expanded but that do not qualify for traditional bank financing.

Nine of the 10 recipients from 2008, including a gourmet catering firm, a bowling center and a day spa, are still operating and employing 23 people, according to the ECIDA. The one that failed, One Sunset restaurant run by Leonard Stokes, became a source of controversy.

For the current edition of the program, 89 applications were received by the mid-December deadline, and the field was whittled to 55, said Karen Fiala, the ECIDA's tax incentive product coordinator.

The 55 applicants that made the preliminary cut will have to submit a detailed analysis of how they would use the ECIDA funds, as well as business plans. The recipients will be announced in mid-March.

The applicants include minority businesses in Buffalo, East Aurora, Cheektowaga, Grand Island and Getzville, with ventures including construction, a day care, and a bookstore.

Only a handful of the 55 applicants might end up receiving loans, Fiala said. "We have to take a long, hard look. Does it make sense? Do they have a good plan? Do they have the experience?"

In 2008, the pilot program attracted 70 applicants and 28 made the preliminary cut. A loan committee approved loans for 11 of them, but one later withdrew. The 10 ventures were awarded about $400,000 in low-interest loans and grants.

Gidney said the loan he received through the ECIDA program helped him move his business from Elmwood Avenue to the mall location a year ago. The low interest rate and terms make it feasible for a small business such as his to pay back the loan as he tries to build his business, he said.

Gidney said he is trying to spread the word about his business into the suburbs. That would benefit downtown by bringing more customer traffic there, he said. But as a start-up, his resources are limited.

While Gidney's business forges on, the sole loan recipient from the 2008 program that has closed, One Sunset, drew criticism.

City Comptroller Andrew A. SanFilippo faulted the ECIDA for not performing its "due diligence" on One Sunset before approving that $50,000 loan. The agency defended its actions, saying it had made its decision based on the best information it had available at the time.

A Buffalo News investigation last year found the agency had overlooked public records showing an unpaid vendor won a court judgment against the restaurant before the loan was dispersed, and that two other businessmen had already sued the restaurant. One Sunset had also racked up $17,376 in unpaid sales taxes.

Current applicants to Minority Entrepreneur Grant and Loan Program can expect more-extensive reviews this time.

"We're expanding our due diligence this year to include a more intense credit check," Fiala said. That will include research into matters such as liens and judgments, she said.

The finalists will also be subject to another financial review within 30 days of receiving their funds. And program participants will have to complete an approved business "mentoring" program, to help them avoid potential mistakes in running their operations.

Business Finance

2009-12-04T06:15:00.001-08:00

Be the decision maker. There is nothing wrong with getting advise from advisors when trying to close a deal and arrange business acquisition financing. Just don't turn all the decision making authority over to the advisors. Take all the counsel as input and then decide for yourself what issues to bend on and which issues are sacred cows.

Select Deal Makers. Make sure that advisors you chose to work with (lawyers, accountants, business consultants) are deal makers not deal breakers. A working definition of a deal maker is simply someone who has a lengthy track record for closing the type of deal you are trying to consummate. These individuals have a combination of the right technical ability, relevant experience, and ego control necessary to truly add value for the money you're going to have to pay them if the deal closes or not.

Pre-Qualify the business acquisition financing requirements. Make sure that the buyer has the means to acquire financing. The buyer typically needs to have 1/3 to 1/2 the purchase price as a down payment, depending on the industry and the hard assets being acquired. Good credit and a solid net worth can also be requirements for suitable financing.

The seller needs to be prepared to work with different financing options before getting too deep into due diligence. Will a vendor take back be required? How long is the vendor willing to assist with the business after sale? How much working capital is the vendor draining out of the business?

Consult with a financing consultant. Whether you're the buyer or the seller, there is great value to talking the potential deal over with a financing consultant before your accountant and lawyer start running up their tab respective tabs.

From the seller's point of view, a financing consultant can be invaluable in providing insight as to how to get the business in a financial position. From the buyer's point of view, a financing consultant can provide guidelines as to lender requirements. In either case, there is no sense going through all the potential aggravation of closing a deal if its unlikely to attract the necessary business acquisition financing capital.

Become blood brothers (or sisters) with the other side. A close working relationship between the buyer and the seller can stop the deal from going down bunny trails and sitting unnecessarily on an advisor's desk. Always listen to your chosen advisors, but remember that as buyer and seller, its your collective deal, and you're the one's who will make or break it when the issues are cloudy and the timelines are dragging on.

Set a realistic time frame. Negotiating the deal, going through due diligence, getting advisor input, writing up the deal, and getting financing in place normally takes more time than first estimated.

If the change of control is time dependant due to the business sales cycle, year end, etc., then make sure you have sufficient time to get the deal done before you start, otherwise the only people that will be making any money will be the advisors when the deal can't get closed on time.

Business Financing

2009-12-04T06:12:00.000-08:00

Business acquisition financing is right up there with your basic root canal. It may be necessary but it most certainly is not fun.

In fact the overall process for acquiring an ongoing business can be a mind sucking affair, very expensive,and in the end unfruitful.

Why is the process so frustrating?

The answer in many cases is the advisors involved.

That's right, the very people that are paid to complete the deal, are the same ones that kill it.

Let me explain.

All deals have two sides, a buyer and a seller. Both sides have to rely on their third party advisors for advise on such things as legal, valuation, taxation, finance, etc.

Unfortunately, the business acquisition financing issues do not tend to be dealt with in the construction of the purchase and sale agreement, creating sometimes unworkable issues for potential lenders.

When buyers and sellers rely heavily on advisors, there is automatically less chance for the deal to succeed. Why? Because it can be impossible for both sides to agree or reconcile issues between the advisors without great cost and time delays.

The advisors are commissioned by their clients to protect the client's best interest. But in this process of protection, it can be very difficult to get both sides to agree on all issues as both groups of advisors are coming at each issue from the opposite point of view. The result is a deal between buyer and seller in principal that can't get closed.

Even when the purchase and sale agreement does get finalized, there may be terms and conditions that are now not acceptable to your source or sources of business acquisition financing.

If the agreement has to be reworked for the lender, this can be the beginning of the end as it may have already taken the powers of heaven and earth to get everything agreed to and signed off the first time. Making revisions can be like opening Pandora's box with no hope of ever getting it closed again.

If this all sounds bleak and depressing, it certainly can be.

The stark reality is that if you're going to buy or sell a small business you need to self educate yourself to some degree before you get started.

Here are some points to consider:

Approach the deal on a Win - Win basis. Too often in deal making, one side is trying to pull a fast one on the other and try to come out better that they otherwise would have.

This is a dangerous strategy because no matter what you and the other party agree to in principle, the advisors will weigh in at some point and likely uncover any inequity that was created in the negotiations.

Not only does the deal now become more complicated as a new basis for agreement needs to be established, but there may also be distrust forming between the parties, either of which could end up killing the deal.

Working Capital Advances for Businesses

2009-11-24T07:46:00.000-08:00

Working capital is essential for the running of any company. Merchants often require additional working capital in order to meet unplanned needs. One method of attaining this working capital is to approach a company like Capitallynk to raise the working capital as a loan.

The advantage for companies that seek small working capital loans is that merchant advance cash schemes often do not require any collateral from the borrower. There are no restrictions placed by the lender as to how the money should be utilized within the business. Such companies do not levy hidden fees or up-front costs on such transactions.

Companies seeking working capital loans opt for such funding schemes as they have a number of benefits. Companies that have otherwise been rejected from business loans can apply for a working capital loan on a credit card or debit card account. There are no fixed payments or predetermined time frame for this lending scheme.

The entire procedure is automated and hassles free. The loan is granted by the customer selling a dollar amount of future debit or credit card transaction sales at a discount to the loan provider. It is this guarantee that acts as a security and does away with the need for collateral.

There are two main requirements that lending companies impose on businesses applying for loans. The first is that the company should have been in business for a stipulated period. The company will also need to earn a certain percentage of its earnings through credit card based transactions every month to qualify for this scheme.

As each sale is settled, a percentage is automatically deducted and the issuing company is repaid. It is due to this reason that there is no fixed repayment schedule. Repayment is thus directly related to the earnings of the customer.

Business cash advance schemes allow companies to meet sudden demands for their products when working capital or ready materials may be in short supply. Such a loan ensures that the company has enough cash available to be operative and yet competitive at the same time.

CapitalLynk provides such working capital advances to companies that have been in business for four months with an average of $5000 in credit card transactions. Approval for loans is done within 24 hours and funding is provided within seven working days

Value Investing Still Work

2009-11-16T14:12:00.000-08:00

The essence of technical analysis involves studying of past financial market data to forecast price trends and make an investment decision based on this.

Technical analysis only takes into consideration price behavior of the market. Unlike in value investing, technical analysis doesnt care about the value of a company.

What's the use of analyzing past market data when the market is random. There can be a 50% chance of going up and another 50% of going down, why do we still need to study Technical Analysis.

As I explained in the earlier article about how psychology affects investment, investors move in a crowd approach (causing a trend) and this cause support (lowest price point of this trend) and resistance (highest price point of this trend) levels to be formed until something drives the stock higher or even lower.

Technical analysis is useful only if you want to 'predict' short term stock performance. Technical analysis is not so useful in predicting long term stock performance.

In a short run, stock prices are the effects of the actions of investors and , the prices are governed by intrinsic value of underlying business and past price movements and current or future news and rumours affects the decision of investors.

Eventhough technical analysis is not beneficial in a way to long term investors, i still believe its important to keep an open mind when it comes to investing and to read and learn as much as possible.

To summarise, value investors basically follows the below criterias when identifying potential stocks

1. Undervalued stocks
2. Low Price/Earnings ratio
3. Low Price/Cash flow ratio
4. Low Price/Book value ratio
5. Sound financial statements, low long term debt. The company must have enough cash flow to pay its long term debt with 3 financial years
6. Positive earnings in an upward trend
7. Strong management team and strategy
8. Competitive advantage of a company

How is technical analysis useful to value investors? Value investors can use technical analysis to identity investments who are over speculated. Over speculated stocks are hardly undervalued. They are usually overvalued due to the overcrowded speculation. Now, lets look back at rule number 1 of value investing, to identify stocks that are overvalued and have strong potential.

Now value investing is becoming too popular as its backed by Warren Buffett's success and everyone is learning and using the system of value investing. Do you still think value investing techniques will stick work since there are more people using value investing? I believe it will still work in some extend as we are dealing with long term investment as compared to short term investment. The criterias that we have identified for valued stocks for ways of identifying good companies. Good companies = strong financial potential and growth.

Home Equity Loan Or Line Of Credit

2009-11-05T18:45:00.000-08:00

A home equity line of credit is very closely related to a home equity loan but the subtle differences can mean a lot. Determining which option is the best for you relies upon you knowing your current situation and having a clear plan for what you wish to accomplish with the money.

A home equity loan is a lot like a mortgage. With a home equity loan you are able to borrow the amount of your homes value that you have already paid off. The benefits of this type of loan is that it is almost always guaranteed since it is based upon the amount of your home that you already own, the terms are almost identical to a mortgage and you receive the entire amount of the loan up front after closing.

While a home equity loan is also based upon the amount of your home that you currently own, the terms of the loan are very different. A home equity loan is basically a credit card where the limit is the amount of equity that you have in our home. Instead of receiving one large lump sum of cash, you will receive an overdraft type of service on your account that will allow you to withdraw as much or as little of the equity that you wish to use.

Which choice is better for you? The answer depends upon what you need the money for. With a home equity loan the monthly repayment schedule is known and the interest on your loan will be lower than most other types of loans. However, with a home equity line of credit, you have instant access to cash and the payments will vary depending but the interest will vary. With this in mind the question really becomes do you need access to a varying amount of money or one known lump sum of cash?

A lump sum of cash with a set repayment schedule is great for specific things such as debt consolidation or the funding of specific projects with a predetermined cost. If you are considering debt consolidation for credit cards or any other high interest loans a home equity loan is most likely a very good idea. You will be able to repay all of your debt and will only have to make one monthly payment at a lower rate of interest that you are currently paying on your cards and other unsecured loans.

Home equity loans also make perfect sense if you know the exact amount that you need to borrow. While it is always nice to have cash on hand it is often better to have more credit available to you. The more of your credit limit that you use up the higher the interest rates will be for you and the tougher it will be to borrow more money in the event of an emergency. It is definitely to your advantage to only be in debt for a specific amount to complete one project.

A line of credit option may be better depending upon what you wish to do with your money. While you will still use up a portion of your credit limit, the payments and impacts on your available credit may be lower. With a line of credit you always have the same amount of money available to you. As you pay off the amount of credit used, you can reuse that portion if needed without having to apply for another loan. Also your payments may be considerably lower since you are only paying on the amount of money that you have actually used, not the total amount borrowed.

As you can see there are some big differences between a home equity loan and line of credit. If you are looking at a single project, such as a new car or adding a pool to your home, a home equity loan is the better choice for you. However, if you are looking at starting up a new business, wish to travel or can not settle on predetermined amount money, then a line of credit is the better option for you. With a line of credit you can use as much of your credit as you wish whenever you wish and, much like a credit card, you can reuse the amount of the line of credit that you have repaid with out having to re-apply for a loan.

The Bond Market

2009-10-02T07:10:00.001-07:00

The bond market fluctuates on a daily basis and is a major determinant in the setting of interest rates. In fact, one can actually guess with an astonishing degree of accuracy as to any movement within a business day if there will be a rate adjustment, whether up or down, based on what the bond market is doing, specifically the 10 year bond. For clarity's sake, there a couple of different bonds that affect interest rates. They are:

The 2 Year Bond
The 5 Year Bond
The 10 Year Bond
The 30 Year Bond

The primary bonds that affect interest rates are the 10 year and the 5 year bond. To see actual, real time fluctuations in the bond market, go here at http://money.cnn.com/markets/bondcenter/ to see current prices for bonds. This is the one I view daily. The bond market is highly volatile. How do you read the graphs so as to know if interest rates will have a spike downward or upward?

While looking at the 10 year price graph (the farthest one on the right), if the 10 year price has a massive swing upward from say 99 28/32 to 103 28/32, rates most likely will have a decrease from current levels.

If the bond market fluctuation merits an increase or decrease in the loan broker's yield spread premium (their rebate), it will in turn affect the interest rate that is quoted to a client, which in this example would be a lower rate. If the bond price doesn't have much of a fluctuation during a normal business day, the rate will not move. Every day, in the morning, rates are received in the office. If a price adjustment is required, the primary lenders will immediately issue an adjustment rate sheet to their broker partners.

As I've said, interest rates are set based on the yield in the bond market at any given time. Let's show an example. If, for example, a $100,000.00 bond falls in value to $95,000.00, the corresponding yield (return) is significantly higher. Because the yield is higher, the prevailing interest rate that is set for the mortgage must offset the higher yield and provide a return on the mortgage for the lending institution. With all things being equal, the rates on fixed rate mortgages would tend to rise.

Multiple Forces in The Economy
There are many factors influencing interest rates for home loan in the US economy. Higher interest rates can cause fluctuations in the stock market which in turn affects the bond market. In fact, the bond market and the stock market are opposite sides of the same coin. One can't move without the other.

If the US Dollar rallies, bonds dip; when oil prices dip, bonds can as well. Generally speaking, when the bond market is up, the stock market is down. In addition, if economic news is worse or better than expected, it will cause a fluctuation in the US dollar currency pairs in the spot Foreign Exchange market (the FOREX), which can affect the bond market and in turn rates.

A quick example. A couple of weeks ago from this writing, the US New Jobs report was projected at 350,000 -- it only came in at 10% of that or 35,000. Once the report was announced, literally IMMEDIATELY the GBP/USD currency pair (Great British Pound and US Dollar) spiked upward. The GBP dramatically increased in strength with the US Dollar becoming weaker. One FOREX trader I know literally made $3,500 in five minutes as he projected the claims to be much less than expected.

Also, interest rates dropped that day due to the lackluster jobs report. Coming into the office that day, a wise loan agent would have locked some loans or at the least knew interest rates would had gone down that day. Truly, the US economy is a highly interdependent organism that is very fluid and dynamic -- it is never static or motionless. Some of the key economic indicators that affect the economy, and in turn interest rates, are:

Durable Goods Orders
New Home Sales
US Trade Balance
Jobless Rate
Weekly Initial Jobless Claims
Fed Chairman Speech Before Congress

The key economic indicators that can affect the bond market with corresponding fluctuations are:

Consumer Confidence
Retail Sales
Manufacturing Activity
Industrial Production
Jobs Growth
Inflation

Interest Rates Set

2009-10-02T07:05:00.000-07:00

How are interest rates set -- a common refrain for those who broker loans. The first thing most clients or prospective clients will ask is "how are rates doing?" Or, "what rate can I get?"

It's understandable as the rate determines in large part as to what your monthly payment will be. Fundamentally, the interest rate is what you pay the lender in exchange for their lending you the money for your home loan.

How Are Rates Set?
So, how are rates set? Generally speaking, the longer the loan the more the risk to the lender and consequently the higher the rate. Of course, it's not as simple as that for there are a number of factors that determine how rates are set. There are three fundamental forces that determine interest rates.

The Federal Reserve
The Bond Market
Multiple Forces in The Economy

The Federal Reserve

The "Fed" as it is commonly called determines US monetary policy for the entire country. There was no central federal banking system in the US from 1783 to 1913 but that all changed with the Federal Reserve Act of 1913. Ostensibly, it is the central bank of the US. Don't let the term "Federal Reserve" throw you -- it is NOT a federal US government institution or department.

It is a privately-held organization. There are 12 regional Federal Reserve System banks throughout the US. In addition, the Federal Reserve seeks to constantly adapt its various monetary policies in a concerted effort to combat inflationary and deflationary pressures brought about due to changes in the domestic or global economy.

The Federal Reserve Board members meet eight times a year and generally only changes rates during a meeting. The 12-member Federal Reserve Board can control interest rates by changing the rates it charges banks to borrow money.

Here's how it can influence rates.

The Federal Reserve loans banks funds from their district Federal Reserve bank who pledge their commercial paper as collateral. The Fed essentially charges the borrowing bank interest on the loan. This is called the discount rate.

Banks or lenders then lend the consumer or borrower money charging their primary interest rate. The implications are self-evident. The higher the discount rate the Fed charges the bank, the higher the primary interest rate will be to the borrower as the bank wants to meet the minimum requirements as well as make a profit.

Many people think that when they hear current Federal Reserve Chairman Alan Greenspan make a monetary policy change with the Prime rate, it automatically affects interest rates. Not so.

The Prime rate increase or decrease may affect a Home Equity Line of Credit (HELOC), but it wouldn't affect interest rates. Interest rates also fluctuate with the various loan programs available to the borrower.

Leasing Benefits

2009-09-18T06:56:00.000-07:00

Alternative to financing - Leasing is essentially an alternative to traditional financing and can be great for companies not able to obtain business loans.

100-percent "financing" – In many cases, leasing requires no down payment. This allows you to "finance" an entire purchase, including software, hardware, consulting, maintenance, freight, installation, and training costs.

Ease and convenience - Applying for a lease is easy, and lease arrangements can be structured to meet your individual requirements. Equipment leases can range from $ 2,000 to $ 2 million. For smaller amounts, you can complete a brief application and receive a final decision within days—often with no financial reports or tax returns needed.

Leases for more than $100,000 generally require detailed financial information from the business, and the leasing company conducts a more thorough credit analysis than it would for a smaller.

Flexibility - Lease terms range from 12 to 60 months, depending on the equipment type. Most leases can be structured so that payments are made with operating rather than capital funds. This can eliminate or reduce capital budget delays.

