Is Bank Loans Required To Finance Your New Business?

You have probably heard about an adage that you have to spend money to make money.  Definitely, it is an underlying fact. When you want your business to grow, you should be both prepared and willing to invest in the expenses for its growth, purchase of inventory and equipment, marketing and many others.

Why Your Business Require Loans?

Several businesses sometimes need loans to meet their daily operational cost when their funds are insufficient to cover up the cost for their working capital needs. However, loans seem to be a nightmare experience for a small business owner. Even when you consider taking a loan, you will think about different options and wants to know everything about loans. Nevertheless, for business growth, you can say it is a “must.” If you want to grow your business successfully, you should get out of the comfort zone.

When you are looking for a business loan and not sure what is the purpose of the loan, let us see a few common reasons why you need a business loan

  • Starting A Business

When you want to make business startup off the ground, perhaps business loans is one of the best-suggested choices for your business kick start. There are a few start-up friendly lenders who grant loans for new business. However other conventional lenders generally offer loans only 6 months after you start the business.

  • Business Expansion

Business expansion loans are easier to get than a startup loan. It can provide you the cash you need to finance your growth plans. However, you need to provide the lenders with a good reason to give you the money which means that your expansion ideas should be meaningful and should state it will be profitable for the business.

  • Purchase Of Inventory

One of the largest and most difficult to manage expenses in many industries is inventory. As with any business, cash flow gets tight from time to time, so you will be in need of finances to manage the situation. In order to overcome, these difficult circumstances, you can use loans to manage seasonal dips in business and to restock inventory. Generally, business owner uses long-term business loans or line of credit to purchase inventory.

  • Purchase Of Equipment And Machinery

When you want to expand your business or modernize your operation, you will be in need of new or used equipment to replace out of date machinery, especially for the business involved in manufacturing, food, and service. Without a defined capital, you cannot keep your business rolling, so probably you will require an equipment financing to keep your business on track. Purchasing equipment may necessitate a need for a business loan or a line of credit if your credit limit is high enough to meet the business expenses.

  • Hiring Qualified Employees

Hiring even just one employee is a major investment for a business. This is because of this reason, and several small business owners delay the process of hiring employees with higher talents. However, in order to financially sound hiring decisions, you will need a positive return on investment to the company. Apparently, there are ways to quantify whether or not you will take a loan to hire a new employee

  1. Make an analysis to determine whether the person you are hiring can generate profits for your business
  2. You can hire a person when you want to focus on some other aspect of your business.
  3. To bring an in-house activity that you have outsourced in the past.
  • Pay Your Taxes

It is a common aspect of every business owner to set aside enough money to pay your business taxes. However, the tax burden is pretty high and intimidating, so business often seeks investment or finances to pay taxes. Before you become personally liable to your business tax debt, it is essential to explore a range of loan options to ease the financial pressure. In fact, IRS recommends taxpayers consider taking a loan to cover the tax expenses.

  • To Consolidate Debts

When you don’t have the expected cash flow in your business or your business is at near bankruptcy, it will require finance to pay back the existing debts. Here comes the debt consolidation loan which has profound benefits on small business owners. Small business debt consolidation loans allow you to take out a single business loan which can be used to meet several financial needs like paying small business loans, to improve terms on a larger loan and many more. Perhaps, taking a business loan can lower the interest rates and reduce the principal amount of your monthly payments. In fact, this will permit you to borrow additional working capital.

To Sum It Up

Getting a business loan is fast and easy. Before approaching the lender, you can check your eligibility to get qualified for the loan by filling an online application. However, check for the different loan option and do a comparative analysis of various lender with varied interest rates and make a well-informed decision because the loan you accrue will make or break your business.

Easy Ways To Control Your Finances

It is a pathetic yet a real-time fact that half of the US population are struggling to handle a $400 emergency. If you feel that you are one among those Americans, then you have to rethink about your finances. You need to figure out a plan for effective money management to prevent you taking high-interest loans and to cover up expenses that can damage your bank account.

How To Control Your Finances Easily?

If you feel stuck in some financial emergencies and feeling hard to get over it, then you need to make some changes to your financial decisions. Avoiding the situation or not paying enough emphasis towards it, further sabotage your financial conditions and make your situation even worse.

