Small Business Loans - Initiates a Good Start For Your Business

To be a successful entrepreneur, it is a must to have the requisite support of money. It is not a matter of concern what is the size and nature of business you are dealing. Finance plays a very important role as it assists you to accomplish your goals. Whenever starting a new business or refinancing the existing one, it is the flow of finance which determines the success of business. In this regard, you can consider small business loans which provide the necessary monetary assistance. These loans are very easily accessible and can be used for a number of purposes.

With these loans, you have the finances which enable you to take care of the various demands. You can utilize the amount for installing machinery and tools, purchasing raw materials, arranging transportation of finished products, paying wages and salary, purchasing plot, clearing unpaid debts and so on.

These loans can be availed in two forms of secured and unsecured. Secured form of the loans offers a bigger amount at comparatively low interest rate. But to avail this loan option, you have to pledge one of your valuable assets as collateral. It is the equity value present in the collateral which helps you access a bigger amount

On the other hand, unsecured form of the loans can be obtained without pledging any collateral. This loan option is totally risk free and is beneficial to meet small needs. The amount offered is limited and is offered with a high rate of interest. Those with imperfect credit history such as CCJs, IVA, arrears, defaults, non repayment etc can also avail these loans. However the interest rates levied will be slightly higher.

Before availing the loans, you must prepare a loan proposal which clearly outlines where and how the amount will be utilized and repaid. A good business plan will help you obtain the loans instantly. You should also provide the business related documents with the loan proposal.

Small business loans are offered by most of the lenders based in the financial market. However to get the best deals, you should prefer applying online. By collating and comparing the rate quotes of various lenders, you can select a suitable deal. Thus with these loans, you are not required to worry about arranging finances to take care of your business needs

Beginning Steps of Business Credit Building

Building credit for your business can be daunting if you are unfamiliar with the process. The absolute first thing you'll have to do is have a business. A corporation or LLC should be fine to start building business credit. The state where you incorporate is not very important for the credit side of things.

Once your business is setup you will need to make sure it is listed in 411. When you submit applications for credit many companies will search for your business in a 411 listing to verify the phone number on your application. Some companies use Google Voice and submit the number to several 411 services themselves.

Business credit bureaus collect information and report it to businesses that subscribe to their service. There are 3 major business credit bureaus: Experian, Equifax, and Dun & Bradstreet. Some creditors report to Experian only, some report to D&B only, but the ones that help you the most will report to Equifax, Experian, AND D&B, giving you a tradelines on all the major business credit bureaus.

Net 30 accounts mean you have 30 days to pay the invoice after purchase. A few of the net30 credit companies might require you to place 1-2 orders where you pay-in-full upfront before they will give you net30 billing. Net30 creditors include phone companies, gas cards, and office supply stores.

Your business will need 4-5 tradelines reporting in your credit file to start applying for the next level of non-PG credit - retail revolving credit accounts. Wait a month or two after paying before you can expect the net30′s to report. Even if you get in on net30 terms pay before the due date. This will be a positive factor for your business.

Some net30 accounts are easier than others but once you get that first one reporting things should fall in line. If you need business cell phones this can be an easy way of getting net30 tradelines reporting. The higher the balance of your net30 order the better. When ordering you can ask if there a minimum dollar amount before they will report to credit bureaus. Your high balance is usually reported and creditors like to see high paid balances if they are going to offer you a high credit limit.

Now you need to spend some time building your credit file and get those net30 accounts reporting. It may take a few months to get but once that happens a lot of the hard work is over.

Letter Of Credit Financing

The example involves a grain trader in Minnesota, who buys a shipment of grain from a producer and who plans to then resell the same grain to a buyer in the Middle East.

The example involves a grain trader in Minnesota, who buys a shipment of grain from a producer and who plans to then resell the same grain to a buyer in the Middle East. Using what is called the "warehouse receipts financing" method, the Minnesota trader acquires the grain and "deposits" it in a recognized public warehouse and, in return, receives a warehouse receipt, identifying - among other things - the type of grain, its quality, the quantity, and the date it was received into the warehouse.

The trader takes this warehouse receipt to his/her bank as evidence of his ownership and assuming everything is in order, the bank will then extend a loan to the trader a loan based on the estimated market value of the grain, less some percentage amount (sometimes called a “haircut”). The trader then contacts the buyer in the Middle East, who agrees to buy the goods in the public warehouse from the seller in Minnesota.

The L/C mechanism in this case is as follows:-1. The sales contract between the Minnesota seller and the Middle East buyer is agreed and both sides agree to do business on an L/C basis.

2. The buyer requests his/her bank to issue an L/C. This bank is the issuing bank. The L/C specifies that the seller must present certain documents to the bank before receiving payment and in this case the primary documentary requirement is the warehouse receipt.

3. The issuing bank notifies the seller through the correspondent bank (notifying bank ) by SWIFT and then sends the original L/C to the seller.

4. The seller presents his bank with a bill of exchange (draft) based on the conditions of the L/C together with the warehouse receipt and he/she applies for negotiation.

5. The seller’s bank checks the conditions of L/C and the warehouse receipt document. If the conditions of the L/C are found to be consistent with the documents, the seller’s bank pays the seller. However, the seller has to be very careful as the bank is not able to honour the bill of exchange if there is any discrepancy between the conditions of the L/C and the documents provided by the seller. If a discrepancy occurs, the seller has to inform the buyer and have him request the issuing bank for an amendment to the L/C accordingly.

The rules for letter of credit transactions are comprehensively dealt with under the International Chamber of Commerce (ICC) rules called “UCP 600”, which were updated this year.