Leased equipment can be purchased later if capital becomes available. Plus, a percentage of the lease payments can be credited toward the purchase of the equipment.

Fixed, predictable payments - Having fixed lease payments enables you to accurately predict the impact of equipment expenses on your cash flow.

Conserves working capital - Leasing conserves your working capital by requiring only a minimum initial outlay of cash.

Tax Advantages - Operating leases are generally treated as a 100-percent, tax-deductible business expense paid from pre-tax earnings instead of after-tax profits.

Protection against inflation - Lease payments are based on the dollar's current value. And unlike bank lines of credit with fluctuating rates, your payments are fixed regardless of what happens to the market tomorrow, making it easier to budget, forecast and grow.

Working with a Leasing Companies When leasing equipment, keep in mind that the company selling the equipment simply makes a direct referral to a leasing company with which it does business.

And, usually, the company selling the equipment works with more than one leasing company. So be sure to get quotes from a number of leasing firms. It’s also a good idea to ask for referrals from friends and business associates.

Additionally, make sure you understand with whom you’re dealing. Are you talking to a broker—the person who simply structures deals, then gets them financed through any of the leasing companies he or she works with. Or are you dealing with a leasing company that is actually putting its own funds on the line?

Brokers can be beneficial because they have valuable insight about the leasing market and can help you find the best leasing solution for your needs. But as when dealing with any type of salesperson, you are responsible for handling the due diligence. Do your own homework to ensure you negotiate the most favorable lease agreement for your company.

Leasing to Buying

2009-09-07T07:15:00.000-07:00

Short on cash, but need equipment? Consider leasing what you need. Leasing equipment may be a better alternative to buying, depending on your situation and needs.

Today, leasing is common practice in business. Over the past two years, equipment leasing has risen approximately 20 percent, according to recent research by the U.S. Small Business Administration (SBA). And 8 out of 10 U.S. businesses lease all or part of their equipment, reports the Equipment Leasing Association.

Leasing is appropriate for just about any business at any stage of development. For start-up businesses with no revenues, smaller leases—those of $100,000 or less—may be better managed on the personal credit of the owners—if they are willing to make the monthly payments.

Comparing Leasing to Buying When you buy a piece of equipment or vehicle, you usually have to pay for it in full either by using cash or by financing the balance. After you finish paying for it, you own it.

Equipment leasing, on the other hand, is essentially a loan. The lender buys and owns the equipment and then "rents" it to a business at a flat monthly rate for a set number of months. At the end of the lease, the business has several options. It can purchase the equipment for its fair market value (or a fixed or predetermined amount), continue leasing, return it or lease new equipment.

With a lease, you actually only pay for using the equipment. But at the end of the lease period, you could end up owning nothing. So why lease? The answer is simple: By leasing equipment, you leave money in the bank that can be used for other purchases. Since lease payments are usually smaller than regular loan payments, you don't have to pay out as much each month.

However, keep in mind that a lease is not cancelable like a bank loan or other debt. If you need to get out a standard loan you can sell the equipment and pay off the loan, or even refinance it. With a lease, you generally have to pay off the lease in full. So you have to be sure you make the payments when you enter into a lease.

So what kinds of equipment make the most sense for a small business to lease? According to research by the SBA, the most common items leased are office equipment, computers, and trucks and vehicles.

Benefits of leasing equipment offers a wide range of benefits, from consistency with expenses to increased cash flow. But perhaps the most significant advantage of leasing is the ability to maintain up-to-date equipment. Leasing allows you to easily and affordably add equipment or upgrade to a complete new piece of machinery to meet future needs. This lets you transfer the risk of being caught with obsolete equipment to the leasing company.

Debt Solutions

2009-08-31T06:29:00.000-07:00

With the ever-rising costs of living, debts are something that piles up in our lives that are a major cause of stress.

We often find ourselves in a quagmire of financial crisis when we try to extend our credit for the next month just to find out that we are again facing the same problem and the over-extended credit just keeps adding up to present debts. In worse cases, people are known to declare bankruptcy to save them from impending doom.

Debt Reduction Solutions
In the case that you are unable to pay off your pending bills or find yourself trapped with increasing debts, there are some debt reduction solutions you can use in order to control your finances better.

It is important to look up the similarities and differences between the two debt reduction solutions in order to understand which of these solutions is better for you before making a choice.

1. Debt Consolidation
Debt consolidation programs are excellent alternatives to bankruptcy and offer consultation to manage and reduce debts. They also provide you with options to handle credit card debts.

a. Debt consolidation programs can plan your finances and give you a debt consolidation loan to pay off all your debts.
b. They offer specialized debts consolidation too in the case of credit card debt consolidation.
c. They have a very low interest rate and you are required to make only one monthly payment that is very small and is planned keeping in mind your financial situation.
d. You can use these programs with all kinds of debts – secured and unsecured.

2. Debt Settlement/Negotiation
This is different from debt consolidation. A debt settlement consultant will reach a settlement with your creditors to drastically lower your interest rates up to 50 percent of reduction is possible.

This system works because most creditors are reasonable and are interested in obtaining their money so they will be willing to reduce their rates as they know that they stand a better chance of getting their money in this fashion rather than from a person who declares himself bankrupt and can no longer pay the money.

a. You can choose the debts you wish to include in the debt settlement program.
b. There is no guarantee that all creditors will accept debt settlement though most will.
c. You will still be responsible for all secured debts incurred.
d. This system is most suited for people who are employed and working hard to clear their debts.

Credit Card Debts Solutions
Control the urge to flash that plastic. Each time you swipe your credit card; you are further pushing your credit limits and adding to expenditure. The start to saving can be done if you change your spending habits and reduce or eliminate the use of credit cards.

Credit card companies offer attractive benefits and schemes to lure the user into making a lot of non-essential spending as they stand to make a profit from pending balances. People end up ensnared in debt and then most of their money can just flow in the direction of clearance of credit card debts.

Lenders also tend to avoid lending any money to people with a bad credit card history or a high amount of balances. Bad credit is an extremely bad partner to have when you are in need of a loan for making a huge purchase such as a home or car. It is possible that bad credit does not go against you in obtaining a mortgage or finance but the terms of finance may be very narrow and binding as in a higher rate of interest or a bigger down payment which basically adds up to yet more losses and possibly more debts.

Tips for credit card debt reduction:
1. The best way to cope with credit card debt is to stop the problem at its source that is to stop using the card. Cutting down on those expenses could help you save money which you can use to pay off your debt.
2. The minimum payment you need to make is just about equal to the sum required for the finance charges. For quick debt reduction, keep track of this and make a higher payment than the minimum payment. The more you pay the sooner the debts clear off.
3. Make sure that you use a zero percent interest credit card. That way you will not be paying interest and transfer all your existing credit card debts to that card too.

These are a few of the debt reduction solutions you can use to eliminate debt from your lives. The best thing of course, is not to incur debts at all but if that is inevitable it is equally important to take charge of your finances and keep your debts under control, in order to lead a stress free life

Your Credit Report

2009-08-25T07:31:00.000-07:00

Conscientious consumers are sometimes startled to learn they've been turned down for a loan or credit card, not because they're unemployed or lack savings, but because they lack a credit history.

These people are:

Teens College students are showered with credit card offers because lenders know that their earning potential will soar after graduation. But those who bypass college may find it difficult to get such offers or build a credit history.

Retirees, widows, divorcees Retirees may have sterling credit, but if the mortgage was paid off years ago or a deceased spouse managed household finances, the widow(er) may find that an inactive or nonexistent credit history can keep them from buying a new car, for example.

Immigrants Regardless of their bill-paying history in their native countries, immigrants must start to establish credit history from scratch when they arrive in the United States.

"Conscientious objectors" Some people prefer paying only in cash because of personal beliefs or an anti-consumerism philosophy. But they risk a cash crunch if unanticipated expenses arise. The wealthy Highly affluent people may not often need good credit because they usually pay cash. In an emergency, though, their money could be tied up in illiquid investments and not readily available.

There are many options for young people and others who recognize the importance of establishing a solid credit history based on responsible borrowing, on-time bill payments and disciplined spending habits.

Options include: - Secured credit cards - Student credit cards - Debit cards - Prepaid cards - Joint credit cards - Authorized user cards - Co-signer loans Remember, lenders purchase borrowers' credit reports from credit reporting bureaus to help decide if they should extend credit, whether it's credit cards, mortgages, car loans, or student loans.

Landlords and employers may also run credit checks to determine what kind of risk you are. Familiarize yourself with what lenders are looking at by reviewing a free credit report annually. So, what does a credit report contain?

1) Personal information This includes basic details like your Social Security number, current and past addresses, and date of birth.

2) Your credit history This contains detailed information about credit accounts in your name or accounts that list you as an authorized user. This information, reported by creditors, may include the date accounts were opened, loan balances, credit limits, and payment history. Closed and inactive accounts may also appear.

Inquiries:
Whenever third parties (anyone other than you) pull your credit report, the credit bureau makes a notation here. Public Records: Government agencies will report bankruptcies, overdue child support payments, and liens.

3) Personal payment history This section summarizes your payment history for credit accounts. You'll see mortgages, installment debt, revolving accounts (such as credit cards), and accounts in collection.

4) Public information This section provides details on matters of public record, such as bankruptcies, tax liens, foreclosures, or judgments.

5) Inquiries This area lists businesses that have inquired about your credit during the last two years. Typically, this happens whenever you apply for credit.

6) Creditor contacts Here you'll find contact information for current creditors. As you can see, credit reports contain a wealth of personal data that can have a lasting impact on your financial household, dictating the interest rate you'll pay for loans. In fact, there's so much history there, dating back to the time you borrowed your first $3,000 for a second-hand Mustang, that you might start thinking your credit report contains everything but the kitchen sink.

To set your mind at ease, here's what's not revealed in your credit report. - Your gender - Your race or national origin - Your salary history (although the names of previous employers may show up) - Your religious affiliation - Whether you're up to date on your dog's vaccinations - Information on your savings or investment accounts - Your medical history (although a medical credit score is currently in development) - Any criminal record you may have - Your family background - Whether you're a stingy tipper - Your voting record or voter registration - Any purchases for which you paid with cash or check - Your jury duty records - The $50 you owe to a bad bet on the Red Sox - Chapter 7 bankruptcies that are more than 10 years old - Speeding tickets (as long as you paid them) - Your credit score (which you'll have to purchase separately to see) While the items above are legally restricted from appearing in your credit report, someone reading between the lines could still deduce some personal details.

Medical conditions, for example, while not reported directly, could be guessed at based on the name of a medical creditor, like the Greater Milwaukee Substance Abuse Medical Center, when the debt shows up on your report.

For many negative marks in your credit past, the magic number is "7," meaning that these items disappear from your credit report after seven years: - Charge-offs or debts placed in collection - Lawsuits and judgments (unless the statute of limitations hasn't yet expired) - Chapter 13 bankruptcies, provided they were paid in full (10 years if not paid as agreed) - Foreclosures - Paid tax liens If you have unpaid tax liens, you'

re on the hook forever. The same holds true for unpaid federal student loans.

Fed extends consumer lending program

2009-08-17T08:52:00.000-07:00

The U.S. Federal Reserve has extended a program intended to spur lending to consumers and small businesses at lower rates, but the central bank will not expand the types of loans made.

The Fed on Monday said extended its Term Asset-Backed Securities Loan Facility through March 31 for most of the types of loans it makes. The program was scheduled to end on Dec. 31.

The TALF started in March and figures prominently in efforts by the Fed and the Obama administration to ease credit, stabilize the financial system and help end the recession. Under the program, investors use the funds to buy securities backed by auto and student loans, credit cards, business equipment and loans guaranteed by the Small Business Administration.

The program for commercial mortgage-backed securities was extended through June 30 because issuing new securities in that area "can take a significant amount of time to arrange," according to a joint news release from the Fed and the Treasury Department.

The broader TALF program had gotten off to a lethargic start, hobbled by rule changes, investor worries about financial privacy and fears that participants might become ensnared in an anti-bailout backlash from the public and Congress.

The program has the potential to generate up to US$1 trillion in lending for households and businesses, according to the government. Spurring such lending is vital to turning around the economy.

The Fed and Treasury on Monday said they were prepared to reconsider this decision if financial or economic developments conditions indicate that such an expansion would still be warranted. However, the government believes the financial system is beginning to stabilize after being hit last fall by the worst financial crisis since the Great Depression.

"Conditions in financial markets have improved considerably in recent months," the Fed and Treasury said in their statement. "Nonetheless, the markets for asset-backed securities backed by consumer and business loans and for commercial mortgage-backed securities are still impaired and seem likely to remain so for some time."

The Fed last week delivered a vote of confidence in the economy, saying the downturn appeared to be "levelling out." Fed officials also said they would slow the pace of a program to buy $300 billion worth of Treasury securities, an effort aimed at keeping mortgage rates affordable. The central bank said it planned to shut down the program at the end of October.

How Much My House Cost

2009-08-10T06:54:00.000-07:00

With the real estate market still in flux after the subprime mortgage crisis, many potential home buyers are confused over which listings they should be scouting. That's because the math that once guided their decisions about what buyers can afford has been through the ringer and back again.

There are more than 1.5 million cautionary tales for getting in too deep. That's how many U.S. properties received a foreclosure filing during the first half of 2009, according to RealtyTrac. And as of December, one in every five American mortgage holders owed more on their mortgage than the value of their home, according to First American Core Logic. With the market still fluctuating, real estate is far from a sure bet as an investment.

Of course, for those with an appetite for risk, there are plenty of opportunities. Interest rates are low, and so are prices. The S&P Case-Shiller 20-city index of home prices suggests they are roughly at 2003 levels. Although the decline has started to slow, in an uncertain market, the question of how much house you can afford may be more important than ever before.

The old guidelines were fairly loose and straightforward. Spend roughly three and a half times your annual salary on the house, and make monthly payments somewhere between 25% and 33% of your monthly salary. In the years leading up to the bust, easy credit left a lot of wiggle room here.

Now, after all of the ups and downs, those basic guidelines are the same, but the gatekeepers have grown stricter about making you stick to them. Lenders have tightened mortgage criteria in the new, post-bubble housing market. Even if your own financial situation hasn't changed, you may find you're not able to access as much credit as you might have a couple of years ago at the height of the boom.

Given the current low prices, these tighter standards may represent an overcorrection from the excesses of the subprime boom, says Ryan Tomazin, COO of Integrated Asset Services, a privately held default real estate and mortgage-service provider. "Affordability is almost as high as it's ever been, but what the banks are allowing people to purchase is still far more conservative than what people could afford," Tomazin says.

Others maintain that lenders' tighter standards represent a return to more traditional ideas about home buying that bypass the boom-time assumption that incomes and real estate values rise without bound. Once again, lenders are requiring a down payment, documentation of income and assets, and good credit scores, says Keith Gumbinger, the vice president of HSH.com, a mortgage market analysis firm based in Pompton Plains, N.J.

"The world is very largely a fixed-rate world," Gumbinger says, but in an uncertain economy, with some economists predicting that unemployment could go as high as 25%, the certainty of a fixed monthly payment is a good idea anyway.

Online calculators will offer you a ballpark figure of how much house you can buy based on your income and other debts. However, buyers should use that estimate as a starting point for a careful examination of their budget and overall financial goals, particularly in today's economy.

"For a person that likes to spend, if you give them a rule of thumb, they will always take it to the max," says David Hefty, a certified financial planner and chief executive at Cornerstone Wealth Management in Auburn, Ind. He recommends going through a quantitative assessment of your real expenses and a qualitative assessment of your priorities to come up with a number that represents the house you can really afford.

Even in a market where low housing prices mean you can get a bigger house for your buck, "sticking to that number is key, so you can get a bigger house, but you're not overextending yourself financially," Hefty says.

Don't just take a lender's word for it when they tell you how much of a monthly payment you can afford. If you're now renting, use your rent as a starting point and be wary of lenders that assume you can suddenly start paying much more in housing costs, says Liz Freeman, a mortgage expert for ShopRate.com, and a former loan officer.

Consider questions like, "Am I starting a family? Would I like to take a trip around the world? Do I spend my weekends jumping horses?" Freeman says. Make sure the house you're planning to buy fits in with your overall financial plan.

Real estate isn't a get-rich-quick scheme, but that doesn't mean that buying a home can't be a good investment for those willing to look at it in the long term. "You'll be building equity slowly and over time," Gumbinger says, "just like your parents did."

Some credit union loans are not a good deal

2009-08-04T07:13:00.001-07:00

Short-term loans offered by some credit unions as alternatives to high-cost payday loans are as risky and deceptive as those they're supposed to replace, some consumer groups say.

Payday loans allow cash-strapped consumers to take out small loans against their next paycheck. The loans often carry annual interest rates of 400% or more. Because they typically have to be repaid in two weeks or less, many borrowers roll the balance into a new loan, which mires them deeper in debt.

In recent years, hundreds of credit unions have introduced short-term loans for members who face a temporary cash crunch. But some of the loans "are only marginally cheaper than traditional payday loans," says Lauren Saunders, an attorney with the National Consumer Law Center.

The National Credit Union Administration, which regulates federal credit unions, last week issued guidance to its members, alerting them to the "risks, compliance issues and responsibilities" associated with a short-term loan program.

The agency issued the letter in response to the rapid growth of these programs in recent months, says John McKechnie, spokesman for the agency.

Federally chartered credit unions are prohibited by law from charging more than 18% on loans, but some charge excessive fees that drive up the effective rate, Saunders says.

For example, Nevada Federal Credit Union says it offers a 0% annual percentage rate. Brad Beal, president of the credit union, says it charges an application fee of $70 for a 14-day loan of up to $700, or $60 for members with direct deposit. That's half the fee charged by the average payday lender, he says. But the National Consumer Law Center points out that a $70 application fee for a $400, 14-day loan is the equivalent of a 455% APR.

Saunders' consumer group has recommended capping the annual interest rate for payday loan alternatives at 36%, including fees. But Beal says that works out to less than $10 per loan and wouldn't cover his credit union's costs.

"We're not out to take advantage of our members," Beal says. "We're just trying to find a way that's economical for them and economical for us."

Lois Kitsch of the National Credit Union Foundation, the charitable arm of the credit union industry, acknowledges loans offered by a handful of credit unions resemble traditional payday loans.

But, she says, "there are a huge number of others that don't look like them at all."

Many short-term loan programs offered by credit unions require members to deposit a small percentage of their loan payments in a savings account, Kitsch says.

"Eventually, they'll have enough money so they can borrow against their own savings at a very low cost," she says.

And unlike payday lenders, Kitsch says, many credit unions give members 30, 60 or even 90 days to repay their loans.

Fix Bad Credit

2009-07-27T19:16:00.000-07:00

Before your loan application is processed, it is usual for the lending institution or bank where you have applied to run a check on your credit report and get your FICO score.

If your FICO score is high that means that you are a low risk customer, you can be counted upon to make your premium and interest payments regularly and on time, and you will face no hassles in getting prequalified for your loan.

Having a history of bad credit can reflect very poorly on your chances of getting a mortgage or a refinancing loan. If you have bad credit, it is important that you take the proper steps to mitigate the debt. Your credit rating will improve as you pay off your pending debts and you can work towards becoming financially secure.

Here are some of the many ways in which you can go about fixing a bad credit.

Don't let the scammers mislead you

In the first place, do not under any circumstances fall for the tall claims made by the sundry companies hawking their Credit Repair Services through aggressive advertisements by way of fliers, newspapers, T.V., Radio, and Internet. There is no legitimate way they can 'erase' your credit problems '100%' or remove bad credit reports from your credit file.

And if you go along with their offer of giving you a new credit identity, you could find yourself arrested and charged for fraud. Misrepresenting your personal details and falsifying your financial and work details for the purpose of securing a loan application is a federal offense, a crime you can go to jail for.

