Bank Loans Verse Private Lender Loans

So, what is better; a business loan from your bank or a business loan from a private lender?
The answer is simply the one loan that you can get approved for.
But every business owner wants a bank loan. In fact, many business owners think that their bank is the only place they can get a business loan. But that is far from the truth.
Everyone wants a bank loan. Why? It is usually because bank interest rates can be lower.
Why do bank loans offer lower rates?
Banks typically have a lower cost of funds than other lenders. Depositors (their retail customers) keep a lot of money in their checking and savings accounts. Thus, banks have easy access to those funds to lend out. And, if banks don't pay interest for those deposits or pay very little interest like they do today (under ½ percent) - then those funds are very cheap for the bank to use.
Plus, all banks can access federal funds. And, right now the federal funds rate has been stuck around 0.25% (a quarter of 1%) - very cheap considering that it is usually around 4% or 6% and has been as high as 19%.
Private lenders on the other hand either have to get funds from investors who are looking for decent returns or from other banks and financial institutions who lend these private lenders funds at higher rates than it costs them to acquire that money.
Either of which raises private lender's cost of funds which in turns gets passed on in their loan rates.
Let's look at an example:
A bank needs to earn a spread on their loans of say 6% to cover the bank's direct expenses and overhead costs (their cost of being in business).
If they can acquire funds at 0.25% then they can lend them out at 6.25% and still earn their spread.
A private lender might need to earn a spread of 4% to cover its operating costs. But, its cost for the funds it lends out could be 6% or more to either repay the bank that lent them that money or to repay investors.
If the private lender's cost of funds are 6% and its needs to earn a spread of 4% - it has to charge 10% at a minimum or go out of business.
Thus, it is easy to see why everyone wants a bank loan as opposed to a private lender loans.
But, banks are also opportunistic.
While banks can lend out funds at lower rates, they hardly do. Here's why:
1) Banks see that their main competition (these private lenders) have to charge 10% or more - from our example. Thus, banks know that all they have to do is be below that figure to win your business.
Thus, banks can charge 9% or 9.5% and still beat the competition.
2) Banks have other ways to make money. Thus, if you don't want to pay their high rates, they really don't care all that much. They can still earn a ton of revenue from banking fees or from taking those cheap funds and investing them to earn their 6% or more (investments in stocks and bonds or through acquisitions). Thus, they really don't need to fund your business loan.
3) Banks have stiff regulations that pretty much forces them not to lend to new or small, growing businesses. These regulations are in place to protect their depositor's money but also tie their hands when making loans (things like time in business, high credit scores, high cash flow requirements and low debt-to-income ratios).
Plus, banks add a lot of other costs to their loans - including fees, reporting requirements, covenants, etc. that are not included in their rates but make the overall cost of their loans higher.
Private lenders, alternatively, don't have all those restrictions or alternative ways to generate revenue (beside fees which only happen when they close a loan). In fact, they are usually in business only to make loans.
Thus, private lenders tend to be easier to get approved by.
Kind of a double-edged sword. Cheap money but hard to get on one hand and easy to get loans but higher rates on the other.
However, going back to the original questions, which is better? The answer still remains the loan that you can actually get; but it only remains true while you can't get the other.
If you don't qualify for a bank loan, make it your goal to grow your business to the point that you qualify for bank funding (you might not actually need it when you can qualify for it). But, in the mean time, if all you can get approved for is a private lender loan, then by all means; knowing that it is only temporary as your business grows.
Two things to remember here:
1) The difference between 10% and 6% on a short-term loan (say under three years) is really not that much given the grand scheme of growing your business.
2) Private loans are much better then not growing your business at all or losing your business altogether. As long as the use of those funds will return more than that loan costs - your business is really not losing anything.
Example: If you have an opportunity to earn $10,000 above the principal of the loan but can't get a bank loan - do you just let the opportunity die or do you take the private loan and only realize say $9,000 in profits due to the higher interest rate?
You do what you have to do until you qualify for something better.
So, when seeking a business loan, which is better a bank loan or a private lender loan? It really depends all on what you can get approved for.

Business Credit Report and Tips

Just like a personal credit report there is also a business credit report for your business. There is plenty of free access to the credit report for your business which can provide you with important information you can use to make vital business decisions. You can also use DandB.com business directory for additional business resources.

An accurate report can help you to decide whether or not you want to do business with a certain company and possibly what price you can charge. You can access comprehensive financial information that will allow you to assess the level of risk there is in extending credit to other companies.

You will also be able to investigate credit risk factors to help avoid unforeseen surprises when reviewing current customers for credit increases and learn what to expect through review of a company's historical business practices.

Having access to an objective business credit report can help determine how confidently you can make a decision on credit for a new customer or if you need to learn more about them before you extend credit terms to them.

Through UCC, or the Uniform Commercial Code, filings you can figure out what your creditor position is in relation to other creditors that may already be in line for collection on any given credit customer of yours.

If you dedicatedly monitor your business credit, you can always have access to the information available to you regarding how much credit your suppliers will extend to you, the interest you will pay, how much you can borrow from a lender, what your customers think about you, and how interested potential investors may be.

With the ability to monitor other companies' credit reports, you can get a leg up by discovering past payment practices of prospective customers, your current client's business conditions, supplier's history with other businesses, what competitors are doing, and other business details that you deem important.

You need the ease, affordability, and convenience of being able to monitor your own and your competitors credit status and receive updates right to your email. Important information about the stability of a company is sound or if they are planning to go out of business. You should also know if they begin to get behind on payments or if your own credit report remains accurate; so you can maintain a positive cash flow environment.

Having free access to all this data is the key and can mean the difference between your business success or business failure and keep you out of trouble. I have a friend who owned a business several years ago and if she had had access to all this information she probably would still be in business today. She didn't have this kind of access to other's information and got seriously taken advantage of by more than one supplier and then discovered she had no legal recourse to do anything about it.

If she had had access to objective, accurate business credit report information, she would not have ended up filing for bankruptcy and spending the better part of the next decade digging herself out from under a pile of legal BS she had to deal with.

Business Loans for Women: Getting It Approved

With the increasing number of females applying in agencies offering business loans for women, a business-minded lady should work twice as hard to get the loan approved. There can be many styles as to how one can get her loan application approved, but there is only one sure-fire style - and that is to be prepared!

Business Loans for Women: Preparing for the Application

As mentioned, preparation is the key to having the loan approved. But how should one prepare for it, anyway? The following are tips that females applying for business loans for women should apply in order to gain the trust of the agency and have her loan application approved.

Before applying in an agency giving business loans for women, it is essential for a wise businesswoman to request a copy of her credit report. Upon receiving the copy, she must review it meticulously and find possible problems or issues, which need to be dealt with in the soonest possible time. If there are any discrepancies or errors, it is best to contact the associated agency immediately. Remember, a good credit report reflects that the individual is actually someone who pays her dues responsibly.

Keep essential records at hand. The agency will definitely ask for documents, records, and other important paperwork; it is important to have these records available.

If there are any negative remarks on the credit report, one should prepare a good and viable explanation as for the cause of these "negative entries". Preparing for questions that the lender might possibly ask is also important. Agencies that are providing business loans for women are keen and strict with regards to negative remarks, but having these doesn't mean that one couldn't avail of a loan anymore. The lender also considers other factors before approving or denying an application.

Define why the funding is needed. A smart loan applicant will be able to gear the lender to approve the loan by defining very well why the financial aid is needed in the first place. In the case of business loans for women, it is important for the female applicant to state what kind of business is she going to start or develop that needs the required funding. In addition, it is also important for one to be able to explain to the lender how she plans to pay for the borrowed sum.

