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Business Loans (Volume 1)

BUSINESS LOANS (VOLUME 1)

 

 

By

Word Chapter

 

 

 

Shakespir EDITION

 

 

***~~~***

PUBLISHED BY:

Word Chapter on Shakespir

 

 

Business Loans (Volume 1)

Copyright © 2016 by Word Chapter

 

 

 

COPYRIGHT NOTICE

 

All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, without the prior written permission of the publisher.

 

DISCLAIMER

 

All the material contained in this book is provided for educational and informational purposes only. No responsibility can be taken for any results or outcomes resulting from the use of this material.

 

While every attempt has been made to provide information that is both accurate and effective, the author does not assume any responsibility for the accuracy or use/misuse of this information.

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College has Become a Business Loan Collateral

Read more Business Loans articles: http://j.mp/29NuPE5

There are different reasons why people attend college, just like there are lots of course options to choose from. Parents always encourage their wards to get a college degree since it ensures some kind of social integration, creates some kind of exposure which is necessarily for mental maturity.

Pathetically, people go through college learning every other sphere of life (from laboratory works to arts and science and management) without learning what is most vital as far as our society is concerned – which is the process of making money. That is why many people graduate from college and find it difficult funding for themselves.

The vitality given to college was demonstrated in 2013 when students of Cooper Union walked peacefully into the office of the president and occupied it for the next 65 days in protest of the decision by the school to make students begin to pay for tuition. To them, this would force many students to drop out of school.

[*The problem with starting small businesses  *]

The major problem with starting a small business is – it is hard to get funding for startup. Virtually no one, including commercial banks would be willing to stake their money with you, even with the best business proposal. Most of the banks would require collateral tantamount to the intended borrowed amount.

Sourcing for funds to start your business

Getting funds is always a herculean task as far as startup is concerned. However, all hope is not lost if your passion drives you to owning a business. There are still modest and simple ways to source for funds if you have a strong business plan and projections.

1. Angel Investors

There are people who are known as angel investors. These set of people are grouped under high risk takers. When you bring your business plan to them, they look at it and if they deem it fit, they give you the money to kick start the business on the agreement that a certain percentage of all business profits will come to them. Angel investors are not everywhere but a little research will help you find one.

2. Commercial banks

This remains by far the financial institution where many people run to for aid. Some of the things that may be required of your to present besides your business plan will include; credit history of business and person, financial statement of project, cash flow predictions and guarantees.

The above requirements can be easily met by some but what about those that cannot? The bitter truth is that if you can get a few of them, it still puts you at par with someone that cannot because most financial institution would require all of them before they would agree to your request.

Put your college certificate to the test

There are still financial institutions that would accept the originals of your college certificate as collateral for lending. Owing to the strong importance attached to these certificates, these financial institutions are ready to give out loans on certificate basis with the prediction that the importance of the certificate will make you pay up.

Article highlights

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p<>{color:#000;}. Securing a loan to start a business if often very difficult.

*
p<>{color:#000;}. Banks are the most popular lending financial institution.

*
p<>{color:#000;}. Angel investors are high risk takers.

*
p<>{color:#000;}. With a good business plan, you can attract an angel investor.

*
p<>{color:#000;}. Much emphasis is laid on college degree rather than on making money.

*
p<>{color:#000;}. College creates an atmosphere for mental maturity which every child needs.

*
p<>{color:#000;}. There are various ways you can source for funds.

*
p<>{color:#000;}. Cooper Union students stages a sit-in that lasted for 65 days to demonstrate tuition.

*
p<>{color:#000;}. Banks usually ask you to bring; credit history of business and person, financial statement of project, cash flow predictions and guarantees.

*
p<>{color:#000;}. Your college certificate can serve as a loan facility.

Read more Business Loans articles: http://j.mp/29NuPE5

  • * * * *

 

Strategies to Pursue a Small Business Loan from Your Government

Read more Business Loans articles: http://j.mp/29NuPE5

As an upcoming entrepreneur, a very important source of required business funds is small business loans from the government. There are numerous sorts of business loans that can be gotten from the government all based on the size, nature and experience of your business. It is necessary to obtain all the documentation required before applying for a loan in order to avoid getting your application rejected.