So, understand this, there is no magic wand that anyone can wave to cure your financial woes. You have to salvage the situation yourself by a good deal of patience, common sense, self-discipline, and determination.

Get a copy of your credit report

The credit report can be obtained from the central bureau of the three main consumer reporting companies – Equifax, Experian, and Trans Union. Remember that you can directly contact the credit report bureau. There is absolutely no need to go through a credit service company that will charge you a good amount in fees for something you can access for free.

You should apply for your credit report every year actually, whether you have bad credit or whether your financial situation is sound. It is possible that certain glaring errors may have crept into the report and, if you neglect to get these errors correct, they may spoil your credit rating. Another thing to watch out for is Identity Theft.

There are enough stories around about scammers appropriating legitimate identities for fraudulent purposes. It is better to keep an eye on your credit report and avoid such problems.

Clear your debts

Start paying off all your outstanding debts. Try to clear up your debts as soon as you can. First repay all the debts that have the higher interest rates and then work your way through the others.

Don't lag behind on current bills

Be prompt and regular about paying off your current bills. Late payments will not reflect well on your credit report.

Reduce the credit cards

Cut down the number of credit cards you have or close down the accounts altogether. Don't apply for a new credit card until you have paid off all your debts.

Do not file for bankruptcy

And do try to keep away from tax liens and collection accounts as well. If you file for Bankruptcy, tax liens, and collections, it will figure prominently and not to your advantage on your credit report for ten, seven, and seven years respectively. Which means that for the next ten years you will have little or next to no chance of getting your new loan applications approved.

Polish up your act

If you lead a lavish life-style, well, do consider sobering up a bit – at least until your debts are cleared out of the way. Cut down on all unnecessary expenditure and sell some of your assets if it becomes absolutely crucial.

And after you have cleared up your bad credit, you may return to square one and start all over again.

Protect Your Credit Rating

2009-07-21T06:38:00.001-07:00

Your credit rating is basically your personal finance history, whatever accounts and forms of credit you'd had in the past and any missed payments, defaults or notices on those accounts are marked on your credit rating. Finance companies use credit reports to see how individuals manage or fail to manage their :

bank accounts,
credit cards,
personal loans,
mortgage payments,
mobile phones.

This helps the lenders to gain a profile of the kind of customers they're more likely and less likely to lend money to in the future. But can you really protect or make your credit rating better?

Well, yes, there are certain things you can do to make sure your credit rating is the best it can be. First off you should always tell the truth whenever you're applying for credit. In the end it will only be you that suffers if you cannot afford to make the repayments on your debt.

This is the first basic rule of lending, don't fool yourself - can you really, honestly afford to make the repayments? If you lie on an application form lenders can easily find out and it could be deemed as a fraudulent application which will cause problems for you in the future.

Don't apply over and over again with different lenders, this will only leave a trail of rejected applications behind you. Each time you make a new application the lender will see on your credit rating how many times you've already applied and which lenders you've applied to. If you feel that you might be able to get a more competitive quote from another finance company then ask for just that - a quote. Then you can go on to make a formal application. If the finance company say they need to run a credit check to give you a quote then ask them to make sure it will only show up on your credit rating as a quotation search, rather than a credit application search.

Your credit report will also show other people with whom you have joint accounts or any form of joint credit. Obviously these people could be ex-partners that you no longer share a relationship with. Make sure you keep you credit report up to date by telling the credit agencies to remove the people who are not financially connected to you. Lenders may look at the credit ratings of financially connected people on your credit rating and if they have a bad credit rating you could be affected.

You should always check your ID, if there is anything suspicious looking like applications you can't recall then let the agency know. Infact if you find anything in your credit report that you think should not be there then write to the credit agency and ask them to amend it or let you know exactly what it means. For example if you have settled a CCJ then make sure this is showing. You need to ensure the corrections you have made your efforts to clean up your rating are being shown.

The easiest way to keep your credit rating clean is to make your payments every time, on time. Even if the payment is just a few pounds it shows that you are responsible with your finances and can budget correctly. If you think that you might miss a payment in the future then contact the lender immediately, burying your head in the sand will not help the problem and things will only get worse.

Improve Credit Rating

2009-07-14T05:26:00.000-07:00

Every individual and business entity earns a certain level of credit worthiness in a lifetime or phase of function. The credit rating is either evaluated as a credit score or as entries in a credit report. Credit ratings are awarded to individuals, business corporations and even countries. The calculations of the debit-credit facets are made at government-supported credit bureaus.

Calculations include averages summed up from the financial history of the individual or entity, and the available current assets and liabilities. A credit rating is a very important evaluation that tells an investor or lender whether or not a fiscal avenue being explored or the borrower is financially healthy enough to pay back the desired line of credit. Credit ratings are also sought to calculate and adjust insurance premiums and interest rates.

The readings, and sometimes the final score, help to determine employment eligibility. A poor credit rating simply attracts high interest rates and/or loan refusal. The factors that commonly influence credit rating include the amount of credit availed of, saving and spending patterns, incurred debt and current ability to repair the impaired history.

How to Improve Credit Rating:

Credit rating is usually compiled and maintained by the Experian, Equifax, and TransUnion credit bureaus. A person or business entity's credit worthiness is usually determined via statistical analysis of the evaluated credit data. The records reveal a 3-digit credit score, also referred to as the FICO or Fair Isaac Corporation score.

The credit rating agencies calculate debt obligations and debt instruments that can be traded within a secondary market. Credit ratings are commonly accessed by investors, banks, issuers, broker-dealers and the government. The rating helps evaluate the current credit risk associated with the person or business.

The steps to improve credit rating involve:

Paying bills on time and minimizing debt.
Clearing incurred debt as soon as possible, and refrain from acquiring fresh debt.
Avoidance to transferring debt balances.Keeping low or no balances on credit cards.
Keeping old bank accounts operative.
Interceding for an immediate intervention of a payment plan and outside help, if the debt incurred is more than you can handle.

It is very important to assess the situation from a third person perspective and work in tandem with a lender. It helps to earn goodwill via regular payments, to improve your credit rating. The credit rating vouches for your credibility. You should focus on ironing out your previous history of borrowing and repayment and repair the liabilities-assets ratio, to feature more assets than debts. It is critical to tally facts within the credit report and take remedial action to eliminate errors and omissions.

You can use factors such as transparency in the stock market and public investment enhancement patterns to your advantage. You need to apply all your energy to meet impromptu expenses and train yourself to optimize credit-in-hand. Monitoring and reviewing past credits and identifying wanton expenses also help to maintain a good credit rating. The regularity with which you address repayment of incurred debt greatly reflects your financial stability. A credit rating addressed and repaired in time attracts smaller rates of interest and easily manageable credit balances.

Designing your own finance management strategy will help you to enjoy a stronger credit rating in the near future. Paying back high interest rate credit card debt and not spending more than 30% of your total credit limit are both highly beneficial to a sore credit rating.

Credit Rating

2009-07-07T06:42:00.000-07:00

Credit rating is the means of assessing the credit worthiness of individuals, companies, states and countries. It indicates the ability of the debtor (individual, company, state or country) to fulfill his financial commitments. Credit rating can refer to personal, corporate or sovereign credit rating.

Personal Credit Rating

Credit Rating:
In the US, creditors use a scale of 0-9 in order to rank a debtor. The numbers can be preceded by the alphabets R or I. I refers to credit that is repaid in installments (like mortgage on a house), while R refers to a system of revolving credit (credit cards), whereby the debtor is only required to make minimum monthly payments.

R1/I1 means that the debtor repays his debt in one month, while
R2/I2 means that he repays within 2 months.
R7/I7 indicates a situation wherein debts are paid by consolidation.
R8/I8 implies that debts are recovered by repossession.
R9/I9 is the worst rating and indicates the inability to repay debts.

Credit Report and Credit Score:
Information about credit inquiries, bankruptcies, liens, judgments or collections is sent to the credit bureaus, which prepare an individual's credit report, and assign credit scores. A person has 3 credit scores assigned to him by the following bureaus: Equifax, Experian and TransUnion. While these scores may differ, the underlying principal is the same.

The credit bureaus calculate scores based on the credit scoring system created by Fair Isaac Corporation (FICO) in the year 1958. Credit scores computed by Experian are called 'FICO or FICO II', scores calculated by TransUnion are called 'Empirica', and credit rating computed by Equifax are called 'Beacon'. Fair Isaac Corp. has also developed the next generation FICO scores, which are meant to be user friendly. The FICO advanced risk score is used by Experian, while TransUnion uses Precision, and Equifax uses Pinnacle, to calculate credit scores.

Credit bureaus also assigns weightage to the following factors while calculating credit scores: 30% to previous credit performance, 30% to current indebtedness, 15% to the use of time of credit, 15% to the types of credit available, and 5% to new credit.

FICO scores are fast gaining popularity over the R/I multiple rating system. Hence, we can discuss the importance of good personal credit rating from the perspective of maintaining good FICO scores.

What is a Good Credit Rating for an Individual?

Credit ratings for an individual range between R0/I0 and R9/I9. 9 is the worst rating while 0 would mean that a person has no credit history. Credit scores for an individual are generally in the range of 360 and 850. A score below 620 is considered unhealthy. The worst score, of course, is 360 and the best is 850. Higher the credit score, lower the risk of a person defaulting.

A poor credit score/credit rating would result in lenders charging a premium for providing loans. If the credit score/credit rating is very poor, lenders may refuse to provide credit. A credit score between 650 and 690 is considered good, while a score above 700 is considered optimal, by the lenders.

Bridge Loan

2009-06-28T18:42:00.000-07:00

Commercial bridge loans act as a conduit by helping the business bridge the gap between meeting current financial obligations and securing a permanent source of financing, at a later date.

Bridge loans are generally meant for short periods of time, since their intention is to help the company fulfill its financial obligations before another viable source of commercial financing becomes available. These loans are also known as swing loans or interim loans.

The lender of a commercial bridge loan generally insists on clarity as far as 'exit strategy' is concerned. Exit strategy is the means by which a lender can hope to recover the amount of money lent. The absence of an exit strategy will disqualify a borrower from obtaining a loan. Bridge loans also carry a higher rate of interest than permanent loans. Generally the borrower would need to pay 3 to 4% more as interest on a bridge loan as compared to a permanent loan. Commercial bridge loans typically carry no prepayment penalty.

Eligibility for a Commercial Bridge Loan

The borrower needs to provide the lender with a clear exit strategy.
In case the borrower needs the money for a new venture, he has to convince the lender about the viability and the profitability of the proposed business, by providing details of the expected revenue and cost structure.
If the money is for an already established business, the borrower would need to present detailed financial statements indicating the profitability and the cash flow situation of the business.
A loan to value ratio of 70 to 90% would also be required.
For bridge loans that are secured by the assets of a business, the repayment period is generally 5 years.
Unsecured commercial bridge loans have a repayment period of 6 months.
A good debt service ratio (net operating income to total debt service) is also desirable.

Depending on the needs of the business the following types of commercial bridge loans are available:

Types of Commercial Bridge Loans

Commercial Property Bridge Loans/Mortgage Bridge Business Loans: These loans are typically borrowed for the purpose of buying a new property. Many a times, a businessman may be interested in new property and would like to close the deal at the earliest. The new purchase would be financed by selling off the old property. However, the latter deal would take a few months to finalize.

Bridge loans became popular because most lenders were unwilling to provide a loan in order to finance a new purchase when the old property was up for sale. Commercial bridge loan providers may not expect interest payments for a few months. Bridge loans are provided for a period of 6 months to 1 year, although most lenders may allow the borrower to extend the period of the loan for up to 1 year by paying an additional fee.

Commercial Construction Bridge Loans: This is a type of construction loan meant for the purpose of providing temporary finance for a new construction, or for making improvements on an already existing structure, in order to enhance the available cash flow from the property.

Fractured Condo Scenario: Some bridge loan providers may be willing to provide loans in case of fractured condos. Generally, a builder constructs an apartment complex with an intention to sell the apartments. Sometimes, due to the unavailability of buyers, the builder is forced to rent out most of the apartments. Such a condominium complex is known as a 'fractured condo'.

Since the builder's ultimate intention is to sell the condos, he might approach a lender in order to obtain temporary financing in the form of bridge loans. Of course, the lender charges a very high rate of interest due to the extent of risk involved.

America’s Recovery Capital Loans (ARC Loans): Since 16th June 2009, the US Small Business Administration (SBA) has started accepting applications from small business enterprises for bridge loans. These loans are meant for well established companies, which were profitable before the start of the recession.

Recession might have resulted in reducing their customer base, working capital, and employees. Loss of ability to restructure existing debts, increase in costs, and reduction in suppliers, will also qualify the firms for bridge loans, since the aforesaid issues would negatively impact the ability of a business to tide over difficult times.

Commercial bridge loans are generally paid off by opting for a permanent source of financing. In case of commercial property bridge loans, the sale of the old property may help repay the bridge loans. Bridge loans are only available for firms which have a good operating history, or new firms engaged in highly profitable projects. Delinquencies will definitely disqualify firms from obtaining commercial loans.

This is especially true for companies desiring commercial bridge loans. Such firms might be forced to opt for 'hard money financing' which carries a very high rate of interest. The credit worthiness of a borrower is inconsequential in case of such loans. These 'last resort' loans, which are secured by the value of the property, have a loan to value ratio of 50%.

SBA 504 loans

2009-06-21T19:36:00.000-07:00

SBA 504 loans are tailor-made for business owners who want to acquire or develop their own facilities. Forget everything you’ve ever heard about the U.S. Small Business Administration (SBA). Wipe the slate clean. The negative connotations may have been warranted in the past, but the SBA is different these days. It’s no longer a four-letter word.

And like many things in our modern, technology-laden world, even the SBA has become user-friendly. The SBA is worth every penny of its more than $24 billion budget on the basis of a single program alone: the SBA 504 Loan Program for small business owners who want to acquire or develop their own facilities.

Lots of entrepreneurs -- and far too many bankers, ironically -- dismiss the SBA on the basis of its 7(a) lending program that always seems to be in a crisis needing supplemental appropriations. The 7(a)’s reputation may or may not be deserved, but some of its negativity has managed to soil other effective and lesser-known SBA programs.

SBA 504 loans, by contrast, are a dynamo. They work; they work well; and unfortunately with some of the historical problems in the SBA’s 7(a) program, a dark shadow has hung over 504 loans for too long making many people unaware of their virtues. In fact, for some time now, I have heard many otherwise knowledgeable lenders ignore 504 loans based on faulty and out-dated information.

Entrepreneurs, real estate brokers, accountants and franchisors are gradually waking up to the fact that 504 loans were designed to level the playing field for small business people in the marketplace. With 90% loan-to-cost financing of most commercial real estate projects (inclusive of land/existing building, hard construction, FF&E, plus soft and closing costs), 504 loans are very powerful.

Borrowers with 504 loans get long-term, below-market, fixed-rate financing at better terms than are available from any private sector lender. That’s correct -- you didn’t read that wrong -- SBA 504 loans for commercial property offer the least expensive money available to most small business people. For most of the past 3 years (2004 to 2006), the SBA bond rate (which usually makes up 40% of the total project costs or 44% of the actual loan amount) has hovered near 6% fixed for twenty years.

Loan terms on the first mortgage portion (usually 50% of the total project costs or 56% of the actual loan amount) are usually 25 years with no balloon payments and loan fees more inline with conventional lending than with other SBA programs. And if all of that wasn’t good enough, borrowers generally put a third to half as much money down for 504 loans (usually only 10% of the total project costs), thus enabling them to grow their businesses much faster while getting the highest cash-on-cash return for their new real estate investment.

Last year, 504 loans helped fuel about $14 billion in total capital investments for 9,720 small businesses throughout the U.S. These loans also helped create about 112,000 new jobs through reinvestment of the "equity savings" small business owners experienced. In addition to helping create jobs, the 504 loan program is about capital preservation and cash-flow sensitive lending -- it enables smaller business owners grow their business more quickly than they otherwise could.

SBA 504 loans rank as one of the most effective domestic economic development programs the federal government oversees with its funding having grown about 22 percent a year since 2000. So far, every qualified 504 loan proposal my company has submitted to the SBA has been approved and funded, or is about to be funded. The notorious SBA hiccups of the past have been banished through their own process improvements and the emergence of specialists.

Lending amounts for 504 loans are generally not capped or limited and only non-public, for-profit businesses qualify. Three financial qualifications, however, set some limits as to who can get a new 504 loan: the borrower’s small business must have a tangible business net worth under $7 million; the operating company’s net income for the previous two years must average less than $2.5 million annually; and the borrower(s)/guarantor(s) cannot have liquid, non-retirement assets greater than the total project amount to be financed.

Despite these restrictions, the field of qualified businesses is not as limited as one would think. In fact, over 98 percent of all businesses in Florida, for example, qualify for SBA 504 loans based on the criteria just mentioned – a similar percentage applies nationwide as well.

So what sorts of businesses make the most appropriate SBA 504 loan candidates? We see an extraordinary number of service professionals (physicians, attorneys, accountants, and so forth). But in truth, any business owners with a track record, a franchising license or at least some solid personal experience in their particular (or a similar) industry is an appropriate SBA 504 loan candidate. The 504 loan program collateral requirements are generally limited to the commercial real estate facility that the loan finances (unlike with other SBA programs), and approvals and closings happen in days and weeks, not in multiple-months as it was last century.

Historically, the SBA has usually been considered a lender of last resort. But compared to ordinary financing for free-standing commercial property, 504 loan terms and conditions are so good that almost every small business owner should select an SBA 504 loan as their top choice. The secret’s out: now you know what is truly the savviest program offered by the SBA. Pass it on.

Disapprovals Of Commercial Loan Applications

2009-06-15T10:58:00.000-07:00

This article highlights the five primary reasons that banks decline commercial loan applications. The reasons provided below do not represent obscure issues, so it is likely that two or three of the reasons described will be important for typical commercial loan situations.

The first two reasons (business plans and tax returns) will potentially impact all commercial borrowers. Many commercial loan officers will start their loan review process by stating some variation of "Can you show me your business plan?" and "We will need to see several years of tax returns."

Commercial projects are frequently too unique for traditional commercial banks. In these situations (even if a commercial borrower has favorable tax returns and an adequate business plan), it is not unusual for commercial borrowers to be declined for a commercial loan by a traditional commercial lender. Commercial borrowers are likely to be confused when they are turned down and will be unsure as to why it happened and what to do next. For each of the five major reasons that a bank might decline a commercial loan, a practical strategy is provided for converting the declined commercial loan into an approved commercial loan.

REASON # 1 FOR COMMERCIAL LOAN REJECTIONS

A bank's loan officer or loan underwriter is not satisfied that the business plan provided by the commercial borrower supports the requested loan.

STRATEGY # 1 FOR CONVERTING THE DECLINED COMMERCIAL LOAN INTO AN APPROVED COMMERCIAL LOAN

Most commercial borrowers will benefit directly from dealing with a commercial lender that does not require a business plan due to the following major benefits:

(1) Reduce commercial loan costs by thousands of dollars. A common range for an average business plan (prepared to typical bank specifications) is $5,000 to $10,000.

(2) Reduce commercial loan closing time by several months. Business plans can be prepared before or after applying for a commercial loan, but either way the net extra time required will probably be 1-2 months or more.

(3) If the lender does not require a business plan, there is one less item standing between the commercial borrower and their approved loan.

REASON # 2 FOR COMMERCIAL LOAN REJECTIONS

Loan underwriters find something on a tax return that disqualifies a borrower under the bank's lending guidelines. This "something" will frequently be insufficient net income, but when loan underwriters look at tax returns, there are many other possibilities which produce a similar result.