Be convincing. Aside from doing these aforementioned tips, it is also a part of the preparation to sell oneself and prove to the lender that one can pay for the loan. Providing a collateral is the usual method used by applicants to give confidence to the lender that the borrowed money will be returned.

Surely, by doing these tips mentioned above, one will be confident and prepared enough for the loan application. In addition, a businesswoman should also present herself in a professional and formal way during the interview by dressing appropriately. By showing to the agency providing business loans for women that one is prepared enough to the commitments at stake, one can have a better chance of receiving the loan as compared to the rest.

Business Loans for Women: Four Easy Steps in Applying

In the past, when one speaks the word "Boss" - it automatically pertains to a man who runs the business. However, times have already changed. Today, this term may not necessarily mean only a male employer anymore; more and more women are already venturing into the world of business. For this reason, more and more agencies or institutions that offer business loans for women are also on the rise.

Applying in small business loans for women is a good decision. It provides a woman enough funds to start up her own entrepreneur project and eventually gain money and even financial freedom. On the other hand, before applying in a business loan, a smart businesswoman must act with keenness and good decision-making skills.

There are four easy steps that a willing businesswoman should take before applying into any agency that provides business loans for women. These four essential procedures are as follows:

Step 1: Check one's assets and liabilities. In other words, every woman applying for a business loan should check her strengths and weaknesses first. It is advisable for the woman to ask herself these questions:

Do I have a good credit report?

Did I pay previous lenders the amount as stated in our contract?

Do I have the capacity to pay back the funding I will receive from granted business loans for women?

Do I have a collateral?

These simple questions are necessary in determining whether one is capable of applying for a loan, and whether the lender will most likely approve the application or proposal.

Step 2: Identify the lender. The lender and the borrower must complement each other. The loan applicant should be able to find an agency or institution that grants business loans for women whose criteria suits her business plan or proposal. For small businesses, it is a good move to also choose small lending agencies or banks.

If the lender's criteria are too high for one's capacity, the available option is to get a good and trusted broker (preferably someone one knows). If there aren't any lenders or even a broker, getting a commercial mortgage broker is the last resort.

Step 3: Sell oneself... or the proposal. In applying for business loans for women, the lender will definitely throw out questions and usually, the successful applicants are those who know their numbers well and who are prepared enough for these questions. So sell oneself to the lender, and be prepared!

Step 4: "Never say never." Finally, a positive outlook towards the business loan can make all the difference. If one's proposal gets denied, it's never an option to give up. Although it may be difficult to have business loans for women get approved, it is not impossible. Determination, willingness, and perseverance should be practiced.

Indeed, starting a business without a capital is a challenge that most business-minded women face. Good thing though, there are business loans for women that are available in almost everywhere. Although it may not be easy to get a loan approved, with the right strategy and attitude, anything is possible!

Business Loans for Women: What If the Proposal Gets Denied?

Getting a "denied" response from a lender after submitting a proposal is oftentimes heartbreaking. For most women who mean serious business in asking for funds to start-up or develop their moneymaking scheme, being denied from business loans for women is such a sad experience. However, instead of seeing this as a major disaster, a daring and smart businesswoman should take this setback as a challenge to be more resourceful.

On the other hand, the big question that follows after a denied loan proposal is: What shall I do next? Well there are plenty of things that a businesswoman should do after receiving a "thumbs-down."

First of all, it is not all the time that business loans for women are being approved by an agency. If a proposal gets denied, it's nothing personal. The first step in accepting this fact is for the loan applicant to understand that there is nothing really personal going on - that it was not just her character which made the results unfavorable on her part. Aside from the applicant's character, a lending corporation or an agency also looks at several other factors before approving a proposal such as: the debt ratio, credit score and the business' profitability.

Secondly, being polite to the agency that offers business loans for women even if one's proposal was denied is a decent way to show professionalism. Every businesswoman should practice being polite and grateful. For instance, thanking the agency or the institution for reviewing one's proposal is a concrete way to show these values. And besides, perhaps if the lender appreciates these values - the next proposal wouldn't be denied anymore!

Thirdly, review the proposal by asking the lender what is the reason why it was denied; perhaps the proposal lacks information, or the business plan isn't very convincing. Lenders of business loans for women always check the business plan - whether the business is more likely to succeed or not.

In addition, it is also essential to take into consideration the lender itself. Perhaps the agency is too big for the proposal or it's the other way around. If this is the case, it is wise to seek other lending agencies or institutions. Usually, if the proposal is to start a small business, it is advisable to apply in agencies or banks that are supporting small business loans for women.

Lastly, quitting is never an option. Business loans for women aren't the only sources of funding. If the first proposal fails, finding for other types of loans is another option. In applying for other loans that can fund one's business, it is important to consider one's resources so that the right kind of loan is taken. For instance, a homeowner can apply for a home equity loan - this is a good choice. Applying for a collateral loan is also a good option.

Business loans for women don't always get approved. However, even if one has been denied of her proposal, it doesn't mean that it's already the end of her career as an entrepreneur. These setbacks in life are just normal. What a determined businesswoman should remember is that there are always new opportunities ahead. Denied requests aren't reasons to mope around and complain about things, these things exist to let each woman stand up and improve herself!

Business Grants for Women: What You Need to Know

Everyone is affected by the economic crunch. Even businesses are hit by the market slump. If cash is hard how can you run a business? One option is to get a loan from a financing institution. It is good if you are a man. If you are a woman you will find out that it is tougher to get a business loan.

Truth no. 1: whether you like it or not there still is a "silent" discrimination between man and woman. The norm still exist that the men are more capable in running businesses than women so these institutions would rather deal with men. To be able to get a loan from them you need to prove your capability as an entrepreneur. How can you do that if you are still in the stage of growing your business? This is where business grants for women will come in.

So you started searching for business grants. Basically the first place you look for is the government's financial support. You browse through their site and start searching through their list of grants. Upon seeing one that might suite your business, you click through the requirements. Then the next reality will hit you.

Truth no. 2: the government does not have any business grants for women. Instead of helping you out of your predicament they offer business establishment support in the form of references and trainings. Then they point you to other sites and the process goes on and on until you get exhausted and give up. You look to foundations, non-government organizations, associations, women's groups and others. Very seldom do you see them giving business grants for women. What they offer are business loans. You may find business grants for women among their programs but they never give grants to individuals. They give grants to groups of women or organized groups of women. One site even suggested that to be able to get business grants for women you have to pay a grant research company to gain access to their database. Doing business is already hard. Finding financial support makes it harder.

Assuming that you got a /business grant for women/ from the sector that supports women entrepreneurs the next reality will hit you.

Truth no. 3: you have to work doubly hard to ensure that the trust they gave will be worth it so next time it will be easier for you to get subsequent assistance. Now that you have the fighting chance you have to make things work for your business. To make it work sacrifices have to be made. You need to upgrade your skills set. If you are a mom you need to learn to balance your time between the business and your family. You can do this by replicating yourself. Look for a person who can support you and train that person to take on some of your responsibilities. In that way you can free up your time to spend for your family. Always remember that you cannot succeed on your own. Success is always a team effort.

The bottom line is finding free money is very hard to come by these days especially during the financial slump. You need to find more creative ways to raise the funds that you need. Read /Grant Funds for Women/: Where to Find Them. It can help in opening doors for you and your business.

How to Obtain Business Loans for Women

A good businesswoman is always someone who has a vision for herself and for her business. Most women of today are tired of being chained to the demands of labor and employment, that's why; they're finding ways to increase their income in the form of starting a business. However, not every woman has the capital to start a business of her own. Considering this need, today, there are numerous agencies that are offering business loans for women who are willing to start up their own business and be successful entrepreneurs.

