Archive for March, 2010
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Financing is financing, right? A loan for a business is just like a loan for a home, right? Unfortunately, this simply isn’t the case. Commercial financing is an entirely different game compared to personal financing.
Sooner or later, you are going to need financing as a business. It might be to get up and started. It might be to finance materials needed to fulfill a large order. Whatever the reason, it is vital to understand that there are two basic forms of commercial finance for businesses – debt financing and equity financing.
Equity financing is the most common choice of newer businesses. Why? Well, the statistics are fairly ugly. Something between 70 and 90 percent of all new business fail within two calendar years from the date of launch. As a result, traditional commercial banks are loath to invest in newer companies. The risk is just to big that a default will occur.
So, what exactly is financing and who does it? Well, equity financing is not really financing at all. It is the sale of pieces of ownership in the business to drum up money. For most small businesses, this means tapping into the bank of Mom & Dad as well as lightly twisting the arms of friends. For businesses with bigger ideas, angel investors or venture capitalists can also be sources of funding. The primary issue to keep in mind, however, is once that equity is sold off, the business is no longer “yours”. It is owned by a group and a group that wants to make a profit.
Debt financing for a business is much more like personal financing. You are usually dealing with a bank. Assuming your company has been around for a bit, the bank will be receptive to chatting with you about your financing needs. That being said, it is not going to give you a general loan. Commercial debt financing usually is tailored to a specific need. If my business needs to buy a piece of equipment, the lender will give me a loan for that specific piece of equipment.
There is one area where commercial banks will provide more general financing to small businesses. This is in the form of a line of credit. These lines can be a blessing and a course. First, they are expensive. Second, they tend to be watched closely by the bank. You might have a million dollar credit line, but you will rarely get to use it all. If the bank sees your balance going up towards the limit, it will often call the line. This means it will essentially demand payment within a specified time. If you do not make it, the bank will come after your assets since it required you to personally guarantee the line. This is something you see happen with service companies, such as law firms, all of the time.
So, which form of financing is better for your business? If you can swing it, debt financing is by far the best. Giving up ownership interests in your company should be avoided, which makes equity financing a Faustian bargain.
Stephen Teak writes about financing through commercial loans for small and big businesses alike. Read more of his work at CommercialLoanStop.com.
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Buying an automobile is such an exhilarating thing. If your budget is limited, there are copious numbers of models and add ons to choose from. Once you decide what you want to buy, the next step is looking at the auto finance options. One of the most expedient and cheapest mode to fulfill the desire of owning an automobile is auto financing. Auto finance means financial assistance given to an individual for buying an automobile like scooter, bike, truck, car, lorry and any other automobile as per desire of the buyer and which is simple to repay till its last installment. Ontario auto finance is combination of these factors: Low rate of interest, long repayment period, Low miscellaneous cost, No hidden cost, Flexible terms and conditions. It is also known as auto loan. Its repayment amount depends upon three factors: Amount financed, loan term and Interest rate. These factors are the core of any financing deal.
Amount financed is the amount financed which will be equal to the difference between the cost of an automobile and the amount which the buyer can arrange himself. Loan term means period of repayment. Generally, the lender offers lower monthly installment when the repayment period is longer. Interest is return to the lender for undertaking risk on providing finance to the buyer and, these can be taken into account as charges for the buyer. Interest rates is decided and settled on the basis of certain factors such as prevailing market, base rate, amount borrowed and credit score of a person. As a result, interest rate differs from person to person. It is also recommended that the buyer must be aware of all terms and conditions of the financing deal. He must make sure that the deal doesn’t compromise of hidden cost, as making such undesirable payments regularly increases the cost of the financing.
Ontario auto finance while providing finance for an automobile, the person with poor credit score needs to pay high rate of interest compared the person with good credit score. They are of two types: secured auto financing and unsecured auto financing. Secured auto financing is finance where borrowers offer collateral against the financed amount and in return the lender proffers low rate of interest as he feels secured. Unsecured auto financing is exactly the opposite of secured auto financing. In this financing, the borrower does not offer collateral against the financed amount and in return the lender proffers high rate of interest as he feels unsecured and doubt on creditworthiness of the borrowers. The buyer must look for such a lender which have appropriate match with the financial needs and requirements of him.
