Corporate credit lines and how they help business owners expand.

It is important for business owners to consider corporate credit lines, when financing their business to shield their personal credit scores from their business expenses. It is not uncommon for businesses to have busy months and typically during those busiest months there will be high expenses. Individuals that use personal credit cards and personal loans to finance these large expenses will likely see their personal credit scores suffer, which will make it more difficult to the individual to obtain a home loan, student loans, or any other kind of financial products.

There are many banks that offer commercial accounts that report ONLY to the business credit bureaus. Thus, it is important for business owners to have access to these types of accounts for financing their business expenses, without affecting their personal credit scores.

 

A popular way to financing business expenses is with commercial credit lines.
With credit lines, business owners can finance:

  • Working Capital Expenses
  • Inventory-Stocking Shelves
  • Payroll
  • Down Payments
  • Marketing Campaigns
  • Upgrading storefront

There are two main types of credit lines that business owners can consider:

  • Commercial Credit cards
  • Traditional Checkbook Lines of Credit

Most start up business owners (companies less than two years old, or, companies who have not generated significant revenue) will opt to obtain commercial credit cards to assist in financing business expenses, because these types do not require tax returns to get approved.

 

To qualify for commercial credit cards, a business will need the following:

  1. Existing business entity with a Tax ID number (Corporation, LLC, Sole Proprietorship)
  2. Business owner or a business partner with strong personal credit profile
  3. No collateral required
  4. Most all industries can get approved for commercial cards

Companies less than two years old, even startups, can receive significant card limits, while businesses more than two years old will typically see higher approved card limits.

Commercial credit cards typically come with a 0% interest introductory period on purchases, balance transfer or both. After that, APR’s can typically range between 7.99% – 17.99% annually.
NOTE: Interest on commercial cards is assessed monthly

Typically, after the commercial cards have been responsibly managed for six months, clients can expect to receive transfer checks in the mail. These checks allow the client to draw cash from their business cards at a 0% interest for a small fee (Typically 2-5% of the amount being transferred). These checks can be used to pay contractors, or to even deposit cash straight into your business bank account.

Many real estate investors find that these checks are useful for purchasing properties, or financing down payments. These transfer checks allow the client to utilize their business credit cards similar to a traditional line of credit. These checks typically expire after 30 days of being issued, but, several individuals have reported receiving new checks from the banks every other month while their account is kept open. Using transfer offers and transfer checks, many business owners have been able to maintain 0% interest on their business debts for several years.

Credit limit increases can be requested on commercial credit cards every six months, as long as they are responsibly managed. These credit limits can be quite generous. Commercial Credit cards are a highly FICO driven product, so, to ensure maximum approval limits on new business cards, the business owner should apply when their personal credit report is in the most favorable position.

 

A well qualified candidate for commercial credit cards will have a credit report with the following characteristics:

  1. 8 years of personal credit history
  2. No major delinquencies (Bankruptcies, foreclosures, tax liens collections)
  3. No minor delinquencies in the past two years (late payments)
  4. Less than 5 credit inquiries on each credit bureau, Experian, Equifax and Transunion
  5. 30% or less revolving utilization ratio (Total credit card debt divided by total credit card balances should be less than 30%)
  6. At least $5,000 worth of major bank credit card limits
  7. 700 or higher FICO scores.

If a company is more than two years old, and has strong income verified by its last two years tax returns, then, the company might consider Unsecured checkbook access lines of credit.

A Checkbook Access Line of Credit is an account that a client can draw cash from, and deposit straight into a business bank account immediately after approval. Checkbook lines of credit typically do not come with a 0% interest introductory period, but, they typically come with lower interest rates and higher approval limits than credit cards, since they are an income verified product. APR ‘s on Checkbook Access accounts can go as low as 5%, within interest assessed daily on the principle balance.

 

To qualify for unsecured checkbook access accounts, a business owner will typically need the following:

  1. Business entity with tax ID (LLC, Corp)
  2. Two years business tax returns, verifying revenues
  3. $100,000 or more net income annually
  4. All business owners must have a strong credit profile to get approved (similar to the credit requirements described above for commercial credit cards)
  5. Not in a restricted industry (investment, gambling, strip clubs, medical marijuana)
  6. Typically, no collateral required.

