Your Financing Strategy
Ask questions from your bankers which of one these will benefits you most and which one could be costly to you. You can also get free checks when you open your account, you do not need to pay for checks. All checks are processed the same way that is up to you and how you manage your money.
-Savings Accounts: Custom Savings, Money Market Account Checking Accounts: Economy Checking, Express Checking, -Regular Checking, Senior Checking, Student checking
-Your Debit/Visa Card to use for shopping could be free when you open your account, make sure you ask for it, at times they will ask you if you want one or not. Where you use your Debit/Visa Card to withdraw money matters to your bank, it could cost you for using it at the wrong places, ask your banker for information where you could use your card without paying extra charges...
Some banks charges between $1.00 up to $3.00 if you use their card to withdraw money from another bank that they do not do business with. It is your money...
Each one of the above has advantages and dis-advantages, be careful when you are opening your accounts; you could loose money to the bank right away. You also need to know if your monthly statements are going to be free or not, when you make inquiries, the bank could be charging you for too many inquiries. Some things are free from the big banks and something's are cheaper from the community banks.
Basic Requirements for lending you money:
· Savings and Checking Account
· (2) Good Credit or No Credit it depends where you are getting the money.
· (3) Collateral such as your House, Car, Boat, Gold/diamond or any valuable assets they can hold on
· Driver's License,
· Social Security numbers
· Good Employment, at least for six months.
Lenders Information:
Big Bank requirements-
Can be very tough to meet because they have to abide by the 'Federal Reserve Bank or Federal Deposit Insurance Corporation (FDIC)' regulations. They got their money from the Federal Reserve Bank at a lower rate, however, they could turn around and loan it to the smaller banks at a higher rate, and the smaller banks loan it at higher quote rate to the public.
Community Bank requirements/Credit Union:
Well, the community bank is no different either, they turn to the big banks to borrow money at a lower rate so that they can loan it to their customers/clients at a higher rate to make some profit to stay in business.
Private Capital market requirement:
This is where the business gets tougher. The Capital Market enterprise is a big boy on the Wall Street, where they can finance just about anything they like, because they are not being regulated by the government, it is an individual rich businessmen that have money to loan out at a higher rate. They are not required to follow financing rule rigidly as the bank does, but they still have follow the consumer law that protect all of us from being taken advantage of.
Family friends requirement:
This one is your best source of financing, if you could find a rich friend or family friends that can loan you money without any attachment or collateral. They may ask you to pay them some small interest, or none it all depends what you are using the money for, at they would like to get a piece of the apple when they know you are going to make a lot profit.
Collateralization:
There some companies out there that would loan you money to meet your emergency needs, but becareful, they may ask you to give them your house, car, motor cycle or any of your valuables for collateral just in case you were unable to pay them back, but, they are very quick to take your valuables and you may not have any re-course to take them to court for doing so. I would stay away from such financing unless you have to...
There is going to be a time when we are going to need finance or re-finance our mortgages, car, motorcycle, big boat, air-planes etc., that we cannot come up with up-front lump sum money to pay for it This force us to turn to our bank, family friends, private capital market, small loan companies to loan us that money. This is where we are being taken advantage of by offering us some sort of un-affordable rates. At first you would think this a great opportunity that it will not be problem, you could afford that payment being offered to you by your lender, you better think again before you sign that dotted line. They could be collecting interest from you money for long time without any of it going to your principle.
Pay attention to dotted Line and Small print in the loan documents:
The loan documents can be very tricky to read when you are not an attorney, the small fine prints areas are very important areas to pay attention to, because this is where they hid rates, timeline, and warrante, but if you don't pay attention to the rates they quote or offer to you in the loan document that you are going to sign you could be losing a lot of money. You probably better off to take to your attorney before you sign the dotted line.
In the fine print of the loan documents is where they hid most important information that your lender did not want you to know about, especially mortgage and credit card documents. It sounds strange, but it is true, If you don't believe what I said here in this document, go to your loan documents and read the small prints in there you may find out something that you would not like to see or hear about, or if don't believe what I said here, ask yourself a question of why didn't they just print the whole loan documents in a readable format with nice fonts that an average third grader can read and understand it without having to scratch their head or look up words in the webster dictionary for interpretation of words, after all you are the consumer paying them for this services and they will be collecting interest from your financing for such a long time. 95% of mortgage homeowner never gets to the point of paying principle or their mortgage finance off before being taken away from them, but the bank or private investor already started to benefit. Yes, I understand they took the risk to finance us.
I think what is fair is fair, they should make the loan documents more readable for us, and there should be no small prints that is had to read on any loan documents. They should be in a readable format that average Joe can understand; my question all the years was why are they making it so complicated to read if they do not have anything to hide? I also think the loan documents should not have so many pages when we are talking about saving the threes... Not too many consumers read all these pages, it has no value to have so many pages when no one really reads it, of course the attorney will not be making money if they these document could be reduced to minimum.
