Posts

Students with Federal Loans - Complete Controller

Besides purchasing a home, getting a higher education can be one of the most expensive endeavors in your life. While some students get scholarships or obtain grants that don’t have to be paid back and others have parents who can afford to pay for their education fully, many students have no choice but to obtain federal student loans.

Student loan debt rivals credit card debt to be the number one debt most working adults carry. While this fact may be disheartening, all hope is not lost if you carry federal student loan debt as there are some ways to gain debt forgiveness. Check out America's Best Bookkeepers

Debt Forgiveness Programs

Student debt forgiveness programs were developed to show compassion for students with an overwhelming amount of student debt. There are many smaller and local programs you can apply for; however, you will have to do your research to find them.

There are four major debt forgiveness programs you can apply to; however, they will not take on debts of students who are in default status, which means they have not paid against the loan in over nine months. These debt forgiveness programs are Public Service Loan Forgiveness, Perkins loan cancellation, Income-based repayment, and Teacher Loan Forgiveness specifically for students who went to school to become teachers.

While each of these programs is widely available, they have extremely strict requirements that have to be followed. They often require the yearly filing of paperwork and intricate program rules and steps to follow. Because the amount these programs give out each year is limited, if you are using the program and have even one slipup when it comes to procedures, you are removed from the program. It is important to consider your options before using any of these programs carefully. Check out America's Best Bookkeepers

Other Loan Forgiveness Options

There are a few different types of occupation-based loan debt forgiveness programs available, depending on how you live. Such programs are mainly for attorneys, doctors, and other professionals who pay more than the average amounts for advanced degrees. Students who used such loans have a great shot of getting the entire debt forgiven after just five years. The process mainly depends upon the type of profession, particularly for the people who have a full-time job in a community.

Loanforgiveness.org

There is a government-subsidized student loan forgiveness program with multiple options under the plan, one of which may be right for you. All of these loans or debt forgiveness plans are only for students with federal student loans.

  • Standard Repayment Plan: Under this plan, your payments are fixed to pay in full over ten years.
  • Income-Contingent Repayment (ICR) Plan: This repayment plan is based on your discretionary income at the time of the plan implementation or a fixed monthly payment over 12 years, also based on your discretionary income at the time of implementation. Check out America's Best Bookkeepers
  • Income-Based Repayment (IBR) Plan: This repayment plan is based on 10 to 15% of your income and will change if your income changes. There are two IBR plans, the standard IBR plan for students who obtained a federal loan before July 1, 2014, and the New Borrower plan for those who have obtained a federal student loan after that date.
  • Pay as You Earn (PAYE) Plan: This repayment plan will cap at 10% of your discretionary income at the implementation time. If you still have any debt after making regular payments for 20 years, the rest of your debt will be forgiven if you go on to earn a graduate or professional degree that would be extended to 25 years.

Permanent Disability Release

Through the Department of Education (DoE), if a student who has a federal student loan has an incapacitating physical or mental disability and cannot contribute to what is considered significant gainful activities (a job), there may be some debt relief for a federal student loan.

First, the student must prove the disability with an authenticated doctor and have supporting documentation. Once permanent disability is determined, the student debt is canceled; however, the student cannot apply for any other educational loans. The only way a student can apply for loans and continue their education is to obtain a letter from a qualifying doctor that shows they can now engage in gainful activity (get a job.) Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
Business Financed - Complete Controller

Are you looking for a loan to finance your small business? Banks no longer have the monopoly as the only financing source for companies in Europe and the US. The lack of financing options for small businesses and the self-employed in our country has facilitated the development of alternative ways to obtain financing that has nothing to do with traditional banking institutions. Check out America's Best Bookkeepers

Business owners are tapping into and exploring new routes of financing their businesses, and banking advancements are taking the financial world by storm. It’s time to hop on the bandwagon and devise strategies for your business, even if it means taking the big plunge in a new direction. By utilizing these tools, chances are your business will grow and increase its returns. All in all, if you dread raising finances for your business, untraditional financing options might be the way to go. Here are five alternative financing options, what they offer, and how they work.

