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A Dozen Tips for Starting an Import/Export Business
Thinking of starting an import/export business? Jennifer Henzel, a Certified Import/Export Trade Professional offers these tips for getting started: 1. Many countries have set up offices (Consulates or Embassies) in foreign countries to promote...
Catch The Cash On The Net…In More Ways Than One
Thousands of dollars in commission? Does the idea sound too good to be true? Well, it’s what people like you and me are earning these days. Thanks to the Internet. Couple of years ago, you’d probably think its gab. But if you have...
Grow Richer As Your Competition Gets Tougher
Copyright 2005 Roy Primm
"The market is getting crowded
It’s getting harder to compete;
The path to take is clouded
Which profit path should I seek;
I’ll stand firm and take on tough competition
I won’t run away from my mission,
I’ll grow...
Small Business Q & A: Investing In Son's Business Could Cause A Real Family Feud
Q: My youngest son wants to borrow $5,000 to start his own business. My wife is afraid to tell him no. She thinks we should just give him the money and not expect anything in return. I disagree. He doesn't have a very good track record with...
Who can build your own business?
Copyright © Cecilia Chang Anyone can be a boss if you’ve the skills and knowledge. But to be a boss can be easy and difficult. Upon some readings, it seem to me that some entrepreneurs will become a boss easily if their parents are business...
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The Basics of Borrowing Money to Start A Business
Are you thinking about starting a business but have no money to do it with? Well, you're not alone. This article will tell you the basics of borrowing money.
A loan is money that is borrowed, and has to be paid back along with interest. If the money is borrowed from an institution such as a bank, this is called a commercial loan. Money that is borrowed from a friend or a relative is called a personal loan.
The borrower, or debtor, is the business or individual that takes out the loan. The lender, or creditor, is the source from which the money was borrowed. The term, or period, is the time that is specified during which the borrower has to use the money borrowed before he has to repay the loan. The maturity of a loan is when a loan term reaches its end. The Principal is the amount that is borrowed from the lender.
When you or your business borrows money, the lender wants to know when they will get their money back. Keep this in mind when you are looking for a lending source.
If the business is not able to repay the loan, the lending source has a right to legally come after assets to recoup it's money. The extent to which you are personally liable depends on the business structure your business is operating under.
If you are approved for a loan, that you will have to make scheduled payments (typically on monthly basis) plus interest. A loan can sometimes be set up as a balloon loan. A balloon loan will typically require smaller initial payments and one lump sum of what was borrowed as the final payment at the end of the term.
Borrowing from Institutions
Business loans generally fall into two main categories: short term and long term loans. A short term loan is a loan that is to be payed back within one year. Examples of short term loans include:
Working capital loans
Accounts receivable loans
Lines of credit
Long term loans are loans that are to be payed
back typically from one to seven years. Long term loans are typically used for:
an expansion of a business
the purchase of equipment
real estate
Most business loans that are used for starting a business are long term loans.
When you approach an institution for a business loan, it will be looking at you as the business owner as closely as it will be looking at the business itself. One of the ways lending institutions make money is by lending money and they want to be as sure as possible that they get back their money with the interest owed.
The time between applying for a loan and learning that you have been approved (or disapproved) can vary. If you are disapproved, you may be told almost instantly. If you are approved, it may take a few days though it usually takes longer. It may even take several months to learn whether you or your business has being approved for the loan.
Borrowing from Family and Friends
If you don't want to, or can't get a commercial loan, you can consider getting a private loan from family or friends. This is usually real informal. However, you need to be careful because this can lead to ruined relationships.
If you are getting a private loan, it is in the best interest of the lender to have an agreement put in writing. The written agreement should state the principal, the interest charged and the terms of repayment. This puts the lender in better position either write off the loan on his or her tax return or to legally come after you.
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about the author
Jose Valdez is the owner/webmaster of A Guide To Starting A Business.com
Find Business Articles.com and
All Home Based Business Ideas.com
Jose Valdez is the owner/webmaster of A Guide To Starting A Business.com
Find Business Articles.com and
All Home Based Business Ideas.com
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