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Suggest You - Financing A Business For Expansion
Do you ever stop and wonder why women are leaving your company? Are you unsure how to stem the tide of women leaving corporate America? The simple fact behind the answer is senior management and employees are not on the same wave length. The appropriate policies are in place and every one uses the politically correct rhetoric yet the implementation of policies nev
The two loan amounts ($150,000 & $50,000) should be in two separate loan accounts or sub-accounts
The financial institution assesses the overall loan first against the property value and second against the capacity to make repayments, so the business should have the capacity to cover the additional repayments
While the mortgage is a cheaper source of finance (7%-8% pa), it is also potentia
Do you ever get frustrated with your marketing? Are you putting in a lot of effort but not getting the results you want? Don't you wish you could just hit a switch and get a better response from your mailings, sales calls and web site?You hear a lot about breakthroughs; is it all hype, or can you really create a breakthrough in your marketing and sales? I k
However these sources of business finance have shortcomings. Personal savings and family loans are usually limited in amount. While it is possible to extend credit card limits, the cost of credit card debt is high, with interest rates between 10% and 19% pa. Record keeping for income tax purposes is also more complicated if the same credit card is used for both business and personal expenses.
So, while the initial sources of finance help establish a business, at some point the proprietors may have a need to expand their business. High demand for a product may require investment in more stock or in a manufacturing capability. Extending the business to a wider market may entail additional advertising. High growth in a service business can lead to employing (additional) staff. Any of these reasons for business expansion requires additional funds. The limitations or expense of start up finance makes it unsuitable for business expansion.
A sometimes overlooked source of additional finance is borrowing or extending a loan against property. Many business owners are also home owners. While the home usually still has a mortgage over it, it may be some years since that loan was taken out. Two things will have changed since then. The mortgage will be lower by being partly paid off. Secondly, the value of the property will usually be higher. Depending on those two amounts, an additional loan could be taken out to be used in the business.
Example: Original property value: $200,000 Original Loan: $160,000 (80% of property value) Some Years later: Current property value: $250,000 Current Loan value: $150,000 Potential additional loan: ($250,000 x 80%) - $150,000 = $200,000 - $150,000 = $50,000
The business could obtain a $50,000 loan using the increased value of the property as security.
There are a number of points to note about this strategy:
In order to gain full tax deductibility for the interest on the $50,000 loan it must be clear that it has all been used in the business
The two loan amounts ($150,000 & $50,000) should be in two separate loan accounts or sub-accounts
The financial institution assesses the overall loan first against the property value and second against the capacity to make repayments, so the business should have the capacity to cover the additional repayments
While the mortgage is a cheaper source of finance (7%-8% pa), it is also potential
It creates some negotiating room, and you might just get what youre asking for.Whether playing the role of buyer or seller in a sales transaction, asking for more than you expect to get is a classic opening position in negotiations.In the audio book, Sound Advice on Negotiating Skills, author Roger Dawson says, Henry Kissinger called this the key
So, while the initial sources of finance help establish a business, at some point the proprietors may have a need to expand their business. High demand for a product may require investment in more stock or in a manufacturing capability. Extending the business to a wider market may entail additional advertising. High growth in a service business can lead to employing (additional) staff. Any of these reasons for business expansion requires additional funds. The limitations or expense of start up finance makes it unsuitable for business expansion.
A sometimes overlooked source of additional finance is borrowing or extending a loan against property. Many business owners are also home owners. While the home usually still has a mortgage over it, it may be some years since that loan was taken out. Two things will have changed since then. The mortgage will be lower by being partly paid off. Secondly, the value of the property will usually be higher. Depending on those two amounts, an additional loan could be taken out to be used in the business.
Example: Original property value: $200,000 Original Loan: $160,000 (80% of property value) Some Years later: Current property value: $250,000 Current Loan value: $150,000 Potential additional loan: ($250,000 x 80%) - $150,000 = $200,000 - $150,000 = $50,000
The business could obtain a $50,000 loan using the increased value of the property as security.
There are a number of points to note about this strategy:
In order to gain full tax deductibility for the interest on the $50,000 loan it must be clear that it has all been used in the business
The two loan amounts ($150,000 & $50,000) should be in two separate loan accounts or sub-accounts
The financial institution assesses the overall loan first against the property value and second against the capacity to make repayments, so the business should have the capacity to cover the additional repayments
While the mortgage is a cheaper source of finance (7%-8% pa), it is also potentia
Throughout the business world, companies are scrutinizing marketing budgets more than ever. However more and more, they are doing so with a broader value perspective not by simply looking at numbers. They are looking at things like the total lifetime value of a client, and they are paying more attention to non-tangible value items such as brand awarene
A sometimes overlooked source of additional finance is borrowing or extending a loan against property. Many business owners are also home owners. While the home usually still has a mortgage over it, it may be some years since that loan was taken out. Two things will have changed since then. The mortgage will be lower by being partly paid off. Secondly, the value of the property will usually be higher. Depending on those two amounts, an additional loan could be taken out to be used in the business.
Example: Original property value: $200,000 Original Loan: $160,000 (80% of property value) Some Years later: Current property value: $250,000 Current Loan value: $150,000 Potential additional loan: ($250,000 x 80%) - $150,000 = $200,000 - $150,000 = $50,000
The business could obtain a $50,000 loan using the increased value of the property as security.
There are a number of points to note about this strategy:
In order to gain full tax deductibility for the interest on the $50,000 loan it must be clear that it has all been used in the business
The two loan amounts ($150,000 & $50,000) should be in two separate loan accounts or sub-accounts
The financial institution assesses the overall loan first against the property value and second against the capacity to make repayments, so the business should have the capacity to cover the additional repayments
While the mortgage is a cheaper source of finance (7%-8% pa), it is also potentia
Everyone dreams of a life full of love and adventure. But we fill ourselves with reasons not to follow our dreams. Instead of protecting us, they imprison and hold us back. Life will be over before we know it, so now is the time to really live life and love.In Life Lessons, Elizabeth K?bler-Ross and David Kessler suggest that love is the only gift
Example: Original property value: $200,000 Original Loan: $160,000 (80% of property value) Some Years later: Current property value: $250,000 Current Loan value: $150,000 Potential additional loan: ($250,000 x 80%) - $150,000 = $200,000 - $150,000 = $50,000
The business could obtain a $50,000 loan using the increased value of the property as security.
There are a number of points to note about this strategy:
In order to gain full tax deductibility for the interest on the $50,000 loan it must be clear that it has all been used in the business
The two loan amounts ($150,000 & $50,000) should be in two separate loan accounts or sub-accounts
The financial institution assesses the overall loan first against the property value and second against the capacity to make repayments, so the business should have the capacity to cover the additional repayments
While the mortgage is a cheaper source of finance (7%-8% pa), it is also potentia
Attempting to understand the nature of job satisfaction and its effects on work performance is not easy. For at least 50 years industrial/organizational psychologists have been wrestling with the question of the relationship between job satisfaction and job performance. Researchers have put a considerable amount of effort into attempts to demonstrate that the two
The two loan amounts ($150,000 & $50,000) should be in two separate loan accounts or sub-accounts
The financial institution assesses the overall loan first against the property value and second against the capacity to make repayments, so the business should have the capacity to cover the additional repayments
While the mortgage is a cheaper source of finance (7%-8% pa), it is also potentially a longer term commitment (25-30 years)
As with any major decision affecting a business, professional advice should be sought and considered before a commitment is made.
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