It might seem that the hardest thing in the world to do is to secure a loan after having been declared bankrupt. In fact, there are options available to bankruptees, and those who have recently come out of that status. But when applying for a post bankruptcy personal loan, there are certain issues that need to be addressed.
There is no point in denying that bankruptcy does not have a negative effect on the status of loan applicants. Lenders are more cautious about submissions from them, but it is worth noting that they are interested mainly in understanding the reasons for bankruptcy rather than the fact itself. That is why loan approval after bankruptcy is possible.
So, what are the points to consider and factors to pay most attention to when seeking a personal loan in these circumstances? Few are really any different to normal, but qualifying for the loans in the first place usually requires some extra effort if lenders are to trust your commitment to repaying a loan is intact.
Your Negative Image
In truth, that image of irresponsibility is the first matter that needs to be addressed before applying for a post bankruptcy personal loan. While lenders are willing to hear applicants out regarding the reasons for filing for bankruptcy, they are still concerned that that route is seen as an easy option when things get difficult.
When assessing your application, lenders will take a careful look at why bankruptcy was sought, and this can affect their impression. For example, if there was a history of purchasing, it suggests a foolish attitude towards money. But if there was an unexpected redundancy, then it suggests bad luck. The latter reason is most likely not to impede the quest for loan approval after bankruptcy.
Also, setting about improving your credit rating before submitting your personal loan application can play a big part in getting the green light. This can be done by taking out a small payday loan and repaying it immediately. These are indicators rather than any grand gestures.
Other Moves To Improve Credit Rating
The issue with bankruptcy is that it effectively bans the bankruptee from securing credit deals for a period of time - usually 2 years. However, the stigma remains for up to a decade, so there is a challenge in securing a post bankruptcy personal loan.
The only reason that a payday loan might be secured is that it is granted on the back of an upcoming paycheck, with payments taken directly from the bank account of the borrower. It means the chances of default are extremely low. But there are other steps that can help to secure approval after bankruptcy.
For example, take out a secured credit card. This is easy to get as the card limit is covered by a deposit, so banks are willing to grant them despite bankruptcy. Repaying the interest every month without fail also sends the right image, thus helping when it comes to applying for a personal loan. Opening a savings account and making deposits in it regularly is also a good idea.
Use A Cosigner
Finally, arguably the best thing to do to convince a lender to grant a post bankruptcy personal loan is to find a cosigner. This is someone who promises to make repayments if the borrower is not able to make it, so there is a guarantee that the repayments will be made without fail.
If the cosigner qualifies for approval - with an excellent credit history behind them and a good income - then it is easy to secure approval after bankruptcy. However, it is essential that the right person is found - and this can be the challenge. But to get a personal loan under the circumstances, it is the best bet.
Unsecured Bad Credit Personal Loan
Thursday, September 1, 2016
Tuesday, August 30, 2016
Small Business Financing
An important source of funding for your business in the future can be the bank. For decades, banks have supplied the business community with small business financing.
As most business owners will come to know, obtaining a loan can be a trying ordeal.
Learn what you need to know about getting credit or loans for your small business. The "traditional" rules of banking relationships and the 5 C's of credit will be explored. Be aware of changes sweeping through the small business lending community in North America. New rules apply to small business financing game. If your business doesn't understand the new game, you could be left out in the cold.
Relationship banking has been the cornerstone of small business financing. A good relationship between the business owners and bankers allows for the free exchange of knowledge and the ability to meet the needs of business.
A banker informed of your business can offer practical advice on financial matters. Setting up a relationship with your banker begins with following a few tips:
•Set up a bank account at a bank that deals with your size and type of small business.
•Manage the account effectively and avoid overdraws, bounced checks, and low balances.
•Borrow a short-term loan and pay quickly to establish your business credit.
•Keep your bank informed of upcoming issues, missed projections, and missed payments.
•Get to know your banker and help them to understand your business.
Relationships can be beneficial when it comes time to apply for a loan or large credit line. Remember, banks are in business and all companies need to assess risk and make profits.
As most business owners will come to know, obtaining a loan can be a trying ordeal.
Learn what you need to know about getting credit or loans for your small business. The "traditional" rules of banking relationships and the 5 C's of credit will be explored. Be aware of changes sweeping through the small business lending community in North America. New rules apply to small business financing game. If your business doesn't understand the new game, you could be left out in the cold.
Relationship banking has been the cornerstone of small business financing. A good relationship between the business owners and bankers allows for the free exchange of knowledge and the ability to meet the needs of business.
A banker informed of your business can offer practical advice on financial matters. Setting up a relationship with your banker begins with following a few tips:
•Set up a bank account at a bank that deals with your size and type of small business.
•Manage the account effectively and avoid overdraws, bounced checks, and low balances.
•Borrow a short-term loan and pay quickly to establish your business credit.
•Keep your bank informed of upcoming issues, missed projections, and missed payments.