Personal Microcredits Online

Online loans are one of the best financing options to not only finance your business quickly but to do it without so much bureaucracy. These are small loans that can be requested online through platforms such as Credit Cashier and ranging from $50 to $300. This financing option offers flexibility in terms and gives you thirty days to repay the loan from the time the loan is approved and issued. It also has a lower threshold of credit score requirements. While this loan is not large, it is fast and can help you with immediate needs less expensive. Check out America's Best Bookkeepers

Angel Investors

If what you need is not just a small but a more significant investment, from $50,000 to $200,000, you can seek out angel investors. These investors often provide financing, business experience, and contacts that will further your business. Angel investors are professional investors that are both entrepreneurs and philanthropists. In some cases, they invest without expecting a return. Other angel investors will look for some level of return on their investment. These investors tend to finance riskier businesses that other investors and lenders won’t approve.

Crowdfunding

Crowdfunding is based on a model of mass financing or multiple investor financing. Different people interested in the start-up and promotion of a project become its prominent investors or patrons. In collective financing, the endorsement of the project is through the financing and confidence in it. The internet and social networks make it possible to quickly publicize the business idea, which triggers many potential investors. Check out America's Best Bookkeepers

Public Subsidies

The aid of official government or public subsidies that offer grants and loans is another option that is unconventional and outside the traditional banking institutions. This type of financing can boost your business or fund a specific project without paying it back. While these grants or loans are ideal since they are free money, they are difficult to obtain.

Tips When Requesting Financing

To successfully obtain financing for your small business or project, there are a few things to keep in mind.

  • A matter of Faith: You must believe in your idea and trust in its success. Convincing investors to finance your business or project will depend on your belief in your business and yourself.
  • Time and Dedication: Do not give up after the first rejection. Finding investors and financing is possible, but it is not an issue that happens overnight as it requires a continuous search.
  • Initial Financing Plan: This plan accounts for financing needs and available resources. It is usually presented in the form of a table, either through an investment or financing plan or through a complete financial study with cash flow and analysis of key ratios and magnitudes.
  • New Technologies: Take advantage of the internet and social networks’ connections to help you find and attract future investors.
Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
Small Business Bank Loans - Complete Controller

The bank expects the entrepreneur to finance itself for a significant part of the financing needs and therefore take part in the risk. The bank is seldom interested in approving loans for a small business if the entrepreneur or main investor has not put up the credit of their own. Check out America's Best Bookkeepers

Insufficient Contributions

  • On the current bases, one generally speaks of a minimum level of own contribution of the order of 20%, but this is theoretical because specific parameters can imply a need for own contribution more consequential, for example. If a starter project or for specific sectors.
  • We can consider two main reasons for this requirement: (i) the more significant the entrepreneur’s contribution, the more the risk of the bank is limited, especially since the bank is by definition reimbursed first, and (ii) the more he entrepreneur is involved in his project, including financially, the more he is stimulated to create value.
  • Please note, this does not only concern starter projects! It is indeed also necessary during the development phase of the activity that the company take a more or less substantial share of the risk at its expense. Sometimes a recapitalization is even necessary.

Financial Imbalances

  • Specific financial imbalances can appear both in the asset structure of a company and in its profitability structure.
  • Considering the impact that the existing and future situation may have on the business’s viability and, therefore, on its ability to repay loans, the bank is careful to analyze with precision the main related indicators. These main indicators relate to solvency, liquidity, working capital, working capital requirement, gross margin, added value, EBIT (DA), etc.
  • A manager / associated current account with assets or liabilities will also have an impact.
  • These analyzes are carried out based on the situation before and after integrating the new loan (s). Check out America's Best Bookkeepers

Insufficient Warranty

  • As much as the bank analyzes in-depth the probability of default on loan to be granted, it also wishes to cover its risk if a default occurs, via guarantees.
  • However, it is quite common for a company not to have elements that can serve as sufficient collateral in the bank’s eyes, especially since the requirements in this area have increased in recent years. In such a case, the bank generally requests private guarantees (real or personal) or refuses the credit.
  • There are various solutions to try to make up for this lack or avoid having to excessively link the business’s risk to the private heritage of the entrepreneur, for example, by calling on public solutions and the Investment Fund.
  • Also, avoid giving too many guarantees too quickly to a single bank, as you will then be “married” to it without any real possibility of requesting another.

