Unsecured startup loan
Question: I’m not sure whether to acquire an unsecured startup loan or a secured loan. I know there are benefits and drawbacks to both. I opened my restaurant almost two years ago, and have been showing a profit since my sixth month in business. I sold my house and put the proceeds into the restaurant. I’m nearly broke, but I have excellent personal and business credit scores. I rent my restaurant space and my house. I’d like to expand my menu, but I’ll need new kitchen equipment to do it. Is an unsecured startup loan best for me—I really don’t have anything for collateral—or should I apply for a startup loan?
Answer: You’re right about the plusses and minuses to an unsecured startup loan, but in your case, I think the benefits outweigh the drawbacks.
The upside:
• You rent your home and business space, so you have minimal debt.
• You have good personal and business credit.
• That you began showing positive revenue within so short a time bodes well for your ability to pay back an unsecured startup loan.
• Your loan amount will be relatively small.
• The lender will be happy to see you’ve invested your own assets into your restaurant. Lenders don’t want to invest their money into businesses when owners haven’t been confident enough to invest their own. The fact that you have made the investment will make getting an unsecured startup loan much easier for you.
The downside:
• You’ll probably have to pay a higher interest rate for an unsecured startup loan, though it will probably be lower than credit card rates.
• You don’t have any collateral to guarantee a secured loan, so your options are actually more limited than you think.
Don’t let the negatives scare you; your situation is exactly right for an unsecured startup loan. However, you should begin looking into a business line of credit next. You will need it to invest in inventory for special occasions when the restaurant will be especially busy. A business line of credit is also important to have on hand when you have unforeseen expenses, and in the restaurant business, that happens frequently!
Business line of credit
Question: I’m not sure if I need a business line of credit, a small business loan or a mortgage. I’ve bootstrapped my business for two years. I recently hired another employee and would like to hire two more, but I don’t have room in my current rented space. I’ve set aside enough money to buy and renovate a bigger building, but it’s hard to make payroll when I am waiting for payment. Should I take out a mortgage for another office? Should I take out a business loan or a business line of credit?
Answer:I recommend paying cash for the new space, and taking out a business line of credit.
A business line of credit a good way to cover smaller short-term expenses, like new electronics, furnishing and supplies—the sort of things you will need for a new space with more employees. A business line of credit will tide you over through the ebb and flow of A/P and A/R, and help you make payroll while you are waiting for payment. Payroll is one of the most common uses for a business line of credit.
If you can afford to move your business to a new level without going in debt, do it. Use the cash you have to invest in a new space because it is not a good idea to take on the increased overhead of a mortgage at the same time you are increasing personnel expenses.
Business lenders are not going to make an investment in your business if you have not already done so. Taking out a mortgage makes your new offices a debt instead of an asset you can use as collateral. Pay cash and lenders see you have made a huge investment and have little or no debt, and they will be happy to give you a business line of credit.
You will also be building your business credit score by staying within the limits of your line of credit and making regular payments. Moreover, you will have a higher credit line with better terms, and your next loan will be easier to acquire.
Small business lending
Small business lending to get boost from TARP funds
The U.S. Treasury Department announced today that Main Street is about to get some of the same home cooking enjoyed by Wall Street.
As much as $1 billion from the Troubled Asset Recovery Plan will be made available to banks, credit unions and thrifts certified by the Treasury as Community Development Financial Institutions (CDFIs). CDFIs are committed to lending to businesses in poverty-stricken rural and urban areas.
During a time when small business lending dropped off precipitously, the Obama administration has met with bitterness from voters and struggling small business owners resentful of the $700 billion given to some of the largest Wall Street banks, which, in turn, refused to loosen the purse strings and spread the wealth.
Earlier this week President Obama asked Congress to make another $30 billion of the remaining TARP bail out money available for small business lending from community banks. Last week, in his State of the Union address, Obama stressed the urgency of creating new jobs to stanch the small business failures contribution to high unemployment levels. Roughly half of American jobs are in small businesses.
Congress is not required to approve the money to CDIFs, but because the small business lending plan is an altogether new program, Congress must approve it. Congressional members, however, are already giving the lending plan a stiff arm.