The benefit of Checkbook Access accounts is that the business owner can finance short term cash flow needs at any time, by transferring cash from the line of credit into their bank account. Clients can enjoy initial approval limits up to $50,000 per account with checkbook lines of credit, And of course, as long as these accounts are also responsibly managed, credit limit increases can be obtained every six months.

Whichever option the business owner decides to obtain, commercial cards, checkbook accounts or both, it is important for the client to obtain the accounts as early as possible, before the business owner gets into a money tight situation. Commercial credit lines give the business owner the ability to finance their business expenses without having to dig into emergency cash reserves.

On top of all this, building a business credit profile will also assist the business to obtain lower interest rate and better terms on business loans and SBA loans in the future.

Why Your Small Business Needs A SWOT Analysis and How to Use It

Setting out targets and goals for a business is crucial when it comes to succeeding.  Every small business uses strategic planning in order to create a map of what it wants to achieve and its time you used the same method.  This is all about you – what you want to achieve for the business and what you need to achieve – and it needs to be approached carefully.

As soon as you have a vision of what your business needs, you can strategize and build a strong formula for success.  SWOT analysis is one very important and useful formula to help you strategize.  The following will let you know a lot more about SWOT and hopefully you’ll understand the need for it.

Understand Your Strengths and Use Them to Your Advantage

First and foremost you need to investigate what your strengths are.  Now, to do this you have to research the market fully to see what, if any, advantages there will be for you in the area you’re in.  You also need to determine whether or not you can rival a competitor and if you have the strength to become the best in your field.  Also, there needs to be some sort of understanding about your USP, your Unique Selling Proposition.

There has to be something that sets you apart from the rest otherwise you aren’t going to get extremely far.  If a competitor has the same ideas as you, what makes yours just as good as or better than theirs?  There absolutely has to be strength somewhere and you need to understand what it is so that you can take positive steps forward.

You need to stand out in the crowd and constantly check your strength against competitors so that you can be the number one in the field.

What Are Your Weaknesses?

Next you need to understand what weaknesses are out there.  Everyone has these and it doesn’t matter how good you think you are you still have a weakness.  This is something you have to be aware of and use to your advantage because once you know them, you can learn from them.

Does your product have a major fault?  What areas need to be improved upon?  How can your competitors beat you to the launch?  These are just a few of these things you have to be aware of because they are crucial and must be answered.  They are weaknesses and if you don’t understand or know about them, they can be your downfall.

Bring everyone together in a group session and list all weaknesses and address them.  Get everyone to contribute and hopefully the weaknesses can be worked on and don’t be afraid to actually stand up and say there is a problem.  If you don’t, a potential weakness slips through the net and can cause problems.

The Opportunities Available

What opportunities are going to lead you to success?  Whenever there is a new opportunity, grab it because it can help your small business greatly.  Is there a gap in the market for your product?  If so, this is where you need to pounce and really get your product out there.  Missed opportunities can cost you dearly.

Whenever there is even a hint of a potential new opportunity investigate it fully.  This will give you a clear understanding how you could progress forward and what possibilities there are also.  You might be in a position to take advantage of the opportunity which could prove successful.  Analyze every opportunity that comes your way.

Outside Forces That Threaten Success

Whether it’s from a competitor, changes to the market or problems with production, there will always be a threat out there.  This can be very frightening because your potential new success is gone in a matter of seconds.  However, if you can understand or know what potential threats pose a risk to your success you can take steps to avoid them or have a backup plan in place should the worst happen.

Keep a Close Record of Progress and Review It

You have set out one strategic goal however, if the business isn’t reaching its target as quickly as it should, adjustments may have to be made.  Break down the final goal into several smaller, achievable goals instead.  You are still working your way to the final result but you are taking baby steps to help you get there.  This can be good and the best way to find success.

Occasionally you should review everything that has happened so that you know where your progress stands and if it’s achievable.  Sometimes, adjustments have to be made in order to move forward and it of course helps you to achieve something great.  Instead of looking at the end result in December, consider breaking the results monthly so that you can set targets and get success a piece at a time.

