The Basics of Small Business Loans

A loan is a very simple thing when you get down to it. You get some money and you agree to pay it back with interest. It doesn't matter if your business is a success or a failure, all the risk is on your shoulders alone. 

In business, we take it for granted that risk is just a part of life. When borrowing money for your business a lender may not lend you money if they think they are not going to be paid back. The risk of not getting paid back calls for the lender to ask for a bit of security like a mortgage on the business owners house, so if they don't keep up on the payments they can take and sell the house to cover the loan. 

If you weigh the risk of borrowing the money to the risk of selling a part of your company to investors, the business owner would rather borrow the money and take the risk alone. The business man is confident that they will be a success and they do not want to share that success will investors. 

Some of the basics of a small business loan: 

The Promissory Note 

When borrowing money you’re going to have to sign a paper that states you promise to pay back your loan plus interest. It also states how and when payments are to be made. This document is called a "promissory note". 

Putting the loan in writing is a good idea whether you’re loaning the money to your brother in law or borrowing from a commercial lender. A handshake just doesn't cut it anymore. 

Forms of Repayment 

Lump sum repayment. You agree to pay principal and interest in one lump sum at the time agreed upon. Under this plan there would only be one payment for the loan and the agreement would be settled. This form of repayment can contribute to your business saving money and not having to worry about making monthly payments. 

Periodic interest and lump sum repayment of principal. You agree, for example, to pay interest only for two years and then interest and principal at the end of the third year. With this type of loan plan, often called a "balloon" loan because of the big payment at the end. 

Periodic payments of principal and interest. You agree, for example, to repay one-fourth of the principal each year for four years, plus interest at the end of each year. 

Amortized payments. You agree, for example, to make equal monthly payments so that principal and interest are fully paid in five years. Under this plan, you'd consult an amortization table in a book, on computer software, or on the Internet to figure out how much must be paid each month for five years to fully pay off a loan plus the interest. The table would say you'd have to pay a fixed amount each month. Each of your payments would consist of both principal and interest. At the beginning of the repayment period, the interest portion of each payment would be large; at the end, it would be small.

 
Amortized payments with a balloon. You agree, for example, to make equal monthly payments based on a five-year amortization schedule, but to pay off the remaining principal at the end of the third year. 

Prepayment penalties 

When you borrow money, it’s possible to pay off the principal faster than called for in the promissory note, since this stops the accruing of interest. In other words, if you have a three-year loan but are able to pay it off by the end of year two, you don't want to pay interest for year three. By law, some states always allow such early repayment, and you pay interest only for the time you have the use of the borrowed money. 

But in other states, the law allows a lender to charge a penalty (amounting to a portion of the future interest) when a borrower reduces the balance or pays back a loan sooner. It seems unfair to have to pay anything for the use of borrowed money except interest for the time the principal is actually in your hands. Make sure any promissory note you sign says you can prepay any or the entire principal without penalty. 

Cosigners and guarantors 

If you don’t have sufficient collateral for a loan, the lender can ask for other methods to guarantee that the loan will be prepaid. One is having someone cosign or guarantee the loan. That means the lender will have two people rather than one to collect from if you don't make your payments. Be sure to explain to whoever cosigns or guarantees the promissory note, that they are risking their personal assets if you don't repay it. 

Some lender wants the spouse to cosign the promissory note. If your spouse signs, not only are your personal assets at risk, but also all assets that the two of you jointly own like a house or a bank account. Also, if your spouse has a job, his or her earnings will be subject to garnishment if the lender sues and gets a judgment against the two of you because the loan isn't repaid as promised.

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How To Motivate Your Employees

Motivating your employees can be one of the hardest parts of any manager’s job. Try as you might, you can end up feeling like your workforce doesn’t have shared goals, or are struggling to retain an interest in their jobs.

There are several ways in which you can inspire your employees to be motivated and ready to give their best for their respective jobs, but all take time and require a strong dialogue to be opened up between different levels of management. 

Some of the best ways in which you can develop this process, and achieve higher levels of motivation, include:

Create the Right Environment

If your employees want to spend time in their workplace, then you’re already far ahead in terms of making them motivated. Invest in the quality of a workplace, and seek feedback on what can improve a space to make employees comfortable about where they do their jobs.

We all like to feel appreciated for what we do at work, whether it is something big or small. Workplace victories build our confidence and overall morale. Employers should show gratitude toward employees on a regular basis. Gift cards are one way to express this. Some gift card resellers can be called upon to supply the most popular gift cards that will make your team stay motivated.

Offer Shares

A successful motivational tactic for many companies, offering shares in the company can make employees experience a stronger incentive to do well, as well as being able to receive the benefits of their hard work.

Have Regular One to One Meetings

This means taking the time to see people individually, rather than just relying on group situations where some people won’t be comfortable bringing up private grievances. One to one meetings can also allow employees to learn more about their contribution to the company.

Be Honest

Being upfront with employees about why there are problems with a business, and suggesting ways in which they can help to improve these can instill a sense of belonging and shared spirit amongst a workforce.

