Entrepreneurs Find Personal Loans Can Help Finance Business Startup Expenses

Being short-term loans that assist your immediate cash needs, personal loans can help finance business startup expenses. Typically personal loans are a single payout loan with a high rate of interest. The borrower usually returns the loan with interest in one go rather than paying monthly installment. In general, personal loans are not recommended due to their high interest rates. A borrower may find it difficult to repay the whole debt in a single shot, however, with business startup’s the case is indeed different! Let us see how different finance options can save the day for business startup’s.

Typical Business Start-up Expenses

Once you have decided to start a business you will most likely have a solid business plan that will detail your initial financial requirements. Typical business start-up expenses can be broadly divided into overheads and variable expenses. One thing that remains constant with almost every new business, is that you need some money to purchase inventory, lease a building, start an advertising program and work towards your first sale. Personal loans are extremely useful in financing those overhead expenses that usually occur at the beginning as a one-time cost. Variable expenses are those that continuously occur in the process of conducting a business and are generally tied to sales projections.

For instance, in case of a software business start-up, the administrative costs, licensing costs, initial infrastructure setup cost would constitute overhead costs. On the other hand client visits, traveling for demonstrations etc. would constitute variable costs that will keep occurring every time there’s a potential client and may not be predictable. Also, irrespective of sales, overhead costs will still remain to keep your setup active!

Before you borrow any money, it is vital to have a repayment plan as well as projected business plan, to understand how your cash flow will operate. Once you segregate your expenditure into fixed overhead costs and variable expenses, you need to sort out the expenses that will be one-time events. A business loan or credit line can help with these one-time costs provided your business is able to afford it once projected sales begin to be realized! You need to anticipate all possible scenarios and ensure enough cash flow over the period of few months before you take a personal loan.

Types of Personal Loans

The beauty of this financing, is that it often can be obtained with or without security collateral. A secured personal loan involves borrowing against an asset such as your property. If you default on your repayment, the lender can claim your asset! On the other hand, unsecured financing, does not need collateral, however, the lender generally protects his loan from possible default by charging you a high rate of interest. In the event of a default, the lender may resort to legal channels to recover the amount.

If you are confident of repayment, it is best to go for a secured personal loan wherein you can negotiate a low annual percentage rate (APR) while pledging your property or car or any other asset.

If your business startup requires funding that cannot be met by a single personal loan, you may even borrow more than one loan. The more you expose yourself to the debt scenario, the more financial risk you’re exposing yourself and your business to. It is important to conduct thorough research and prepare for contingencies. It is always best to dig into your own savings or borrow from close relatives if they’re willing and able however, for those that need instant cash and a huge amount at that, a personal loan could be a lifesaver. In fact, if you successfully repay your personal loan within the stipulated time, you could even get a good credit score which in turn will be better for the future of your business!

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CIT Group – Retail Financing Business Failure May Mean an Un-Merry Christmas

One of CIT Group’s specialties is providing financing for apparel and furniture manufacturers and other suppliers with a long wait from procurement of supplies to manufacturing to delivery to retailers until invoice payment by retailers. Cash flow and working capital keeps the supply chain flowing. There is much anxiety on the part of retailers about an interruption in the supply chain that would come about as a result of an interruption in cash flow along the value chain. To the suppliers and manufacturers, their very business survival is at risk. The concern for many is how they can continue to meet payroll.

The big year end retail season is fast approaching. The apparel and retail industry is generally one season ahead of the actual calendar season. But months earlier, they are already planning and strategizing on how to best navigate the Christmas holiday. That’s when the majority of retail sales revenue is generated. Now is the time. And the supply chain and value chain needs to be functioning. Business cash and cash flow is crucial.

What is Factoring?

Receivables are business assets, assets which businesses can use to get cash and working capital. With factoring or accounts receivable financing, the business owner sells customer invoices in exchange for cash advance in as little as 24 hours. This is a big improvement over the 60 to 90 days that retail industry suppliers must wait to get paid. Everyone in the supply chain has already had to have sufficient cash flow and working capital to carry them through until their invoices are generated. Then it could be another 60 to 90 days until there is an inflow of money to fuel continued operations.

With accounts receivable financing or factoring the business gets qualified for cash advances by its customers. Factoring companies purchase business receivables in exchange for providing immediate cash to the business owner. As part of the factoring transaction, the factor or funder or funding source has to the right to receive the A/R invoice payment directly from the customer. After the customer pays the funder, the funding source then deducts the discount fee and remits the balance of the A/R money to the business owner.

The Good News

The cash flow industry is in the business of providing cash advances against future assets and cash flows. Invoice or Receivable Factoring is the original and probably the largest cash flow product. While banks are tightening their money and lending criteria, there is still plenty of money in the cash flow industry. Alternate ways of financing business must be considered as the US Government money dries up and the national deficit and debt continues to rise. Not sure that the fiscally fit factoring companies could absorb $42 billion worth of factoring business. Hopefully that theory won’t be tested. CIT Group, Inc is being rescued by private financing.

Can A Franchise Finance Business Loan Be Creative? Here’s How Canadian Franchise Finance Works!

Is it actually possible to get ‘ creative ‘ when considering a franchise finance business loan for you new Canadian role as an entrepreneur in franchise financing? There are some tried and trusted rules we use in the franchise lending area, but a little creativity has never hurt anyone we believe!