Start Budgeting

Irrespective of the money you earn, it is always wise to plan for the future by planning a realistic budget that enables you to manage the money wisely. Managing an effective budget will help you handle your finances in a much better way. Perhaps, a great tool to change your financial future.  When you have a proper spending plan for your money, it will ensure that you have sufficient funds to handle emergencies and purchase things that are categorized as needs. In fact, it will also keep you out of debt or find a positive way to get out of debt if you are curling in debt.

Pay Attention To Cash Flow

When you are looking at the cash flow, you are looking at the income and expenses.  You will have better visibility of how much money is coming in and how much is the expenditures. Cash flow is categorized into two types: Positive cash flow and negative cash flow. Positive cash flow is defined as more income than expenses, on the other hand, negative cash flow is defined as more expenses than your actual income. The status of negative cash flow occurs when you don’t pay proper attention to the cash flow. In addition, when you don’t have knowledge of these numbers, it can lead to undue stress and anxiety and failure of having control over the money.

Financial Goals

Financial planning helps you to determine your short term and long term goals. In fact, create a balanced structure to meet these objectives. It is apparently important to set your financial goals early because some goals can be more pressing and require immediate attention. For example, it is crucial to plan for your child’s post-secondary education cost while the child enters the high school. However, failure to do it will put you in hardship, and you will be pressed under financial burden when the child finishes high school education and get prepared to enter the college. Because, post-secondary education cost is a real nightmare to most low-income families, so unless they are financially prepared they cannot afford a bright prospect for the child.

Calculate Your Expenses

Monitoring your spending can help you discover serious spending problems. As already mentioned, budgeting is a technique of creating a plan to spend your money. When you have this plan, you can determine in advance whether you will have sufficient funds to roll your family smoothly. It will also give you an idea where you are spending the most and how you can make adjustments to cut down the unnecessary cost and turn it into an investment.  In order to do that, in the first place you need to list down all your expenses

  • Electricity bills
  • Water bills
  • Rent
  • Motor insurance
  • Fuel
  • Groceries
  • Medical emergencies
  • Wifi and cable
  • Telephone connection
  • And many more

In addition to that, don’t forget about the miscellaneous and maintenance expenses like the property tax, car maintenance, birthday gifts, and a few others. Once you have calculated all your expenses, now subtract from the actual income and determine whether you are living within your means or you need to cut somewhere to make the adjustments.

Trim The Fat

When you find that you don’t have enough money at the end of the month, it can be due to a few reasons, one of the major reason is impulse buying. You are creating a need for your “wants” which leads to impulse buying. You may be buying things just because it is on sale or you want to show your love for your spouse. These expenses will certainly impact your bank balance. There are many ways to show your love either you can purchase the product when you are getting it on a really good deal or prepare good food and make him/her happy.  This will indeed add a new perceptive to your budgeting and gives you an extra push to cut down the unnecessary purchases.

Closing Thoughts

One of the foolish thing that most people do is to carry a lot of debts particularly the credit card bill holding high-interest rates. When you are intended to make some changes in your financial decision and wants to have better control of your finance, try to get rid of the debts as early as possible.


Unfair, Deceptive Or Abusive Acts And Practices (UDAAP)

UDAAP is the short form that refers to unfair, deceptive or even abusive acts or may be practices. These are performed by individuals who offer financial products as well as services to the consumers. According to the Dodd-Frank Wall Street Reform and Consumer Protection Act of the year 2010, they are not legal. The Consumer Financial Protection Bureau prepares rules about UDAAP and it is enforced by the help of Federal Trade Commission.

Unfair Acts Or Practices

An act or practice will be considered unfair when:

  • It will cause or will likely cause considerable injury to the consumers;
  • The injury can never be reasonably avoided by consumers; and
  • The injury is never outbalanced by overriding benefits to any consumer or competition.

Deceptive Acts Or Practices

An act or practice will be considered deceptive when:

  • The act or practice misleads the consumer or is likely to do so;
  • The interpretation of the act or practice by the consumer is found to be reasonable under the situation; and,
  • The misleading act or practice is material.

