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What are Debt Management Ratios?

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Debt management ratios are used to manage a company’s ability to continue to operate without encountering financial challenges in the future. These ratios are sometimes referred to as a long-term solvency ratio. Lenders, investors and business owners rely on this ratio as a decision-making tool and use it to measure the overall health of their business.

How are debt management ratios used?
Debt management ratios are used to determine whether or not a person is capable of handling long term debt in addition to regular obligations. The measurement of a company’s total debt amount in proportion to what is financed is considered the debt management ratio. These metrics can be used in gauging the overall health when operations, savings, funds and stocks are all taken into account. This ratio is very important in determining the level of risk associated in dealing with a business. This proportion also weighs the potential of default. The ratio measures the proportion of a firm’s assets funded by equity or debt.


What happens if the debt management ratio is unfavorable?
If the debt management ratio is unfavorable, the business is at risk of default, bankruptcy or some other form of financial distress. Industries that are unpredictable when it comes to sales and cash flow do not have the same latitude as their more stable counterparts. These differences determine how a business is able to handle its debt. Companies classified as being capital-intensive require more capital like plants to operate; low capital industries do not. This is why companies that are capital-intensive tend to have higher debt management ratios compared to companies that have low-capital. A company with a higher ratio can expect to pay more in interest rates in the debt management ratio isn’t low enough.

Why are they used?
This ratio is used by lenders and investors to measure the health of a business. High debt-to-equity signals that a company may be headed in the wrong direction or may be approaching financial distress. The revenue generated isn’t substantial enough to meet all obligations. These ratios may also demonstrate the company’s inability to really increase their profits and properly leverage them to the firm’s advantage. Investors like to know beforehand whether or not it makes sense to invest in a particular business.

How do lenders treat those with better debt management ratios?
Companies with better debt management ratios are much more likely to secure funding from lenders and investors. Those with the best debt management ratios are in a better position to acquire capital if more is needed. Other businesses may have a more difficult time getting additional capital if they get in a bind.

Debt management ratios can be a valuable tool in assessing the health of your business and gauging its long term solvency. It can also helpful you strategize on how to better leverage your finances should you discover a need for loans and investors in the future.

If you have questions or concerns related to debt management ratios or services contact the professionals at Rescue One Financial, we are here to help!


Can Debt Management Help With Hospital Bills?

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can debt management help with hospital bills Expensive hospital bills can cause a great amount of stress due to their importance and high cost. Consumers struggling with a long-term medical condition might find themselves having to make large payments every month just to keep seeing their doctor. Those struggling without insurance or without a job may find it very difficult to make these payments each month. Additionally, high debt can exasperate these difficulties as consumers are forced to make car payments and mortgage payments instead of paying for the doctor visits. Those struggling with this type of debt should consider the debt management strategies Rescue One Financial has recommends in order to help make managing these difficulties easier.

1. Consider Selling Assets
Consumer struggling with high hospital bills might want to consider selling off some of their assets in order to pay off debt. Common items like expensive cars or homes might not be necessary during hard times. While it may be difficult, consumers should admit when their financial situations are dire and consider selling down some of these assets. This can cut down on the amounts owed each month and make debts more manageable. This will leave more money to be spent each month on hospital bills rather than unimportant luxuries. Prudent actions like moving into a less expensive home and selling off expensive cars can make getting through rough times more manageable.

2. Settle Debts
Debt settlement can also be a viable option for those struggling with high debt. Many creditors do not want to make the high payments necessary in order to collect an outstanding debt. They may simply write off the account entirely or reduce the amount owed. By making these debts more manageable, hospitals and doctors know that they will be more likely to get their money. To do this properly, consumers should hire a professional, such as Rescue 1 Financial, in order to reduce outstanding debts. By doing this, great amounts of money can be saved each month and more can be allocated to medical bills.

3. Refinance
Many consumers often do not consider refinancing until they find themselves in a difficult financial situation. They may have had expenses loans since they were young that have interest rates that are simply too high. Individuals who have developed good credit scores can often refinance some of this debt in order to save money each month. In order to do this, consumers will need to make their debt payments on time in order to improve their credit scores.