Unprofitable Demand

  • In recent years, banks have taken steps to improve their efficiency, which is reflected in an increased desire for standardization and automation. Consequently, companies’ banking contacts, especially in small companies, are pushed to manage the time spent on each request. Therefore also to filter files that are unlikely to be approved or to avoid applying an overly tailor-made treatment if the profitability potential of the file is limited.
  • Thus, any element that weighs down the process requires additional action by the bank; therefore, risks impacting its assessment and processing of the file.
  • This can be seen, for example, when the bank has to submit small files to the Participation Fund or the Brussels Guarantee Fund. Check out America's Best Bookkeepers

Other Elements Related to the Bank and its Environment

Other elements specifically related to your bank and its environment can impact the lending process, such as:

  • What is the general economic context and that of the banking sector: growth, stability, crisis?
  • What is the sector’s regulatory context: are there increased requirements in terms of the financial soundness of banks, are they more controlled and supervised in their management of granting of credit, do they have increased responsibilities vis-à-vis their customers?
  • NB: a more complex situation in the banking sector’s economic and regulatory environment (as it is currently the case), does not fundamentally change the rules for granting credit but leads to a stricter application of the fundamental logics summarized in this article.
  • What is the bank’s current risk policy: does it have the will or the capacity to broaden its clientele or outstanding credit?
  • What is the bank’s current commercial and segmentation policy: are there excluded sectors, is it open to starters, is it mainly interested in private accounts?
  • Who are your interlocutors and the decision-making process? Do you have the possibility of visually presenting and defending your project to a direct interlocutor, is he competent, and does he have real weight in the decision?

Note: Be careful. The more people there are, the more there is a risk of misunderstanding and loss of information.

With this reading grid, you can try to deduce if your expectations are realistic and especially if you have the possibility of increasing your chances of success by adopting one or the other parameter!

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
SMALL BUSINESS LOANS - Complete Controller

Nobody likes rejection, whether from someone you love, a job interview, or a bank loan. As a small business owner, the feeling is relatable as only half of all small business loans are approved. Even though small businesses have many lending options, it is still an arduous task to acquire any credit. The high number of lending options might be making things worse rather than better. Check out America's Best Bookkeepers

Surveys reported that almost 45% of small business loan appeals had been rejected more than once, and about 23% of them have no idea why. To clear the dilemma, here are the most common reasons that contribute to the rejection of small business loans.

Bad Credit Scores and Financial History

A credit score is one of the most critical measures of a person’s creditworthiness. Banks heavily rely on credit scores to make decisions regarding approval. Therefore, they set interest rates accordingly. Credit bureaus are responsible for keeping track of credit scores. A bad credit score is often due to several reasons, including late or missed payments on credit cards, loans, vendors, etc. Banks will approve small business loans after looking at credit history to minimize their risk. If your business has a bad credit score for any reason, you should immediately improve it.

Some small businesses are too new to have any credit history. Such a situation is harmful when it comes to scoring a loan. To elevate their personal and business credit scores, business owners must make payments on time, spend well under their credit limit, and keep their credit accounts open. However, this requires business owners to make smart financial decisions that will eventually lead to higher credit scores. Check out America's Best Bookkeepers

Lacking Collateral

Banks and other lending associations require collateral, typically a fixed asset such as property, to guarantee that the loan is repaid. A start-up venture often does not have resources to put up as collateral and might not be willing to risk their assets. The amount that is approved as the loan is equivalent to the value of the collateral.

Homes and cars are the most popular options for collateral among new businesses. However, that can be a significant risk and must be thoroughly analyzed before advancing. Online lenders are a better option when it comes to securing small business loans without collateral. However, interest rates are significantly higher.

Weak Cash Flows

Lenders want to see businesses with enough money to sustain their daily business operations and make monthly loan payments. Healthy cash flow is vital for the survival of any business, and lenders know that. However, small businesses often struggle to keep a steady balance in their bank accounts because they have to make advance payments to vendors.

If the amount of money going out of your business is more than what’s coming in, it can be hard to acquire a small business loan. Business owners need to implement changes in their current business model so that the cash flows improve. Lowering expenses and looking for ways to grow your business are the only ways to improve cash flow and eventually qualify for securing a loan. Check out America's Best Bookkeepers

Pursuing Small Business Loans

Small businesses often look for loans that amount to less than $100,000. On the other hand, banks want to approve larger loans because they are more profitable for them. The cost of processing a $20,000 loan is the same as preparing a $1 million loan. Therefore, predisposition.  It does not mean that you have no chance of getting a loan approved, merely suggesting the way banks look at small business loans.