Abusive Acts Or Practices 

An act or practice will be considered abusive when:

  • Significantly interferes with a consumer’s ability to understand any term or consumer financial product or service’s condition or
  • Take unreasonable benefit of:
  • An absence of proper understanding as a consumer about material risks, costs or product or service’s conditions;
  • Consumer’s inability to protect its interest in making a selection or using a consumer financial product or service; or
  • Reasonable dependence by consumer on a covered person to behave in the consumer’s interest.

Examples Of UDAAP

Mentioned below are some of the examples of unfair or deceptive practices:

  • A lender who keeps a lien on that house for which a consumers has paid fully.
  • A company of credit card that issues checks of convenience to the consumers and then refusing to acknowledge the checks without informing the consumers.
  • A bank keeping relationship with one such customer who has always committed fraud.
  • An advertisement of car dealership showing down payment of $0 car leases without properly disclosing any related fees.
  • An advertisement by a mortgage lender exhibiting fixed mortgage rate but selling adjustable mortgage rates only.

What Are The Benefits Of UDAAP?

It features the following benefits:

  • Gives supports to powerful operational preparedness
  • Makes way for establishment of staff training needs
  • Gives explanation of roles as well as responsibilities
  • Aids in meeting regulatory along with internal compliance needs
  • Enables policy revisions to suit your business model
  • Delivered with the help of email within a single business day

How Can UDAAP Violations Be Avoided?

UDAAP is still there in the limelight for many regulators. Compliance officers are working in order to manage the risk associated with compliance and understand how UDAAP is placed into various areas of consumer compliance. So here are some tips for avoiding UDAAP violations.

  • Be Attentive About The Vulnerable Consumers And Offer More Options To Aid Them: Consider a telephone script. On it the product script needs to be more than one-size-fits-all.
  • Consumer Complaints Have A Main Role In The Detection of Unfair, Deceptive or Abusive Act or Practices: The consumer complaints are essential information source for anyone such as regulators as well as examiners n their rule making along with their regulatory enforcement.
  • Consider Conversing With Consultants As Well As Internal And External Counsel Before You Make Any Changes: Regulators will get access to documentation or written materials regarding your compliance program. On the basis of your regulator, geography as well as other factors, an examiner might go through the efforts of improvements as admission of awareness of violations of UDAAP. They will also evaluate your institution for not making any improvement fast. Apart from this, you may also want some of your work covered by attorney-client privilege. Thus the community groups along with journalists will not have any access.

Challenges and unknown surrounding the trend of rising consumer protection that is rapidly growing will take up a higher percentage of your resources in the coming years. But with the help of attentive reviews and energetic steps, you will be able to minimize the risk associated with potential violations.

Types Of Business Loans With Which You Can Benefit

Business wants money for many reasons. According to a business statistic report, six percent of small scale business require some sought of external funding for a different variety of purpose.

In the current turbulent economy where every business faces tough competition to stay in the market, many businesses go bankrupt unable to manage the business.

An Alternative To Your Business Bankruptcy

In the fast-paced tough economy, a business loan is the only alternative for the small business owners to obtain cash to sustain in the business.  When you get an efficient business loan, you can witness an immediate growth to your existing capital. There are a plethora of reasons to consider getting a business loan. Some of the basic and essential rights are

  • Secure financing to maintain a business operation
  • Invest in inventory and equipment
  • Locating to a new premises
  • Expanding the operation
  • Other business needs

When you take out a loan, you will have enough money to become larger, and it will become easier to maintain proper cash flow in the business which will enable you to cover any unexpected expenses.

People who have decided to go for a business loan often weigh its pros and cons to determine whether it is worth considering for a loan. Although the pros and cons can vary depending upon a lender, however, there are some common aspects like terms, repayment, revenue projections that are much similar to all the lenders.

Let us overlook the benefits of bank loans.

Banks Never Going To Intervene On Your Expenditure

Unlike investors, the bank is not going to look, how you are spending the money. However this is not the case of the investor, you always need to work alongside and show how the money borrowed is spent on your business. This is pretty frustrating and an unfriendly approach for the business owners.

