Things to Consider Before Applying for Personal Loans

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StrategyDriven Managing Your Finances Article |Applying for a Personal Loan |Things to Consider Before Applying for Personal LoansMillions of people apply for personal loans around the globe for a multitude of reasons. We seek loans to acquire a property, pay for unexpected expenses or simply, to improve our lifestyle. Many end up getting bankrupt for not being able to repay the amount acquired on heavy interest. Few are aware of the fact that a loan agreement does not just include loan, but also add-ons, often making it almost impossible for the borrower to repay.

One of the solutions to this is small loans, such as payday loans that are availed because these are less risky and provide added benefits. Before you apply for a personal loan, you need to be aware of the following important factors.

1.Identify The Type of Loan: If you’re planning to borrow a personal loan, you need to identify the right type of funds to borrow. Generally, personal loans are available in two forms; secured and unsecured. Unsecured personal loans are not bound to be provided against any collateral but are highly dependent on the lender’s conditions.

Before the lender supports you with the personal loan, he or she looks at your financial history and then decides whether or not they should sanction the loan. If you do not have a strong financial history, then you may avail of the services of a person who does and has a reliable financial position. This loan is riskier in the sense that the lender can recover their investment by selling the collateral in case things do not go well.

2. Criteria to Qualify: When it comes to investment and banking, certain rules and regulations have to be followed as a criterion. Similar is the case of borrowing a personal loan. The first and foremost factor is to find out whether you are qualified to borrow the loan. The general criteria are that the borrowing candidate must be over 18 years of age, has evidence of regular income and strong financial support to be able to survive even without being employed. It is advisable to only approach a lender if you have all of these things in place, or else you might get in trouble.

3. Income Status and Payables: Income status and payables is an obvious thing to decide before you go ahead with the borrowing. Think about what is the best method to repay the loan taken? What are the pros and cons of choosing a certain method, and whether you will be paying it back on a weekly, fortnightly or monthly basis? When deciding your options, remember to know all the conditions of the lender that fall in your favor, so that you make the most of the agreement.

4. Add-on and Interest: The amount of the actual loan and the interest may often be confusing. The amount you take as a personal loan has to be repaid with a certain amount of interest. Since many people are not aware of the concept of interest, they end up paying much more than they should. To avoid this, you should compare the interest rate with other personal loan providers and make a sound decision. This is because different lenders charge a different percentage of interest and have different timelines for repayment. Choose an option that offers the right interest rate and repayment schedule.

5. Comparison between Different Loans: According to an evaluation, banks and other lenders offer a secured loan on eight to 10 percent interest and unsecured personal loans on 12 to 26 percent. Again, this is because unsecured personal loans are riskier. When it comes to the repayment schedule, secured personal loans are more often seen to be long term as opposed to the unsecured ones. If the loan is not paid on time, a huge amount of interest is charged to reduce the uncertainty of loss. Make sure that your comparison is not bound to just the amount of the interest; there are some other things to be considered, such as payment chargers and loan processing fee, which may vary from lender to lender.

6. Lenders to Approach at a Time: Usually, people have the practice to apply for a personal loan with multiple banks, but it reduces the chances of earning the funds on time. Let’s understand how this happens. When a person applies for a personal loan, the bank or the lender is bound to collect their financial history and credit report. Such reports are treated as hard inquiries at the Credit Report Bureau, which reduces the credit score by a few points. Multiple lenders tend to reduce the score, eventually reducing the chances of receiving the loan on time. So, always apply with a good credit score to the least number of banks.

7. The Employment Factor: Many of us are not familiar that the number of jobs that we have switched in the past also affects the successful or immediate loan borrowing. People who are frequent in switching their jobs are considered to be unstable in their professional life, eventually giving a perception of a difficult repayment. This eventually leads the lender to conclude that it is better not to sanction the loan to a certain applicant. You need to understand that if you want a personal loan, then the stability of your professional career also plays a role in making it possible.

