How To Apply For Business Loans
If you are just starting out in the business world or you are thinking of expanding your current business, then you may be thinking about taking out a business loan. Getting a loan is not always the cheapest way of financing, but it is often necessary and does give you more flexibility than most other options. If you do your research and follow some simple steps, then you will find the best loan for your business needs.
Types of loans
As with any type of loan, business loans come in various types and with various terms. Here are some of the options you should think about when getting a business loan:
Fixed vs. variable rate
As with most personal loans, business loans come in both fixed and variable rates. Fixed rate loans are better for those companies that have definite incomes each month, and so want to pay a fixed amount. Variable rates can save you money, but you remember to budget in case interest rates increase.
Payment types
Whatever type of loan you get, the most important factor is the way you will pay back the loan. The most common repayment scheme is to make equal repayments back each month until you pay off the loan in full and the interest amount. The interest level and the agreed loan term length determine the amount you pay each month.
Another popular method is to pay lower equal payments each month and then pay a larger balloon payment at the end. This works if you know that in the future you will have more money, but right now you need to keep your outgoings to a minimum. However, you should remember that you will have to pay the large payment at the end; so budgeting for this is crucial.
If you want even lower payments then you can just pay the interest each month and then pay the remainder of the loan at the end of the term. This is good if you want really low monthly payments to begin with, but you need to remember that the loan term will last a long time if you only pay interest, and that the final payment will be very large.
Advantages of business loans
· There are many advantages to business loans, including:
· Retaining business ownership
· Financial flexibility and improved cash flow
· Easier budgeting
· Increased financial leverage
Even if you can afford to pay for things with cash right now, getting a loan may mean you have more financial flexibility, and will leave your cash free when times are tougher. Of course, there are disadvantages as well, including the costs involved and the risks of default and repossession. However, if you need to expand your business or free up cash to get your business started, then a business loan could be right for you.
If you are just starting out in the business world or you are thinking of expanding your current business, then you may be thinking about taking out a business loan. Getting a loan is not always the cheapest way of financing, but it is often necessary and does give you more flexibility than most other options. If you do your research and follow some simple steps, then you will find the best loan for your business needs.
Types of loans
As with any type of loan, business loans come in various types and with various terms. Here are some of the options you should think about when getting a business loan:
Fixed vs. variable rate
As with most personal loans, business loans come in both fixed and variable rates. Fixed rate loans are better for those companies that have definite incomes each month, and so want to pay a fixed amount. Variable rates can save you money, but you remember to budget in case interest rates increase.
Payment types
Whatever type of loan you get, the most important factor is the way you will pay back the loan. The most common repayment scheme is to make equal repayments back each month until you pay off the loan in full and the interest amount. The interest level and the agreed loan term length determine the amount you pay each month.
Another popular method is to pay lower equal payments each month and then pay a larger balloon payment at the end. This works if you know that in the future you will have more money, but right now you need to keep your outgoings to a minimum. However, you should remember that you will have to pay the large payment at the end; so budgeting for this is crucial.
If you want even lower payments then you can just pay the interest each month and then pay the remainder of the loan at the end of the term. This is good if you want really low monthly payments to begin with, but you need to remember that the loan term will last a long time if you only pay interest, and that the final payment will be very large.
Advantages of business loans
· There are many advantages to business loans, including:
· Retaining business ownership
· Financial flexibility and improved cash flow
· Easier budgeting
· Increased financial leverage
Even if you can afford to pay for things with cash right now, getting a loan may mean you have more financial flexibility, and will leave your cash free when times are tougher. Of course, there are disadvantages as well, including the costs involved and the risks of default and repossession. However, if you need to expand your business or free up cash to get your business started, then a business loan could be right for you.
Business Insurance
Business insurance as the name suggests protects your business from any loss as a result of accidental damage, fire, theft or vandalism. Business insurance is necessary as all the items you own that relate to your business have to be covered by a business insurance policy before they can be claimed. Regardless of the type of business you own you will need a business insurance policy to be able to survive without being ravaged by civil lawsuits.
A great mistake people make is that have a home based business and they assume that their office equipment is covered by the basic home contents insurance policy. This is incorrect. If you have a home based business you need both a home contents insurance policy and business insurance.
Who needs business insurance?