Understand the requirements of a bank

Various banks or financial institutions require different criteria or standards, but generally here are some of the basic requirements you should meet before applying for a small business loan;

*
p<>{color:#000;}. It is imperative for the loan to be solely for business. For most financial institutions, the business must qualify in terms of loan proceeds, size and nature of the business. All other purpose like passive investment, speculating, lending, gambling, pyramid sales and the rest would not be considered.

*
p<>{color:#000;}. Your ability to pay the loan back is also very essential for your application’s success. If you don’t have a strong collateral, don’t let that stop you from submitting your application. Keep in mind that most banks expect the loan pay-back to be completely assured but some banks will still consider your application if the only issue you face is insufficient collateral.

*
p<>{color:#000;}. The track record of you and your business partner is also a strong determinant. Having a bad personal or business credit history might jeopardize the chances of securing that loan.

Acknowledge your business size

A business’ financial needs are very different all depending on its size. This is the reason why most government small business loans are offered based on the type or size of the business. Ensure you review your business size against the government’s guidelines before submitting an application.

Get all the required information prepared

Before you submit a loan application for your business, make sure all the important information are ready. Here are some of the required information you need to get prepared.

*
p<>{color:#000;}. Personal and Business credit history.

*
p<>{color:#000;}. Projections of cash flow for a minimum of one year.

*
p<>{color:#000;}. Personal and business financial statements.

*
p<>{color:#000;}. Guarantee provided by each business partner.

*
p<>{color:#000;}. Fully outlined business plan showing the current functioning of the business, the business nature, future plans for the business etc.

Completing and submitting the loan application

As soon as all the required information is ready, it’s time to round up the application and submit it for assessment. Ensure you proofread your application properly and check for all possible errors or omission. Also keep in mind that you have to include your partners (if you have one) in your application. Failing to include your partners in the application might get your application rejected all in all.

Article highlights

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p<>{color:#000;}. .Certain strategies in framing your application for a small business loan can help convince the government.

*
p<>{color:#000;}. Get all the required documentation ready before applying for a loan.

*
p<>{color:#000;}. Apply to the appropriate authority for the business loan.

*
p<>{color:#000;}. Better have a strong and dependable collateral available before submitting your small business loan application.

*
p<>{color:#000;}. Insufficient collateral may weaken your application and reduce the chances of success.

*
p<>{color:#000;}. A bad personal or business credit history might jeopardize the chances of securing the loan.

*
p<>{color:#000;}. The nature of your financial needs should determine the chance of approval.

*
p<>{color:#000;}. Ensure you review your business size against the government’s guidelines.

*
p<>{color:#000;}. Before you submit a loan application for your business, revise the important information.

*
p<>{color:#000;}. Include your partners in the application, otherwise your application might be rejected.

Read more Business Loans articles: http://j.mp/29NuPE5

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Here are Some Financial Lifelines you can Utilize to Boost your Business

Read more Business Loans articles: http://j.mp/29NuPE5

In the event that you have finally secured your own business successfully, you have to understand that there is still a lot for you to do to build that business. There are a lot of factors involved when it comes to building your business like effective marketing, creating a good business plan, and solving financial issues.

Now, most people will immediately resolve to applying for SBA to get started. Even though those are ideal, there are still other options they are missing. In this article, we have detailed the various alternatives you have to boost your business quickly.

A/R based loans get fast approval

A/R is an abbreviation for Accounts Receivable financing and it is a set-up where receivables are used to hold collaterals. In more details, it involves your business receiving an equal amount of money to some reduced value of the pledged qualified receivables. These days, technology has made it possible for the bank or financial institution to receive your account details for faster approval. This is best for funds needed in short-term.

SBA loans can be secured

This is probably the most ideal loan for your business and it is provided by banks which operate in financing Small Business Administration. The SBA is relatively easy to secure than other loans due to the fact that a part of these loans are guaranteed to financial institution giving them more reasons to approve your loan application.

In order for the SBA loan to be provided, you will need to provide collateral and your financial and credit statements must be assessed in the process. It is also imperative to provide an effective business plan in addition to loan repayment ability. Entrepreneurs who possess good credit, have effective business or repayment plans and desire to enhance their business are very ideal to secure this loan

Business loans require solid plan

This loan is solely for business purposes with no exceptions. Ideal for business expenses such as outstanding salaries, provision of office inventory, or supplies. This loan creates debts and requires extra interest with repayment all depending on the terms and conditions of the loan. In order to improve your chances of securing this loan, there must be a valid plan of how you will spend the money you might be receiving.

Notwithstanding what type of loan you’re applying for, there are a lot of easy ways you can go about the application. Your character, credit history, personal finance record and work experience can all be important determinants in your loan application’s success. It is advised to include every important document when applying for a A/R based loan or conventional business loan.

Try to utilize a product that can be easily integrated such as CriskCo Approve as it provides an easy one click loan application process. This relieves you the efforts of gathering the required information from all sources and then sending to the prospective bank or financial institution. Also having a personal investment in the course of the loan enhances your chances of getting your application approved. This is because banks are constantly searching for evidence that you will be able to pay the loan back in without any stress.

Article highlights

*
p<>{color:#000;}. Apart from SBA loans, there are still alternatives that can be used to revive your business.

*
p<>{color:#000;}. Accounts receivable is an arrangement in which receivables are used to hold collaterals.

*
p<>{color:#000;}. SBA is only provided by banks which operate in financing Small Business Administration.

*
p<>{color:#000;}. SBA is relatively easy to secure than other loans.

*
p<>{color:#000;}. Provide an effective business plan in addition to loan repayment ability when applying for SBA.

*
p<>{color:#000;}. Entrepreneurs who possess good credit have effective business or repayment plans.

*
p<>{color:#000;}. The conventional business loan is solely for business purposes with no exceptions.

*
p<>{color:#000;}. In order to improve your chances of securing a conventional business loan, there must be a valid plan of how you will spend the money you might be receiving.

*
p<>{color:#000;}. Having a personal investment in the course of the loan enhances your chances of getting your application approved.

*
p<>{color:#000;}. Try to utilize a product that can be easily integrated such as CriskCo Approve when applying for a business loan.

Read more Business Loans articles: http://j.mp/29NuPE5

  • * * * *

 

Some Effective Ways to Raise Funds in Order to Run your Business

Read more Business Loans articles: http://j.mp/29NuPE5

Even though running or setting up a small business possesses a lot of benefits long term, there is the dire need to work hard on the business most importantly at the early stages. A major challenge you might face is insufficient funds or cash to have the best start-up possible. In fact, without a perfect business history, it is very unlikely national financial institutions will be granting your business loans. This leaves every small business owners with the best option of SBAs.

However, before applying for an SBA, it is important to understand the different types and sources of loans available to you based on your feasibility and business requirements. Outlined below are some major ways by which you can generate funds to run your business.

Trade Credit can open many opportunies

Trade credit provides you with the opportunity to buy raw materials and different business tools on credit from various suppliers. It is usually available for a period of three to six months as a sort of short-term financing. This option is very ideal for developing funds.

A business can become qualified for trade credit as soon as there is an increment in the sales and production of your goods. Eligibility is also evident once the volume of purchase increases to a reasonable extent.

Secure Financial Support from Commercial Banks

You can secure a medium-term finance support from commercial banks based on your assets or collateral security. With this finance option, there is no need to apply any legal protocol in order to secure funds safe the assets’ mortgage. This financial support provided by commercial banks is most ideal for the improvement of a company’s assets.

Bank Overdraft may help

Overdraft is a type of agreement with a bank that enables you to overdraw funds from your active bank account to some particular limit. Overdraft option can be used against life insurance policies, assets, fixed deposits etc. In any case, keep in mind that overdraft interest rates are somewhat high contrasted against bank deposits’ interest rates.

Cash Credit

Cash credit might be ideal for you in the event that you qualify for all requirements for short-term financing. It enables you to gain advance money from financial institutions on particular intervals within certain time frames. This option can be utilized against your saleable assets like government bonds.

Factoring can be an alternative

Factoring is another option in case you intend to raise funds by selling your A/R. It is mostly considered to be an alternative for asset-based financing and can provide you with funds at any point in time. Try factoring to kick off your business as it assesses a business’ financial solidity, not an entrepreneur’s creditworthiness.

In any case, to obtain these loans, you will need to submit collateral as shares, stocks or mortgage on the properties of your entity.

