The principles of securing a small business loan

During the last couple of years, monetary demand has been shaping small businesses and start-ups throughout the UK, which is why it is essential for all entrepreneurs to understand the basics of lending, the loans that they can have access to, and how to secure them. In this article, we will focus on the two types of loans that businesses can secure alongside with most of the other principles that have to be kept in mind to make sure that your business doesn’t fail whenever it is in need of some extra cash.

The types of loans that a small business can secure

With this in mind, the first principle of borrowing money refers to its source and use. Understanding the type of loan that you require is an essential aspect of properly securing one. With this in mind, the first type of loan that we will talk about, is known as the traditional line of credit, also referred to as the LOC. They represent a bank financing product that has been designed by banks in order to help businesses survive their natural and well-known cash flow cycles, but also to get them through short-term growth. Often times, LOCs are meant to support manufacturing processes, such as buying new manufacturing material, but also producing the finished product, collecting money on the sale and managing to sell the products in question. These are typically smaller loans that have to be paid somewhat faster, yet the main terms are quite similar to the traditional term loans.

Based on this, the traditional term loans have been designed by banks for new business investments that require the cash to be given upfront. Some relevant examples in this area of use include the purchase of new equipment, geographic expansion, launching a new product, or a new business unit.

Securing an assurance of repayment

At this moment in time, most banks deny small businesses their loans due to the fact that they lack an assurance of repayment, or something to vouch with. Unfortunately for businesses throughout the world, banks are not keen on accepting the business’ net operating income as the only payment guarantee, and are now seeking a secondary source of repayment that they can access in case the funds are not given back on time. With this in mind, there are times when the business owner needs to make personal guarantees, and vouch for the loan in question in different ways. Personal balance sheets alongside with financial statements can help improve the chances of securing a loan, as they provide banks with an assurance of repayment.

Developing the ability to create a personal connection with the banker

Bank employees who are in-charge of offering loans often have flexibility in terms of some features of their jobs. With this in mind, it is essential to find ways of developing a personal connection with the banker in question, as this can greatly increase your chances of securing a loan. This can be done in numerous ways, yet the most popular ones include sharing your passions, and business dreams with the person in question, while also being open about the information you share. Often, sharing too much data isn’t a good idea either, but keeping a closed mouth and refusing to answer the questions that you’re being asked will definitely mark your business as suspicious and lower your chances of getting an LOC or a traditional loan.

Last but not least, it is important for business owners throughout the UK, but also from other areas of the world to pay their debt back on time. It rarely happens that a business needs one loan only, so having a good credit score and a great reputation for being a good loan client can work wonders towards helping you achieve even bigger loans in the future, and not getting in trouble with your current ones. This represents one of the main reason why it is important for businesses to hire a competent accountant, capable of taking things over with the bank employees, but also capable of managing finances and making sure that profit continues to flow in regardless of the circumstances that the business in question has to deal with.

Based on everything that has been outlined so far, by following the principles and tips outlined above, as a business owner, you’ll surely face less trouble when it comes down to getting a loan, while also increasing your chances of getting access to higher loans in the future.

Are there any risks associated with payday loans?

Upon considering the idea of getting a payday loan, people from all around the world often ask themselves whether there are any dangers associated with the idea of securing a payday loan, and viewing it as a source of emergency cash.

For those who do not know, payday loans are normally supplied by payday lenders and are meant to help get customers out of last minute financial issues, by granting them access to some cash, which they can then pay back onayce they get their next pay check. Before anything else, it is worth pointing out that Emu payday loans have helped millions of people throughout the United Kingdom, but also from other areas of the world access emergency cash whenever they felt overwhelmed by their financial situation. Additionally, no payday loan agency would refer to themselves as a constant source of cash, but rather as an emergency fund that people who are currently employed can access whenever they deal with economic hardships.

This has been pointed out in order to help people understand that the only way to run in trouble while securing a payday loan from an authentic provider, is to do so, constantly, thus continuing to live pay check by pay check, but also not getting out of debt. Based on this, it is definitely not recommended to secure payday loans monthly, as this will likely put you further into debt, while also worsening your economic condition. However, for monetary emergencies, such as having your car break down, unforeseen costs, needing surgery, needing money to pay utilities and more, payday loans are acceptable, and are bound to offer a quick way out of the financial issue that you are dealing with.

Here’s how a payday loan works: You’re short on cash and don’t want to get a traditional, long-term loan, but also don’t want to bother your friends and family by asking them for money. You then turn to a payday loan, so you contact an agency, submit your documents, and get a loan situated between the rough amounts of £40-1,000. While the higher limits are a bit harder to qualify for, they are still definitely achievable, especially if you have a high salary. Once you have signed the documents, the loan will be transferred to your bank account within a couple of hours, or the next business day, depending on the provider. After this, you are free to use the funds in any way you like, as long as you have the debt covered in your account once the timeframe expires (usually a few days to a few weeks). Payday loans have also been known to be extremely popular for people with bad or low credit scores, as most payday loan agencies do not check the customer’s credit.

