Types of Small Business Loans

Nov 30

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SBA Loans

Explanation: The Small Business Administration is an independent agency of the federal government. Its mission is to help people start, build and grow businesses. The SBA does not actually supply the loan; lenders are responsible for that part. But the SBA guarantees between 50 to 85 percent of the loan, making the lender less wary of lending to riskier borrowers. The SBA does this by backing and securing loans that are given by banks.

Requirements/Documentation: Applicants of SBA loans will be required to provide a business profile, loan request, collateral, business financial statements and personal financial statements.

Pros: SBA can back loans of up to $2million dollars. Start up businesses can also take advantage of SBA loans if they meet the requirements, provide the proper documentation and present a sound business plan.

Cons: Borrowers are at the SBA’s discretion when it comes to getting a loan. They have to be able to persuade them that the loan will be put to good use, and they must outline exactly how the loan will be used. Also, as bank lending practices tighten, SBA loans are also becoming harder to receive.

Business Line of Credit

Explanation: A business line of credit is like a credit card for one’s business. A business line of credit offers revolving credit with lines that typically range from $10,000 to $100,000.

Requirements/Documentation: Many different banks offer business lines of credit. They may offer lines of up to $25,000, or lines of $25,000 and over. Requirements may vary depending on the lender that you are working with.

Pros: You have accessible cash on hand anytime you want. Also, many lenders do not require borrowers to have collateral to receive a business line of credit.

Cons: Like a personal credit card, you must pay interest on the outstanding monthly balance.

Business Cash Advance

Explanation: A business cash advance is a purchase of a business’s future credit card receivables. Borrowers receive an upfront lump sum and in return, a small percentage from their business’s future credit card sales is deducted and used to repay the advance.

Requirements/Documentation: Most business cash advance lenders require that the borrower has a business that has been in operation for at least four months, and that the business processes a minimum of $2,500 per month in credit card sales. Borrowers must provide lenders with at least the four most recent months of their business’s credit card statements.

Pros: Borrowers do not need to have collateral to receive a business cash advance. There is no interest on the advance, and there are no fixed monthly payments. There are also no penalties for repaying the advance slower or faster than expected. Also, there are no restrictions on how your business cash advance can be used.

Cons: Business cash advances can not be used to fund start-ups, as the borrower must have owned his/her business for at least four months to be eligible to receive the advance. Also, only merchant businesses that process credit card transactions are eligible to receive business cash advances, as the payments are taken as a small percentage from a business’s daily credit card sales.

Searching For Life Insurance

Oct 24

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Life insurance for many people is something of an enigma. There are many different companies offering BMO life insurance, TD life insurance and CIBC life insurance to name a few, but many people do not agree the sentiment of needing money after your death. But the fact is everyone is not well settled and this set of people they can make do with the money to secure their future and family future on their behalf. However for certain groups it is absolutely paramount that they do and it can be the difference between your family surviving without you or struggling and being moved out of their home.

In order to understand who needs to get insured for life, it is important that firstly you get thorough understanding of its exact nature and its provision. Essentially, this type of insurance does prove their values after you have died, but unlike other forms of insurance it obviously you are not the one receiving the cash. Rather the recipients of your insurance will be those left behind – namely this is normally your family.

When you take out this insurance then, you are guaranteeing that your family will be able to continue to enjoy their current way of life should you die. Essentially then, you pay out your insurance on a monthly basis, and then your family gets the payout after you die. This payout depending on your policy can be a one off lump sum of money, or it can be several smaller payments depending on what you prefer. However, either way it will ensure that your family gets some money after you die and they don’t have to face both the huge emotional turmoil and the financial problems of losing their main income at the same time which could result in their becoming in debt, having to sell the house, or losing out on your children’s education etc.

It is very important then for anyone who is supporting a family to get insurance so that they can continue to do so and be confident that they will at least be supported financially. This doesn’t mean just taking insurance if you’re old or unwell however, instead it’s important for anyone who has a family – as you never know what’s waiting around the corner. However it is fair to say that certain situations and conditions might make life insurance more important.

At the same time not just the main ‘bread winner’ should take insurance but also important for anyone else supporting the family either emotionally or financially to do the same. If you do not take such insurance then your husband would have to either stay at work and put the children in care during the day, or take time off and be faced with serious financial difficulties. Remember that all of these different demographics will not necessarily need or be able to use the same policy. The policies vary from person to person based on their individual needs and differences.

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