Obtaining business loans for women isn't easy, but at the same time, it is also not impossible. There are already hundreds of women today who became successful as business owners because they have the courage to borrow a capital to start their business or even supply an already existing one. So how can a woman obtain a business loan successfully? The following things must be done:

Have a well-defined business plan. Before applying in agencies granting business loans for women, a wise businesswoman must first have a clear picture of what her business will be. Shall it be an accessories store? A food franchising business? A novelty shop? What are the products? Who is the target market? Having a good business plan, a concise vision of what the business will be - is the first and foremost step in acquiring success in the market industry. And besides, without having well-defined business plans, one's application in an agency giving business loans for women may not be approved.

Research Agencies. After defining one's business plan, the second essential step in obtaining a business loan is to find a reputable agency that shall provide it. One should look out for agencies both local and federal. To increase one's chance of acquiring the loan, a wise woman should also look for agencies that support female-owned businesses.

Prepare for the loan application. Agencies providing business loans for women have a lot of requirements. That is why; a good businesswoman should prepare for these right away. One should request her credit report copy and review it for possible problems. If there are indeed problems with the report, it is deemed necessary to deal with it as soon as possible. In addition, pertinent records must be at hand and these should be well reviewed. One should also be prepared for questions that the lender might ask. Showing confidence and dressing appropriately during the interview are things which do increase the probably of having the loan approved.

Since there are several agencies providing support for businesses owned by females, acquiring business loans for women isn't impossible. Every woman, single or not, must look after herself or her family - and this includes being financially stable. A woman who has the right vision in having a business will be as successful as most male businessmen.

Acquiring a business loan is like making a very big step towards fulfilling one's business dreams. Indeed, obtaining business loans for women (who are willing to be millionaires someday) is possible as long as the necessary actions are done.

How You Can Get Development Funding

When planning a big development, such as the construction of a house, commercial building or new office centre, planning the development funding is an essential part of the process.

The funding of the development will ensure that the project can get started, that the architect, builders, and subcontractors get paid and that the project can come to completion.

There are several options to consider when planning. In this article we are introducing a few of them.

Mortgage Broker

A mortgage broker cannot only help with home loans they can also help with development and construction funding. They typically have access to a number of lenders and can find the best deal for you. However, it is important to consider that a mortgage broker probably receives commissions from the lender and therefore may not recommend the option that is best for you, but rather the options that make them the most money.

Banks

Banks can typically arrange a construction and finance loan for a developer or builder when they have the right securities. This means they need to show the bank that they will be able to pay back the funding and have securities in place in case something goes wrong. Banks can only recommend their own solutions and do not have access to a wide pool of options for development funding. In addition, the development funding available from banks is often slow and may fall through at the last minute.

Boutique Lender

A boutique lender is a great option to get one. They are normally flexible enough to tailor a solution to your exact needs and they have very fast turnaround times to get your project started. Because you deal with the lender directly, rather than through a broker you will have direct access to ask any questions and you'll cut out additional administration. Finding a good boutique lender can be a challenge, so it is wise to ask your colleagues and mentors to recommend someone. It also pays off to choose a boutique lender who has extensive experience in the field of it and who knows your area well.

In summary, when choosing the best option for your development funding, you need to consider the circumstance of the project you're working on. How quickly do you need the funds? How long will you need them for? Have you adequately provided for potential delays in the project? Can you choose from previous funding providers or can you receive credible recommendations?

What Options Are Available When Offering Retail Finance?

For retailers who have never offered retail finance then take a few minutes of your time to find out what it can do for your business, what it takes to get a facility in place and what the alternatives are if you can't get a direct facility.

True retail finance involves the use of Debtor creditor Supplier agreements and requires the retailer to have a consumer credit licence with category C coverage on it. This will enable you to act as a broker and process consumer credit agreements through your various trading channels IE Web, Shop or mail order.

When looking for retail finance businesses are usually talking about Interest free credit (IFC) as used by many large furniture outlets. There is also the Buy Now Pay Later (BNPL) product largely used in lower margin sectors such as IT and consumer electronics shops. This product is not to be confused with IFC though as there is a significant difference between the two offers plus it's also illegal for BNPL to be presented as IFC. Lastly there is interest bearing or classic credit, where the customer pays a rate of interest determined by the retailer.

There are other offers that could also be considered retail finance. Store cards as offered by large department stores for example and even some co-branded credit cards available through many large national retailers and online resellers. True retail finance though in my mind is fixed-term credit agreements that are specific to the purchase of goods and/or services from a specific retailer.

To offer retail finance a retailer usually needs to meet certain criteria to be accepted by a lender as an introducer. The criteria will vary from one lender to another but generally they are consistent in that they will all consider the products you sell, your retail sales turnover and your time in business. It may be that your business doesn't meet some or all of the criteria and therefore leaves you without a retail finance offering.

This is an issue faced by many businesses throughout the UK and considering the recent history in the market where two previously key players withdrew from the sector out and another went into administration it may not change much in the near future.

The options then are to look to independent brokers to help your customers who need finance the most get assistance in sourcing a loan that can then be used to purchase from you. It is a process sometimes dressed up as retail finance but the truth is that it is simply an alternative to traditional retail finance for companies who can't get a direct line into one of the 6 main lenders. It may also be treated as a supplement to traditional retail finance where we may offer to help customers declined by a lender but still needing credit in order to buy.

If you can a direct line arrangement in place with a lender then this frankly is the best process for you being that you will get paid directly by the lender and have control over the rates on offer. You won't though be able to control the acceptance rates of the lender and in this sense having a back up offer may be very useful for business.

But what if you can't get a direct facility? It is possible to advertise third-party facilities and enable customers who perhaps have been turned down for a bank loan or credit card.

If you have any questions regarding the Financial market then please get in touch via my website. I am happy to offer guidance on what's available in the market based on personal experience and an honest appraisal of what options are best for your business.

Guide to Loans for a Small Business Start Up

The main roadblock in starting any small business or a start-up venture is to get money and invest it into the business. Several great business ideas bite the dust just for the simple reason that the finance for starting it up cannot be arranged in the stipulated time frame. But like all those unsuccessful business plans you don't have to worry about the financing bit as we are here specifically to solve your financing problems with the least possible hassle. Like other loan offering services we understand the importance of financing without any risk to your current assets. There are other loan facilitating services too but they are a bit reluctant to share your risk as they only provide loans to business offering that are fruitful to them. While other good business plans have to cut a sorry figure just because of the lack of finances now it's time you get what your business deserves.
There are online portals where one can expect to get over the worries of seeking for a loan at the least possible risk. Some of them will also provide you with bad credit business loan facilities at comparatively lower interest rates then that of various existing financial organizations or individual lenders. The main point which is to be considered is that most of the online portals don't distribute any confidential or personal information that you provide like email address, name or other vital information which cannot be distributed legally so you can bank on them to get the apt solutions. Not only do these portals or funding organizations will provide business loans for bad credit but also provide you with loans for business start up financing.
Apart from that these companies hires a well experienced staff and with their expertise strives in helping you out in providing you with the various tips and strategies to get your start up business up and running in no time. You can definitely rely on these organizations as they provide you with professional assistance in planning out the implementation methods and small little tips on how to gradually expand your business and make it into something big. The professional assistance you will get is invaluable as the consultants and industry experts provide you with viable solution to your queries honed by years of experience. So look no further to arrive at a quality solution to all your small business related problems and financing issues.
The typical customers who take loans are are new and existing businesses that have some type of storefront or service based business. Restaurants, Retailers, Clothing Stores, Dry Cleaners, Day Spas, Medical Offices, Automotive Shops etc.

