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Facts and Strategies to Successfully Apply for a Business Loan

Even in these somewhat financially challenging times, a business loan can be obtained by using a sound strategy and smart outlook. If someone is trying to launch or expand their business, there are a few strategies to consider before seeking financial support.

Create a Strong Business Plan

When seeking financial assistance to pursue a business goal, be ready to present a solid, fundamental business plan to potential financial lenders. Try to incorporate as much detail as possible. Ideally it should include:

  • 3-5 year business plan showing a previous record of strong profitability
  • Current and projected sales numbers
  • Cash flow statement and projected budget

Check Both Business and Personal Credit

Business experts collectively agree that it’s crucial for someone seeking a business loan to know their credit scores prior to applying for one. If a person’s credit took a hit during the recession, it’s in their best interest to restore it first to increase their chances of successfully securing a loan or a new line of credit.

Pursue a Bank Loan

apply for a business loanUnfortunately, several small business owners only have one or two banks in mind, and simply give up if they’re turned down. A better strategy is being more open-minded and to research 5-10 banks that appear compatible with someone’s loan requirements and then pursue them. If a person has a business that’s creditworthy, they will likely find a bank willing to work with them.

Dream Big but Ask Small

Although a person may have lofty business dreams, it’s less likely they will secure a large loan over a smaller one despite their collateral or number of assets. It’s better to think small and build from there. Short-term gains are safer and more doable.

Check Out SBA Loans

The Small Business Administration (SBA) can provide loans using third-party financial lenders such as banks and other community development institutions to assist in identifying additional venture capital resources. Different SBA types have various eligibility factors and requirements. In general, a business must have a reasonable amount of invested equity and illustrate why they need the loan as well as no prior history of negative or delinquent debts owed to the government. Those businesses which are significantly involved in religious education, life insurance, or legal gambling are automatically ineligible.

Look into Peer-to-Peer Lending

Another possibility is to look into peer-to-peer lending as a financial source other than traditional banks or high-interest cash advance lenders. If a person’s business doesn’t meet the criteria to obtain a bank loan, peer-to-peer lending can offer a short-term, practical option, assuming a person is able to verify business-associated collateral or a personal guarantee. Interest rates may vary; therefore completely understand the terms before committing to the loan.

If you are in need of a business loan, Rescue 1 Financial offers business loans to start a business or get cash flow to cover your monthly bills.

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How is Interest Calculated on Business Loans?

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Getting a loan is part and parcel of being a small business owner, especially during the start up period. No intelligent businessman will use huge amount of their savings to start a business. Instead, business loans provide the capital necessary to get a venture underway. Here is a guide to how interest is calculated on business loans.

How Banks Determine Interest on Your Loan

calculate interest ratesThe United States government sets the standard for interest rates. The “Fed rate” set by the Federal Reserve will have a bearing on the prime rate set by banks. The prime rate is the interest rate for the ideal customer. For example, a customer with outstanding credit ratings and a great business plan can expect an interest rate close to 4%.

Beyond the prime rate, the amount a customer borrows, their credit rating, the overall relationship with the lending institution, the period a customer wishes to have the loan for, and the customer’s credit score all impact the interest rate on a loan. In some cases, these factors may prevent the customer from getting a loan.

The best way for a prospective small business owner, or current owner, to get a great loan is to ensure their credit rating is as high as possible. Additionally, it would be wise to request a loan from the same bank where you keep your checking and savings account.

It is important to be patient while trying to obtain a loan. Banking institutions are looking to maximize profits and satisfy their shareholders. A lender will look to get you on the least favorable terms possible. It is up to you to stand your ground, present your business plan in a clear and intelligent manner, and to ensure that your credit history merits a low interest rate.

Calculate Monthly Payments:

For this guide, let us assume that the business owner gets a $20,000 loan that has to be paid back in two years with a 6% interest rate. This means there are 24 payments that must be made, with the total being $20,000 plus interest.

