Business loans can prove to be a very effective way in addressing your business needs. May it be for growing your business, expanding your market, or increasing your inventory, a business loan can help you get the job done and buy stuffs like sequin clothes. But like other loans, a business loan can bring your business down if not properly planned and managed for. Without proper planning, a business may find itself under debt which prove to be financially draining. It is essential to know what are the things that is needed before deciding to go through a business loan. Here are a few essential points that will guide you in getting a business loan.
Create a current income and expense report
Creating a current income statement is essential as this will help you identify your current standing in the financial aspect. A current income statement gives a clear idea of how your business is doing and can be easily compared to previous performances. With this, you can forecast your future performance which will help you pay off the loan. While you’re at it, create a second future statement that shows earnings that include income and expenses generated from the loan.
Review your balance sheet
It is very important that you review your balance sheet as this will help you identify the financial stability of your company. This will allow you to make decisions that can affect your financial stability. If you are already showing signs of insolvency, you will be able to assess if the loan will help or create additional financial distress to your business. A balance sheet review is essential as a loan can greatly affect the business’ financial status.
A clear feasibility plan on where to use the loan proceeds
Often, a lender will require the business to show a business proposal to support the loan. A lender will always want to make sure that the company will continue growing as the repayment of the loan depends on the borrowing company’s growth. Having a business proposal at hand will also give you a clear path on how you will be spending the loan and avoid any misappropriations and mismanagement of your debt.
With all the loans, one of the easiest loan to get is a personal loan. A personal loan may be both secured and unsecured but often it comes as the latter. When making a personal loan, careful planning is needed and identifying how it will affect your future income and expenses is very critical. Getting a significant amount of personal loan may create a positive or negative impact on your financial standing. It is very critical that a good plan in managing your loan and expenses are in place. Make sure that you have at least the following before making a personal loan.
Report on income and expense
You will need to write down all your income and expense and know where you stand financially. Being able to identify your financial standing allows you an advantage of identifying the amount of loan and up to which capacity you can pay. The reports can also show you how much you really need as to how much you can get. Ensuring the reports of your financial standing has been reviewed when deciding to take on a personal loan is necessary.
Identify your capacity to pay
Not only knowing how much you can pay but understanding how long you can keep paying the loan. This will help you decide the length of the term that you may decide to take. This will also allow you to decide on the payment frequency (ie. Monthly, Quarterly, Semi-Annual, or Annual) that will best suit your needs.
Knowing where the funds will be used
A proper goal for the funds needs to be set before deciding on making personal loans philippines. If there is no specific reason for you to make a loan except for having the “need for cash” will be a very risky move. A personal loan must be weighed to show your cost versus the benefit it brings. If a personal loan is made without a goal, ending up mismanaging the loan and the loan payments may cause you to lose control over your debt.
Identifying these simple needs before getting your personal loan will greatly help you plan and manage your loan properly.
Credit Analysis is a process in which a lender goes through a process of review prior to granting a loan.
A loan application needs to undergo a process to ensure a money lender’s collectability over the borrowed money. The results derived from a credit analysis gives the borrower more credibility to be granted a loan and that the risk of collection will be probable. Credit Analysis is a much specific process that is applied for Risk Management. It has basically two major categories which are Financial Credit Analysis and Non-Financial Credit Analysis.
Financial Credit Analysis
This area of credit analysis involves the review of a borrower’s financial statements, if it is an organization or asset and income for individuals. It is focused on the monetary value a borrower may to allow the lender to have a quantitative basis of granting the borrower a loan. Review of these financials will enable the lender to see how stable the source of income or earnings are for the borrower.
It also provides a security for the lender to be able to collect from the borrower’s asset when sold if borrower loses the source from which it is earning income from.
Non-Financial Credit Analysis
Not everything is granted with having enough monetary value alone. The area of going through a credit analysis on a non-financial aspect is also important. For working individuals, it is often reviewed that operations will not cease during the quick cash loan period.
This ensures that the salary loan will be paid as it is presumed that income will be sufficient based on a financial credit review. Character is taken into consideration when a non-financial credit analysis is made. An individual who may be liquid and financially capable of paying may still be rejected if there is bad payment history.
Oftentimes, the non-financial credit analysis done on character and other conditions that may affect the loan is given more bearing since the lender’s intention is to be able to collect with less efforts. An individual or company who has a good character background will often find ways and work with the lender when they become illiquid or insolvent.
We often hear the term consumer credit but do we really know what it means? Does it really have any importance in my daily life? Well the answer to the second question is yes. But first let’s address the first question.
Consumer credit is the debt that is taken by individuals where the proceeds are used immediately. The funds of a singapore persona loan or credit line is used to buy goods and services that you may need right now but may not have enough cash to pay for it. Unlike business loan singapore and mortgage loans, the money being borrowed is used for investment or property purchase that is not intended for immediate use or consumption. The main idea of a consumer credit is having the capacity to buy the goods and services for use today and paying for it in the future.
Now one of the biggest questions we may have if we are an individual or a small business is that, does consumer credit affect us. As mentioned above, the answer is yes through a direct or indirect way. If you are a market analyst, a financial institution or even a small business enterprise, consumer credit has a direct impact on you. Measuring consumer credit can tell you how the market is doing and how it will be operating in the short term future.
When consumer credit is high and consumers purchase goods and services through payday loans and credit which are paid in the next few weeks, this tells us that the economy is doing well. When the economy is doing well, it means your business will grow as there are consumers who buy in cash and consumers who buy in credit that support the market spending.
On the other hand, if you are an individual who is the one applying for a car loan singapore and got car refinancing for your car purchase, consumer credit is indirectly affecting you. Your concern as an individual consumer is on getting your loan and credit paid. But when market is doing well, you have opportunities to earn and become more open to more income. The effect to an individual consumer is very minimal and barely noticeable. This is why we should continue to focus on getting our loans paid and our outstanding credit to a minimum.
Having a credit card helps in providing convenience for individuals and businesses in buying and purchasing goods or services. It also provides business organizations ease of monitoring the expenses of its employees without having the need to put out a great amount of cash.
But when we have evaluated and identified that we truly need a card, what do we need to do to make sure that we get connected with the right credit card in the market?
As we are aware, there are dozens of credit card issuers like metrobank direct, credit card types and programs that become the selling point for an issuer to apply credit from them. A credit card issuer alone can have multiple types of credit card that offer diverse programs catered to different type of customers.
For example, a certain credit card type may be specifically catered for frequent flyers, online shoppers or even enthusiasts. These things become the credit card issuers selling point for you to avail the type of credit card they offer.
Comparing the type of credit card that would specifically fit our needs may already be available. It may not address everything that we want it to have but we can surely take advantage of it. An example is that for a frequent traveler, it is best to get a bdo credit card that accumulates points or miles that you can use. This is advantageous as you are actually creating a savings from using your credit.
It is essential that we compare banks or other credit card issuer. They may offer something that would be a great deal for us such as having a lower interest rates, providing freebies that are related to our hobbies. We need to ensure that we are well informed of the benefits a certain type of credit card that we are trying to avail.
Like any other purchase, it is important for us to check out what a specific credit card program can offer us. How we can take advantage of what it offers and how it can benefit us in a financial aspect. Make sure you do your comparisons.