Article highlights

*
p<>{color:#000;}. Setting up a small business requires hard labor on the business at the early stages.

*
p<>{color:#000;}. Without a perfect business history, it is very unlikely national financial institutions will be granting any business loan.

*
p<>{color:#000;}. Both unsecured and secured SBA loans are available for every eligible small business owner.

*
p<>{color:#000;}. Trade credit provides you with the opportunity to buy raw materials and different business tools on credit from various suppliers.

*
p<>{color:#000;}. A business can become qualified for trade credit as soon as there is an increment in the sales and production of your goods.

*
p<>{color:#000;}. You can secure a medium-term finance support from commercial banks based on your assets or collateral security.

*
p<>{color:#000;}. Overdraft is a type of agreement with a bank that enables you to overdraw funds from your active bank account to some particular limit.

*
p<>{color:#000;}. Cash Credit enables you to gain advance money from financial institutions on particular intervals within certain time frames.

*
p<>{color:#000;}. Factoring is another option in case you intend to raise funds by selling your A/R.

*
p<>{color:#000;}. High-esteemed financial institutions normally offer business loans for a maximum period of twenty five years against sanctioned schemes or projects.

Read more Business Loans articles: http://j.mp/29NuPE5

  • * * * *

 

Small Business Lending Trends must Excite you

Read more Business Loans articles: http://j.mp/29NuPE5

Unlike before when small business owners find it difficult accessing loans or getting funds for their businesses, the emergence of the internet has revolutionized how people can source for funds, hence giving SMEs a fresh breath of survival.

As an entrepreneur aiming to start a business, you do not have to keep running to the commercial banks and have them play god over your life and ideas. The only problem budding entrepreneurs tend to have at the moment is lack of information. While the informed are taking their destiny in their hands, the others are growling at their incapacitation.

Online marketplaces are the best sources

Just like the gap between the unemployed and employment is lack of information, so it is with finance seekers. There are various online marketplaces at the moment where people can earn money from the comfort of their homes, providing various services.

So also, there is online marketplace at the moment which brings borrowers and lenders together. MarketLend for example is one of the prominent marketplaces where borrowers can source for both small and large loans, unlike some of the market place that offers either of the two.

The only problem enlightened borrowers will often encounter is answering the question, “which of the marketplace is the best”. The answer too is not farfetched. With the help of services like Valiant, all the information you need would be at your fingertips.

Tapping into the government R&D incentive

The R&D is designed for those who have an idea they want to develop. The program will allow you to get 45 cents out of every $1 you spend. As an entrepreneur with some capital already, this incentive would definitely allow your initial capital to outlast its initial worth. It is more like eating your cake and having it.

The only problem with this incentive is that you have to wait for like forever to get your refund. Also, there are specific times when you can send in your proposal for consideration for the R&D incentive – we all know that time means a lot in business.

Increased speed of funding

With the budding online marketplace, getting your business funded now takes minutes unlike in the past where you will have to queue up filling papers after papers before the funds are released to you – and that is if you get lucky.

There is also increased flexibility in payment and refund. With the global wireless cash transfer you will get to receive your funds in whatever location around the world you find yourself. You also get to utilize the fund received without being put under much duress like commercial banks always do.

Why the emerging platform is commendable

Everyone that has had a stink with economics will understand that competition (demand and supply forces) has an effect on efficiency and price. Commercial banks will now be on their toes to up their game if they don’t want to go out of business.

The problem with online marketplace

The major problem with online marketplace is distrust. It is hard to pick out the transparent ones from the fraudulent ones. The issue of transparency remains a clog in the wheel of online marketplace lending.

Article highlights

*
p<>{color:#000;}. There are more ways for SMEs to get funding now than before.

*
p<>{color:#000;}. The speed of accessing fund has increased with online marketplace.

*
p<>{color:#000;}. There is also the R&D incentives by the government for entrepreneurs to develop their ideas.

*
p<>{color:#000;}. Lack of information is the only limitation budding entrepreneurs are bound to have.

*
p<>{color:#000;}. Valiant services can help you pick out the best marketplace.

*
p<>{color:#000;}. In MarketLend, both small and large funds can be accessed.

*
p<>{color:#000;}. R&D incentives allows the borrower to get 45 cents back on every dollar spent.