“The law is very clear. The monies recouped from the TARP shall be paid into the general fund of the Treasury for the reduction of the public debt,” Sen. Judd Gregg, R-N.H., said in a Senate Budget Committee hearing Tuesday. “It’s not for a piggy bank because you’re concerned about lending to small businesses.
Last month, the 22 banks that received TARP bail out money announced they were cutting another $1 billion from small business lending for the tenth straight month.
Money
Question: How much money should our 8-year-old son get as allowance? Should we tie allowance to chores?
Answer: Allowance is the most important tool parents have for teaching their kids about money management, yet, only 60% of all parents give their kids a regular allowance. Parent’s reluctance to dole out the weekly dough might be one for any of the following reason:
• They’re uncertain how much money to give.
• They don’t know whether to tie the money to household chores.
• They don’t know much about money management themselves.
Fortunately, there are some generally accepted guidelines and suggestions to help answer these money questions.
Most advisers fall into one of two camps on the amount of money is appropriate for kids. Some believe the best solution is to give a child one dollar for each year of age. Every three or four year old kid who ever sat in a shopping cart or in front of a television is ready to learn elementary lessons about money, but $3 or $4 a week is enough to teach them at first.
By the time children are in elementary school, there needs to be a mutually understood agreement about how that money will be spent, with a parental insistence that a specified percentage of the money goes to spending, savings and sharing. Kids also need to know what expenses they’ll be responsible for. Will they pay for school lunches, or will their spending money be for only discretionary purchases?
By the time the kids are tweens, the savings portion should be further divided into short-term and long-term savings. Some parents agree to match their kids’ long-term savings dollar for dollar.
Parents who try linking money to household chores, though, learn pretty quickly that the system doesn’t work. First of all, once kids have enough money for the things they want, they no longer have an incentive to do chores. Secondly, children should be taught they have basic responsibilities to care for their own belongings and contribute to a smoothly running household. If that lesson is tied to financial remuneration, it’s seen as a reward and something they can decide whether or not to do.
That doesn’t mean, however, kids should never be paid for working around the house. For instance, when children want or need extra money to buy Christmas gifts or attend a special event, it’s not unreasonable to demand they do extra chores to earn the money by babysitting, doing additional lawn work, preparing meals or helping with errands. Younger children who want the latest and greatest electronic games can be required to wash the dog or car, or sort through the games they already have and trade them in at a used game store. By doing so they learn the value of thrift and simpler living.
Startup business loans
Startup business loans becoming more available
New business owners looking for startup business loans knows it’s been all but impossible to get credit since fall 2008, when Lehman Brothers crashed and burned. There are, however, signs that things are getting better, and several things would-be borrowers can do to improve their chances of getting startup business loans.
The Small Business Administration (SBA) processed 12,393 loans in the final quarter of 2009, a total of $3.8 billion; that’s a 200% increase over the number of loans processed in the same period of 2008. While the SBA only guarantees loans, the increase means lenders are again willing to make loans, including startup business loans.
That’s the good news; the bad news is that the final quarter numbers from 2009 are still only 60% of the numbers from the same period in 2007. In other words, things are better, but still very competitive, and acquiring startup business loans is going to be a lot of work and require a lot of investment.
- First off, banks will turn a cold shoulder to applications for small business startups if the owners haven’t already invested everything they have: personal real estate, savings, life insurance and credit cards.
- Scrape together money wherever possible. Young entrepreneurs have opportunities to participate in student competitions with cash prizes. Award winners impress bankers who would rather make startup business loans to winners.
- It might be painful to take on partners, but doing so brings more assets and talents to the table, while reducing risk. And remember, banks want to see a lot personal asset investment before they’ll commit to startup business loans.
- Business plans have to be magnificent and accompanied by polished and professional presentations and personal pleas.
- Start small, startup business loans aren’t awarded to businesses without track records. Wait until the revenues have accumulated to show stability and promise.
Personal lines of credit
When are personal lines of credit a better idea than loans or credit cards?