SWOT Is Necessary To Succeed

Many wouldn’t think SWOT is needed because it doesn’t always appear to be such a valuable information tool however, it can actually be important to use.  You can use SWOT to help you get all information together and arrange it so that it can be made actionable.  When it comes to strategic planning SWOT is needed greatly and is the cornerstone of your entire plan.

This will need time to work but if you keep at it and are determine to make it work, it can.

Why You Should Get an Unsecured Business Line Of Credit for Your Consulting Business

Consultants are some of the world’s sought after services.  Thousands more people require these services each and every day yet, the way in which consultancy companies are paid falls behind.  However, many consulting businesses need a simple way to be able to pay staff and manage expenses and this is where unsecured business lines of credit are used.  They can be good for those who use them correctly and if you want to know more about why you should choose unsecured credit lines, read on.

Covering Costs until Payment Is Necessary

Unfortunately most consulting businesses aren’t paid immediately; sometimes it takes 30 days, sometimes, 60 or even 90 days and that can present a huge challenge for most.  Making it through until payday is quite tough because there are lots of expenses.  If you have employees you have them to pay and they can’t wait until the money comes through.

However, when you use an unsecured business line of credit you can cover all of the necessary costs and expenses.  This means your staff is paid, the bills are paid and any expenses you personally occur during the waiting period are paid also.  When you use an unsecured line of credit you essentially prevent yourself from getting into a tight financial position.

You Pay Back What You Spend

When there is an unsecured business line of credit, it can be a lot different from a small business loan because you pay a small piece of interest and the amount you have charged.  Say you spent over three thousand in a month for all expenses; you would be requested to pay this amount back and a little interest.  However, your remaining credit limit is still available for whenever you need to use it even if you don’t need it right away.

The great thing about using an unsecured business line of credit is that as long as all payments are made (which proves you’re a good borrower) the line of credit can be available however long you require it.  This is not only going to allow you the freedom to charge necessary expenses but build up a good piece of credit history also.

No Property Is Secured

Secured loans and credit lines are always tricky because if there are minor issues with payment, personal items or business property can be repossessed.  Now anyone who has gone through this will understand it’s a terrible thing to happen and it can add a lot of strain also.  However, unsecured lines of credit take away the fear of losing items as you don’t need to put up anything as collateral.

An unsecured business line of credit is still very much serious and must be taken seriously also but there is less pressure on the borrower.  You don’t have to fear losing items just because one month payments are missed or late.  This isn’t a good thing to do but at the same time, there is no risk of losing say a car or home.

Consider This for Your Business

When you have an up and coming consulting business you need all the help you can.  There may be long waiting times until payday and it can be very worrying.  However, when you need to cover costs or need cash right away the unsecured business line of credit can be used.  Yes, the line of credit still needs to be used carefully and sensibly but it can also help relieve some pressures also.

Why You Should Consider a Business Credit Card for Financing Your Small Business

Most mistakenly believe securing a loan or a line of credit from a bank is a lot easier than what it is.  Getting any form of credit is tough at the best of times and if your credit history isn’t up to scratch, it’s a lot tougher.  However, many business owners are now looking at a business credit card to help finance their small business and it could be a well thought-of idea.

The purpose of business credit cards is to really help establish credit for the business and ensure when money is tight the cards can be used sensibly.  However, do you really know why you should consider a business credit card?

Zero Interest Intro Rates

Most credit cards offer some form of zero interest for new customers and this is something you need to look for.  Now, you might not be aware of it but you can actually save a great deal of money within a year just by looking at zero interest introductory rates.  This can be very beneficial to most businesses especially those just starting.  You can easily make larger purchases without the need of handing over the entire amount of cash then and there.

Plenty of Bonuses for New Customers

A lot of the time, sign up bonuses are on offer and they can be great for most businesses.  These can range from discounted flights, hotels, free travel even; and there is even the possibility of getting real cash back in hand.  This is great because you need all the help you can but of course, you should only choose one card at a time and ensure it offers you the rewards you need.  There is no point in choosing a card with bonuses you neither need nor want.  There may be a spending cap however for certain rewards or bonuses.

