October 14, 2020, 9:32 am

5 Things to Consider Before Taking Out a Business Loan

by: The Financial Blogger    Category: Personal Finance

If you are about to launch a business, there are all sorts of issues that can arise when getting your venture off the ground. Whether it’s buying equipment, finding office space, taking on employees, or cash flow issues, many entrepreneurs decide that a business loan is the right option to take.

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But, while a business loan can help turn your dreams into a reality, you should never take one out before thoroughly analyzing your situation. To help, here are five things to consider before taking the next step.

Establish the Purpose of the loan

The first thing to consider before taking out a business loan is defining why you need it. If you’re a small startup, you may not have a lot of money in the bank. So, taking out a business loan may saddle you with more debt than you can take on. Once you’ve established the purpose of your loan, you need to be realistic with how much you need. It can be all too tempting to borrow more, but when you factor in the fees on top, you could end up in a mountain of debt.

Know Your Credit Score

To be accepted for a business loan, your credit score will be a primary factor that lenders look at. Understandably, the healthier your credit is, the more chance you have of everything running smoothly. Before you even apply for a business loan, it’s wise to get a copy of your credit report. That way you can check to make sure it’s accurate and take further steps to improve your score.

Determine When You Need the Loan

Once you’ve decided how much you need and have checked your credit score, you need to establish when you need your business loan. The less urgent the need, the better your options will be. If you have lots of time before applying for a business loan, you may be able to boost your credit score, as well as look around at different lenders. If you’re in desperate need of cash, you may make the wrong decision that could come back to bite you later on.

Shop Around

If you are looking for funding for your startup, there are various types of business loans that you should look into. Visiting https://advancepointcap.com/sba-vs-conventional-loan/ will give you a better idea of the types of options you have available. There are pros and cons to every kind of business loan. So, make sure you examine every option and look into business loan alternatives if need be.

Read the Fine Print

No matter what business loan you take out, there will be terms and conditions attached that you must understand. If you don’t take the time to read the fine print, you may sign something that could haunt you in years to come. Be aware of the payment structure and if there are payment penalties.

Launching a new business can be daunting. With so many factors to address, it’s vital that you have the funds required to get up and running. If you’ve decided that a business loan is right for you, the factors above will make the decision process easier and help you stay in control of your finances.

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October 8, 2020, 3:14 pm

Do You Know How Much Smoking is Affecting Your Finances?

by: The Financial Blogger    Category: Personal Finance

Smoking is a dangerous and destructive habit, it’s true; but do you have any idea of how much the habit is affecting your finances? Smoking is expensive, and tobacco prices seem to be continuously rising as the years go by. If you’ve been smoking for a number of years, you’ve probably noticed your costs slowly climbing the longer you smoke or dip.

Let’s take a closer look at what kind of damage you might be doing to your finances by smoking. There’s never been a better time to quit, and you’re about to learn all of the reasons your wallet wants you to leave smoking behind!

Trying To Quit

Before we even dive into the expenses of the act of smoking, let’s look at how much it costs to try to quit. While there are affordable options like tobaccoless alternatives from https://blackbuffalo.com/ and CBD gummies/tinctures, most cessation options are costly.

Nicotine gum and nicotine replacement therapy can cost hundreds of dollars per month. And nicotine withdrawal is incredibly unpleasant. The symptoms can range from sweating and headaches to irritation, mood swings, and even digestive issues. You’ll likely spend money on OTC medications to alleviate these symptoms, furthering the cost of your cessation journey.

That’s not to say you shouldn’t try to quit; this is more for people who have only just started smoking or might start in the future. The best thing to do is to never pick up the habit at all.

The Cost Of Cigarettes

Now let’s look at the cost of buying cigarettes on a daily or weekly basis. For the sake of argument, let’s say you’re a heavy smoker. A “heavy smoker” is defined as someone who smokes as many as or more than 25 cigarettes per day. Heavy smokers make up about 26% of the total population of smokers in the US, so while they’re not the majority, they still represent nearly a third of all smokers.

A pack of cigarettes contains about 20 cigarettes. If you’re smoking 2-3 packs per day, you’re spending quite a bit of money on the habit. The average cost of cigarettes varies from state to state, ranging from about $4-$5 in some places to well over $8-$10 in others. Let’s put out average at $7.50 a pack, right in the middle. If you’re smoking two packs per day, you’re spending $15 per day on cigarettes. Multiplied by seven, this comes to $105 per week, $450 per month, or about $5,400 per year.

How much could you get done with an extra $5,000 per year? An extra $450 per month? You could probably pay off your car or house quicker, upgrade your living situation, or even help fund your higher education.