•Get to know your banker and help them to understand your business.
Relationships can be beneficial when it comes time to apply for a loan or large credit line. Remember, banks are in business and all companies need to assess risk and make profits.
StartUp Money For Your Business
You are the first and a necessary source of money. If your planned operation is modest enough, you may be able to supply all the capital yourself. (About 48 percent of small start-up businesses are funded by the owner.) But even if you can provide all the money, you probably shouldn't. For one thing, you don't want to tie up too much of your own funds, and for another, it's good to get experience handling borrowed money.
Friends and relatives
After you have put up some of your own money, friends, acquaintances, and relatives are probably the source to consider next. About 13 percent of entrepreneurs obtain start-up capital from this source.
When you borrow from people you know, everything starts out on a friendly basis. It may be your Aunt Esther, your old buddy Sam from high school, or a more casual acquaintance from your club. But be aware that once the loan is made, the friendly atmosphere may dissolve. Money can do strange things to people. For example, you may find that Sam keeps calling up every day or so to see how things are going and to pester you with unwanted advice.
Working partner
One solution to the money problem is to take on a working partner who makes an investment and shares the running of the company with you. The capital and skills of two people are combined. In an ideal arrangement the partners' qualities complement each other. One formula teams a person having expertise in the type of business with a money person. Another good combination is one person with administrative skills and the other with operational know-how.
If you're not the kind of person who can do it all, face the fact honestly. Identify your own strengths and weaknesses, utilize your strengths and "partner" your weaknesses.
Keep in mind, partners sometimes may fight and argue. This is healthy, provided the discussion stems from different experience, knowledge, temperament, and ideas about the business, rather than personal reasons.
Although a partnership is easy to set up, have an attorney prepare a contract spelling out the rights and responsibilities of those involved.
Commercial banks
If you are launching a new business, chances are good that there is a commercial bank in your future. However, be aware that most of that lending goes to small businesses that are already in operation and have established a track record of profitability.
In most cases, to get a bank loan, you will also have to put up collateral, such as real estate or equipment.
A checklist to guide you when approaching a lender No matter which lender you choose, you will run into obstacles if you aren't prepared. It is up to you to convince him or her that you've done your homework and are committed to the new venture.
Answer the following questions now so that you will be prepared when you sit down with a lender:
•How will the money be used?
•How will the money be repaid?
•What sort of collateral will back the loan?
•Are you trustworthy?
•Do you have the experience and background necessary for your type of business?
•Do your management and key employees have the experience and competence to make your venture succeed?
•What are the long-term prospects for the business?
Friends and relatives
After you have put up some of your own money, friends, acquaintances, and relatives are probably the source to consider next. About 13 percent of entrepreneurs obtain start-up capital from this source.
When you borrow from people you know, everything starts out on a friendly basis. It may be your Aunt Esther, your old buddy Sam from high school, or a more casual acquaintance from your club. But be aware that once the loan is made, the friendly atmosphere may dissolve. Money can do strange things to people. For example, you may find that Sam keeps calling up every day or so to see how things are going and to pester you with unwanted advice.
Working partner
One solution to the money problem is to take on a working partner who makes an investment and shares the running of the company with you. The capital and skills of two people are combined. In an ideal arrangement the partners' qualities complement each other. One formula teams a person having expertise in the type of business with a money person. Another good combination is one person with administrative skills and the other with operational know-how.
If you're not the kind of person who can do it all, face the fact honestly. Identify your own strengths and weaknesses, utilize your strengths and "partner" your weaknesses.
Keep in mind, partners sometimes may fight and argue. This is healthy, provided the discussion stems from different experience, knowledge, temperament, and ideas about the business, rather than personal reasons.
Although a partnership is easy to set up, have an attorney prepare a contract spelling out the rights and responsibilities of those involved.
Commercial banks
If you are launching a new business, chances are good that there is a commercial bank in your future. However, be aware that most of that lending goes to small businesses that are already in operation and have established a track record of profitability.
In most cases, to get a bank loan, you will also have to put up collateral, such as real estate or equipment.
A checklist to guide you when approaching a lender No matter which lender you choose, you will run into obstacles if you aren't prepared. It is up to you to convince him or her that you've done your homework and are committed to the new venture.
Answer the following questions now so that you will be prepared when you sit down with a lender:
•How will the money be used?
•How will the money be repaid?
•What sort of collateral will back the loan?
•Are you trustworthy?
•Do you have the experience and background necessary for your type of business?
•Do your management and key employees have the experience and competence to make your venture succeed?
•What are the long-term prospects for the business?
Qualifying for a small business bank loan
Whether your company is a hi-tech Internet start-up or an established manufacturer, extra financing is sometimes necessary to propel your business to the next stage of growth.
Enter the small business loan. Offered at lower interest rates than a line of credit, commercial loans can provide an attractive resource for many expanding businesses.