Provide Regular Rewards

As well as giving out bonuses, set up schemes where regular rewards are given for good work. This might be as simple as awards for the week, or providing trips and gifts as incentives for completing quotas.

Use Motivational Speakers

Motivational speakers can be a great way to motivate employees due to your staff often being able to relate to situations the speakers have been in. Passionate and entertaining business speakers can have a great impact on employee morale and productivity.

Be Flexible Showing that you trust employees enough to have flexible hours under certain circumstances, such as working from home on a project, can motivate employees to do their best when not in the office. Doing so also uses trust as a motivational tactic to make employees not want to let you down.

Offer Training Schemes

Employees will be more challenged if you are able to provide regular training schemes and opportunities for them to improve their skills. Making these part of a salary, and covering expenses, can benefit you and an employee if they are able to increase the value of their work.

Make Sure Appropriate Praise is Given

While keeping your praise appropriate, you can make the effort to send a personal email to thank someone for a job well done. Doing so prevents employees from resenting work for underappreciating their talents.

Respond to Different Needs

It’s important not to assume that a single motivation technique will work for everyone. Make the effort to know your workforce, and try to tailor different motivational techniques to individuals, as well as the group.

Don’t Use Fear

A small amount of fear over job security is useful, but without spilling over into creating a climate where employees are demoralized and resent management for creating too much pressure. Set clear goals, be strict when necessary over rules, but don’t go overboard.

Author Bio: Liam Ohm writes about business, from hiring the correct keynote speakers to the latest financial trends. In his spare time, he enjoys networking, socializing, and traveling.

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Are Payday Loans Bad

Loans (Photo credit: zingbot)

In many states in the U.S., due to the hostile home market, payday loans are getting difficult to get because of the higher interest rates and more restrictions, thus making it less profitable. Already many US companies are setting up shops in other countries such as Britain, where the markets are more lucrative. But that should not make those payday loans sound like something bad. Payday loans are gaining more popularity, with consumer credit up slightly and bank lending down sharply. 

Yes, payday loans do carry much higher rates but they are the best options for all those who know how to use them wisely. In fact they offer valuable services and are very useful for those people who use them responsibly  After all, where else can you look for a dependable source for immediate cash in any kind of emergency? 

Payday loans are easier, simpler and faster to get. Moreover, most loan providers have their own websites. One can log online and check out these loans and see if they are getting the best offers. It will just take a couple of minutes to compare and apply. One just needs to fill out an online application form, giving their personal details and other information. As long as you have steady employment and are a legal citizen, you can easily get the loan. Customer care will get in touch with you and inform you whether you have qualified for the cash advance. Within a couple of hours or maximum 24 hours, you will have the money you need in your bank account. 

Payday loans are no monster as they are made out to be. The purpose is to help you out in any situations of cash crunches. It is only when people use them carelessly or are not able to pay them back on time, the trouble begins. The interest rates are high. And those rates can keep accruing if you fail to payback within time. As a borrower, it is your responsibly to use them wisely and only when in need. 

The bottom-line is, that payday loans are not bad, rather they are our useful when we cannot look anywhere else for that small amount of cash we need so desperately. It is a ridiculous idea to do away with them. Already they have brought smiles on the faces of many and helped them tide over money problems without any worries. There are thousands of people taking out these loans and paying them back comfortably on their next payday. They are just the perfect solution for responsible borrowers.

 
However, care should be taken to not get into the habit of taking out these loans. You need to look into your finances and rethink your ways of spending if you borrow too often. Look at your own spending habits before reflecting a prejudice against those payday loans.

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Things You Might Know about Bridging Loan

Bridging loan is one source of fast cash which can answer for any kind of financial needs that are urgent. This loan is ideal for those who do not have sufficient time to make arrangements to secure long term loans. This is considered to be a finance option which is short term as it is made easily available by the lender. One great advantage of this kind of loan is the fact that you need not prove your credit worthiness in order to avail it. While it may require you to post some kind of securities, it will just be the basis of the amount of money you will be able to borrow. Bridging loan offers numerous advantages, but one must carefully study its terms and conditions before signing up for one.

Bridging Loan and the Fees Attached To It

Bridging loans can be taken by those individuals or businesses which are in darn need of financial assistance. However, this kind of loan may have higher interests rates considering that the lender bears higher risk as well. Other fees to pay includes valuation fee for those who will evaluate the value of the asset being given as a security. You also need to pay administration and legal fees. Some of lenders offering this kind of loan also offer equity participation. When it comes to formalities, there no strict form required which can assure you that your loan amount will be disbursed immediately.

Bridging Loan for Corporate Financing

For business financing, bridging loan can be used for many different purposes. For one, it is used in carrying the works of a business when it is looking for some new investors. The money obtained from securing the loan is useful to finance routine expenses of the business during this process. When an interested party starts investing, the cash flowing from such investment can be use in repaying the bridge loan. When partners in business withdraw their contribution upon retirement, it may become difficult for the business to continuously thrive with its remaining capital. This is another case where bridge loans can be used to smoothly run again the operation of the company.