Conclusion

Out of multiple personal loans, a payday loan is less risky as it does not allow huge interest or add-ons, and is repaid in a small amount of time. If you need cash, there are multiple options for borrowing the loan, but you need to figure out how you will manage the payment terms and maintain the credit score. Will it be feasible for you to repay the loan in the given time or will it be much more difficult? If you think you are not capable of repaying the loan, then it is better to gain a strong financial status before deciding to approach a lender for funds.

Unsecured Business Loans: A Comprehensive Guide

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StrategyDriven Managing Your Finances Article | Entrepreneurship | Unsecured Business Loans: A Comprehensive Guide

Have you ever felt the need to apply for some sort of business funding? If yes, then I am sure you must have gone through a million options before you came to the right conclusion about your loan. For any business, whether it is a big or small business, funding can actually make a huge impact. Getting the loan that suits your business best is very important. There are various types of loan options available for you to choose from but one option that can really work for you faster is an unsecured business loan. Here is a comprehensive guide that can fully educate you about an unsecured business loan.

What Is It?

What exactly is an unsecured business loan? If we look at the basic definition then this is one type of loan that actually does not in any way require the business owner to pledge any sort of asset or collateral against the debt they receive. The usual protocol for when you get a loan from the bank is to secure any sort of leverage that the business has to the lender to ensure some sort of guarantee. Unsecured business loans are a sort of financing option for those businesses that do not have or do not want to put up collateral for the loan. Through this type of loan, they can still access it and use it in their business in their own way. To get this type of loan all you need to do is apply for financing and also have a good credit score. It is the easiest way to raise funds for your business.

Types Of Unsecured Business Loans

There are certain types of unsecured business loan options out there that you can pick and choose according to the needs of your business in every way. The time period and the amount of loan can be huge indicators for the type of unsecured loan that is the most viable option for you. With options like term business loan, the candidates are mainly given a large amount, which can be repaid over a period of one to five years. This is a type of unsecured loan that is best used to pay off substantial one-time purchases. Another option that works best for short term financing resolutions is an unsecured business line of credit that is indeed a more adaptable finance choice, which is perfect for numerous purposes. Rendering to your long term and short term financing needs, you can check which type of unsecured business loan works best for your company.

Reasons For Need

The question of the need for this type of loan is very important. Identify the clear and concise need for an unsecured business loan that you are going for. An unsecured business loan can have many uses in your company. See whether you want the loan to increase the size of your inventory or to improve the cash flow of your business. Some businesses even require this type of loan to increase the quantity of their staff. Every business has different needs for using an unsecured business loan. Many business owners might get a unique opportunity for which they might need extra funding. In that case, they then go for an unsecured business loan as it can help them in completing whatever they want. Many companies that want to create a good credit rating so that they can prepare their business for a much bigger loan in the future also use this type of loan.

Selection For Lenders

There are many lenders who actually offer an unsecured business loan. When opting for this type of loan make sure that you actually look into all the options for lenders that you have. The reason for this is that many lenders tend to vary and have a different interest rate that they give. Work your options and see what kind of lender best suits your needs and gives you the most favourable conditions for the loan. Times have changed and now when you need a loan the only option available is not your bank anymore. There are various online sources that also offer safe and secure lending procedures that you can go through. As the application procedures for banks and institutions like these have tightened up, people are looking for alternative lenders. You can go for alternative commercial finance lenders or peer-to-peer lenders according to the terms and conditions that suit you best for your unsecured business loan.

Things To Consider Beforehand

There are various things that you must consider before you go for an unsecured business loan. Things like the time period when you need the funds matters a lot. Some places might offer you funds pretty quickly while some actually take their sweet time. When exactly you need the funds needs to be clear so that then you can work according to your timeline. Another very important factor is that make sure that you are absolutely aware of all the terms and conditions of the unsecured business loan that you are about to acquire. The reason for this is that if there are certain conditions that are unfavourable then you should know about them from the get-go. You may be required representing certain financial documents to get your loan approved also. These are things you must know beforehand so that you can work around them before you actually do get the loan. Once you have gotten that loan then there is no going back so make sure you are mindful of such things in the beginning.