STRATEGY # 2 FOR CONVERTING THE DECLINED COMMERCIAL LOAN INTO AN APPROVED COMMERCIAL LOAN

Business loan borrowers will never have Reason Number 2 to worry about if they are applying for a "Stated Income" commercial loan. Very few traditional banks use Stated Income (no tax returns, no income verification, no IRS Form 4506) for a commercial loan. Commercial borrowers should seek out lenders using Stated Income commercial loans. However, this strategy will not work for all commercial loans since there is a maximum loan amount of $2-3 million for most Stated Income commercial mortgage loan programs.

REASON # 3 FOR COMMERCIAL LOAN REJECTIONS

The bank does not generally make business loans for the type of business involved or imposes special requirements that make the commercial loan impractical for the commercial borrower. Fewer banks are making loans to bar/restaurant properties. Similarly, auto service businesses are frequently given unnecessary (and expensive) environmental reporting requirements. There are many "special purpose" properties such as funeral homes, campgrounds and churches that most traditional banks will not include in their business lending portfolio.

STRATEGY # 3 FOR CONVERTING THE DECLINED COMMERCIAL LOAN INTO AN APPROVED COMMERCIAL LOAN

For most business borrowers that can get approved at a traditional bank, there are prudent options available elsewhere. And "prudent options" are clearly available only elsewhere when the bank won't make the business loan in the first place! There are very capable commercial lenders that are interested in special purpose properties.

REASON # 4 FOR COMMERCIAL LOAN REJECTIONS

When a business is refinancing their current commercial mortgage and wants to get a significant amount of cash out for various uses, it is not unusual for the bank to restrict what the funds are used for and to limit the amount of cash to amounts as small as $100,000. Even though the bank might make the commercial loan, if they won't provide the amount of cash needed by the commercial borrower, this is equivalent to declining the loan.

STRATEGY # 4 FOR CONVERTING THE DECLINED COMMERCIAL LOAN INTO AN APPROVED COMMERCIAL LOAN

As mentioned in Strategy Number 3, there are other options available elsewhere! The commercial borrower's mission (and it is not impossible at all) is to use a commercial real estate lender that will allow them to get much larger amounts of unrestricted cash out of a commercial refinancing without restrictions on what they do with it.

REASON # 5 FOR COMMERCIAL LOAN REJECTIONS

The bank will not provide a commercial loan without adequate collateral, usually in the form of a lien on personal assets such as the commercial borrower's home.

STRATEGY # 5 FOR CONVERTING THE DECLINED COMMERCIAL LOAN INTO AN APPROVED COMMERCIAL LOAN

Commercial mortgage borrowers should seek out lenders that do not "cross collateralize" assets as a condition for obtaining a commercial loan. This will provide greater flexibility for the commercial borrower and avoid unnecessary (and unwise) connections between personal and business assets.

Commercial Loan Information

2009-06-07T17:21:00.000-07:00

There is a large need these days for commercial lending and can be quite overwhelming. I If you are looking into applying for a commercial loan you may want to inquire a little about the subject before you speak to a commercial lender. I If you prepare yourself in advance, then you will know what will be expected of you before you apply for a loan. A commercial lender is advantageous and they will be able to answer any questions you may have.

If there is a business that wishes to expand, improve or perhaps pull out some equity in their real estate, commercial loans are very helpful to obtain this goal. I Also, anyone who has a business or a starting up business can request for a commercial mortgage. I Keep in mind that a commercial loan and a personal loan are different from one another. I Business loans are not backed up by the government; and these lenders are unwilling to take a risk with some business loans, this is why the interest rate is higher than that of a personal home loan.

Depending what the total amount you plan on getting a loan for, will determine which lender you will most likely work with moving forward. I This will be determined on what your wants and needs are for the loan. I If a smaller organization that plans to borrow less than about $2 Million, then a local bank will be a good way to go when needing a loan. I You can also find online, non-bank direct commercial lenders. I If you choose an online lender, you need to remember that you will not get the individual interaction, as you would with a local bank. However, the terms and conditions of your application will be lenient.

Whether you work with a local bank or a direct commercial lender, you will want to have all of your paperwork completed and ready. I So the lender can help you correctly, be sure that you are very clear with what you are wanting from this loan. Check lists of business expenses you will need to have for yourself are; profit & loss statements, and balance sheets, operating statements, etc. I Along with your application, the commercial lender will also need your pay stubs from the at least the past two years and personal and business income tax returns.

Along with the necessary documents they want you to fill out, be sure to have some collateral lined up if you want the lender to know that you are serious in applying for the loan. I

Credit scores are also important to a commercial lender. I Before applying, take advantage of the free credit report companies. I If at all possible, commercial lenders are looking at your debt to income ratio less than 40%. I If it is higher than 40%, you might want to look into seeing a non-bank lender who could be more willing to help you out.

The process and approval from a local bank commercial loan might take a long time with your application. I If you are unable to wait that process out, you can try and get a faster loan by working to get pre-qualified with an online non-bank commercial lender. Online non-bank lenders can possibly qualify you a bit faster than a normal local bank. Either way, make sure you have all of your documents completed so the process for the loan will be easier for you.

Commercial Real Estate Loans

2009-06-01T19:37:00.000-07:00

Getting commercial real estate loans approved is almost always complex and frequently difficult. Business borrowers need to realize that there are several situations with commercial real estate loans which can be especially difficult to get approved.

Examples of eight difficult loan scenarios are described to illustrate two key points: (1) difficulties with commercial real estate loans are not uncommon; and (2) difficulties with commercial real estate loans can be overcome in most cases.

A commercial loan that needs to be closed in 60 days or less.

It is not unusual to discover that a traditional lender considers six to nine months "normal" for commercial loan underwriting. Obviously this will act as a severe constraint if a commercial borrower is trying to buy a property that the seller wants to close in two to three months. If quick funding is essential, the commercial borrower should contact a non-bank business lender where most commercial real estate loans will close in 45 to 55 days.

A commercial loan that won't work without long-term financing.

What is long-term financing for a commercial loan? Some commercial lenders view 3-5 years as the longest period before a commercial loan will be subject to a balloon payment. If that sounds short-term instead of long-term, most non-bank business lenders can arrange 25-year to 40-year commercial real estate loans for commercial properties. Longer-term financing will often be the critical difference that facilitates a successful business investment (especially because mortgage payments will be reduced dramatically).

Providing financial data to a commercial lender after the loan is closed.

Some commercial real estate loans will have covenants stipulating that the lender must receive financial data even after the loan closing and that the loan can be recalled (forcing the borrower to repay early) if the audit of this data is not satisfactory to the lender. In stark contrast to this, commercial real estate loans via non-bank commercial lenders based on Stated Income will not require business plans or income verification either before or after the loan is closed.

Borrower is self-employed or income is paid on a commission, bonus or incentive basis that is somewhat erratic and difficult to document properly.

Non-bank commercial lenders using a Stated Income business loan program will not require tax returns or any income verification. They also will not require commercial borrowers to sign IRS Form 4506 (which authorizes the lender to obtain tax returns directly from the IRS), a form routinely required by many commercial lenders.

A borrower wants to refinance a commercial property and use $500,000 to $1 million from the proceeds to buy another property.

Most commercial lenders will restrict the maximum cash that can be taken out of a refinancing, with a normal limit of $100,000 to $250,000. It is also not uncommon to encounter restrictions on the use of the cash. With a commercial loan via most non-bank commercial lenders, the commercial borrower could receive unrestricted cash up to one million dollars and use the proceeds without restrictions.

DIFFICULT COMMERCIAL REAL ESTATE LOANS SITUATION NUMBER 6:
A borrower wants to use a substantial amount of subordinated debt (a seller second or other secondary financing) to reduce the amount of cash needed to purchase a commercial property.

Many commercial real estate loans will not permit a seller second or other forms of subordinated debt. With a commercial loan via most non-bank business lenders, a commercial borrower can obtain Combined-Loan-to-Value [CLTV] ratios up to 95% with subordinate financing (including seller seconds).

DIFFICULT COMMERCIAL REAL ESTATE LOANS SITUATION NUMBER 7:
Sourcing and Seasoning of assets or ownership.

For a purchase, commercial lenders will frequently want documentation about where the down payment is coming from (the source, so having limitations about where the funds are coming from is called sourcing). Commercial lenders will frequently have requirements stipulating that the down payment funds must have been in a specific account for a specific period of time, often 3-6 months or longer (this is called seasoning because it is tantamount to requiring that the funds have matured by being in the same place for a while).

Seasoning of ownership is similar to seasoning of funds, except this requirement involves the minimum time someone has owned a commercial property before they can refinance the property. Most non-bank commercial lenders do not have any requirements or limitations involving either sourcing/seasoning of funds or seasoning of ownership.

A borrower needs a $100,000 commercial loan.

What's difficult about this situation? Many/most commercial lenders will have much higher minimum amounts for commercial real estate loans ($250,000 to $350,000 is not uncommon). At most non-bank business lenders, the minimum commercial real estate loan is $100,000.

Glossary Of Business Loan Terms

2009-05-25T06:50:00.000-07:00

Accounts Receivable Financing - A loan gained by borrowing against receivables. Loans are paid down as receivables are collected.

Annual Fee - The amount charged by the lender each year to cover the administrative costs of the loan.

Business Credit Card - An amount of money, which a business can borrow against at times it needs capital. Using a card accesses the money.

Commercial Real Estate Loans - Similar to residential mortgages, but collateral is business property. Interest rates are usually fixed, the length of the loan can range from 5 - 20 years and payments due monthly.

Commercial Term Loans - Loans made to businesses that can be either secured and unsecured. Usually made to mid-size and large businesses.

Credit Rating - A predictor of the ability to pay back a loan. The credit rating is a result of credit scoring

Credit Report - Financial history supplied by a credit information company like Dun and Bradstreet, Equifax, Experian or TransUnion. Contains credit information on a business or an individual, including payment history of bank cards, store cards, mortgages, student loans, and trade payments.

Credit Scoring - The evaluation system used by lending institutions to determine relative credit riskiness of a business or consumer. When evaluating businesses, it generally considers factors such as credit payment history, new credit sought by owner of business, and financial strength and longevity of business.

CreditFYI - A web site for checking business credit reports

Debt Financing - A loan with pre-agreed terms, including payback schedule and interest.

Dun & Bradstreet - Leading provider of business credit information.

Equifax - One of three leading providers of personal credit information.

Equipment Leases - Leases allowing companies to purchase new equipment.

Experian - One of three leading providers of personal and business credit information.

Fixed Interest Rate - An interest rate that is the same throughout the life of a loan.

Interest Rate - The amount charged by a lender for the money borrowed. It can be fixed or variable.

Inventory Financing - Money borrowed on the basis of finished inventory. The loan is paid as inventory is sold.

Line of Credit - An amount of money, which a business can borrow against at times it needs capital. Often accessed by check, ATM, or business card.

Capitallynk.com - A web site for small business loan offers from a variety of lenders instantly.

Loan Term - The length of time the borrower has to repay debt.

Long Term Debt - Financing used to purchase or improve assets such as plant, facilities, large equipment and real estate.

Maturity - A loan's maturity is the life of the loan; that is, how long you have to repay the loan. It usually applies to term loans and not lines of credit.

Multi-Lender Environment - Numerous lending institution sharing the same site and information to provide instant financing to small businesses.

Personal Guarantee -A guarantee that the primary owner will assume personal responsibility for repayment of the loan, should the company not repay the loan.

Prime Rate - The rate a lender charges its best customers. The rate is calculated differently by each lender.

Revolving Credit - It is the same thing as a line of credit: an amount of money, which a business can borrow against at times it needs capital. Often accessed by check, ATM, or business card.

SBA Loan - Loans to small businesses unable to secure financing on reasonable terms through normal lending channels. The program operates through private-sector lenders that provide loans, which are guaranteed by the Small Business Administration (SBA) -- the SBA has no funds for direct lending or grants.

Secured Loan - A loan secured by specific collateral. Creditor may foreclose and seize the specific property that is collateral to satisfy an unpaid secure loan.

Small Business Administration -Established by Congress, the SBA provides financial, technical and management assistance to help Americans start, run, and grow their businesses.

Short Term Debt - Financing used to secure cash for accounts payable and inventory.

Subsequent Draw Fee - It's a fee that the financial institution may charge each time you use the line of credit after the initial use.

Term Loan - A loan for a specific amount of money. It has either have a fixed or variable interest rate, matures in between one and ten years and has a set repayment schedule.

TransUnion Corporation - One of three leading providers of personal credit information.
Unsecured Loan - A loan granted upon the good credit of the borrower. No collateral involved.

Variable Interest Rate - An interest rate that changes during the life of a loan.

U.S. housing starts, permits hit record lows in April

2009-05-19T07:02:00.000-07:00

New U.S. housing starts and permits unexpectedly fell to record lows in April, a government report showed on Tuesday, denting hopes that stability in the housing market was imminent.

The Commerce Department said housing starts fell 12.8 percent to a seasonally adjusted annual rate of 458,000 units, the lowest on records dating back to January 1959, from March's upwardly revised 525,000 units.

"It obviously calls into question the notion that the housing market is stabilizing," said Brian Dolan, chief currency strategist at Bedminster, New Jersey.

Compared to the same period last year, housing starts tumbled 54.2 percent. Analysts polled by Reuters had expected an annual rate of 520,000 units for April.

U.S. stock index futures pared gains after the data. Government bond prices extended losses despite the weak report.

Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey, said the weak housing starts data was "not encouraging."

However, he noted that the drop in building permits, which also fell to record lows, could set the stage for a housing rebound later.

"The first step to healing the housing sector is to eat into inventory. There is so much inventory on the market that the sooner we stop building and start eating into existing inventory the better off we'll be," he said.

New building permits, which give a sense of future home construction, dropped 3.3 percent to 494,000 units, the lowest since records started in January 1960, from 511,000 units in March.

That was well below analysts' forecasts of 530,000 units. Compared to the same period a year-ago, building permits plunged 50.2 percent.

A National Association of Home Builders survey on Monday showed U.S. home builder sentiment surged to an 8-month high in May, with industry leaders hopeful the three-year housing slump was nearing a bottom and market stability around the corner.

Collapsing domestic home prices and the resultant global credit crisis pushed the U.S. economy into recession in December 2007 and restoring stability to the housing market is a key element to a recovery in the economy.

Building completions rose 4.9 percent to 874,000 units, Tuesday's data showed.

Meanwhile, aggressive cost-cutting helped Home Depot Inc, the word's largest home improvement chain, to report on Tuesday a bigger-than-expected profit in the latest quarter despite the deep U.S. housing slump.

The news followed by a day stronger-than-expected results from rival Lowe's Cos Inc that pushed up shares of both chains on Monday. Both Home Depot and Lowe's had been hurt by the housing slump.

Stimulus Bill-Small Business Loan-part 2

2009-05-14T16:53:00.000-07:00

If you like to read fine print, here is the exact wording:

SEC. 503. ESTABLISHMENT OF SBA SECONDARY MARKET GUARANTEE AUTHORITY. (a) PURPOSE- The purpose of this section is to provide the Administrator with the authority to establish the SBA Secondary Market Guarantee Authority within the SBA to provide a Federal guarantee for pools of first lien 504 loans that are to be sold to third-party investors.

(b) DEFINITIONS- For purposes of this section:

(1) The term `Administrator' means the Administrator of the Small Business Administration.
(2) The term `first lien position 504 loan' means the first mortgage position, non-federally guaranteed loans made by private sector lenders made under title V of the Small Business Investment Act.

And further:

(2) GUARANTEE PROCESS-
(A) The Administrator shall establish, by rule, a process in which private sector entities may apply to the Administration for a Federal guarantee on pools of first lien position 504 loans that are to be sold to third-party investors.

But there is a catch. In another article I stated the SBA is doing away with the borrower paying a loan guarantee fee, which can be thousands of dollars for larger loans. Unfortunately, for the secondary market on 504 loans, the SBA will charge a fee. Currently, these loans did not have an SBA guarantee:

(3) RESPONSIBILITIES-
(A) The Administrator shall establish, by rule, a process in which private sector entities may apply to the SBA for a Federal guarantee on pools of first lien position 504 loans that are to be sold to third-party investors.
(B) The rule under this section shall provide for a process for the Administrator to consider and make decisions regarding whether to extend a Federal guarantee referred to in clause (i). Such rule shall also provide that:
(ii) The Administrator shall charge fees, upfront or annual, at a specified percentage of the loan amount that is at such a rate that the cost of the program under the Federal Credit Reform Act of 1990 (title V of the Congressional Budget and Impoundment Control Act of 1974; 2 U.S.C. 661) shall be equal to zero.

This secondary market program set up by the SBA will only last for two years under section 503 (f). Because this is emergency legislation, the SBA is to issue regulations within 15 days of the signing of the bill (503 (i)); amazingly quick for government purposes.

What about the secondary market on other loans? The typical everyday medium to large SBA loan is under the workhorse 7(a) program. For example, using the same trucking company, if they needed money to purchase more trucks, hire employees, or for general cash flow, they would seek a 7 (a) loan. The stimulus bill does not set up a new secondary market for 7(a) loans. But it does allow direct government loans (not made by private banks) to broker-dealers in the secondary market purchasing 7(a) loans. So if you are in the business of buying pooled 7 (a) loans and need a loan to do so, taxpayers monies will be used for this purpose. The idea is to stimulate this secondary market again so banks will make further loans.

But what about the small guy? here the news is very disappointing. Studies show the average small businesses loan is $10,000. None of the stimulus programs helps the secondary market on the smaller loans and so few lenders are loaning.

But do not give up hope. There are still lenders out there, including those lending their own money, that are still making loans in the range of $5,000 to $50,000 unsecured at good rates, in the neighborhood of 7.75%. You just have to know where to look.

Stimulus Bill-Small Business Loan News

2009-05-14T16:44:00.000-07:00

The word is out that the new stimulus bill (American Recovery and Reinvestment Act of 2009) has a special provision creating a Federal government secondary market for SBA guaranteed loans. If you are a small business owner, will this loosen up my lender purse strings and allow some money to trickle down from the big cats on Wall Street and into your pockets?

Yes, it is a good start, but hold your contagion because it is not as wildly exciting as you might think. In fact, some have openly criticized the new bill. This is a continuing article (20 in all) on the subject: Help. Is anyone out there loaning to small businesses anymore?

Let us first begin by looking at a program that is already in existence and is being sold on the secondary market. There is a loan program out there and SBA lenders are actually making loans currently: the Community Express Loan Program. This gives unsecured small business loans between $5,000 and $50,000 with very little paperwork, answers typically in two days, interest rates presently at 7.75%, funding and two weeks, and monies wired directly to your business account.

There are still lenders participating in this program, although Congress has failed to make the program permanent and still has a 10% cap on the number of loans. Enter the Obama stimulus bill. Let us look how it affects this program and small business lending as a whole.

Some undiscerning headlines claim $3 billion in the stimulus bill is being pumped into the secondary market and viola, the banks will be making more loans. Not so fast. As this article explains, that money is being pumped into an elite SBA program that will not affect the average small business owner.

Before I give a clear answer, let's define what we're talking about. Most of us have heard about SBA loans. With the exception of disaster loans and the Microloan Program (for underserved communities), the Federal government through the U.S. Small Business Administration (SBA) does not actually loan the money. Instead, it licenses private lenders, like the community bank on your block, to make loans and if there is a default, Federal government guarantees come to the rescue and reimburse for a certain percentage. So, if you got a $100,000 loan (in this economy? OK, hypothetically) that has a 75% guarantee and there is a default, after going through certain steps, the lender could receive reimbursement for up to $75,000. And remember there are literally thousands of lenders out there that do SBA loans for the simple reason they feel warm and fuzzy with the guarantee.

