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Trends in Financing Your Business In 2010

Business trends change over the years and for people who run businesses, being aware of those changes is an important factor to survive the market. In the following paragraphs, we will take a look at the developments in financing a business for the year 2010.

Angel Investment

Angel investors can be individuals or groups in search for promising business ventures. Angel Investors started to become a favorite financing option in the late 90s and since that time, has went on to be one of the most highly regarded methods of business financing, especially with small enterprises.

Equipment lease financing

Equipment leasing has become the most recommended methods for business financing not just for small enterprises but for large and established companies as well. Through equipment leasing, a small working capital doesn’t need to be a major barrier in delivering those brilliant business ideas to reality. Business equipment lease is paid in installment so the business owner gets the chance to acquire all equipment needed for the operations without a great deal of upfront cost.

Supplier Credit

A number of wholesale vendors provide credit lines to their small business customers particularly if they can present an outstanding credit history. Be sure to check out prospective vendors who can provide you with your needed supplies and if you can be extended a credit line.

SBA Loan Programs

For business owners who are having trouble acquiring a business loan from banks or commercial lending companies, they can get support from the Small Business Administration (SBA). By being guaranteed by the SBA, it will be easier to get approved for small business financing. Nevertheless, remember that the SBA has its own requirements in approving small business loan applications. Check from the SBA’s website for the prerequisites in applying for a small business loan.

Business Credit Cards

At present, a growing number of business owners are realizing the benefits of using small business credit cards. As opposed to using their personal credit cards for business expenses, entrepreneurs are making use of business credit cards to separate their personal and business finances. Business credit cards are also perfect tools in building business credit history. Over time, maintaining an impressive business credit rating will be a major advantage in the future development of a business and one of the simplest strategies to build credit is by using a credit card for business.

Bank Business Loans

Despite the emergence of fast loans, a lot of small business enterprisers still favor the traditional approach to business financing. The reason for this is that banking institutions generally provide a bigger amount of funding and when matched up against other types of loans, a bank loan is still more reliable. For business owners who are willing to use their homes as collateral, a secured small business loan gives them the opportunity to obtain the financial assistance they need for starting a business. Secured business loans are known to have lower interest rates and longer repayment period compared to unsecured business loans.

Unsecured loans – A sub-type of personal loans

It is a known fact that in a secured deal, collateral protects the lender’s investment, and thus makes it easy for him to part with his money and facilitate the borrower with loan benefits like quick attention, high credit limit, competitive low APR, variety of rate plans, different repayment methods, and negotiable loan terms and conditions.

Unsecured loans, a sub-type of personal loans, do not offer the above-stated benefits. But, they are still catching up in the UK loan market. So, what are the reasons behind the growing popularity of unsecured personal loans?

The most significant reason is that irrespective of the loan seekers capability and willingness to pledge collateral, this personal loan sub-type can be availed by all – tenants, students, homeowners and property owners.

We all know that homeowners and property owners can easily take advantage of their valuable assets to avail favourable secured loan deals. However, pledging collateral may not be always practical or essential.

Hence, unsecured loans is a better alternative for people who are capable of offering collateral, but are unwilling to get into property related legalities or risk their property for a small monetary requirement.

Also, as every UK resident is not a homeowner or a property owner, unsecured personal loans is the only credit option for people who are incapable of offering an asset as collateral – tenants and students. This no collateral attribute in turn leads to:
• Less paperwork and quick service in the absence of lengthy property evaluation procedures
• No immediate risks in the event of repeated defaults or non-repayment of the loan amount
Hence,unsecured loans are ideal for small monetary requirements, as offering collateral may be unnecessary. And, for urgent requirements too, as getting into extensive property evaluation procedures may be unfeasible.

Besides advantages, no collateral attribute has disadvantages too, as the lender’s investment remains unprotected – limited amount, high interest rates, fixed payback option, and preset loan terms and conditions.