Funding Your Business With a Personal Loan or Business Loan

A personal loan is most appropriate for your business in its early days. Why? Because in the beginning there is little or no history to illustrate your viability as a business. Banks want to see records of free cash flow, goodwill, and profitability. A new business will not have any of those things.

The owner, however, does have a credit history. Banks will be more willing to loan money to a responsible consumer rather than an unproven business. In fact, many banks will not even look at companies that are less than two years old. For example, the Small Business Administration (SBA) reported that in 2016 only 10% of their loans issued went to companies valued at $150,000 or less. Even companies with valuations ranging from $150,000 to $350,000 made up just 11% of loans. Being the little guys is a disadvantage when seeking a business loan. However, its an advantage when going the personal loan route.

If you have a strong credit history, youll likelyqualify for a loanat an affordable rate. Again, banks shy away from smaller businesses because the loan request is often too small. Lower lending requires the same amount of processing work for a bank without the profitability of a big loan.

A personal loan also solves the collateral problem. New businesses have little or no collateral. Even if you do have physical assets to pledge you may not be comfortable with risking them for a loan. A personal loan, in most cases, fixes this issue. Most personal loans will not require you to post collateral.

Choosing a Business Loan

Now your business is on its way. You have a few years under your belt and some history of profitability. With strong positive cash flow, youll be able to show the bank why youre a suitable candidate fora traditional business loan. Additionally, you’ll likely have built up the hard assets needed when a bank requests collateral. At the same time, you’ll have a substantial list of accounts receivable to point to when banks ask questions about your viability. Finally, past financial returns will further illustrate your strength.

A business loan is particularly useful for those with only a short-term need, for example, three to 18 months. Capital is often required to take the next step in growing the operations. Or, it’s a solution for bridging a seasonal gap in revenue. Business loans can be appropriate for larger amounts, however, there will be more paperwork and due diligence required. If fast processing is critical a smaller loan may be your only choice.

With a smaller loan, you can get through the paperwork fast as banks can move quickly. The sooner you get the cash, the faster you can return your focus to where its needed: the business. Some small business loans are available for companies with annual revenues as low as $50,000. When annual revenues climb to $100,000 some companies will offer as much as $500,000.

If you’ll need more time to repay, or a larger sum, a business loan might still make sense withhelp from the SBA. In this case, the paperwork will be lengthy, and the cash will not come fast. However, the maximum amount is $5 million, and there is no minimum loan request. The average SBA loan total in 2015 was $371,628. Also, repayment terms are flexible (5-25 years).

Think of a business loan as financing 2.0. Youve already used a personal loan to get things off the ground. Now youre more established, and you wantto build creditfor the future, purchase better equipment, or increase inventory to fulfill more demand. Now that you’ve proven yourself as a skilled business owner you can also benefit from lower rates that often come with a stronger balance sheet. The idea isnt just to get the loan but to earn one at the lowest possible expense. Theres no better way to do this than drive down the rate. As a low-risk applicant, youll be in a better bargaining position to command more affordable financing.

Some business owners can get the best of both worlds with an online business loan. Many online lenders offer the speed that would otherwise only be available with a personal loan. The list of requirements is often shorter than what you’ll see at a traditional bank and technology makes credit analysis faster.

This solution is also cheaper as research suggests peer-to-peer lenders can operate at costs 60% below brick-and-mortar banks. It’s no wonder the head of the British Business Bank remarked that marketplace lending is “starting to make an impact.”

Remember, at all stages of business you’re likely to require financing therefore keep costs in mind, like your business they’ll be a going concern.

The article Funding Your Business With a Personal Loan or Business Loan originally appeared on ValuePenguin.

Oman banks feeling the heat of bad loans as expats lose jobs

But the increasing cost of living has spurred many to take out personal loans, which rose to Dh349.9 billion in February this year – a three per cent increase from January, according to the UAE Central Bank.

Oman hosts a total of 1.86 million expatriates, mostly from India, Pakistan, Bangladesh and Philippines.

Expats working in Oman are also concerned they may lose their jobs before they can finish settling their financial liabilities in the sultanate.

Financial Conduct Authority concerned over personal debt

The deadline for PPI claims is August 2019 and the FCA is overseeing an awareness campaign to ensure pay-outs are claimed.

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Andrew Bailey is the chief executive of the FCA

Mr Bailey said there had been a big increase in consumer borrowing, such as loans, overdrafts, credit card debt and car finance.

This echoes concerns raised by the Bank of England. Its Financial Policy Committee said there had been an acceleration in debt last year.

Consumer credit lending is still less than 10% of all lending by UK banks to household borrowers. It is also far smaller than mortgage lending, which amounts to 70% of loans to households.

But UK lenders stand to lose much more on their consumer credit loans if there is an economic downturn and their borrowers default on their credit card and other personal loans.

A Lords committee also recently called for stronger controls such as a cap on rent to own products.

The FCA is already conducting is own inquiry into overdrafts, door-to-door lending and other forms of guaranteed loans.

This includes considering whether a compulsory limit should be placed on overdraft charges. Consumer groups have consistently argued there should be one in place.


The FCAs mission statement also signals it is aiming to remain flexible in its response to Brexit.

The UKs decision to leave the European Union creates uncertainty for both the UKs financial industry and the FCA, Mr Bailey said.

Both we and the government are keen to ensure that the financial services industry remains resilient and well placed to meet users needs and thus make the most of opportunities in a post-Brexit world.

Leaving the EU inevitably creates a higher risk of disruption to our business plan priorities.

Mr Bailey was asked on the BBCs Today programme whether he would be happy regulating firms in the City if the UK had no say in making the European rules that firms in London may have to adhere to.

We cant just be a rule taker, that frankly doesnt work for any country, he replied.