Personal lines of credit are perfect for those times when you’re uncertain what your total expenditure will be, for instance home renovation projects. Ask anyone who ever remodeled a kitchen if the projected expenses matched the final costs, and you’ll begin to understand one of the advantages of personal lines of credit over loans.
Personal lines of credit lines of credit allow you the convenience of writing a check or using a bankcard to draw on the account whenever you need it. Personal lines of credit are revolving credit accounts similar to credit cards; as you pay down the balance, you’re replenishing the pot of money you might need later
You make payments only on the portion of the credit limit you’ve used. If you have a $35,000 credit line for a kitchen remodel, but have only spent the first $5,000 of it to take out a wall, your payment is based on the $5,000 expenditure rather than the $35,000 loan.
In contrast, most loans are paid out in a lump sum. That means that if you take out a $35,000 loan, you have to begin paying on the full amount right away whether you’ve spent the money yet or not.
One of the biggest factors in choosing personal lines of credit over credit cards is expense. Personal lines of credit have lower interest rates than credit cards. Because of the lower interest rate, more of the payment goes toward the principal of the lines of credit, unlike credit card payments that can go on seemingly forever. Since the principal gets paid off faster, there is always a greater pot of money to draw from as the project proceeds.
Everyone loves the convenience and lower interest rates, of course, but most people opt for personal lines of credit because of the tax breaks they offer. When personal lines of credit are secured with borrowers’ home equity, the interest paid is tax deductible, just like the interest on mortgage payments. An added bonus: home equity lines of credit have even lower interest rates than unsecured personal lines of credit.
So, let’s see … borrowers take out personal lines of credit; secure the credit with home equity to get the lowest interest rates; write off the interest; use the money to increase the value and enjoyment of their homes; and pay off the debt faster.
Personal lines of credit for home renovations are a pretty sweet deal. Let American Unsecured help you sort through your personal lines of credit options and find the credit line that best suits your situation. American Unsecured is a loan-consulting firm and has helped millions of people find the money they need, and they can help you, too.
Small business loans for women
Filed under: Small Business Loans For Women, Uncategorized
Loans for woman-owned businesses
Small business loans for women have always been hard to come by because women often have fewer personal assets than men. That’s not to say it’s impossible to find small business loans for women, but that making the right choices can help get the loan, avoid excessive debt, increase business and decrease stress.
Scaling back on the amount of loan requested so it’s more proportionately in line with personal assets is one to increase the likelihood of obtaining the necessary loans. But how can business owners do that without sacrificing perceptions of professionalism?
- Even though it’s easy to use a free package to design a business website, hire a professional instead. The investment is minimal for an advertisement that has the potential to reach millions of potential customers. Besides that, this is an essential component of a marketing plan that can yield small business loans for women.
- Hire a free-lance blogger to continually update web content and drive traffic to the website. The cost will be roughly $5,000 a year for one or two new posts a week.
- Pay for a virtual assistant to answer phone calls, forward messages, make travel arrangements, maintain appointment schedules and create basic correspondence. It’s cheaper than hiring a full-time employee and boosts professional image and productivity.
- If the goal is small business loans for women-owned home-based business, improving workspace is a tangible use of money that bankers like, whether it’s a business loan or a home equity loan. Private entrances are essential.
- Rent a conference room on an a la carte basis to avoid conducting presentations and high-level meetings in a spare bedroom. Consider women’s centers or local nonprofits if their mission is appropriate to your product or services and will help project a desirable image.
Whatever the intended purpose of small business loans for women, the most important element to the business loan application will be a very detailed business plan that plays up the creativity and resourcefulness it took to find ways to grow the business while achieving maximum bang for the borrowed bucks. Contact American Unsecured for more tips on acquiring small business loans for women.
America One Funding Group
Unsecured personal loans from America One Funding Group offer borrowers an immense flexibility and quick accessibility necessary in situations of urgency or extreme emotion.
Online applications for unsecured personal loans are submitted with little required documentation and are assessed very quickly, so the applicants get an almost immediate response. And, when an application is accepted, the funds can be wired to an established checking account so the entire process, from application to deposit, can be completed in less than 72 hours.