Author Darrin is associated with SBLT which offer several different types of small business loans including unsecured 6 month, 12 month and 24 month loans at fixed interest rates and are repaid via daily debits directly to your business bank account. Our small business loan application process is simple and our loan decisions are quick.

Need to Find a Private Business Lender? Here Is How

Private lenders for businesses have a number of different objectives as it pertains to how they inject debt capital into your business. Foremost, these private investors want to achieve a substantial return on their investment as it relates to being able to generate a highly recurring stream of income on their investment on a month to month basis. When you are seeking a private financier you must be aware of the fact that this individual or firm is going to heavily scrutinize your business as it relates to your ability to repay the loan on a regular basis. As such, you are going to need to have a well drafted business plan that focuses on each aspect of your business. This is especially true if you are seeking a loan from a private loan company because you have bad credit. One of the things that we are going to continue to discuss through many of our future articles is how to obtain small business financing in the event that you do not have either the credit or collateral to support a traditional business loan.

Private lenders for business often charge very high interest rates for capital that they provide to businesses. This is due to the fact that there are always a substantial number of risks involved as it relates to providing outside capital to an ongoing business concern. Most importantly, most private lenders for businesses do not require that the borrower provides a personal guarantee for the loan. As such, the only collateral that a private lender or private investor has is their ability to recoup their investment in a fire sale of a business. A private lender, from time to time, may put a lien on specific tangible assets that are owned by the business. You should always offer the ability to provide this type of security to a private lender or angel investor as it relates to a loan for your business.

Prior to seeking any type of financing, you should always consult with a certified public accountant or business adviser that can make sure that working with a private lender will result in a strong benefit for you and your company. Additionally, these advisers will be able to provide you with the appropriate advice as it relates to making sure that you can make the full monthly payments on your loan based on your profit statement as well as your cash flow analysis. If you qualify for other types of financing then you may be able to obtain credit or investment at a much lower capital cost than you expect.

Unsecured Business Loans For All Your Business Needs

It is absolutely true that when it comes to the business expansion then you are required to do significant amount of investment from time to time. If you only remain dependent on the commercial bank loans then chances are high that you fail to attain several fiscal needs of the business.

Here, for the consistent growth of the business it is significant to explore some of the better options related to unsecured business loans. It is a kind of advances that are meant for those who are unable to place security in order to serve their purposes. There are certain major advantages associated with the unsecured business cash advance. One major advantage associated with it is that rate of interest provided on it is quite low when made comparison with conventional bank advances. This is one of the critical reasons why it is now consistently becoming popular among the masses.

One more crucial reason why you can give preference to it on the genuine bank loans is that the money that you will receive from unsecured loans can be invested on different elements related to the business. You will not have confined number of options along with strict regulations when it comes to the unsecured business loans. These problems are quite common when it is about the formal procedure followed by the banks while issuing the traditional loan to the public. Banks offer a strict formal procedure in which you can make the investment of loan amount only in the limited number of areas of your business.

It is significant to note that a businessman can attain the desired credit facility without mortgaging the precious belongings in one way or the other. There will be no harsh terms and the repayment of the loan can be done according to your own convenience. Due to excessive competition in the market, some of the business cash advance providers also come with lucrative offers to allure more clients and deals.

You will be happy to know that for the people who are seeking unsecured business loans can avail the same facility through Internet. Yes, it is now feasible to have the funds via online mode in a quick period of time. The procedure of granting the unsecured business loans was simple before as well. But due to the fast and reliable Internet services, it is now easy to sanction a deal in the most convenient manner.

It is now certainly possible for you to attain better results while purchasing new equipments, for the development of infrastructure, investment of the capital, etc. From now onwards, you need not to worry about the monetary needs of your business.

But where can you find the most assured results in business cash advance? Well, in order to achieve all your objectives in the most precise fashion, it is advisable to visit the services of 'Orbit Business Loans'. The most guaranteed results are definitely accessible here!

Huge Positive Changes To The SBA 504 Refinance Program

Good news from the SBA. They have announced the elimination of most of the restrictions to the SBA 504 refinance program, which made it virtually impossible for borrowers to qualify. This announcement was made on 10/19/2011. Borrowers that applied or considered applying for an SBA 504 refinance and were declined/or discouraged from applying, should seriously consider re applying. Virtually all of the restrictions have been removed, and the benefits are substantial.

The demand for the program is expected to be huge, for the 11 months that are remaining on it (expires September 27, 2012). Borrowers can expect 90% loan to value financing, and with low, long term fixed rates. There are no other loan programs available in the market, at this high of leverage, that come close to this. For example, most conventional commercial mortgages are currently capped at 65% loan to value. The only other high leverage alternative is another the SBA 7a loan that typically goes up to 80% - 85% loan to value.

But, virtually all banks structure the SBA 7a loan as a quarterly adjusting loan, tied to Prime. Whereas on the SBA 504 loan, fixed rates range from 3, 5, 10, 20 and even 25 years. And the interest rates are low. As of this writing, the blended rate on the 25 year fixed is in the upper 5%'s... And lower on the 5 year fixed. While on the SBA 7a loan the quarterly adjusting rate is currently at 5.75% to 6%...

And of course, most borrowers, in this economy are worried about inflation, and where rates may end up in a few years. Having a quarterly adjusting rate is unsettling, to say the least.

As far as the removed restrictions they include:

1. Existing loans "lineage" is no longer relevant. Before if more than 15% of the existing loan was ever used for any other reasons than the purchase of commercial real estate or equipment, than the loan was declined. And it didn't matter if you had refinanced your property several times before. For example if you used equity in your property to buy out a partner 30 years ago, that was an ineligible use, and therefore you did qualify.

2. And you had to prove, with full documentation that none of the previous loans were used for ineligible purposes.

3. Likewise, now you can actually use the proceeds of the loan to refinance working capital, lines of credit, payroll expenses, and technically get cash out (but banks won't likely let you do this).

4. Appraisal had to be paid for and ordered prior to submission. This has been eliminated and now you can wait until you have an approval.

5. The existing loan had to have a call or balloon, this has been eliminated.

6. Loan is structure off of the existing loan amount rather than just the appraised value.

Obtaining a Business Line of Credit

When you are deciding whether or not your company needs a business line of credit, the first thing you should determine is how much your business can safely borrow. In order to do this, you should review your cash flow analysis to see the amount of principal that can be repaid on an ongoing basis if it is required by your lending institution. In some cases, a principal repayment does not need to be made on a monthly basis as it relates to your business line of credit. Instead, at the end of the credit facility, the outstanding principal balance is converted into a loan and regular payments of interest are made. However, this methodology is becoming somewhat antiquated as banks are taking fewer risks when it comes to the extension of credit. Now, you will most likely be required to immediately repay any outstanding balance once the term of the credit line is complete.

When you are obtaining a business line of credit, you are going to need to have a business plan that showcases to the financial institution that your company can handle a specific amount of debt. Your banker is going to be most interested in your balance sheet as well as your cash flow analysis. Prior to visiting a financial institution, you should work with your certified public accountant to determine the metrics that will be used by the bank when they are considering your business line of credit request. Additionally, your accountant and business adviser can assist you in putting together the credit request application that you will need when you are discussing your capital needs. One of the most important things that you should discuss in your credit application and your business plan is how you intend to use these funds. This is one of the most crucial factors as the bank is going to want to see that a good portion of your line of credit it for tangible asset purchases. A smaller portion of the facility can be geared towards working capital purposes or for ongoing inventory needs.