Can Put Employees on Cards

You might not think this is a particularly good idea however some expenses need to be charged to the company.  It is a lot easier for employees to have their own employee business credit card to use when certain things must be charged.  This is not only going to reduce paperwork but make transactions a lot simpler also.  Instead of employees paying for something and then filling out lots of paperwork later, they charge whatever is necessary to the card and that’s that!  However you can still set limits for each card user.

Getting Rewarded For Buying

If you are setting up an office for the business and require certain office supplies you can actually see a wonderful return on this.  There are lots of business credit cards which offer cash back on certain business expenses.  This not only allows you to get all of your supplies but gives a little back to you as well.

Additional Help

The great thing about using a business credit card is simply down to the amount of help you can get.  There are so many issues facing you at the end of the financial year and if you use a credit card, it can be a lot easier to deal with certain things.  However, it will still be important to remember that all credit cards are dangerous when they are taken for granted.

Too many people believe the business credit card is the answer to all of their financial problems for their small business but it can add to the pressures if used incorrectly.  That is why it is important to understand that while a lot of benefits come from using the cards, they can also turn against you when you misuse them.

Keep a Level Head

As you already know credit cards are easy things to rely on but the line of credit isn’t for stupid little unnecessary items, especially not when you use a business card.  Use it for business expenses and that only, never charge personal items onto the card.  Also, if you are going out for lunch don’t be tempted to charge the lunch to the card simply because it will all add up later.  This is really only for business use.

Also, don’t opt for a credit card which doesn’t offer you good rewards.  For instance, if you don’t travel for business or hardly ever leave the state, you don’t need a credit card with air miles.  This is a useless card because you aren’t getting any benefits from it.  Instead look for credit cards that offer reasonable interest rates and cash back bonuses.

Successful Business Management

A successful business requires a strong motivated leader.  However, too many people shy away from business management because they think they don’t have to be a strong personality when in reality they do.  Successful businesses get where they are thanks to good leaders because without a leader pushing employees on, nothing would ever get done.

There are many employees who are willing to do what it takes to be successful but there are also others who are happy to let others do all the hard work.  However, when there is a strong leader behind them, everyone is pushed forward.

What Is A Leadership?

Leaderships are the driving force behind a business and usually there is a good leader in charge.  A good business leader has the ability to motivate others around them and be a force for bringing success.  This is all about bringing a strong personality and mind so that employees and of course, the business is able to find a mark of success.

Demonstrating Integrity

You want to show a good presence; you want to become a good leader and have great business management because that is the mark of success.  However, in order to show good management you need to have integrity along with honesty.  These two go hand in hand and if you don’t show these you cannot be a good leader.  Also, there needs to be a sense of truth and you must be able to demonstrate your truthfulness as a leader.

Being able to show your trust in others brings respect and you need to be an honest person in order to receive trust and respect.

Self Confidence

Business management is never an easy task because there are so many things that must be perfect.  However, as a leader you need to have self confidence otherwise staff won’t have faith in you.  You not only have to show confidence in every aspect but also ensure you have restraint and remain level headed.

If you lose your temper often then people don’t see you as you want to be seen, you are feared and that is never a good sign.  There needs to be some way to relieve your pressures and stress without leaving a negative effect on co-workers and colleagues.

Knowledge Is Key

Successful business management is all about being able to deal with tough situations with a level head and a mind able to process all issues.  There is some degree of intelligence required because it is all about problem solving and finding solutions to difficult decisions.  You need to be proactive to be a good leader and be open-minded to all new situations.

Inspirational

Successful leaders also need to find a voice and show their leadership values.  Leaders aren’t supposed to be shying away in their office but rather charging the way forward and making a big impact.  If you are a good leader you are an inspiration to others and they will be more likely to follow you.

There are more responsibilities on hand but that can be a wonderful factor because it can give you the opportunity to shine and show the real leader you are.  Being a highly motivated employee will make you a leader and will prove to people about your strengths and qualities.

Should Start-Up’s Use Credit Card Financing?

Thousands of businesses a small business credit card in order to help boost their company’s finance options; unfortunately it isn’t all plain sailing.  Sometimes these credit cards go wrong and when it goes wrong, it goes horribly wrong.  However, they aren’t always bad, not when you use them correctly and approach them with a bit of careful thinking.