Now here is how the secondary market works. In the good old days absent toxic reverse mortgages, banks held onto their loans and simply kept the in-house interest. But those days are long gone and banks now pool their loans and sell to investors on the secondary market which pays them a premium because of the expected enjoyment of future loan interest. They were packaged almost like mutual funds. Unfortunately, the secondary market is now a dry creek bed. I'm not handing out excuses for our banks, but this is one of the reasons they are not loaning.

But ask the average person on the street and a grimace creeps upon their face when they hear the name SBA loan: "Yeah, in whose lifetime? I would much prefer getting a loan while I'm still young." Visions pop into their heads of pounds of paperwork, endless regulations, untold delays, and layers of government red tape. But not so fast. The SBA also has excellent smaller loans which are truly "lean and mean".

So what does the new stimulus bill do? It got on an "A" for the idea but hardly passing with the follow through-it did not go nearly far enough. Under Section 503 of the new bill it has set up a secondary market for 504 loans only (to eliminate any confusion, the term "504" refers to a section under the old Small Business Investment Act, and not the current stimulus bill) which applies primarily to larger ventures seeking commercial loans for buying land and buildings. A private lender works in conjunction with a government Certified Development Company. Typically, the private lender makes a loan for 50% of the cost under a first mortgage (not guaranteed by the SBA) with 40% loaned by the CDC in a second position (100% SBA guarantee). The other 10% would be cash by the borrower.

So, if you are a trucking company that has worked hard and increased your number of trucks from 5, to 10, to 15, and years later to 100, you need to buy a new yard and warehouse (for less than truckload jobs). Cost--$4 million. You get a bank to loan under the 504 Program as a first position commercial mortgage. The SBA now has the authority to set up a SBA Secondary Market Guarantee Authority and give guarantees for pools of 504 loans to be sold to third party investors on the secondary market. The lender has to retain at least a 5% interest at risk. The SBA loan guarantees not more than $3 billion of such pooled mortgages.

Why Business Owner Might Not Go To A Bank For A Commercial Mortgage

2009-05-11T05:20:00.000-07:00

Traditional banks serve a very important role in the North American economy. Nevertheless, when it comes to a business loan, there are many reasons that small business owners should not always use a traditional bank.

There are not just one or two major reasons to obtain a small business loan from another source. As you will see below, there are over a dozen compelling reasons to consider a source other than a traditional bank for a small business loan. For most small business owners, five to ten of these reasons are likely to be applicable to them.

With many small business loan borrowers, banks have already declined their loan application. That particular compelling reason to use a source other than a traditional bank (being declined by a traditional bank) does not even appear on the list below.

Here are the compelling reasons a small business owner might not go to a traditional bank for a commercial real estate loan. The compelling reasons shown below also indicate that for business borrowers that can get approved at a traditional bank, there might be better options available elsewhere.

Minimum commercial real estate loan for many banks is $250,000 or more. With non-bank small business lenders, the typical minimum commercial loan amount is $100,000.

Most banks charge an up-front commitment fee. Most non-bank small business lenders do not charge an up-front commitment fee for a commercial mortgage.

Most banks will severely limit the amount of cash a business borrower can get when refinancing a commercial mortgage. When a borrower is refinancing their business property with non-bank small business lenders, they can typically get up to $1,000,000 in cash.

Most banks are reducing their commercial real estate loan interest in properties such as bars/restaurants, auto service businesses and funeral homes. Non-bank small business lenders are very interested in these business categories (and many other special purpose properties) for a commercial mortgage.

Most banks will require business plans for a commercial mortgage. The cost to provide this is usually several thousand dollars. Non-bank small business lenders typically do not require business plans as part of their underwriting process for a commercial real estate loan.

Most banks will require tax returns for a commercial mortgage. Non-bank small business lenders do not require tax returns or any income verification for a Stated Income commercial real estate loan. Many banks not requesting tax returns will ask borrowers to sign IRS Form 4506 (which authorizes the lender to obtain tax returns directly from the IRS). Non-bank small business lenders typically do not request borrowers to sign this form.

Most banks will require cross collateralization of personal property for a commercial real estate loan. Most non-bank small business lenders do not require cross collateralization of personal property for a commercial mortgage.

Most banks will require balloon payments or the loan will be subject to recall after periods as short as 3-5 years for a commercial mortgage. With a commercial real estate loan via typical non-bank small business lenders, all properties are eligible for 25-year loans and some up to 40 years.

Most banks will not permit seller seconds or secondary financing for a commercial real estate loan. With many non-bank small business lenders, if the business borrower uses a seller second or other secondary financing for a commercial mortgage, the business borrower can obtain a loan with a CLTV up to 95% of the property value.

Most banks require income verification or audits even after the commercial real estate loan closes. Non-bank small business lenders do not verify income either before or after a commercial loan closes with a Stated Income Business Loan Program.

Most banks have strict guidelines for "sourcing" or "seasoning" of assets or ownership to qualify for a commercial mortgage. Most non-bank small business lenders do not have any requirements or limitations involving sourcing/seasoning of funds or seasoning of ownership.

Very few banks offer an assumable commercial real estate loan. Typical non-bank small business lenders have an Assumable Commercial Loan Program which includes loan amounts up to $1 million.

With most banks, a typical commercial real estate loan will require 3 to 9 months to close. At typical non-bank small business lenders, most commercial mortgage loans close in 45 to 55 days.

Very few banks use Stated Income (no tax returns, no income verification) for a commercial real estate loan. Non-bank small business lenders use the Stated Income Approach for commercial mortgage loans in their Stated Income Business Loan Programs (most commercial mortgages up to $2 million qualify for these programs). This especially benefits self-employed small business borrowers who frequently have income that is erratic and difficult to document properly.

Today's realty

2009-05-04T07:19:00.000-07:00

In 2008 alone, the housing bust wiped out an estimated $2 trillion in home values. But for the first time in a long time, we are finally seeing an upside.

The same falling home prices that wreaked so much havoc in the economy are queuing up as the end-solution to the bust.

With prices down about 25 percent from their 2006 peaks, homes and buying incentives are tempting bargain hunters once again. Many economists agree that we've seen the bottom of the market and can see a faint but discernible light at the end of the long, dark tunnel. Sale volumes are up in many parts of the country, but prices aren't.

In early April this year, the average 30-year, fixed-rate mortgage loan dropped under 4.8 percent to historic lows, according to Freddie Mac, prompting some qualified buyers to buy and others to refinance.

At a spring speech, Harvey Rosenblum, executive vice president and director of research for the Federal Reserve Bank of Dallas, said the economy will improve markedly in 2010 and should be back on track by 2011. Housing, which led the country into this economic mess, could well lead it out, he said, partially because of the Obama administration's $75 billion mortgage relief plan.

The stimulus plan, in part, is offering first-time homebuyers a tax credit up to $8,000, plus a refinancing program that gives much-needed help to owners who are struggling with mortgages and incentive to their lenders.

Credit is finally starting to flow again, and prudent families with a reasonable down payment are for the most part getting the go-ahead to buy. Ian Shepherdson, chief U.S. economist at High Frequency Economics, noted this spring that falling housing prices are likely to slow heading into the summer months and possibly show improvement, cautioning that "foreclosures are weighing heavily on prices."

A history lesson
There are some important lessons to learn from the bust, lest we be doomed to repeat them. In a nutshell, here's what happened:

Years of robust health in the housing market prompted overinvesting, quick-flipping, overbuilding and credit overextension, enabled by cheap financing. Homes began to exceed their brick-and-mortar and land values vastly, and owners started borrowing against hoped-for run-ups in future values. Meanwhile, builders cranked into high gear to accommodate zealous investors and builders.

Caught up in the frothy market, lenders and buyers alike bucked basic risk-management principles by implementing unsustainable mortgage arrangements, zero-down deals and other dubious lending programs, many with upward-adjusting ARMs -- adjustable-rate mortgages that would later cut the legs out from under them.

Meanwhile, some financiers read aggressive federal anti-redlining guidelines as a green light to lend to everyone with a pulse. Lenders pushed these and other mortgage risks onto institutional investors the world over via mortgage-backed securities and bonds, which even some of the world's best financial minds failed to identify as ticking time bombs.

The last wave of investment homes was sold abruptly at big losses, and values started dropping across the board, especially in places like Florida, California and Nevada. ARMs reset and foreclosures continued to spiral. Suddenly, hundreds of thousands owed more on their homes than they were worth and had nowhere to turn. Soon, the stock market tanked, the values of retirement plans were slashed and millions of jobs were lost.

The net result: Real estate has been repriced. The rest is history -- a history we should not soon forget.

The repricing of home values almost everywhere in the country brings with it a whole new real estate reality, one that marks a return to some of the real estate "rules" of the past. It's a reversion to many tried-and-true fundamentals you should recognize and comprehend:

Save smart for a down payment. It's true that tying up all your equity in a mortgage can take away your emergency cash buffer in a downturn. But with the market starting to stabilize, the benefits of a large down payment -- from 15 percent to 20 percent -- will pay off in the coming up-cycle in the form of higher equity, lower payments, better interest rates and more readily available refinancing.

Borrow within your means. Just because you're approved by a lender for a specific mortgage amount doesn't mean you can really afford the home. The wholesale defaults that occurred on tens of thousands of too-lenient loans carry a strong message: Live within your budget. Lenders grew more complacent with underwriting and appraisal standards because double-digit annual price appreciation lulled them into believing their collateral was safe. In their gamble, they abandoned the three C's of mortgage lending -- credit, capacity and collateral -- and everyone lost. Until the run-up in values, a safe mortgage on a home was considered no more than three times a buyer's annual family income. Some old-school traditions need to become new-school traditions.

Buy for the long term. This isn't the time to try to make a fast buck in real estate. There's still some market pain left, and it's unclear when prices will rebound. If you're buying this year, plan on staying put for the long haul.

Your market is unique. National housing trends don't mean anything. Understand your market's dynamics, which include the health of the local job market, local foreclosure statistics, price movements, a home's average time on the sales block, the lack of -- or abundance -- of newly built homes coming upstream and the prices of "comp" sales in your specific neighborhood of interest.

Watch for the pricing warning signs in the next cycle. Continued home-price run-ups year after year should raise a big, bright, red flag in your castle. From 2000 to 2005, U.S. housing prices increased by an average of 53 percent, with many markets far exceeding that, including California at 109 percent, Nevada at 94 percent and Florida at 90 percent. That party ended abruptly, and nearly everyone suffered a hangover.

Truth About Fast Cash Loans

2009-04-27T08:07:00.000-07:00

There may be a time in your life when you urgently require money. You may need money to avert or cope with a crisis, such as a medical emergency. It could also be to make the best of a new opportunity, such as a business deal.

There are a number of ways to generate cash urgently. For instance, you could pawn, or even sell, possessions that you no longer require. You could even request relatives or trusted friends to give you a loan.

However, for those who do not want to resort to these options, there is one more way - fast cash loans. Fast cash loans, also popularly known as payday loans, are loans that are approved almost as soon as you apply for them. Not only that, the required cash is transferred to your account on the very same day itself.

If you intend to apply for one, these are some of the things you need to know about fast cash loans:

You can apply using an online form. You can apply for a fast cash loan simply by submitting certain information online. This would include your address and phone number, monthly salary details, as well as the reason why you require the money. Once this information is verified, your loan is approved immediately.

The loan amount depends on your salary. Fast cash loans are given based on your monthly pay packet. This is because, in the absence of collateral, the lender needs to make sure that you can repay the money once you receive your salary.

The interest rate is high. Again, because there is no collateral, fast cash loans carry a very high interest rate, mainly to protect the lender against default on your part.

There is a short repayment period. Fast cash loans are usually sanctioned only for a period of a couple of weeks. If you cannot pay back the loan within this period, you can extend the repayment period by paying a lender's fee.

Up in Down Times for Business

2009-04-27T07:51:00.000-07:00

NO business is completely recession-proof, but there are those that will thrive in spite of – or sometimes because of – the slumping global economy.

According to Yayasan Tekun Nasional (YTN), the micro-credit agency of the former Entrepreneur and Co-operative Development Ministry, one bu

“When people tighten their belts, they will take advantage of certain goods and services. For example, during a downturn, people are going to be repairing things more than replacing them,” says an agency official, who only wants to be known as Anuar Mohd.

Although no real growth has been recorded, he notes that those in the fix-it business such as shoe repair, clothes alteration, car repair, electrical appliance repair and handyman services generally enjoy an upswing as more and more people opt to cut spending by repairing items that they would have otherwise replaced.

Catherine, as she wants to be known, who has been running a business specialising in shoe and bag repair with her husband in Subang Jaya for over 15 years, says their business has seen about a 30% spike in the last six months.

“We noticed that we were getting more customers last November but we put it down to a normal year-end trend. Usually our business will pick up at the end of the year. But then in the first three months of this year, the number of customers continued to grow,” she says.

While they have a regular client base who are sending more things for repair, adds Catherine, the number of new customers has also increased.

They cater for all types of footwear and bags at the shop but they have received more designer products for repair, she notes.

Catherine says most customers tell her that they are looking to make their footwear and bags last longer before replacing them with new ones.

“Many say they would rather mend their shoes and bags because the economy is bad. But most of our customers use quality goods, so these last longer anyway,” she says, adding that sometimes it is just not about the money.

“It might be about sentimental worth or because they are comfortable.”

Catherine currently employs six workers at her shop and says that she might need to hire more. Due to the overwhelming demand, repair work that used to take a few days can now take about two weeks to complete. Prices range from RM10 to RM150, depending on the repair work and material required.

Fortunately, she says, the cost of materials, such as leather and rubber soles, has not gone up too much, so they have been able to maintain their prices.

“We were able to find more economical materials without compromising the quality. At the same time, we also use the more expensive ones because there are customers who require that.”

Business has also been good in the last few months for Hasan Ahmad, who has a sidewalk cobbler stall in Brickfields.

“Some people bring their new shoes for reinforcements, to put an extra sole; they say that will make the shoes last longer,” he says.

Hasan, who has operated his business for more than 10 years, adds that he has also noticed more sidewalk cobblers around Brickfields. “Maybe they can see that business is good,” he says.

However, the same cannot be said about the garment alteration business. According to Daud Ariffin, who has a clothes repair and alteration shop in Pudu Raya, Kuala Lumpur, his business recorded about a 30% drop in the past year.

“I suppose it is something that you can do yourself. Also, there are many cheap new clothes available in the shops and pasar malam that you can buy. There are also some second-hand stores selling good clothes,” he says.

Y. Foo, who runs a tailor and alteration shop in Cheras, agrees. Her business has also slowed down in the last 12 months, she says.

“Usually, most people who come in for alteration do it because they want to keep their favourite dress or trousers, or because they want to preserve something they have inherited from their parents or grandparents. Not many do it because they have to,” she says.

Putting off big buys

It is also a mixed scenario in the car repair business.

John Lee, owner of a petrol station and garage in Ipoh, says that in the 15 years he’s owned his business, it has been good regardless of the economic climate.

“There will always be vehicles that need repairs, no matter how the economy goes,” says Lee.

He says he has noticed a small increase in the demand for car repairs since the beginning of the year.

The recession, he says, “will probably affect our business in a good way. Fewer people are going to buy new vehicles; they’re going to fix their old ones. That will give us more business.”

True, in an economic downturn, the sale of new vehicles is sluggish. Across the nation, the trend seems to show that people are holding on to older vehicles that often come with more maintenance and repair needs.

The Malaysian Automotive Association (MAA) recently revealed that vehicle sales in February slid 3%, or 1,126 units, to 36,675 from January due to lower consumer confidence as a result of the economic slowdown.

Analyst firm TA Securities predicts a 16% decline in the motor vehicle sales in the country this year. However, some owners of local garages are saying that the number of customers actually getting their vehicles repaired is low.

A mechanic, who only wants to be known as Ah Keong, says he has seen “more down time” in the past 12 months and hopes the economy will turn for the better. “I haven’t seen any increase in business. We have not been doing that well lately, especially with the hike in the prices of spare parts.”

He feels that most people are letting their cars’ mechanical problems go for as long as they can.

“I think people are just doing enough repairs to hold their cars together,” says Ah Keong, who has been running his business in Petaling Jaya for over 10 years.

He hopes the down economy will eventually help car repair shops. “Maybe more people won’t get car loans and have to get the vehicles they have now repaired.”

He opines that the Government’s “car scrapping” scheme that was announced during the recent mini budget recently to help boost vehicle sales might take away some of his business. Under the scheme, owners who trade in their cars aged 10 years or older for new Proton or Perodua cars will get a discount of RM5,000.

Looking for the latest model

Mobile phone repair businesses, however, are not getting a windfall from the economic slump.

According to CK, who manages a mobile phone repair shop in Low Yat Plaza in KL, many would rather buy a new phone if their phone is faulty.

“You can get a working mobile phone at low prices – as low as RM 100 – so many think that it is not worth repairing their phone,” she says.

Raymond Thian, who operates a mobile phone and repair store in the capital’s IT centre for eight years, concurs.

“Many prefer to replace their faulty phones with a new or cheaper model. It really depends on the repairs needed. Many want their phone repaired because of sentimental reasons,” he says.

Thian, however, anticipates more demand for repairwork if the economy worsens.

“We have been feeling a slight slump in the last few months, and I expect it to get worse.”

According to IT research firm IDC, mobile phone users would continue to use their telecommunications service but opt for cheaper alternatives.

IDC market analyst Esther Gan, nevertheless, predicts that telecommunications spending in Malaysia will remain resilient this year. It is projected to achieve a moderate growth to RM24 bil despite the slowing economy.

Demand has not changed yet in the electrical and electronics repair industry either, says an electrical repairman who only wants to be known as Chong.

“However, I am getting more customers who are interested in the second-hand things we have. There seem to be more people who are looking to trade in or sell off their electrical things like hi-fi system or DVD player,” he adds.

Kenny Lim, who runs his family’s audio-visual (AV) equipment store in Petaling Jaya, concurs.

“We deal in high-end AV equipment, and it has not really been affected yet. Many of our customers are audiophiles and are always looking to upgrade to a better or latest model, so they are not reluctant to spend. However, I have more inquiries from people who are looking to offload their equipment. Unfortunately, there are not many customers out there at the moment, so I have to turn them away,” he says.

Similarly, computer repair is also not on the rise yet as many are still buying new computers. “You can now get a laptop at only RM1,000, so many prefer to just replace their computer instead of repairing it,” says Azmi Kassim who owns a computer shop at Low Yat Plaza.

He concedes that the sale of low and middle-range computers has been affected by the economic slowdown. However, he adds, the sale of higher-end models has been steady.

According to a survey by market research firm GfK Asia, the demand for high-end consumer electronical items was strong in South East Asia throughout 2008. The firm adds that although its growth will be slightly slower in 2009, it will remain resilient.

The survey of consumer buying trends in 12 Asia-Pacific countries by GfK Asia shows that despite the bleak economic news that clouded much of last year, there was hardly any change in the buying habits of technology-savvy Asians who were on the lookout for the best and latest in electronic gadgets.

In the current year, GfK expects Asian consumers to be more conservative in spending, but they will still be attracted to good deals that offer value for money.

Recession has hit the bottom, but no upturn until spring 2010

2009-04-19T19:52:00.000-07:00

The CBI will today join the growing list of economists and business groups arguing that the UK recession is now bottoming out.

But despite the relative optimism, Britain's biggest employers' organisation says it has seen little evidence of green shoots of recovery in recent weeks, and warns that official statistics on the performance of the UK economy during the first three months of the year are expected to reveal that the downturn has been even more severe than expected.