If you haven’t considered how to finance your new business in the franchise industry then we feel it’s probably a little too late in some ways, as your ability to finance your business properly we think has a lot to do with the ultimate growth and success of your business. There are very focused lending sources for the franchise area of financing in Canada – the trick of course is to know what they are and more importantly how you can navigate the ‘ maze ‘ successfully.

The reality is that if you have some industry experience in your new business and a proper finance plan you have a much better chance of financing your business properly.

So, who can you turn to in terms of creativity and resources for franchise financing? Clients are amazed when we tell them the most creative partner in franchise financing in Canada is none other than the Canadian government!How could that possibly be? Simply because a program guaranteed by the government and administered by the banks could not be any more creative than this.

The program is the ‘BIL’ loan program, and it provides you with financing up to 350k for your new business. Are the terms onerous? Hardly! The essence of the program is a 5-7 year term loan, with great rates, limited personal guarantees, and some other elements of flexibility. If that isn’t creative then we don’t know what is!

Naturally all the creativity in a business loan of that type for your franchise finance scenario should not be reliant on just one lender – the other lender is someone you know very well. Yourself. That’s simply because when you look at the total financing of a franchise in Canada the two components are simply debt (the funds you have borrowed) and the equity, or money you have put in yourself. These equity funds, i.e. your commitment to the business, typical come from savings, the proverbial ‘ friends and family ‘ support, and investments or collateral that you have available.

Getting back to our key subject of creativity, our above noted BIL loan program only covers certain aspects of a franchise finance scenario. You can augment that loan with flexible equipment financing that has low down payments and extended amortization terms, as well as, in some cases, a working capital term loan.

We never forget to remind clients that the franchise financing plan is a two stage process, acquiring the business, and making sure they have some capital and funding to operate and grow their new business.

In summary, you can be creative when you are looking for info on how Canadian franchise finance works. You need knowledge on what funding sources are available that are specialized to the franchise industry, and assistance in executing a proper financial plan. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in maximizing that creativity!

Top Carriers Dropping Medicare Advantage Private Fee-for-Service Plans

Top health insurance carriers are dropping their Medicare Advantage Private Fee-for-Service (PFFS) plans, according to recent announcements by some health insurance providers, including Coventry and WellCare. A PFFS is a Medicare Advantage (MA) plan that is available through a state licensed, risk-bearing entity, or a PFFS Medicare Advantage Organization (MAO).

As a result of PFFS coverage drops by Coventry and WellCare alone, more than 500,000 Medicare beneficiaries will have to find new coverage.

Currently, Medicare Advantage plans receive government subsidies so that they can offer beneficiaries more benefits than simple Medicare plans. Medicare Advantage plans are offered to Medicare-eligible individuals by private health insurers. However, analysts are expecting the reimbursement rates for these PFFS programs to fall by approximately five percent, making them less profitable for insurance carriers.

How PFFS Currently Work

PFFS are popular amongst consumers because they allow Medicare beneficiaries to choose their own healthcare providers, rather than having to select their providers from a limited number of in-network of Medicare-approved providers. Beneficiaries can see any provider, as long as the provider agrees to charge based on the PFFS fee schedule. This fee schedule is the same as the Medicare schedule.

PFFS MAOs have yearly contracts with the Centers for Medicare and Medicaid Services to provide Medicare beneficiaries with their Medicare benefits as well as additional benefits that a company opts to provide. Essentially, the PFFS provider pays for healthcare instead of Medicare when a beneficiary has such a plan.

The main benefit (which makes PFFS so popular) is that individuals who join PFFS MAOs are not required to use providers within a network and can, therefore, see any provider as long as the provider is able to receive payment from Medicare and the PFFS MAO.

More Changes to PFFS Plans

In addition to the decreased government reimbursement amount for PFFS plans, PFFS plans will be required to develop healthcare provider networks beginning in 2011. The change will force PFFS beneficiaries to select their healthcare providers from within the plan network, limiting their freedom to see providers that they prefer.

Experts predict that more healthcare insurance providers will follow Coventry and WellCare by dropping their PFFS plans in coming months. Individuals should contact their healthcare insurance providers if they are currently enrolled in a PFFS or are considering enrolling in a PFFS to get more information about how their provider will respond to the upcoming PFFS changes.

More Information About Medicare Advantage Plans

Medicare Advantage plans are specific types of Medicare plans that are in place to cover the cost of healthcare related expenses for Medicare participants. These plans are similar to traditional Medicare plans in that they provide financial support for individuals seeking medical or health-related services. However, the Advantage plans generally have more benefits and lower copayments than many other types of Medicare plans. In order to have a Advantage plan, Medicare participants need to have Medicare Part A and Medicare Part B plans.

One major difference between Medicare Advantage plans and other types of Medicare plans is that Medicare Advantage participants may need to see only doctors that are members of the Medicare Advantage provider plan. However, plans may allow participants to use a wide variety of services, including Medicare Health Maintenance Organizations, Preferred Provider Organizations, Private Fee-for-Service providers, and Medicare Special Needs providers.

Medicare participants should also be aware that Medigap policies do not provide gap coverage for individuals that participate in the Medicare Advantage program.