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Questions for People Applying For Business Loans

Are you applying for a loan so you can start your own business? Here are five questions about business loans to help you make the right decision.

Am I a manager or an entrepreneur?

Entrepreneurs and business managers face almost the same stress when it comes to operating a business. But the two are on opposite sides of the spectrum. They’re different. What is the difference? A manager operates an already-established business. They may not be the people who started it and founded it, but they are the ones who own it at the moment. A manager also has to make sure that the challenges the business faces are handled properly. He also has to hire and retain hard-working employees, know the niche their business in focusing on, and be able to improve whatever needs improvement.

Entrepreneurs Are The Innovators

An entrepreneur, on the other hand, is the one who creates the business. He looks for opportunities that are what the market needs, and converts them into a business plan. A real entrepreneur has the eye to identify opportunities needed in the market and also has the ability to turn those opportunities into businesses.

Managers Are Effective With Day To Day Operations

If you think you can be an effective manager but you don’t have the enthusiasm to start everything from scrap, you might consider franchising. It doesn’t involve the stress of putting up a new business altogether and you have tried and tested marketing methods and business plan to help you get started. But, if you think you have the heart of an entrepreneur, go for it! Get the business loan you need to kick start your business and you will surely beat the odds and succeed in your business.

What is my business model?

This is one of the questions about business loans with high importance. Are you putting up a home-based business, an online business or a traditional brick and mortar business that requires a good location?

Create a Business Budget

Create a business budget before you fill-up the application loan. It is important to include the annual budget for the upcoming year, based on the current year’s expenses. When making a budget, don’t forget to review you’re the actual expenses versus the budgeted amounts for the past two years of operation to get a good idea of your average income and expenses.

No Guarantees on Sales Forecasts

While it is important to make a sales forecast, bear in mind that you cannot guarantee the exact sales volume. So, when coming up with a budget consider your past expenses and profits as well as your realistic sales forecast.

Business Expenses

Create a ledger are of your business expenses based on your business model. For example, list fixed expenses such as:

  • administrative expenses
  • marketing expenses
  • payroll
  • rent or mortgage
  • utilities

These amounts are fairly consistent each month regardless of your sales volume. Don’t forget to include the list of variable expenses —or those that fluctuate each month. These include raw materials, inventory and manpower.

Is Self-Employment good for me?

Self-employment is starting your own business- with your own finances, own plan, own budgeting, own everything. Now it also has its own pros and cons like everything else. Being able to own a business may sound quite great at first. But sometimes, it gets tiring when you’re the only one working. Independence is a good thing. You wouldn’t have to rely on anyone else, which minimises the possibility of small quarrels between co-owners.

Are You After Fame or Freedom?

If ever your business becomes known, you’ll be known as the person who single-handedly founded your company. This is actually a great advantage. Imagine, being the only one who founded a huge business? That’s a big deal. To other people, owning a business means being able to control whatever happens in their lives. That’s what we all want right? Freedom to do what we want, say what we want to say.

Being Independent

The search for independence has struck many – this is the reason why the majority now wants to start their own business, for them to have more control over their lives. However, drawbacks exist- such as payoffs.

Loans Give Your Freedom To Chase Goals

When you have access to business loans, regardless of your credit score, you will have the freedom to set your goals.  It is also a good motivator to track spending—knowing that when you do, you’ll be an inch closer to the accomplishment of your goals. Finally, it is a good source of emergency funds. You can cover up to 3 months of working expenses in case you hit an unexpected situation.

Finances are the biggest sources of conflict

Financial issues are one of the commons sources of business conflicts-either with business partners, with suppliers or clients. That’s why it is important to have easy access to business loans to ensure that your business will go on as usual despite financial crises. But, you have to be careful with whom you borrow money from—a good lender would want its clients to move ahead in life. They will not charge hefty interests and unreasonable fees for a small amount, Look for a reputable lender that allows you to grow your business while you can comfortably repay your loan.

It’s common to have questions about business loans. After all, it’s a big decision which does come with risk. However, business loans can also bring great reward. Australian Lending Centre can provide the financial assistance that you need to push your business forwards.

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Personal Loans First Home Buyer Home Loans

Reasons to Pay Arrears with a Personal Loan

Understand the main reasons why you should pay your arrears even if it means getting a personal loan to do it. We will also discuss a few tips on how to use your loans wisely to avoid getting into debt all over again.

There can be some confusion as to the differences between arrears and defaults. In simple terms, when fail to pay your mortgage, you call the unpaid balance, ‘arrears’. It’s ‘default’ when you missed payments on other types of credit—such as credit card or personal loans. Here are some of the most practical reasons why you should immediately settle your arrears—using a personal loan:

Save money on your growth asset

When you pay your arrears you are protecting your home equity. Instead of losing your home, why don’t you just pay your dues and enjoy the benefits of having a home which could increase in value overtime. Plus, you can also use a portion of you loan to make some improvements to increase your home’s fair market value. This is particularly advantageous for those who have obtained their first or second mortgage at a lower interest than the prevailing rates.

It protects your borrowing power

When you take out a loan, it has to be repaid at all cost. You will have to pay a fixed rate or variable interest rate on the loan. Since you put your home as a security to the loan, you have to give it up when you do not have enough money to pay your dues. When that happens, your borrowing power would diminish.

It is too difficult to obtain a mortgage when your home has been foreclosed because of unpaid monthly repayments.

Your home is one of the biggest financial resources. By building your home equity, you can also build up your wealth. You can take a home equity loan and use the proceeds to start a home small business. In addition, many businesses also start from home. You can take advantage of the fact that you don’t have to rent a business space nor commute. It offers flexibility and the perks of growing your business around your family.

You can build income overtime

By building your equity, you are producing wealth while literally living inside your investment.

When your neighbours of friends who are working from home think that their business outgrows their working space at home, you can offer a portion of your house as an incubator space or a co-working hub. Not only will you increase your home’s value, but you will also boost your income while helping other people establish their businesses.

Here are tips when using a personal loan to pay arrears:

Determine the exact amount of money you need

It’s not how much money you want, but how much do you need that really matters. Some borrowers waste money on unnecessary things because they fail to determine how much they really need in the first place. Take the time to pin down your intended loan amount, as accurately as you van before you fill out the application form. But, don’t forget to allow for contingencies, as emergencies may happen. While you should not borrow too much, it must also be enough to cover not only the arrears but other things that could put you in a much better financial position. Borrowing an exact amount may put you in financial trouble especially if you don’t have a backup plan on how to repay the loan when your income decreases or when emergencies arise.

Ask yourself how you will use the borrowed money

Though lenders offering personal loans will not ask you where the money is going, you must specifically know what it will be spent on to avoid wasting it. Simply saying, “to pay arrears” does not give you a specific guide on how to spend it wisely. List all accounts where you have arrears and if possible, include unpaid credit card balances and other debts that charge high interests. It is also important to put aside a certain amount for your emergency fund so you have enough money to cover contingencies when they arrive—and you won’t have to go back to your lender to borrow money again.

When will you pay the loan back?

You will need to decide how to pay the loan back and how will you pay it. Do you have a conservative cash flow projection? Do you have the capacity to pay back the loan, based on your current income or business standing? Will lenders approve your loan even if you don’t have adequate collateral to pledge? Make sure that you make the right decisions when getting another loan. It can save your assets for now by paying your Home Loan Arrears, but you can still lose them if you don’t establish your finances as soon as possible.