The CBI has also substantially downgraded its forecasts for 2009 and is now predicting that the economy will shrink by 3.9 per cent this year. It had previously expected the figure to come in at 3.3 per cent. The group is also forecasting a much longer-lasting recession than other analysts, including the Government.

Nevertheless, the Chancellor, putting the final touches to the Budget he is set to announce on Wednesday, will welcome a more upbeat tone from the CBI, which is now expecting the first quarter of this year to be the most difficult of the downturn, with figures improving during the rest of the year.

"In these turbulent times it is difficult to build a clear picture of how the economy will perform, but there are a few tentative signs that the steepest phase of the recession is now behind us, and that the banking packages, aggressive monetary policy and fiscal support will steady the pace of decline from here on," said Richard Lambert, the director general of the CBI. "The recession is by no means over, but we see a return to very weak growth by spring 2010."

However, Mr Lambert said that while policy initiatives are beginning to have an improving effect on the economy, the CBI does not believe the public finances are in a sufficiently healthy state for Alistair Darling to unveil further fiscal boosts this week. "Given falling tax revenues, the shrinking economy, and alarming levels of government debt, we urge the Chancellor to avoid any further major fiscal boosts in the Budget," Mr Lambert said.

"Budget measures should be targeted on jobs and investment, with a focus on efficiency savings and public service reform."

With that background, the CBI's forecast is now for the economy to shrink by a total of 5.1 per cent during the course of the recession, which would mean the UK suffering only marginally less than in the downturn of the early 1980s, when GDP contracted by 5.9 per cent.

The group expects negative GDP figures in each quarter this year, which would mean six consecutive quarterly falls in the size of the economy, with growth not returning until the second quarter of 2010. Even then, the CBI expects the recovery to be very weak, and is now forecasting 0.1 per cent growth in the economy across 2010.

While the Chancellor is expected to revise downwards his own economic forecasts on Wednesday, the CBI's vision of the next 12 months is likely to prove much gloomier than the figures Mr Darling will lay out. The business group's projections for the public finances are also more downbeat.

The mixed analysis from the CBI is echoed by the Ernst & Young ITEM Club Spring forecast also being published today. The group is predicting GDP contraction of 3.5 per cent this year, and another 0.1 per cent in 2010. But it, too, warns of pain to come.

Peter Spencer, the chief economic adviser to the group, said: "Although one or two positive signs have started to appear, we face another 12 to 18 months of serious grief. Around 900,000 jobs will be lost this year and half a million next."

Job security fears will push consumer spending down by 3.1 per cent this year and 0.7 per cent next. With house prices now around 3 per cent lower than the fundamentals justify – compared with a 15 per cent bubble early last year – the group is predicting a 16.4 per cent fall over 2009 as a whole, and another 5 per cent drop in prices in 2010.

Guard Your Capital

2009-04-14T15:24:00.000-07:00

For generations, business operators have learned that Cash is King. And there is never a moment in the life of any business, large or small, when this generally accepted truth doesn't apply.

But in 2009, small businesses must elevate cash to an even more supreme level. Consequently, these days, and for the foreseeable future, Cash is not King, it's the Emperor.

Any questions?

Blasingame's 3rd Law of Small Business states: "It's redundant to say, 'undercapitalized small business.'" There are at least two reasons this is a law and not a maxim:

1. There is always a growth or operational element hungry for cash from any source.

2. Small businesses typically have only three sources of capital:

a) Reinvested profits;

b) Bank business loans;

c) Investment equity, usually from the owner.

So what's the difference between cash and capital? Operating cash flow is like breathing -- in and out, constantly. Growth capital is like muscle-building protein -- it must be committed long-term. Alas, too often small businesses fund growth with operating cash flow. The reason is because it's easier: it's there, it's theirs and they can. But this is a dangerous practice because it deprives the business of operating breath in order to build growth muscle often resulting in asphyxiation.

All cash in a small business is precious, so availability and proper application must be maximized. Here are a few fundamental best practices to accomplish this.

Sell products and services at a gross profit margin that will more than fund operating expenses.

Manage expenses like a she-bear guards her cubs.

Manage accounts receivable like your life depends upon it -- it might.

Re-invest profits back into the company.

Don't use operating cash flow to fund growth.

Someone once said of small business, "You're either green and growing, or ripe and rotten." Literally by definition, small business survival depends on some level of growth, which takes capital. Sales growth begets increased accounts receivable; personnel growth begets more infrastructure, like offices, equipment and, of course, payroll; product expansion begets increased marketing, training and retooling.

These "green and growing" elements are exciting, but all take fresh, properly acquired and applied capital, and that's why the performance degree of difficulty for a small business to grow -- and sometimes, survive -- is greater than for a big business.

Write this on a rock...

The King is dead. Long live the Emperor.

Growing Industry: Merchant Cash Advance

2009-04-08T06:35:00.000-07:00

Merchant cash advances were originally created as a way to avoid all of the red tape and regulations involved with business loans; many providers are increasingly trying to promote industry wide ethical standards to avoid scrutiny and keep the money flowing to small business owners.

If you are a small business owner and you need quick access to working capital, there is a growing industry that is more than happy to fund you. Sometimes called credit card factoring; the merchant cash advance industry started about ten years ago. The amount of providers has nearly tripled in recent years, partially because of the so-called credit crunch.

Originally created as a way to avoid all of the red tape and regulations involved with business loans; top tier providers are increasingly trying to promote industry wide ethical standards to avoid scrutiny and keep the money flowing to small business owners.

As it is, the merchant cash industry has relatively few players. If one of the providers begins to perform less than reputable business practices, word would get out. If these practices continue; it will be increasingly difficult for that provider to do business.

Forecasters see plenty of room for growth. One BusinessWeek article states that providers have only penetrated about 10% of a market potentially worth about $10 billion.

The difference between a merchant cash advance and a business loan

There are some key differences between a business loans and a merchant cash advance: A business loan gives you the cash based on a fixed interest rate and a fixed payback schedule. Each month you will pay back the same amount until the loan plus interest is paid off.

With a merchant cash advance there is no fixed payback schedule. They receive a set percentage from the daily credit card sales until the advance is paid off. Usually in 6 to 9 months. One of the key benefits to this kind if schedule is that because the amount they pay varies with their cash flow, they pay less in slower months. This creates a flexible payback schedule that protects the business during slow periods.

It is these differences that keep them from being regulated. It is also why they need to be so vigilant against bad business practices. If it were not for merchant cash advances, many businesses would not be able to get the funds they need to keep operating.

A merchant cash advance may not be the first choice for most businesses. But for many businesses it is their only option.

Apply For Government Small Business Loans

2009-04-05T12:50:00.000-07:00

The Federal Government under the leadership of President Barack Obama has launched several packages in order to help the US people. With so many people losing their jobs and businesses running in to losses, the young graduates for once were feeling blank. But now they can see a ray of hope with the $1 trillion stimulus & housing package of the Federal Government. For the small businesses the government has introduced consulting and research grants.

Here are some tips to apply for the Government loans & grants to start a small business:

· Remember, the Federal Government is not giving any loans for small businesses directly. They have appointed SBA (Small Business Administration) for the work.

· Before approaching SBA, you must have your business plan intact.

· Your business plan must be presented very elaborately along with statistical details and an executive summary.

· Work out the budget & marketing of the business plan very properly.

· In order to make this report effective you can also use the free downloadable guides available on the internet.

· There are certain businesses that are preferred over the others by the government. For instance, this year it is IT. In case your business field comes in the focus field or some rare field stress on the same in your report.

· The Stimulus Package 2009 allows personal loans. You can get that and use the money for launching your own trade.

· In case you are woman, you can enjoy special grants. You can work for it in those terms.

· The SBA can help you get loans from banks. They also help you in modifying your business to get the best of results.

· You must have the right attitude before approaching any of the authorities. Think positive, be confident; yet, do not be over confident.

· Have all the valid legal proofs & other required documents in place. They would help you a lot. It would also speed up the procedure of grants.

To know more about Small Business Loans and to check if you qualify for Government Grants

President Obama has offered $1000 incentive for home owners that opt for Loan Modification instead of Short Sale Or Foreclosure.

To know more about Latest Loan Modification Programs and to check if you qualify for Government Grants

Tips for Avoiding Hidden Loan Costs

2009-04-01T06:14:00.000-07:00

Let's face it: getting approved for a business loan is exciting. But in your excitement, don't forget to read the fine print.

Many loans have hidden costs, including annual fees, bank charges, closing costs, commissions, and balloon payments. So stay focused and clear-minded during the loan process. Read more about Bank Loans for Small Businesses. Here are some tips that can save you hundreds, if not thousands, over the life of your loan.

1. Do your homework. You probably spent substantial time researching the viability of your business concept; likewise, employ the same careful consideration when looking for a loan. Consult with the Better Business Bureau to check for complaints against a particular lender, and ask colleagues or contact the Small Business Administration for referrals to reputable lenders. Learn about Small Business Loan Scams.

2. Ask lots of questions. Borrowing money for your business is a serious decision. Ask as many questions as you need to feel comfortable with the loan terms and conditions. Make sure you understand your annual percentage rate, the amount of your monthly payments, and how long you will pay them.

3. Have a lawyer or other expert review your loan documents. This is especially important if you are inexperienced in the loan process. If a lender attempts to talk you out of having someone look over the documents, proceed with extreme caution.

4. Take your time. Don't rush into a loan agreement with the first lender who approves you. Shop around and compare interest rates and costs, just as you would with any other important shopping decision.

5. Read every word in the loan agreement before you sign. During the loan process, consider every piece of paper you sign as a binding contract. Never sign anything that you have not read in its entirety and do not, under any circumstances, sign a blank document or a document with empty lines that could be filled in later.

6. Avoid loans with balloon payments. While they may seem reasonable now, loans with balloon payments may come back to haunt you later. Balloon payments may be acceptable in very limited circumstances, but they are usually bad news for small businesses.

7. Always choose a loan with positive amortization. If you choose a nonamortizing loan, you will find your loan balance getting bigger each month instead of smaller.

8. Beware of high prepayment penalties. If all goes according to plan, your business will soon be flourishing, and you may have the funds to pay down your loan more quickly. But if your loan agreement contains a prepayment penalty clause, you may end up paying significantly more than the original loan amount. Some lenders will include prepayment penalties to prevent you from refinancing a high-interest loan.

9. Know your complete financial picture and credit score. Before you fill out a loan application, gather your personal financial statements and credit reports from the major credit reporting agencies. Once you have a solid understanding of your credit risk, you stand a better chance of getting the best interest rate and not becoming prey to abusive lenders who may try to steer you toward a higher-cost loan.

10. Refinance with care. Before you refinance to a lower interest rate, find out exactly what fees and other charges will be assessed. Some unscrupulous lenders offer deceptively low initial rates and hit you with big fees after you sign the loan agreement.

Unsecured Personal Loans

2009-03-30T07:21:00.000-07:00

It is a matter of concern whether you carry bad or good credit. In case of good credit, you face no problem in approval of loan. Nevertheless, with bad credit you face a bit of trouble. But thanks to the rise in finance world competition that these days you get unsecured personal loans even with bad credit.

Unsecured personal loans are taken without providing any collateral. Unsecured personal loans are best option for private renters, council tenants and people living in housing association properties. Homeowners who do not wish to put their property as collateral can even get the unsecured personal loans. The loan amount of unsecured personal loans ranges from $3000 to $25,000. Here the repayment term varies from 3 to 10 years. The approval process of unsecured personal loans take lesser time as there in no evaluation of property involved.
Unsecured personal loan can be used for multipurpose like debt consolidation, child education, home improvement, wedding expenses, holidaying and many more. Bad credit holder may attach credit problem to their credit record due arrears, CCJs, defaults and many more. But they need not lose hope as now they can get the unsecured personal loan with due ease. All they need to do is show their steady flow of income. This helps them get the loan faster.

Online search for unsecured personal loans is a talked about in the finance market. This tool helps you get the loan deal without wasting much of your time. Just apply online for your unsecured personal loan and there you get the same. Before forwarding, your personal details to the lenders make sure their authenticity. This helps you get your desired loan deal as per your convenience.

So you should be alert while selecting unsecured personal loan through online process. Hence unsecured personal loan come as a friend-in-need loan for each individual who are looking for funds.

Source Of Finance For Your Business- Business Loan

2009-03-23T07:34:00.000-07:00

Have you been planning to start a new business but lack of sufficient funds has been stopping you? You need not worry; Business Loans are here to help you realize your dreams.

Business Loans are the loans granted for the use of a business. Business Loan can be used to start a new business, expand the existing business, to buy a new machine or equipment or for any other business related activity.

Business loans be a secured or an unsecured one.

Secured Business Loan is a loan that is provided in exchange of property, machines or plants that serves as collateral such as houses, cars, savings accounts or bonds. Secured Business Loan also provides finance for working capital, which can be used to purchase raw material, paying the labour charges etc.

Unsecured Business Loan is granted without keeping a property as a security with the lender.

Business Loans can be taken for short, intermediate or for a long term, it depends on you which one do you want to take and for what purpose. Short-term loans are given to businesses that need cash to start operating, this loan is granted for one or less than one year. Intermediate term loan helps businesses to buy equipments and cover initial large expenses, this is granted for a period of one to three years. Long-term loans are used to assist start-up businesses with initial costs and are granted for a period of three to seven years.

Now you would say why only, Business Loan, when other loans are available in the market. Business Loans are tailored specially for people who want funds for their business. Business Loan provides the flexibility to preserve your cash and working capital. Business Loan also helps in managing cash effectively by offering flexible repayment options.

Capital forms an integral part of every business. If you are planning to apply for the Business Loan you need to look into three key issues: -

• Cost – You need to check the cost and risk involved in taking a loan.

• Loan Size – You need to decide the amount of loan you want that would satisfy your need.

• Payback Program – It is very important to decide at the time of taking a loan that how will you repay the loan amount and the monthly installments, otherwise it may create problems for you in future.
You can get a Business Loan from a bank or a financial institution. But shop around and search for as many lenders as you can, you can also look for online lenders. Collect quotes from various lenders and make a comparison among them to get the best deal.

When applying for a loan you need to keep in mind that you must make a loan proposal. Lenders will grant you the loan only if they find your proposal worth because no lender will be interested in taking risk. While writing a loan proposal you should always give industry-specific details so that the lender is able to know in-depth about what business do you want to start or how your present business is run and what market trends affect it.
You should also give details about the existing or proposed business, collateral which you want to keep as a security with the lender, loan repayment plans, personal financial statement and projection of your future operations. The possibility of getting a loan will be higher if you have a good loan proposal and are able to convince the lender about your future business plans.

You can get a secured business Loan if you have CCJs, arrears or bankruptcy. Your bad credit history cannot stop you from getting the cash you needed to invest in your business or to start up your own business.
Business Loan provides funds to businessmen who want to expand their business or people who want to start a business of their own. Success has no limits. Business loan provides you with the funds now it depends on you how use this money to climb the ladder of success.

Financial Products

2009-03-16T09:44:00.000-07:00

Confused by all the lingo and terms concerning the various financial products? Not quite sure which product is best for you - equipment lease or working capital loan? What are the requirements for each product and are they etched in stone? Read on for a quick lesson on 7 financing products for your business or church.

SBA Loans - Loans guaranteed by the Small Business Association, but provided through your local or national bank. The guarantee is for the lender, not you the borrower. Current approvals (up to $2M) given for purchasing an existing business, partner buyouts, real estate transactions, medical professionals. Borrower generally needs 620+ credit score. Individual lenders determine which transactions they are willing to approve and specific requirements.

Equipment Leasing - Used to acquire equipment considered essential to your business. Must provide vendor estimate/sales quote for requested equipment as funds are forwarded to vendor for payment, not borrower. Borrower can own equipment at end of term or lease new equipment. Two years TIB generally required, some start-ups may qualify. Minimum 620+ credit score generally required. Lease payments can be considered business expense and often used instead of paying large upfront amount to outright purchase equipment.

Sales Leaseback - Current owner of equipment agrees to sell their equipment to lender and make lease payments to secure working capital funds. Equipment must have large secondary market; equipment deemed too specific has limited market and not a good candidate. Equipment should be relatively new, less than 18 months. Borrower must submit equipment listing that details equipment specifics offered for sale to determine value given for leaseback. Each piece should be valued over $25,000. Generally good credit expected on borrower.

Account Receivables Financing - Also called factoring, increasingly popular form of obtaining line of credit, based on your average monthly receivables. Great way of obtaining operating capital without having to wait for your customers to pay. Approvals weigh heavily on the quality of your receivables, not as much on your credit. Receivables generally should average minimum $25,000 per month. Once approved, 60-80% of receivable is advanced to borrower after customer is invoiced. When customer pays factoring lender, the balance of invoice, minus processing fee, is forwarded back to borrower.

Working Capital Loan - This is a true loan product, reported on your credit report. Approvals generally based on overall cash flow availability (average bank balance and average credit card processing) as well as credit history. Credit score expected in 620+ range, average balances in $5,000 range. Approval amounts up to $100,000, repayment up to 12 months. Once approved, loan can be used for almost any purpose. Renewals are possible once initial loans are 80-90% repaid. Rates generally lower than merchant cash advance. Funding usually complete in 7 days.

Merchant Cash Advance - Cash advance is forwarded to borrower based on last 6 months of credit card history. Credit is not as important, but should be 500+ with no recent bankruptcies. Merchant generally must process $8,000 minimum per month - Visa, MC, AMEX and some lenders include debit card processing as well. Cash and check amounts are not affected. This can be an expensive financing product, best for those in need of quick funding, generally with no other options for securing money. Operating capital can be used for almost any purpose. Funding usually complete in 7 days. Seasonal businesses may need to submit 12 months of merchant statements.

Church Financing - equipment programs available for new and established churches. Can fund chairs, pews, audio-visual equipment, almost anything needed for the interior of your church. $5,000 minimum request, requires personal guarantor with 600+ credit. Equipment sales quote from vendor needed as payment is made directly to vendor for equipment. Church addition/construction loans also available, generally require $300,000 minimum loan request. Church financial and bank statements needed for review prior to approval.

Now you have a quick starting point to help determine which financial products best suit your needs. Be sure to be honest and upfront regarding all aspects of your financial situation when discussing and submitting your application. Credible lenders will complete due diligence activities and your request may be declined for lack of full disclosure.

Demand for EDC products skyrocketing

2009-03-11T06:29:00.000-07:00

Export Development Canada said Thursday demand for its financing products skyrocketed in the final months of 2008 just as the financial crisis kicked into high gear, leading the Crown agency to set a record year in terms of business conducted.

But along with new business came bigger provisions for credit losses and a 56% drop in profit. It expects higher claims and impaired loans to continue into 2009 as the credit crisis grinds on.

Further, EDC said, the number of larger corporations that sought financial support also climbed -- a sign of tight credit conditions and an indication that its services may be in high demand once it is allowed to enter the domestic lending market upon final approval of the budget bill.

As it happens, the government-owned financier said its participation with private-sector banks on transaction financing increased 20% in 2008, to $14.1-billion, in support of 4,450 deals.

"As 2008 began, EDC anticipated lower business volumes as economic conditions softened, slowing export growth. By the fourth quarter, the extent of the slowdown had created an escalating demand for our services -- far beyond any prediction and in an environment of far greater risk," Mr. Siegel said.

Tighter credit conditions prompted the federal government to boost the Crown agency's borrowing authority and inject additional capital onto its balance sheet, as well as giving it a two-year timeframe to make credit available to transactions outside of its normal mandate, which is export-oriented.