Personal Finance Advice

Personal finance is one of the more popular topics on the Internet. Unfortunately, financial education is lacking at all levels of American society. This contributes to people getting into poor situations that are not necessary. Here are some tips that can help you get into great financial shape.

Minimize The Interest You Pay

Every dollar of interest that you pay to the bank is a dollar that will not go toward building your net worth. That being said, there are instances in which using leverage from debt can allow you to get ahead. For example, it might make sense to take out a mortgage on a rental property so that you can start to build a positive cash flow while letting others pay off your loan. Also, a student loan could help you get training for a job that could really pay off in the long run.

It might also make sense to take out a new loan to consolidate multiple other loans that youve taken out for whatever reason. These could be debts from personal loans or credit cards. Making one payment, rather than several, might free up some cash and allow you to pay off the debt more quickly. Of course, its a good idea to compare the loans that are available so that you pay no more interest than absolutely necessary.

Start To Save

The price of easy money

Personal loans normally come with a processing fee of 1-2 per cent, which means for a loan of Rs 3 lakh, a processing fee of Rs 3,000-6,000 needs to be paid. Pre-closure charges are generally low on personal loans (ICICI Bank charges 5 per cent or nil for loans over Rs 10 lakh; HDFC Bank charges 4 per cent or nil for a loan amounting to more than Rs 10 lakh).

Some banks like Axis and SBI do not penalise customers for prepayment of personal loans once they clear their first EMI. In the case of credit card loans, the processing fee is 1 per cent while 3 per cent of the outstanding principal amount is charged as foreclosure fee.

Financial Services Companies in New Zealand

If you are looking for the best financial Service providers in New Zealand, the given information below will easily inform you on how to get financial services from these popular financial companies New Zealand;

1)Bridgecorp Holdings Ltd

  • This is a financial company that is operating in New Zealand and was originally on the list of the stock exchange market.
  • It is a property development group that has branches in Australia.
  • Bridgecorp moved the headquarters in Sydney, Australia after the few times of rejection to the NZX.

2)Brierley Investmens Limited

  • This financial company was established in New Zealand in 1961 by the veteran Sir Ron Brierley.
  • In 1985 was listed in the stock exchange in Australia and become one of the best and most successful companies in the 80s.
  • In the 90s the company had poor investments and very high foreign exchange.
  • It is one of the best financial companies in New Zealand that is offering this type of services.

3)Hanover Finance

  • This is a finance company that is not a bank.
  • Its focus and aim are on the property development and prevent the high risk of failure.
  • It is lead by Mark Hotchin and is one of the largest companies in New Zealand providing services like financial support, accounting services and finance interests.

4)Angel Investment

  • This is another financial company located in New Zealand that has leading services in the field of finance.
  • It operates by connecting and associating those investors who want to invest in the company.
  • Harmoney Limited also provides personal loans and the focus of the company is directed towards expanding the loan business in the future.
  • It was established in 2014 and was the first licensed company operating in this field.
  • It also provides financial legislation and is governed by board of directors.

5)Sovereign Assurance Company Limited

  • The Sovereign Assurance Company is located in New Zealand and is a financial company that provides health and life insurance, investments and works with loans.
  • It is part of the ASB Group and was established in 1989 as was operating as investment and insurance provider.
  • Its expansion was in 1996 when the company was acquired by the ASB Group and integrated in the financial sector of the country.

6)Pioneer Finance

  • It is one of the largest companies in New Zealand and was established in 1922.
  • It offers services like financial support, accounting services and loan services.
  • It was considered as the best and largest financial institution in the country.
  • The company offers services to the government of New Zealand as well and it has a specialty in the personal loans.
  • In 2000 had almost 35,000 investors and was considered to be $NZ 2 billion worth.
  • The financial company owns 13 other companies which operate as branches in the other parts of the country.

7)Veda NZ Limited

  • This is one of the largest financial companies in New Zealand and previously was called Baycorp Advantage.
  • It is like an agency that operates with credit reference and supplies the companies and the individuals with the needed information.
  • It was owned and managed by the Privacy Act.
  • The company contains a group of providers which shares the information with the members.
  • The company had the biggest debt collection in New Zealand that was sold for $97 billion in 2007.
  • It is definitely among the best financial companies in the country.

8)Kiwibank Limited

  • This is a financial company that is owned completely like a subsidiary and is part of the New Zealand Post limited enterprise.
  • It provides services like banking, accounting, withdrawals, loans, finance support and credit services.
  • The bank was established in 1987 by the government in New Zealand and was separated as a stand- alone company.
  • In 1989 was sold to the government to ANZ.

9)DFC New Zealand Limited

  • The company existed from 1964 until 1991 and was part of the financial industry in New Zealand.
  • It was a joint among the government and the Reserve Bank in New Zealand and operated in the applied technology sector and the business capital funds

10)Electronic funds transfer at point of sale

  • This is also known as EFTPOS and is a type of electronic system that is based on the transfer of funds: credit card, debit card or payment card funds.
  • The technology of the system originally is from USA.
  • The cards that are used in the payment methods in the system need to have a bank card number according to the numbering standard and each card has to be specifically identified.

Bank orders loans review as consumer debt rises

An increase in personal loans and rising levels of debt on credit cards have led the Bank of England to announce a review into whether the UK’s biggest banks have let their lending criteria become too loose.

Britons are taking out unsecured loans at the fastest rate in more than 11 years and the Bank’s financial policy committee, which oversees financial stability, is concerned that a surge in the indebtedness of households could fuel another debt bubble, noting that consumer credit was “growing particularly rapidly”. In January, a member of the FPC described the rise in unsecured borrowing as a “flashing light”.

Debt charities have warned that calls for help are increasing. StepChange said it had received a record 600,000 calls asking for help with…