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Fundation Advances Small Business Education Agenda With Release of “Simple Interest Loan Calculator”

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Fundation Advances Small Business Education Agenda With Release of “Simple Interest Loan Calculator”

Fundation Group LLC, a leader in online small business loans, recently launched a simple interest loan calculator, a comparison tool on its website http://www.fundation.com that educates small business borrowers on the critical differences between simple interest business loans and fixed payment contracts, such as merchant cash advances and other daily payment financing arrangements.

Fundation is often mistakenly compared to credit providers that offer ‘cents on the dollar’ payment contracts that are marketed as loans.

(PRWEB) December 29, 2014

Fundation Group LLC, a leader in online small business loans, recently launched a simple interest loan calculator, a comparison tool on its website http://www.fundation.com that educates small business borrowers on the critical differences between simple interest business loans and fixed payment contracts, such as merchant cash advances and other daily payment financing arrangements.

“In addition to offering technology-based business loan solutions, we strive to educate small business borrowers on the fundamentals of business finance and financial management,” said Fundation CEO Sam Graziano. “Alternative lending is a broad catch phrase for a wide and varied set of credit providers to small businesses, however, the differences amongst them are incredibly important to understand.” Graziano added, “Fundation is often mistakenly compared to credit providers that offer ‘cents on the dollar’ payment contracts that are marketed as loans. While these products serve a limited purpose as a liquidity tool for short-term cash flow needs, business owners are unaware of the actual economic implications of these products which carry materially higher effective financing rates than are advertised. Our new interactive tool allows business owners to easily compare how a true simple interest business loan works versus these fixed payment contracts.”

This simple interest loan calculator allows business owners to enter the terms of their “cents-on-the-dollar” offer and see how much more they will be paying than if they utilized a simple interest loan. In addition, this tool illustrates the effective Annual Percentage Rates (APRs) of a simple interest loan and a “cents-on-the-dollar” contract over the life of the contract and if the loan is repaid after one month.

“Moreover,” Graziano said, “at Fundation, we often find ourselves having to explain how much more attractive our products are than offers received from a ‘cents-on-the-dollar’ credit provider. Interest on our products are just like fixed rate mortgages, they are calculated based on the outstanding balance of the loan. These other payment contracts calculate interest on the original principal balance, then lock the borrower into the full contractual payments, even if the funds are paid back in their entirety the very next day. We hope that this simple tool can help business owners make better decisions going forward.”

Fundation’s simple interest loan calculator can be found on Fundation’s website in its “Become and Expert” section at http://fundation.com/become-an-expert/.

Fundation Group LLC is a technology-empowered direct lender that delivers small balance online commercial loans. The firm provides fixed rate loans up to $500,000 using its own capital. Fundation fills a void in the small balance commercial loan market by offering loans to businesses that banks are unwilling or unable to lend to, and those that desire a simplified process, with capital on terms that will enable them to grow. Fundation’s technology streamlines the loan application process by collecting third party data and automating the majority of the credit review process.
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Paying Up: Payday Loans Prey On The Desperate – Blacklisted News

Despite what the talking heads are saying, the economy isn’t doing so well. In this most recent jobs report, the two main sectors of growth were fast food and retail, accounting for a total of about 32.2% of jobs created in October. And due in part to these low-paying jobs, many more people are using payday loans to get by. Why does it matter?

Unfortunately, when it comes time to pay up, many people are paying much more than what they borrowed due to extremely high interest rates. While the issue gets raised in the mainstream media every now and then, rarely has anyone taken a look how payday loans came into existence – and the type of real financial havoc they wreak on people, mainly the poor. We need to realize that payday loans only harm us, and to explore alternatives.

According to a 2007 article in the Journal of Economic Perspectives, the practice of getting credit against one’s next payment goes back to the Great Depression. However, “the spread of direct deposit and electronic funds transfer technologies slowed the growth in the demand for check cashing services,” and payday loans played more of a side role to check-cashing businesses. But in 1798 the situation changed, facilitating the rise of payday lenders.

The Origins of the PayDay Loan

The beginnings of payday loans can be found in the 1978 Supreme Court case Marquette National Bank v. First of Omaha Service Corp, which stated that “national banks were entitled to charge interest rates based on the laws of states where they were physically located, rather than the laws of states where their borrowers lived.” The ruling allowed banks to offer credit cards to anyone they deemed qualified.

A further empowerment came from the Depository Institutions Deregulation and Monetary Control Act of 1980, which allowed banks and financial institutions to decide interest rates based on the market. This laid the foundation for payday loans, since one could now set up a payday loan company and charge high interest rates claiming they were based on the market. Payday lenders could offer loans to literally anyone they wanted, even those with bad credit.

As most of us now know, payday lenders are able to profit off the loans they provide by charging interest – often exorbitant interest, which gets out of control. For example, “for a loan of $300, a typical borrower pays on average $775, with $475 going to pay interest and fees over an average borrowing cycle.” In 1999, the Federal Reserve Bank of Cleveland noted that loans had “annualized interest rates often ranging from 213 percent to 913 percent.” In other words, the interest on a payday loan could vary between 4.4% and 19% – per week.

