If you are a first-time entrepreneur and you want to start your own business you are almost undoubtedly going to need a bank loan. Here are some tips on getting one.
You must realize that because you don't have a business ownership track record securing a bank loan will be an uphill battle. That doesn't mean you shouldn't try but don't expect the process to be a cake walk.
It wont be. Any bank will tell you that a small business loan has risk factors and that costs of servicing these smaller accounts are primarily responsible for their disinterest in offering a bank loan to an aspiring entrepreneur.
Your first time business bank loan can happen, however, and here are some ideas on how to increase your chances of getting that small business bank loan.
The first thing to remember is to think positive and assume you are entering that bank from a position of strength. Keep in mind that you are customer, not a beggar. Banks sell loans, you buy. For the most part those banks want and need your loan business and the loan officers are tasked with getting your business.
While it certainly is always a good idea to start with the bank that is familiar with you as a person - the one with which you've done business regularly - it is also important that you seek a bank that has underwritten loans for others in your industry and stays familiar with your industry. Look for banks that actively finance small businesses.
There are also banks whose specialty is government programs - participation by the government in funding or guaranteeing loans. Information on the latter would be readily available at your local Small Business Development Center of the Small Business Administration (SBA.)
Keep in mind, however, that no matter how dedicated to small business financing, the bank is going to ask for some fairly hefty collateral for your start up business.
Be prepared to prove to that bank loan officer that lending you and your new company money is not a high risk proposition.
Complete your loan application prior to arrival if you can, bring copies of three years of financial statements such as cash flow, testimonials from satisfied and returning customers, your business plan and a cover letter that spells out why you need the money and how your business is now thriving and will only do better with that bank loan funding.
If you are fully prepared to ask for that bank loan, no question should surprise you. While you should have the details in your business plan already, be prepared to talk about how much money your firm will need and for how long, and what the bank loan funding will be used for.
You ll need to talk about whether you are going to buy new equipment, supplies and assets, pay off some old bills, or spend it on operating expenses. You ll also need to show a well-thought-out and achievable repayment plan, with a payment schedule.
Two important points that should be made about your face to face bank loan interview are often discounted. The first is that you should dress professionally to meet the loan officer. Your garb should be that you would wear to meet a client. The other is that your documents should all be neat, easy to read, clear and clean.
Sunday, November 22, 2009
Bank Loans - Necessary In Todays Material World?
The idea of a bank that loans out money to the public, totally metamorphosed the premise of ancient banks that stated that a bank was only a place to deposit money for safeguarding. Present day banks are synonymous with bank loans to such an extent that today practically every individual who has a bank account has a bank loan of some sort or the other.
It is improbable that in the present day and age anyone (unless born to money) has enough money lying around to make big ticket purchases like a flat or an apartment, without resorting to a bank loan.
Bank loans have attained the reputation of a necessity in to days scenario where temptations to own products are so great that one takes the recourse of a bank loan and in return enjoys the product or benefit from the appreciation of an asset purchased while paying backing installments. Be it an auto loan, a bank loan for a specific purpose or a home loan, present day banking system provides loans for practically anything and everything that one may want to own. Without these convenient bank loans lots of people would never been able to purchase that new car or a laptop or a home.
Factually, a bank home loan is similar to a mortgage with a collateral attached. The only matter of concern that remains is that one gets tied up for a long period and has to keep on paying interest on the loan.
With the passage of time, bank loans have become so versatile that there are bank loans for buying white goods, consumer goods like computers and even for repairs, renovations, marriages and celebrations. It is a case of you name it and that bank has it. There exist student loans too, where a bank advances money for studies with a condition of repayment after the student joins the mainstream and starts earning.
Broadly speaking, even credit cards are a form of a bank loan that you can repay and some banks even offer you loans to pay up other loans you may have taken in the past.
Bank loans issued to individuals for the purpose of housing probably out number other loans issued by banks. But they may not compare in volume or value to bank loans issued to businesses worldwide. Whether it is a small business operated out of the home or a large business that needs millions of dollars in order to tide over a cash flow problem or to acquire assets, bank loans issued to businesses far outstrip individual loans. In fact it will not be an exaggeration if one were to say that without bank loans the vast majority of business worldwide would collapse. Business in modern day thrives on the banking system and the investment, lending, finance and credit that it facilitates.
It is improbable that in the present day and age anyone (unless born to money) has enough money lying around to make big ticket purchases like a flat or an apartment, without resorting to a bank loan.
Bank loans have attained the reputation of a necessity in to days scenario where temptations to own products are so great that one takes the recourse of a bank loan and in return enjoys the product or benefit from the appreciation of an asset purchased while paying backing installments. Be it an auto loan, a bank loan for a specific purpose or a home loan, present day banking system provides loans for practically anything and everything that one may want to own. Without these convenient bank loans lots of people would never been able to purchase that new car or a laptop or a home.
Factually, a bank home loan is similar to a mortgage with a collateral attached. The only matter of concern that remains is that one gets tied up for a long period and has to keep on paying interest on the loan.