The following are a few reasons for and against credit card financing.

There Are Savings to Be Had

The biggest reason why many should consider using credit card financing is down to the fact that there are plenty of savings available.  Really there are lots of savings because every time a purchase is made, the card holder can receive rewards in some way.  Some credit cards can offer cash back while others offer points but all of these things can add up.  This could actually help you to free up a great deal of cash later down the line.

Price Reductions

Technically in the US credit card rewards are non-taxable income.  Now this is the case when you earn cash back and such rewards.  This is not only good for you but can be really useful for the entire company.  However, when it comes to air miles, things get a little clouded.  Putting that to one side if you were to choose a credit card with cash back you could have great price reduction at the end of the year which could give you a big break.

Creating More History for You

When you take out a credit card you are technically aiming to build up some good credit history and that is a big reason to use a small business credit card.  They can be a fantastic way to help establish some form of credit and build on your history too.  If you make all payments on time then you can increase your score and later potentially even get a higher limit card.

More Interest to Pay

One of the biggest arguments against using a small business credit card has to be the interest.  Now as most will know when you have a credit card you have to pay interest and it’s the same with a small business card too.  There is going to be a lot of interest to be repaid and unless you pay off the entire balance at once you end up paying a few hundred dollars each year just in interest alone.  This is quite bad especially when you don’t have a great deal of money to play with.

Less Protection for Small Business Cards

The CARD Act of 2009 was brought into place to help protect customers and consumers however they are not really designed to protect a small business owner.  The reason why is simply because small business credit cards have been excluded somewhat from the CARD Act and that can be devastating.  That is why today it is even more important to take the time to carefully go over every little detail associated with the credit card.  Always read the fine print.

There Is More Liability Put On You

Businesses who give their employees the chance to be put on the credit card is quite risky.  As most will know people tend to spend before they think and could end up potentially charge a lot of money.  However at the end of the day you are the one who is responsible for the repayments and even though they charged it, you are still held accountable.

Should Credit Cards Be Used To Fund A Business?

As strange as it sounds credit cards have been used over the years to help build the foundations of businesses.  Some of the world’s leading businesses have started out with nothing more than a credit card and it really is quite astonishing.  However, most see credit cards as a bad lending line because it can easily spiral out of control; then again, there have been many credit card users who have gotten to grips with their spending.

Sometimes, credit cards can be used in the right way to help anyone get through a tough financial period from Christmas to unemployment and even to help fund a small business.  This isn’t crazy, many have tried and succeeded and if you approach it correctly it could work for your small business also.

Finance without the Hassle

Credit cards are actually a lot easier to obtain than loans and funding.  There may be a host of lending streams available however many of them are difficult to be approved.  For instance, getting a small business bank loan can be particularly tough because you have to prove you have the profits to pay back and it requires lots of paperwork and it’s very costly time-wise.  Some loans also require collateral and if you haven’t got anything that is worth what you need it will be rejected.

However, credit cards can offer up a new form of credit.  Of course, if a small business were to use credit cards to help fund their day to day running’s, it would need to be used carefully.  For example, credit cards shouldn’t be used to go out to lunch but rather to make important office equipment purchases like computers.  If used correctly, credit cards can offer most businesses a great funding source and if all payments are made on time, it shouldn’t become an issue.

Borrow As Much As You Need, Pay Back When You Can

Flexibility is what most borrowers get when they take out a credit card and it isn’t difficult to see why.  When you use a credit card you have a limit and you can spend anything up to that limit but at the end or the beginning of each month when the payment is due, you only have to pay the minimum amount.  Now, this might not seem to be such a good idea but it can be.

The reason why is simply because until you can afford to pay the entire balance off, you can make the smallest payment for the time being.  This not only allows you to fund the business but builds up an established line of credit which can go into your credit history.  You may not have all the money to pay back now but once you start turning a profit the entire amount can be paid off.

Interest Doesn’t Need To Kill You and Rewards Are Possible

Also, there are a lot of cards which don’t have an interest amount for a certain introductory period.  Some can offer a year of zero interest while others can offer twenty months or more; Citi Simplicity offers twenty one months of zero interest for new users.  Of course, you need to have an impressive credit score but the point is there are lots of good credit cards that could potentially help.