Today, the situation has only slightly improved as interest on a two-week loan can be between 391% and 521% annually, or 8.14% to 10.85% weekly. When one factors in that “only 14 percent of borrowers can afford enough out of their monthly budgets to repay an average payday loan,” we can see the beginning of a debt cycle where interest quickly and dangerously adds up.

Who’s Getting Hurt?

While it’s known that mainly working-class people and the poor are the primary users of payday loans, that population is spread out over a rather broad spectrum. More specificity, Pew Research in 2012 reported that the majority of payday loan borrowers are 25- to 44-year-old white women, though “there are five groups that have higher odds of having used a payday loan: those without a four-year college degree; home renters; African Americans; those earning below $40,000 annually; and those who are separated or divorced.”

Furthermore, the Journal of Economic Perspectives found that many payday loan borrowers “are seriously debt burdened and have been denied credit or not given as much credit as they applied for in the last five years.” In other words, the victims of payday loans come from groups and communities that are already having economic troubles – even more so due to the current economic climate. As to why and when people take out the loans, the Journal found that “most borrowers use payday loans to cover ordinary living expenses over the course of months, not unexpected emergencies over the course of weeks.” More than anything, perhaps, this speaks to the problem of wages: that people aren’t being paid enough.

Worse still, not only is the bottom line for payday lenders “significantly enhanced by the successful conversion of more and more occasional users into chronic borrowers,” reported the Economic Development Quarterly, “[but] the federal government has found that one of the country’s biggest payday lenders provides financial incentives to its staff to encourage chronic borrowing by individual patrons.” In short, companies are either purposefully seeking – or have a strong financial incentive – to put vulnerable populations into a cycle of poverty that is extremely difficult to get out of.

There has been some attempt by state governments to regulate payday loans. Some states have banned them outright, whereas others have limited interest rates. The lenders, though, are getting smart and attempting to avoid regulation by “making surface changes to their businesses that don’t alter their core products: high-cost, small-dollar loans for people who aren’t able to pay them back.”

Who Are the Culprits?

It should be noted that payday lenders are no small chumps in the financial world. Not only did their industry have [a revenue of $9.3 billion(http://www.bloomberg.com/news/2013-04-24/payday-loan-curbs-considered-by…) in 2012, but for a while even major banks were involved in payday lending including Wells Fargo, Bank of America, US Bank, JP Morgan Chase and National City (PNC Financial Services Group). These mega-banks were able to finance 38% of the entire payday lending industry, and even that is considered a conservative estimate.

In January of this year, the big banks bowed out of the industry after being warned by federal regulators who were looking to see if the loans violated consumer protection laws. But despite these Wall Street players leaving the industry, the problem doesn’t end there. There are also middlemen involved, which operate on behalf of the payday companies.

In April, Responsible Lending reported that a lawsuit was being filed against Money Mutual which “[claimed] the company [was] operating as an unlicensed lender by arranging loans that violate a [Illinois] state law that restricts borrower fees.” Money Mutual is itself not a lender, but “a lead generator that sells sensitive customer information, like bank-account numbers and email addresses, to payday lenders, and federal and state officials increasingly are cracking down on these businesses.” Middlemen like Money Mutual can be paid $50 to $150 per “lead,” even if a person doesn’t take out a loan.

And the numbers can quickly add up. In 2012, Bloomberg News found that “lead generators in financial services take in $100 million a year, with the market growing by more than 16 percent annually.” Yet this is just with storefront lenders, and many new problems arise when one delves even deeper into the world of online payday lending.

Many online payday lenders “attempt to skirt the rules and charge exorbitant fees, amongst other affronts to regulations that leave many a consumer seeking payday loan legal help.” The Pew Research Center also “found that about 30 percent of Internet payday loan borrowers claim they have received at least one threat from the lender,” whether in the form of arrest or that the debtor’s employer would be contacted.

One of the worst problems with online payday lenders is theft. Take the story of Jeannie Morris of Kansas City. She entered personal information on websites that offered to match her up with payday lenders. The situation took a turn for the worse when, “without asking her approval, two unrelated online lenders based in Kansas City had plopped $300 each into her bank account. Together, they began withdrawing $360 a month in interest payments,” and after her account was wiped clean, Jeannie was hounded by collection companies.

But Jeannie is not alone, as “many consumers reported that loans they’d never authorized had been dropped into their bank accounts. Then those accounts often evaporated as the lenders snatched out money for interest payments while never applying any of the money to the loan principal.” In short, online payday lenders can lend people money without asking them – then clean out those people’s bank accounts, effectively stealing from families.

Some Alternative Solutions

The situation may seem hopeless, but there are alternatives to payday loans. One way to avoid them is through credit union loans, whereby members are allowed to borrow up to $500 each month and each loan is “connected to a SALO cash account, which automatically deducts 5 percent of the loan and places it in a savings account to create a ‘rainy day fund’ for the borrower.”