In closing, obtaining a business line of credit is a difficult process that will require a full examination of your business as well as your personal financial situation. You are always going to be required to provide a substantial personal guarantee, including your primary residence and vehicles, as it relates to undertaking this type of debt. As such, and with any business decision, you should carefully review the benefits and risks that are associated with using a business line of credit.

Business Financing: Spot Factoring

Accounts receivable factoring (or invoice financing) has been around for centuries as a means for small and large businesses to obtain needed working capital while they wait for their customers to pay invoices.

If your ship goods or render services to your business customers but have to wait 30, 60, 90 days or more to get paid (as most invoices offers these trade terms) and your business could use additional capital today to complete other jobs, meet payroll or go out and win new business, then your company could benefit from accounts receivable factoring or financing.

However, in recent years, not all invoice financing has remained the same.

Most accounts receivable factoring companies (like most banks) realize that it costs them the same to underwrite a $1,000 factoring agreement as it does a $1,000,000 agreement. Thus, they tend to migrate to larger deals (getting more bang for their buck so to speak).

Thus, many invoice financing companies have begun to add restrictions that just were not there a few years ago.

Some of these restrictions include:

Minimum Factoring Amounts: In fact, many accounts receivable financing companies require a minimum $50,000; which is OK for larger companies who have those larger amounts to factor. But, smaller firms, just wanting to factor an invoice or two, again get left out.

Long-Term Commitments: As underwriting accounts receivable financing can get expensive on the lender's part; we have begun to see long-term commitment requirements crop up in factoring agreements. These usually require that the borrowing company not only factor a minimum amount of their invoice (see the point above) but factor those amounts over an extended time period, say one year or more (which could mean factoring many cycles of invoices).

Upfront Fees: Factoring companies, like many banks these days, are learning that fee income is the best income because it costs very little to get and usually flows almost directly to profits.

Now, some companies will tell you that these fees are to offset their costs of underwriting so that they do not have to pass those costs along to you. But, do know that all costs (underwriting through servicing) are captured in the financing company's factoring rate.

Over the last decade, we have seen upfront fees from invoice factoring increase from small amounts like $50 to over $500 - regardless if your business receives financing or not.

Choice Of Invoices: Most factoring companies want to reduce their risk of not getting paid. This is somewhat understandable as they are taking a risk on the fact that your customers (not you) will pay their bills.

Thus, these financing companies will ask to look at all your outstanding accounts receivables and then hand pick those invoices that they think will provide them the least amount of risk of repayment. This means that they may choose some invoices that you don't want to factor while leaving you in the lurch for those invoices that your company really needs to factor.

What these restrictions tend to do is create added benefit for the factoring company while placing more burdens on the borrower (growing small businesses) or shut out smaller businesses from the financing market all together.

It really is simple - conform to their policies (meaning factoring more of your invoices for longer periods) or don't get the capital your business needs to continue to grow.

In Steps Spot Factoring.

Spot factoring is essentially designed as the name states. Your business can factor whatever invoices it chooses (to solid business customers) when it chooses - on the spot!

Thus, you factor your accounts receivable only when you need immediate cash. Plus, you can factor just one invoice or as many as you need to benefit your company. Essentially factoring your invoices on the SPOT!

Benefits include:

No minimums or maximums.

No long-term commitments.

Quicker funding decisions as the application process tends to be shorter.

No upfront fees. And,

Flexibility of what invoices you factor and when you factor them.

But, the real benefit is that it provides your business additional flexibility to obtain the capital that you need when and how you need it - not how the factoring company wants it. Plus, by factoring when and what YOU want, you can reduce your overall interest costs and fees.

Now, this is not to say that accounts receivable factoring might not be beneficial to your company. If you have a large amount of invoices that you want to finance and that you need to do this over an extended time in the foreseeable future, then standard accounts receivable factoring can save you both time and expense.

Is It Really Difficult to Get Start-Up Business Loans?

The difficulty or ease with which you get start-up business loans depends on your assets and liabilities. Banks and other financial institutions are hesitant to lend new entrepreneurs start-up business loans because of their naivete with respect to building a business. Now what makes getting a loan easy or difficult? Checking your financial status and surveying the assets at hand will determine whether you would get the start-up loan or not. Banking and non-banking institutions are more interested in what they can get from you than the start-up business loans they will give you. Usually, the start-up business loan amount si computed with the total amount of assets that the bank can seize, in case you cannot pay back your business loans. That is why it is good to seek professional help, in order to reduce the stress of computing your assets in comparison with the amount you are borrowing.

Most financial advisers advise their clients not to get business loans that are higher than their assets, so that it will be easy to get out of trouble. It is not easy to give your entire house and other assets just because you have incurred a bad loan. That is why many financial experts advice that you get small start-up business loans because the less start-up business loans you get, the less loans obligations you are going to pay.

Nevertheless, improving your income can ensure you get the loan you want. Your ability to create personal financial opportunities (which means that you would have a good financial status until the year ends) will give the financial institutions an assurance that once they give you the money, they can have their investments returned. Remember, lending is a business too, and the primary goal of a lending institution is to earn profits in order to allow expansion of the business, thus creating more financial opportunities for others.

In conclusion, you don't need huge start-up loans that are difficult to pay. All you need is the right information about the business venture that you want to undertake. All you need to do is to plan your finances carefully; avoid hasty judgments and decisions when it comes to money matters. Meanwhile, when getting any kind of loan; ensure that you understand the terms and conditions connected with the loan. Since interest rates are easy to shoot up, ensure that you can pay the principal and the interest in due time. Always check the status of your loan and do not get another loan, if you are not yet finished paying the other one.

Banks Reject 60% of Small Business Loans

The federal government doled out $30 billion dollars to small community banks to help small business get the credit they need. According to the Wall Street Journal, Instead of loaning the money to mainstreet, the banks repaid their TARP obligations. Only 4 billion or 13% of the money went to small business. Crumbs in my opinion. The cake went to the banks to clear their books. This whole program was very disingenuous. It has become harder and harder for small businesses to get the credit they need.

A recent study conducted by Pepperdine University found that 60% of small business loan applications were rejected. Such high rejection rates leave small businesses in a quandary about where to get funds to buy equipment, to expand, or fulfill their obligations.

One alternative might be merchant cash advance. Merchant cash advance or merchant capital advance have progressed in recent years and offer a viable alternative to banks. Merchant cash advance offers a type of "loan" against future sales. Traditionally this was done through a merchant's credit card processing receipts. There other options available through cash sales and using the ACH networks. In most cases, merchant cash advances are more costly than a bank loan but the good news is that the merchant cash advance or merchant capital advance rates have come down in recent years.

It is time to put all the cards on the table and see what is really in the market. Small businesses can no longer rely on their banks. If a business needs a cash infusion to purchase equipment, make repairs or to stock up on inventory for the holiday season, a merchant cash advance may be a possible solution. If the banks are not lending, then small business need to find other options to get the funds that they need.

Some businesses have relied on their banks for years for credit. Even merchants with great credit are finding it difficult to get the loans when they need it. It always seems the banks are ready to loan money when the merchants don't need it and when they do need the loan the banks refuse to loan. Business owners need an alternative to turn to in this every happens.

The problem in the US economy is right now the average bank is leveraged 17 times. This is much better than several years ago when the average bank was leveraged 55 times. What does this mean? Banks are reluctant to loan money because don't want to or are not allowed to leverage themselves anymore.

This is where the private lender comes in. The private lender is filling that gap. Now, merchant cash advances are becoming more common ways to finance a business. This is why it is imperative that all business owners learn about merchant cash advance because someday, they may need it.

