5 Tips on Funding Your Home-Grown Business during a Crisis

5 Tips on Funding Your Home-Grown Business during a Crisis

Did you sit with your banker of late? You may need to trust your banker while trudging through economic hardships. For instance, it’s often beneficial for a home-based businessman to sit with his banker regardless of whether his business thrives on borrowed money or not. Trust and credibility are often the key determinants of a successful relationship. In order to stay in touch, you’ll need to remain honest and respectful towards each other.

Get in touch with your banker more frequently and keep his organization informed about what’s taking place in your business even when you don’t need money. Invite them to your premises more frequently and show them through your operational activities for about once each year. Developing a good standing with your bank often helps develop a strong bonding for tough times. Bankers are more likely to approve loan requests from businesses or individuals with whom they have a good standing for long. But when the economy is trudging through a downturn, even the issuers of quick cash loans are likely to ask more questions and incorporate stringent compliance norms.

To-do-list for achieving funds under a financial crisis

If you can manage your business activities and future plans more effectively, borrowing money often helps in establishing a great business sense.

Points to consider before you reach out to your banker:

1. Determine the type of fund you require

Do you need funds for acquiring fixed assets in the long run? Are you looking forward to extending your working capital? Do you wish to contribute more towards equity? Determining your choice of financers gets easier when you’re aware of the type of fund you need. It will help you decide on whether you should approach an equity investor, credit union, or a banking concern.

2. Opt for more than one lenders

Establishing a few extra credit sources and shopping in your neighborhood are supposed to be included in your risk aversion policy. If you’re well-equipped, your finances ought to be segregated between multiple organizations. Also, consider distinguishing between your long-term and short-term needs.

3. Get in touch with your banker

There’s no point in being a stranger; you must be open to all forms of communication. You must meet and exceed the reporting needs of your business on time. You may end up leaving a bad impression on your banker if you furnish financial reports and statements later than his expectations. You mustn’t exceed the spending limit set on your credit card. Contact your banker if you need more funds for your business and seek an extension temporarily. Check out the projections of your cash-flow for the long-term as well as short-term and convey it to your banker. You may consider it as the basis of your credit requirement.

4. Do a detailed research

Avoid creating a fuss when extra paperwork and data are demanded by a banker. Banks are eager to lend money to their customers, but the applicants often need to undergo stringent screening under a financial crisis. It helps in proving that the funds that they applied for are actually going to be used for safe business ventures.

Prior to lending money, banks tend to improve the plans and procedures of their client businesses. Furnishing a sound business plan often makes it easier for an entrepreneur to achieve extra funds.

5. Stick to the basics

This is more about sailing your ship more tightly like stock-taking, meeting bills, and collecting dues more swiftly. You must reassure your banker about protecting your business fundamentals. For this, you’ll need to prepare yourself for offsetting risks, diversify them as and when you meet them and ensure you’re aware of the assessment factors. You must also prove how you’re planning to cope with conditions that affect these risk factors. Be proactive in answering the questions asked by your banker and share your views concerning all problems in advance.

Master the art of planning and executing the strategies more accurately just to gain full control over your financial situation.

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How to Repay Your Loans

How to Repay Your Loans

If you have loans, then you may feel that you will have them for a long time. This can be the case with some loans, but it can be relatively easy to pay some off quickly and get rid of them. Wiping out a loan can be a great relieve as it not only removes stress but will mean that you will have more money to spend. You may feel a loan gives you the freedom of having extra money. However, when that money has been spent, you have to repay the loan and the fees that go with it and this can make it difficult for you to manage. There are ways that you can repay your loans, which should be fairly easy and will allow you to have more money in the future.

Find out what you owe

You will need to start by working out exactly what you owe and who to. Understandably this might be something that you are reluctant to do, but it is important. It isn’t nice knowing exactly how much debt you have, but until you know, then it will harder to start to repay it. Include all loans, overdrafts, credit cards, store cards and money you owe to friends and family.

Calculate the costs of each loan

It is worth calculating how much each loan costs you. This is normally done by looking at the interest rate, although some loans may have charges as well. It is good to see which is the most expensive as if you pay this one off first you will save the most money and therefore get out of debt more quickly.

Choose which to repay

You may think that there is a different loan you would rather repay before the dearest. It could that you owe money to a friend or family member and feel they deserve to be repaid first. You might feel that one loan makes you feel more stressed than the others so you want to pick that one.

Be careful that you do not pick an overdraft or credit card because you want to pay it back so that you can spend on it again. You need be wary of getting loans again as they are expensive. It is best to try to avoid most types of loans in the future so that you do not get into uncontrollable debt again.

So think about the reasons for picking one loan over another to repay first. If you have no reasons, then pick the dearest to repay first.

Pay extra off the selected loan by spending less and earning more

In order to start paying back the loan more quickly, you will need to make overpayments. It is wise to find out whether there is a charge from your lender for doing this. If there is a charge then you will need to work out whether it is worth paying that charge or if you think that you should opt for a different loan to repay first.

In order to make these extra payments you will need some spare money. If you have money in a savings account, then it can be wise to use that. It can be hard to use this money but if it is earning less interest on it than you are paying on the loan then it is better to spend it on repaying the loan as you will save money and soon be able to replenish the savings. You will need to check the interest rate though and make sure that you are better off repaying the loan.

If your savings are not enough to repay your loans then you will need to find the money elsewhere. By spending less money, you will have extra left to make bigger repayments. It can be good to think about whether there are areas that you can temporarily reduce your spending so that you can repay the loans. These areas will vary depending on the person but cutting down spending on luxuries such as vacations, clothing, jewellery, alcohol, evenings out, eating out, subscriptions and take away food can really help. Also checking process and making sure that you are not overspending on things can help as well. You could also see whether there are any ways that you can earn more money. As well as your conventional job, where you could see if you can do extra hours, you could get a second job, do some work online from home, sell things that you own, set up a business or something else. There are many opportunities to earn out there – you just have to find one to suit you and your lifestyle.

Once first loan paid off, start on second

Once you have paid off the first loan, then you will need to choose the next one to pay off, working through them one by one until they are all paid off. It can be a great feeling every time one of them is paid off in full and knowing that you are closer to your goal of paying them all off.

Stay motivated

The hardest thing can be to stay motivated. It can feel like you are punishing yourself because you are earning more, spending less but not seeing any of the extra money. However, it will be worth it when you have paid off all of your loans and no longer have to worry about them or pay out interest on them.

You may find that you need to keep reminding yourself of this. One way to do this is to write yourself a small note, with your goal of being debt free written on it and a reminder of why you want to repay the loans. It could just the freedom of not having any, the fact that you will no longer be paying interest payments to the lender, the fact that you will have more money available or something else. Keep a note of that as well so that you can keep remembering why you are doing this. It can be also be good to keep imagining how good it will feel to be free of debt.

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