Small consumer loans are another option. They are a lot less expensive than payday loans; for example, “a person can borrow $1,000 from a finance company for a year and pay less than a $200-$300 payday loan over the same period.” Some people can also get a cash advance on their credit card. In the long term, credit counseling can help people create debt repayment plans and find a way to balance their budget.

Most agree that payday lenders are a major problem: they prey on the desperate in order to make money. For this reason, people need to organize and fight for their economic freedom. Consumer watchdog groups, payday borrowers and victims of payday theft need to come together to end the practice that creates a never-ending cycle of debt. To quote the rallying cry of IWW songwriter Joe Hill: “Don’t mourn, organize!”

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Hedge Fund Monarch Said to End Talks on RadioShack Loan

Monarch Alternative Capital LP abandoned negotiations to take over a $140 million loan to RadioShack Corp. (RSH) as the electronics retailer struggled to reach a deal with lenders on a turnaround plan, according to two people with knowledge of the matter.

Monarch, run by Michael Weinstock, backed out talks it was leading with two other hedge funds to acquire the asset-backed senior loan and renegotiate the terms, said the people, who asked not to be named because the discussions were private. The company continues to talk with the other funds and with other potential lenders, one of the people said.

RadioShack is seeking to refinance the debt to loosen terms that may restrict the amount it can borrow under the loan in March, the people said. That would give the company time to implement a turnaround plan and avoid a cash crunch that management said in a Sept. 11 regulatory filing may lead to bankruptcy.

The loan is part of a $585 million funding package arranged last month by RadioShack’s largest shareholder, Standard General LP, that gave the retailer enough cash to operate through the holiday season. Any deal to refinance the debt will be contingent on whether a key RadioShack lender, Salus Capital LLC, agrees to a company plan to close underperforming stores, one of the people said. Salus owns part of a $250 million, second-lien loan.

Its initial plans to close as many as 1,100 stores were blocked by lenders including Salus earlier in the year, limiting to less than 200 of the sites that could be shuttered. Salus is affiliated with Philip Falcone’s Harbinger Group Inc. Closing unprofitable sites would help the chain preserve cash.

RadioShack had 5,387 outlets on Aug. 2, according to data compiled by Bloomberg.

Turnaround Plan

Merianne Roth, a spokeswoman at RadioShack, David Glazek, a spokesman for Standard General, and Stacey Maman, a spokeswoman at New York-based Monarch, declined to comment.

Salus attempted to buy as much as $465 million of RadioShack’s senior loans last month, two people with knowledge of the discussions told Bloomberg at the time.

Distressed hedge fund investors are interested in buying the struggling retailer’s senior debt to position themselves in restructuring negotiations in case the company files for bankruptcy.

Standard General’s October financing that retired the senior debt held by GE Capital, General Electric’s finance arm, altered the loan terms and provided the company with additional capital.

RadioShack has about $1.06 billion of debt, comprising $325 million of senior unsecured notes due in May 2019 and loans maturing December 2018.

To contact the reporters on this story: Jodi Xu Klein in New York at jxu205@bloomberg.net; Jeffrey McCracken in New York at jmccracken3@bloomberg.net

To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net; Mohammed Hadi at mhadi1@bloomberg.net Mitchell Martin

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CDOs And The Mortgage Market

Collateralized debt obligations (CDOs) are a type of structured credit product in the world of asset-backed securities. The purpose of these products is to create tiered cash flows from mortgages and other debt obligations that ultimately make the entire cost of lending cheaper for the aggregate economy. This happens when the original money lenders give out loans based on less stringent loan requirements. The idea is that if they can break up the pool of debt repayments into streams of investments with different cash flows, there will be a larger group of investors who will be willing to buy in. (For more on why mortgages are sold this way, see Behind The Scenes Of Your Mortgage.)

TUTORIALS: Mortgage Basics

For example, by splitting a pool of bonds or any variation of different loans and credit-based assets that mature in 10 years into multiple classes of securities that mature in one, three, five and 10 years, more investors with different investment horizons will be interested in investing. In this article, we’ll go over CDOs and how they function in the financial markets.

For simplicity, this article will focus mostly on mortgages, but CDOs do not solely involve mortgage cash flows. The underlying cash flows in these structures can be comprised of credit receivables, corporate bonds, lines of credit, and almost any debt and instruments. For example, CDOs are similar to the term “subprime“, which generally pertains to mortgages, although there are many equivalents in auto loans, credit lines and credit card receivables that are higher risk.

How do CDOs work?
Initially, all the cash flows from a CDO’s collection of assets are pooled together. This pool of payments is separated into rated tranches. Each tranche also has a perceived (or stated) debt rating to it. The highest end of the credit spectrum is usually the ‘AAA‘ rated senior tranche. The middle tranches are generally referred to as mezzanine tranches and generally carry ‘AA’ to ‘BB’ ratings and the lowest junk or unrated tranches are called the equity tranches. Each specific rating determines how much principal and interest each tranche receives. (Keep reading about tranches in Profit From Mortgage Debt With MBS and What is a tranche?)