The Advantages of Taking Secured Business Loans

Secured business loans are the best solution to a person who wishes to start a business. It is very hard for an individual to be in a position to raise all the money required to start a company. One will require paying wages, buying raw materials and purchasing buildings. A business man may even have to pay for a very expensive license which he or she cannot afford. The best solution is a loan that will provide all the funds required.

There are many types of loans that are available in the market but the fact is that secured business loans are the best. There are many reasons why one may be advised to take such a form of borrowing.

One of the main advantages is that a person is charged a lower interest rate than the other types of borrowing. This means that one will not have to pay a high additional amount of money when paying back the money.

Since the creditor is not afraid of losing funds in case one is unable to repay, one is not required to provide a lot of financial records and guarantors. One is only required to provide an asset or assets which will be used as security for the funds borrowed. This means that the creditor will be in a position to sell the asset in order to recover part or full amount of the loan. This means that it is advantageous to both the creditor and the individual who has been given the capital.

There are many types of assets that can be used as security. The type depends on the creditor. Before a certain commodity is accepted it has to be evaluated so as to approximate its value. Its value should be close to the amount of capital borrowed.

Different countries have different laws and policies that govern the action to be taken in case a person is unable to repay the amount given. A person may choose to sell the secured commodity in order to raise part of the capital.

If the sale does not cater for the full amount, the creditor has the right to obtain a court order or permission to demand the remaining amount. They are many ways in which a person can locate financial institutions such as banks that offer such kind of borrowed money. Advancement in technology has made it possible to view and access such companies by a click of the button. This is where a person logs into an official website of a financial company and provides the necessary details required by the company.

The details include physical address, the type of loan, amount of money being borrowed and the time to repay the borrowed capital. This information is verified online within a very short period of time. This is to ensure that a client receives the capital as soon as possible. The next step involves collateral. This can also be availed online if it involves things like bank accounts and trademarks. Interest rates are usually low and competitive in the market.

Healthy Lending in a Sick Economy

The Great Recession has brought upon us the Great Credit Contraction. That means that commercial real estate lenders have become more cautious. The high loan to values (LTV's) have been replaced by higher investment capital from borrowers. Lower credit scores have been replaced by higher minimums. Raw land and Construction loans have vanished. Stated Income and Reduced Documentation loans have left the lending stage making room for the Fully Documented loans. Appraisals are scrutinized from top to bottom and local economic data are given its deserved emphasis.

At first one may be inclined to think of all these events as a negative element that would impact an economic recovery. But this is far away from the truth. Our current economy can be easily described as an alcoholic man. The credit that's been pumped into our economy during past decades (dot.com, Y2K, real estate boom) has had the equivalent effect - figuratively speaking - of alcohol abuse. The non-discriminatory credit expansion along with below market interest rates - made available by the central banks - has given wrong signals to individuals and businesses thus causing "malinvestments" and speculation. Our economy has become addicted to credit for too much consumption (and not enough production) and finally withdrawal symptoms are kicking in. There are certain unpleasant steps that are required to sober up and that is just one of the requirements necessary for an economic recovery.

For one that has been in the field of lending for a few decades he can probably attest to the fact that in reality today's lending guidelines are not much different than what they were back during the 70′s, 80′s or even the early 90′s. They are in one word, conservative. Of course, if one compares current lending to only five years ago, the difference appears quite drastic. And drastic difference it is but not because today's guidelines are way too rigid but because yesterday's were way too loose.

So, where does this leave the entrepreneur or business man of today? To start with he needs to be prepared to play in the same field with the rest of the competitors. He must be well equipped to prove himself and his project worthy of new credit. This implies a well documented and up to date loan package. He must emphasize his strength and generously compensate for any minor weakness. His project must be sound and viable from an economic standpoint. His background must be rich in experience and knowledge. His financial strength must be outstanding, in other words, he must have some serious skin in the game. And finally all of the above requirements must be clearly described in the project's summary without leaving any room for ambiguities. For more details on how to position yourself first in line for financing read my article, Reality vs Fantasy in Commercial Financing.

The conclusion is that lenders are not willing to take high risk anymore. The current credit deflation has decreased the pool of funds available for lending thus competition for money is fierce. This does not mean there is no more money to lend, it simply means that the current available funds will be distributed to those who can prove their competence and efficiency best.

The Lending industry is quite chaotic and unpredictable, especially in today's economic environment. Banks will like your deal today and hate it tomorrow. Most commercial loans are originated today as Portfolio Loans. This means the lender keeps the loan in their portfolio for the entire term. So, if they find today they have too many retail centers in their portfolio, they will decide - over night and without a warning - to shift to apartment buildings.

Loans For Small Business Owners

Entrepreneurs are some of the most ambitious, adventurous people in our society. Without the people willing take a risk our society would not be where it is today. With the economic climate as shaky as it is in our current state some small business owners are looking at loans for business expenses, equipment, advertising and other business related expenses. Growth in these times is often difficult without the backing of some type of financial source. Financing these days come from many sources traditional and non-traditional.

First let us look at a loan for small business owners specifically. The SBA express loan was launched to offer small businesses a chance at a loan backed by the SBA with little hassle in regards to application. Qualified applicants can obtain a loan for up to one hundred and fifty thousand dollars and are guaranteed to receive a decision within thirty-six hours. The SBA express loan alleviates small business owners from having to go through all of the paperwork that is originally identified with the standard SBA loan.

Next small business owners should look into their local community banks for financial backing. Although the options in financing may not be as varied as a financial giant smaller community banks offer something large lending institutions cannot and that is their flexibility in dealing with entrepreneurs. This is something very valuable when owners are looking into financial backing options.

An asset backed borrowing option can be the right choice for some. This is a way to reduce the risk that entrepreneurs present to financial institutions. Offering up assets as backing to loans can often help to decrease the credit-risk premium. If this is the only way to go don't be discouraged, asset backed loans don't narrow the terms of the loan. That is not the case at all. Assets can be anywhere from a home-equity line of credit to a SBA loan backed by a child's college savings account. Pricier options entail loans linked to company's receivable or contracts billed.

A cosigner is another option for small business owners needing financial backing but not able to obtain financing on their own. A co-signer is needed when the history of the applicant, in this case the small business owners, has a lacking credit history. This is a tricky situation for new business owners to get themselves in because the co-signer then becomes liable for the payments on the business loan if the owner defaults. With new businesses the statistics for success are not weighted in their favor so this is a risky option for a close relationship. It is best to look outside of this option until it is apparent that all other options have been exhausted.

Loans for equipment, startup and growth amongst other things are all incredibly important reasons for a small business owner to be looking for capital funding. It is important that as a society we look at small businesses within our communities and support them financially with our business to help them succeed. With their success comes growth for communities, local and state governments not to mention national growth. With the economic stupor society is in today it is important that people willing to take risks involved with business ownership are rewarded with business.