Business insurance is absolutely necessary for any business owner who wants to have protection for their business from legal action and from damage or theft of their business property. Many small to medium enterprises are vastly underinsured in this area as they try as save money. Usually, these same businesses fail as they have insufficient funds to defend themselves in a court action, or can’t afford to replace all the equipment they had stolen.
Business insurance is absolutely necessary for piece of mind.
What typically does a business insurance policy cover?
Business insurance has a broad set of inclusions as standard. You should be covered for accidental damage, loss or theft of property from your business. You should also be covered for liability from your employees, contractors or business partners and all legal, medical and compensation costs will be also be covered.
What typically does a business insurance policy not cover?
A typical insurance policy will give you a fair amount of cover in areas where you will need it but each industry is different and each business is different. Find out if your particular business will be covered by basic business insurance policies. You will find that if you are in a primary industry like farming and fishing you will need specialized cover. If you are in high risk industries like aviation, engineering, construction or the military then you will invariably not be covered by a basic policy.
Additional insurance products that policy holders might need in this area
Depending on your particular type of business, you may need professional indemnity insurance and public liability insurance. Professional indemnity insurance will protect you from mistakes you make in the course of your business that cause a financial loss to another individual or company. Public liability insurance covers you against injury caused to any member of the public at any of the premises of your businesses.
Additional coverage for a business insurance policy
In business some of the most valuable items are not pieces of equipment or property but paper that contains valuable information. You can get extra coverage to ensure that in the event of damage or loss you can easily replace all your documents. Other coverage that may come in useful is incorporating any intellectual property you have in with your business insurance. This will ensure that you will suffer only minimal technical or intelligence losses to your business.
What will business insurance typically cost?
Business insurance is usually a percentage of your total insured cover. The size of the percentage is wholly dependant the industry you are in and the risk factors the insurance company believes to be true for your business. You may find that a smaller white collar business have a percentage around 1% of your total cover whereas large businesses who many staff members and a ‘dangerous’ industry may see premium at 4-5%. The exact percentages are then determined by the level of coverage required and the insurer you choose to go with
Business Insurance Recommendations
general business insurance policies SEIA recommends InsuranceFinder.
InsuranceFinder is great because it provides the user with a selection of quotes from insurance companies and brokers that match the exact needs of the specific type of business inurance required.
For example, they have insurance for business owners, workers compensation insurance, corporate group plans, professional liability and more.
They have an easy to use system where you fill in one form and then receive quotes from multiple insurers. All the quotes come with no obligation which makes InsuranceFinder fairly painless to use.
Have a browse over to InsuranceFinder and fill in their short form in the correct business insurance category so you can see for yourself how many great quotes you get from around 5 minutes worth of work.
Insuring your business with a BOP
The Business Owners’ Policy or BOP provides coverage for property, liability and hired auto (e.g., rental cars, borrowed cars).
The Property section of your Business Owners’ Policy (BOP) provides protection for your building and contents. The BOP repairs or replaces items damaged due to a covered loss in a building that you own or rent for your business.
The list of items covered by a BOP typically includes:
1. Inventory
2. PCs
3. Equipment owned or leased
4. Furniture and Fixtures
5. Money or securities
6. Personal Belongings
7. Property Being Held for Someone Else
8. Records
The BOP also provides liability insurance to protect your business in case you’re sued. The BOP liability section includes coverage for personal injury, bodily injury, property damage and (often) advertising injury.
The BOP excludes Wear and Tear, Mechanical Breakdown, Pollution, Nuclear Contamination, Flood and Earthquake. Detached buildings, signs and fencing are most likely excluded from your BOP but probably can be added on to the policy or covered by a separate insurance policy.
Company cars owned by your business should be insured separately from your BOP.
Other coverages may be included or added on to your BOP depending upon your line of business.
What Should You Add to Your BOP?
· Crime coverage- for theft and employee dishonesty;
· Errors & Omissions (E&O)- Protects you from catastrophic claims due to negligence;
· Mechanical Breakdown- Losses resulting from equipment breakdown;
· Extra Expense- Costs to get your business up and running again ASAP after a loss.
How Much Of A Good Thing? - business insurance
We admit it: Discussing business insurance is about as exciting as, say, cleaning out the basement. Perhaps you’re thinking of turning a few pages and skipping this article altogether.
