Simply Junior

There is a number one rule in building business credit and that is to pay your bills on time. This shows other businesses, particularly investors and suppliers that the process of business is being carried out the way it should be. But even more importantly it allows banks and financial institutions to see for themselves whether or not the business is operating under good financial parameters.

When a bank or other lending institution receives a request for a business loan one of the first things they do is check the business credit score with Experian Business, Equifax Business or Dun and Bradstreet. The reports a creditor can buy from these companies will immediately identify any outstanding business liabilities as well as showing how well a company has been doing to pay their bills and keep their suppliers happy.

The other important factor in building business credit is to for the owners or principals of a business to look after their own personal finances. When a bank lends money in the form of a business loan or business line of credit they have to satisfy themselves that the corporate officers of the business are themselves creditworthy. In fact under the Small Business Administration guidelines this is one prerequisite for banks to access funds under the Small Business Act.

Another element in building business credit is to keep good financial records and have a solid accounting system that not only tracks accounts payable and accounts receivable, but is also capable of making forecasts and projections about financing and cash flow problems before they arise. One of the major reasons that small businesses fail is that they do not properly track their financial situation so even if a business never has to borrow money, it will need to be financially well organized just to survive.

A final way in building business credit is to create a business credit track record. A business can do this by borrowing small amounts of money or arranging limited financing using personal guarantees. This shows the banks that a business is not afraid to invest in itself and is prepared to back that up with their own personal monies. Just like getting a car loan and making all twenty four payments on time at the bank will improve your personal credit so too will meeting your financial commitments in a business arrangement improve and build your business credit.

Building business credit is a process that will evolve over a period of time. Just staying in business past the first two years will improve your business credit outlook. So too will keeping your suppliers happy and ensuring that your financial recording systems are accurate and up to date. The longer that you pay your bills on time the greater your business credit will grow. Look after the small things in your business and building your business line of credit will look after itself. Learn more about building business credit at http://www.corporatecredit.biz

CREDIT AND ITS IMPACT ON INVESTMENT LOANS

The status of your credit plays a major role in helping you to obtain commercial real estate financing. It helps to determine how much financing for which you will qualify and what kind of an interest rate you will get on the loan. Unfortunately, most people do not pay attention to or monitor their credit files on a regular basis. If you are going to invest in real estate, this is an absolute “must.”
What is good credit?

Good credit for a commercial real estate investor usually means about twelve to fifteen “trade lines” of seasoned credit in a credit report, with several real estate loans either showing as active or having been paid off successfully. For example, car loans, current mortgages, and charge cards which are at least two years old and show no late payments. Again, for real estate investors, successful maintenance of real estate loans is a “must.”

Now granted, not everyone is perfect (in fact, very few are!) and we all have our ups and downs, so don’t be worried if you have a few 30-day late payments or some old collection accounts on your credit report. Today, credit reporting systems use a complex method of evaluating credit patterns which is distilled into and issued as a “credit score.” The higher the number, the less risk there is that a borrower is likely to “default” on a loan.

While this process, called “credit scoring,” is in full use for residential loans, the commercial lenders are only now starting to adopt it. There is a trend to use them by certain non-bank lenders for loans less than $2,000,000 or so.

Most underwriters (the people who would approve your loan) and underwriting systems that review your track record are looking for trends. In other words, they’re looking for a history or recent pattern of good or bad credit. Isolated incidents should not affect your ability to get a loan.

How Can You Repair Your Credit?

In most cases, a simple letter or phone call to the credit card company or business that originally gave you the “credit” can put you on the right track to having that “scar” removed from your report. It may not even be necessary though, based upon your recent credit patterns!

Sometimes they’ll require you to pay-off the balance of your debt or send in a letter explaining why you were late with your payment. Don’t pay any creditor off without talking to a qualified professional financial advisor or mortgage consultant first!

However, if you have a history of recent late payments, you’re probably going to have to let time take its course (although there might be trick or two here you can use).

There are a million scenarios I could review, but I think it’s important you walk-away with two key thoughts from this: 1) Your credit can make or break your ability to acquire a loan; and 2) you must know what is on your credit report, your credit score, and begin to examine and, if necessary, repair any credit problems immediately.

What Role Does Your Investment History Play?

Your investment property loan history or “track record” will play an important role in whether or not a lender will want to finance your next property. Investment properties, and their respective loans, are often looked upon as a higher credit risk than if you were buying your own home. So, if you have a proven track record of successfully selling or managing investment properties loans, with no late payments, then you are more likely to get your loan approved.

The bottom line is that “credit” or, more accurately, “credit history” is a major determinant in your ability to finance commercial real estate. Pay close attention to this area of your finances if you intend to be an active investor and manage your credit as you would one of your properties: Actively.

Are you thinking about creating a brand new real estate note that you can turn around and sell right away? Good, then let us talk a little bit about what buyers look for when purchasing a real estate note. Just so you know – the best way to get the most current information on this subject is to call a qualified note finder.

