Personal Finance Tips

Congratulate yourself. You started your business from nothing. You kept it afloat through that rough first year, and you have positive cash flow in your second year. Now it’s time for growth and expansion, and you need a bank loan for that. Getting that first loan can be tough, and though you know that going to be tough, you know you can do it.

Here are some tips to get you started.

Identify the right bank. Do you want a bank that can offer a business loan backed by the Small Business Administration? Do you care about the geographic location, or are you comfortable dealing online? Ask a friend or another business owner for suggestions on where to get a business loan. If you contact a bank that isn’t right for you, ask for a recommendation of another, more appropriate bank. Once you find the right bank, get the name of the person who will review your loan application and set an appointment. Ask for a list of all the documents required for the business loan you need. Generally, you’ll be asked to provide a cover letter, loan application, business and personal tax returns and financial statements, an updated business plan and projections. Bring brochures, newspaper articles or press releases-anything that speaks favorably of you and your business. Prepare to answer in detail questions about what collateral you have; when you’ll have the loan paid off; and exactly how you’ll spend the money. The idea is to present the company-and yourself-as rock solid and low risk, but don’t stretch the truth; the risk of getting caught is too great. Let the lender know you’ve identified potential business “challenges” and have B-plans prepared.

The first business loan is the hardest to obtain, and requires a lot of forethought. Make sure your personal and business credit reports are spotless before you apply. Dress like a banker. Be confident. If you can start a business, you can obtain the money you need to succeed.

Many small businesses are falling apart and are looking for ways to keep it running. Some have considered applying for grants but it is just not reachable for the present economic times. But some banks and other institutions are considering small businesses for loans. There are items a business owner must know before applying for the loan and how to apply.

Before Hand

The owner should like up a business plan and have all financial statements readily available. A normal business plan includes the exact purpose, what is to come revenue and expense wise, and how the business will prosper with the use of the loan. All personal financial records need to be gathered. Even though personal credit and finances are separated from the business the lender needs to be ensured that have people with a good financial status to make payments. The purpose of the loan needs to be clear. A financial institution is not going to give out a loan for nothing. They need to know exactly what the loan will be used for. For most small business loans collateral is a must. Assets such as equipment or land are often used for collateral. The financial institution needs to be sure that if a loan is not paid there will be back to pay it off. Lastly, before applying for a loan the owner should be well aware of the costs and payment plan. The payment needs to fit the budget of the business or it will fall apart.

Instructions

Numerous business owners do not have a clue on how to apply for a small business loan but want to make sure it is done properly. Having the paperwork, such as financial statements, the cover letter with the purpose of the loan, accurate and organized is the first step. Reviewing and prioritizing the stacks of paperwork will show that the business owner is well organized and the financial institution will spend less time shuffling papers. The owner should not meet with only one financial institution. Financial institutions all have different loan rates and upfront costs. Researching several institutions is highly recommended. Once all the paperwork is together and several financial institutions have been selected, filling out the loan application completely should be priority. They do not want to see incomplete work and will just toss aside the application not even considering the business for a loan. Alongside the application, a cover sheet should be attached with all the company’s vital information.

All over the world, most businesspeople have business loans from their banks. This is to secure their business growth. A business loan is where you get some of your capital especially if a businessperson wants to expand their business.

Banks will may provide loans on their businesses because of the big profit they might make. The bigger the amount of loans, the higher interest rates bank can get, provided that your solid plan for your business sounds good.

Applying for business loans is not easy because they have requirements for you to submit especially if you are a first timer in business. You have to make sure that you have everything what the banks needs to approve. But most likely, if you want to have a business loan, bank needs some collateral if you loan for a bigger amount.

If ever you got the desire or ideas and plan for small business and you need some money for capital, you can also have small business loans. Mostly business loans require some documents so always prepare for that and one thing is usually bank will look at your personal credit history.

Especially you are just started to have a business or having your business does not have a long operating history. In this, banks will assume that you operate your business in the same manner that you manage your personal finances so you better bring your credit history record as reference.

If possible, try to bring your financial statements of your business so they can see your financial health where in they can base on how much money you are moving and how much it worth too. Always have an updated business plan and prepared the detailed plan as possible.

A business loan is good if the money you borrow is really intended for business. Remember that it cannot be called a business when there is no profit. So before planning to have a business loan, try to think, plan it well what kind of business you want to have, estimate the overall expenses every day.

Doing business is not as easy as before since there are lots of businesses now a day where in most establishment has it all. Like in malls, you can find different kind of business there. Remember that having a business that prices are competitive unlike when you have your business far away from the city.