Use a Debt Management Plan to Pay Off Medical Debt

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Consumers experience long-term medical conditions can find themselves in a situation where they are unable to make debt payments associated with hospital stays, doctor visits, and specialized treatments. Without doing something about this outstanding debt, consumers may be faced with making large monthly payments for the rest of their life. Additionally, they may be forced to file for bankruptcy as they will be unable to pay their debts. This could result in being unable to take out future loans since individuals will be viewed as not creditworthy. Therefore, consumers need to come up with a plan to make their medical debts more manageable.

1. Survey Existing Debtuseadebtmanagementplantopayoffmedicaldebt
The first step to devising a debt management plan is to run credit reports to get detailed information about outstanding debt. Consumers should sit down and add up the total amounts owed and the interest rates associated with these accounts to get a full overview of their financial situation. As part of this process, consumers should also evaluate their own credit scores and look for opportunities for improvement. High debts might seem impossible to pay off, but with time this will become more manageable. Consumers should not be afraid to know their financial situation by carefully studying these reports.

2. Get Help from Experienced Experts
When attempting to come up with a debt management plan, consumers should be certain that they rely on proven strategies. Individuals who have successfully overcome high medical debts and professionals in the debt management field, such as Rescue 1 Financial should all be consulted. They can often provide great insights into strategies that can be used to pay down or off medical debt. Additionally, debt management professionals will be able to assist with settling an existing medical debt or at least reducing the payments. This could make the debt more manageable and relieve part of the burden from the consumer.

3. Consolidate Loans
Individuals struggling with large amounts of outstanding medical debt can consider consolidating their debts into one lower monthly payment they can afford. This can make paying debt more affordable as individuals will not need to worry about making several monthly payments. Rather, one creditor can be paid at generally a lower rate. For those with many outstanding loans, this can be an effective strategy to managing medical debt and even starting to pay them off. As part of a debt management plan, consolidation can be an effective tool for making the plan work for the future.

Contact Rescue One Financial today and find out why using a professional might be your best option for maximum results.


Reduce Old Credit Card Debt With Debt Management

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A debt management plan is often the best path to take for an individual’s personal finances. In the end, this type of debt repayment strategy can help prevent a bankruptcy; while at the same time, it can give a person a chance to get back on their feet and pay back the money they owe. When people get to a point in their personal finances where they need help paying their credit card debt, the services of a debt management company, such as Rescue One Financial, can be the best solution to resolve your debt.

Eliminate old credit card debt from your life

Eliminate old credit card debt from your life

A debt management company will offer plans that can do several things to help with credit card debt. They will be able to help create a repayment plan that will satisfy both the debtor and the creditor. This means that all collection calls will stop, and a person will begin to live easier without the constant hounding of bill collectors wanting to know when they are going to get their money. In most cases, there is no answer to give because a debtor simply does not know how the money will ever be paid back. Debt management companies provide a solution to this problem.

Rescue One Financial has a working relationship with all of the major credit card companies, so they have the ability to negotiate in ways that will result in less debt, interest, and fees for the debtor. They are often able to waive late fees and fees charged for being over the limit. This will lower the total amount owed. Interest rates can also be negotiated and lowered. All of this will result in a lowering of monthly payments. In effect, what they are doing is calling time out on a consumer’s debt and giving a person a chance to catch up and then pay down their bills.

Credit card companies are willing to listen to what a debt management company has to say because they know how badly a person’s finances are when they turn to one for help. Using a debt management company shows a credit card company that the debtor wants to pay back the money they owe; they only need a little help in doing so. This is a strong motivation for a credit card company to work with a debt management firm to create a plan to pay off the debt.

There are many questions that a person will have before they will want to commit to this type of repayment plans, and if you would like more information, you can contact Rescue 1 Financial today.