A loan won't fall in your lap, though-obtaining a commercial loan does require a good deal of legwork and preparation. That's because your ability to secure a loan greatly depends on how well you present your company to your prospective lender.
Be prepared to have several key documents on hand before you even set foot in a bank. These should include personal financial statements, tax returns, monthly cash flow projections, and a well-prepared business plan. Established businesses should also produce references from suppliers and customers.
In addition, it's essential to be able to supply a well-organized plan of how you intend to use the loan. For a start-up company, this might involve listing the expenditures and inventory that you need to purchase. For a manufacturing firm looking to purchase a building, this might entail explaining what the building will be used for and how it will be used to increase revenue.
As a general rule, banks will never provide 100% financing. Start-up companies typically must contribute at least 25 to 35% of the costs. Contribution requirements can vary, however, depending on the stability of the business and the value of the collateral used to secure the loan.
While providing more collateral is one way to increase your chances of securing a loan, additional alternatives can help to reassure a reluctant bank. The U.S. Small Business Administration works in conjunction with banks to guarantee a variety of loans for small businesses. SBA loans are especially advantageous to businesses that have tight cash flow, as the terms of such loans can often be extended far longer than those of a comparable bank loan.
You can also improve your chances by finding out who will make the final decision regarding your loan. While this decision may fall into the hands of the bank officer you deal with directly, more often than not it will be made by a boss or a loan committee that relies on the bank officer's ability to tell your story. If the bank officer that you're dealing with has little lending experience, it might work to your advantage to schedule a second meeting and ask to have a higher-level officer involved.
Since guidelines on the types of loans processed differ from bank to bank, your best bet is to first turn to the bank with which you already have an existing relationship. In addition, local businesses, attorneys, and accountants are other good resources for a lender referral.
How much will the loan cost? Established businesses with excellent credit can expect to pay back the principal plus Prime. Start-ups should factor in the principal plus an additional 2 to 3 % above Prime. Moreover, SBA loans charge an upfront fee of 2% to 2.75% of the of the portion of the principal that they have guaranteed.
Quick tips
•If your credit history is less than stellar, a bank officer is more likely to be understanding about an accident that kept you out of work than an ongoing habit of overspending on credit cards.
•Pay attention to early repayment penalties. Some banks charge a 2% to 5%-plus penalty if you decide to repay the loan early.
•Limit your inquiries. Since each request for credit shows up on your credit report, apply to no more than one bank at a time.
A loan won't fall in your lap, though-obtaining a commercial loan does require a good deal of legwork and preparation. That's because your ability to secure a loan greatly depends on how well you present your company to your prospective lender.
Be prepared to have several key documents on hand before you even set foot in a bank. These should include personal financial statements, tax returns, monthly cash flow projections, and a well-prepared business plan. Established businesses should also produce references from suppliers and customers.
In addition, it's essential to be able to supply a well-organized plan of how you intend to use the loan. For a start-up company, this might involve listing the expenditures and inventory that you need to purchase. For a manufacturing firm looking to purchase a building, this might entail explaining what the building will be used for and how it will be used to increase revenue.
As a general rule, banks will never provide 100% financing. Start-up companies typically must contribute at least 25 to 35% of the costs. Contribution requirements can vary, however, depending on the stability of the business and the value of the collateral used to secure the loan.
While providing more collateral is one way to increase your chances of securing a loan, additional alternatives can help to reassure a reluctant bank. The U.S. Small Business Administration works in conjunction with banks to guarantee a variety of loans for small businesses. SBA loans are especially advantageous to businesses that have tight cash flow, as the terms of such loans can often be extended far longer than those of a comparable bank loan.
You can also improve your chances by finding out who will make the final decision regarding your loan. While this decision may fall into the hands of the bank officer you deal with directly, more often than not it will be made by a boss or a loan committee that relies on the bank officer's ability to tell your story. If the bank officer that you're dealing with has little lending experience, it might work to your advantage to schedule a second meeting and ask to have a higher-level officer involved.
Since guidelines on the types of loans processed differ from bank to bank, your best bet is to first turn to the bank with which you already have an existing relationship. In addition, local businesses, attorneys, and accountants are other good resources for a lender referral.
How much will the loan cost? Established businesses with excellent credit can expect to pay back the principal plus Prime. Start-ups should factor in the principal plus an additional 2 to 3 % above Prime. Moreover, SBA loans charge an upfront fee of 2% to 2.75% of the of the portion of the principal that they have guaranteed.
Quick tips
•If your credit history is less than stellar, a bank officer is more likely to be understanding about an accident that kept you out of work than an ongoing habit of overspending on credit cards.
•Pay attention to early repayment penalties. Some banks charge a 2% to 5%-plus penalty if you decide to repay the loan early.
•Limit your inquiries. Since each request for credit shows up on your credit report, apply to no more than one bank at a time.
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