The ‘AAA’-rated senior tranche is generally the first to absorb cash flows and the last to absorb mortgage defaults or missed payments. As such, it has the most predictable cash flow and is usually deemed to carry the lowest risk. On the other hand, the lowest rated tranches usually only receive principal and interest payments after all other tranches are paid. Furthermore they are also first in line to absorb defaults and late payments. Depending on how spread out the entire CDO structure is and depending on what the loan composition is, the equity tranche can generally become the “toxic waste” portion of the issue.

Note: This is the most basic model of how CDOs are structured. CDOs can literally be structured in almost any manner, so CDO investors can’t presume a steady cookie-cutter breakdown. Most CDOs will involve mortgages, although there are many other cash flows from corporate debt or auto receivables that can be included in a CDO structure.

Who Buys CDOs?
Generally speaking, it is rare for John Q. Public to directly own a CDO. Insurance companies, banks, pension funds, investment managers, investment banks and hedge funds are the typical buyers. These institutions look to outperform Treasury yields, and will take what they hope is appropriate risk to outperform Treasury returns. Added risk yields higher returns when the payment environment is normal and when the economy is normal or strong. When things slow or when defaults rise, the flip side is obvious and greater losses occur.

Asset Composition Complications
To make matters a bit more complicated, CDOs can be made up of a collection of prime loans, near prime loans (called Alt.-A loans), risky subprime loans or some combination of the above. These are terms that usually pertain to the mortgage structures. This is because mortgage structures and derivatives related to mortgages have been the most common form of underlying cash flow and assets behind CDOs. (To learn more about the subprime market and its meltdown, see our Subprime Mortgage Meltdown feature.)

If a buyer of a CDO thinks the underlying credit risk is investment grade and the firm is willing to settle for only a slightly higher yield than a Treasury, the issuer would be under more scrutiny if it turns out that the underlying credit is much riskier than the yield would dictate. This surfaced as one of the hidden risks in more complicated CDO structures. The most simple explanation behind this, regardless of a CDO’s structure in mortgage, credit card, auto loans, or even corporate debt, would surround the fact that loans have been made and credit has been extended to borrowers that weren’t as prime as the lenders thought.

Other Complications
Other than asset composition, other factors can cause CDOs to be more complicated. For starters, some structures use leverage and credit derivatives that can trick even the senior tranche out of being deemed safe. These structures can become synthetic CDOs that are backed merely by derivatives and credit default swaps made between lenders and in the derivative markets. Many CDOs get structured such that the underlying collateral is cash flows from other CDOs, and these become leveraged structures. This increases the level of risk because the analysis of the underlying collateral (the loans) may not yield anything other than basic information found in the prospectus. Care must be taken regarding how these CDOs are structured, because if enough debt defaults or debts are prepaid too quickly, the payment structure on the prospective cash flows will not hold and the some tranche holders will not receive their designated cash flows. Adding leverage to the equation will magnify any and all effects if an incorrect assumption is made.

The simplest CDO is a ‘single structure CDO’. These pose less risk because they are usually based solely on one group of underlying loans. It makes the analysis straightforward because it is easy to determine what the cash flows and defaults look like.

Are CDOs Justified, or Funny Money?
As mentioned before, the existence of these debt obligations is to make the aggregate loaning process cheaper to the economy. The other reason is that there is a willing market of investors who are willing to buy tranches or cash flows in what they believe will yield a higher return to their fixed income and credit portfolios than Treasury bills and notes with the same implied maturity schedule.

Unfortunately, there can be a huge discrepancy between perceived risks and actual risks in investing. Many buyers of this product are complacent after purchasing the structures enough times to believe they will always hold up and everything will perform as expected. But when the credit blow-ups happen, there is very little recourse. If credit losses choke off borrowing and you are one of the top 10 largest buyers of the more toxic structures out there, then you face a large dilemma when you have to get out or pare down. In extreme cases, some buyers face the “NO BID” scenario, in which there is no buyer and calculating a value is impossible. This creates major problems for regulated and reporting financial institutions. This aspect pertains to any CDO regardless of whether the underlying cash flows come from mortgages, corporate debt, or any form of consumer loan structure.

Will CDOs Ever Disappear?
Regardless of what occurs in the economy, CDOs are likely to exist in some form or fashion, because the alternative can be problematic. If loans cannot be carved up into tranches the end result will be tighter credit markets with higher borrowing rates.

This boils down to the notion that firms are able to sell different cash flow streams to different types of investors. So, if a cash flow stream cannot be customized to numerous types of investors, then the pool of end product buyers will naturally be far smaller. In effect, this will shrink the traditional group of buyers down to insurance companies and pension funds that have much longer-term outlooks than banks and other financial institutions that can only invest with a three- to five-year horizon.

The Bottom Line
As long as there is a pool of borrowers and lenders out there, you will find financial institutions that are willing to take risk on parts of the cash flows. Each new decade is likely to bring out new structured products, with new challenges for investors and the markets. (For more insight, read Why Are Mortgage Rates Increasing?)