Apparently, banks after lending the loan will not interfere with your business operations and will leave you at peace.  They only want them to repay the money at regular intervals with the defined interest rate. Hence you can feel free and do anything you want.

Business Loans Are Easy To Get

If you have less time in business, challenged credit or low annual revenue,  getting a business loan can be difficult and turn challenging as well.

However when you have an established business with a strong financial background something like good credit score, long history of business, produced good annual revenue, then getting a business loan is straightforward and easy to understand.

In addition, once you have furnished all the details correctly and submitted the application, you can get immediate approval. However before getting a business loan, first you need to understand the different types of business loans and alternatives:

Merchant Cash Advance

This type of loan generate a lump sum payment, allows the business owner to obtain an advance of the funds regularly flowing through a business merchant account. Traditionally the transaction is made through credit card payments or other receivable streams.

Invoice Financing

Otherwise known as asset-based lending products, is a methodology for a business to borrow money against the amounts due from the customers. The obvious advantage of invoice finance is, the majority of the invoice will be paid within 48 hours.

Business Lines Of Credit

This loan provides a lot more flexibility than a typical business loan. The only difference between the business line of credit and line of credit is, with business lines of credit, you can borrow only up to a certain limit. Apparently, it is a revolving loan, providing access only to a fixed amount of capital.

1 Hour Payday Loans

When a business doesn’t qualify for a line of credit loan, then 1 hour payday loan will be there to help you save your business. However, these loans should be repaid when your next paycheck arrives. They are simple investment products with an upfront lump sum money; however, the fees are much higher than other types of loans.

Equipment Financing

Equipment loans are generally secured by the equipment that is being purchased, and this doesn’t require collateral to get the loan. It is a monetary loan that helps small business owners pay for the piece of the equipment. Perhaps, a very useful loan for the business expansions and growth.

Term Loans

When your business needs immediate, one-time cash either to purchase an asset or an inventory, term loans can be really worth considering because, with these loans, you can get upfront lump sum money which can eventually help in growing your business.

SBA Loans

SBA loans can help you start, buy or expand your business. Some business loans usually take more time than other loans in terms of paperwork or funding however when you think about the advantages it offers, and it is really worth it.

Closing Thoughts

Not every business loan will be fit for every organization although they are absolutely fantastic. So, when you are considering the loan, compare the interest rate, how much timeframe it requires for funding and the duration of the loan to conclude to a wise decision.

How To Pay Off Your Mortgage Faster?

Paying off the mortgage faster is not difficult if you plan the finances correctly. If you clear off the mortgage early, you will be able to save a lot of your money on the interest. So here lie 5 tips for clearing off your mortgage faster.

Opt For Bi-weekly Payment:

If you have been making a monthly payment, you can switch to a bi-weekly one and pay a half-sized amount every two weeks. Thus if your mortgage payment is $1000 in a month, you can pay $500 every other week. It will also have almost the same impact on the budget as one payment every month. But since there are 52 weeks in one year, a bi-weekly payment schedule will be resulting in 13 complete payments in a year rather than that normal 12. You will be paying an additional amount each year without begging around for additional money. So if have a mortgage of $200000 mortgage for 30 year at a rate of interest of 5%, you should make biweekly payments rather than monthly ones as it would help you to save $34328 in interest and will allow you to clear off the loan almost 5 years early.

Repayment At Higher Rate:

Pay off your mortgage at a higher interest rate of you wish to clear it off early. Avail a loan at possible lowest rate of interest. Add either 2 or may be 3 points to the amount of repayment. So if you take a loan at 4$ and clear it off at 5%, you would not even have a look if the rates rise up. The best thing is that you will be clearing off your mortgage faster and also saving something.

Pay Maximum Down Payment:

Make 100% down payment as it is the best way to buy a home. Paying cash for buying a home can sound strange. But it will be much relaxing if you do not have a mortgage. If you cannot delay the purchase of your home until and unless you can pay the cash, make a plan to at least make 10% down payment. You can also pay 20% if possible as then you will be avoiding paying the private mortgage insurance. It typically ranges between 0.5 and 1 % of the loan amount in a year. For example on a mortgage of $250000, the private mortgage insurance will be costing you $1250-$2500 per year. Remember that the more cash you give away as down payment, the less money will be required for financing. As a result you will have to pay lower money for the mortgage every month. This will make it easier to clear off your mortgage faster.