But wait–you might want to reconsider. Because if you’re operating your business with the wrong insurance, not enough insurance or–heaven forbid–no insurance at all, then you might as well be bungee jumping off a cliff without a cord. Insurance may one day be the only thing that prevents you from having your life’s work destroyed in a few disastrous moments.
To help you, we asked leading industry experts for their do-or-die suggestions on how you can build (or maybe just strengthen) this strongest safety net for your growing business.
After you figure out the types of insurance your business needs, assess whether your current policy is right for you. Too little insurance leaves your business vulnerable, while too much leaves you cash-poor from paying high premiums. Industry experts advise that you consider these factors:
* Actual value: When purchasing property insurance, know the true value of your property (what it would cost to replace it). Insure your most vital property for its full replacement value. Because that costs a lot, however, consider insuring only the property you absolutely need to continue running your business.
* Lenders’ stipulations: If you have a loan on property, the lender usually requires you to maintain insurance. If you don’t, the lender may foreclose on the property or purchase insurance itself and charge you an exorbitant price for it.
* Absolute minimums: When you’re our shopping for liability insurance, check with your current agent to learn whether there are minimum insurance limits set by law. These are usually small, however, and you shouldn’t expect them to cover you adequately in the event of a serious accident.
Sole proprietorships usually need more liability insurance because the owners run the risk of losing personal as well as business assets. Businesses that are incorporated, however, require less liability insurance. Put simply, if a corporation is sued, only its assets can be seized.
* Employees: Are your employees experienced professionals or high school kids? Are they accident-prone? If bad things seem to happen to you or your staff, buy more insurance rather than less.
Pamela Rohland writes about issues of entrepreneurship for a variety of regional and national business publications.
You Can Do It Yourself
Well, maybe. Self-insurance was a trend of a decade ago that didn’t travel well into the new millennium. Commercial insurance is now competitively priced, and many companies that were self-insuring gave it up.
Still, some businesses–usually large corporations with plenty of cash–prefer to self-insure. According to Tepp, a company can do it one of three ways by:
* Agreeing to a large deductible, then using cash or credit to fund it.
* Self-insuring up to a certain amount (such as $250,000) then purchasing so-called excess insurance, which kicks in when losses above that amount occur.
* Joining with a group of businesses operating in a similar industry or region to establish your own insurance fund. Members pay premiums, plus a fee to join.
“Alone, these businesses wouldn’t be large enough to self-insure, but together they are,” says Robert P. Hartwig, vice president and chief economist for the Insurance Information Institute in New York City. “This way, you all have a stake in each other’s businesses, and one bad claim won’t wipe out a business. The problem is, if the companies in your group have a bad year, you’ll be asked to pay more. If there are 100 companies in your group and 10 have fires and are burned to the ground, the premiums could cost much more than anyone expected.”
Pamela Rohland writes about issues of entrepreneurship for a variety of regional and national business publications.
Back To Basics
Kathy Posner, 46, unknowingly spent five years with a gap in coverage–but lucky for her, she was afforded the opportunity to make changes before disaster stuck. As founder of [Comm.sup.2] Inc., a Chicago communications consulting firm, she learned the hard way how essential it is for entrepreneurs to have the right types of insurance for their businesses. “When I started my company in 1990, I had a partner who took care of most of the business aspects,” she says. “When I bought him out in 1995, I discovered that we had never had workers’ compensation insurance. Companies are required by law to have workers’ comp, and if anyone had ever gotten injured, I would have lost my business and all my assets!”
To evaluate the extent of your current coverage, check out the Business Insurance Oracle Web site (www.insuranceoracle.com Developed by Jerry Glenn, CEO of Western Sentry Insurance Brokers in Thousand Oaks, California, the site provides a good starting point for entrepreneurs via a basic insurance checklist. Glenn’s biggest piece of advice: Avoid buying policies a la carte, like you would Chinese food. Instead, purchase them as a package deal and you’ll receive a lower price. You’ll also have only one party to hold responsible in the event of screw-ups.
Cut Business Insurance in 8 ways
1. Comply with recommendations from company engineers and loss control. Naturally, the company will be more favorable to their customers who help keep losses down.
2. Voluntarily take steps to eliminate hazardous conditions and create a safe environment any company would want to insure. And safeguard your property to reduce the risk of theft and damage. This puts you in a position of deserving the lowest rate possible.