Healthcare Costs

Smoking carries with it the inevitability of health complications. There’s no possible way to be a heavy smoker (or even a light smoker, for that matter) and not develop health problems. Smoking is a direct cause of lung disease, cancer, heart disease, hypertension, and more. There’s no way to escape it; you will develop health problems, and in some cases, your insurance won’t cover the expenses entirely.

The US spends about $170 billion in direct healthcare costs for smokers every year. Cancer is an especially costly health complication, with treatments reaching well into the hundreds of thousands of dollars over the course of their lifetime. Treatments can last for years with aggressive cancers, and heart complications often require expensive surgeries to remedy.

You could also incur costs that stick with you for the rest of your life, such as oxygen tanks or other medical equipment to help you breathe. The cost of smoking goes well beyond just wasting money on cigarettes. It could potentially put you into crippling medical debt, as well.

Your Home

Did you know that smoking inside of a home can reduce its potential value by nearly a third? That’s right. Smoking damages the interior of your home, pollutes the air, and can compromise your ventilation systems and furnace. Not to mention, it’s nearly impossible to get the smell out of carpets and walls without replacing them, and smoking damages hard surfaces, as well.

Your Vehicle

You didn’t think your car was safe, did you? The same effects that smoking has on the home it will also have on your vehicle. Hard surfaces, upholstery, and the very quality of the air in your vehicle are compromised when you’re a smoker. This can significantly reduce your vehicle’s value, which undermines your investment in the vehicle itself.

The Bottom Line

Smoking is something you’d do well to stay away from if you want any kind of financial security in the future. It’s difficult enough to build a sustainable financial future with today’s wages without the added difficulty of a habit like smoking!

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October 7, 2020, 12:12 pm

Why SEO Is Important During the COVID-19 Pandemic

by: The Financial Blogger    Category: Blogging

Image Source: https://cdn.pixabay.com/photo/2016/10/09/08/32/digital-marketing-1725340_960_720.jpg

The conditions created by the COVID-19 pandemic are difficult. Even as communities are asked to stay home in order to curb the spread of the virus, many people are finding ways to survive the crippling blow to the global economy.

The internet has proven to be an effective tool during these difficult times, especially when so many businesses have been forced to close in order to adhere to physical distancing protocols. It’s for this reason that both business owners and consumers have turned to online platforms in order to fulfill their needs. With this in mind, here are some of the reasons that search engine optimization (SEO) is so important during this pandemic.

A Lack of Alternatives

The fact that people are confined within their homes means that they are guaranteed to spend much more time online. This is evident in the spike in internet traffic since the onset of the pandemic.

The internet is the only tool that allows us to get things done despite being confined within our homes. There aren’t many alternative platforms and tools to use other than the internet. The internet also lends a lot of utility through its use for information, education, and business.

The Rapid Increase In New Businesses

The increase in the number of new businesses also translates to an increase in the number of competitors on the market. This means that you need to be able to differentiate your business from your competitors, not just so you don’t lose your share of the market to your competitors, but also so you’re able to grow your business. Seeing as so many people are using the internet these days, the potential to grow your SEO campaign should be compelling enough to make you want to invest in it.

The Power of Online Presence

Just as there are many new businesses that are legitimate, there are an equal number of scammers on the internet. Established businesses are king in terms of online presence because of how it takes time to build a reputation and this is also one of the primary purposes of investing in SEO.

Businesses that show up on the first results page are almost automatically perceived to be more credible than businesses that do not enjoy the same level of online presence. In fact, many businesses hire SEO companies to help them make the adjustments needed to maintain their ranking. It’s also for this reason that credible SEO companies charge more for their work than shady SEO companies. The benefits often justify the asking price of their services.

The truth is that it shouldn’t take a pandemic to compel business owners to invest in SEO. It is a staple in any digital marketing campaign, and its effects are bound to stay long after any crisis. SEO shouldn’t be perceived as a supplement to a marketing campaign, but rather an essential component.

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September 28, 2020, 10:25 am

Eric Inspektor, Toronto executive, on small business loans: how they can save, sustain or grow your company

by: The Financial Blogger    Category: Business

Image par Ronald Carreño de Pixabay

When people think of business loans, their thoughts may turn first to banks and traditional financing institutions. Afterall, they know that loans can be key to launching a startup or growing an existing business, with funds often used to purchase equipment, build-out premises or cover other working capital expenses.

However, business loans can be difficult for a new business or small company to obtain, and there are many roadblocks that can keep a business owner from getting approved for a loan.  Moreover, if you’re an aspiring business owner who may have limited cash flow, an incomplete business plan will make securing a loan next to impossible.

The COVID-19 health pandemic has also thrown a wrench into the already complicated process of securing a loan.   Undeniably, lenders are approaching credit risk assessments with more scrutiny because of increased volatility.  In other words, at a time when so many businesses desperately need funding, lenders are being more careful with their money.