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Some New Insights Into Logical Payday Loans Online Uk Methods …

All the merchandising is done for you. Although this is a hard-and-fast askment with some lenders others would opt you to hold one but would be leaving to make alternate systems so you can get the loan that you need. Dan and Julie McGrath cannot say whether the plan would hold assisted them. Your life, my life. Central elements for www.arrysbrewsite.co.uk explained. withal, after 30 geezerhoods your debt will get written off.

But that kid had to get somebody to come to a nutrient bank to see if they could get dresses! How did you pay it rearwards? You either stay your payment, or you say you don’t hold the cash to pay your requitals, then multitudes’s same, wow you’re a a lot high-risk person to add money to. most of the masses take to apply for this loan program because it can be easy uncommitted and executes not involve procedures or formalities and more confirmation. Oh, and there’s the guy on the top. Michael So he’s on the Today Show, he’s on VH1?s Best Week Ever. We might hold an unexpected measure develop, such as a medical measure or an automobile bushel, and we might not experience adequate money for a twosome more hebdomads to pay these measures. The coitus interruptus sometimes continue even after customers feature pleaded with the banks to preven outt the loaners from tipping their chronicles.

The sentence sociable, this alternative is reasonably hand on grade 3 and below. The agency is likewise in all likelihood to grant borrowers to convert payday loans into longer-term loans, known as installment loans, Mr. Seiberg told. We got a phone call least the former day there. In fact, because of payday loans, on that point is another way uncommitted for you to take. You would definitely get the better of all hurdle races in a delighting manner and everyone can bask it.

In the aftermath of the subprime loan nuclear meltdown, Congress and many state legislatures are now bright a crackdown on the “payday” loan industry. What can you do? If the borrower fares not have the loan amount upon the end of term agreement, he pays up the advance fee and rolls out the loan concluded to the falling out paycheck. While all payday loans bill eminent interest ranges, some are eminenter than others.

I want to be an of import person someday. It is of import to understand that sometimes you will need to make a determination between two options where each of them might be you more than you can in truth afford. You can too dispatch this procedure while you are sitting down in the office and are online. To encounter the requisites for payday loans, at that place are more than than a few eligibility criteria that you have got to encounter before you apply for these loans though.

It is true that money is not everything but it is something without which we can t even imagine to have our introductory and lavishnesses of life. If you don’t do it now, do you know when you will? It was amazing to see everything and be a portion of this, on the brink of double coevals delay rhythm, and to see the future coevals cabinets. You experience, instead of senseing weak and vulnerable, alike that lad done me sense. Ana Hernandez, who supervises the so-called fiscal readiness program at Fort Bliss, avers that soldiers on the base of operations promptly lead out loans to buy things similar electronic commodities.

They cognize him pretty well. If you don’t find a good loaner, your state of affairs could be potentially financially dangerous and could end you up in more debt than before. raging clients have got directed to the bank’s Facebook pageboy to plain about the varieties, menacing to leave alone in protestResearch by MoneyComms shows at that place is a immense difference in complaints. We proceed to feature to borrow 40% of every dollar that we’re dropping. It is dependable that these online agile loans bid infinite welfares for the consumer.

But when I launched out what he’d done, I felted up alike smashing him to parts. Payday loans you kay no credit bank check offering workable solutions to many peoples fiscal jobs. Don’t bank a land site that turns down touch beyond electronic mail or on-line chat. That is near to the £25 accused by some payday loan societies to borrow £100 all over the same period.

turn up a payday loaner close you. I meanspirited, I’m- I’m modeling- I’m posing around in my surviving room hither, talking to a photographic camera. The only difference is the numbers games at the top constituted 2016. So hither we hold venders who are likewise attempting to sieve of get on board and get these- this participatory civilization to work for them. A payday loan is a loan against your future payroll check. fill up out the form and click subject.

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USSmallBizLoans.com States More Business Loan & Merchant Cash Advance Borrowers Denied By Banks

Channel Islands, CA (PRWEB) August 03, 2014

— In recent years, studies have shown that banks have the highest rate of business loan denials than any other funding source. During a time when business funding is critical, many owners find themselves helpless after being denied the merchant cash advances or business loans needed to keep their businesses open or growing. They are literally hoping and waiting for their next lucky break unsure of what to expect next.

James Gipson learned this hard lesson through trial and error over a span of 25 years of being an entrepreneur, business owner and an investor. Creator of USSmallBizLoans.com, he is now informing other business owners of alternative lending resources through his free e-book, “12 Insider Secrets To Business Loans: What Your Lender Is Not Telling You!”

For years, banks have been the primary source of capital for small businesses, but since the Great Recession, the allocated funds earmarked for existing small businesses has dried up. As of 2008, owners are finding it more difficult to get the capital they need to run and grow their businesses. “What has magnified the problem is that banks have not only shortened the money supply by holding more funds in reserves and circulating less, but they have tightened the lending guidelines allowing fewer businesses to get funded,” says James Gipson, Expert Author and Business Loan Adviser.

Recently, entrepreneurs have pooled their financial resources and connections to form alternative private lending firms to meet the demand of small businesses across the U.S., when the banks and credit unions have failed to do so.

Since starting USSmallBizLoans.com, business owners and entrepreneurs have been educated on the differences between bank and private funding. “The more people are informed, the better decisions they can make for themselves.” As he points out, “A borrower shouldn’t judge a loan just based on the amount, the term or the interest rate alone. The borrower must also consider the fast availability of funds,” says Gipson. “A bank loan requires a ton of paperwork, personal credit risk, and can take 3-6 months to close, while private funding is less restrictive, usually has only a one page loan application, offers a no personal guarantee merchant cash advance, and can close in as little as 3 to 5 days,” he proclaims.

He warns that many small business people are not taking into consideration the velocity of money as a major factor. The speed in which you can turn $1 into $15, $20 or more in the shortest time is why the availability of funds is the most critical component.

Gipson uses this example: “Let’s say, you are the proud owner of a pizza delivery service who needs to increase production to meet the peak demand of Super Bowl Sunday. Well, maybe you were too busy running your business to stop to go to the bank, sit down and fill out tons of loan paperwork or you just didn’t get around to it. You are only weeks away from your peak season, but you need an extra $10,000 to stock up the inventory.” He asks, “What do you do then? If you go to the bank you will either get denied or even if you get approved the bank can’t fund you fast enough!” He suggests your best solution is an alternative private lending source. This type of scenario is a realistic illustration of just about any business or industry these days.

The amount of competition for a larger piece of the market share is ever increasing. A small business must have the additional capital to grow in order to compete. He points out that business owners just need to be aware of their options before applying for a business loan, merchant cash advance or a business line of credit.

USSmallBizLoans.com is a one-stop small business resource that offers small business owners in any industry across the U.S. and Canada, the opportunity to obtain fast working capital needed to sustain and to expand their businesses by lending easy to qualify funds to purchase equipment, supplies, and inventory or for any business purpose.

For more information, or to obtain James Gipson’s free e-book, “12 Insider Secrets to Business Loans,” please visit http://www.USSmallBizLoans.com.
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Ace Cash Express agrees to pay $10 million to settle allegations

Irving payday lender Ace Cash Express has agreed to pay $10 million to settle what federal regulators called “appalling” predatory tactics to induce borrowers into debt traps.

The consent order with the Consumer Financial Protection Bureau, announced Thursday, comes amid a crackdown by federal and local regulators on aggressive payday lending practices.

The bureau took enforcement action in November against Fort Worth-based payday lender Cash America. In that case, Cash America agreed to pay $19 million to settle allegations of improper debt collection lawsuits and overcharges of military customers.

The bureau said Ace harassed overdue borrowers and threatened lawsuits or criminal prosecution to pressure them to take out additional loans to pay off old ones.

“Ace used false threats, intimidation and harassing calls to bully payday borrowers into a cycle of debt,” CFPB Director Richard Cordray said in a statement. “This culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back.”

In a two-page statement, Ace said its policies prevent delinquent borrowers from taking out new loans. The company did not admit or deny any wrongdoing in agreeing to the consent order. Ace agreed to pay $5 million in consumer refunds and a $5 million penalty.

“We settled this matter in order to focus on serving our customers and providing the products and services they count on,” CEO Jay B. Shipowitz said in a statement.

Ace is one of the largest payday lenders in the country. It provides payday loans and other alternative financial products online and at 1,500 stores in Texas and 35 other states as well as the District of Columbia. The company has an annual transaction volume of $14 billion and saw 40 million customer visits over the past year.

Payday loans are meant to address short-term cash needs. They can offer quick access to credit in small amounts that must be repaid in full in a short time.

But critics say these high-interest products bury many consumers under a mountain of debt.

In March, the bureau’s study found 4 of 5 payday loans were being rolled over or renewed within 14 days. It also found that a majority of payday loans were being made to borrowers who end up paying more in fees than the loan’s original amount because they renew the loan so many times.

Consumer advocates applauded the bureau’s latest action against a payday lender.

“I don’t think there’s any question that these companies are on notice that it’s not going to be the Wild West as it was pre-bureau,” said Don Baylor Jr., senior policy analyst at the Austin-based Center for Public Policy Priorities. “Now, you actually have a federal bureau with actual teeth.”

The investigation and enforcement action against Ace resulted from the bureau’s examination of the company, which is part of the agency’s oversight responsibilities.

The bureau said Ace’s training manuals instructed debt collectors to “create a sense of urgency” when contacting overdue borrowers. The bureau found a graphic illustration in a 2011 training manual that spelled out the loan process. It directs employees to offer consumers the option to refinance or extend the loan if borrowers cannot repay.

Ace said in its statement that the bureau’s allegations relate to some of the company’s collection practices before March 2012.

The company retained an independent consultant to review a random sample of the company’s collection calls in response to the bureau’s concerns. Deloitte Financial Advisory Services’ review found that more than 96 percent of Ace’s calls during the review period met “relevant collections standards,” according to the company.

Moreover, the company analyzed data from March 2011 through February 2012 to ensure that its polices preventing a delinquent borrower from taking out new loans were working.

Since 2011, the company said, it also has taken voluntary steps to shore up its compliance program, including hiring full-time legal analysts outside the collections department to monitor calls.

Follow Hanah Cho on Twitter at @hanahcho.

[…]

'Appalling' predatory lending practices cost Ace Cash Express $10M in settlement with feds

Irving payday lender Ace Cash Express has agreed to pay $10 million to settle what federal regulators called “appalling” predatory tactics to induce borrowers into debt traps.

The consent order with the Consumer Financial Protection Bureau, announced Thursday, comes amid a crackdown by federal and local regulators on aggressive payday lending practices.

The bureau took enforcement action in November against Fort Worth-based payday lender Cash America. In that case, Cash America agreed to pay $19 million to settle allegations of improper debt collection lawsuits and overcharges of military customers.

The bureau said Ace harassed overdue borrowers and threatened lawsuits or criminal prosecution to pressure them to take out additional loans to pay off old ones.

“Ace used false threats, intimidation and harassing calls to bully payday borrowers into a cycle of debt,” CFPB Director Richard Cordray said in a statement. “This culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back.”

In a two-page statement, Ace said its policies prevent delinquent borrowers from taking out new loans. The company did not admit or deny any wrongdoing in agreeing to the consent order. Ace agreed to pay $5 million in consumer refunds and a $5 million penalty.

“We settled this matter in order to focus on serving our customers and providing the products and services they count on,” CEO Jay B. Shipowitz said in a statement.

Ace is one of the largest payday lenders in the country. It provides payday loans and other alternative financial products online and at 1,500 stores in Texas and 35 other states as well as the District of Columbia. The company has an annual transaction volume of $14 billion and saw 40 million customer visits over the past year.

Payday loans are meant to address short-term cash needs. They can offer quick access to credit in small amounts that must be repaid in full in a short time.

But critics say these high-interest products bury many consumers under a mountain of debt.

In March, the bureau’s study found 4 of 5 payday loans were being rolled over or renewed within 14 days. It also found that a majority of payday loans were being made to borrowers who end up paying more in fees than the loan’s original amount because they renew the loan so many times.

Consumer advocates applauded the bureau’s latest action against a payday lender.

“I don’t think there’s any question that these companies are on notice that it’s not going to be the Wild West as it was pre-bureau,” said Don Baylor Jr., senior policy analyst at the Austin-based Center for Public Policy Priorities. “Now, you actually have a federal bureau with actual teeth.”

The investigation and enforcement action against Ace resulted from the bureau’s examination of the company, which is part of the agency’s oversight responsibilities.

The bureau said Ace’s training manuals instructed debt collectors to “create a sense of urgency” when contacting overdue borrowers. The bureau found a graphic illustration in a 2011 training manual that spelled out the loan process. It directs employees to offer consumers the option to refinance or extend the loan if borrowers cannot repay.

Ace said in its statement that the bureau’s allegations relate to some of the company’s collection practices before March 2012.

The company retained an independent consultant to review a random sample of the company’s collection calls in response to the bureau’s concerns. Deloitte Financial Advisory Services’ review found that more than 96 percent of Ace’s calls during the review period met “relevant collections standards,” according to the company.

Moreover, the company analyzed data from March 2011 through February 2012 to ensure that its polices preventing a delinquent borrower from taking out new loans were working.

Since 2011, the company said, it also has taken voluntary steps to shore up its compliance program, including hiring full-time legal analysts outside the collections department to monitor calls.

Follow Hanah Cho on Twitter at @hanahcho.

[…]

7 Tips to Stay Afloat When Times Get Tough

Many small business owners struggle with cash-flow issues. They may not be paying themselves, at least not a fair market wage for the type of work they do and the hours they put in. They may be putting money into the business to survive.

These entrepreneurs are struggling to keep their enterprises afloat. Below are seven tips for making ends meet when times are tough.

1. Get control of the checkbook and inventory. Verify that every nickel that leaves your business is going to a legitimate creditor. A surprising number of small businesses fall victim to fraud.

Related: 10 Ways to Keep Your Company’s Cash Flow Alive

Similarly, make sure that your inventory is going to paying customers and not home with your employees. The Small Business Administration estimates that 30 percent of small business failures are the result of embezzlement, employee theft or fraud. Don’t think that your business is exempt. As Ronald Regan said, “Trust, but verify.”

2. Make prudent reductions in operating expenses. Unless you have no choice, don’t slash and burn, making cuts that will cripple your business in the long term. However, in difficult times, it makes sense to reduce operating expenses.

One example of a place to look is overtime pay. If sales are below budget, you shouldn’t be paying overtime to production and warehouse workers. If you are in a bind, you may need to reduce hours for non-exempt employees and/or ask exempt employees to take a temporary salary reduction. These are not easy decisions, but they are preferable to bankruptcy.

3. Delay capital spending. Unless the payback is very short (a couple of months at most), delay capital spending (such as buying a new building or equipment) when the business is in a cash crunch. In the long run, you have to invest in your businesses or see it die a slow and painful death. However, there are right times for investment. When a business is struggling to make payroll, it’s not the right time for capital spending.