Shijina is a SEO copywriter for Victorville car financing. He has been written various articles like Auto financing Ontario, Car dealer riverside, Highland auto financing, Grand Terrace used Honda and more. For more information visit our site randbcares.com. Contact him through mail at randbcaresasn@gmail.com.
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Are you searching for some bucks to meet your debts? Are you in need of money because you have a home repair ahead? Or you may be in need of money because of certain business need. Well, all these needs require you to have money and that you may not have in your pocket. So, are you interested in finance scheme? Just don’t go by any finance scheme for this. There is cheap personal finance available for any of these purposes.
Cheap personal finance is available for any of the above mentioned needs. Well, you can also buy a car or can go for a holiday with the aid of this plan. As most of these needs are personal in nature, they have termed this finance as personal finance.
Cheap personal finance is available at affordable rates of interest, indeed, at cheap rates because there is the collateral pledging in the secured option. Collateral makes your go cheap because it assures the lender that his money will be paid back timely. In lieu of this, he advances the loan amount at cheap rates. Moreover, the secured tag is available for a term of 5 years to 25 years while the amount varies between £ 5000 and £ 75000.
Yet, there is another type that sparks another luminous side of cheap personal finance. It is the unsecured options, where you will not pledge any collateral for the money. Here, you can grab the amount ranging between £ 1000 and £ 25000. The term for the advance of this finance goes up to 10 years from 1 year. Such type of finance is available for the bad credit holders also, and only they have to pay slightly higher rates of interest.
Well, this finance scheme is available online where every click of your mouse makes your move smoother and this also works to make the finance scheme cheap enough. Applying online is free and one has to fill in only a small application form to apply. Personal finance becomes cheap here because there are more choices you have here. Cheap personal finance is real cheap as the lender claim and the one who chooses this, is sure to earn a rainbow.
Ben Gannon is a senior financial analyst at Cheap Finance UK with an acumen for business and loans. To find Cheap Personal Finance, personal finance UK, small business finance UK, cheap personal finance UK, finance UK that best suits your need visit http://www.cheapfinanceuk.co.uk/
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There are secrets to litigation finance that every plaintiff should know prior to applying for lawsuit funding. Too many plaintiffs rush to litigation finance as the answer to their current cash flow problems without completely understanding the intricacies behind litigation funding. This article should shed some light on plaintiff litigation finance and the secrets that some litigation finance companies use to make money
What is litigation finance?
Litigation finance is not a “loan” but rather it is a cash advance based upon the merits of a lawsuit that provides a plaintiff with sufficient funding to reach the conclusion of the case when the plaintiff will receive his/her fair share of the settlement or verdict. Litigation finance companies invest in the lawsuit itself as opposed to advancing money to the plaintiff in the form of a loan. Litigation finance is not based on a plaintiff’s prior credit or bankruptcy status. Other terms used for this type of funding include: lawsuit loan, litigation funding, litigation loan, lawsuit funding, lawsuit finance, lawsuit cash advance, case loan, case cash advance, plaintiff cash advance, litigant funding, pre-settlement loan, pre-settlement lending, pre-settlement cash advance, etc.
How do litigation finance companies make money?
All litigation finance companies are different and charge interest and fees differently. We all agree that litigation finance companies assume a lot of risk due to their investment in the lawsuit as opposed to investing in the plaintiff. The investment is therefore only as solid as the case. We are all familiar with how quickly a good case can get thrown-out or a jury can award a large settlement for a case that we could call “frivolous.” The United States justice system never ceases to surprise us. With that in mind, the investments of litigation finance companies are risky. They must charge relatively high interest rates on the cases that are successful in order to make-up for the unsuccessful cases. Some litigation finance companies use a multiplier instead of an interest rate which is really just a different way of accomplishing the same thing.
Are there other fees associated with litigation finance?