That’s why, with all of the reasons listed above, it’s important to get your facts together before you present your case to a lender.  Whether you are borrowing money to save, sustain, or grow your business, simply put, you need to know the rules.

As co-founder and senior underwriter at CORFinancial Corp., a boutique investment bank based in Toronto, Eric Inspektor has successfully helped many business owners overcome the roadblocks of securing a loan. 

Eric Inspektor says the first step in asking for a business loan is to be prepared and to ask the right questions.

He explains, “One has to be practical. First of all if you need and you’re looking for financing, make sure that your financing application, the package that you present to a lender, is detailed, comprehensive and makes sense, most important of all.”

Inspektor says that everything needs to make sense and it needs to answer all of the lender’s questions.  He also says that,while the Canadian government has been proactive in coming up with programs and solutions for businesses who are suffering due to the global pandemic; government aid may not be enough to secure a loan.

“Remember, the government is not a bank, so any lending or any borrowing has got to

be done through the banking community and is still subject to credit criteria being met,” adds Eric Inspektor.

The government programs that have been successful are the $40,000 interest free for two years and the rent and wage subsidy. These program continue to work but when you get to actual borrowing, the issue is you still have to apply to the bank and they are still going to apply their standard credit criteria when reviewing loan applications; unfortunately, this results in the banks not being as proactive as we want them to be.

Eric Inspektor notes, “The banks are taking applications and they’re treating those applications without regard for the government guarantee.  In other words, if they don’t see it as viable in relation to their credit criteria, they are not taking into consideration the government guarantee. That’s the feedback that’s coming to us.”

If there’s a silver lining, it is that the banks are not the only lenders out there.  There are other funding sources such as  asset-based lenders who may be a better alternative.

“Asset-based lending is best suited to certain situations; however, many businesses are turning to this type of funding even when they would qualify for traditional bank funding because asset-based lenders are more proactive and, in some cases, better qualified to underwrite business loans,” Inspektor says.

Where traditional banks are cash flow lenders, asset-based lenders lend against the company’s assets and rely on the present asset value and future performance based on deployment of their capital.

When entrepreneurs or small business owners are determining what lending route to go, Eric Inspektor says there are good lenders around who understand business, use different criteria, will leverage the assets, and who will leverage the enterprise value of the business.

“There are a number of good business lenders out there; the challenge is in doing your research tomake sure that you’re dealing with the right one.”

From cash flow to expansion, small business loans can benefit your business in various ways. Despite the current roadblocks, Inspektor advises business owners to keep on persevering.

“Remember there will be a solution to COVID but in the meantime your business must go on. At CORFinancial we’re here to assist, even if it’s only as a sounding board.”

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September 9, 2020, 10:44 am

10 Things to Do During a Sudden Cash Shortfall

by: The Financial Blogger    Category: Personal Finance

If the past six months have taught us anything, it’s that we can’t always rely on the income we usually receive. Even when a global pandemic isn’t smothering the economy and resulting in massive job loss, we’re vulnerable to layoffs, sudden business downturns, and factors that could reduce or eliminate our income streams. That’s an unquestionable fact of life in the current economy.

What can you do about this? When you suffer a sudden reduction in your income, how can you keep yourself afloat? The answer isn’t simple or easy, but you can take action. Here are 10 critical steps.

Image par Tumisu de Pixabay

10 Things to Do When the Money Isn’t There

1. Stop Digging

There’s an old saying: “If you find yourself at the bottom of a hole, the first thing to do is stop digging.” This is true and essential for financial holes. The second you learn your income will be cut, cancel plans to spend extra money.

Shopping is a typical way of dealing with stress. It may feel good in the moment, but it will make every problem from your cash shortfall worse in the long term. Do what it takes to stop unnecessary spending in its tracks until you have things under control.

2. Run the Numbers

Sit down and find out how bad things are. Go through your past few months of bank statements, and look at your calendar for upcoming irregular expenses like a child’s birthday, a doctor’s visit, or scheduled maintenance for your car.

Whether or not you usually stick to a budget in your regular financial life, it’s essential to know as accurately as possible how much money you have to spend in the coming weeks and months. While going through this process, note habitual spending that’s necessary and what you can do without for a while.

This process tells you exactly how much trouble you’re in and can help you form a plan to get yourself back on track.

3. Review Terms

Review the payment terms and late payment policies for your regular bills, like utilities, rental storage, car insurance, and your mortgage. Use this to prioritize payments if your shortfall is massive enough that you can’t pay all your bills in a given month.

For example, say your garbage company has a hefty penalty on 10-day late fees. However, your electric and water bills have no fees until you’re 90 days late. In this case, you should pay your garbage on time monthly while staying a bit looser with your electric and water payments.