Tips if you want to get a business loan from banks:

Extreme planning on what kind of business you want to have. Determine the goal you want for your business. Shop for the interest rates for the loan Always ask for an advice to the expert businessperson which is your friend Plan on how much money you need for your business, estimate your overall daily expenses. Think twice or thrice before jumping to conclusion of having a business. Go around, observe other business that is in your place, what people needs mostly and which businesses that are profitable. Never waste the money you borrow for your business and always think that it is your obligation to pay your loan monthly. You have to estimate your profit in order for you to pay your business loan. If you want to have more knowledge regarding businesses or business loan banks, you can go online through the internet. Remember, knowing or learning is knowledge but jumping to conclusion without studying or having more ideas makes you look stupid.

Insurance is a necessity in any business. Businesses cover themselves against losses such as fire, theft and unexpected natural disasters. It is with the bookkeeping or accounting that owners get it wrong.

On successful insurance claims, a payment is normally made to the insured. My experience has led me to believe that small businesses have no clue, as to how, to account for insurance settlements. Most businesses reflect the payment as income.

Not only would this be deceptive but also violates International Accounting Standards. Since the transaction has everything to do with assets and nothing to do with income, it should be adjusted against assets. Erroneous accounting for assets might prejudice the business further in future, if similar insurance claims are made.

Insurance companies settle claims on assets, on its book value and not its costs. (And yet the asset was insured on its cost at date of purchase). Whereas this principle might vary from country to country, book value is widely accepted as the norm. Since most small businesses fail to maintain proper fixed assets registers, insurance companies perform “desk top valuations”, or make an “estimate”, on the book value, mostly much lower than its “real” book value. Without proper records, the claimant cannot debunk the assessor’s final conclusions.

Before I loose you in a sea of confusion, let me elaborate. If an asset is on your books at least, without the asset register, but you have no purchase date, and this asset is lost due to theft, no accurate wear and tear can be furnished. Furthermore, if a claim is settled, and reflects as “income”, what happens to the asset that was stolen, but still reflects on your books?

Many reading this article could not care a hoot about the number crunching involved, but please stay with me for a minute. You might not care, but an investor, a bank and yes, the insurance company might pick this up on your financial statements when they demand your reports.

The method used to account for insurance claims is the “disposal method”. Any asset subject to an insurance claim should be transferred to a “Disposal Account”. Depreciation on the asset for the relevant period is calculated, and credited to the disposal account with the insurance settlement. The cost, less depreciation equals book value. Any settlement amounts over or under book value, will result in a loss or profit on disposal.

An insurance claim, wrongly entered as “income”, can be adjusted by transferring the amount to the disposal account. After effecting these entries, the disposal account should balance to zero. Your new records would reveal, the loss or profit on claim (income statement), settlement in bank account, fixed assets less the stolen/lost asset, and a lower depreciation estimate for the year.

I acknowledge that this is your accountant’s job, you however have a duty to provide accurate records. But how many businesses continue to pay, the same insurance premiums on the assets, since purchase date, when they, entitled to a lower premium, due to a lower asset value.(prior to any asset losses).

Also, a precarious asset situation in your books, might lead to problems in your tax affairs.
No business can afford a visit from the IRS. Did you know that tax authorities always commence auditing, your assets, before they move on to your income?

A US government small business loan is a great way for companies to receive financial help in beginning or maintaining a successful venture. These financial programs were created to help companies in the United States succeed in their endeavors. This does not mean, however, that everyone in the country will be granted US government small business loans. There is quite a lot of preparation and research that needs to go into the success of receiving this type of funding. “Be ye strong therefore, and let not your hands be weak: for your work shall be rewarded” (2 Chronicles 15:7).

An individuals first stop should be to the local chapter of the United States Small Business Administration (SBA) office. The SBA will be able to help the interested person understand everything about applying for US government small business loans. Organizations will have resources that will help the individual understand their finances and will even help them write a plan. This can be a great help if the person is just starting out and not sure what information is needed to get a US government small business loan.

Once a person gathers information about US government small business loans, they can start their plan of action. Individuals must make sure they have all written materials in line when applying for a US government small business loan. The last thing a person will want is to be denied simply because of insufficient documentation. They will need to provide financial statements for at least the past two years, which include incoming and outgoing money. When applying for this funding it is also important that the person have a clear definition of what the company is about. It is nice for lenders to see the organization is or can be profitable, but if they can’t get a clear picture of how this is or will be accomplished, they are likely to deny funding.

There are great opportunities for small companies to succeed through the help of a US government small business loan. If a person has the right documentation and the right attitude about a venture, there is a much better chance they will be accepted for any US government small business loans they apply for. Individuals must remember that assistance is available for businesses that will help the economy. Lenders, especially those working for United States government funding programs will look for the positive attributes that a company will bring to the surrounding areas economic growth and development.