In the past you’ve heard me speak, and maybe even have received information from me on a variety of business related funding products. You know how challenging it is to get capital in this mercurial economic environment, and I’ve striven to keep you informed with the most up to date info.

I understand that building positive business credit is serious, it takes time and dedication on the part of any business owner. For several years I’ve researched “Building Business Credit”. I’ve interviewed dozens of purveyors of the product. Never have I endorsed one because I didn’t want my sterling reputation tarnished. Over promise……..Under deliver…….was the typical mantra. Charging enormous up front fees and additional “points” on the back end…..They all sing the same tune. Until now……..

Against my better judgement, I took the time to talk to one more of these guys. I gotta tell ya, I’m glad I did. For the first time I found someone that “tells the truth”! Someone who has a program in place that actually builds business credit and gets the funding the rest only claim. And best of all, at a reasonable price!

I am now a referral broker for them and yes I am going to get compensated if you buy their program. They guarantee a A rating with Equifax and Experian business, and an 80 Paydex score, and a MINIMUM $50,000 in business credit. You’re assigned a specialist that works with you, and over 6 months you will have access to at least $50,000 in actual trade line AND unsecured lines of credit.

“Many small business owners use personal credit to run their business. Doing so could put you at risk if your business is ever in trouble. Plus, many creditors today are moving away from relying on personal credit alone when judging a business’s financial health since personal credit is not considered an ideal predictor of business behavior. Furthermore, smart creditors are taking advantage of new blended commercial scoring tools that integrate both personal and business credit attributes to assess and predict small business risk.”

“However, if you are a sole proprietor, your personal credit and your business credit are closely linked in the eyes of banks and other lenders. So it is important to take steps to protect both. You should monitor, evaluate and protect your credit standing just as you would protect any other business or personal asset.” *

Remember what I said…”over the next 6 months”! These guys DON’T over promise. They do what they say, when they say. They are BBB approved. There is no other company that vends this product (that I know of) that is.

If you’d like to get more information, e-mail me. Darrell@midas-financial.com and request in the subject line “I want to build business credit”. As a further incentive to get into this program I am offering two hours of my consulting time, normally billed out at $175 an hour, to discuss any personal or business credit/funding issue you have.

* Excerpted from Experian.com

The Self-Directed IRA (SDIRA) puts you in control of your qualified accounts such as IRA’s, 401(k)’s,  403(b)’s, Keogh’s, SEP’s and more. With a SDIRA you have the flexibility to invest in real estate, mortgages, businesses, franchises, tax liens etc.  This gives you, not Wall Street, discretionary control of investment options, whether traditional or non-traditional. A Self-Directed IRA is a retirement plan that allows the account owner to direct investment decisions on behalf of the retirement plan. Basically, an SDIRA is a unique hybrid tool that utilizes a self-directed IRA custodian and a specialized legal structure. With an SDIRA you will have a checkbook, a debit card and all the tools that come along with a business checking account.

The SDIRA owner can use his retirement funds for a multitude of investments providing a higher potential rate of return. All you need to know are the few things you cannot do and the rest is up to your imagination.

Here are some uses for a Self-Directed IRA:

Business Financing

•    The ability to supply business seed capital through an SDIRA
•    The business can be contained within the SDIRA set up as an LLC
•    Provides the prospective business owner a way to get funding
•    Franchisors are able to sell additional franchises
•    You essentially become your own bank so that you can loan the business money, set an interest rate, pay the IRA back and never go to a traditional lender.

Real Estate Investor Financing

•    The ability to supply capital through an SDIRA
•    The property can be contained within the SDIRA set up as an LLC
•    Provides the investor with a tax advantaged leverage
•    The IRA investor can grow their retirement nest egg through buying and selling properties with the gains
•    and the income is tax deferred
•    You essentially become your own bank

Your current retirement account is moved to a self-directed IRA custodian who allows alternative investment vehicles that pass their compliance and IRS scrutiny. To do this, it is highly advised you utilize an expert with experience in setting up and customizing your SDIRA.