My solution to this big fat loan documents should be to reduce them to minimum, all it should it be contain is, who own the house, the rate, how long is going to be paid, warranty, borrower's and co-borrower, and all other very valuable information it should not be more than 10 pages long.
Kisah Benar Dari Dalam Kubur
Financing the Acquisition or Expansion of a Small Business through the SBA 7A Program
Recently a prospective client visited our office and was inquiring about the financing of an upcoming business acquisition. I immediately inquired whether the business opportunity that he was contemplating also came with real estate or was it only the purchase of a business opportunity consisting of good will, Furniture Fixtures and Equipment (FFE), work in progress. and, the client/customer list. He immediately responded that it was only a business acquisition along with two five year lease options. As a commercial financial broker I immediately realized the scene was set for a typical SBA 7A loan. Typical is probably not the best word because each 7A loan is very different, the only similarities are that the loan is SBA Guaranteed, and that the SBA will require a loan to be collateralized to the fullest extent possible. For those readers that are not familiar with the SBA 7A program I offer the following basic information. The Small Business Administration (SBA) will guarantee a business loan for a prospective purchaser of a business acquisition. The difference between this SBA Program and others is that this is the only program that will allow for the purchase of a business without the accompanying real estate. Most business that is sold fewer than two million dollars is sold without real estate. The business is usually situated in a leased facility. SBA does require that the business have a lease agreement in place for the length of the term of the SBA loan, or at the very least additional option periods to cover the length of the term. Many prospective borrowers are under the impression that the SBA actually funds their loan. This statement is obviously not true. The SBA only guarantees the loan should the loan go into default, the SBA guarantee protects the bank not the borrower. The true funder of the loan is the local bank that approves the loan. Therefore each financial institution needs to feel very comfortable with the requested loan submission. The rest of this article will share the questions and responses that I share with my clients. It is my hope that other people can learn from these experiences. The first question I'm usually asked is that I've heard that the SBA takes "forever" to close transactions. I respond that a professional prepared loan submission package should fund between 45 and 60 days from submission to the underwriter, I believe the reason for this closing time frame is in the preparation that goes into packaging the loan. A properly prepared package should answer the following inquiries by the review underwriter. Does the business in question have a positive cash flow that is supported by historical documentation? This is answered by including the appropriate financial statements and tax returns Can the business support additional debt? Is the individual that is attempting to secure the loan qualified to run this business? This is answered by the inclusion of his current resume, as well as any supporting documentation. Does the prospective purchaser have marketing and business plan to demonstrate knowledge of the business as well as their plans for repayment and future growth? What are the projected revenues for the new business? What is the current financial situation of the borrower? If a buyer of a business just walks into their local bank, and does not have an individual who knows and understands the process the loan will definitely take longer. But a professionally prepared package answers all the above questions that an underwriter needs to have handled and thus makes the time frame for approval and ultimately closing much faster. Another question revolves around the experience of the new buyer of the business. Many new buyers believe that because the borrower has agreed to in the purchase agreement to train them in running the newly acquired business, that this should satisfy the lender. As a matter of practical application most sellers do in deed offer training for a minimal period of time, usually no more than three months. Most sellers are more than willing to extend the training time on a continuing consulting basis if needed. I respond with pretend for a moment that you are the lender, would you lend you hard earned money to an individual who has little or no experience running this particular business. Many new clients are so excited about the idea of running their own business after so many years of being an employee that they exaggerate their own abilities. This question causes an individual to take a hard look at their self, and the potential for success in running the new venture. After we dispense of the experience question, I usually ask for their financial history and current situation. This request always causes the following inquiry. Why should my past financial condition other than the fact that I have accumulated a proper down payment matter to the bank? Again I ask them to put on their lenders hat, and ask themselves would they lend money to an individual who has no experience making money over the past years. The lenders want to feel very comfortable that the new owner will be successful, and they can only judge by the borrowers' historical trends evidenced by their financial statements, bank accounts and tax returns and then project forward. Another consistent question revolves around collateral. Most borrowers assume that the assets of the business will cover the collateral requirement of the lender. They tend to believe that the business assets should be valued for collateral purposes at their fair market value. Nothing is further from the truth. The lender will treat all collateral as if it was liquidated at an auction and therefore they discount it at least 50% or more. The follow up question then becomes, If the business assets secured by a UCC 1 filing statement (the Uniform Commercial Code filing statement allows the bank in the event of default to take immediate ownership of the business assets and liquidate them to recoup their investment) for is not enough security for the loan, what must I do pledge my home? This is a more difficult one to handle, but I basically ask them for a minute to imagine that they are the banker/Preferred Lender Provider (PLP) would they lend money completely unsecured other than just the assets of the business. In conclusion in the proper circumstances there is no better way to fund the purchase of a business.