3. Make a list of the actions you’ve taken to reduce your risk. I’ll be able to use that list to negotiate your rates.
4. Minimize your claims. The businesses that will get the highest rate increases, or not be able to get insurance at all, will be those with frequent small losses or who ignored loss control recommendations.
5. Make sure any new equipment or buildings are installed or constructed in a manner desirable to the insurance company. Consult with your insurance specialist BEFORE proceeding with construction or installation and avoid nasty surprises on the back-end.
6. Increase your deductibles and retain more risk - most companies look favorably upon clients with higher deductibles. It shows you are willing to cover the small day-to-day stuff, and use your insurance for large losses - as it is intended. This will help lower your rates, too.
7. If possible, use higher coinsurance formulas to help lower rates.
8. Be sure your insurance is providing proper coverage amounts. You may be dangerously underinsured in some instances, or paying for coverage you don’t need in others. Be sure to make contact with your insurance specialist.
Business Insurance; Information you will need
When you start a small business you will need to have insurance. You would be wise to shop around. Triple A rated carriers like Farmers Insurance, State Farm and All State are definitely places to get quotes from, but also be sure to check out your local independent insurance agents as well. When shopping for a quote there is some things you will need to know. For instance you SIC code and business category. If you are involved in more than one, it pays to look at both SIC codes to see which category is preferred by the agents underwriters. Some SIC codes many insurance companies will not even touch. For instance Car Washes, Amusement Parks, Aviation Businesses and security companies. But there are insurance companies who specialize in these areas. Perhaps you might wish to thumb through a recent trade journal to see which insurance companies are actively seeking clients in those categories. You will be glad you did; also do not forget to check online as well.
You will also need other data when shopping for quotes; you will be asked such things as: Address of Business Office; are you running your business out of a home or commercial location. If it is a commercial office; what is the square feet of business location, customer area. What is the age of the building; is it made of masonry or frame construction? How many floors? What types of business tenants occupy or share the building? The main concern of the underwriter’s in some businesses is; where the supplies are stored? Especially if chemicals are used in your business. If you are a mobile service; are the chemicals stored on a vehicle? Where is the vehicle parked.
Insurance agents will also ask you how many years have you been in business? How much experience do you have; what are your projected and current gross annual receipts? How many full time and part time employees do you have? If you have mobile service vehicles you will need the full name, social security number and drivers license number for all employees who will be driving the vehicles. The more current our files, the happier the underwriters and the more information you bring with you when shopping for quotes the happier the agent. Happiness equates to a better deal, more shopping on the agents part and better relationships will all the parties concerned. Think on this when shopping for Business Insurance.
Disability Income Insurance Can Meet All Your Financial Needs
Disability income insurance can cover you in the event of a severe accident or illness but, it really depends on how much disability income insurance you purchase as to whether or not it will be able to meet all of your financial needs. The greatest number of families have no form of disability income insurance.
Short term disability income insurance covers the first few months you are disabled and the benefits of short-term disability income insurance, are many . Short term disability income insurance is a temporary relief though. If your condition prevents you from working for more than the covered period, then you will need to rely on long term disability income insurance.
Disability insurance can be purchased up to a certain percentage of your income and is tax free if you pay for it yourself.
Disability insurance does not mean you have to take the maximum but you would be wise to take sufficient to cover your monthly bills, even if you give up covering some items.
Disability insurance is sometimes hard to think about. Some people believe that if they make a Will that it will bring them faster to their Maker. Ditto for disability; take a policy and get disabled. But of course it doesn’t work that way.
And the worst thing to do is to consider taking a policy and then becoming disabled before getting a policy in force. Disability insurance quotes will give you firm premium figures for various amounts of income and then you can make up your mind what to do. Even if you take a disability insurance policy with the longest waiting period, it will start paying when you , really, really need it.
Disability insurance cost should be considered as a percentage of your income. If you earn $60,000 a year is 2% or 3% of that too high a cost to ensure that your net income will continue? Only you can answer that after you have obtained a written disability insurance quote based on your income.
Mortgage Insurance Plans: How Good Is Yours?
Mortgage insurance, to pay off a mortgage, is something you’ll inevitably be asked to take out by the bank. Mortgage insurance is necessary so that if something happens to you or your spouse then your loan will be paid off which is good news for your family and the bank. Banks act as if doing you a favour by offering mortgage insurance through their own group plan. Are they?