*
p<>{color:#000;}. The problem with R&D is the time it takes to get your refund.

*
p<>{color:#000;}. Online lending has increased the flexibility of cash transfer.

*
p<>{color:#000;}. The major problem with online marketplace is lack of transparency.

Read more Business Loans articles: http://j.mp/29NuPE5

  • * * * *

 

Women Empowerment Loans to Improve their Status

Read more Business Loans articles: http://j.mp/29NuPE5

The world is gradually drifting and so are norms changing very fast in our societies. In the past, women are viewed as weaklings and in various parts of the world, their opinion on any subject matter rarely counted. The same cannot be said of today.

In our modern society, women have suddenly begun to own businesses and take up jobs that were once seen as a man thing. When it comes to entrepreneurship, they often face steeper challenges getting funds to help them run their business.

Every unemployed woman should own a business

For the employed women, it is a different case because they already have a source of livelihood (though it doesn’t exclude them from owning a business too). However, the unemployed should take the issue of owning a business more seriously for a number of reasons;

1. To prevent men from taking undue advantage of you

Women who have no source of income usually fall prey to men who often use them for their selfish purposes and in the end pay them an amount that is not tantamount to their services – if they get paid at all.

2. To become independent

There is a saying that he who feeds you controls your life. If as a lady you cannot stand independently, then you are willing power over your life to the person who feeds you and this is not a cool way to live.

3. If need be, take care of your family

Imagine your beloved husband or the guy that takes care of you should lose his life, does that mean you should die with him too? Obviously not. In the event of such unforeseen occurrence, you should be able to take care of yourself and children if you have any.

How women can access funds for their business

Currently, there are government programs that give women access to soft loans to start small businesses. Such loans often take less hassle to get approvals. There are also some non-governmental agencies (NGOs) that consider the affairs of women of utmost importance and often go great lengths to help them financially.

Commercial banks often prove invaluable, offering help and guide to women who need access to loan facilities. However, there are often no preferential treatment given to them as regards to their gender and they will need to follow all the routine laid down for accessing loans.

Role of commercial banks in encouraging women to borrow

In trying to get women to borrow, commercial banks often have fair interest rate for them. Their loans are often expedited, that is processed at a faster rate and also made as flexible as possible. The only concern of the woman would often be to put the fund togood use.

Therefore, women should stop being scared of starting a business or springing up reasons as to why they are incapable of starting one. The major problem with starting a business is often that of funding and the points above explains it all.

Article highlights

*
p<>{color:#000;}. In the past women were considered as weaklings.

*
p<>{color:#000;}. Women are currently taking up jobs which in the past were restricted to men.

*
p<>{color:#000;}. Employed women can also startup businesses.

*
p<>{color:#000;}. Staying without a source of income makes women vulnerable.

*
p<>{color:#000;}. Any man that feeds you controls your life.

*
p<>{color:#000;}. Staying independent helps a woman to have self-respect.

*
p<>{color:#000;}. Having a source of income will help a lady take care of the family when the man is not there.

*
p<>{color:#000;}. There are government programs that give soft loans to women.

*
p<>{color:#000;}. NGOs also try to alleviate some of the problems women face in businesses.

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p<>{color:#000;}. Commercial banks gives women loans at fair interest.

Read more Business Loans articles: http://j.mp/29NuPE5

  • * * * *

 

Useful Tips to Get Funding for Small Businesses

Read more Business Loans articles: http://j.mp/29NuPE5

The greatest challenge small businesses have is getting loans. Almost nobody will be willing to give loan to a small business because they are often high risk ventures – you never can tell how soon they will fold up. What then happens to the genuine small business owners who are determined to succeed?

Inasmuch as small businesses have a culture of nonperformance, those who are determined to succeed can still get funding to either start or expand their businesses – we all know that the national economy is driven by small businesses. The reason for underperformance of small businesses is often because they take up loans without proper planning.

Most of the financial institutions that are in the position to help would often require that you present your cash flow statistics, that is, how much money comes into the business and how much money goes. As a starter, there is just no way to make this presentation.

