Startup financing easier to find for franchises

It’s no secret that obtaining small business loans in today’s tough economy is harder than ever, even for established businesses. But, for people absolutely determined to begin their own businesses, startup loans for franchises might be easier to find.

Lenders hate risk, and there are fewer loans riskier than startup loans. Franchises, however, have always had an edge of other small businesses because there is less perceived risk associated with franchises for a number of reasons:
•    Franchises have stronger brand presence;
•    Franchises benefit from large national marketing campaigns;
•    Franchises offer training, mentoring and proprietary software;
•    Franchise owners enjoy—and can pass on—low prices negotiated at corporate headquarters.

Those advantages have always resulted in a higher success rate than that of independent businesses—maybe not as high as the 95% frequently cited, but because that’s the perceived success rate, it might as well be when it comes to getting startup loans.

The International Franchise Association has also made it easier for their constituents to receive startup loans by making a concerted effort to teach lending officers about financing franchises. Regional banks have been extending more small business loans than the mega-banks, so the franchise associations are doing all they can to steer more of that money to their constituents.

No business is recession proof, but banks are more likely to give startup loans to a franchise that offers an essential service rather than one providing luxury items. For instance, home fires occur just as often during a recession as when the economy is strong, so restoration business that specialize in fire and smoke damage are more like to receive startup loans.

Other franchise businesses more likely to fare well at the bank and in the market include low-budget family hair salons, child care centers, clothes or furniture consignment shops, and almost any home-based business with very low overhead.

America One Unsecured is one of the largest loan-consulting firms in the country. They have helped their clients secure hundreds of millions of dollars in personal and small business loans since 1999. Click here to learn more about America One Unsecured and how they can help you.

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How to find the right lender for you needs

It’s easy enough to say a lender is someone who lends, but it’s not always that simple. Not every lender provides the same loans. One lender might make only business loans, while another lender makes only consumer loans. It’s not much of a challenge to find a lender who makes loans only to people who have stellar credit, but finding a lender who makes loans to someone who’s “credit score challenged” can be a different matter altogether.

So, how to you find the lender who’s right for you? There are three ways to narrow the field.

• You could call around to local financial institutions, asking what type of lender they are, and what their terms and rates might be for someone with your needs and credit history.
• You could ask friends or other business owners for recommendations. Ask where they’ve gotten loans in the past, and if the lender was someone they would use again.

• You could go through a loan-consulting firm that will analyze your needs and credit history and either present your application to a lender that specializes in loans like yours, or will advise you on what type of lender to use and how to maximize your chances of getting a loan with satisfactory rates and terms.

It hasn’t always been so, but today almost anybody can find a lender will to make a loan. Even someone with a low credit score can find a lender, if the borrower is willing and able to pay more for the loan.

There is no shortage of short-term lenders, cash advance storefronts, payday loan providers and pawnshops. It’s not hard to find a lender online with minimal requirements for income and credit, and most are able wire the loan to the borrower with a bank account within 24 hours—many can do so within an hour.

The one caveat that should be heeded when accepting loans of this type is to make payments on time; failing to do so can result in high penalties and higher interest rates. Though much has been written and said about how payday lenders take advantage of borrowers with limited options, the truth is that a short-term lender is often the only lender and the only option available. In addition, for a borrower who repays the loan on time, the option can be a lifesaver.

"The measure of a life is not its duration, after all, but its donation."  Corrie ten Boom

Eighty-nine percent of Americans donate money to churches and charities. Americans gave an average of $1,620 each in 2008, the most recent figures available, according to the National Philanthropic Trust, and even that is 2% less money than they donated in 2007.

If you ever doubt humankind’s generosity, consider that more than $644 million has just recently been donated in the aftermath of the earth-shattering January 12 earthquake in Haiti—an unprecedented amount of money, according to the Chronicle of Philanthropy. The average amount of money per donor is less than was donated in the wake of the 2004 Indonesian tsunami, but there have been millions more people donating. The advent of donating money by texting from mobile devices has likely contributed to the number of donors—12 million donors chose this method—but clearly, there is something more at play than convenience.