Very Little Collateral Is Okay

A catch-22 is when a small business needs a small business loan to buy needed equipment, but they have no collateral which is necessary to obtain that small business loan. Your lending institution may look to see if you have any existing assets before they will negotiate with you on making the purchase a security. Therefore, how do you start up a business if you do not have anything established? Catch-22 is a huge dilemma many business owners face when they are attempting to start up a business.
Since there is nothing you can really put up for collateral, it makes it very difficult to get any working capital and if you do not have any working capital, you are basically stuck in neutral with starting up your business. However, there is an alternate route that can put your business in first gear, to find a new business loan you need to find a lender who is willing to take a risk for you. Obviously since the lender is taking the risk you will have to be the one that pays the high price for it because the interest rates for these risky unsecured loans can run fairly high.
Even though we are going through some tough economic times, unsecured business loans are not necessarily prohibited. Just like everyone else banks and lending institutions are not in that better of a situation than us and need as much of your business as they can get. Before even asking for a small business loan you should have thought up of a thorough business plan you really feel confident about. Now if you take that business plan and show these banks or lending institutions exactly what you plan on doing, and showing them the same confidence you have in your business plan, they will almost definitely decide to take that chance on you and grant you the loan you need to start up your business.
In an economy where there exists a collapsed mortgage market and an unemployment rate of 10% financial institutions need to find a different route from the mortgage market to make their money. One way they can do that is by lending out money, even if you do not have much collateral they will be willing to lend due to the fact that these financial institutions want and need to make money in this tough economy. Therefore, when you walk in to get a loan use this information to your advantage to receive that small loan.

Prepare To Be Approved

As a small business owner to be or one that is in existence, but in need of financial backing for growth, the SBA loan application can be complicated. It is important that once an entrepreneur decides upon a loan guaranteed by the small business that they begin the loan process by obtaining the documents required and contact a local lender that deals with SBA loans since they are not a direct lender. Once the documentation has been gathered the loan company with then submit the information to the SBA for approval or denial.

The first piece of documentation that should be completed is the SBA loan application. The business owner should complete this seven page application. Another two page loan application is required to be filled out by the lending company. These applications detail everything about the business, business owner's finances, information on people of interest in the company and details about investments, debts and other financial documentation.

Another part of the SBA loan application is the personal history and background statement. This goes through the applicant's personal history. This involves fingerprinting with a criminal history check as well as a credit check being done in regards to the applicant past business ventures and transactions.

It is also required when applying for a SBA loan that the businesses financial statements are included. This is basically a detailing of a signed balance sheet of the company's profits and losses as well as current statements on the business. Current in this situation is anything within the past ninety days that has relevance to the company's profits and losses. Supplementary schedules are required on all current statements of finance.

Another piece of documentation that is important is a projected statement of finances. A written explanation of your income goal and a financial explanation with how the company hopes to achieve this goal are required to show that the business has a plan for the money being leant. Another pertinent piece of information that is requires in your loan documentation is information on all interested parties in the business be it ownership and information on affiliates with the business.

Licenses and all business certificates are important and should be documented within the application. Another important document that will need to be included is a loan application history. If you can obtain loans through a bank or private lending institution this needs to be sought out before asking for financing form the SBA. The laws set forth to obtain a SBA loan include equality in hiring and granting products and services. This means that the company cannot participate in discrimination of any kind. In order for a small business to be considered for qualifying for a SBA loan it must be a non dominant business in the field it represents and must be independently owned and operated. Certain criterion also involves the number of employees and annual receipts.

Tax returns from the business shall also be considered in the application checklist as well as personal tax returns. It is important to represent at least three years of history to the SBA. Resumes are also an important piece in the puzzle of obtaining funding from the SBA. Along with a detailed overview of why the funding is needed and how it will help the business prosper the business should also obtain a copy of current lease agreements in regards to the building and the equipment leases.

If the purchase of an existing business is in the works the SBA will need information from the existing business including balance sheets, tax returns, the terms of sale along with a list including the purchase price, inventory, value of machinery/equipment and a list of all furniture and fixtures belonging in the sale.

This information will give the SBA a detailed look into the business covering the entire picture on what the owner is basing his attempt for funds for. When looking at the provided information there should be little doubt as to the success of the businesses in order to obtain a loan from the SBA. After going through the documentation requires obtaining a loan the small business entrepreneur should also have zero doubt about the substance on which the small business will be running.

Finding Commercial Mortgage Note Buyers

Commercial real estate has been struggling since the market tanked. Commercial properties are remaining on the market much longer, causing many property owners serious financial headaches. Owners are being forced to make heavy concessions that include deep price reductions and seller financing. Though financing the deal may have seemed wise at the time, the extra cash from an outright sale might really be needed right now. Commercial mortgage note buyers will purchase the note, providing fast cash in return.

If sellers come to the conclusion that this is the best approach, they must find a buyer for their commercial mortgage notes. Many of them are new to this arena so they do not know whom to trust. They may not have any referrals from colleagues, leaving them without any direction. Rather than opening up the phone book or going online and randomly choosing a company to deal with, they should structure their search.

The recommended approach is not really much different than looking for a vendor. The best commercial note buyer is well established and has a good reputation in the industry. It employs knowledgeable people who are committed to customer service and offering a fair price for the mortgage note. A free quote should be available that does not obligate the individual in any way. Commercial note holders should feel comfortable that they can compare quotes from various companies without having any pressure placed upon them. Strong-arm tactics have no place in the commercial mortgage note industry.

Many note holders feel pressed for time because their mortgagees are missing payments. As this loss of income adds up, they may be tempted to make a hasty decision. This choice almost always ends up being regretted. It is better to look for a reliable note buyer that provides a reasonable quote than go with a company that promises a high payout and has an unknown reputation.

The search should begin online and should involve research regarding how long the company has been in business, what it specializes in within the note buying industry, and what its reputation is with previous clients. Companies that include an online quote form make the process much easier. Busy commercial note holders can complete this form in a few minutes and submit it electronically. Within a reasonable period, they should receive a call or email with a no-obligation quote.

Closing time frame is something the note holder should inquire about because this determines how long the income shortage could continue. A reputable commercial note buyer can close the transaction within 30 days and will pay the typical closing costs. The note holder can rest assured that the lump sum payment will be in hand within the next month.

Commercial note holders may choose to sell their mortgage note to receive a return on their investment. If they are not receiving mortgage payments regularly or have stopped receiving them altogether, exploring the commercial mortgage note buyers available may be worthwhile. Going down this road can prevent their entire real estate and overall financial portfolio from being threatened.

Towards Greater Uniformity

EXPECT the most unexpected in the markets. Despite decision to ban badla, the Sensex has been inching upward perplexing a majority of investors. More than the upward movement of the Sensex, it is the improving breadth of the market which indicates that bulls are trying to regain control.

One reason for the improving breadth of the market is the shift in focus from A group stocks to B1 and B2 category scrips. A large number of scrips from these categories have seen sharp rise in volumes during the last fortnight.

The reason for the shift in focus is simple. While A group stocks will move into rolling mode from July 2, B1 and B2 category scrips will go into rolling mode only early next year.

This will provide enough opportunity for marketmakers to keep small investors' interest alive in the market till then. It is the interest of small investors which keeps the market alive and kicking.

Also, FIIs are pleased with the trading system moving closer to international methods such as options and futures. They have pumped in more than Rs 10,500 crore during this calendar.

In fact, consequent to Sebi's decision banning badla, FIIs alone have pumped in Rs 676 crore during the last 10 trading sessions.

This flow of fresh funds and general feeling in the market that nothing bad is in store, have brought back the feel good factor.

Over the next few years, there will be a fundamental change in the market structure. By March, the caste system in the market, ie, classification of scrips into different categories A, B1 and B2 will come to an end.

Currently, A group stocks enjoy an edge over other category stocks in the form of liquidity and carry forward facility. Come July 2 and this will come to an end. It will make investors look at all scrips in like fashion.

This is likely to lead to an upward re-rating of a large number fundamentally good scrips which are currently neglected by marketmen just because these belong to the B1 and B2 categories.

Therefore, it is now time to take a closer look at fundamentally sound scrips belonging to the B1 and B2 categories as a large number of winners are likely to emerge from among these categories.