Bridging Loan for Purchasing Real Estate

Bridging loan may also be availed by those who intend to purchase real estates. If you intend to buy a new property and you need to make down payment on it, you can obtain a bridging loan for this purpose. However, you may be required to post a collateral security before your application will be approved. Once you were able to secure the loan, the proceeds can be used to make your down payment. After you have found a buyer for your old property, you can use the proceeds of the sale in order to pay off the bridge loan. Should there be balance after paying off the loan, it can be applied to the remaining amount due of the new property. With this, you will be assured that you will not lose the property you always wanted simply because you do not have the funds available.

Author Bio:

Joel Cordle is marketing lead at Microbank.com.au, Micro bank is Friendly and Professional Lending Company, provide bridging loans and bridging finance as fast as 24 hours. We offer different types of bridging loans and help people those are buying a new property or need investment for business.

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Bank Lending Payday Loans

(Photo credit: Wikipedia)

Payday loans are a billion dollar industry today. The number of payday loan providers is on a steady rise and so is the number of borrowers. This points to the dependence among people with these loans to tide over their cash emergencies. These easy and fast loans offer great relief to many who find themselves facing a cash crunch and their pay day still far away. However, these loans should be taken out only during cash emergency and paid back within the next month. These should not be looked upon as a long term loans as they are not. They carry very heavy interest and that can only get bigger if not paid in time. 

Surprisingly, some banks too, have started showing interest in offering payday loans. Earlier, these financial institutions showed little interest in this industry. And some of these trusted institutions are certainly not the biggest loan sharks in town. Generally speaking, people taking payday loans from banks remain in debt for an average 175 days a year. The regular bank payday loan with a yearly 365% interest rate is certainly less than what other payday loan providers are charging.

The advance loans from banks, just like payday loans are usually made for two weeks or a month. But here, the banks do not accessing the borrower’s bank account information or use post-dated check. It makes use of customer's checking account to pay back itself. Many customers are not able to pay back the loan and fees, thus forcing them to extend the cycle of debt and forcing them to take out another loan to break free of the earlier debt. 

However, a recent research shows a cycle of higher debt with bank payday loans. The borrowers pay more overdraft fees than non-borrowers. This is a clear sign that some of these banks are targeting vulnerable borrowers and have already been warned to stop predatory bank payday lending. Already investigations are on to curb this practice and the regularity bodies are spreading more awareness among customers on these issues. For example, in US, Payday lending has been declared illegal in North Carolina. But still, there are many banks in Alabama who are still marketing their payday loans to their customers.

 
According to some banks, their loans differ from those offered by payday lenders. The advantage here is that as the borrowers are already their checking account customers, they can be sure if the customer will be able to repay the loan and has the fund. Moreover, the banks account the repayment history of their customers to credit bureaus unlike payday lenders. Moreover, banks normally won't give out new loans unless and until the earlier loan is paid off, unlike the payday loan lenders. 

If your bank is payday lender, you should try to get complete information about these loans. Talk about the terms and conditions, the interest rates charged, the payback time etc. Don’t be afraid to join the call for regulators to prevent some banks to keep away from payday loans. 

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When To Use a Real Estate Agent

You may be taking many steps today to prepare for your next home purchase. For example, you may be saving money for a down payment and using a mortgage affordability calculator to determine what size of mortgage you can afford. If you will be selling an existing home, you may be making minor repairs and upgrades to prepare to list your house on the market. In addition to taking these steps, you may be wondering if you should use a real estate agent to sell your existing home, buy your new home or both. Read on to learn more about when you should use a real estate agent or go to http://www.mortgagerates.ca/ for more information on applying for a mortgage.

 

The Cost of A Real Estate Agent’s Services

One thing to consider before deciding if you should use a real estate agent for your sale, purchase or both is if you can afford to pay for the agent’s services. The services of a real estate agent are typically paid for by the seller, and the total fees paid to both a buyer’s and seller’s agent during a single transaction may range between five and ten percent, although there is some variation in this. However, you should be aware that the amount of the fees as well as who pays for them can be negotiated. With this in mind, it is possible for a buyer to use a real estate agent’s services and not pay any agent’s commissions at all. Furthermore, it is possible for a seller to negotiate agents’ fees so that they are affordable. 

The Benefits of an Agent’s Services

The transfer of real estate from one party to another is not something to be taken lightly. There are legal and financial ramifications associated with this transaction. Furthermore, the buyer needs to ensure that the home is functional for his needs and that the property is a sound investment. A skilled real estate agent offers expertise and knowledge that can be used in each of these areas throughout the process. An agent’s services are most beneficial for a seller in a buyer’s market and for a buyer in a seller’s market. In these situations, market conditions may be in favor of the other party in the transaction, and the skills and experience of an agent are vital. However, in all market conditions, a real estate agent can add value to the transaction. Because of the benefits associated using the services of a real estate agent, one of the steps that you should take in preparation of your upcoming sale or purchase is to locate a reputable, experienced real estate agent to assist you with this process.

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