Why are there controversies surrounding payday loans?

There are times, when a payday loan may not be suitable for a short-term financial problem, but this all depends on the economic hardships that the consumers are dealing with. Based on this, in case you need more than a few hundred pounds and your salary is quite small, the cash that you get from a payday loan agency may not be enough to fill your needs. Not only this, but for some people, payday loans have been proven to cause future dependency, which, in turn, can lead to worse effects on the state of your credit score.

This is definitely understandable, but it is important for people to keep in mind that payday loans weren’t designed for such a use in the first place. Indeed, the loan amounts may be insufficient, but payday loans are only meant to deal with small, unforeseen economic issues, rather than bigger problems that would require the help of a traditional loan. Not only this, but future dependency can also be achieved if people choose to live their months by acquiring more payday loans. This is definitely bad, and will surely put these consumers further into debt, especially since the interest fees associated with payday loans are significantly higher for good reasons (faster lending time, no credit score check). There are indeed cases, when there may be better alternatives to payday loans, but, if you’re facing a financial hardship that doesn’t require thousands of pounds to fix, or you’ve simply run out of money for the current month, then don’t be afraid to reach out and get a payday loan. Better budgeting in the future alongside with smarter planning may ensure that you never have to get one again.

Based on everything that has been outlined so far, most of the controversies and risks behind payday loans are often uncalled for, and are meant to discourage people for no logical reason at all. If you can budget, and choose not to rely on payday loans for a living, then chances are that you won’t experience any issues whatsoever.

7 Ways of Increasing Your Current Credit Score for the Better

At this moment in time, millions of people from all around the world are unable to get access to a traditional loan due to their low credit scores. Often times, it seems like there is nothing people in such positions can do to improve their overall score, yet this is completely wrong. In fact, there are over 7 things that you can do in order to improve your credit score, thus increasing your chances of being able to secure a loan in the near future.

Investigating and disputing bank errors

Unfortunately, numerous people believe that banks cannot make mistakes. This is definitely a wrong approach, regardless of your credit scores. With this in mind, it is essential for people throughout the UK to actively keep an eye on their finances, and carry out small-scale investigations in case something appears odd. Mistakes do happen, and many banks offer their clients the possibility to dispute all sorts of errors. As long as you have proof worth taking into consideration, then chances are that you will save money, whilst also improving the overall state of your credit score.

Attempt negotiating

Another common misconception that people from all around the world have when it comes down to dealing with debt is the fact that they cannot negotiate with their lenders. With this in mind, while you definitely cannot deny that you did not pay a credit card bill on time, due to other forms of financial hardships, you can always offer to pay the entire sum, and kindly ask the bank to mark the debt as paid upon the due date. While there is no guarantee that this technique is bound to work, it is definitely worth a try, as bank employees are often left to take some decisions at their own discretion. However, the chances of someone helping you out without having you reach our first, are quite shallow.

Under-use your credit cards

Getting a credit card is important to improving your credit score, yet using the card to pay for everything is not a good idea either, as it’ll show banks that you cannot manage your finances properly, thus lowering, or keeping your credit score at the same amount. Judging by this aspect, if you have a $2,500 limit on your credit card and you’re constantly maxing it out, or using 75% of it, then this definitely won’t put you in a green light. Therefore, you can attempt to use your debit card more, or even pay via cash, as this has the chances of improving your current credit score.

Avoid closing your cards down

Often, the process of cancelling a credit card can actually cause the credit that you have available to drop, which definitely doesn’t look good to any institution preparing to give you a loan. Therefore, a good tip would be to use your cards to pay for recurring payments, such as utility bills, and simply forgetting about it, while, of course, paying your debt back on time.

Find better ways of managing your funds

There is simply no way of improving your credit score then finding better budgeting options. Not only will this put you on the path to financial freedom, but it will also likely increase your credit score, and definitely keep it from dropping below a certain threshold. Together with this, doing so may also lower your need of requiring loans in the near future.

Consider the idea of using payday loans

Not many people are aware of this, but the payday loans market has grown exponentially in areas from all around the world, especially in the UK. These represent a special type of loans that do not take your credit score into consideration, yet which are limited to a certain amount that you will have to pay back within a considerably shorter period of time. With this in mind, if you are running behind on your recurring payments, or need some extra emergency cash, consider the idea of accessing this type of loan, rather than a traditional one, as the impact on your credit score will likely be minimal as long as you keep your promise and pay the loan back in time, usually within a few weeks.

Paying your bills on time

Your credit score is also often determined by how often you manage to pay your bills on time. Late payments can usually lead to lower credit scores, so keeping an eye on this aspect definitely won’t hurt.

Based on everything that has been outlined so far, raising your credit score isn’t an impossible endeavour, but rather quite simple, as long as you find better ways of managing your funds and respect some of the tips that have been outlined above.