Business Loans: Make An Intelligent Decision
You need a lot of resources for effectively managing your business. The purpose may be to start a new business project or plunge into a hitherto unexploited domain. Your purpose will define your needs – the requirements may be huge or small. All this calls for serious thinking regarding the type of loan that you should avail.
Business loans are widely available in the UK financial market. Apart from private individuals offering business loans, there are many other options also. Many government-sponsored schemes, designed to assist new businesses, are in the market. There are many ifs and buts when it comes to government grants and loans. These loans depend on many things like where you intend to locate your new business and the type of business. The rate of interest is low in these schemes.
But, business loans are more freely available in the open market. You have a few conditions there. Broadly, lenders provide two types of business loans – secured and unsecured. Mostly, to get a business loan [http://www.apply-4-loans.co.uk/business-loans.html], you should hand over your business proposal, along with your loan application form. An exhaustive and well-drafted business plan will help you get business loans easily. Lenders will assess your business plans and strategies on merit and then accordingly dispose off your loan application. The whole process does not take much time. Lenders understand your business needs and try to minimise the time needed in loan processing.
All secured business loans call for collateral; unsecured loans do not have such a requirement. Secured business loans are easily available and also attract a low rate of interest. But, unsecured ones involve comparatively high rate of interest. You should consider both the merits and demerits of these loans before deciding in favour of any loan. This will help the borrower make a better decision.
Author: Braden Fred
Article Source: EzineArticles.com
Provided by: Programmable pressure cooker
Originally posted 2009-11-01 19:34:13. Republished by Blog Post Promoter
Bad Credit Business Loans – When Your Credibility Becomes Secondary to Bad Credit
A business stands firm on the ground with the help of funds. Every business man would know that without finances one cant establish or advance a viable business plan. Not everyone is born with the kind of money required for furthering a business plan. Bad credit is so prevalent and this is the reason why we have bad credit business loans.
In practice, bad credit cannot prevent you from having bad credit business loans. Bad credit business loans can be difficult to find but they are certainly not impossible to find. Writing a good business loans application is key to getting it approved. There are a few things that the lender wont neglect while providing you with business loans for bad credit. Business plan and its feasibility are crucial for bad credit business loans. Along with that lender will look for equity, collateral and repaying ability.
Now credit history is fundamental to getting a business loan approved. Since you have bad credit, you should start with your credit score. Obtain your credit report from any of the three credit reporting agencies Experian, Trans Union and Equifax. Many people are unable to understand what the report and credit score signify. Credit score is given after studying the data in the credit history
Late payments
The amount of time credit has been established
The amount of credit used versus the amount of credit
available
Length of time at present residence
Employment history
Negative credit information such as bankruptcies, charge-offs, collections, etc.
A
Bad credit business loan lender will usually use a FICO score to identify your bad credit. Fico score ranges from 340-850. The lower your score is the chances are you might be seen as a greater credit risk. Any business loan borrower with a credit score below 600 is considered as bad credit. Here the business loans application will be approved with the added compensation of higher interest rates and down payment. Higher interest rate is attached to bad credit business loans. Research would be an investment worth it while finding a bad credit business loan. Comparatively low interest rates are possible for bad credit business loan.
You should be aware of your exact credit score before you apply for bad credit business loan. In case you have improved your credit score since you last saw, you can get lower interest rates. Credit repair may be a good step before you apply for bad credit business loans. Bad credit will not vanish immediately but there will be a gradual improvement. Dont make credit repair without thinking for it may backfire. For shutting down a credit card because the interest rates are high, can harm your credit score.
Bad credit would not be the only criteria for getting business loan. If you can prove the ability to repay in spite of bad credit your loan will be approved. Bad credit business loan application should have
nature of your business
the objective of using the business loan
business name
Your social security number
proof of ownership
letters of reference
contracts, tax returns
financial statements, credit references
Incorporation or LLC organizational document
It is important that a lawyer reviews your bad credit business loan application. Read the fine print and check carefully for things like hidden charges, including annual fees, bank charges, closing costs, commissions and balloon payments.
50,000-200,000 is the range for bad credit business loan. This will depend basically on your loan repayment ability. Try to make a claim that is practical for your situation. Failure to repay will have serious repercussions on your credit which is already marred.
A business loan works in exactly the same way as a personal loan, the only difference is that it is the business doing the borrowing, not the individual. Bad credit business loans are used for a variety of reasons, including starting a new business, purchasing an existing business or refinancing an existing business. Whether it is to alleviate cash flow problems or fund future activity, a loan can provide a business with instant funding.
You are in record a financial risk you may not be that otherwise. Bad credit business loans are meant to argue against the record in favour of the creditability of the person himself.