May Require Personal Guarantee

The level of risk attached to an unsecured business loan is much higher than a secured one. Thus, it is possible that you may be required to give some sort of personal guarantee against the debt you are to obtain. This means that in the case that your business is not able to pay back the loan it has gotten then the holder of that loan must take a personal responsibility to pay that loan back. The structure of a personal guarantee can vary from lender to lender. Apart from a good credit score the lender will look into your situation and see if you will be able to take a personal guarantee against your loan. This is done to put the lender at ease and lower their level of risk as well.

These are the main and basic principles that are attached to an unsecured business loan. This type of loan can actually be very beneficial to give your business the boost that it needs to move forward. Just make sure you are fully aware of an unsecured business loan before you actually go for it.

4 Ways to Reinvest in Your Small Business to Drive Success

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StrategyDriven Managing Your Finances Article|Reinvest in your business|4 Ways to Reinvest in Your Small Business to Drive SuccessAs a small business owner, earning your first profit is a milestone. Hanging your first dollar from your first sale on the wall is a symbolic gesture that pays respect to the hard work that goes into building a business. Whether you actually hang up your dollar or not, you can understand the feeling of working tirelessly to create something that works. It’s an exciting moment for a new business owner.

This moment also comes with the decision of what to do with your company’s profits and how to put it towards an investment that will pay off. It can be a tricky decision, especially if this is your first business venture and you aren’t sure what course of action is best. Here are the best four ways to invest or reinvest into your company to drive future success.

1. Invest in business improvements

It’s common for start-ups and small businesses to reinvest in the early stages in order to help the business grow. Reinvesting in improvements like equipment, infrastructure, product development, and improving customer service are all valuable ways to build your business.

Software

Finding ways to streamline business processes is another good investment to make into your company. One aspect to consider is what kind of software your business should use to help achieve this goal. You are definitely spoiled for choice as there are so many programs out there designed to help you and your team save time and eliminate unnecessary tasks through automation. These programs are especially useful for start-ups who are operating with minimal staff and have a lot of team members wearing many hats already. You can purchase software to help with everything from your accounting to employee management and acquisition.

Organization

One integral but often overlooked program to invest in is a digital asset manager. Digital assets can quickly become disorganized if there isn’t a strict organizational method in place. If you’ve ever worked at a company with an internal drive that had no structure or naming conventions enforced, you know how chaotic it is to try and keep track of assets. This is especially true if you send and receive assets for feedback to retailers, partners or an outsourced team. Using digital asset management or a DAM such as Brandfolder can help save you from the headache and panic of trying to track down the asset you need.

2. Invest in your team

Building a strong team from strong foundations will help your business thrive. Creating a workplace culture where your employees feel valued, challenged, and happy to come to work every day improves productivity, which turns into profit. It also helps attract other talent because they know they can be successful in that environment and helps reduce turnover, which can be quite costly.

The best ways to invest in your team are with education and training courses, benefits packages, competitive salaries, and in-office perks like meals, flexible or remote working, and a good employee lounge to help people de-stress.

3. Invest in your marketing

When done well, investing in your company’s own digital marketing is a smart investment. It helps build your brand’s presence online and in your industry to attract customers or clients and talent. Sometimes start-ups take their time dipping their toes into their digital marketing efforts, possibly because they aren’t sure where to begin or don’t think they have enough in the budget. It can be a low-cost endeavor if you know how to strategize and plan properly, and there’s no downside to investing in performance metrics.

4. Invest in yourself

If you’re the one leading the charge, you should also be spending time and resources improving yourself and your expertise. Many start-up CEOs have some of the skills required to run a successful business but are missing others. For example, they may know how to innovate and fill a market need, but they don’t know how to manage people. Skills development courses can go a long way for the success of your leadership and business.