Chief executive Eric Siegel said as envisaged, EDC expects to play a role by providing reinsurance to support the credit insurance and surety bond industries, and either participate in lending syndicates with chartered banks or provide business loan guarantees.

The House of Commons voted in favour of the budget bill on Wednesday night that gives EDC these newfound powers, and it is currently before the Senate for its OK. It then needs royal assent from the Governor-General to become law.

"We anticipate being ready to go the minute the legislation gives us the power to do that," Mr. Siegel said, adding it has talked to private-sector lenders and insurers as to where EDC's capability is needed.

Mr. Siegel said applications for financial products that backstop exports transactions soared 70% in the final three months of 2008, compared to the year-earlier period. That led the agency to post record-high business volumes in 2008, $85.8-billion, or a climb of 23% from the previous year. The number of customers also increased 11%, to 8,312 companies.

As of last Dec. 31, 82% of EDC's customer base is made up of small and medium-sized firms -- and that is down from 85% from a year ago, Mr. Siegel said, as "we have more large-sized exporters turning to us during this period."

A prevalent example is Nova Chemicals, which weeks ago secured $150-miillion of financing from a group led by EDC, which put up two-thirds of the amount, and a syndicate of three Canadian banks that pitched in the remainder.

But with this increased demand, EDC officials acknowledged it experienced increased claims activity and higher impaired loans as the year progressed -- and the pipeline of new business showed a "distinct" deteriorating in credit quality. They said they expect the trend toward higher claims and impaired loans to continue toward 2009.

For the year, it posted a 56% drop in profit, to $206-million, largely because it had to double its provision for credit losses to $346-million in light of the severe downturn in the automotive sector. Claims-related expenses also climbed by $90-million, or two-thirds, to $222-million for the year.

Nevertheless, the EDC said the amount of leverage on its books, at a 3:1 ratio, remains below what is carried by Canadian banks, and conservative when compared to U.S. and European lenders.

Get a Merchant Cash Advance With Bad Credit

2009-03-08T09:15:00.000-07:00

The short answer is; yes you can.

In case you haven't heard; a merchant cash advance is a way to get working capital for your business without having to go through the bank. Sometimes referred to as a business loan alternative, a merchant cash advance (or merchant loan) can often fund a business even though they may have less than perfect credit.

How does it work?

When you apply for a bank loan, you need to bring years worth of records, some form of collateral (usually real estate) and your business plan. The bank will then perform a credit check and proceed to pore over all your documents and records. This process takes anywhere from a few weeks to two months or more. In many cases, you are turned down because of your credit score even though your business is doing well.

With a merchant cash advance; all you generally need to do is fill out a two page form and provide 6 months of merchant statements. That's it.

Whereas a bank focuses on your past; a merchant loan provider looks ahead to your prospective future. To qualify for a merchant cash advance, all you need is to be in business for at least 6 months, accept credit cards and process at least $3K in credit card sales each month.

How much can I get?

The amount you qualify for is in direct proportion to your monthly credit card sales. A general rule of thumb is 2.5 to 3 times the amount of your monthly average. For example: If you process an average of $10K each month, you will be funded between $25K and $30K.

How do I pay it back?

A merchant cash advance uses your credit card processor to automatically deduct a small percentage of your daily transactions until your debt is paid back. This is usually spread across a 6-9 month timeline. One of the really cool features of this payment method is that because the payback is based on a percentage of your daily sales; you pay back less on slow days and more when things pick up. This creates a flexible payback schedule that flows with your business.

What if I can't pay it back?

A merchant loan provider works closely with the business owner to establish an advance amount and a payment schedule that makes sense to both parties. Your business success is of mutual interest. In the event that the business owner is unable to pay back the outstanding debt, it is usually because the business has failed. These things happen. When it does happen, both parties lose.

One of the reasons a merchant cash advance is more expensive than a bank loan is because of the inherent risks involved. All reputable merchant loan providers do not require any form of collateral. Make sure you read any contracts before accepting the funds.

How do I find a reputable merchant loan provider?

Research is your best friend, and so are questions. Here is a list of basic questions you should ask before signing anything;

· How long have they been in business?

· Where are they located?

· Who are their customers?

· Are they listed in the Better Business Bureau?

· What happens if you don't pay them back?

You might consider going to a site like Capital lynk. They do all of the research for you and send your request to several providers to get you the best quote.

With the economy the way it is and banks refusing to lend money, many businesses are taking a second look at merchant loans. Because of this increased interest; many new providers have sprung up, seemingly from out of nowhere. Don't let that keep you from getting the cash you need to make your business grow. Just be cautious.

Merchant Cash Changes Mean To You

2009-03-02T11:21:00.000-08:00

It is an unfortunate fact that raising funds for any business is harder than ever. A Merchant Advance is no different. Bank based merchant cash advance funding sources have disappeared faster than any experts could have predicted.

You need to know how to increase your chances of getting a Merchant Advance if you need cash for your business. If you haven’t applied for merchant cash before, you don’t have a clue what I am talking about. If you have had a Merchant Advance and paid it back, you need to know the rules have changed.

A Merchant Advance is not a loan. It is an advance. This may sound like semantic nit picking but it is important to understand. The major difference is loans are regulated by the banking regulators (for the most part). A merchant cash advance is unregulated. There are NO Usury Laws that apply.

That’s the good news and the bad news. The good news is private investors or institutional Merchant Advance funding companies can … and do … take more risks than banks. The bad news is Merchant Cash is expensive money.

A merchant cash advance is structured to allow funders to “buy” a portion of your future projected Visa & Master Card sales at a discount. The funding source analyzes your business’ past credit card sales. Then they assess your ability to pay the Advance funds back over a period that usually ranges from four months to one year. If you are pre-approved, the Merchant Advance funder sends you a “Term Sheet” with an offer and a list of terms.

So … What’s changed? The most important changes are Credit related. In the past few funders required good credit. That has changed almost universally. Some funders will make Merchant Advances to business owners with credit scores as low as 500. But most want 600 minimum scores.

The other changes are that there is more due diligence than ever before. Funders now require several months of past credit card statements and restrict the types of industries they approve for funding. You need to be proactive to put forward your best financial data when applying.

The best advice is to find an independent Merchant Advance Funding “specialist”. These specialists, or experts, are set up with many Merchant Cash Advance funding sources. They can guide you to the best source for your business.

The bottom line is … in these tough financial times … you need professional help to find the right Merchant Advance for your business.

How Not to Use a Merchant Cash Advance

2009-02-27T06:44:00.000-08:00

The merchant cash advance was created to provide small business owners with an alternative method of business financing. It can be very conducive and can promote business growth and development, if used correctly. Most merchant cash advance lenders set no restrictions on how a small business owner can use a merchant cash advance, but this is under the assumption that the business owner will use the funds to build his/her business.

Using a merchant cash advance for personal pleasure, or even personal emergencies can put a small business in jeopardy and ruin its future.

Below are a few examples of how not to use a merchant cash advance.

Take a Family Vacation

Your business is doing great, your credit score is high and you qualify to receive a $25,000 merchant cash advance. This money could buy you plane tickets, extended hotel stay, transportation and leave you with a couple of extra dollars in spending money for a summer vacation for your family of five.

Taking a merchant cash advance and using the money to finance such as trip may sound like a good idea, and you may even have two weeks of great fun, but what about the consequences? Are you willing to risk your small business’s success for a two-week vacation?

While you are out vacationing, a percentage is being deducted every time a customer swipes his/her credit card for the purchase of a product or service at your business. Since the merchant cash advance is not being used to improve your business, you will not be gaining money by receiving the merchant cash advance, you will not even break even. You will actually be losing money.

Buy The Dress/Suit You’ve Been Wanting

I will admit I am as much of a slave to fashion as the next person is, maybe even more. But when it comes down determining priorities, I know what things are most important to me and when it is not a good idea to make a clothing or accessory purchase.

Say you had an important business meeting coming up or you were planning to attend an important business conference. Then, after making these plans, you realized you did not have the appropriate attire for the events. Your options are one; miss the events and forego multiple business opportunities, or two; buy an outfit or two in order to attend the events. In this case, spending merchant cash advance funds would actually help to improve your business and your purchase could be use for future events as well.

On the other hand, simply making random personal purchases with business funds is not beneficial to any small business.

Buy Christmas Gifts

Do you think your friends and family would rather receive lavish Christmas gifts and watch your business suffer or receive something inexpensive and know that you are financially sound and your business is not in jeopardy? Most family and friends would choose the latter of the two, and so should you.

The idea of the merchant cash advance is to use it to make even more money. You should look at a merchant cash advance as an investment. If your merchant cash advance is not going to be used to make more money for your business, than you should not use one. But, if you have a plan for the funds, it can be a very lucrative business move. The percentage that is deducted from future credit card sales is small and virtually unfelt.

Business Loan Solutions

2009-02-24T06:36:00.000-08:00

Statistics show that 94.7% of all small business owners feel their only financial resources are their local banks or personal credit cards... even though their local banks often require them to pledge their personal homes & land as collateral.

Here are some tips that can save your business, regardless of your personal credit history.

First of all, getting approved for a small business loan is definitely easier than getting personal loans... regardless of your personal credit scores. Additionally, getting the right types of corporate credit is absolutely critical: if you want to protect your personal assets, minimize the risk of a personal lawsuit affecting your business, and to your ability to weather the economic changes that happen overnight.

All business owners must be much more proactive about developing relationships with the right types of lending institutions. You usually want to start your application process with out-of-state, national lenders... not your local or regional banking institutions. National lenders typically won't require a personal guarantee or your social security number.

I've attached a basic roadmap you'll need to follow, if you need a small business startup loan, a business debt consolidation loan, a bad credit business loan, or a government business loan.

Ultimately, you need to find a competent professional that can help you navigate through the process of building a strong corporate credit rating.

Finding a competent business loan expert will give you a head start on your competition & also let you focus on running your day-to-day activities... instead of dealing with the hassles of establishing a strong business credit rating. An excellent business credit score can help your company's image, overnight.

You need to prepare yourself with these very basic questions, before you apply for any business credit.

1. How is your business structured? Is it a sole proprietorship, C-corporation, S-Corporation, Limited-Liability Corporation (LLC), Partnership, or Trust?

2. How long has your business been recognized by your State & Local government?

3. Has your company ever had derogatory information reported against it to either of the two (2) most popular business credit reporting agencies, Dun & Bradstreet or Experian?

4. Are your company permits, licenses and registrations current?

5. Does your business have a physical address, or are you trying to use a U.S. Post Office Box instead?

6. Is your business telephone number recognized by directory assistance?

7. Are your incoming telephone calls professionally answered in your business name?

8. Have you established a business checking account?

9. Have you registered & asked for an Employer Identification Number (also known as an EIN) from the IRS?

If your answer to the first question was a sole proprietorship, partnership or trust; I urge you to re-establish your company as a corporation or LLC. I'm not going to provide you with legal advice, but many CPAs and attorneys highly recommend LLCs (Limited Liability Corporations) as a way of protecting your personal assets & estate... in the event of any lawsuits being filed against your company.

As a sole proprietor, your personal assets are at direct risk of seizure or forfeiture when faced with most types of legal action. Additionally, if you are applying for business loans in a corporation's name... most lending institutions will not require you to provide any personal guarantee!

A corporation can still face difficulties applying for business credit, if it has been in business less than 2 years or had previous credit problems reported against it. Here are some ways to fix these problems.

- Purchasing a "shelf corporation" or "aged corporation" that's been in good standing with your State government (for longer than 2 years) can drastically improve your chances for small business loan approval.

- You can attempt to repair your business credit rating by writing dispute letters to Experian or Dun & Bradstreet, which isn't always possible.

- Some corporate credit experts will help you find, select & purchase an established "shelf" or "aged" corporation, some of which already have strong credit ratings established... saving you alot of hassles!

I cannot stress this enough... you MUST have a physical address (not a PO Box) if you want to establish a solid business credit rating. The same thing is said for telephone numbers & the way incoming phone calls are handled. Would you lend money to a company that does not appear to have a physical address or documented telephone number?

And, don't forget to always keep your small business permits, licenses & registrations current... and always keep copies of these documents in case a potential lender asks for this information.

Business checking accounts are a must. Again, this proves stability to your potential lenders. Here are a couple of tips for you, in case you've had any checking accounts closed by a financial institution. Pay off the outstanding balance (if any) that's being reported by the bank, or open a checking account at a bank or credit union that doesn't use the ChexSystems credit reporting system. Most credit unions don't use ChexSystems, and you can always find a list of banking institutions in your area that don't use ChexSystems... by simply doing a search on Google, Yahoo or MSN.

Small business credit ratings are tracked using your business name, business address and employer identification number (EIN). You can apply for & receive an EIN at the IRS's website (irs.gov). You can also call the IRS, but be prepared for long waits.

Then you'll want to obtain a D-U-N-S number from Dun & Bradstreet, the largest business credit reporting agency. You can apply for this without any fees at Dun & Bradstreet's website (dnb.com), and you'll usually receive this number within thirty (30) days. Do not apply for this number until you've prepared your self thoroughly, because any information you give to them... goes into your credit file... permanently.

After you've obtained your D-U-N-S number, you're probably ready to start establishing some vendor credit. Vendor credit is where many business owners start establishing business credit ratings. Simply go to staples.com, officemax.com or officedepot.com to get started. Then, you'll also need to fax your business telephone bill & the credit application to them... on your business letterhead (which you can create using your favorite word processing software if you don't have expensive stationery). They usually don't require any personal guarantees (if you've followed the outline above), and you'll usually receive a starting credit line of $750.

This is critical & I repeat... critical! Always pay your invoices before the grace periods begin... especially on unsecured credit cards or vendor credit lines. Dun & Bradstreet will lower your credit score for every day a creditor reports your bill as unpaid while you're within your grace period. Whereas, personal credit scores are not lowered unless you are 30+ days past your due date.

Dun & Bradstreet reports what's known as a Paydex score (your corporate credit score), and a score of 80 is very good... with 100 being the highest score you can achieve. Your Paydex score is issued once you've established a known vendor/credit relationship with at least five (5) creditors.

There are shortcuts that will help you get much more than $750 alot faster. When using a business credit expert, most small business owners (even startups) can be approved for vendor credit lines of $25,000-$50,000 and open credit lines of $50,000, $250,000, $500,000 or more... in as little as 45-60 days... by using their knowledge of the application process & "shelf" corporations.

Now, it's your choice. Are you going to go against the grain & try to establish business credit on your own (which could prove costly to your business health, growth & survival)? Or, will you choose to utilize a corporate credit expert... allowing you to remain focused on your daily business needs?

Most business owners make the mistake of trying to do this on their own... usually trying to find grants, investor "angel" money, or falling back onto the "personal credit card sword". Don't be a casualty like the rest. Learn more about how you can use the tools that informed, educated millionaire businessmen have used for years.

Business Cash Advance Strategies - Problems to Avoid

2009-02-20T07:09:00.001-08:00

One of the most important commercial financing needs for any business is ensuring that short-term cash requirements are successfully met. This is frequently a difficult task. Even thriving small businesses frequently need more cash than they can borrow from a bank. The use of a viable business cash advance strategy has become an increasingly important commercial financing tool for many businesses faced with a potential short-term cash shortfall. However, as noted below there are a number of potential problems to be anticipated and avoided when businesses seek a business cash advance.

USING CREDIT CARD RECEIVABLES

One of the least-known commercial financing strategies for small businesses is potentially the best strategy to quickly obtain needed cash for growing their business. This commercial financing strategy uses an under-utilized business asset (credit card receivables) to obtain a business cash advance based upon a merchant's sales volume. A business cash advance typically varies from $5,000 to $300,000. Small businesses will frequently benefit from converting future cash flow into immediate working capital. The most likely candidates to benefit from this business cash advance strategy are restaurants, bars, service businesses and retail stores.

CREDIT CARD FACTORING

This strategy is also known as "credit card factoring". Many small businesses have relied upon a commercial financing strategy called "receivables factoring" which allows them to sell their future receivables at a discount. Most small businesses cannot adequately document their receivables in order to qualify for this kind of commercial financing. Many other small businesses (such as restaurants, bars, service businesses and retail stores noted above) simply do not have such receivables to rely upon as a commercial financing tool.

What these businesses do have in many cases is documented sales volume and documented credit card sales activity. It is this documented level of sales volume and credit card sales activity that becomes a financial asset to the business. Business cash advances up to $300,000 can be obtained based on a merchant's sales volume and future credit card sales.

TEN BUSINESS CASH ADVANCE PROBLEMS AND RECOMMENDED SOLUTIONS

Before employing this strategy, small businesses should realize that there are several recurring potential problems that they need to anticipate. Ten common problems that small business owners should avoid when employing this strategy are highlighted below. Preferred/Recommended business cash advance requirements are shown after each potential problem.

BUSINESS CASH ADVANCE PROBLEM NUMBER 1:
Up-front fees

Preferred and highly recommended business cash advance requirement: No up-front fees

BUSINESS CASH ADVANCE PROBLEM NUMBER 2:
Closing costs

Preferred and highly recommended business cash advance requirement: No closing costs

BUSINESS CASH ADVANCE PROBLEM NUMBER 3:
Financial Statements required

Preferred and highly recommended business cash advance requirement: financial statements not required

BUSINESS CASH ADVANCE PROBLEM NUMBER 4:
Collateral required

Preferred and highly recommended business cash advance requirement: collateral not required

BUSINESS CASH ADVANCE PROBLEM NUMBER 5:
Fixed term to pay off the business cash advance

Preferred and highly recommended business cash advance requirement: No fixed term for repayment

BUSINESS CASH ADVANCE PROBLEM NUMBER 6:
Fixed payments to pay off the business cash advance

Preferred and highly recommended business cash advance requirement: No fixed payments

BUSINESS CASH ADVANCE PROBLEM NUMBER 7:
High credit scores (680 to 700 or higher) required to qualify

Preferred and highly recommended business cash advance requirement: Credit scores of 500 or better

BUSINESS CASH ADVANCE PROBLEM NUMBER 8:
2-3 years or more in business required to qualify

Preferred and highly recommended business cash advance requirement: 1 year in business

BUSINESS CASH ADVANCE PROBLEM NUMBER 9:
12 to 24 months of documented credit card sales of $10,000 to $25,000 or more required

Preferred and highly recommended business cash advance requirement: 6 months of $4,000 or more

BUSINESS CASH ADVANCE PROBLEM NUMBER 10:
Maximum business cash advance of $10,000 to $50,000

Preferred and highly recommended business cash advance requirement: Maximum cash advance of $250,000 to $300,000

Not all of these potential problems will be relevant to each commercial borrower. Most commercial borrowers will encounter at least 2-3 of these problems if they are reviewing business cash advance programs that use credit card receivables as the basis for obtaining short term business loans. It is not necessary to accept ANY of these problems in order to obtain business cash advances based on future credit card sales. There are viable credit card receivables programs which avoid all of the problems described above.

Use Fast Cash Loans for Your Business

2009-02-16T06:14:00.000-08:00

Salaried individuals need to maintain a monthly budget to meet their financial requirements. This is because they have a limited source of income and any unwanted expenses may spoil their whole monthly budget. To assist these individuals in meeting emergencies or any unwanted expenses, the loan providers have evolved a new loan program, know as the fast cash loans. These programs are curved out to assist the individuals during the times of pinch.

These quick cash loans, as their name suggest, offer finances to the loan aspirants within a very short span of time. Usually, these are short term loans which do not require any security to be pledged for their approval. The loan amount approved is usually very small in comparison to the other loan options, but would be sufficient enough to meet the exigencies of the borrower. These finance options actually bridge the cash gap for the borrowers. As the loan providers do not carry any credit check of the borrower, bad credit borrowers can also apply for the fast cash personal loans.

