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Small Business News 2019
The lending industry has changed since it first began. Technology has jolted lenders to a completely different level of financing options. That being said, technology can only empower a business owner wise enough to know how to use it. Changes such as this and technical complications have risen many doubts about the future of the lending industry. Various sources explain that many money lenders are charlatans however; when you take in to account what the purpose of a business is then you will not be perplexed. No matter what business you may own more than likely you wish to make more profit. The idea that money lenders are ripping people off because of the high interest rates on unsecured loans is a narrow minded way to perceive our business.
Unsecured business loans come with risk to the lender. There is never a guarantee that the borrower will not default on the loan however; if you are one of those business owners with a decent credit score and options to choose from then, we suggest you consider a syndicated business loan. Its true that even a decent credit score isn’t enough to get you a low rate deal these days. Did you know that there is a way to get a better rate? The answer is loan syndication. Lenders compete for deals all the time. A business looks much better on paper when another lender is willing to put their money into the deal. Most lenders review this kind of action and wonder what did we overlook that convinced the other lenders to put their money into the deal?
Small Business Reports 2019
The easiest way to drop the rate on a syndicated business loan is to shorten or lengthen the time to pay back the loan. The funding is better utilized by paying back the loan as soon as possible. Once you have received an offer your options begin to multiply. For example; if you were offered $10,000 and the payback is $12,000 within 6 months then the daily ACH can be adjusted depending on your preference. Certainly, this is an assumption because every business has factors that underwriters scrutinize and may ultimately define your rate. However; very few businesses are completely unqualified for some type of loan. The underwriter's bottom line to rate is risk. If you lessen the risk you lessen the rate. The best way to lessen your risk is to remove all negative factors within your white sheet.
A white sheet is typically created for you once you have submitted your information. Most experienced lenders create a report of negatives and positives on your file so that your assigned agent may advocate a better deal for you by haggling with underwriters. Usually, these are the same factors your agent will help you work around or through to decrease the rate. Being Informed of this process gives you the upper hand on negotiation. As a business owner you should be working with your agent to identify your risks and improve profitability.
Recent Case Studies 2019
It is obvious that a business owner should refinance after he or she has paid off a loan and is ready for a new one. Did you know that you can pay off a loan early and immediately reap the benefits of that new found trust? Your competitors probably already know that. Most big businesses can absorb the cost of an expensive business loan. They use a simple math equation involving the part, rate, and base. The base is your monthly bank average, the part is the loan amount, and the rate is the percentage of interest on the loan.
Did you know that you can use the financial information from your last paid off loan to negotiate a better deal in the future? I'm going to tell you a simple trade secret. Most big businesses try to refinance right before or after tax season because they can hide a loss of profit or show a gain in profit for the same savings. Your competitors will divide the interest on their loan amount by their monthly bank average then, multiply the sum by the amount that they borrowed and thats how much money they should save from the maximum amount on the next deal. This is typically called leveraging risk and is applied to early loan payments.
For example; if you are paying back $15,000 and borrowed $12,000 then, the interest is $3,000. Lets say your monthly bank average is $20,000 a month. Divide 3,000 from that and you get 0.15 (the amount saved). If you multiply that by 12,000 (the amount borrowed) you get $1800. This equation is simply a mitigated risk assessment. Because you can prove financially capable of paying off the business loan at an earlier date than required your risk has lessened and your rate should improve. Incrementally if you keep raising your monthly bank average you should save more on every successful funding.