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Small Business Loans 101

What are small business loans? To put it briefly, small business loans are loans that are specifically designed in order to cater to the monetary and financial needs of these types of business ventures. The interest, the amount that can be loaned and the time table to pay such loan are all in favor of small businesses. The interest rate ranges from a low rate of 4% up to a high rate of 15%. The ratio behind these low rates is that new businesses will not have high or big funding in order to pay back the amount loaned. If the interest rate is too high then the they cannot hope to pay such amount. As such, these low rates in order to help these businesses follow through with their dealings.The amount that can be loaned has also been personalized with regard to small business loans. Depending on the capital and assets of a business is the amount that the business owner or the business itself can loan from a bank or a lending institution. This guarantees that the small business will not commit “over loan” or the act of loaning a high amount that is very hard to pay back with the business’ current finances. There is a predetermined floor limit and a ceiling limit for small scaled businesses. This has been the practice of banks and lending firms for the last couple of decades since it has been backed up by adequate research and statistics gathered by the experts.The time table for these small business loans usually range from 60 days up to 180 days depending upon the amount loaned. If the amount loaned is minimal then it will necessarily have a 60 day payable period. If the amount is high then it will have the maximum payable period of 180 days. This time table has been carefully studied by financial experts in order to cater to the needs and capacities of every small business owner nowadays. The time frame to pay the amount is in proportion with the capacity of the small scaled business’ ability to pay vis-à-vis the interest rate. If you own your very own small business then this is the right kind of loan for you to avail of!These small business loans can now be easily availed of by using the internet. All you need to have is a computer with an internet connection. You can access any online banking website that will allow you to process your request. You need to key-in your personal information like your first name, last name, credit card number, social security number, email address, home address and the like. Registration typically takes as fast as a couple of minutes. You can expect your small scaled loan to be processed within 24 hours upon submission. You can either choose to have your loan delivered to your home or you can personally pick up the money, whichever you prefer. Availing of a loan has never been this easier like never before!

Lower the Payment on Your Business Loan

It is hard enough to get a business loan these days. And, even harder if you want that loan to work for you – allowing your business time to leverage those loan proceeds to grow your business and repay the loan.When most business owners consider a business loan they think about the interest rate as they don’t want to overpay for the loan.But, the interest rate on your loan might not be the most important factor in reducing your loan payment.The term you negotiate may have more impact.Let’s take an example:Your business is seeking a $100,000 business loan and gets offered one at 9% for 36 months.This makes your monthly payment $3,180.If you negotiate a lower interest rate – say at 7% – your monthly payment would drop by just under a $100 per month. A good savings but not spectacular.But, instead of negotiating your interest rate you get the loan term increased by one year or 12 months.This relates into a monthly payment savings of nearly $700 – making your loan payment $2,488 per month – much more affordable.Now, while under this scenario your business could pay additional interest to the lender over the life of the business loan. But, as you can see, you can make up that difference in a short time from your monthly saving – further using that $700 monthly savings to fund other needs in your business.Plus, the most important aspect of getting a business loan is using those funds for growth and expansion. If done properly you can use those loan proceeds to repay the loan through increase business or by improving operational efficiencies.Thus, the additional interest that you might pay is far less detrimental to your business over the long term then either not getting a loan in the first place or having payments that are not affordable – potentially putting your business in a position to default and lose everything.Moreover, in the following months that your business does have solid revenue, you can always pay a little additional principal to help reduce your overall interest.If you have a great opportunity that you need outside business capital for but you want to keep your payments manageable – giving you time to reap the benefits from that opportunity – then the term on your business loan may have more of a positive impact in lowering your monthly payment then your potential interest rate.

What to Do If Your Business Loan is Approved

Your business loan is approved. Congratulations! It’s one of the most exciting phone calls you can receive as a business owner. It means that your business has received the financing that you’ve desired for opening your new business or expanding your existing business. Obviously, a celebration is in order! However, before popping open that bottle of champagne and proposing a toast, remember a few key rules before signing on the dotted line and picking up your check.- Thoroughly review all loan documents, and understand what they mean before you sign and accept the loan when your business loan is approved.If you don’t understand something on the loan documents when your business loan is approved, ask the lender to explain. If you feel that the explanation was not clear, ask for further explanation, or ask that you receive a copy of the paperwork to take with you so that you can review, read, and research. Consult your attorney or accountant if you have questions.- Return all required documents to the lender on time when your business loan is approved.When your business loan is approved, there will be a number of documents and required paperwork that the lender will need before you can close on the loan. Your proposal and ideas were obviously impressive enough to the lender for them to them to tell you that your business loan is approved. Keep up that good impression that the lender has of you by promptly responding to requests for additional documents, information, and credit references. Once your business loan is approved and your money is in your account, you’re your time and review your business’ situation with care.- Turn to your business plan.Review the goals and objectives of your business, and review the information that you gave to the lender. The lender was impressed enough to offer you the money for your business – impressed enough that your business loan was approved. Refresh your memory regarding your business. Read your business plan weekly to keep these ideas continuously in your mind so that you can stay focused. Remind yourself daily why your business loan is approved.- Turn to your loan proposal.Yes, turn to your loan proposal. It seems odd to consider the loan proposal now that your business loan is approved, and now that the money is in hand. However, recall the reasons why you wrote the loan proposal and why you applied for the loan. The loan proposal served the purpose of demonstrating to the lender that you are a trustworthy, business-minded, energetic, responsible individual with a great idea for your business. The proposal also stated the items that would be purchased with the money. Review the ideas behind obtaining the loan. Keep your self-esteem levels high, and work only to succeed. Purchase only the items listed in the loan proposal, and use the money for nothing else when your business loan is approved. To find business success, stick to your initial goals for the loan, and maintain financial control of the money. Remember, you have not won the lottery. This money needs to be repaid in a timely manner.Additionally, lender communications are very important, and much appreciated by the lender, when your business loan is approved.- Maintain close contact with the loan officer when your business loan is approved.Before you close on the loan, keep in touch with the loan officer to let that person know of your progress in gathering your final information needed to close. After closing, check in periodically with the loan officer to fill him or her in on how things are going with your business. When your business loan is approved, the lender has a vested interest in both your personal and business success, and will appreciate your efforts in keeping communications open by offering current information about your business. Keeping the line of communication open will allow you to possibly take advantage of the lender’s other services, which may be needed by your business down the road.- Communicate any business problems to the lender immediately.Lenders don’t like surprises, particularly if it involves bad news. Be honest, and if you’ve run into a snag, inform the lender before anyone else. If you prosper, the bank will prosper. If you fail, the bank fails. By being open and honest if something doesn’t work out after your business loan is approved, the lender may be able to offer solutions or assistance to help you resolve your problems and get back on track. Hiding the problems, or worse yet, ignoring the problems or becoming elusive will only make the lender leery of you and your business, and may jeopardize your credit scores, or worse, your reputation as a business owner.