How Debt Settlement Can Help Pay Off Large Credit Card Debt

Many consumers today are struggling with credit card debt. Since these cards are widely available, many people make the mistake of taking out several of them and maxing them out without being able to pay them back. It is not uncommon for consumers to be more than $20,000 in credit card debt with interest rates as high as 23%. This can make for very high payments each month that consumers simply will never be able to pay. Rather than declaring bankruptcy, consumers can consider settling the debt. Below is an overview of some advantages of settling credit card debt.

howdebtsettlementcanhelppayofflargecreditcarddebtAvoid Bankruptcy
Bankruptcy can be a traumatic process that can make it difficult to get loans in the future. Rather than spending thousands of dollars to declare bankruptcy, consumers can hire a debt settlement company, like Rescue One Financial to guide them through the process of settling their debt. When credit card debts are settled, Rescue One Financial works directly with the credit card company to reduce payments to an amount that the client can afford. If possible, credit card companies would like to avoid the expenses associated with bankruptcy as well.

Maintain the Right to Declare Bankruptcy
Another big advantage of avoiding bankruptcy protection for credit card debt is the ability to exercise the right in the future. Individuals who choose to declare bankruptcy will be unable to do so again for another seven years. In the event that more debt is accumulated, consumers will have no protections available to them for nearly a decade. This could be much more costly than even a higher monthly payment related to credit card debt.

More Affordable Payments
Consumers who settle their credit card debts can usually get more manageable monthly payments that they can afford. This can more than justify the expenses of going through the process since interest rates can be reduced and amounts owed can be cut down. Rather than dealing with wage garnishments or collections agents, consumers can make affordable payments and gradually pay down the debt.

Improved Credit Score
Once the credit card debt has been settled and consumers are able to make their payments on time, their credit scores may gradually improve. Many people struggling with credit card debt have poor credit scores which can make their lives difficult. Consumers can benefit in the long run by making these payments on time and thereby increasing their credit scores. By doing this, consumers can avoid these issues repeating themselves later and can look forward to a bright financial future.

If you’re unsure of where to start, seek help with the experts at Rescue 1 Financial who are always standing by.

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How to Qualify for Debt Settlement

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Debt settlement is a process in which a creditor agrees to settle a debt for a portion of the balance. In other words, the debtor only has to pay back a certain percent of the balance on an account, and the creditor will forgive such an account. Debt settlement is different from debt management because a consumer pays the credit assistance company and that person then pays all the creditors. In a debt settlement situation, the debtor pays the creditors, and the debt settlement company charges the debtor for its services. The fees may be a certain portion of the saved debt amount.

Come to a mutually satisfactory agreement and settle debt

Come to a mutually satisfactory agreement and settle debt

How to Qualify for Debt Settlement
To qualify for debt settlement, a debtor must have enough funds to pay back the debts once the counselor negotiates for the reduction. The debtor should have a separate bank account for all funds that he or she intends to submit to creditors for the debt settlement amounts.

A person who wishes to qualify for debt settlement should have at least $7,500 in total debt. Anyone who has less than that amount of debt can try alternative options such as negotiating with the creditors alone.

The applicant must have unsecured debt. Unsecured debt is any credit account that is not secured by an asset such as a car or home. Examples of unsecured debt are credit cards, medical bills, utility bills and personal loans. Student loans and tax debts do not qualify for this program.

A debt settlement is only available in certain states in the United States. Additionally, the debt settlement can differ greatly from one American state to another. For example, a consumer can apply for debt settlement in Florida. The state of Florida also has many laws in place that protect the debtor against wage garnishment, harassment and bank account seizure.

Getting Help with Debt Settlement
If you feel as though you qualify for debt settlement, then you can have a reliable company, such as Rescue One Financial, help you with the process. Rescue One Financial will explain the process in a manner that you can fully understand. A representative will offer to negotiate with the creditors for you. Negotiation is something that you can do yourself. However, debt settlement companies have personal relationships and experience with the creditors. Therefore, they have more leeway for negotiations. Contact Rescue 1 Financial today to learn whether debt settlement is an option for your financial situation.


How Do I Apply For A Small Business Loan?