The Bible’s Old Testament demands a “tithe,” literally, 10% of one’s income. The New Testament, however, is clear that Christians should give money to the church to further the gospel, but the emphasis in on a freewill gift without a specific formula for determining how much money should be given. Orthodox Jews follow the Old Testament law and donate 10% of income to charity.

Alms-giving is one the Five Pillars of Islam, and though the amount of money to be donated isn’t specified, Muslims must donate at least a small percentage of their surplus income to the poor, or risk that their prayers will no be heard.

The tradition of charitable giving is universal, and in many European countries, there are compulsory taxes for money to be given to churches and charities. There is no such tax in the United States, but the importance of charity is clear in our tax code that provides tax credits to donors.

Is charitable giving a moral obligation? Is it evidence of innate compassion? If it is a moral obligation, what is the “right” amount of money to give?

There are two schools of thought regarding how much we should give to help others. One is that we should give until it hurts; we should make a sacrifice. The other thinking is that we should give until it feels good, and when giving feels good, maybe that is evidence of our innate compassion.

Debt consolidation loan for credit card debt

Millions of Americans have already been hit with increased credit card interest rates, but if your rates haven’t gone up yet, keep your eyes open; there’s probably a rate increase notice in the mail right now. It’s time to look into a debt consolidation loan.

Robert Manning, of the Washington Post, described credit cards as “yuppie food stamps;” a way of making ends meet. Right now, there are more than 700 million general purpose credit cards in use, and another 500 million retail store credit cards. Moreover, the average American household carries more than $10,000 in credit card debt. If a household happens to have credit cards at 18%, and makes minimum payments, it will take roughly 48 years to pay off the debts. Makes a debt consolidation loan sound sensible, right?

The average credit card rate is almost 14% this week, compared to six months ago when it was only 12%. However, for anyone who makes a late credit card payment, the rate can go as high as 30% or more. And, when interest rates get that high, a debt consolidation loan is just about the only way to get out from under credit card debt.

In the most recent Federal Reserve survey,
•    54% of senior bank loan officers said they had or would soon increase interest rates on credit cards held by consumers with good credit;
•    74% said they had, or will, increase rates for consumers with bad credit;
•    50% have or will but credit card limits; and,
•    40% said they have or will increase fees.

In a flash of creativity, they’ve even introduced a new fee—an inactivity fee for cardholders who pay off their accounts every month, or don’t use the card at all.

With a debt consolidation loan consumers have:
•    Lower interest rates—as low as 6.99% with good credit
•    Fixed interest rates
•    Consistent monthly payments
•    Faster payoff with savings of $1,000s in interest charges.

If you’re thinking about a debt consolidation loan, consider working with America One Unsecured, a loan consulting firm. They can help you learn more about your debt management options, and help you get the best rate a debt consolidation loan.

Personal line of credit or personal loan?

Everyone needs credit sooner or later, but different situations require different loan products, each with a unique set of advantages and disadvantages. Aside from auto loans or mortgages, most personal loans are classified as a personal line of credit or a personal loan. So which is which, and when is each most advantageous?

• A personal line of credit is ideal for ongoing projects such as home renovations or wedding planning, because the borrower makes payments only on the amount of the credit used. For instance, a June bride may purchase her gown in October, buy stationery in February, and pay deposits to the caterer and reception venue in March, and so on. If the bride takes out a personal loan instead of a personal line of credit, she’d be making payments on the full amount regardless of what portion of the loan she’s used.

• A personal line of credit makes an idea safety net. When an emergency strikes, a personal line of credit is at the ready to meet financial needs. Unlike personal loans that require application and approval processes with each need, a personal line of credit can be tapped into as needed without further application.

• A personal line of credit is generally available for any amount from $10,000 to $250,000—depending, of course, on the applicant’s credit history and income.

• A personal line of credit usually has a variable rate of interest that is lower than that of personal loans.