You aren’t always stuck paying out thousands each year in interest, not if you choose a credit card with a zero interest introductory period.  There are even a lot of credit card companies who offer new customers bonus points and rewards.

Balance Transfer Is Possible and No Fees

If you have a balance on an old credit card you could potentially transfer that over to the new credit card.  There are lots of credit cards which charge no interest for the first year and it could help you to avoid the debts piling up.  Of course, getting the credit card balance paid off as quickly as possible is always important.  Also, look for credit cards that don’t charge an annual fee.

Treat a Credit Card like a Loan

However, don’t make the mistake in believing a credit card offers you a free ride because it doesn’t!  Credit card balances are going to be something you have to pay back and the longer you wait to do so, the more you will have to pay.  You should always consider a credit card as a loan because if you don’t take the cards as seriously as you do a loan, payments can be missed and soon the balance gets out of hand.

Always make the payments at the end of the month and if you can, pay more than the minimum, even if it’s an extra $20, it all counts.  Repaying the debt off will allow you to keep your credit in fairly good shape and will avoid potential problems with finances in the future.

Have a Set Agreement about Finances

Credit cards are going to be used by most people however they can still be tricky especially when used in a business.  When there are two or more people using the cards in a short period of time the charges can rack up and there can easily be disputes.  However, when you have a written agreement set out about how the card should be used and who is responsible for what payments, everything can be a lot easier.  This will not only help protect the name on the credit card but ensure no unnecessary fights occur.

Credit Lines Can Be Increased

Let’s say your credit line limit was $25,000.  This is a great deal of money but if you continue to make steady payments and show a good history with the credit card company, they may decide to boost your available credit.  Basically this means your credit line could increase to $30,000 but only if your credit is good and you show you can continue to make payments.

If the company doesn’t increase the limit you could always request for the limit to be raised.  This may work if the company believes you are able to repay the amount and whether your credit is clean.  It is unlikely if your credit history is poor you will be issued with a high balance credit limit but it can vary depending on where you take the card out from.

One in Ten American Consumers Is Credit Invisible

There are over forty million American citizens who are credit invisible.  As unbelievable as it sounds, it’s true; millions of people across the country do not have any credit history and as well all know no history, no credit score.  However, so many don’t realize your credit score is what makes you because if you don’t have any credit you aren’t able to take out a loan or even get a credit card.

As scary as it sounds this is happening right now and it’s truly frightening because it can happen to anyone.  The saddest part is so many don’t know how to establish credit and don’t receive any help in correcting this matter.

Why Is A Credit Score Crucial?

It is hard to get anywhere in life but it’s even tougher when lenders can’t find your credit score.  How can you be eligible for a mortgage when a mortgage lender can’t see your credit history?  Exactly, they can’t trust you because they don’t know how responsible you are with finances.  What is more, it won’t be just a mortgage you get turned away from either; it can be anything from a store card to car loans.  Worst still, it will cause a huge impact.

Who Will Be Credit Invisible

Typically it is those earning fewest that are considered to be most credit invisible.  This is because they do not earn tens of thousands while others are only able to work casually.  Low earners really have a problem establishing credit and quite frequently become invisible in the credit world.

However, there is no set type for invisibility because anyone can fall into this category.  For instance, there are those who earn a fair amount but haven’t established credit.  Some are paid in cash and don’t use bank accounts and don’t use credit cards either and don’t receive any help from the government and don’t take out loans.  They have credit records but they cannot be scored because there is a lack of information or history.  Young people are most likely to be credit invisible simply because they have yet to establish credit.

Building Credit

There are quite a few simple ways to help establish credit and one option would be to use a secured credit card.  Now, this isn’t always a great option however when you are trying to build credit it does offer you a great foothold in a sense.  However, if this is something you are going to try you need to be assured by the card company the payment history will be reported so that you can build some payment history and credit.

You could of course be put on a friends or family member’s credit card.  This would certainly help to establish credit and give you a right shot in the arm too since you make progress.  It might seem a little slow but every little helps.

However if you don’t have the option to be put on another credit card you could apply for a student loan.  Now, this only applies to students going to college but usually this is one way to help build some form of credit.  Or, you could turn to a credit union and taking out a credit builder loan.