With the passage of time, bank loans have become so versatile that there are bank loans for buying white goods, consumer goods like computers and even for repairs, renovations, marriages and celebrations. It is a case of you name it and that bank has it. There exist student loans too, where a bank advances money for studies with a condition of repayment after the student joins the mainstream and starts earning.
Broadly speaking, even credit cards are a form of a bank loan that you can repay and some banks even offer you loans to pay up other loans you may have taken in the past.
Bank loans issued to individuals for the purpose of housing probably out number other loans issued by banks. But they may not compare in volume or value to bank loans issued to businesses worldwide. Whether it is a small business operated out of the home or a large business that needs millions of dollars in order to tide over a cash flow problem or to acquire assets, bank loans issued to businesses far outstrip individual loans. In fact it will not be an exaggeration if one were to say that without bank loans the vast majority of business worldwide would collapse. Business in modern day thrives on the banking system and the investment, lending, finance and credit that it facilitates.
Sunday, November 1, 2009
Big Profits From Currency Trading
If you want to make big profits from currency trading, you need to lock into and follow the longer-term trends.
“The art of contrary” thinking is one of the most powerful tools a trader can use, and is a trait with which all true great traders are familiar with.
What is the Art of Contrary Thinking?
Humphrey Neill’s book, "the art of contrary thinking,” the best known work on the subject, is based on a simple powerful idea that:
"When everybody thinks alike, everybody is likely to be wrong"
“The art of contrary” thinking consists in training your mind to ruminate in directions opposite to general public opinions; but basing your opinion in the light of current events and human behavior”.
Why Contrary Trading Works
By spotting situations when the consensus of a currency is either extremely bullish or bearish, means that a trend change is imminent, as it is likely the emotions of greed and fear have pushed prices too far away from true value.
If you can step aside from the crowd and take a contrary view at these turning points, you can make big currency trading profits. Contrary thinking can be used in any market and is highly effective in currencies.
Contrary thinking can be used to make really big currency trading profits and if used selectively, when markets are extremely over bought or oversold, you can be in right at the start of the trend for maximum profitability.
In any currency you look at - The Yen, Euro, British Pound Swiss Franc Canadian or Australian dollar and many others, there are always occasions where a currency trend in the news is forecast to continue, due to overwhelming evidence in its favor and it then promptly collapses!
Big profits from currency trading can therefore be made by using the art of contrary thinking when the market is extremely bullish or bearish.
Why? Because everyone who has bought has taken positions and there are no buyers left. Prices have moved away from fair value. When there is no more buying to enter the market, a trend change is imminent.
It is clear that to succeed and make big profits in currency trading you need to think independently of the majority at important market turning points.
You can make big profits in currency trading from trend following, but you can with a little practice spot potential turning points in currencies as well which will help you bank profits, tighten stops or open new trades right on the turn, for maximum profitability.
Contrary trading will not only make you big profits in currency trading but in ANY market and has worked for centuries, as human nature never changes.
“The art of contrary” thinking is one of the most powerful tools a trader can use, and is a trait with which all true great traders are familiar with.
What is the Art of Contrary Thinking?
Humphrey Neill’s book, "the art of contrary thinking,” the best known work on the subject, is based on a simple powerful idea that:
"When everybody thinks alike, everybody is likely to be wrong"
“The art of contrary” thinking consists in training your mind to ruminate in directions opposite to general public opinions; but basing your opinion in the light of current events and human behavior”.
Why Contrary Trading Works
By spotting situations when the consensus of a currency is either extremely bullish or bearish, means that a trend change is imminent, as it is likely the emotions of greed and fear have pushed prices too far away from true value.
If you can step aside from the crowd and take a contrary view at these turning points, you can make big currency trading profits. Contrary thinking can be used in any market and is highly effective in currencies.
Contrary thinking can be used to make really big currency trading profits and if used selectively, when markets are extremely over bought or oversold, you can be in right at the start of the trend for maximum profitability.
In any currency you look at - The Yen, Euro, British Pound Swiss Franc Canadian or Australian dollar and many others, there are always occasions where a currency trend in the news is forecast to continue, due to overwhelming evidence in its favor and it then promptly collapses!
Big profits from currency trading can therefore be made by using the art of contrary thinking when the market is extremely bullish or bearish.
Why? Because everyone who has bought has taken positions and there are no buyers left. Prices have moved away from fair value. When there is no more buying to enter the market, a trend change is imminent.
It is clear that to succeed and make big profits in currency trading you need to think independently of the majority at important market turning points.
You can make big profits in currency trading from trend following, but you can with a little practice spot potential turning points in currencies as well which will help you bank profits, tighten stops or open new trades right on the turn, for maximum profitability.
Contrary trading will not only make you big profits in currency trading but in ANY market and has worked for centuries, as human nature never changes.
A Balanced Banking System
Banking is a business like all others but customers these days seem at the mercy of whatever the lenders want to charge.
Yes, we can shop around but at the end of the day, they're all in it for profit, gained by ever fluctuating interest rates. They also take risks investing our money without our knowledge and we are susceptible to those investments failing.
However, with the diverse mix of cultures in every country these days it is not that unusual to see a different banking system coming into play.