• Some personal loans carry a penalty for per-payment. There is never a prepayment penalty with a personal line of credit, because there is no timeline for paying off the credit. Any unused or paid off portion of the personal line of credit is immediately available to be used again, and until it is, the borrower can enjoy lower monthly payments.

Let a loan-consulting firm help you determine which loan products are best for your needs, and help you acquire them. America One Unsecured has been helping people achieve their dreams and attain financial security since 1999, and they can help you too. Click here to learn more and get started.

Nearly every time someone talks about starting a small business, the suggestion of applying for Small Business Administration (SBA) loans comes up. SBA loans are wonderful things – since its inception in 1953 more than 20 million small businesses have received SBA loans – but there are some serious misconceptions and drawbacks to SBA loans.

For starters, the very term “ SBA loan” leads many to wrongly infer that the SBA is a lender. Rather, SBA loans are small business loans from commercial, private or nonprofit lenders that are backed by SBA loan guarantee programs.

Through SBA loans, small business owners who are denied loans are given a helping hand from the SBA through loan guarantees that back up to 90% of the loan total. The advantage for the lender is in sharing the risk of default with the government, so they’re far more likely to approve SBA loans that those without a guarantee.

Another serious drawback to SBA loans is the long and frustrating approval process – for most borrowers the procedure will take six to nine months, and even then the application may be denied. The reasons for this are simple. Borrowers have to go through a lengthy application process with the bank, and then go through an even more rigorous procedure with a federal agency.

But the nature of the loan guarantee is often another source of confusion about SBA loans. Many borrowers think that if they default on SBA loans, the SBA guarantee means they’re off the hook with the bank. Nothing could be further than the truth.

When small business owners default on SBA loans, the SBA may eventually pay a portion of the loan value to the lender, but only after the lender has made aggressive efforts to collect from the borrowers. If the SBA allowed lenders to sell them out to every defaulting borrower they’d soon be out of business, so instead they hold lenders’ feet to the fire. If that means the banks foreclose and seize borrowers’ business and personal collateral, so be it.

And finally, SBA loans can be expensive. The federal government charges a minimum of a 2.5% guarantee fee to the banks, and the banks pass that expense on to the borrowers.

None of this is meant to imply that small business owners shouldn’t attempt to receive SBA loans. It’s just a recommendation that prospective borrowers consider all their options.

Unsecured small business loan spotted in Pacific Northwest

There are some common misconceptions about obtaining an unsecured small business loan. Among them is the notion that the best place to obtain an unsecured small business loan is through the Small Business Administration (SBA). Many business owners believe business loans are only available for established, long-profitable businesses. Another mistake is the belief that business loans have to be secured.

Let’s clear away some of the clutter.

First of all, the SBA does very little direct lending; rather, they guarantee that approved traditional lenders will receive payment on business loans even if the borrower defaults. There are many benefits to taking advantage of SBA lending programs, but the application process is complicated and lengthy. And, it’s at the lenders’ discretion as to whether to demand collateral or provide the borrower with an unsecured small business loan.

Startup loans are generally available to businesses in their second or third years of business, and approval is based almost entirely on applicants’ personal credit and financial statements.

There is a nugget of truth in the idea that an unsecured small business loan is hard to find; they’re rare, but not extinct. Nearly all business loans are secured with equipment, inventory, real estate or other financial assets, but it is possible to obtain an unsecured small business loan.

The secret is in knowing where to look for one. America One Unsecured can help with that. Before you tie up your business assets, contact America One Unsecured, a loan-consulting firm in business since 1999.

Unsecured loan or secured loan: which is better for you? You could fill a page with the pros and cons of each, but the question may be moot if you’re an apartment dweller or don’t own a car. Unless you have financial assets—certificates of deposits, a 401(k) or 403(b), stocks or bonds—you don’t have the collateral necessary for a secured loan.