A 6% interest rate means a 0.005% interest rate per month. The interest rate + 1 is raised to the negative power of payment periods. In this case, 1.005 ^ -24 = .887186. Subtract this number from 1. For example, 1 – 0.887186 = 0.112814. Now take the amount borrowed and multiply it by the monthly interest rate. $20,000 * .005 = 100. That number divide by 0.112814 = $866.42 which is the monthly amount you will pay on your business loan.

Rescue One Financial offers business loans, find out how we can help.

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How to Get a Business Loan

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Many Americans have dreamed of starting their own business. If you have a great idea that you want to fund, the first step is to get financing. Read on for a step-by-step guide about how to go about getting a loan for your small business.

  1. Make Sure Your Credit is in Order
  2. how to get a business loan
    It will be difficult to get a business loan if you have poor credit. You’re eligible to get free credit reports annually from each of the three credit agencies, so start by accessing these documents to find out where you stand. If your credit is not up to snuff, it may be necessary to have a cosigner for your loan.

  3. Have a Solid Plan
  4. When you approach the bank, loan officers will be reviewing whether the idea for your business has the opportunity to make enough money to repay the loan amount you’re requesting. Before applying for the loan, have a solid business plan and budget in place. Most banks will require your credit history, financial statements as well as projected statements for the next 12 months, cash flow projections for a year, and resumes and bios of all owners of the business.

  5. Find a Bank to Work With
  6. Depending on the scope of your business plan, a national or local bank may be your best chance for getting funding. If you already have a relationship with a financial institution, consider starting there. If you’re not sure where to start, consider asking other small business owners for recommendations. You can also consider a credit union in your area.

  7. Leverage Resources
  8. If you’re just getting started, the U.S. Small Business Administration has a wealth of information on their website at sba.gov. Federal loans are available for new and existing businesses, depending on your needs and the type of enterprise you’re starting. They also have business plan templates and advice, as well as other resources to help educate and support the small business owner.

  9. Submit Your Application in Full
  10. The business loan approval process is typically complex, with lots of required documents and hoops to jump through. Remain engaged throughout the process, responding promptly to information requests and checking in regularly with your loan officer to determine status. Once your application is complete, it will take a few weeks to hear back. If your application is rejected, find out why and work toward strengthening your business plan to try again.

At Rescue One Financial we offer business loans to make your dream of owning your own business a reality, find out how we can help.

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What is a Business Loan Agreement?

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If you own a business and need cash for developing new products or expanding the existing operation, work with a lender to obtain a business loan agreement. Banks and other lenders use this type of contractual agreement to define the terms and conditions that will govern the lending arrangement. The text of the agreement is usually much more detailed than a promissory note and helps to ensure there is no question about the rights and responsibilities of the lender and the borrower.

Key Provisions in a Business Loan Agreement

Business Loan AgreementThe contents of any loan contract will vary to some degree, depending on local laws and the terms that the borrower and lender agree to include. Just about every contract will address the following:

The Rate and Type of Interest: The terms of the contract will define the rate of interest that will apply to the principal, how that rate will be applied, and whether the rate is fixed or if it will vary over the life of the loan.

The Repayment Schedule: This will identify the amount and frequency of the payments that the lender requires in order for the debt to be considered up to date. That frequency may include terms that defer payments until a certain date, involve a balloon payment followed by monthly installments, or any other combination of repayment methods

Terms of Default: In the event that the debtor fails to honor the terms of repayment, the loan contract will empower the lender to utilize a series of options to minimize the loss. This can involve calling the debt early, seeking collection of the debt through an independent agency, or even filing suit in a court of law

Above and beyond these basic provisions, the loan contract can include other provisions that the debtor and lender choose to include. For example, the terms may include additional room for the lender to temporarily suspend payments if certain events take place. If the contract specifies that payments can be suspended in the event of a natural disaster that wrecks the debtor’s manufacturing facility, then the destruction of the plant due to flooding or a tornado would allow the debtor to petition the lender to invoke that provision.