Author: Natasha Anderson
Article Source: EzineArticles.com
Provided by: Smart cooker
Originally posted 2009-11-01 19:33:34. Republished by Blog Post Promoter
7 Small Business Start Up Money Seeking Mistakes
photo credit: Adam Tinworth
Small business start up money is a highly sought after commodity as more and more people are trying their luck at self employment.
Statistically, the odds of small business start up success is less than 20% within a 5 year period.
A large part of the reason for getting your loan request turned down, and the basic reason start ups end up failing in large numbers in the first place, is the mistakes made when seeking financing.
Here are my top 7 small business startup money seeking mistakes.
Mistake #1 – No borrower risk.
The biggest single mistake I see with people seeking startup capital is that they ask a lender for 100% of their capital requirements.
Risk needs to be shared between borrower and lender. Startup situations, depending on their nature, typically require the borrower to invest anywhere from 30% to 50% of the total capital required into the deal.
A personal equity investment not only reduces the cost of borrowing but also provides some serious skin into the deal that indicates a strong commitment on behalf of the borrower.
Mistake #2 – Purposeful Business Plan.
For most small business start up money, a business plan is a required part of the application.
Fundamentally, this is an important requirement for someone getting into any business. Unfortunately, most borrowers look at this strictly as an academic exercise to get financing with the only purpose of completing the business plan being to satisfy a lender requirement.
A business plan should always be prepared from the point of view that the primary benefactor of the process of creation and preparation is the underlying business. If this approach were taken more often, start up situations would achieve greater success, faster.
Mistake #3 – Poor Working Capital Projections.
Start up situations tend to intensively focus on the assets they need to acquire, the space they’re going to lease, the leasehold improvement cost, and other initial expenditure outlays required to get the business up and running.
What tends to be either missed entirely or poorly estimated is the realistic cash flow required to operate the business until such time as the business can sustain itself on a month to month basis.
Part of the reason for this is a working assumption that the business will immediately be cash flow positive in the first month of operations. In most cases this doesn’t happen, the shortfalls are financed by personal credit cards because of the lack of planned working capital, and the borrowers end up in credit card hell, paying high interest rates with potentially no way out.
Unfortunately, creating more realistic, and potentially conservative cash flows may indicate that you don’t have enough money to actually get started, so the temptation is to be overly optimistic in order to make the numbers work, which statistics show is a bad idea more often than not.
Mistake #4 – No Real Marketing Plan.
For most retail and service start ups, the marketing plan consists of placing some advertising, offering some grand opening specials, and sitting back and waiting for the flood of customers. Advertising can be very expensive and if you don’t know what you’re doing, you can burn through all your available cash pretty quickly.
From the financier’s point of view, they want you to be able to clearly articulate what you’re going to do and why its supposed to work along with the related costs. Lenders typically are not very good at assessing marketing plans, but they can likely tell if one is missing or grossly incomplete/unrealistic.
One of the most powerful ways to support your marketing strategy and related tactics is with written orders or letters of interest, or letters of intent to do business with you once you open.
Mistake #5 – No Rationale For Key Assumptions
Even if you have a plan and realistic cash flow projections, part of being credible is articulating what you’re attempting to do in a logical and clear to understand format so that someone who potentially knows nothing about you’re business can follow along.
If a request for small business start up money is logical and contains well documented assumptions, it automatically stands out from the pack.
Be clear on how you came up with each and every number you represent in your application package and why you feel they are relevant to your business case.
Mistake #6 – No Expertise and Support Team
One of the first questions that goes through any lender’s mind when someone asks them for small business start up money is whether or not the person requesting financing has the knowledge, expertise, and support to make the business successful.
Too often, individuals do not document and support their own expertise relative to the business venture. This can be done through a resume, examples of previous related work experience, letters of reference, a list of contacts that can provide verbal reference, etc.
Outside of your own skill set, what type of team have you assembled to support your efforts? In many cases, small businesses can start out with no employees outside of the proprietor(s). But you can still have a virtual team which can include an accountant, bookkeeper, lawyer, marketing coach, technology service support, and so on.
Mistake #7 – Poor Presentation
The discussions you have with a lender and the information you provide to them either inspires them with confidence or turns them off.
It may take weeks to get a loan approval, but it can take mere seconds to loose any realistic chance of even being seriously considered.
Outside of the obvious need for good grooming, neatness, and punctuality, the presentation process usually falls apart because the presenter is not sufficiently prepared to impress the heck out of the lender.
But making a good impression is not just about being enthusiastic and confident in your delivery, its also about being able to articulate the details of what you’re trying to do and why it would be a good investment for the lender.