Here’s the simple step-by-step approach:

1.    Your retirement account is moved to a self-directed custodian.
2.    A legal and accounting team creates a customized LLC and submits to the custodian.
3.    You open a business checking account for the SDIRA
4.    You submit an authorization form to the custodian instructing them to fund your new bank account.

Once this is done you will have absolute control over your new SDIRA and you can direct your investing efforts. This could be in the form of business seed capital, real estate investing, tax lien certificates, and even traditional stocks, bonds, and mutual funds.

In the simplest meaning, asset-based lending is any kind of lending secured by an asset. This means if the loan is not repaid, the asset is taken. A home mortgage is an example of an asset-backed loan. More commonly however, the phrase is used to describe lending to business and large corporations using assets not normally used in other loans. Typically, these loans are tied to inventory, accounts receivable, machinery and equipment, but they can also include exotic things like the value of pharmacy script files, a trademark, or whole assets of intellectual property. For example, Midway Games took out a line of credit secured by its Mortal Kombat game. If it fails to repay, the bank then owns the  franchise and can sell the rights to it.

This type of lending is usually done when the normal routes of raising funds – such as the capital markets (selling bonds to investors) or normal unsecured or mortgage secured bank lending – is not possible. This is usually because the company is in dire financial status. Thus, asset based lending can be compared to sub-prime lending. It is usually accompanied by high interest rates, and can be very lucrative for the parent company. As an example, Wells Fargo made more money from its asset-based lending business than it did the rest of its corporate business (both lending and fee based services).

In fact, many financial services CEOs argue that normal lending to corporations can no longer be profitable in and of itself, because the interest rates involved are too low. This is because for most of the second half of the twentieth century, it has been possible for corporations to not borrow from banks but instead borrow from individual investors in the form of bonds. Thus, competition has made rates so low that many feel they do not adequately reflect the risk. Most financial services companies now only lend as part of a package of services, or do asset based lending or other more lucrative businesses.

Assets can be:

• Accounts Receivables
• Inventory, including marketable raw and finished goods
• Machinery and Equipment
• Real Estate
• Personal Assets

With few exceptions, little has been written about asset-based lending. Most of the attention in leveraged loans these days has gone to the cash-flow crowd. Yet buyout practitioners are now making full use of this decades-old corner of the capital markets.

If you are under-capitalized, but have good performing receivables, and are growing faster than your cash flow intake, ABL is the ticket.  Especially for manufactures, distributors and service companies with a leveraged balance sheet whose seasonal needs and industry cycles often disrupt cash flow. If this scenario sounds like your reality, drop us a line at info@midas-financial.com. We can help.

As your post-holiday credit card statements arrive in the mail, you´ll probably think about what you spent. But have you thought about how much of your personal and financial information was exposed? Sounds like the perfect time to check your Credit Report!

In the past you had to be careful of the carbons when they “swiped” your credit card. Today credit thieves have a whole new high tech and low tech bag of tricks. The only way to make sure you’re safe is to take precautions and regularly check your credit report for inaccuracies, you know, the key changes on your report that could either indicate identity theft or a reporting error.

The way you handle your credit has an impact on your Credit Score. If you sit on the sidelines your Credit Score may never develop the credit worthiness that you’ll want someday when planning a major purchase, looking to rent an apartment or trying to get a new job. But by being out there, you increase your risk. Today’s identity thieves have been so bold as to install devices within stores that duplicate your credit card information when you use your card, and then use that information to steal your funds.

Get online to check your credit card and bank statements. Review your purchases. See something that doesn’t match? With credit cards you can call their customer support number and challenge your charges. You may even be able to find inaccuracies before they turn up on your Credit Report and potentially affect your Credit Score. If your credit card company extends warranties on your purchases, you will also want to take note of where, when and what you purchased – to make it easier if you should need to take advantage of this service.

But the best credit monitoring is you regularly checking your Credit Report. Look for new entries, such as a new credit account that you did not authorize. Look for address changes. Take advantage of everything your membership has to offer – from Score Tracker (which follows and plots your Credit Score from month to month and informs you of the factors that help and hinder your score) to helpful articles that may help you understand and manage your Credit and Credit report. The first step is to click here, download your reports, and see if there is anything amiss.

