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.
Wanita Ini Dicabar Untuk Mengubah Mukanya Jadi Mona Lisa. Tengok Apa Jadi
More Financing Options - If the Major Source of Financing Says No, Where Do I Go?
Question: After all this, what if the bank says "no"?
Answer: If this happens, then there's probably a weakness in your application, and other banks will also identify a flaw in your acquisition prospect.
This "no" can save you money and grief in the future. Look at the loan officer as an ally in evaluating the health of your plan.
"No" may mean "maybe": In any sales seminar, you'll learn that before a "no" actually means "no", you need to understand what the other party really means. They should give you a good reason to support their refusal. It is possible that they misunderstood your request. You may be wondering how this applies to requesting a loan from a bank. Remember, if you can sell your idea to a loan officer, this can actually be your first sign of success. Banks are tough and demanding consumers. They may refuse your idea from the start just to see how determined you can be in your quest for your new business acquisition. This whole strategy is used to test the buyer for his belief in the potential of his business idea. Don't let current liabilities be an obstacle in your presentation to the bank. You need to overcome any fear regarding the financial history of the business. Think of this as a mutual arrangement, from which both parties (you and the bank) will profit.
Question: If I get the loan, do I simply have to accept the bank's terms?
Answer: That's a good question, because the assumption is that you must do what the bank wants when they loan you their money. But, in truth, there are a number of areas in which you can negotiate a "sweeter" deal, including interest rate, loan period (the longer, the better), and the depth of your collateral. With the right advice, you can structure your loan for maximum personal protection. Make sure to be armed with the right consultants (i.e. accountant, attorney.)
Question: Should I consider a Small Business Administration (SBA) Loan?
Answer: You might already know this, but the SBA loans process starts where a regular bank stops. In other words, you have to be turned down for a bank loan to qualify as a candidate for an SBA loan. Listed below are both the advantages and drawbacks of this type of loan.
Advantages:
1) An SBA loan can be stretched over ten years, or even as long as twenty. This compares to a bank loan that typically runs a maximum of seven years.
2) The SBA is more willing to lend to a business in distress.
3) The SBA is a very valuable resource when you live in an area in which no financial institution collaborates highly in the development of new local business. The SBA loan is guaranteed by the government; however, do not think of it as easy money that is given away with no obligation. Actually, the SBA borrows the money from the same bank from which you were turned down. However, since the SBA is a government entity, banks welcome them with open arms, knowing there's no risk involved in the transaction.
Drawbacks:
1) The SBA wants more collateral.
2) SBA loans take longer to process- as much as six months.
3) The biggest "thumbs down" of all is that the SBA may ask you to put up 20% of the funding yourself.
The welcome news: Government agencies encourage new start-ups and acquisitions because the taxes those new companies pay will be reinvested into the economy and will also generate new jobs. The empowerment zone is one of the many programs available from the government to incite new businesses in hiring labor from specific zones of the district. These incentives come in the form of a tax credit for each employee, averaging about $3,000 per employee, which in turn results in a substantial tax break. When it comes time to contact government organizations for extra financing, you should not hesitate to ask about the discretionary budget, which represents money set aside for a variety of needs. Many new entrepreneurs aren't aware of this hidden available fund offered by the government. When this fund is not used at the end of the fiscal year, it is reinvested in the same budget for the next year, constantly accumulating in amount. As a new entrepreneur, make sure you approach this very delicately.
First, make sure you contact the right person, because most secretaries and other entry-level employees within the government aren't aware of this discretionary budget either. You should ask for the accounting department of whichever government agency you contact. Since they hold the accounting books, they are more aware if there is any public funding available for start-ups, and if so, how much. Even though this is often privileged information, the fact that you ask about it obligates them to address your question.
Question: What should I know about venture capitalists and angel investors?
Answer: Both are actually great sources of outside financing, especially if you need more than $100,000. Venture capitalists look for a minimum of 20%-25% return on their investment. In most cases, they want to become a financial partner and might want to invest enough in the company to own almost 50% of the common shares. At that point, they might want to sell out the company at a profit if their return on investment doesn't reach around 20%. My advice to you is if you are looking for a venture capitalist, make sure you look for a few so that no one individual might own the majority of the stocks. Their biggest concern when they invest in a new company is the management team. They require that you have an excellent manager and if interested in contacting them for funds, make sure your resume emphasize your management expertise. As said previously, venture capitalists will eventually want to acquire a company that will go public or be sold for a substantial profit. That's how they expect to make a return on their investment (ROI). They'll expect at least between 20 to 25% of ROI.
Friends, mentors, and family members can also be considered sources of funding. Let me tell you, if you can sell to family, you can sell to anyone in this world. Family members can be the strictest and most demanding investors you will ever find. Anyway, this is just the beginning of a long journey. You are building your family's future. Make sure to work hard to achieve your goals.