This type of loan is unique but really helps to build up a credit score.  This is a bit tricky but as long as all payments are made on time there shouldn’t be many issues to deal with.  You need to be wary however that building credit does take time and while you can find a few ways to help, it won’t be an overnight success.

In What Order Should You Pay Off Debt?

Millions of people are using credit cards more so than ever before.  However, credit card debt is vastly becoming a major problem for almost every household and it isn’t difficult to see why.  Credit cards are tempting because they can be used in the toughest of financial spots.

Families use these during the Christmas period, more than any other time of the year; and college students rely on cards when money is tight.  All in all, debts pile up from deaths and personal problems and of course the cost of living is rising daily.  Average households have debts of over fifteen thousand dollars and the worst part is debt continues to follow you.

Getting Control Is the Hardest Part

As most will know, when you have debt you are in a financial hole; there are times when you want to pack up and get as far away.  It can have such a negative effect on an entire family because the stress of money worries and fears of being able to repay a debt mounts.  However, getting free from debt isn’t impossible and even if you have tens of thousands of dollars worth of debt, you can repay and get free.

Becoming debt-free is not easy unfortunately however, that is one of the main reasons why more are now turning to consolidation loans.  These can actually be useful because what happens is that a consolidation company will take every one of the debts, combine it into one monthly payment.  Hopefully you will end up paying less interest for the one loan rather than all debts and be able to repay quicker too.

Secured Debts Are the Most Important Debt to Worry About

A lot of people will say every debt is just as important as the next and while that may be true, secured debts are terrifying.  The reason why is down to the fact when there is a secured loan, certain items such as a vehicle, home or personal property can be collateral and if it isn’t repaid, the collateral will be taken.  For that reason, secured loans and debts are the first debt to be repaid.

However, if your debts are secured by crazy items such as expensive cars you cannot afford or televisions, forget about it.  You have more important debts to worry about.  Let’s say your secured loan had the family home as collateral; this would absolutely be your first priority.

You may also have credit cards but right now your home is top priority.  Remember, unsecured loans are a little easier to work with because there is no threat of the home being taken away.  They still should be paid of course but you can work with the banks or credit card Company to give you more time.  Higher interest may be added.

High Interest Rate Credit Cards or Loans Are a Top Priority

You need to look at what you’re paying out when there is several loans or credit cards under your name.  Every loan has a set amount of interest added each month and it’s crucial to look at the debt with the highest interest rate.  A lot of people would say you should pay back the smallest debt first however, when you leave a high interest debt more interest is added and it means you have to pay back more.  Instead get these high interest rate cards paid off and gone.

Do Not Default

Whatever you do, never default on any loan or credit card.  This will haunt you for the rest of your life because it lasts on your credit report for at least seven years.  When you default you are less likely to be able to take out a loan in the future.

Make the Minimum Payment At Least

You may not be able to pay a great deal back at one time however even if you attempt to make the smallest payment each month, it’s a start.  Credit card companies and lenders love when they receive money and even if it’s just the minimum payment that is still good.  Yes, you will take longer to repay the debt off however the most important thing is that you aren’t actually defaulting or missing a payment.

Decide What Is Most Important

Everyone has their own opinion over how to deal with debt but the truth of the matter is you are the one who needs to make the decision.  If you want to tackle the smallest debt first, go ahead and get it cleared; or if you prefer to consolidate the debts into one so be it.  It really is your choice and you are the one who must carefully decide which route to take.  After all you are the one making the payments.

You Need a Plan of Action

You need to decision how you will deal with the debts.  So, you need to decide which debt takes the priority and understand what your outgoings are each month and what is coming in.  Hopefully you can budget well enough to contribute a little extra to the first debt; and doing this will help to get the debt paid back quicker.  Once it is, you now technically have extra money to put towards the next debt, all the while making minimum payments to the others.

To help you remember to pay the debts on time, you can set up a standard order with the bank to directly pay the lender on a certain date.  This is certainly wise and may help ensure your credit stays on track too.

What about Savings?