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A small business loan can provide the financial boost you need to excel in life and achieve your goals. As long as you have a sound business plan in mind and are willing to exercise hard work and effort to achieve your goals, a small business loan will provide the leverage required to build your very own business empire. It is recommended to include loan repayment in the planning phase of your business. Depending on the nature of business, you can determine the optimal amount of financing that you need to embark on your business venture. Professional consultation, offered at Rescue One Financial, may also be sought for these matters.

Be organized with your financial documents and business plan!

Be organized with your financial documents and business plan!

Applying for a Small Business Loan

  1. Get a copy of your credit report from some of the major credit reporting companies. This is usually the first requirement laid down by most financial institutions.
  2. Gather the essential financial statements. Generally, the financial documents required by a lender include balance sheets, income-statements and net worth reconciliation for the past 2 to 3 years. The financial statement submitted to the bank or other financial institution should generally be current and not more than 2 to 3 months old. If you are setting up your business for the first time, you must provide your balance sheet and income statement.
  3. Project your future business operations. Cite industry standards to project positive cash flows yielding from your planned business activities as well as the time required to achieve those landmarks. You can search for samples of profit and loss projection on the Internet. Pre-formatted spreadsheets can be of great help.
  4. Show your own equity invested in the business. Banks need to know that their money is safe and it will be repaid to them in the stipulated time. By seeing your own equity invested, they will feel more secure about offering you a loan.
  5. Select the financial institution to which you want to apply for a loan. Find out the specific documents that the institution needs.
  6. Create your executive summary and business profile. The summary can include a short description of your business, the purpose of loan and how you intend to pay back the money. It won’t hurt if you provide the resumes of business owners as well. Write a strong business profile that reflects your history, strengths, product features and the business industry.
  7. Request an appointment with a consultant, such as Rescue 1 Financial, for small business loans and financial institutions. Go through the necessary documents with the consultant to make sure that you haven’t missed anything.
  8. Submit your application, along with all relevant documents, to the correct person and address of your financial institution. Be patient and wait for a response!


Obtaining Business Credit

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Insufficient start-up capital can hinder the progress of a new business, and a lack of ongoing working capital can doom any business no matter how old. Access to business credit is critical, but obtaining a business loan is easier said than done. Here are key things Rescue 1 Financial believes you should remember as you seek credit for your business.

Banks and other lenders carefully analyze your capacity for repayment. To do this, they review personal and business financial records that help them understand your cash flow, both past and future. The most common documents used include:

Create an updated balance sheet listing assets and liabilities

Create an updated balance sheet listing assets and liabilities

  • Financial statements outlining your assets, liabilities and net worth
  • Income statements and tax returns detailing income, expenses and cash flow
  • Records relating to inventory and accounts receivable that reflect critical issues specific to your business
  • Future projections including reasonable assumptions that support your ability to pay going forward

Detailed, accurate financial reports are critical, and you should file tax returns on-time whenever possible.

Lenders also want to understand your character or willingness to repay even if times get tough. To do this, they review personal credit bureau reports along with business credit reports, such as Dun and Bradstreet, and credit references from vendors and other credit providers you use. It is important to keep your personal credit history clean, and also to be diligent in meeting all payment due dates associated with your business.

In most cases, to obtain business loans you will need some form of collateral. Collateral provides additional protection for the lender if you become unwilling or unable to repay. This can take many forms (real estate mortgages, liens on accounts receivable or equipment, etc.) but the key is to have equity. If all of your assets are already pledged as collateral on other loans, or if you’ve failed to make cash down payments to build equity in your assets, you may be denied even if your cash flow is great and your credit is clean. Be conservative, live within your means (both personally and in your business) and put significant cash into purchases so you have adequate collateral to qualify for the credit you need.

By understanding and managing your payment capacity, your credit history, and your available collateral, you can obtain the right loans to support your business today and into the future.

If these steps pose as any concern or perhaps you are still confused as to what to do, rather than risk a damaging mistake, look to professionals for assistance. Representative’s at Rescue One Financial are standing by to help.