Adding to the bullish mood of the market is the announcement by the meteorological department that monsoons are set to be normal yet again. Even drought hit states -- Rajasthan, Gujarat and Madhya Pradesh -- are expected to receive normal rainfall.

Historically, after a spell of drought, whenever normal monsoons have returned, the market have always recovered sharply.

During the drought of 1987, the Sensex was moving in the range of 530 and 390 and was in the firm grip of bears. In 1988, as soon as first indications of a normal monsoon reached the market, the Sensex moved upward very sharply and touched a high of 720 in the same year.

With the arrival of normal monsoons in the three drought hit states, rural demand from these states is expected to increase. This is likely to bear a positive impact on sectors like tractors, pesticides and two-wheelers which draw a large part of their demand from rural India.

Improved rural demand should help see a rise even in FMCG major HLL's topline growth.

Technically, the most important signal likely to emerge will be on the weekly moving average convergence divergence charts. Currently, it is placed in the negative territory.

The average and trigger lines are converging towards each other and are very close to give a buy signal.

If a confirmed buy signal emerges from this chart, (most often it is a whip-saw), it would be after a gap of five years when the MACD chart will show a strong positive divergence coupled with a buy signal.

A similar trend appears on the monthly stochastic chart too. It is currently in the sell mode and is placed in equilibrium territory. But the average and trigger lines have started converging.

Though, these are still far apart, if a buy signal appears on this chart too, that would confirm a strong bullish mood as it would also be seen after positive divergence.

The 14-month William%R has given a buy signal as it moves upward from the oversold territory. However, it has not yet shown any positive divergence.

Multifamily Financing Tips

Apartment buildings are hot today. As a matter of fact those who own them benefit from this real estate bear market. If you wonder how's that, just think of the millions of homeowners whose properties have been foreclosed or were forced to short sale their homes. These folks are now renting, they can't qualify to buy another house, at least not for a few years. In the meantime, banks are in no hurry to dispose of the recently foreclosed homes as the government has helped them eliminate their losses (through bailouts). While these homes are sitting vacant for months, if not years, the apartments are getting full and more demand is thus created.

Before rushing in to look for apartment buildings be sure to learn what it takes to qualify for a mortgage nowadays. Skin in the game is a must, there are no 100% loan programs available today no matter what the internet says. Financial strength is also required, the lender must feel comfortable that you'll have sufficient reserves/net worth to cover for the mortgage payments should high vacancy occur or major repairs must be made. And last but not least, it's the background in owning and managing apartment buildings. Owning and managing residential properties is not sufficient experience, yes both are real estate but completely different breeds. For more details on how to position yourself first in line for financing read my past article titled "Reality vs Fantasy in Commercial Financing".

As far as apartment building loan programs there are a few that most seasoned owners/investors are currently taking advantage of. For example, there is a Multifamily Small Loan Program that streamlines the entire loan process for multifamily acquisition and refinancing for loans between $1 million to $3 million ($5 million in major MSAs). Why is this loan so cool? First of all because once you have it you won't need to refinance after a few years. You see, most bank loans have terms of three, five, seven or ten years (with balloon payments and longer amortizations), after which owners simply are forced to refinance. Not with this loan! You get a low rate and save money - and equity - by not having to refinance in the future.

Does it appear too good to be true? No, not really, because as mentioned earlier a substantial down payment (if purchase) or equity (if refinancing) is required. Expect an average of 70 to 80% LTV (Loan to Value) with no exceptions above this limit. Expect to provide evidence of previous multifamily ownership and a solid PFS (Personal Financial Statement). If you're half way there here is an idea. Find a trustworthy partner with whom to join forces, and remember the word "trustworthy".

When it comes to rates while they are low they won't be as low as residential rates. However, the lower the LTV the better the rate. For example a loan with a forty percent equity and a higher debt service ratio will benefit in form of lower rates due to its lower risk. (For a rate quote please contact me). The other difference is that residential loans today tend to come with no prepayment penalties while many commercial loans do. So what should a borrower expect? Up to five years with a penalty determined when the loan is underwritten. Yet, this should not be considered a big detriment unless you plan on selling the property during the next few years. This loan program is best used for those planning on holding on to the property in longer term (more than five years) otherwise, there are better programs for short-term investors.

Properties best suited for this program are those in good to great condition and with high occupancy rates of 90% or above. I see plenty of requests out there for distressed multifamily properties and yes, there are great opportunities in buying and stabilizing such properties. And hard money or private money may be the temporary solution. After the property is fully stabilized it may then qualify for the Multifamily Small Loan Program.

Please try to forget the guidelines from the past decade. Forget the no down payment or little down payment programs. Forget the stated income, no income and no documentation programs. They are fantasy, unrealistic, time-wasting thoughts. They are gone and not coming back for a long time. Seasoned investors know this and that's why they work rather efficiently when they are in need of financing. Their goal is a successful closing and they know what it takes to get there...a viable project and a viable borrower with more than enough proof to provide to the lender.

One last piece of advice. If you're looking to finance apartment buildings in Croatia or Australia or some other far-off land you won't get funded by American lenders. No matter how appealing your project is it won't happen. Why? The problem is one of taxation. If a foreign bank were to make a big loan here in the states, the US government would levy a foreign lender tax of 30% of its interest income. Conversely, an American lender doing a loan in another country would subject itself to a similar tax imposed by the foreign country (check with your tax adviser for more details). There is one exception, however, and that is if an Australian bank starts a subsidiary bank here in the US and the subsidiary makes loans in the US. Generally speaking, if you are seeking a loan in Croatia, save time and energy, and go local.

The Lending industry is quite chaotic and unpredictable, especially in today's economic environment. Banks will like your deal today and hate it tomorrow. Most commercial loans are originated today as Portfolio Loans. This means the lender keeps the loan in their portfolio for the entire term. So, if they find today they have too many retail centers in their portfolio, they will decide - over night and without a warning - to shift to apartment buildings.

Individual Private Sector Banks

Bank stocks had moved up last week in anticipation of big-ticket reforms in the banking sector. However, the move came about as a damp squib as it was just an enabling provision to help banks raise more equity from the market. The proposal to bring down the government stake down to 33 per cent would essentially come through banks increasing their equity or through a reduction of capital.

As no one can hold more than 1 per cent of the equity, it would ensure that no strategic partner comes in nor a change in management would be possible. As the public sector character of the banks would be retained together with parliamentary supervision, it does little to change the management style either.

The move to grant greater autonomy to bank boards would as a result come as a cropper. The government has also retained the right to appoint the chairmen and directors on the boards of the bank, thus doing little to induct in more professionalism and entrepreneurship. The ability to restructure cost base and issues of independence of management would still remain. Key long-term issues including legal reform to address asset recovery and universal banking remain unaddressed too.

The lack of reform has impeded meaningful reduction in non-performing assets. The credit growth is likely to slow down in the coming months on the back of slower industrial growth. The interest rate environment is also expected to be fluid, which will put pressures on the spread. Technology has widened the gap between pro-active banks and others.

Most public sector banks have been unable to respond to the opportunities created by technological change. As most of the PSU banks having controlled market share till now are facing capital and management constraints, pro active private banks have managed to gain share and grow rapidly. While bank stocks, particularly those in the PSU sector are currently available at attractive valuations, there aren't significant upsides to the performance at these levels.

While we are not bearish on the sector, a lot would depend on the portfolio churning by institutional investors. With the information technology sector going out of favour for fresh money buys, a defensive sector like banking could be looked up to by investors. In that event, if portfolio churning does take place, the sector may find favour.

There aren't any indications of that happening now. Individual private sector banks with a technology edge are expected to continue to generate investment interest.