Again, all litigation finance companies are different and charge interest and fees differently. Generally speaking, the answer to this question is “yes.” These fees usually show-up on the contract that the plaintiff’s attorney must sign and are then taken from the settlement upon a successful case. Some examples of these fees include: origination fees, application fees, documentation fee, closing costs/fees, premature payoff penalty etc. These fees are not that different from traditional loans but plaintiffs should be aware of these so they are not blind-sided when they see these fees.
Is litigation finance a different way of getting my settlement?
Litigation finance should not be a substitute for your settlement but rather a raft that helps you stay afloat while your attorney fights for you. Too many plaintiffs apply for litigation finance with the belief that litigation finance is simply a different way to get their settlement money. Assuming you win your case, the amount owed to the litigation finance company varies greatly depending upon the length of time between the date of the advance and the date when you receive the settlement/verdict money. You should exhaust other means of funding first. Some good sources of information about litigation finance are The Funding Exchange (www.TheFundingExchange.com) and Expert Law (www.expertlaw.com).
Conclusion
As a plaintiff, you should understand litigation finance and the process of securing funding before you apply. If your expectations are set appropriately and you proceed with litigation finance then you will find that it is a saving grace in the turbulent world of litigation. If you apply for litigation finance without a true understanding then you may be disappointed.
About the author: Tony Perkins is the founder and president of The Funding Exchange (http://www.TheFundingExchange.com) which connects the top litigation funding companies in the country to people in need of a lawsuit loan. The Funding Exchange is not a litigation funding company but rather it is an independent 3rd party company that routes a high volume of applications every day to its network of top litigation finance companies.
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Benefits of Asset Finance – The Reason Behind Its Popularity
Asset finance is a sort of financial arrangement with the help of which one can purchase any business related equipment be it new and used cars, machinery or office equipment. As the loan can be arranged easily, many business firms take the asset finance route to expand their business infrastructure and this is adding to its growing popularity as an affordable finance solution.
Here are some major benefits associated with asset finance:
Helps in saving working capital
Buying equipment outright needs a huge amount of capital investment that at times prevents the business owner from investing in other projects. But with smaller, frequent lease payments, one can save some much needed cash and invest it in other areas of the business. It helps a company to adapt quickly to new business opportunities and meet unexpected requirements.
Helps in responding to opportunities
To take advantage of sudden unexpected opportunities, one needs money. And especially businesses are almost always in need of easy finance solutions to keep pace with latest technological developments. Timely response to the changing needs of the business holds the key to success. Asset finance is one of the quicker solutions that can be arranged in relatively shorter time.
Helps in managing the budget
Asset finance allows one to make regular fixed payments for a particular period of time leaving one comparatively free from inflation worries or changes in interest rates. Hence, it becomes easier for a business firm to plan its future budgeting.
Helps in maintaining existing credits
With asset finance, there would not be any problem in maintaining other existing credit lines arranged with a bank or other financial institutions. Hence, if necessary, a business firm is free to use other bank facilities any time.
Has a flexible nature
Under each and every asset finance agreement, a lot of meticulous attention is given to the lender’s requirements. Most of these finance solutions are tailor made to ensure that the future targets of the business can be achieved as planned.
No need for any deposit
For arranging an asset finance loan, there is no hard and fast rule for a deposit. The borrower just needs to make regular payments to repay the loan as per the terms of the agreement.
Maximum tax benefits
As the lease payments are referred to as expenses, it means the payments may be offset against taxable profits. It ultimately helps in reducing the overall cost. Moreover, the untaxed portion can be used in a profitable manner.
Payments as per the lender’s convenience
For the repayment of an assent finance loan, the lender has the flexibility to choose the repayment option. While payments can be made through direct debit, there are also provisions to choose the period – monthly or quarterly. One can decide the right option depending upon their financial conditions.
These positive factors do make it seem as if asset finance is the best solution whenever your business is in need of fast cash. But before applying for asset finance, it is advisable to understand all its pros and cons.
Rather than taking the plunge without adequate homework, it is advisable to take the help of some consulting company which is networked with the top lenders and can help you to get competitive and tailored asset financial solutions to suit your business requirements.
Stephanie Iles is working as a consultant in a reputed asset finance loan providing company in the UK.
As an amateur writer, he writes on business and finance with special reference to various asset financial solutions.
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