Factors to consider before applying for loans

As a small business owner, it is paramount that you consider various factors before ever applying for a loan. This will help you to be prudent in utilization of the loan when you do get it. Some of the factors to be put into consideration include;

1. Do you have a proper business plan?

A business plan is like a guide to help you plan efficiently every step of your business. Every business, just like every building, is supposed to be guided by a well-structured plan. It is in this piece of document that you evaluate your expenditures and projected income. A good business plan alone can guarantee you a loan facility from an investor who sees great potential in your business.

2. How much do you need?

This is the mistake many small businesses make, taking more than they need. Whenever you have the opportunity to get a loan, always have at the back of your mind the consciousness that borrowed money must be paid back. With this consciousness, you would have the discipline to take just what you need and not more.

3. How much capital have you invested in the business?

Your chances of getting a loan become slimmer as the amount of finance from your pocket you put into the business nears zero. Investors are always keen to know how much of your own finance you have put into the business and it I just logical, if you as the business owner are not willing to stake your money in it, how then will you convince another person to do that?

4. What type of funding do you need?

There are grants (in which you are not required to payback) and loans (which need to be paid back over agreed space of time). Before seeking for fund, be sure of the type you require so that you don’t run into financial troubles over time.

The need for long term plans

Most short businesses are often too preoccupied with now that they forget to think about the future. For any venture to be sustainable, it has to be backed up by a long term plan and in this case, long term financial plan. So before thinking about the funds, have this at the back of your mind.

Article highlights

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p<>{color:#000;}. The greatest challenge of small business is funding.

*
p<>{color:#000;}. Small businesses are high risk ventures.

*
p<>{color:#000;}. Financial institutions will require cash flow statistics to give out loan.

*
p<>{color:#000;}. Every business should have a proper plan.

*
p<>{color:#000;}. Always borrow only the amount you need.

*
p<>{color:#000;}. Be conscious that borrowed money must be repaid.

*
p<>{color:#000;}. Consider going for grant or loan.

*
p<>{color:#000;}. It is good to always have a long term plan.

*
p<>{color:#000;}. National economy is driven by small business.

*
p<>{color:#000;}. A good business plan sums up expenditure and projected income.

Read more Business Loans articles: http://j.mp/29NuPE5

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Brief Analysis of Peer-to-Peer Business Lending in US

Read more Business Loans articles: http://j.mp/29NuPE5

The windows of opportunities for small businesses to get loans have broadened with the advent of the internet, unlike what was obtainable in the years past. Before now, the only source of funding for small businesses has always been grants from family or friends or they queue up, hoping that the banks smiles on them.

Possible sources of loans for small businesses

There are various means by which small businesses can obtain loans and that includes banks, online market place, p2p, angel investors and grant. Each of these sources of funding has their pros and cons likewise their peculiarity. Hence it would be most helpful to have a look at them individually.

Bank loans are secure

Bank loans are an age long practice of money lending. Till date, it is the most secure form of lending. However, not everyone is eligible to get a bank loan and for those who are eligible, it may take awfully long time for the processing to be complete.

Online market place is a modern source

This is a relatively new form of lending. There are online market place that connects both lenders and borrowers. Here what would possibly stand you out of the pack is a well written proposal and business plan.

Angel investors may be a blessing

They are called angel in the sense that once they like your business plan and see some light in it, they will gladly stake their money in it. However, the problem with this is that it seizes to be your business but rather collaboration.

Grants is a good support

Grants usually come in form of aids by the government or bigger organization as a way of supporting small businesses. Grants are not repayable, that is, you are not expected to pay it back. However, grants are very rare to find and when they are available, too many hands are competing for them.

Peer-to-peer should be the steer

A website, funding circle, allows small businesses to get funds directly from individuals in the UK. The good thing about funding circle is that they raised $65 million in venture capital less than a year after the last round of thirty-seven million dollars. One of the great edge funding circle has over bank loans is that funds get approval in a few days.

Prospects of funding circle in the US

US citizens can now key into the dividends of funding circle after the company expanded into the US after merging with the Endurance Lending Network, which is US based back then in 2013. Because of regulatory ambiguity in the US to such structures, the sector has been dominated by Lending Club and Prosper, two multi-billion dollar market sources that keeps growing at unprecedented rate.