Because there aren’t requirements for collateral, the America One Funding Group applicants don’t have own or have equity in automobiles, real estate or financial investments. Applicants who do have those assets don’t have to place them at risk. Another advantage of not securing a loan with collateral is the ability to sell the car or house that would be otherwise encumbered as security, limiting the owner’s rights of property ownership.
Unsecured personal loans typically have lower interest rates than a lot of credit cards, but their rates are usually higher than secured loans. The largest loan amounts and lowest interest rates are available only to those with excellent credit scores, but even borrowers with damaged credit can usually access an unsecured personal loan with a higher interest rate.
The uses of unsecured personal loans are limited only by the law; any legal intended purposes are acceptable uses. In fact, lenders seldom ask applicants’ their intended use of their loans. That kind of flexibility means borrowers can be confident the loan they’re applying for will meet their needs.
When emotions are running high—an unexpected death, a car accident, a medical emergency—unsecured personal loans are fast, flexible and easily accessible with online applications. Let America One Funding Group help you get the money you need.
Vacation loan for holiday reunions
It seems like everyday for the last couple years I’ve been bombarded with the same negative “thou shalt not” messages about going into debt, and I’ve been obedient … until now. I’ve decided to thumb my nose at the nags and naysayers and take out a vacation loan.
You can call it rationalization, but I choose to call the results of a recent Harris Interactive Survey my justification for a vacation loan that will allow me to travel during this holiday season. I’ve decided my emotional need for connection and continuity supercedes my need for just a wee bit more financial security.
According to the Harris survey, people are willing to suffer the travails of holiday travel—in my case, even though it means taking out a vacation loan—so they can
create memories; maintain traditions; reconnect and build relationships; and,
improve their sense of well-being.
All of the above apply to me.
Two of my friends died this year. I chose not to take out a vacation loan to attend their memorials, and chose instead to apply the money to my Lowe’s credit card. I congratulated myself for being grown up and responsible, but took no comfort from it. Though I gained a couple points on my credit score, I still felt nothing but loss. The loss of my middle-aged friends brought home for me the knowledge of how tenuous life is.
In counterbalance, I reconnected with high school friends I’d lost track of 30 years ago (thank you Facebook), and I want to solidify those relationships, especially one with another woman who, like me, had her only child at 41.
The last time I went home to Ohio was two years ago when my sister had surgery for uterine cancer. I rationalized taking out a vacation loan then, not so much because I wanted to visit Ohio in January, but because my sister needed me, and I was doing it for her.
This year I’ve taken out a vacation loan for me, for my sister and for my friends. But more than all that, I’m doing it for my son. I want him to see that relationships with family and friends are important, tenuous and can be lost in an instant. I want him to see me living my values.
I also value financial security, and being a middle-aged woman with a young son means that’s especially important, but I have enough financial security that I can afford the small monthly payment this vacation loan will cost me over the next couple years. What I can’t afford is losing connection with my family and old friends.
Wedding loans for DIY dream weddings
Wedding spending was down in 2009 … way down. In 2008, couples took out wedding loans to pay for $30,000 weddings, but this year they took out wedding loans so they’d stick to their wedding budgets and keep the expenses at an average of about $20,000.
Much of the expense of those over the top weddings was put on credit cards, and some of those newlyweds are paying off that debt at 29.99%; that’s not a mistake recession era couples are making. Instead, they save up all they can, and take out a loan to make up the difference; either way, wedding loans reinforce the notion that the available funds are finite.
That doesn’t mean sticking to a budget is easy, even with wedding loans. Lots of brides have been imagining their weddings since they played with Bridal Barbies. Wedding loans allow those brides-to be to shop for the best deals, and then move on them fast. Airfares have become unpredictable. With all the new fees and surcharges, it’s hard to find a bargain. But, when a rare low fare is announced for the frugal couples’ dream destination, wedding loans mean the money’s available.
The same goes for other areas where couples are cutting corners. With wedding loans, couples can tweak their DIY projects to achieve more professional results. For instance, taking out wedding loans a year before the wedding allows couples who decide on a backyard wedding to begin landscaping projects that will mature in time for their wedding.