Mortgage Insurance Is Probably A Much Better Deal From Any Number Of Insurance Companies.
Mortgage insurance is no different than term life insurance; in fact it is term life insurance. With either, your policy lasts for a specified period of time and pays if something happens to you or your spouse if you are both insured. The real difference is how much control you’ll have over your policy and how much you’ll pay for it.
Mortgage insurance offered by the bank, does not allow you to customize a policy to fit your needs and you’ll be lumped together with other borrowers under a group plan. So, you will have no control over your policy. For example, through a company of your choice, such as Canada Life or National Life, you would be able to choose your own beneficiary and decide how to spend the proceeds. These options are not available with a mortgage taken from a lending institution. If the insured party dies, the mortgage loan is completely paid off, even if you need some money for other things.
Additionally, the bank has the right to not renew your policy and to cancel the policy when you sell the house. Do you want to give up this control as now you may have become uninsurable?
MORTGAGE INSURANCE COSTS MORE FROM A BANK
Your own premiums will not go up in the life of a 20 year policy so you would pay the same premium today that you’d pay ten years from now. You won’t get that same guarantee from a bank which can increase your premiums during the life of the policy. In addition, you could pay as much as 40% more right now than if you shopped around and found your own insurance provider. Not to mention that the policy you take out through your bank will gradually decrease in face value while a plan you select from an outside source will have the same face value during the entire policy period.
Of course, many people don’t mind paying more for their mortgage insurance because it’s more convenient than dealing with insurance agents. But the truth is that you can easily find a policy that fits your needs and provides affordable premiums via the Internet. An organization, such as The Hughes Trustco Group, can generate quotes for you from all the providers so you’ll know that you’re receiving the best deal possible on the policy you want.
Mortgage insurance is important and should be part of your home buying or refinancing preparations, but that does not mean you need to pay more or let the bank make important decisions for you. Instead, you should find your own personal plan at a company that you choose which will let you stay in control of your policy and will save you money in the long run. You can get a quote right here at Mortgage Insurance.
UK Young Driver Motor Insurance - Build Your Own No Claims Bonus or Insure through Your Parents
For may young drivers, affording the costs of motor insurance is an issue. With first time insurance costs running to several thousands of pounds in some instances, it is no wonder that younger motorits are looking for ways to keep premiums down.
There are many legitimate ways of doing this. Young drivers shoudl look at the type of cover they need, consider the pass plus course and their first car should have as small an engine as possible to keep the cost low.
However many young drivers look to insure in their parents name in an effort to make their first policy affordable.
If the main driver is a young driver, most companies will insist that they be the principle policyholder and will not allow them to be named on anothers policy. Deliberately insuring a car and misleading your insurer about your circumstances has serious consequences. In this particular scenario it is referred to as fronting.
If a claim should arise from a policy and the insurer discovers that you were fronting, then it can have serious repurcussions. Firstly they could refuser to pay a claim and they could go as far as to void your policy which could mean that the police deem you to have not been properly insured and the courts could then issue an IN10 conviction.
If a young driver is merely a part time user of a car then it may be legitimate to insure in this way. However the reality is that it might not save you the money you think it will.
The building of a No Claims Discount is one of the best ways of helping to reduce your Motor Insurance premium. This works through loyalty and history built up between yourself and your Motor Insurance Company.
If you have not claimed the company will calculate your premium and apply a discount to it, rewarding you for your safe driving. This figure, depending on the Motor Insurance company can range from anywhere between 30% and 60%.
These days many companies allow you to protect your No Claims Bonus by paying a small amount up front on your premium. This could be highly worthwhile when you consider how much your policy may end up going up in price next year given an accident this year.
It is very important that young drivers build their No Claims Bonus. If you insure the car in a parents name, whilst there may be a cost advantage in Year 1, it may transpire that in years to come this becomes a false economy.
The No Claims Bonus is a bonus weighed against the main driver. If a parent insures a car with a young driver on the policy then at renewal, the 30-40% disount you were expecting might be far less.
It is highly recommended that the main user of any vehicle be the main insured name. It can work out financially better and you can avoid the risk of invalid insurance.
The best course of action is to speak to specialists who deal with Young Driver Motor Insurance. Of course, the best money saving tip of all is to shop around! No one insurance company can give competitive premiums for every driver so check as many quotes as you can.