These too companies have enjoyed a relatively low competition over the years making the sector a lucrative business for p2p investors. Because of regulatory hurdles funding circle has to cross, it is currently available to accredited investors although in the long term, they wish to make it available to non-accredited investors too.

It is without doubt that the p2p business is a world of opportunity. The competition is gradually building and currently, there are more than thirty p2p in the business lending platform with no clear leader at sight. This would surely be a great relief to small businesses.

Article highlights

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p<>{color:#000;}. There are many ways for small businesses to source for loans now.

*
p<>{color:#000;}. Bank loans take a long processing time.

*
p<>{color:#000;}. Grants are not repayable.

*
p<>{color:#000;}. When grants are available, there is usually too much competition for them.

*
p<>{color:#000;}. Grants are usually in the form of government intervention.

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p<>{color:#000;}. P2p allows lenders to directly fund small businesses.

*
p<>{color:#000;}. Funding circle expanded to the US by merging with Endurance Lending Network.

*
p<>{color:#000;}. When investors fund your business, you lose some claim to the business.

*
p<>{color:#000;}. Lending Club and Prosper were the two p2p lending business in the US.

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p<>{color:#000;}. The competition in the p2p lending space has increased because of its lucrative nature.

Read more Business Loans articles: http://j.mp/29NuPE5

  • * * * *

 

How Brokers are Milking Small Business Owners

Read more Business Loans articles: http://j.mp/29NuPE5

When it comes to lending, chances are that most small business borrowers know nothing about the rigors of borrowing. What follows is that they turn to brokers to help them scale through the hurdle. Brokers on the other hand have come to realize this, that they are sole mediator and some seek to exploit the borrowers.

First, there are lots of loan options and whether online or offline, borrowers will somehow come around to their loan broker to help them explain the complicated huge documents they are often given. Online lenders also often have no base for lending and rely on loan brokers to secure their investment.

Some brokers exploit the borrowers

Many brokers will pride themselves as impartial to get the attention of borrowers but what they do underneath is far less than desired. There are those that will advise borrowers to pick up loans that are expensive to the borrower because it will favor them – the loan brokers – more.

Compared to the latter, the former will seem like saints. What the latter do is to inflate the interest cost by some ten or twenty percent and include some other hidden charges so that in the end, the amount the loan broker is milking from the borrower eludes the borrower.

Loan brokers use several tricks to swindle borrowers

There are various factors that make it easy for a dishonest loan broker to take undue advantage of borrowers. Besides the obvious fact that they are more knowledgeable than the borrowers on the subject, there is no law that checks their activities at the moment.

Such a scenario was the order of the day in the mortgage industry till the Dodd-Frank rule got rid of them. This time, the same ugly head is popping up in small business loans. Also, loan brokers are not under federal regulations. The only regulation that applies to loan brokers is that posed by some state governments who require them to obtain operating licenses.

What makes it even crueler is that the state governments that require the loan brokers to obtain licenses often do so to increase the state financial revenue because once the license has been obtained; no one gives a hoot to their activities anymore or cares to monitor and regulate them.

Tips to stem the tide on these predatory behaviors of loan brokers

Having analyzed the problem, the next question to answer is the way forward. Knowing that borrowers depend on loan brokers a hundred percent, steps should be taken to ensure that loan brokers match the trust of borrowers by the same margin.

Hence, the first key step would be to set up regulatory bodies to see to it that loan brokers follow the rules of engagement. Policy makers and regulators should congress and fashion out laws that would encompass all loan brokers. And as it is with every law, a stiff penalty should be carved out to punish offenders.

Such laws should make it binding that loan brokers should disclosure all there is in any contract to the borrower. Finally, conferences should be organized every now and then to educate loan brokers on some of the ills they should avoid in their practices.

Article highlights

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p<>{color:#000;}. Many borrowers depend on brokers to make sense of the documents.

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p<>{color:#000;}. Both online or offline lending still fall back on the broker.

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p<>{color:#000;}. There are lots of lending options and it is the duty of a broker to clarify.

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p<>{color:#000;}. Many loan brokers pride themselves as honest but their activities speak otherwise.

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p<>{color:#000;}. Some brokers hoodwink borrowers to take up loans that are detrimental to them but fatten the broker.

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p<>{color:#000;}. Others increase their services but up to 20 percent without the knowledge of the borrower.