4. Reduce working capital. Accounts receivable and inventory suck up cash. When things are tight, collect what is owed to your business as quickly as possible. However, be cautious about factoring your receivables. When annualized, the interest rates are often usury. For example, paying 3 percent for the use of money for a month is more than 36 percent annually when compounded.

Related: Obsessed With Revenue? Don’t Forget to Check Gross Margin.

It can be less expensive to finance your business on credit cards. Selling excess inventory, even at fire sale prices will generate cash. Reducing inventory without hurting customer service will put cash in your pocket. Similarly, stretching your payables without damaging supplier relationships can be helpful.

5. Consider refinancing. Restructuring debt can lower monthly payments. All else equal, if the term of a loan can be increased or the interest rate reduced, monthly payments will drop. Refinancing assets can put cash in your pocket.

6. Ask for concessions. If you have been assessed fees, penalties or interest, ask that they be waived. Request extended terms. Don’t hide from creditors. They will often be willing to work with you if you communicate with them — particularly if they think that the alternative to working with you is that they get paid nothing when you declare bankruptcy.

7. Grow sales — maybe. One of the most common reactions to a cash flow squeeze is to grow sales. This makes sense. All else equal, sales growth will generate increased profit. But, as a savvy finance expert drilled into our heads, “You can’t buy beer with profit, you can only buy beer with cash.”

If growing sales means increasing accounts receivable and inventory, it can actually result in a short-term reduction in cash flow. Companies can literally grow themselves into bankruptcy, and do all too often. Before attempting to grow sales to relieve cash flow pressure, make sure that this will make things better, not worse.

Businesses can survive a cash-flow crunch, but the wrong move can be fatal. What’s needed is a well-crafted plan of action that will inevitably include some or all of the seven items above.

Related: Are You Prepared for Your Small Business to Flatline?

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Two-Thirds of Payday Loan Users Trapped in Cycle of Debt …

Image PR-Image-Payday-Loan-by-Duckie-Monster-614x279.jpg

Vancity one of the first to offer payday loan alternative

Vancouver, BC – A poll released today by Vancity indicates 67 per cent of payday loan users in the Lower Mainland and Greater Victoria are borrowing several times a year.

The credit union poll, which was conducted by Insights West, indicates 35 per cent took out a payday loan once a month or more. Having an unforeseen expense they didn’t anticipate (38 per cent) and getting behind on bills (37 per cent) are the main reasons why borrowers said they used payday loans. Another 22 per cent said it was because they had a debt that was due.

Today Vancity became one of the first mainstream financial institutions to launch an alternative to payday loans for its members. The new Vancity Fair & Fast Loan™ reduces costs for borrowers and helps them break the cycle of debt.

Under the Vancity Fair & Fast Loan, if a member borrowed $300 for the minimum term of two months and paid it off after two weeks, it would cost $2.20, which is 19 per cent annual percentage rate (APR). Under B.C. legislation, the maximum amount that can be charged for a $300 payday loan is $69, which would be 600 per cent annual percentage rate.

Members can borrow up to $1,500 and be approved in about an hour. And because borrowers have up to two years to pay back the loan, they can build their credit history in the process. The loans are relatively small and have more inclusive qualifying criteria so members with lower credit ratings have a better chance of being approved.

According to Consumer Protection BC, the provincial regulator of payday loans, more than 100,000 British Columbians took out 800,000 payday loans in 2013.

The Vancity poll indicates up to 60 per cent of payday loan users are somewhat or very likely to consider a short-term, same-day loan from a credit union. It also found 37 per cent of survey respondents carried a balance on their credit card, 23 per cent had to borrow money for an unforeseen expense and 22 per cent got behind on bills.

The poll was conducted among 990 Lower Mainland and Greater Victoria adults, which includes an oversample of 131 payday loan users.

“The Vancity Fair & Fast Loan is a low cost, long term alternative to help members get out of the cycle of debt and build their credit history,” says Linda Morris, Vancity’s senior vice-president of business development, member and community engagement. “It’s one of the ways we are working to enhance the financial well-being of those who have been underserved by mainstream financial institutions.”

Additional sources of information:

Insights West Vancity poll results snapshot, presentation and data tables
www.paydayloanrightsbc.ca
Backgrounder: Payday Lending in BC, Consumer Protection BC
Pay Day Lending: In Search of a Local Alternative, see page 15, Centre for Community Based Research and funded by the Wellesley Institute (2010)

About Vancity:

Vancity is a values-based financial co-operative serving the needs of its more than 501,000 member-owners and their communities through 57 branches in Metro Vancouver, the Fraser Valley, Victoria and Squamish. As Canada’s largest community credit union, Vancity uses its $17.5 billion in assets to help improve the financial well-being of its members while at the same time helping to develop healthy communities that are socially, economically and environmentally sustainable.

Tweet us @vancity and connect with us on Facebook.com/Vancity.

For more information:

Lorraine Wilson | Vancity
T: 778-837-0394
mediarelations@vancity.com

Mario Canseco | Insights West
T: 778-929-0490
mariocanseco@insightswest.com

Photograph: Duckie Monster

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