Earlier this month we posted an article about Payday Loans, and the possible pitfalls connected to this institution. This post was evidently compelling enough for a reader to ask to be a guest writer and post her own story. The following is from Angela Sanders, who writes a Blog of her own called A Financial Journal. We are always excited in bringing you the very best in information and calls to action on this blog. Here is Miss Angela…

Is it possible to consolidate your debts?

“The consumers take out payday loan to manage their emergency expenses at the middle of the month. When you apply for payday loan you are not required credit check so the interest on this loan is comparatively higher than other loan programs. Make sure that you pay off the owed amount on scheduled date to avoid the accruing interest on the principal balance.”

“Debt consolidation is a process when you consolidate your high interest debts in a low interest consolidation loan. You can combine your high interest debts into a single monthly payment. When you consolidate your multiple debts then you can manage your single bill and avoid defaulting on your payment. So it will be easier to pay off your debts and regain control over your financial situation.”

“Know about the drawback about payday loan consolidation? The debt stricken consumers take out another loan to pay off your debts so the chances are high that they have poor credit report. Therefore, you might not get loan on affordable interest rate. It will not be a beneficial option to take out another loan of high interest rate to pay off your high interest payday loan. Another disadvantage of taking out a new loan when you can’t exercise financial discipline as you can splurge it before paying off your debts.”

“When you get a low interest loan to pay off your high interest debts then it is considered to be a viable option. It will be a beneficial option for you when you consolidate your high interest debts with low interest loan. You can attain financial liberation when you pay off the existing debts. You can repair credit once you pay off the owed amount.”

“The interest on payday loan is high with exigent repayment terms so people usually default on their payment. Many people rely on payday loan as it does not require credit check so they can easily apply for this loan during financial crisis. These people continuously take out loan to avoid the exigent repayment terms so it becomes difficult to come out from the vicious cycle of debt. So payday loan consolidation can help you pay off the owed amount and guide you to deal with multiple creditors. This will help you regain your financial independence by paying off your debts.”

We thank Angela for her time and effort.

Have a Happy Thanksgiving everyone.

Parents, start building your children’s credit early – and do it well. Build credit early for your children – even before college starts, if they plan to take out student loans. Sign over an account that they must pay on time each month. Get a credit card with a low limit, and a bank account that you help them manage monthly. Avoid opening several charge cards at once in their name – not only will they be hard to repay, but having new accounts when they have a short credit history will cause their credit rating to drop. Encourage them to get a part-time job.

“The Credit Card Act of 2009 sought to temper aggressive marketing of credit cards to students by restricting campus promotions and requiring students younger than 21 to have a co-signer, unless they have enough income to get their own card.” And banks are unwilling to offer credit education to their customers. “They do not tell us that no credit is as bad as poor credit. Banks and educational institutions certainly do not think it is their responsibility to conquer the critical task of teaching children about credit.”

One interactive tool that has seen positive results is a Family 401(k). Just as many companies match their employees’ contributions to 401(k) savings plans, parents can kick in a matching contribution to money their children save. For every dollar of their allowance they put away in the bank, you can match it in some way, some percentage that you can afford. This will give children a real incentive to save. Having their own savings account, and getting monthly statements from the bank, can also be a good way to teach them about interest and compounding.

As always, the task of educating our children ultimately falls on parents. Again, teach your children early about money, credit and how to manage both, which will help them foster good money habits and establish good credit, and in turn help get a good student loan rate. More importantly, establishing credit early will help ensure that they have a long (and good) credit history by the time they graduate from college, which will help them with all their important, large post-graduation expenses.

(excerpts and photo from WSJ)

Be careful of online loan rate comparisons, timing is everything. Online loan rate quotes are easy to get – type in some personal information and you can get a quote on a car loan, personal loan, student loan, or mortgage in seconds. This is free and convenient, leading many people to compare several companies at once in order to make sure that they get the best deal possible.

The problem is that since online quotes are a fairly recent phenomenon, Credit Bureaus count each such quoted estimate as a “Hard Inquiry.” This means that if you compare too many companies online by asking for quotes, your credit score will fall due to too many “Inquiries.” This does not mean that you shouldn’t seek online quotes for loans – not at all. In fact, online loan quotes are a great resource that can help you get the very best rates on your next loan. What this information does mean, however, is that you should research companies and narrow down possible lenders to just a few before proceeding.