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p<>{color:#000;}. It is very easy for brokers to swindle borrowers because they are more knowledgeable on the subject.

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p<>{color:#000;}. There is no federal regulation on the activities of loan brokers.

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p<>{color:#000;}. The available state regulation seems to only focus on them obtaining licenses.

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p<>{color:#000;}. Conferences should be organized to train loan brokers.

Read more Business Loans articles: http://j.mp/29NuPE5

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The Negative Effect of National Debt on Small Businesses

Read more Business Loans articles: http://j.mp/29NuPE5

A small business is regarded as one with less than twenty workers and a high percentage of them are non-governmental organizations. Small businesses looking to expand always face one reoccurring problem which in this case is getting loans to make the vision a reality. The main problem which makes it difficult for small businesses to get loans is because of the high risk associated with them.

Are banks lending at all?

Besides the high risk, the other salient reason why this venture looks almost impossible is because of the national debt crisis. Commercial banks usually get their loans at a low or near zero interest and give this loans back to the government at a high interest rate.

It might interest you to note that the United States government also borrow money to finance the affairs of the State (this is not peculiar to the United States government but to virtually all – if not all – government around the globe). So, the answer is obvious. Commercial banks are lending hugely, but not to small businesses.

Banks prefer to lend to the government to earn more money

Although the United States economy is run by small businesses, the answer to the reason why banks would prefer to lend to government rather than the driving forces of the nation’s economy is so glaring – banks are also out to make profit.

Not only will lending to the government guarantee them huge profit, there is also the reduced risk of non-payment of acquired loan which is rampant with the small businesses. Banks do not also get incentives for their effort in growing the small businesses and when they do lend to small businesses, they have to do so at a reduced interest – so what’s the fuzz?

Businesses that can easily access loans

To every rule there is always an exception and in this case, real estate appears to be an exception to this rule of non-lending by banks to small businesses. Normally, a real estate owner hoping to but a property worth say a million dollar will need to put down like twenty five percent of the payment.

However, there is a new program called the CDC/504 program which allows the real estate owner to put down only a paltry ten percent while the government spreads out the payment. Now, banks love this program so much and would gladly lend their money. Why? Because there is collateral which they can liquidate to get back their money in the event of failure by the borrower to repay the loan.

Who will bell the cat?

Naturally, the awkward bank policy would have dealt a great blow to small businesses and possibly brought an end to that name – small businesses – but on the contrary, if you look around, you will discover that small businesses are flourishing. What could be the reason?

The reason is simply because of the intervention of investors who are now willing to stake their money into small businesses. The bitter part of the story is that small businesses are given one of two options to choose from; either they pay huge profit to the investor or they give up ownership of a reasonable amount of their businesses to the investor.

Article highlights

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p<>{color:#000;}. Assessing loans as a small business is getting increasingly difficult.

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p<>{color:#000;}. Commercial banks are willing to lend to the government rather than small businesses.

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p<>{color:#000;}. The risk associated with small businesses is too high.

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p<>{color:#000;}. Many governments around the world borrow to run national affairs.

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p<>{color:#000;}. A small business is regarded as one with less than 20 workers.

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p<>{color:#000;}. Banks easily lend to government because they are confident they’ll pay back.

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p<>{color:#000;}. The 504 program makes it easy for real estate owners to borrow money.

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p<>{color:#000;}. Investors are filling the gap of commercial banks in lending to small businesses.

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p<>{color:#000;}. Small businesses drive the economy of the United States

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p<>{color:#000;}. Small businesses are losing their business ownership and control to investors.

Read more Business Loans articles: http://j.mp/29NuPE5

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Cover image credit: https://www.flickr.com/photos/usdagov/6233297840/

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Business Loans (Volume 1)

From small to corporate business owners and/or managers may need business loans. In this modern age, it is getting hard to run business without any loan when a business starts growing. When a business is growing, it is hard to cover all financial needs with personal finance. There are many other situations when a business loan becomes necessary. This book will give you some insights about getting and managing business loans. Download and read this easy to read and understand book.

  • ISBN: 9781370471607
  • Author: WordChapter
  • Published: 2016-09-02 17:35:09
  • Words: 6816
Business Loans (Volume 1) Business Loans (Volume 1)