Too often, individuals seeking start up funds do not prepare in advance for their discussions with the lender and just “wing it”, potentially destroying any chance they might have had to get the small business start up money they were looking for.
Brent Finlay makes it easy to understanding business financing. Learn how to locate and secure proper financing for your business. To receive your free 6 part mini-course visit the small business credit and financing website
Originally posted 2009-02-16 05:03:02. Republished by Blog Post Promoter
Hard Money and Bridge Loans For Real Estate
Although the hard moneylenders were largely affected when real estate industry crashed in the 80’s, recent credit crunch has brought more business to this sector. People who are in need of loans are turning towards hard money loans after the financing by traditional lenders and banks has come to a halt. The casualness and irresponsibility of these banks and lenders when giving out loans in the past has hit them hard and they are going through a severe liquidity crisis. With this serious drop in supply for finances, hard moneylenders are seen as a reasonable alternative. People and businesses are short of funds, and naturally they have to go for the best substitute available. A hard money loan comes as a last resort in such situations.
Characteristics of a hard money loan:
Hard money loan goes by the principles of mortgage; the distinguishing characteristics are the interest rate and the time consumed in approval. A loan application can take quite some time before getting through all the procedures and verification process that are part of a bank policy. Whereas hard money loans are issued normally by private lenders (though you can find many commercial hard money lenders as well) in relatively short time at higher interest rates and lower loan to value (LTV) ratio. The interest rate or loan to value ratio is not fixed and it keeps changing with the ups and down of real estate market. Hard money loans are often for short period of time (also known as bridge loans) that means the correct quick-sale valuation of the property is vital for the lenders.
Some tips for the borrowers and lenders:
As a borrower, you need some extra efforts to convince hard money lenders (these extra efforts are compensated by their fast approval time, once they are convinced), a hard money lender will believe you more if you are ready to put your cash into the deal as well. This is why they emphasize on low LTV ratio more than your previous credit score when compared to traditional lenders. Along with the advantage of their availability in even hard financial times, they are a much better option when you need quick finance. Being a lender, you should be extremely careful when determining the current value of property. Over estimation or wrong valuation can cause you serious loss in case of default. Also borrowers should try to reach hard moneylenders themselves, without bringing too many agents and brokers in between, as it will save them lots of upfront costs and expenses.
Author: William King
Article Source: EzineArticles.com
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The Evolution of Financing a Small Business
photo credit: Vincent Boiteau
For years I have read the popular business magazines, all having so called experts write articles for entrepreneurs on how to finance their business. “The top 10 strategies for financing your start-up”, “How the SBA can help your small business”, “Personal credit is the key for entrepreneurs” and so on. In most cases I’m willing to bet those writing these articles are journalists that have never had a successful start-up. How can I come to that conclusion you may ask? Because of the bad advice they give.
Going to the SBA for a loan, using your retirement funds, tapping all your personal credit cards or giving up 75% of your idea to an investor are all ideas I have read from the popular magazines. The thing is, in every one of these cases you are using your personal credit and not separating you from your business. You are putting 100% of your credit and assets at risk. Read more
Originally posted 2009-02-16 05:41:45. Republished by Blog Post Promoter
Should You Ever Consider Hard Money Business Loans?
Before we go any further, let’s make sure we’re working from the same definition of hard money business loans.
For the purposes of this discussion, hard money business loans and hard money loans in general, are typically secured by real estate.
Because the lender is not usually concerned with the application of the funds acquired, I’m further defining a hard money business loan as a source of funds invested into a business operation.
The lending criteria for issuing a hard money loan is primarily focused on the equity held in real estate.
Typical characteristics: 1) private lending sources, 2) short interest terms from one to three years, 3) up front fees on closing, 4) short in duration, 5) use of funds not a focus, 6) limited number of debt covenants if any, 7) interest only payments is quite common, 8 failure to pay results in sale assets to retire the debt. Read more
Originally posted 2009-02-16 04:34:23. Republished by Blog Post Promoter
The Primary Cause Of Business Financing Frustration
Finding proper business financing is not easy at the best of times for most small and medium sized business owners and managers.
There are a number of reasons that collectively explain why the business financing market can be so difficult to understand and navigate.
But probably the single biggest reason is the lack of useful information about how the business financing market actually works.