But that isn’t necessarily bad news.  It’s a new piece of good news, but not owning your own home and taking out an unsecured loan is now an advantage if you lose your job. Just like apartment dwellers, mortgage holders have been laid off by the millions. And, those newly unemployed unfortunates who secured loans with their houses now are at risk of losing their homes if they can’t make their loan payments.

The same goes for any other assets put up as security for a loan. An unsecured loan provides a sort of financial security. If the time comes when you can’t make the payments, your assets can’t be repossessed; take out a car loan and the car is the security for the loan, and will be repossessed leaving you with nothing but the receipts for payments made.

That’s just one of the nuggets of conventional wisdom that’s fallen by the wayside during this recession. It’s a well-known fact that an unsecured loan has a higher interest rate than a secured loan, but the spike in credit card rates mitigates the disadvantage for those whose only option is an unsecured loan or credit card debt.

An unsecured loan almost always has a lower interest rate than the current ridiculously high interest rates on credit cards.

Personal Loan Rates a Better Bargain for Debt Consolidation

It’s more than a little ironic that most people borrow money to cover expenses they can’t afford, yet some loans and credit cards come with interest rates so high that they’re unaffordable. That used to be the case with personal loan rates, but right now they’re a lot less expensive than many credit cards.

Today, the average interest rate is down to 12% for unsecured personal loans with terms ranging from 12 to 60 months, but there are a lot of banks offering personal loan rates lower than that.

Compared to average credit card rates of 11.68%, the average personal loan rates are slightly higher, but because revolving credit card accounts have variable interest rates compared to the fixed rates of personal loans, personal loans are the better bargain. And, of course, 33% of credit card issuers have raised their interest rates this year, many as high as 29.99% or more.

To get some idea of how much money those lower personal loan rates can save when used for debt consolidation, take a look at these figures:

• Today the average household carries $8,924 in total credit card debt. If that household is among the millions whose interest rates have been increased to 29.99%, the five-year, payoff will cost $288.67 per month.
• In comparison, if the credit card debt were paid off with the average personal loan rate of 12%, in a five-year payment period the monthly cost would be only $201.23—a savings of $87.44 per month or $5,246.40 over the life of the loan.
• The average interest rate for balance transfer cards is now 14.54%, so if the card holders in the average household consider that route for paying off high interest cards, they can expect to pay $210.15 monthly, in addition to the balance transfer fee that is typically 3%.
• So again, using the credit card debt of an average family, the balance transfer fee will be an additional $267.72.
• The total savings of using a personal loan to pay off credit card debt compared shifting it to a balance transfer card is $802.92.

When you do the math, personal loan rates are by far the better bargain.

Sometimes balancing a budget is like standing on the bank of a creek, wondering if you can make it to the other side in a single leap without landing in the water. Those are the times short-term personal loans can help bridge the gap.

Examples from my own life:

• My husband bit into a piece of pizza this week and broke off a molar. He saw the dentist yesterday and was quoted $1,179 for a crown. Right now he’s in no pain, but if that changes, we’ll probably look into short-term personal loans.
• I’ve lost my bifocals. Under ordinary circumstances I could replace them without much of a hardship, but the holidays are upon us, and our budget is stretched thin already.
• Ordinarily, we’re able to cover additional holiday expenses without going into debt, but this year we committed to buying gifts for three boys from a disadvantaged family … and then a family friend suffered a serious injury, and we offered to help buy gifts for her two girls, too.  Given the financial situations of both families, even short-term personal loans are out of reach for them, but my husband and I still have jobs, so will be able to acquire loans if we have to.
• And, in the midst of all this, our dog has gotten sick, and this week’s trip to the vet’s office cost nearly $400.

We’ve never taken out short-term personal loans in the past, but there does seem to be a “perfect storm” gathering, and if the rains come, the creek may become dangerously flooded.

While short-term personal loans sometimes come with high interest rates, because so many credit card issuers have recently jacked-up their interest rates, the short-term personal loans may actually be cheaper. Besides that, many people have elected to close their credit card accounts to avoid the higher interest rates, meaning short-term personal loans may be their own option for making it to the other side of the creek.