Of course, you ideally want to pay all your bills on time every time. But this research will help you make the smartest possible decisions if that proves impossible.

4. Cancel Subscriptions

Subscription services like premium sports channels, box deliveries, and print magazines tend to be a sort of sleeper cell in your finances. They don’t cost much, and you’re used to them slowly bleeding your finances, so you don’t really notice them. In good times, this isn’t necessarily a problem, but when you’re struggling to make ends meet, reducing these expenses can make a big difference.

Review your statements for recurring charges, and ask yourself how vital each one is to your happiness. There’s nothing wrong with keeping that sports channel if you watch it with glee every week. But that membership to the gym you never visit, or the subscription box shoes you rarely wear, should go.

5. Find Extra Cash

For short-term financial hits (like a week without work or a tax bill), this might mean finding spare cash in a savings account or going through coat pockets and couch cushions. It can also mean selling used books or old sports equipment. Whatever it takes to make up for the temporary shortfall and keep things moving forward.

For a longer-term problem (getting laid off or a major economic downturn), you need to find extra ways to earn cash. This could be a side hustle, a regular part-time job, some kind of passive income project, or whatever else you can find. The point is to create a regular stream of extra funds however you can.

It pays to get creative. Look at your resources, both physical and mental, and brainstorm how to turn them into the cash you need. Who knows? You may find an option you like better than your current solution.

Warning!

Under no circumstances should you even consider using a payday loan outfit to provide this extra cash. Their interest rates are extremely high, and you risk getting trapped in a spiral of paying fees every month moving forward. This makes your financial situation much worse when you should be taking steps to make it better.

6. Call Around

Once you learn you will experience a budget shortfall, call the vendors you’ll owe money to in the coming months. Find out how flexible they can be with due dates, late fees, finance charges, and even pricing. You might find that a company — especially one you’ve done business with for a long time — will offer you deals to keep you happy when you’re having trouble. Many companies that won’t offer a discount will still put your account on hold so you don’t have to pay or incur new charges until you’re back on your feet.

During these calls, ask for the representative to email you any offer made in writing. That way, you have a reference to look back on later and proof of the offer if you talk to a new person when you take advantage of the offer.

7. Hold a Fundraising Event

A one-time cash infusion can help in any budget shortfall. Consider holding a garage sale, crowdfunding event, or training course related to what you do for a living. As with finding extra cash, get creative. Think of how to make a few hundred, or a few thousand, dollars with your energy one-shot expenditure.

For short-term problems, this might be all you need to get by. You could even experience one of the best months of your financial life so far. In a longer-lasting financial dilemma, aim to earn enough money to help a little for several weeks or months to come.

8. Identify the Silver Lining

We’re not telling you to be cheerful about financial stress. However, most causes of an income shortfall also come with opportunities. For example, getting laid off can mean lowered expenses from gas, work clothes, and eating out.

Look hard at what caused your income shortfall. Find the ways it can save you money or create opportunities to earn income in other ways. Leverage these small advantages to help you make it through this lean time, and even to refocus your priorities once your income stabilizes. 

9. Cut Corners

Go back through your statements and look for every way you can reduce any given bill by 5% to 10%. Some common opportunities include:

  • Reduce utility bills with simple changes in your habits
  • Cook large, inexpensive meals and eat leftovers instead of dining out
  • Downshift your cell phone plan to less data per month
  • Carpool to work to save on gas
  • Opt for a less-expensive plan at a gym, day care, or other service
  • Skip alcoholic drinks when eating out
  • Put premium entertainment options on hold
  • Skip a costly event you go to regularly

The goal isn’t to reduce your life to a joyless experience with only the essentials. Instead, just trim a little fat off everything you do, just long enough to make it through the crisis. When it’s over, consider how much of the fat you can leave off and still be happy.

10. Cure the Disease

Finally, look deeply at the cause of your sudden cash shortfall. In some cases, the cash shortfall is a symptom, not the disease. The disease might be the tenuous position of the career you chose or a lack of financial discipline in your personal finances. It could even be a personality trait or home situation that leads to getting fired frequently.

Be honest with yourself and assess what changes you could make in your situation to prevent the next hiccup in your income. Once you’ve identified what you can do, create and execute a plan for doing it.

Final Thought

If you’re experiencing a sudden cash shortfall right now, the best thing you can do is go through the list above. If you aren’t experiencing a shortfall, there’s an important step you can take right now to help yourself in the future: start your emergency fund.

Do whatever it takes to get $500, then $1,000, then one month’s worth of expenses saved in an easily accessible account. That way, if you suffer a cash shortfall in the future, you can borrow money from yourself and keep moving forward.

Sean Picket is a financial journalist in Florida. Over the years, he’s used many of these strategies himself to contend with financial rough spots.

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