Business financing information and education sources predominantly come in two forms: 1) Text books; 2) Major bank advertising. Read more
Originally posted 2009-02-16 04:44:33. Republished by Blog Post Promoter
Best Alternative For Small Business Loans – Business Cash Advances
The topic of small business loans in the world today is a relatively large topic, primarily because of the fact that so many people are going to get business loans or alternatively want to get business loans in order to start a small business. While this is an admirable goal, a combination of current economic conditions and the general difficulties of getting a small business loan have made it a poor option for most people. Instead of getting sucked into a bad small business loan, there are alternatives that you can explore. One of these alternatives is a business cash advance and it compares very favorably to small business loans in a number of different categories.
Requirements
The requirements on business cash advances are a lot easier than on small business loans. For a business cash advance, all you need to do is have a track record of sales in your company, process credit card sales and get a minimum monthly amount of those sales in order to qualify for unsecured loans that the business cash advances represent.
On the other hand, small business loans require you not only submit all of your personal information in a process that seems designed to hassle at times, but you also need to have great credit and meet a lot of other minimum requirements as well. The only conclusion possible is that it is a lot easier to get a business cash advance than a small business loan.
Amount
Another big difference between these two types of loans is the amount of money that you can potentially get. Even if you are approved for a small business loan, you are not going to be able to get that much money unless your business is hugely profitable and the credit rating is excellent. Even for expansion, you would be lucky to get $100,000 in a small business loan. With business cash advances on the other hand, what people are beginning to find is that they can sometimes get as much as 5 times that amount. That’s $500,000, certainly an amount of money that would help you facilitate any plans for expansion your small business might have in the near future.
Repayment
Repayment is another huge issue. When you are involved in a small business loan, you are going to have to repay on a set schedule that essentially forces you to move money around in a way that might not be conducive to the way your business works. This in turn forces you to do things differently and that in turn could have negative effects on the cash flow situation of your particular business.
With a business cash advance however, the money to repay the loan comes directly from the processed credit card sales that your company has accrued. Therefore, all you have to do is simply set those sales aside for the repayment and then use your other revenue generators for the general expenses in your business. Repayment therefore is made extremely simple and that allows you to pull attention away from the loan and focus it on your small business where it belongs.
Author: Gaston Castro
Article Source: EzineArticles.com
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Commercial Hard Money Loans – Best Scenario
One of the best scenarios for commercial hard money loans is when the borrower has an opportunity that he knows he will make a substantial amount of money on, needs to move on it immediately, and regardless of the fees the hard money lender charges. With this scenario the profit the borrower will make will easily offset the fees the borrower has to pay to the commercial hard money lender.
Commercial Hard Money Loan – Scenario 1
For example, we have recently worked with a borrower that had an opportunity to purchase a fleet of trucks for his business at a 50% discount. Total purchase price on the trucks was just over a million dollars with a value over $2,000,000. On the commercial hard money loan the borrower had to pay 3% in fees in order to get the loan or $30,000, to be able to save over a $1,000,000 of needed trucks for his business. He collateralizes the commercial hard money loan with his building and was able to close in 3 weeks. So $30,000 in fees to save over a $1,000,000…
Commercial Hard Money Loan – Scenario 2
Another similar example is when a borrower wants to purchase a property from a distressed seller at a substantial discount. Typically the seller can’t wait 60 to 90 days to close a conventional commercial real estate loan and instead needs to close in a few weeks or will not offer the discount.
So say the property is really worth $2,000,000 but the seller has agreed to $1,500,000 a $500,000 discount. The buyer would get a commercial hard money loan at 60% of the purchase price or a loan amount of $900,000 and pay say 5% or $45,000 in fees to the commercial hard money lender. So the borrower would save $455,000 by taking advantage of the opportunity. In this case most borrower wouldn’t care (at least that much) about paying the commercial hard money lender their points because of the amount of money they make off the deal.
In general these type of scenario are much easier to close than the bankruptcy/company turn around/debt consolidation type situation. Many commercial hard money lenders no longer look at deals like this.
Author: Jeff Rauth
Article Source: EzineArticles.com
Provided by: Canada duty tariff
Are Bad Credit Business Loans Hard To Get?
Trying to run your own business enterprise, calls for numerous fiscal challenges. High leverage, fiscal losses, low net worth, bad credit record, or no credit record in the least could impact your ability to qualify for a commercial loan. Whether you are facing a leveraged buyout, restructuring, or a turnaround position, there’s a poor credit business loan out there for you that guarantees the viability of your business enterprise.
Even if you’re a budding Bill Gates, your business concern battles to make ends meet, within the 1st 2 years of inception. Tenured businesses may likewise battle just every bit easily when the times are hard. A business enterprise relies strongly on the economic system and additional outside factors. When those factors are experiencing a depression, it filters down to the business; thereby impacting or challenging the business’s credit. Read more
Originally posted 2009-06-01 00:23:50. Republished by Blog Post Promoter
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