Refinancing Into A Loan With Shorter Term:

If you have a mortgage for 30 years, you can refinance it as a loan for 15 years. It will be blasting through the mortgage much faster and will give a better rate of interest too. Shorter terms for the loans are typically teamed up with lower rate of interest. Due to the shorter time duration, you will be paying less interest. So the amount that you will be paying on a loan of 15 years will not be double the payments of a loan for 30 years. They will much less. With the help of the mortgage calculator, find out how much you have to pay for a 15 year refinance. So if you see that the payment for such a loan very month is not what you can afford, then avail a loan for 20 years.

Make Use Of A Windfall:

If recently you earned or got some unexpected money may because of inheritance or wedding gift or even due to any unexpected gain in investment, then use the entire amount to clear the mortgage principal. Remember that all lenders and mortgage come with their individual rules of prepayment. Some will let you make monthly double-up payments, while other will let you pay as much as 20% lump sum of your original mortgage principal as prepayment. To prevent yourself from paying any prepayment penalty, go through the mortgage document properly or contact the mortgage lender.

So if you the financial situation to clear off your mortgage faster, then you should consider it. By paying off your mortgage sooner, you will not only be out of debt but will own your home very soon.

Inflation, Stages And Types Of Inflation

When the prices of goods along with services increase, inflation occurs. There are many types of inflation such as creeping, walking, galloping and hyperinflation. There are also a specific asset and wage inflation. Mentioned below are the stages and different types of inflation.

What Are The Different Stages Of Inflation?

Inflation will pass through three different stages. The three stages of inflation are described below:

The Pre-Full Employment Stage: 

In the first stage, there occurs a rise in the price level. It is less than proportionate to the supply of money’s increase. If the supply of money increases by 10%, so there will be an immediate price level rise. Hence the production of goods, as well as services, receives some stimulus. Because of this increase in the goods and services output, the price level will fall. But if again there is an increase of 10% in the supply of money, there will be a rise in the price level. This will encourage good as well as services produced in the economy. Thus if there occurs continuous increase in the money supply, a stage will be seen when the goods, as well as services output, may not be increasing in the same proportion in which there is an increase in the supply of money. The reason is that with production expansion, there is a decline in the supply of the production factors.

The Full Employment Stage:

 If without any disturbance, the supply of money keeps on increasing, then there the production will stop to increase after some time. The production will be becoming stagnant. The only reason is that each and every productive resource are completely employed then. Additional resources are unavailable for further production expansion. Hence the further production expansion ends. Since the production becomes persistent, the price level will start to increase in the same proportion as there occurs an increase in the supply of money.

The Post-Full Employment Stage:

If there is a continuous increase in the supply of money, even after that time of full employment, then for a certain time there will be an increase in the price level. It will be in the same proportion in which the increase takes place in the supply of money. But afterward, the supply of money increases a lot that people loses confidence in it. Moreover, the increase in the price level is high than that of the supply of money. So if the supply of money is 10%, then there is an increase of 20-30% or maybe even 40% of the price level. In this kind of a scenario, it is very difficult to examine the rise in the price level. This is known as the final stage of inflation. There will be such a high rise in the price that there occurs a replacement of money exchange by commodity gradually.

What Are The Types Of Inflation?

The two main types of inflation are:

Demand Pull:

The most well-known cause for inflation is the pressure that takes place due to the ever-rising demand on a stagnant or maybe less rapidly increasing goods and services supply. The expansion in total demand may be because of the private investment that increases rapidly or the expenditure of the expanding government related to war or development of the economy. Attempts are done for production expansion when the demand starts to expand and exert pressure on the prices. But this is not possible always either because of unavailability of any employed resource or scarcity of transport, capital, equipment, and power. Expansion in the total demand after full employment level leads to an increase in the price level. Resources are being used for the growth, to create fixed assets as well as for consumer goods production. Large expenditure will be creating large income money and demand but without any corresponding increase in the real output supply.