All You Need to Know About Unsecured Business Loans

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StrategyDriven Managing Your Finances Article |Unsecured Business Loans|All You Need to Know About Unsecured Business LoansWhen you first try to establish your business the first thing you look for is money. Money is an essential component of any business. How are you going to finance the idea which you have in your mind is the main question. When you read the biography of any big businessmen they all tell how they gather up finances. Some sold their land some borrowed money from relatives some put their house on stake to get some finances luckily nowadays unsecured business loans facility is available for people who want to venture in business.

What is an Unsecured Business Loan?

Let’s take a brief look at what an unsecured business loan is all about. In secured business loan when you go to a bank or any other loan provider you have to put your tangible asset on stake (as a guarantee) to get the loan but in unsecured business loan, you don’t have to put your asset (which is commonly known as collateral) as a guarantee instead of the bank see your credit history and provide you a loan on the credibility that you have given them written promise that you will return this money.

An unsecured business loan is the entrepreneur’s heaven to start a new venture without seizing his asset.

How many types of unsecured business loans?

We are dividing them into two main categories

  • One type of unsecured loan is made you repay and withdraw continuously.
  • The second is fixed terms of payment lender has to make small payments until it reaches the whole amount.

Why it’s Called Unsecured?

It’s called unsecured because one party is lending money but another party is not putting collateral on stake. In secured business loans if the lender failed to repay you can seize his asset but this is not the case with an unsecured business loan.

What information is required by a bank or a Venture Capitalist for Providing an Unsecured Business Loan?

1. History of Your Transactions:
The first and foremost information that banks ask is about your track records of three months how much cash you withdraw and how much you have reimbursed in the bank.

2. Business Partners:
The second most important information required by the bank is who was your business partners in the past and how was your dealing with them and who are your current and future partners and their record of business and stakeholders.

3. Your Lending History:
Yes, you heard me right your lending history, who you had lent money in the past, their contact details and did you return the money, and at what time?

4. Tax Details:
How much tax you have paid annually as an individual and how much you have paid as a business entity.

5. Credit Score:
Your credit history is very important, to lend you money, banks will also want to know your credit scores and details about your credit card history

6. Profit and Loss:
Another important thing lender wants to know is how well is your business running. Is it making a profit or running at a loss? As it plays a vital part to know about the borrower of the money, although they have some knowledge about your money details. All this information is required by the bank to process your application on the unsecured business loan.

Pros of an unsecured business loan:

1.Less Time Required to Proceed:
As we all say that time is money, you need money on an urgent basis, the unsecured loans are provided on an urgent basis which will eventually work for you.

2. Flexible period (payback):
It is also a great advantage for you, to pay back your loan according to your flexibility. The purpose of an unsecured loan is to provide you money on an urgent basis and also pay back the amount according to your flexibility of time.

3. Flexible amount:
It is very important to pay back the amount of loan in a lease form, like you may have the option to pay back the amount on a monthly lease basis.

4. Good for young entrepreneurs:
As they are fast loan providers and have the different options available for the convenience of the borrower it is beneficial for the entrepreneurs, as it will not only help them to start the business but also it will help them to grow their business.

5. No risk to a personal asset:
As business is all about profit and loss, the unsecured loans are providing benefit to the young energetic individual to provide the business opportunity with the option of no personal guarantee needed, which means that if the company faces any losses in future, the owner of the business will not be personally responsible for the loss.

Cons of an Unsecured Business Loan

  • High Markup
    Everything comes with advantages as well as some disadvantages. As the unsecured loans will help the borrower to pay back the money in lease form, but it has a higher amount of mark up as compared to other loans available on an online basis.
  • Increase in the Overall Borrowing Cost
    By providing the loans on a lease basis, it will increase the overall cost for the creditors, also, it will not help the borrower to save the interest cost which is the main consequence in an unsecured loan.

Conclusion:

Several loan companies are providing loans and giving help to the entrepreneurs but they also are helping the different businesses in different ways, to establish and grow.

To get loan from a genuine money lenders are most essential thing which a person need to look up for, also, after getting a loan the borrower must need to work hard to repay it, as it is the responsibility of the borrower to work and return the money and also to establish the business in a greater way.