Timing is the key in this arena. We all do our research before making critical decisions in our life. Executing an online comparison is one way. But, say you run an online comparison and your decision is to wait a month or two to pull the trigger on that major purchase (car or mortgage). The next time you run a comparison your scores will be impacted greatly in the eyes of the credit bureaus. Statistically, people with six inquiries or more on their credit reports can be up to eight times more likely to declare bankruptcy than people with no inquiries on their reports. Plan your online research carefully, this will help ensure that the number of inquires on your credit report is small – and your credit rating will stay in good shape.

Credit card “piggybacking” isn’t a new practice. For years, parents have done it to help their children get a jump start on their credit. However, it recently came under scrutiny because shady credit repair companies and unscrupulous consumers used the practice to artificially boost bad credit scores.

What is Credit Card Piggybacking? Credit card piggybacking is much like the childhood game of being carried around on someone else’s back; but instead, you’re “carried” on someone else’s credit card account. Once you’re added as either a joint card holder or  an authorized user to a credit card account, the entire credit history typically appears on your credit report and included in your credit score.

Being a joint card holder or an authorized user on an account with a positive payment history would boost your score. While late payments and high credit card balances could lower your score depending on the other information on your credit report. Note that not all credit card companies report authorized user accounts to credit bureaus, partly because of the cost and partly because of the way the practice has been abused by some.

Piggybacking Abuse. Piggybacking became a way for people with bad credit to artificially raise their credit scores. Some companies mentioned above would enroll you into their program, and for a fee, you could be added as an authorized user to someone else’s positive credit card account and see a boost in your credit score. Then, you could use the higher score to qualify for the good stuff: loans, credit cards, and interest rates you wouldn’t have been able to get otherwise.When the mortgage meltdown began, lenders realized they’d been defrauded and criticized the practice. Fair Isaac, developer of the widely-used FICO score, threatened to remove authorized user accounts from the credit scoring calculation, but instead tweaked the score to allow lenders to better predict fraudulent authorized user accounts. Had the initial plan to remove authorized user accounts been carried out, innocent consumers – which are the vast majority who use this practice (joint account holders, authorized users) – would have seen drops in their credit scores.

Joint Account Holders. When two people have a joint credit card account, both people can make charges to the credit card and the card’s history is included on both people’s credit report. Both people are also liable for the credit card payments. If the payments become delinquent, the credit card issuer can go after either cardholder for payment. There are advantages of Joint Credit Cards. Share a bill. When you and the other person have one rent, electricity or cell phone bill, it seems only natural to share a credit card bill. Having one less bill to pay can let you make the most of your income. Plus, when it’s time to pay off your debt, you’ll have an easier time deciding which card to pay back first.

Help one person get better credit. Adding a spouse or family member with bad credit to your credit card can help them get a better credit card. But it will only work if the credit card is managed right – the bill is paid on time and the balance is kept low. Help one person get a credit card/good interest rate where they otherwise wouldn’t. Being added as a joint user might be the only way to get your spouse a credit card, or to get them a low interest rate.

Disadvantages of Having a Joint Credit Card. Both people are legally responsible for making the payments. That means the credit card issuer can take legal action against you for charges you might not have made. You could even be sued and have your wages garnished. Credit card disagreements could cause relationship problems. In a 2008 poll conducted for CreditCards.com, 19% of respondents who shared a credit card said they had arguments with the other person about the account, while 7%  said they’d canceled a shared credit card because it caused relationship problems. Breakups or divorce make it hard to manage the credit card. No matter what a divorce decree says, the credit card issuer holds you to the original credit card agreement. So if your ex-spouse isn’t paying his or her share of the credit card bills, your credit can still be affected. It’s even harder to manage the credit card bill if you sever ties with someone you were dating or even a friend or family member. One person could use the credit card to hurt the other. It sounds childish, but it happens, often after a breakup. One cardholder could go on a revenge spending splurge, leaving the other cardholder with the bill. If the revenge-seeker already has bad credit, he or she has nothing to lose from a maxed out credit card or a few more late payments.