Though the amount is approved without any security, some of the lenders ask for a post dated check containing the borrowed amount along with the processing fees. The financiers withdraw the borrowed amount, when the repayment term is over.

By having these loans, a person can avail the loan amount between the range of 100 to 1500 $. In addition, loan period ranges from fourteen to thirty one days. The paying-off period is sufficient enough to repay the entire loan amount. With the help of the borrowed sum, the borrowers can easily cover the expenses on medical and other utility bills, car repair, home repair, paying school fees and so on. The rates of interest are slightly higher because of the short repayment period and the unsecured nature of these loans.

To avail the fast cash personal loans, the borrower has to fulfill certain requirements. One such requirement is that the borrower should be suitably employed with a regular source of income. He must also have an active bank account number and his or her age should be more than 18 years.

After the verification processes, the loan amount gets transferred within a period of twenty-four hours. This is done to provide immediate relief to the borrower so that he can attend to his urgent needs. In addition, the online request also helps the borrower to instantly avail the money for his immediate needs. However, before availing the loans, compare their quotes to get better deals on the loan plans that are available to the borrowers. The fast cash loans give instant access to money to the loan seekers who have an urgent need for cash.

Fast Cash Loans

2009-02-09T19:03:00.000-08:00

If you are running low on cash and you fear that you won’t be able to make ends meet, you can always resort to fast cash loans to cover for your lack of cash problem till your next payday. These loans are excellent emergency tools that can be approved immediately as well as credited right away too. Thus, they are the perfect financial solution for these kinds of problems.

If something unexpected happened and you need money quick, Fast Cash Loans can save your day. In less than 24 Hs. you can have fresh cash deposited into your bank account and there are no harsh requirements that you need to meet in order to get approved for a fast cash loan. Approval is almost a certainty.

Loan Amount You Can Get

Due to the high risk involved in these transactions for the lender, they keep the loan amounts to low figures. You can get any amount within a certain range that usually goes from $100 to $2000. There are loans offered for higher amounts but these loans require some sort of credit verification or a credit history with the financial institution that can be verified (pre-approved personal loans are an example of these).

Nevertheless, emergencies are supposed not to imply higher amounts than a couple of thousands and given that the costs of these loans are high, if you need further financing you should always resort to other, cheaper loans. Otherwise, your budget would suffer a lot and you may end up falling into a vicious circle of debt.

Repayment Programs Available

As regards repayment, there are two types of fast cash loans that work differently. Pay day loans are due at your next pay day and thus, don’t have monthly or weekly payments. You need to cover for the principal plus the interests by the day your pay day check arrives. Otherwise you’ll need to pay the interests and refinance the principal.

Cash Advance Loans, on the other hand, offer monthly installments so you can repay the loan within a longer repayment program. Nevertheless, these programs are short compared to personal loans repayment schedules and will never exceed a twelve months period. Usually, you can consider yourself lucky to get more than three months to repay a cash advance loan.

The Costs Of Fast Cash Loans

Fast Cash Loans are probably the most expensive financial products of the loan industry. Yet, there is a very good reason for this. Fast cash loans do not require credit checks at all. Thus, the lender doesn’t really know what he is getting into by lending to someone whose credit report he ignores.

He must then assume the worst and the risk associated with this kind of transaction is high enough to justify the high rates and fees charged for approval. Nevertheless, as long as you don’t make it a habit to resort to this kind of tool, applying for fast cash loans under an emergency is useful and affordable. You just need to make sure to put aside some money every month into a savings account so the next time you need funds for an emergency you can avoid using fast cash loans.

Working Capital For Your Business

2009-02-03T05:48:00.000-08:00

Do you own a business? If you are like most business owners, you probably have a lot of responsibilities. First and foremost, you have to meet payroll. Every time. You also need to pay rent and suppliers - on time. All this requires working capital.

However, if you are selling products or services to commercial clients or to the government, you are probably painfully aware that they can take as many as 60 days to pay their invoices. Why? Because if you want their business you have to conform to their terms. There is no other way around it.

But this also leads to an impossible situation. You have bills that need to be paid quickly but customers that want to pay slowly. Unless you have a lot of money in the bank, it’s not a sustainable situation. Sooner or later you’ll miss payroll, delay a supplier payment, or turn a large opportunity away.

The solution is simple. You just need working capital. One way to get working capital is to get a business loan. However, business loans are hard to get and can prove to be inflexible. A better solution is to factor your invoices.

Factoring, or invoice factoring as it is most commonly known, is a type of business financing that is ideal for owners who cannot wait up to 60 days to get their invoices paid. It provides you with the necessary working capital to pay rent, suppliers and meet payroll. And, as opposed to a business loan, factoring is easy to get.

Invoice factoring eliminates the usual 60 day wait to get paid by your customers. The factoring company provides you with an advance on your soon to be paid invoices. In effect, it accelerates your invoices. By accelerating your invoices, you get the working capital you need to run and grow your business. And, unlike a business loan, there are no arbitrary limits. The amount of financing you get is only limited by your sales. If your sales increase, so does your financing.

If you are running a business that is growing – and you can’t afford to wait up to 60 days to get your invoices paid, consider invoice factoring.

Small Business Loans

2009-01-28T09:56:00.000-08:00

If you're starting a new business, a small business loan can help you get started by providing working capital to build a store, buy inventory, or promote your business. But how does a small business loan benefit you in real terms, and do you even qualify for a loan?

What is a Small Business Loan?

By definition, a small business loan is a certain amount of money that is borrowed by a person who wants to start or operate his or her own business. It is basically a type of personal loan given by lenders to small business owners.

There are several types of small business loans. Unsecured business loans are issued by a lender based on your credit alone without any sort of collateral. Usually, you will need a high credit score and a very good credit history as well as have a stable personal finance situation.

There is also business financing that can be based on collateral such as real estate collateral, a vehicle or property that is free and clear of debt, and so forth. Then, there is a commercial real estate finance loan for which money is granted for a commercial property that is to be used for business. There is also a business line of credit, which is a fixed, predetermined amount of credit that a company can borrow against as needs arise. The borrower will only be required to pay interest on the amount used.

Benefits of Small Business Loans

Obtaining a small business loan for your new business can bring relief in many ways. It can give you working capital to help build your business, promote it, and keep inventory. It can also help with the costs of hiring employees if needed at the start. A small business loan enables you to grow your new business without the financial stresses of a new business. Also, the interest on a small business loan is tax deductible.

Small Business Loan Qualifications

Once you understand how business financing works, you must consider whether or not you will qualify. It's good to know this before you apply so that your credit history will not show various credit checks and inquiries from lenders, which can lower your credit score for the future.

First, be sure your personal credit history is in order. Find out your credit score by requesting a copy of your credit report. There are many online resources available to check your own credit history. Also, be sure your personal bill and loan payment histories have been consistent and on time over the past two years or more. Small business lenders are likely to base your approval on your personal credit history, especially if you do not offer collateral.

Next, ask the lender directly about their business loan qualifications. This can eliminate any questions in your mind before applying.

Finding a Lender

Do some research to find a small business lender that's right for you. Check around online for interest rates, small business loan plans and qualifications, and for flexibility. Some lenders will offer creative small business loan options to work with your particular situation. Some lenders make it easy to get approved while others make it almost impossible. Look for a lender that is easy to work with from the start. Ask about early pay-offs, lines of credit, flexible financing, guaranteed interest rates, and any fees you will incur by using their services.

Keep these tips in mind as you search for small business finance solutions. You'll be on the road to success in no time!

Business Plan- Get Financing

2009-01-22T05:35:00.000-08:00

When the time comes that you and your business seek financing, a business plan will be one of your greatest assets. A business plan is extremely beneficial, even when you are not seeking outside financing, but becomes crucial when you start knocking on the doors of various lenders and investors. Think of yourself as the author of your own story, you must first plan out those crucial plot points in order to ascertain where the story is going. Don't let your business have a cliffhanger ending; instead have all the pieces come together in a synergistic and seamless manner.

The first thing to remember is to keep things simple when writing your business plan. Gather the facts and present them in an organized manner. You don't want possible investors/lenders losing themselves in your presentation of paperwork in order to answer their big questions. Put yourself in their shoes and ask yourself what you would want to know if someone came to you seeking funds. The more you are able to answer their questions and create a well thought out business plan, the more likely chance of securing funds and success in the future. In fact, according to a recent survey, 78 percent of business failures have problems rooted in the lack of a well-developed business plan.

A comprehensive business plan is one that will display you and your business in a positive light. It will provide evidence of solid leadership within the business as well as such attributes as discipline, foresight, and attention to detail. It also provides clarity to your investor/lender as to what the plans for your business are, the direction you intend to go, and its overall growth prospects.

This understanding can then create a common ground between both parties on which an open dialogue can occur regarding the financing needs of your business. The business plan is more than a business blueprint on paper; it speaks to a number of other aspects regarding the team behind the business.

In terms of structure, you want to keep the overall paperwork neat, organized, and succinct. It doesn't need to be an epic, but make sure you cover the basic points. When writing your plan, it's important to remember who your financing sources are likely to be. Bankers, investors, venture capitalists and investment advisors are sophisticated in business and financial matters. How can you ensure your plan makes the right impression? Three tips:

Make your executive summary interesting: It needs to grab and hold the attention of the possible investor/lender, as they more than likely have received countless others. If at first glance your proposal looks dull, poorly written or confusing, investors will toss it aside without a second thought. In other words, if your executive summary doesn't grab them right away, you won't get a second chance.

Avoid hype: Clearly define what your business does, whom you employ, your mission, your growth plans, and your client base. These are all important factors in creating a clear image to the investor/lender of whom they are dealing with. The language you employ when writing the plan should not sound like a late night infomercial that makes wild claims and exuberant exclamations. You want to be professional and demonstrate the promise associated with your venture.

Make sure your business plan is complete: It doesn't have to ramble endlessly, but it does need to cover all points of interest. When you're presenting a business plan, always keep in mind that you are starting from a position of weakness. And if potential investors/lenders find any flaws in your plan, they will gain an even greater bargaining advantage. A complete and well-written plan gives you greater negotiating power and boosts your chances of getting financing on your own terms.

This blueprint you are creating is also beneficial for you in that it can provide insight into the needs that might develop within your business over time. You will be able to further anticipate financing needs, placing you in a proactive role concerning your business' financing. When you are better able to see what is in the path ahead of you, measures can be taken that will then aid in keeping you ahead of a possible credit crunch.

Working closely with a consultant or an accountant can be a wonderful asset during the construction phase of your business plan. Consulting with professionals on these matters will only serve to strengthen your business and your own knowledge of your business. Ask them questions so that you are not completely dependent on their services without really understanding the details. Ask questions and consider the consultant/accountant your editor, someone who will look over your plans, make suggestions and guide you in the right direction.

Boost business financing

2009-01-21T06:01:00.000-08:00

The federal government is investing $350 million in the Business Development Bank of Canada to help companies across the country gain access to financing because of tight credit markets.

Federal Industry Minister Tony Clement announced today that the investment will allow the bank to provide an additional $1.5 billion in financing to help small and medium-sized businesses – ranging from manufacturing to forestry, farming and fishing – stay afloat and grow.

"Current market developments have resulted in increased demand for BDC financing and services, and the government has taken this action to enable the BDC to help counter the effects of the credit crunch," Clement said.

Federal officials said the move could mean the immediate injection of funds for more than 3,700 companies with average loans of about $400,000.

The bank assists entrepreneurs through financing, venture capital and consulting services for small and medium sized businesses.

Its role has increased significantly during the current economic slowdown by raising financing activity, extending repayment terms, postponing capital repayments and offering new working capital for expansion projects abroad.

Ottawa is providing an immediate $250 million out of the $350 million in capital to increase the bank's term lending activities.

The government will invest another $100 million when the bank completes a working capital guarantee program probably by April to top up credit lines from financial institutions for small and medium-size businesses.

Small Business Loans

2009-01-15T20:07:00.000-08:00

If you want to set up your own business and you don't have the required amount to start with, there is a good solution for you. Small business startup loans are becoming very popular among the individuals who are making their first steps in the business world. Loans are not only useful to set up the business, but also to deal efficiently and effectively with the first fees and expenses that come inevitably with the first phase of every newly born business.

When applying for a loan you will see that there are two kinds : secured and unsecured. Secured loans come usually with low interest rates and a longer pay off time, while their amount is usually high. In order to avail a secured loan you need to place some kind of collateral which refers to your properties; you can submit your car or business property as collateral, or something else depending on the margin given by the bank.

Unsecured loans do not demand any kind of collateral, which is positive for those who don't have significant items in their property, however the rates are higher, the amount is lower and the payoff time can be also shorter.

The amount granted as a startup loan ranges from 5,000-100,000 but this is something that is negotiable, as many factors will be taken under consideration, such as the credibility of the business person, the integrity, ability and the business experience of the borrower.

The usual payoff time in business loans is from 5-35 years, but that is also a very generic rule. Specific requirements and conditions may apply, since the financial institutions can be very flexible when the borrower is of significant credibility and reliability. This applies to the rates as well. Although the usual rates can range from 8-14% there is an array of factors that can determine a further amelioration of all terms to the benefit of the borrower. Everything though is subject of a prior agreement between the lender and the borrower

In the case that the borrower has a bad credit history and hasn't run effectively a credit repair, or is still in the process, banks and financial institutions may reconsider the terms of the application. Conditions are usually stricter in this case, but it doesn't mean that the applier will be denied the loan.

When availing for a business loan you need to submit several ancillary statements, including the business plan, the financial and marketing projection of your business and other documents that might be needed for the evaluation process of your application.

The application forms require you to give specific answers to several questions, such as the purpose of the grant, the prospect of business, your personal experience which are always taken into perspective by the banks. The typical requirements in an application form are of course the type and amount of the loan, but most banks will allow you to add any request you might have initially, but it's not mandatory to actually meet them.

Small business startup loans are given to both amateur businessmen and savvy professionals who are starting a new business or firm. Their significance is acknowledged and appreciated by everyone involved in the corporate world because they can prove to be very beneficial at the initial steps of a new business.

Get a business loan?

2009-01-12T10:13:00.000-08:00

Getting a business loan can be tough. Learn about these two new alternatives.

Sooner or later every business will need financing to be able to survive and grow to the next level. This is true for every company, regardless of size. If you are a business owner and you need money, your first stop is likely to be your bank.

Banks offer a number of financial products, but business owners generally try to get business loans or lines of credit. While both can help you grow your business, they are also very hard to qualify for. Banks usually require that the business have significant assets, collateral and 3 years of audited financial statements.

What if you don’t meet these tough criteria? Are there any alternatives?

There are two financial products that may be able to help you significantly. Let’s look at two statements:

a) I have a lot of money tied up in slow paying invoices - and/or -
b) I have a big purchase order and cannot afford to pay my suppliers

If you can answer yes to either of these statements, you can benefit from either factoring or purchase order financing. Both are great alternatives to bank loans.

Factoring provides you with financing based solely on your slow paying invoices. The financing is determined by your invoicing. If your invoicing grows, so does your financing.

Purchase order financing is ideal for distributors, wholesalers and resellers who work with large purchase orders but cannot afford to pay their suppliers. The purchase order financing company pays your suppliers and helps you deliver the sales. They get paid once the end client pays the invoice for the delivered products.

Both invoice factoring and purchase order financing are easy to qualify for and available to businesses regardless of size. They are ideal products for businesses that are growing.

Line of credit for Your Small Business

2009-01-08T11:17:00.000-08:00

Now the small business owner can get a line of credit with no hassle. Even in today's economic climate with banks faltering and the stock market declining, smart banks and credit companies are still looking to invest in small business opportunities. Oftentimes, a line of credit can mean the difference between success and failure for a small business.

Lines of credit can be used to purchase inventory, pay utility bills, manage payroll, advertise, or to fund expansion projects. A line of credit can also allow a small business to weather downward trends in sales without having to make painful budget cuts and unpopular layoffs.

A line of credit also allows a small business to avoid high interest loans from traditional banking institutions. Lines of credit are also much simpler to manage than typical loans or financial advancements, and securing a line of credit for your small business has never been easier.

While traditional banking institutions offer lines of credit for your small business, there are also other options.Conventional credit card companies are great resources a line of credit. They usually offer introductory low interest rates, flexible payment options, and are usually easier to secure than small business loans from a bank. The Internet is great tool to utilize when searching for an available line of credit for your small business. There are several web sites that offer searchable databases of credit offers.

You can limit the search by any number of criteria, making each search specialized to your particular needs. These details can include credit limits, payment options, interest rates, and credit company options. Also, by applying online, many credit card companies offer different and better credit line terms for small businesses. These better terms can mean the difference between success and failure in a competitive business environment.

While credit card companies are a great and easy way to secure lines of credit for your small business, a bank can also be a good place to look for a line of credit. The terms may not be as good initially as a credit line issued from a credit card company (especially from an online application for credit), but banks a generally more trust worthy and the credit line terms are more predictable. When applying online for credit lines, there can be hidden terms or stipulations that are hidden in pages upon pages of small print.

It is often difficult to realize all the terms and limitations of an online credit line. Interest rates are a good example. While introductory rates can seem excellent, once those introductory rates expire, the interest rate can skyrocket. This increased interest rate can cost your small business thousands of hard earned dollars, thus straining your business' bottom line. Credit lines issued from banking institutions are more straightforward, and while their introductory interest rates are not generally as desirable as online credit institutions, the increased rate is generally much lower.

When trying to secure a line of credit for your small business all aspects of the credit line are important. While credit lines can help your small business purchase inventory, pay employees, and weather downturns in sales, the wrong terms for your credit line can cost your small business thousands of dollars.

Loan to Buy a Business

2009-01-07T11:10:00.000-08:00

With today's economic outlook, you might think that securing a loan to buy a business is a hopeless endeavor. However, there are several things an individual can do to help ensure that business loan from a bank or other loaning institution.

These easy steps will help you secure a larger loan with better terms and less hassle. This could mean the difference between settling for something you do not want, as opposed to buying that business opportunity you have always wanted.

First, do your homework. Research loan offers from several institutions. This research can end up saving you time by eliminating banks and other institutions that are unlikely to give you a small business loan. Research will also give you an edge over other proprietors searching for a small business loan. You will already know what is required to secure the loan, have the proper paperwork in hand, and the proper documentation already secured. The easier you make it for the bank of lending institution to grant you a loan, the more likely you get that much needed loan.

Also do not underestimate the power of a strong credit rating. All things being considered, this number is most important factor when trying to secure a small business loan. This number is a simplified number that quantifies your loan risk to the bank or financial institution. It is a composite of your current debt, your debt history, and your payment history among other personal and financial characteristics.

The larger this number is, the more likely you are to secure a loan to buy a business. You can improve this number by paying bills, credit line fees, and loan obligations on time. You can also affect this number by securing valid forms of capital. This capital can be in the form of personal property, down payments, or even mortgages on homes or other business opportunities. You can check credit score by going to any number of websites. However, remember that every time you check your credit score, it decreases slightly.

When trying to a secure a loan to buy a business, it always helps to approach the loaning office with a complete business plan in hand. This plan can include the business' potential earnings, its ability to weather potential downturns in sales, is revenue potential, a full list of expected expenses and costs, including estimated utility and labor costs, and any earnings history that may be available from the previous owner. It will sometimes help to have the previous owner present when attempting to secure a loan in order to answer any questions the loan officer may have with regards to the business's earning history.

Remember, by giving you a loan to buy a business, the bank of loaning institution is basically investing in you and your business. You want to highlight the advantages to investing in your business, while pushing the more risky elements of your potential business into the background. By following these simple tips, you can help yourself secure a loan to buy that business you have always wanted.