How Do Small Business Loans Work?

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One of the ways banks and credit unions serve the community is by loaning money to businesses. This money is used to finance business expansion, capital acquisition, and indirectly helps boost the economy when businesses have to hire more employees to meet demand.

Financing a business and getting it started properly is something small businesses must to do. Often, there’s a learning curve involved, but it is not excessively steep. Rescue 1 Financial has compiled some basic rules to attaining your own small business loan.

How The Lender Makes Money

A business lender lends you money and expects you to pay it back with interest. Business loan interest rates are usually lower than personal loans, but with longer terms. Many businesses use rotating lines of credit with their business lenders.

Just remember that for a lender, a longer lending term at a lower interest rate usually makes them more money (and you end up paying more over the term of the loan, albeit in smaller chunks).

Cash flow and Loans

There are two common time points where businesses fail: Within the first year of operation, and at around the three year anniversary mark, when the business, if successful, has to fund an expansion. The general rule of thumb is that you should start the business off with modest financing, and try to run it for the first eighteen months on a cash flow basis (money coming in is used to pay bills as they come in), just to see how your cash flow compares to your expenses. Many businesses are afraid to take on debt when they need to make an expansion, don’t get enough financing, and choke themselves just as the business starts to grow.

Opening your own business doesn't have to be scary!

Opening your own business doesn’t have to be scary!

Sources of Capital

Most small businesses, such as family restaurants, are funded by loans from family members, rather than a standard commercial business. Medium sized businesses, businesses with high initial capital investment requirements, and franchise businesses, usually require that the prospective owner get outside capital arranged to take off, with banks and credit unions being the primary lenders. The Small Business Association, and parallel State and County level loan programs also provide loans to small businesses, with competitive terms.


Regardless of the source of your loan, be sure to get an agreement in writing, specifying the amount borrowed, the interest rate, and the payment schedule. The purpose of a written contract is to protect you if something goes wrong. While you are at it, be sure to file the paperwork with your state to form a Limited Liability Company, so that if the business does fail, you’re not personally liable for the debts.

Financing your business, and getting through the steps of the learning curve can be greatly aided by talking to a professional. Feel free to contact Rescue One Financial if you need help.


How to Get a Loan to Start a Business

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For many entrepreneurs, obtaining loans is necessary to accomplish business goals. Not all loans come with the same types of lenders, interest rates or payment requirements. Also, there are specific types of loans made for minorities, small business owners and people with bad credit. Rescue 1 Financial believes people should learn about the options available before they apply. There are certain steps involved in the process of getting a business loan.

Getting a business loan is a process similar to applying to a school. Lenders want to work with businesses that are serious and determined to use the funds appropriately. The banks and lenders have to verify the applicants’ words. When lenders review applications, they look for several factors:

Implement a well thought out business plan

  • A well-developed business plan
  • Steady employment
  • Good credit

Most banks and financial institutions want to see a realistic business plan. This plan is more detailed and important than the loan application. It provides an overview of the company’s goals for the present and future. The lenders know exactly how the funds will be spent. They also know the exact amount needed and the predicted return on investment. In addition, the marketing plan shows how the company wants to retain old customers and reach out to new ones. Without customers, the business does not make sales or earn profits. The lenders may request changes to the plan so that it suits their requirements. Overall, lenders want to see long-term goals and details in a well-developed business plan.

The lenders want to know exactly how business owners plan to use the funds and make repayments. One of the most important factors is credit. Getting a good loan is done only by having good credit. Lenders want to see a history of borrowing responsibly and paying on time. They lose money if payments are not made on time. They want to see a high credit score that indicates a stable history. Whether the borrowers want to become partners or sole proprietors, they must build good spending and borrowing habits.

A few steps are required to prepare and apply for a business loan. The first step involves reviewing the credit and ensuring that the loan obligations can be made. Then, it is important to create a well-thought-out business plan. After the borrower puts the details on paper, they should find the right lender that provides the specific loan that they want. Any professional who needs more information about the process should contact Rescue One Financial for assistance.