However, small businesses can acquire a loan from other sources such as online lenders and personal contacts if the amount is relative to the size of the company. You also have a better chance of getting a loan approved from a community bank, provided you have good relations with them. Having a banker that recognizes your business can be a blessing, as your chances of approval rise significantly.

Avoiding the possible scenarios mentioned above will ensure that lenders approve your small business loans. Ensure that the applied amount of the loan fits the needs and requirements of your business. Don’t go for a higher amount just for the sake of it. Instead, calculate the exact amount you need to maneuver your business towards its mission.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers

Loans are almost always a necessity for new and small businesses.  A common misconception about business loans is that they are used for starting a small business, and nothing else.  The truth is, besides starting small companies, business loans are needed to maintain cash flow as well.  Most businesses have a line-of-credit loan on the back burner for when issues work against plans.  This is normal, and the more you know beforehand, the more comfortable you will feel with your lender and borrowing situation.  In this article, we will be discussing the three major types, or categories, of loans used by small businesses. We will also be discussing secured loans vs. unsecured loans. Check out America's Best Bookkeepers

The 3 Types of Loans

The first thing to know is that all lenders have various names that they give their loans.  Don’t panic!  The point of this article is to provide you with the three most common categories in which these loans fall into. Establishing a good relationship with your bank or lender is key when it comes to borrowing.  Once you’ve established a bank, communicate clearly what your business needs are and how their services will best fill those needs.

Line-of-Credit

This is the most common type of loan that small businesses will use to keep cash-flow running smoothly.  These loans are designed to cover the cost of inventory and payment of operating costs.  The nature of this loan is not to be used for business growth such as real estate, renovations, and equipment but only for stimulating cash-flow. This is a short-term loan.  The extent of that loan is up to the discretion of you and your loan officer.  The amount in which you receive is generally based on your credit score.  Your credit score and previous loan history will also determine the amount of interest charged on that loan.  Fortunately, Line-of-Credit loans fall on the lower spectrum of the interest rate scale because they are seen as low-risk loans. Most Line-of-Credit loans are written for one year.  During this period, interest rate payments are made monthly, while the payments on the principal are up to the discretion of the business owner.  It’s recommended that business owners make principal payments a little each month, rather than waiting until the end of the term to pay it in full. Check out America's Best Bookkeepers

Installment

Installment loans are to meet whatever needs the business owner decides. This would be in place of a Line-of-credit loan, which is designed specifically for operating costs and inventory. Installment loans can essentially be used for whatever the business wants. The way an Installment loan works is that an equal amount is leveled month-to-month for combined principal and interest payments.  The loan is in full to the business when everything is signed and set.  Interest is determined before the loan is handed out, so if you pay the Installment loan before its end, the interest rate is adjusted. Depending on the nature of the loan, the length of payback time will vary.  They can range from a business cycle of 4 months to 1 year to pay off the loan.  But if using this loan for real estate or renovations, they can have a payoff of up to 20 years.  The shorter the life of the loan, the lower the interest rate you will have to pay.

Balloon

Balloon loans are received in full on the date that the contract is signed.  Interest is paid off on a month-to-month basis with a “balloon payment” of the principal due at the end of the term.  These loans typically have lower interest rates and are most commonly used for mortgages.  Every bank is going to manage its balloon loans differently.  Often banks offer ‘reset’ options for their balloon loans to reset the interest rates and expiration dates based on current interest rates.  At the end of the balloon loan term, you have three options: pay it off in cash (and keep the asset), sell the asset, or refinance. Check out America's Best Bookkeepers

Secured vs. Unsecured Loans

Loans are either going to be secured or unsecured, and this is entirely up to the bank you choose to borrow from.  Secured loans simply require collateral if things go sour and unsecured loans do not.   Unsecured loans almost always have higher interest rates, given their nature.   New businesses with zero financial and success history are usually never going to be given an unsecured loan.  These typically follow after a positive relationship has been developed between the lender and the borrower.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers