Business Loans From Family & Friends – How to Ask, Make it Legal, & Make it Work

The first thing I noticed about “Business Loans From Family & Friends: How to Ask, Make It Legal, & Make It Work” by Asheesh Advani was that the book had a foreword by Richard Branson. Having admired the founder and chairman of the Virgin Group, I figured if he’d endorsed it, I’d take a look. I was not disappointed.

The book covers a topic that you don’t see that often. Sure, there are books on entrepreneurship out there that suggest a source of funds may be family and friends, but this book delves into the subject matter at a much greater level and provides a lot of practical advice on the topic.

The book is divided into eleven chapters with the following titles:

Why Raising Money From Family and Friends Is For You and Yours

Checking Out All Your Financing Options

Basic Legal and Tax Issues of Business Loans From Family and Friends

Deciding Who to Ask for Money

Preparing Your Business Plan and Your Fundraising Request

Deciding Interest Rate, Repayment Schedule, and Other Loan Terms

Drafting a Loan Request Letter

Making the Kitchen Table Pitch

Preparing a Promissory Note, Security Agreement, and Other Loan Documents

How to Be Your Own Investor Relations Department

Handling Gifts From Family and Friends

For anyone who is looking for small business financing, this book may have just the information you need. There is a lot of useful information here, and one of the best things I believe is that it gets the reader thinking about costs and sources of money for their business venture.

The book also comes with a CD ROM that contains a number of forms and worksheets. These are also found in Appendix B. Sample promissory notes, security agreements, and letters are a few of the documents included.

Nolo does an excellent job at making legal information accessible to everyone, however, depending on your situation, you may still want to seek out legal advice regarding any loan agreement you enter. However, this book is a great start and a very good resource for anyone who is looking to finance a small business and needs to raise money from family or friends. Very good resource for small business financing!

Business Credit Resources

What exactly is business credit? If you’re trying to start up your own business, you need to be familiar with this all-important term, and what it means for you.

In many ways, credit is similar to an individual’s personal credit. It’s a measure of how trustworthy you are when it comes to borrowing money or making payments over time. Just like a person with bad credit will have a hard time getting a loan or credit card, so a business with poor credit will have difficulties getting loans or setting up payment plans. Lenders look at your history and see if you’ve been faithful to previous commitments, and if you’ve had trouble before (in their minds), you’ll probably have trouble this time.

Business is measured on a scale from 0 to 100, with a higher score being better. 75 or above is usually considered to be an outstanding rating. Personal credit is measured from 300 to 850, with 680 or above being an excellent score.

Who reports on your business credit? As is the case with personal credit, there are 3 major bureaus that keep information about businesses: Experian, Equifax, and Dun & Bradstreet (which is not a personal credit bureau). When you apply for any kind of credit — loan, credit cards, etc. — the lender orders a report from one or more of these bureaus to see how you’ve been doing. Even small things like utility payments are reported, and even if you have just one late payment, you’d better believe it’s going to be on your file. Fortunately, one late payment isn’t a huge deal, as long as it doesn’t happen again.

Why is credit business so important? As mentioned before, your credit is basically a summary of how trustworthy you are. You can give the most convincing speech to a lender, but if your credit is bad, it tells them that you can’t be trusted when you borrow money. Almost any company that you try to set up a payment plan with is going to take a look at your business credit history and make a decision from it.

Business is taken into consideration in other situations as well, and not just in lending of money. If you try to establish a partnership with another company, you can be sure they’ll look at your credit history to see whether it would be a wise decision or not. Also, if you need to lease any equipment to expand your business, your credit will again be a factor.

You can see how your credit appears to lenders in the same way that an individual would. You can order your business credit report from any of the major bureaus, and see if the information in them is accurate and favorable. If there is a blot in your history that would make a negative impression on a lender or potential partner, you should take steps right away to improve your business credit so they can see that you’re proactive and are taking charge of your credit.

Home Loan Interest Rate

A home loan is the security for the repayment of a debt, such as the one incurred upon the purchase of that home, whereas mortgage means a loan secured by a real property. In other words it is a loan on a property that has been taken as security by the lender against the loan. Home loan interest rate is the financial charge for availing the authorization of using the future capital. Sometimes this interest rate becomes one of the very important factors that you must think before applying for any loan.

You can get a lower home loan interest rate if you constantly keep an eye on the various updates of the banks. In order to carry on with the market competition and to expand their business, the banks often try to offer the lowest interest rate and hence you will be getting better values. If you go back less than a decade ago, you will find that the bank used to enjoy more benefit over their customers because majority of the clients lacked what we call bargaining power; this is because there was less competition. With the gradual passage of time many banks came into existence that started offering lower home loan interest rate and the previous situation reciprocated and now the customers have started enjoying more power.

The credit card report in certain cases also acts as an important factor in determining your home loan interest rate. A credit card report contains information about the form of credit you have obtained, bankruptcies, history of bill payment, and court history at each and every phase of your life. Not only this, each time a creditor’s admittance is also noted down in your credit card report.

The various reasons for which a creditor will access your credit report are for home loans, personal loans or credit cards etc. One thing you must keep in mind that a creditor only will be allowed to access your credit report with permission only. This factor is important because what happens is, if in a short period of time quite a lot of lenders have accessed your credit report then either the lenders will deny your loan applications or you may get a higher interest rate offer.

The type of occupancy determines the home loan interest rate because if the loan is meant for the home, where you will be living in for full time, part time or rent affects. In general those who live in their homes for a longer duration enjoy the best rates. Just like when you buy something in bulk, you get to pay for the reduced price; this same thing also takes place if you borrow larger sums of money. It may help you to land up with a discounted interest rate.

Sometimes the business costs also decides this interest rates. Like different states have different business costs owing to their respective rules and regulations. For the lenders they pass or add this cost to you in the form of interest rates. Hence, fluctuating cost means fluctuating interest rates.

Facts about Personal Bad Credit Loans

If you have a job, a checking account and/or a clear title to a vehicle, but you have bad credit, you may be targeted by payday advance companies or car title loan companies. Some of the companies that offer personal bad credit loans have been investigated by the Federal Trade Commission. The fees charged by companies for these small loans for bad credit risks are much higher than the fees charged by banks and other lending institutions for standard loans. These personal bad credit loans have been called a debt trap. Before you take one of these small loans for bad credit, consider your options.

If you have a job and a checking account, talk to your bank first. Just because you have bad credit does not mean that they will not approve a small loan. If you have a clear title to a vehicle, then the chances of your being approved are even better. Many people think that because they have bad credit, they will automatically be rejected by a commercial bank or lending institution. They think that they will only qualify with companies that advertise “no credit check”, personal bad credit loans or small loans for bad credit risks. The truth is that lenders consider different factors when approving loans. If they do approve your application and you make your loan payments on time, then you will also be building a good credit history. Payday advance and other small loans for bad credit risks do not report to the credit bureaus. They will not help you improve your credit score.

If the bank will not approve your application, consider borrowing from a friend or family member. You can write up a promissory note that will be legally binding. If you need money quickly to pay mortgage, rent, utilities or another creditor, talk to them first. If you just need a little extra time to pay, then they will usually work with you. A late fee will be less than the fees charged by a company offering personal bad credit loans.

If you are active duty or retired military, there are emergency funds available. Check with your commanding officer. In fact, companies that offer payday advance and other small loans for bad credit risks are required to inform military personnel that they have other options.

If you must take one of the personal bad credit loans, borrow only what you must have to get through this emergency situation. Borrow only what you can afford to pay back on your next payday. Companies that offer payday advance and other small loans for bad credit risks charge roll-over fees if you are unable to repay at your next payday. Because of these roll-over fees, people have paid as much as $60 to borrow $100. The roll-over fee is not applied to your balance. You cannot make partial payments on these personal bad credit loans. They must be paid in full.

If you are searching for small loans for bad credit risks, then your real problem is bad credit. Once you get through this emergency situation, consider making efforts to repair your credit score. There are do-it-yourself kits and companies that offer bad credit repair. It is possible to improve bad credit scores. It takes time, patience and a little know-how, but it is worth the effort. Credit repair will probably cost less than the fees charged by companies offering personal bad credit loans and it will save you money in the long run. For more information, visit Credit Fix Solutions.

The Convenience of a Graduate Student Loan

Students look at a graduate student loan as an alternative to student debt, its obvious attraction being the ability to get one without collateral or the need to show proof of a regular income. Normally, students are in college fulltime and neither have jobs or properties of their own.

Being an unsecured loan, a graduate student loan normally has a reasonably good interest rate. It usually doesn’t take long for such a loan to get approved, but this speed and convenience comes at a price. Borrowers could find themselves tied up in a long-standing bond that is not exactly to the advantage of the borrower.

More costly than a student loan, a graduate loan is typically given upon graduation, when a student just out of college is not qualified for a student loan anymore. This loan is intended to ease the transition from college life to an employed life. Someone who has just joined the workforce would need a place to stay, new clothes appropriate for the workplace, and other necessary expenses.

A student overdraft, a regular feature in a student’s bank account, can be paid using a graduate loan. But one has to be reminded that a graduate student loan, even though inexpensive compared to a personal loan, is more costly than a student loan.

But once a fresh graduate has found a job, he or she could get a loan from the employer or company that has hired him or her at better rates. This is an alternative to a graduate loan open to new graduates, who could also avail of what is called a career development loan, meant for those who enroll for another course like medicine or graduate studies.

Student debts are continually increasing, with graduates who have found employment doing better than undergraduates since the former do not rely too much on loans but on their salaries for their daily needs and other necessities.

Someone who finishes college and decides to pursue graduate studies will broaden his or her horizons in other academic fields which could lead to better career opportunities. If it is necessary to do this by taking out a graduate student loan, it could also mean a new set of financial burdens. But it is an alternative that many graduate students are more than willing to take to pursue higher education.

If you want to apply for this loan, the first thing to do is fill out a Free Application for Federal Student Aid (FAFSA) form. You will be asked questions about your salary and savings or that of your parents. You can do this online or obtain a hard copy. After you have mailed your FAFSA application, the government will look at it and inform you how much you need to contribute to your graduate studies. Include in your application the graduate schools you are thinking about to enroll in so the government agency in charge can also send them a report.

Send applications to federal agencies for both subsidized and unsubsidized loans. Federal loans have the least expensive interest rates. You are better off maximizing federal loans to avoid the more expensive interest rates of private creditors.

A Grad Plus Student Loan can help you with the balance for your tuition. This loan can only be acquired from private creditors. Find the best interest rates available by shopping around. Many graduate schools will provide you a list of creditors and the interest rates they’re offering. The amount you can borrow depends on your credit so you better apply as soon as possible for a graduate student loan, making sure that you only make a request for the exact amount you’ll be needing for your education to increase your chances of getting approved.