Business and Investment sidenote

The schedule of normal day to day living is greatly affected by debts. It is more like leading a life without any financial freedom. You have to answer the multiple creditors which is an unnecessary burden. The problem of debts is so deeply rooted that you can’t afford it to pay back through a regular income. So, generally in these kinds of circumstances you can seek the assistance of finance debt consolidation which helps to easily remove the debts. With its practical policies and financial support, it is one of the best ways to eliminate the debts.

Finance debt consolidation is a process or way where all the outstanding debts of the borrower are merged in to a single amount. By consolidating all the existing debts under a single lender definitely eases the burden of the borrower and showers relief from the stress of mental agony which was due to the debts. Here the solution does not end in consolidating your debts but also it helps to stabilize the dwindling finances which show positive effects on the long run. Instead of paying a high interest on multiple debts, borrower has to pay low interest on a single loan amount which helps in saving considerable amount of hard earned money.

Finance debt consolidation can be availed in two formats from the financial market. They are secured and unsecured debt consolidation. If borrower is opting for secured option of debt consolidation, he has to pledge collateral on the basis of which loan amount is derived. So collateral of higher value can easily fetch a bigger amount which can be used to dispose off debts. On the other hand unsecured option is approved without any collateral. The repayment duration of finance debt consolidation is designed keeping in mind the borrower’s financial condition which helps in easily paying back the borrowed sum.

Finance debt consolidation can be easily accessed from the financial market in the form of debt consolidation loans, instant debt consolidation loans etc. Borrower can easily source this program by simply getting online. It is designed to help borrower lead a debt free life.

Preparing for the Perfect Score

By Christopher Y, Guest Contributor

Before your business takes the dive into debt financing, make sure you have prepared for the associated risks with borrowing, so when you do take the leap, you don’t belly flop. Preparation is vital. How can you get a perfect 10 so you can finance your business? Let’s take a step back and look at how banks evaluate risk and how they view businesses.

Depending on what stage your business is in will have a huge impact on the way a bank looks at your business:

Stage 1: Are you a start up (have you been in business two years or less)? Stage 2: Are you an established growing business (have you been in business for more than two years and still growing; i.e. are your sales still expanding, not yet stabilized)? Stage 3: Or, are you a mature business with a stable sales cycle (have your sales reached a plateau and are no longer growing rapidly)?

Knowing where your business is in its growth cycle will better help you prepare for the bank lending process.

Debt Financing for a Start-up (Stage 1)

A start-up business is going to have the most difficult time obtaining bank funding.  Think about it; ideas are worthless without execution.  If we could all capitalize on our ideas, then everyone would be in business for themselves.

Evaluating Risk
Banks approach each deal based on the amount of risk they are undertaking and start-ups are as risky as they come.  This is why it is vital for a business to be completely prepared for the bank underwriting process. You need to be prepared to answer any and every question that a bank might ask, be your best advocate, and able to sell your business as a good risk.

So, what can you expect?  While every deal that a bank looks at is unique and presents its own risks and challenges, there are some common things that most banks will look for.

Be prepared to provide:

A business plan that gives a thorough explanation of your business and its strategy A project cost worksheet (what are you going to use the money for?) Management resumes (how much experience do you have in this field?) Two years of personal tax returns and all schedules for every owner of the business (typically defined as a person who owns 20% or more of the business) Personal financial statements for each owner Two or three years of projections showing the business’s expected cash flow (broken down monthly) A business debt schedule (does the business have any other debt? I.E. personal notes, other start up financing, etc) Collateral (what do you have in terms of assets that the bank can take as collateral?) It should also be pointed out that most banks have minimum credit score requirements for all parties guaranteeing debt (a 700 or greater credit score for start ups and 650 or greater for established businesses)

Though useful upfront information will get you into the front door, don’t be surprised if a bank requests additional information. Start at a bank where you have an existing relationship and have a candid conversation with a loan officer.  Ask them what their credit, collateral, and equity requirements are for their business loans; be sure to explain your business in detail, as this can have a bearing on the requirements.

Banks look at things from many different angles to evaluate your risk.  You may be working with one bank employee, but there are probably several parties involved in underwriting your deal; each person will approach your deal from a different perspective.

Start-up Resource Guide

Though debt financing is challenging, we hope you haven’t abandoned your business. While approaching a bank for start-up financing might seem like an impossible, daunting process, it doesn’t have to be.  There is free help out there. Two great resources available to everyone are the SBDC and SCORE.  Both are government sponsored programs funded by tax payer dollars.

The SBDC (Small Business Development Center) is a government-funded program that seeks to provide assistance to current and prospective small business owners.

Some Useful Services for Startups:

Viewing and interpreting your credit Writing a business plan Making projections Developing a management plan And many other useful, free services

If they can’t help you, more likely than not, they will know someone who can.

SCORE (Service Corps of Retired Executives) is a nonprofit association that exists for the purpose of educating small businesses owners and promoting the growth of US based small businesses.  SCORE offers services similar to the SBDC.

While it can be difficult for some to obtain bank financing, it is not impossible; you also do not have to go at it alone.  Whether you decide to approach the task alone, utilize a free service, or pay a consultant or a broker to help you, you need to understand that preparation is vital.