When seeking a business loan, understanding every provision found in the loan contract is essential at Rescue One Financial we will ensure you understand every term before you sign on the dotted line. If any of the terms seem vague or open to multiple interpretations, the debtor would do well to work with the lender to refine the verbiage. Doing so will minimize the potential for misunderstandings later on, and increase the chances that both parties find the business to be mutually beneficial.

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Will a Debt Management Plan Affect my Mortgage?

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Debt Management Plan Affects on MortgagesIn some cases when a person is facing ever more unmanageable debt, he or she seeks out the assistance of a debt management program or organization. In basic terms, a debt management program negotiates with creditors to work out a more reasonable plan for you to pay off existing liabilities. Typically, this includes negotiations with credit card companies and even providers of medical or health care services to whom a person owes money.

Oftentimes, once a debt management program representative negotiates with certain creditors, the consumer makes one monthly payment to the debt management company which in turns makes individual payments to creditors. A person with a home mortgage loan may wonder what impact, if any, entering into a debt management program will have on that loan.

Direct Impact on a Home Mortgage Loan

The quick answer to what affect a debt management plan has on a home mortgage loan simply is “it depends.” In some cases, a consumer needs to have a home mortgage loan included in the debt management process. This typically is the case when an individual’s combined debt truly is overwhelming. Such an individual is one step away from heading to bankruptcy court.

In such a situation, a debt management counselor or consultant may attempt to negotiate a reduction in the monthly mortgage loan payment, at least for a set period of time. If the home mortgage lender agrees to such a reduction, the monthly home mortgage loan payment will be made through the debt management organization.

In other cases, a consumer may not desire or need to have a home mortgage included in an overall debt management program. In such cases, a debt management plan will have no appreciable impact on the home mortgage loan.

Reliability of Debt Management Organization

When a person engages a debt management organization, he or she must undertake a course of due diligence at the outset to ensure that the entity is reliable. In addition, once such a service is engaged, an individual must monitor its efforts to ensure that it is making timely payments to creditors.

If a debt management organization is not making payments to creditors in a timely manner, a consumer could end up in a worse position than he or she was in prior to the start of such a plan. If the home mortgage lender is included in the mix, a person could end up faced with late fees and penalties if the debt management company does not make the monthly mortgage payments in a timely manner.

At Rescue One Financial, we can help you resolve your debt in 24 to 48 months to ensure the weight of the debt you are carrying is lifted from your shoulders in a timely manner.

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Who Regulates Debt Management?

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A person contemplating taking advantage of the services offered by a debt management agency or organization likely desires to undertake some research before engaging such assistance. Indeed, appropriate due diligence is necessary before electing to engage a service to assist a person in dealing with debt related issues.

As part of the process of considering whether to participate in debt management, or if a person is in the midst of debt management and encounters some sort of problem, the question may arise as to who regulates debt management. A consumer is able to make better informed decisions regarding debt management, and is in a stronger position to address an issue relating to this type of service, when that person possesses accurate information regarding who regulates these debt management.

Federal Regulation of Debt Management

Federal Regulation of Debt ManagementThe federal government plays a role in debt management and the organizations or agencies that provide these services in the United States. Specifically, the Federal Trade Commission, or FTC, is the federal agency that is charged with the oversight of these the organizations or agencies that provide debt management services.

If a consumer faces some sort of issue or problem with debt management, he or she can file a complaint with the FTC. The agency maintains an online portal through which a consumer can file a complaint with the FTC regarding the practices of a debt management organization.

State Regulation of Debt Management

Keep in mind the each state has different laws pertaining to debt management. Some states place restrictive standards on the types of organizations or agencies that can provide debt management services. For example, some states my restrict for profit companies from providing debt management services to consumers but may permit non for profit entities to provide debt management assistance to consumers.

Each state designates a particular agency to oversee the operations of a debt management organization or agency. Indeed, most states require a debt management service to provide a consumer with the name and contact information for the state agency with oversight authority.

Oftentimes, the state attorney general’s office serves as something of a clearinghouse for information on the regulation of debt management services, even if the AG’s office may not directly regulate these services directly. Most attorneys general maintain a division within their offices that deal with consumer related issues, including those dealing with fraud or inappropriate activities by different business or organizations operating in that state.