Should You Share a Credit Card? It’s wiser to keep separate credit cards. Before you make the decision to get a joint credit card, evaluate your reasons for sharing a credit card. In the CreditCards.com survey, only 9% of respondents said they felt closer to the person after sharing a credit card. Similarly, 9% said they felt more in control of the relationship. Discuss the pros and cons of having a joint credit card. Make sure everyone understands the effect a breakup could have on your credit history.

Authorized Users. An authorized user on your credit card is someone who you have given permission to use your credit card. An authorized user can receive and use a credit card with his/her name on it, but is not legally responsible for repaying the credit card balance. The credit card payment history will appear on the authorized user’s credit report. That can be a good thing if the payment history is good, but a bad thing if the credit card payment history is bad. Unlike a joint account holder, a credit card authorized user doesn’t have to go through a credit check to be added to the credit card account. Some credit card companies may charge a fee for adding authorized users.

Is Piggybacking Illegal? There’s disagreement on whether credit card piggybacking is illegal or just deceptive. U.S. law says that someone who commits bank fraud “knowingly executes, or attempts to execute, a scheme or artifice to defraud a financial institution; or to obtain any of the moneys, funds, credits, assets, securities, or other property owned by, or under the custody or control of, a financial institution, by means of false or fraudulent pretenses, representations, or promises.”

The crime is punishable by a maximum $1 million fine or 30 years in prison or both. By definition, credit card piggybacking could be considered bank fraud, but, to date, there has been no official ruling on the practice. But used with just a modicum of common sense, this technique will assist you in raising your credit scores.

As the Thanksgiving and Christmas Season looms just over the horizon, having available money for holiday shopping swings into the forefront of our thoughts. As enticing as it may be, you should avoid payday loans except as an absolute last resort. Payday loans are also called “cash advance loans” and they are small, short-term loans that carry very high interest rates. Some companies have even begun to advertise them as “loans to help you repair your credit”, but this is very misleading. Some companies suggest that these loans can help you pay off your bills and so establish good credit, but if you cannot afford to pay your payday loans back on time, you have to “roll-over” or extend the loan – often at huge expense and interest. Many people get into a “payday loan cycle”, whereby much of their monthly paycheck goes towards paying off their ever-growing payday loans.

The typical process for a payday loan involves you writing a check, made out to the lender for the amount you’re borrowing, plus fees. You’re given the net amount. The fees may be based on a percentage of the loan amount, or charged in increments, for example a set amount for each $50 or $100 loaned. Borrowers can often choose to extend or “roll-over” the loan period, with fees charged for each extended loan term. Let’s say you borrow $100, with payment due in two weeks. The lender takes your personal check for $115, and holds it until your next payday, or, rolls it over into the next loan period. You receive $100, the lender keeps $15, which equals an APR of almost 400%. If you extend the loan term with three more two-week periods, you’ll pay $160 for that $100 loan.

The Truth in Lending Act requires a specific set of guidelines to be given to the borrowers before the loan agreement is signed. Several states are investigating payday loans for possible illegal activity stemming from usury laws.

If you cannot afford your bills one month, you are much better off trying to arrange an alternate schedule of payment with the companies you owe money to rather than risking your credit rating through payday loans. Payday loans may be fine in a true emergency, but the “payday loan cycle” gets very unaffordable very fast and can ruin
your credit rating for a very long time.

That time of the season is rapidly approaching. So you have company coming over and need something quick, easy and delicious for dessert.  Well here it is…Darrell’s Key Lime Pie.

First heat your oven to 350 degrees.  In a mixing bowl mix at low speed (for 2-3 minutes) one can of sweetened condensed milk, 1/2 cup key lime juice and four egg yolks.  Pour the mixture into a pre-made graham cracker pie crust and bake for 15 minutes.  Cool for an hour.  THAT’S IT !!!  This recipe is so simple and easy.  I like to top it with real whipped cream, and I highly suggest pairing it with a nice high quality margarita…….

Best,

Darrell