A Business Loan For Your Expanding Business
It is common knowledge that most initial capital in most businesses come from personal savings, loans from family or the use of credit cards. These are the most accessible and convenient sources of hard cash. The great thing about loans from family is that there are no interest rates or pressure on meeting a certain deadline for paying it back. It is perhaps the most flexible type of business loan. The only disadvantage is that family loans or personal savings for that matter is very limited. You may need to look for other sources to augment your needed capital. Though many businesses rely on credit cards, it is not altogether a good idea since credit card interest rates are high. Moreover, you may end up with a terrible headache once the income tax filing period draws near since you are using the same credit card for both personal and business transactions.
Moreover, there will also come a point that your business need to expand if you are aiming for a higher return or capitalize on the increasing demand of your product. You may need additional capital for investing in more raw materials to manufacture your product or advertise it to expand your consumer base. Bigger production may also mean hiring new staff to do the additional work. Evidently, any expansion of your business will need more additional funding. Your friends or relatives may no longer be able to accommodate your increasing needs.
For your business expansion, you may want to look into applying a business loan with your property as collateral. Most businessmen own their own house so this will be easily accomplished. Though your home may still have a mortgage on it, it may be that a good number of years have passed since that loan was taken out. There will be changes by then like the mortgage will be a lot lower since you have partially paid it and the value of your home will be a lot higher. The community where you belong may have undergone some positive changes like modern infrastructure, which could contribute significantly to the value of your property. It may be highly possible to have an additional loan against the property for your business expansion. For instance, you may still get a substantial amount, say about $60,000, as your potential additional loan based on the increased value of your home as collateral. If we calculate it as such: Your property is valued at $350,000 and you have a previous loan of $280,000 or 80% of the value of your home, then years later your property is valued at $400,000 and your current loan value at $260,000. Your additional loan is based on $400,000 x 80%= $320,000 - $260,000 = $60,000.
If you are planning to utilize this option, you need to make sure that you will use the entire amount for your business so that you can deduct the interest from your tax. The two loan amounts must be identified as distinct from the other with their own sub-accounts. In addition, you need to understand that the lender will evaluate you first loan against the value of your collateral and the new one against your capacity to repay so your business should be able to afford the additional payments. A mortgage is actually a more affordable source of funding but it is also the longest, tying you for several years in repayments. As a good way to evaluate your options, consulting with a financial adviser or an expert may certainly be a wise strategy.
Survive Recession:Know Your Priorities
Survive Recession: Know Your Priorities
The world has been turned upside down by the recession that suddenly gripped all of us. The stock markets and most financial institutions could not cope up with the demands of the effects of the recession. Investments were down, those who had investments pulled out, those who were not able to lost theirs, and add in the incredible reality that there were some who took advantages of these bad times by buying out those lost investments.
Most countries like America, UK, Asia and certain parts of Europe have been greatly affected by this global recession and everything else was like a domino down the line.
Since everyone is going through this problem, you might as well accept the reality that you need to survive in these trying times. You need to protect yourself, your family and whatever is left of your lifetime savings and investments. It is best to be prepared for the inevitable even when you are in the middle of this financial crisis, you still have to think of practical ways to survive your way through all this.
As previously said, know your priorities. That means knowing how to manage your financial matters. It also means you focus and plan out how you are going to make use of your money that must not run out on you. Take it one step at a time at a pace you are confident enough to follow through.
Your top priority is paying your credit, especially those with high interests like credit cards, purchase cards and your personal loans as well. If you can, try to pay them off every time your bills come. If you have many credit cards, be responsible enough to use them as needed only so your bills won’t pile up. If you have to get another credit card, make sure that you would set a small and limited credit limit to avoid overspending and to keep your costs down. Be sensible enough in using your credit the best way you can.
Your next priority would be your mortgages. If you are still paying for your house you must have already expected that this would be part of the recession problem. Since the banks are greatly affected by the recession they are likely to pass on some of those problems to you. There would be increased rates to pay. However, banks have resorted to cutting down mortgage rates because they want people like us to spend money and buy more to help the economy back on its feet. If you are on the lookout out for a good deal for your mortgage it would be wise to get a broker who could help you get a more reasonable rate to save some money.
Make your superannuation savings your next priority. The funds have suffered and you may realize that your super savings may not amount to what you have expected when you started it. You may have to work some more years just like most people who have retired but are now seeking employment because their super savings would not last throughout their lifetime. Perhaps earlier on, you and some others should have opted to turn your super savings into cash, but then, who would ever know that recession would be this fast to catch everyone unprepared? Have a good talk with your financial adviser if you have one to know your options; if you don’t have a financial adviser, then it is time to get one who would help you save your funds.
Manage your savings bank account. Some banks rates went down but there are still banks offering high rates to encourage more people to save in banks. You may choose to earn more interests if you place your money in time deposit. Choose a bank that offers the best interest rates. You can have a time deposit of at least a year where you can get your interest and access your money if you already need it. But if you think you can save your money and not need it for a few more years, then you can place it in a long term time deposit to earn more interests. You can also get an online saver account if you want easy and convenient access to your money. There are banks which offer good interest rates for this type of account, and Bankwest is one of them, offering as high as 8.10 per cent. Likewise, check for new bank schemes which may help you save your money more. On the other hand, if you think you want more value for your money, think gold, or better yet purchase gold. News has gone around that people have been into buying gold to better prepare themselves against recession.
Your property is a priority as well. If you already own one, the next best thing to do is to take care of since repair costs are high. It is also a sad state that most people would be having difficulty purchasing property due to the high costs. Some properties are sold at lower prices, but then most people are not ready to buy yet because their finances are not too stable to afford them. Those who are renting may as well stay put and be contented with what they have at the moment, and they must also be ready for rental increases which, hopefully, may not happen at this time.
The recession is happening all over and all of us are feeling the bad effects of it. But if we are willing to accept that it is one of the challenges we have to face in our life, then we would be able to handle it. It is just a matter of looking at things at their proper perspective; just like you knowing how to survive this recession and knowing your priorities.