Cost Push:

In some situations, the prices rise up due to the increase in wages that are strained upon the economy by labor leaders under the threat of a strike. Manufactures also cause a rise in the cost through a system that fixes a higher profit margin. The common people usually put the blame on profiteers, speculators as well as hoards or others for causing an increase in the cost along with the prices. The government is again considered responsible for increasing the costs by forcing new taxes as well as continuously increasing the rates of taxes related to the existing commodity. Hence the rising commodity taxes rates in the market of a seller will let the producers increase the prices by the complete tax amount. Under these conditions of the rise in price, business, as well as industrial unites, will find it convenient to pass on the stress of increased wages to the consumers by making a price rise. Thus the increase in wages, margin of profit along with taxation will be held responsible for this cost-push inflation.

So anyway, people are always affected by the high rise in inflation. The rising rate of inflation is a failure sign of the part of the government.

Pros And Cons Of Certificate Of Deposits (CDs)

You will get many benefits if you invest in certificate of deposit (CDs) accounts. But it also has some risks. Understanding the pros and cons associated with CD is important to open a CD account. So, examine the below-mentioned pros and cons of CD and make an informed decision.


Fixed Rate Of Interest:

When you will open a CD, you will decide how much you wish to invest and for how long. There are many banks that will also let you open a CD account online. In return, you will be receiving a fixed rate of interest.


Your funds are safe when you invest in a CD. The Federal Deposit Insurance Corporation will insure CDs up to $250,000. The federal government will give you a guarantee that you will never lose the principal. As a result, CDs are less risky than bonds, stocks or any other investments that are more volatile.

Ladder Options:

It is an investing strategy. In this ladder options, a customer actually invests in CDs of increasing lengths (1 year, 2 years and so on). This allows the investors to tap into the customer’s money along the way. Some of it is also kept invested for a longer duration.

Expected Returns:

CDs are more definite than any other investments. When you will invest in a CD, there will be no question how it will work or for how long you require to keep it. You will be investing a certain amount at a locked rate for a certain time. For example, $10,000 @ 2.25% for 1 year. You will be aware of how much return you will get at the year’s end: $10,225.

Options For Interest:

You should never assume that the interest that will be earned on a CD, can be collected only once it gets matured fully. This is because there are several banks that will let customers select to receive the interest earned very often (monthly or maybe annual). If you select monthly, then each month you will be paid the interest and can select to reinvest it in your CD account in order to earn more interest. You can also send the interest paid to a separate account with no penalty.


Locked Rate Of Interest:

The rate of interest gets locked in for the CD term. Even if there are too much market fluctuations, then also the CD rates are never variable, until it is time for withdrawal or rollover. Stability along with low risk is CD’s selling points. Thus it makes potentially beneficial variability unavailable on the basis of the financial climate.

Less Liquidity:

If you have a savings account, then your money will be easily accessible during any financial emergency or any change in your spending priority. But with CDs, you will never be able to withdraw your money whenever you wish. If you do, you need to pay a penalty. Most of the banks will be charging you some of the accrued interest. It may also be part of the original investment if you make up your mind to withdraw early. Such penalties mean a loss of interest or may be a loss of the original investment.

Miss Other Investment Opportunities:

Your money will be tied up if you invest in a CD. So you would not be able to transfer it to any other financial product even if it will give you a higher return during the change of interest rates. Since you are locked in you will not be losing anything but you will not be able to either increase the interest margin.


CD rate of interest can sometimes struggle a lot to keep up with the inflation. CDs never pay sufficient to keep up with the inflation rate. So if you invest in CD, you will be losing your standard of living with the passage of time. When inflation will rise, the dollar value will be going down. So if you make an investment of $1000 in a CD for 1 year along with a rate of interest of 1.5% and if the inflation rises 1.9% in the same year, your money will become less valuable at the year’s end. In such a scenario, it will be much better to keep the money in a much flexible savings account that has a high rate of interest. You can also look out for an investment that will have a chance of giving better results than a CD.

So when it is about CD investment, the pros and cons will be related to predictability as well as flexibility. You can find the balance between those two that will work the best for your financial condition.