As tight as money is, you should try to put money away for a rainy day.  Now, this doesn’t have to be a great deal, $5 a week or even a month and while it doesn’t seem much, it can be useful.  Of course, if money is so tight it just isn’t possible, fair enough.  Hopefully the debt will be paid back soon enough and you will be able to put money away for the future.

One thing to remember: when in debt, never give up.  You will overcome it and even if it takes another twenty or thirty years you will be debt-free one day.

 

 

In the long run, if you pay off debt, you will be better off across the board.

How Much Insurance Does A Business Need?

Insurance has really become a much needed tool for most businesses today yet there are still thousands who don’t have any insurance.  Not having cover to protect them is quite dangerous because one minor disaster could destroy a business forever.  You might not believe so however, you never can truly tell what is waiting around the corner.  Insurance is necessary but what do you really need?

Liability Is Needed but Don’t Go Overboard

Most businesses will need some form of liability insurance simply because if a customer or client should fall within your premises you are the one responsible.  If someone is hurt due to your negligence then you not only have to pay for medical bills but possible pain and suffering, further medical treatment and lost wages.  The final bill can be tens of thousands and if you have no cover or not enough you are left in a terrible position.  However, the amount of cover required can vary depending on the type of business you have.

General liability cover is suitable for most workplaces however, for some professionals such as a lawyer, they require product liability.  However, some people won’t actually require any form of liability.  For example, those who work from home and don’t come into contact with others for business purposes generally don’t require liability.

Workman’s Compensation

Workman’s comp or employee insurance is crucial for anyone who hires an employee.  It doesn’t matter if you have only one employee or several hundred or even if the employees are friends or family – insurance is always necessary.  Remember, this is actually protecting you because as the employer you are the one held responsible.

You don’t need to be in an industry which is considered to be dangerous such as construction, whether you own a convenience store, a small IT firm or a gardening business, employee insurance is important.  Accidents can occur at the best of times and in all honesty more people today are injured at work than anywhere else so it’s important to be prepared.  This may cover the employee who is hurt but also protects you.

Insure the Office

Flood, fires and burglaries are some of the worst things to happen for a business today but they do unfortunately occur.  When disaster strikes the mess left behind can end up costing you dearly and if you aren’t covered you are left out of pocket.  However, insuring the business premises, whether it’s an office or general store, is important to protect you against damage and theft.

Do You Have A Website?

For those setting up a branch of their business online, they need to consider having cyber insurance.  This is actually very new but when you have a business online then you need cover.  When you look at cyber insurance it can potentially help protect against being hacked.  This might come down to how much you value your online presence and whether you can afford to risk a cyber attack.

Consider a Business Owner’s Policy

Business owner’s policies are really common today because they end up being a lot less expensive than having several policies.  For example, a business owner policy can offer insurance to cover property of the business, liability and protect cars too.  This is very popular and often it’s a lot easier to manage than when you have many different insurance policies to deal with.

Vehicle Insurance and Avoid Minor Insurance Claims

When a business is using company cars or vehicles, you need to of course have these fully covered so that any accidents are taken care of.  It might also be wise to add your employee’s vehicles to the insurance policy if they are using them during work hours for business purposes.  However, be wary that you could potentially pay out more if small claims are filled.

For instance, let’s say someone damaged equipment within the office or had a small bump in the car, claiming for this isn’t always good.  If the damage is only a few hundred dollars, you may be better to pay for the costs out of pocket.  When you do this, you avoid potentially costly premiums because every time you file an insurance claim the premiums increase so be wary.  Of course, if the damage is quite severe, then it’s an entirely different story.

Review Insurance and Don’t Be Afraid To Go Elsewhere For a Better Deal

A lot of people think it’s more hassle than good to switch to a new insurance provider however, if it saves you thousands, it’s worth the hassle.  There are lots of different insurance options to consider and no matter what type of policy you require you should only ever settle for the best.  It doesn’t matter if you are looking to save money, adapt a policy or just find a better insurance carrier there will always be a policy for you.

There is no harm in researching what other insurance companies have to offer and it might potentially allow you to get the same cover cheaper somewhere else.  Also, at the end of the year, check again to see if you are missing out on better deals.  It all helps to save a little extra and of course, you will get an insurance carrier you’re happy with.