If you are in need of settling your debt, find out how Rescue One Financial can help you with one of personalized debt management programs. We have helped thousands of people struggling with debt and we can help you.

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Is Debt Management the A Good Way to Resolve Debt?

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resolve your debtWhen in debt, most people will struggle as they do not know what to do or how to approach the situation. Sadly, this leads to more problems as most will end up doing nothing. Instead, a person should look at his or her options and choose the best course of action. One such way to get out of debt is to use a debt management company. Here is a quick rundown on why debt management is a good way to resolve debt.

Get help: When dealing with this problem alone, one will face an uphill battle. On the other hand, a debt management company will help a person devise a practical strategy to pay off the debt. This is crucial as it is hard for the average consumer to talk to his or her creditors and come up with a solution that both sides will like. Simply put, with a professional on their side, one can get a quick and painless resolution.

Reduced charges: Banks and lending institutions do not want to lose money. For this reason, when dealing with a person who is in a lot of debt, they will often forgive some of the loans. This is more than a goodwill gesture as a creditor would rather receive some money than nothing. One must remember that it is hard to do this without help as many lenders will not negotiate with an individual. On the other hand, when bringing more to the table, the creditor will change its tone and offer a workable solution.

Monthly payments: Now, when in debt, most people cannot come up with a lump sum of cash. This is the reality that many face when trying to pay down bills. Luckily, when using a debt management plan, one can pay off their debts slowly. By taking 36-60 months to pay the collector or creditor, one will not have to struggle to come up with cash.

Fix score: With a debt management company, one can fix their score and borrow money at a lower rate in the future. Since the company can help a person clean up their credit report, a consumer will do better by using a qualified professional.

Without a doubt, a person in debt has plenty of options. While there is no one-size-fits-all solution, it is wise to consider a debt management plan as a borrower can pay off his or her debts in a timely manner and regain their financial footing.

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How Long Does the Debt Settlement Process Take?

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Debt Settlement ProcessDebt settlement is one option available to persons experiencing financial difficulties. This process involves negotiations between the debtor and their creditors.

Debt settlement can be done by the individual, but many times the process can be handled more efficiently by a reputable debt settlement company.

How Does Debt Settlement Work?

Debt settlement is a process where by the debtor cannot continue paying their monthly obligations and seek relief. The debtor must gather all their financial statements before approaching creditors.

Creditors will review a debtors financial documents, verifying that they are indeed in need of financial relief. Creditors see settlement as a viable option, compared to collection costs and possible bankruptcy on the part of the debtor.

Preparing a Settlement Worksheet

The first thing the debtor must do is prepare a budget (worksheet). This worksheet does not have to be shown to creditors, but its sole intent is to help the debtor know what they can afford and provide a guide for negotiations.

The worksheet is simple. Debt settlement usually involves unsecured debt, e.g., credit cards, personal loans, retail cards. The worksheet will have income on one side and fixed debts on the other. The leftover income is what creditors are after. This income has to be divided among the creditors involved in the settlement process.

Negotiating With Creditors

There are there areas commonly negotiated in this process:

  1. Interest Rates
  2. Term (length of loan)
  3. Reduction of Principle

Item 3, reduction of principle, is where debtors get the most resistance. The finalized worksheet, mentioned above, will give the debtor a basis for what offers will be made to each creditor.

Creditors will try and squeeze as much as they can in negotiations; to be expected. The bottom line is, the debtor must ultimately balance the new terms to their income, or else the settlement won’t work.

How Long Does The Debt Settlement Process Take?

Typically, this process can be wrapped up in under six months. Since each case is different, the outcome will depend on the number of creditors involved and the complexity of the negotiations.

Many people find it more efficient and less stressful if they hire a reputable debt settlement company. There’s a lot of written and verbal communication that goes on in the process; this can take up a lot of time that the debtor just doesn’t have.

Also take into account that many reputable debt settlement companies already have relationships with creditors, and this can be a big advantage in the negotiation process.