A qualified note finder deals with buyers all day long, and knows exactly what they are looking for in the current market. Make sure if you are going to create a new note you consult with a qualified note finder before you create the real estate note.

4 Key Ingredients for Creating a Note that Sells

1. Most Important – make sure your note in secured by real estate. If you forget to secure the note to the real estate in question, your note will be worth nothing to a note buyer.

2. Interest Rate – buyers like the interest rate on the loan to be at least 6%. A buyer may buy a note with a lower interest rate, but may also ask you to modify the loan before purchase. You and the payer both have to agree to the modification before the note can be modified. This can create problems. So, with a new note shoot for 6% or better.

3. Note Term – buyers liked fixed term loans – 5 year, 10 year, 30 year, etc. They tend to stay away from interest only notes, and notes that have big balloon payments at the end of the term.

4. Payer’s Credit Score – When you are seller financing to someone, make sure you check their credit. You are allowed to check credit twice a year on anyone about to make payments to you or that is already making payments to you. You probably want to consult a lawyer about this statement, but I have been told on many occasions that this is federal law….And make sure your payer’s credit score is at least average – 625 or better.

There are other factors of course in creating a sellable real estate note, but these are the top four. Always consult with a qualified note finder before creating a new real estate note. Your finder will know all the current market values, and be able to outline the criteria you need for creating a sellable note.

When seller financing a property you have to realize the buyer and the payer are looking for different things on opposite sides of the spectrum. For instance, the payer wants a low interest rate or no interest rate, and the buyer wants a high interest rate. You want to accommodate the payer, but if you want to sell the note after creation, you have to look out for the buyer’s needs as well.

Don’t worry, you can be fair to the payer, and still meet the buyer’s needs. A qualified note finder will help you do just that.

Today’s recession has had an impact on personal and business credit cards. Over the past 1-2 years many any people are receiving letters from their credit card lenders informing them of an increase in interest rates or a decrease in the credit limit.

Small business credit cards can be an additional source of financial income. They also help in keeping other lines of credit open. Using this type of credit card can ensure that suppliers are paid on time while giving the business an interest-free period (float) in order to obtain enough money to pay off the credit card debt. As the recession has begun to deepen, businesses have found that obtaining credit cards for their business has become much more difficult.

The worst thing a new business owner can do is to use their own personal credit card to finance their business purchases. This makes it very difficult to separate business and personal finances, but also makes the individual responsible for the debt of the business. Not a good thing!

Some businesses are using business even credit cards to pay their tax bill, which is tempting as it avoids any fines for late payment. There is however a fee for doing so. Usually, this fee is significantly lower than the penalty would be for not paying taxes on time.

There are still plenty of opportunities out there for small businesses who have good credit record to take advantage of their business’ credit cards. Even though lenders are stricter in their acceptance criteria than in previous years, you should not give up. Before applying for credit make sure that you meet all the requirements for acceptance. Every time your credit is check, the credit score goes down. As a result, only apply for cards when you feel confident that you will be accepted.

Global financial crisis has badly struck the economical state of everyone from a common man to large established businesses. Even those who never think to make a budget are now trying to prepare an effective financial plan which could help them survive in such circumstances. Whether you are enjoying a strong economic position or passing through financial fluctuations like today, a budget is always there to add more flexibility to your way of spending. A budget presents a clear cut picture of your earning, spending and saving. You do not need to worry about where your money has gone and how it got finished soon if you are following a budget with realistic financial approach.

What are the Main Factors Behind Debt Accumulation?

Overspending or impulse purchases are considered the main factors behind debt accumulation. We often come across people who are talking about their inability to control the rising expenditure and deteriorating financial state. What is lacking there? Answer is “budget”. Only a fact based budget can limit these bad financial habits and can put a halt on declining financial scale. Impulse purchases which are said to be responsible for about 50% of total expenditure, if controlled through an effective budget then there left no reason for further financial tension.

What should be the Essential Part of Financial Activities?

Making a budget must be an essential part of your financial activities, as it not only helps you warding off financial worries but also makes you a responsible person in your financial dealings. First of all you stop taking loan and learn to live within your mean. Secondly you start paying monthly bills and installments timely which improves your credit score and open the doors for further credit facilities. Even it can make you save and invest a little portion of your income which can be helpful in putting off your debt smoothly.

Budget Making and Hassles of Busy Life

It’s true that we are living in a busy world with lots or tensions and responsibilities and do not want to get into the complications of making a budget. But do not worry budget making is not a complicated process. You just need to take paper pencil, make a list of all expenses and allocate finances to it. In this way you can easily keep track of your money and effectively control the factors responsible for wasting a big chunk of your monthly income into unplanned and impulse purchases. So before rejecting the idea of making a budget at once, stop for a moment and think that spending one or two hours in making a budget is not a big deal rather than wasting your time in tackling with unmanageable expenses whole month.