The Shariah, or Sharia, system of finance has been set up by the Islamic community to comply with their strict laws on banking in accordance with the Qur'an. Sharia law covers all aspects of everyday living for the Muslim community.
Banking and finance are issues that are covered in depth, from personal finances to business banking. Working on a shared profit and loss system makes this system quite different to Western banking. This prevents the bank from monopolising the economy and is less risky to the borrower.
This way, the borrower is more secure, more businesses succeed, more money is borrowed, thus keeping the whole system afloat and everybody from borrower to lender benefits.
Sharia law prevents the collection and payment of interest. So, how do the banks make money?
If a Muslim wishes to utilise a loan to purchase items, the bank actually make the purchase and re-sell to the buyer for a profit that is agreed between the two parties. That profit is set without alteration and it is essential that it is very clear upon the agreement.
No extra charges can be enforced on this loan, even if payments are late. However, rights to the items purchased remain with the bank until the loan is paid in full.
The same principles apply to mortgages. The house is purchased by the bank and resold at an agreed profit to the buyer. Repayments are made in instalments but without the worry for late payment charges. However, a Muslim is expected to meet his repayments without taking advantage.
The land and property will be in the name of the buyer from the outset of the agreement for the security of the borrower but for protection the bank will ask for strict collateral.
As far as business banking is concerned, an individual can borrow interest free money to set up his own business. As with all loans an agreed profit is decided upon from the outset and repaid in instalments.
The borrower provides the labour while the bank provides the finance thus reflecting Islamic law of profit and loss sharing with no one party carrying all the burden of risk/cost of failure.
Money can be lent to businesses, whether existing or new. It is specified that the business must not contradict Muslim beliefs, such as the selling of alcohol or pork, or be involved in any media business which deals in gossip columns or pornography.
Business banking is not free and neither is there any interest imposed. Money is lent on a floating rate interest loan. This means the floating rate is dependent on the company's individual rate of return.
The banks profit on the loan is equal to a certain percentage of the company's profits - the profit sharing side of Sharia law. Once the original agreed amount has been repaid, the profit sharing arrangement ends.
So, money can be lent to businesses and it will be dependent on the individual business as to what the repayments will be. Therefore, any business can afford a loan.
Interest is not paid or collected on current accounts so overdrafts are not permitted. However, there is always the option of Hibah (Gift). This is a voluntary payment by a creditor or debtor in return for a loan. This is usually practiced in Islamic banking but is discretionary.
Yes, we can shop around but at the end of the day, they're all in it for profit, gained by ever fluctuating interest rates. They also take risks investing our money without our knowledge and we are susceptible to those investments failing.
However, with the diverse mix of cultures in every country these days it is not that unusual to see a different banking system coming into play.
The Shariah, or Sharia, system of finance has been set up by the Islamic community to comply with their strict laws on banking in accordance with the Qur'an. Sharia law covers all aspects of everyday living for the Muslim community.
Banking and finance are issues that are covered in depth, from personal finances to business banking. Working on a shared profit and loss system makes this system quite different to Western banking. This prevents the bank from monopolising the economy and is less risky to the borrower.
This way, the borrower is more secure, more businesses succeed, more money is borrowed, thus keeping the whole system afloat and everybody from borrower to lender benefits.
Sharia law prevents the collection and payment of interest. So, how do the banks make money?
If a Muslim wishes to utilise a loan to purchase items, the bank actually make the purchase and re-sell to the buyer for a profit that is agreed between the two parties. That profit is set without alteration and it is essential that it is very clear upon the agreement.
No extra charges can be enforced on this loan, even if payments are late. However, rights to the items purchased remain with the bank until the loan is paid in full.
The same principles apply to mortgages. The house is purchased by the bank and resold at an agreed profit to the buyer. Repayments are made in instalments but without the worry for late payment charges. However, a Muslim is expected to meet his repayments without taking advantage.
The land and property will be in the name of the buyer from the outset of the agreement for the security of the borrower but for protection the bank will ask for strict collateral.
As far as business banking is concerned, an individual can borrow interest free money to set up his own business. As with all loans an agreed profit is decided upon from the outset and repaid in instalments.
The borrower provides the labour while the bank provides the finance thus reflecting Islamic law of profit and loss sharing with no one party carrying all the burden of risk/cost of failure.
Money can be lent to businesses, whether existing or new. It is specified that the business must not contradict Muslim beliefs, such as the selling of alcohol or pork, or be involved in any media business which deals in gossip columns or pornography.
Business banking is not free and neither is there any interest imposed. Money is lent on a floating rate interest loan. This means the floating rate is dependent on the company's individual rate of return.
The banks profit on the loan is equal to a certain percentage of the company's profits - the profit sharing side of Sharia law. Once the original agreed amount has been repaid, the profit sharing arrangement ends.
So, money can be lent to businesses and it will be dependent on the individual business as to what the repayments will be. Therefore, any business can afford a loan.
Interest is not paid or collected on current accounts so overdrafts are not permitted. However, there is always the option of Hibah (Gift). This is a voluntary payment by a creditor or debtor in return for a loan. This is usually practiced in Islamic banking but is discretionary.
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