At Rescue One Financial we can help you resolve your debt in 24 to 48 months. Find out if we can help you!

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How to Qualify for Debt Management

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These days, many hardworking people are experiencing difficulties when it comes to paying off debt and managing finances. And while it is generally common to hold some amount of debt, it can become a major problem when a person experiences an inability to make debt repayments on time or to even make the minimum payment. Fortunately, debt management programs exist to assist people who are struggling financially when it comes to paying off their debts. The result of going through a debt management program is typically a more reasonable and feasible repayment plan that is worked out with one’s creditors and a debt management company.

Qualifying for Debt Management
Qualify for Debt ManagementOf course, not everybody is eligible for debt management assistance. To ensure that only those who are in the most need are assisted, many debt management companies have some strict guidelines in place when it comes to who they will work with. In general, there are some basic criteria that must be met in order to be considered for a debt management program. Some of these criteria include:

  • Being unable to make debt repayments
  • Only being able to make the minimum payments
  • Losing a job or experiencing other financial hardship
  • Carrying a certain amount of debt, which can vary based on the debt management company

Some debt management companies specialize in certain types of debt as well, which can also affect one’s eligibility. For example, a debt management company may require the applicant to hold a certain amount of credit card debt and will not work with other types of debt. It all depends on the specific company being worked with. Regardless, the basic criteria outlined above tend to be the minimum requirements for somebody who is looking for help from a debt management company.

The Process
Upon being accepted into a debt management program, it is important to attend an initial consultation with a financial advisor from the company. From there, debts and income will be analyzed and the advisor will be able to get a better idea as to the person’s financial situation. From there, he or she will begin working with the person’s creditors to come to an agreement that will be amicable for both sides, thus allowing the person to gradually be able to get out of debt in 24 to 48 months. Rescue One Financial has helped thousands of people resolve their debt with creditors since 2007 and we would like to help you. We have relationships with all the major credit cards and banks to help you get a debt management plan you can afford.

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How to Rebuild Your Credit After Debt Settlement

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Many people who have a large amount of debt often resort to debt settlement. Although this can help to relieve the stress of having bill collectors calling daily, it can have a negative impact on a person’s credit score. Fortunately, there are steps that individuals can take with the help of a debt settlement company that will help to rebuild their credit after settling their debt.

Credit Cards for Bad Credit

    Rebuild Your Credit After Debt Settlement
  • Although credit cards are usually the reason people have a large amount of debt, they are also the best way for individuals to rebuild their credit.
  • There are numerous credit card companies that specialize in helping people with bad credit. These credit cards will usually contain a high interest rate because the company realizes that the person may be a high risk customer.
  • Also, these credit cards may require a person to pay a monthly fee or a yearly fee.

Eliminate Old Habits

  • In most cases, people may develop bad credit because they have reckless spending habits that lead to large amounts of debt. Therefore, people should work hard to get rid of these old spending habits.
  • First, it is important to not charge items on a credit card that cannot be paid off immediately, instead use cash.
  • Second, it is extremely important to pay all bills on time and not miss any payments for any reason.
  • Third, it is vital to communicate with credit companies when a problem arises. Many companies are willing to work with you for a short period of time, and in most cases, you will only need a short amount of time to come up with the money to make your payment.

Minimize Your Debt

  • The amount of debt that you carry plays a huge part in your credit score.
  • Your goal should be to eliminate as much debt as you possibly can, and you should also aim to do this as quickly as you can.
  • Some people rely on the snowball method, which is simply putting all your extra money into eliminating the lowest bill.
  • Other people rely on the avalanche method, which is simply putting all extra money into eliminating the bill with the highest interest rate first.
  • When you are trying to minimize your debt, it is important that you do not take on any new credit during this time.

Debt settlement is the only option that some people may have. However, even when you have to resort to this option, you should still take steps to rebuild your credit worthiness. IF you find yourself in this situation find out how the debt settlement professionals at Rescue One Financial can help you settle your debt to eliminate the harassing debt collection calls and get back on your feet.