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.”
Well, after several years of research I’ve finally published my much anticipated E-book. The Midas Guide to Credit and Business Funding is now available by going to: www.bizfunding101.com. And yes I’m pretty excited. The hard launch was Monday and we’ve sold five books so far.
The book is broken into three sections. The first section talks about both business and personal credit and dispels all myths about each. Loaded with nothing but the facts and what you need to have to enjoy perfect personal and business credit. The second section reveals all loan products available to a small biz owner. In laymans terms, I describe each and every product so you can make an educated decision as to how and where you fit. The third section is about something no one has ever written. You all know I’m a loan broker. I charge fees! Those fees can sometimes be hard to swallow. With this guide I am providing the exact model I use to get people funded every day. I tell you everything you need in your funding package and I give you two hours of personal counseling on picking a product and getting funded. This sounds mundane but what if you could get the money you need and not have to pay thousands in broker fees?
One of my readers has recently posed the question “in what cases should a manager look at equity verses debt financing”. First let’s make sure we understand the difference between the two.
Debt financing is exactly what it says. Incurring debt (taking out a loan) to finance the start-up or purchase of a business. You can also take out a loan to grow or expand a current business. Debt financing can take on many different forms. SBA loans/lines, traditional business lines of credit/loans, equipment leasing, etc. You can also find alternative debt financing through vehicles like credit card advance funding, hard money loans and hedge fund loans just to name a few.
Equity financing typically comes from an angel investor, a venture capital firm or the like. When a group or individual makes a cash infusion into your business in exchange for an interest in your company, it is an equity investment.
As the credit markets continue to tighten, an old reliable source of financing for small businesses, the U.S. Small Business Administration (SBA) and its loan programs, is once again being looked at as a critical component in providing liquidity in the market. It is now imperative small business owners understand what is required of them to tap into this source of financing. The SBA lending market has changed dramatically over the past 120-180 days and the effect on lenders in this market has been dramatic as well. Several top SBA lenders have completely left the market with most others pulling back significantly. Losses and defaults are up and can no longer be offset with high interest rates (prime rate is at an historical low and capital costs are relatively high) or premiums earned on the secondary market, as there is no secondary market for SBA loans currently. This means SBA lenders are now approaching loans in a much more conservative manner and assessing risk instead of simply booking sufficient volume to stay ahead of delinquencies and defaults. This is being done on all loan applications, not just yours. There is going to be much more due diligence on the part of the lender and more hurdles for the borrower to jump. The days of 100% financing and fixed rate loans may be a thing of the past, but reasonable financing is still available to those borrowers willing to work a little harder and smarter.
As all of you know the financial world as we knew it has changed forever. Absolutely there still exists and always will exist a variety of financial products and services to serve consumers and businesses. However, the way banks and financial institutions lend money to businesses and consumers is changing dramatically. Gone are the days of ridiculously high amounts of leverage employed by banks and amazingly excessive levels of risk assumed. If you ever felt it was tough to obtain a loan or LOC from a bank before well you haven’t seen anything yet.
About 9 million existing businesses per year apply for funds from a bank and are denied. One of the only options an existing business had to this point to obtain funds was a merchant cash advance. Many merchant cash advance companies exist and may be willing to advance your business cash based on your credit card sales activity. The problem with these cash advances is that they tend to be very expensive and burdensome for a business. These companies take advantage of customers that are in need of an advance. Up until recently no competition existed for these cash advances that presented a very reasonable cost of financing option.