Also, search for the money lenders that are providing the services according to your own need and according to your own choice of paying back money policy which is feasible for you.

Research, before you get into the loan process, as getting a loan according to your needs, is difficult. Try to clear your mind and focus. Moreover, try to discuss your business plan with the other successful entrepreneur so that you may also get tips for your business venture.

For entrepreneurs, try to work on innovative ideas that will lead your business venture towards a successful journey, although it will require a great effort from business owners as well as with the other partners but will eventually work. Lookup for the opportunities and avail them on time so that you can grow your business.

Find High Acceptance Loans the Easy Way

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StrategyDriven Managing Your Finances Article |High Acceptance Loans|Find High Acceptance Loans the Easy WayWhen it comes to personal finance, finding the right sources when you need funds quickly is paramount. Finding a balance between a trusted lender and high approval rates can be tricky and making the wrong choice can end up costing you considerably more. With lawmakers reported to be looking to tackle high-cost, high-interest loans, you’ll want to be able to spot one before using one. So where can you still find a loan with high acceptance and affordable interest?

Search the Market

To be able to find lenders who offer high approval rates with low-interest rates, you’ll need to look at the market in general to compare the lenders. This way, finding high acceptance loans becomes a much easier task to navigate. You’ll find specialist lenders who can help with searching the market so that at a glance you can compare what’s available to you. You’ll want to ideally avoid the lenders who will charge you a fee during the application, only pursuing no fee lenders. One of the problems you may find is that some lenders will claim they can offer high acceptance even with poor credit and charge a fee to go through an application. This way, they will still make money from you even if you are declined. Be cautious with any of the fee-charging lenders and make sure you read their terms carefully before agreeing to a loan.

Avoid Payday Lenders & High Interest

As tempting as it may be to use a payday lender, you should consider all your options. Because payday loans are designed for the short term, they generally charge a higher rate of interest. This is why it is not advisable to take one out if you want to pay a loan over a longer period with more manageable repayments. Although they offer same-day funding and high approval rates, you’ll find better options when you start to look.

Budget Accordingly

This is important; you should be working out exactly what you can afford to borrow and repay each month before applying for any borrowing. Even if you think you know what you can pay or a loan term seems affordable, you should audit your finances to see what disposable income you actually have each month. The reason this is important is that some lenders who offer high acceptance rates may focus more on what you can afford than your credit rating.

Although your credit score will play an integral part in the approval process, you need to be able to prove what you can afford.

Responsible lending is vital in 2020, with more and more lenders wanting to ensure that lending to you does not create financial difficulties. You should, for this reason, only use trusted lenders. If you’re unsure how to spot a trusted lender, then use the Better Business Bureau to see a list of them. Not only will you be able to see all the trusted lenders you should ideally use, but you can also find out about any current scams you should avoid falling victim to.

Don’t Go For the First Offer You See

There is searching, and then there’s searching well; because there are hundreds of online lenders available, it can be easy to go with the first offer you see just because the monthly repayments seem affordable. As the saying goes, if it’s too good to be true, then it probably is. Fully consider your options, even when using a comparison tool.

Although a lender may come out as the top result in comparison, that could just be because it offers the lowest monthly repayment. It may miss out on other aspects such as the interest rate and length of the term. If you take your time and not rush into a loan just because you want the funds quickly, you can hopefully save yourself a lot of money.

Consider the Amount You Want to Borrow

With the loan amount itself, do you need to borrow that much? The reason you should ask yourself this question is that it can affect the chances of being approved. The lower the loan amount is, the higher the acceptance rate because the lender will be taking a much lower risk. You should consider whether the loan amount is enough to cover what you need it for, and secondly, that it is not too excessive. Some lenders will offer a higher amount by saying what they can offer up to, but you should carefully consider if you need to borrow more than you need.

Additionally, with higher amounts of loan, you may need to offer the lender more assurances, such as with a secured loan, and attach something as collateral to guarantee it. If you want to keep it unsecured, then keep it low to what you need it for and those high acceptance rates should still be accessible.