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What is Debt Financing?

When a company needs to pay for something, it can pay with cash, or it may finance the purchase. Financing means that it gets the money from other businesses or sources, in return for obligations. Companies that are short on cash may need financing to pay for short-term needs or long-term capital expenditures.

There are two kinds of financing—debt financing and equity financing.

Equity financing means the company raises money by selling ownership shares in the business.

Debt financing happens when a company gets a loan and promises to repay the loan over time, with interest. Debt financing can come from a lender’s loan or from selling bonds to the public.

Loans usually require the borrower to offer collateral to guarantee repayment. This is called a secured loan. If the borrower defaults on a secured loan, the lender can take the collateral as repayment.

Various assets may be acceptable as collateral. For example, accounts receivable, real estate, equipment, securities, mortgages, inventory and merchandise might be acceptable to the lender. Having other people or companies sign as guarantors or endorsers may also work to secure a loan.

Selling bonds or commercial paper in the capital markets is another way to raise money through debt financing. This may at times be more economical or easier than taking a bank loan.

[…]

Government Loans: Risky Business for Taxpayers

Obtaining a loan from the government now seems perfectly normal to most Americans, be the loans for education, business, healthcare, or whatever else.

Examples include Small Business Administration loans, where a potential business owner goes to the government to get startup cash, and student loans, where a college student borrows money for tuition or even living expenses. These loans can often be paid back with interest over the course of what is often several decades.

Other examples might include Federal Housing Administration (FHA), Veterans Administration (VA), or Rural Housing Services (RHS) loans, which differ from the former in the sense that they are government insured loans, yet the fundamental principle behind them remains the same: government is taking upon itself (via taxpayers) the risk behind making the loan.

Of course, private loans are also available, though those that do not employ government insurance or other subsidies usually come with higher interest rates. The higher interest rates in the purely-private sector come from the fact that the private entity making the loan must take on all the risk, instead of externalizing it to the taxpayers.

So, the reality of lower interest rates in government and government-subsidized loans means they are vitally necessary, right?

First of all, the government doesn’t “make money,” in the way that private entities do. There is only one way in which states initially accumulate revenue, and that is through taxation. This extorted wealth is originally made in the private sector. So, in order for a government to make a loan back to the private sector, that money must first be removed from the private sector via taxation.

Government Knows How To Best Spend Your Money

For private entities, however, when they make a loan and determine who qualifies for it, and at what interest rate, the private firm making the loan is basically determining at what price (i.e, interest rate) the firm feels adequately compensated for the risk of lending out this money, and for giving up direct control over that money for the duration.

To claim, therefore, that the government should be in the business of making loans because private loans are generally too costly or too inaccessible for buyers, is no different than saying that government must take individual’s money and use it in a way that the original owners (i.e., the taxpayers) themselves would determine to be reckless and irresponsible. While it is true that occasionally a government loan may be paid back with interest at the appropriate time, it would be absurd to suggest that politicians would be more knowledgeable about how a person’s money should be used than the person who originally created and owned the wealth in the first place.

But Government Should At Least Prevent Usury, Right?

Moreover, there are those who will say that private firms making loans should be restricted from charging “excessive” interest on their loans (i.e., usury). This is an example of a very well-meaning, but utterly damaging regulation. It is crucial to note the differences in time preference displayed by both the lender and the borrower. The lender’s time preference (in this case) is lower than that of the borrower’s, meaning that the lender prefers a larger sum of money in the future, and the borrower prefers a smaller sum now. To get money now, however, the borrower must pay for it in the form of interest.

This represents a healthy balance between lenders and borrowers. It is why loans are made. Laws passed that prohibit certain interest rates on loans are far more likely to hurt those who need the loans, than anyone else. As was previously stated, a firm or person making a loan must feel compensated for the risk of making the loan, and that compensation manifests itself in the interest rate. To restrict a firm from charging a certain percentage of interest on their loans will only reduce the amount of loans it gives out.

Taking Away Your Choices

If a potential borrower who is determined to be a rather high risk asks for a private loan, then their interest on that loan will be quite high, but at least in that situation, the borrower has the choice of taking the loan, or to not take the loan. In the end, the borrower will choose what he or she believes will most benefit him or her. Yes, the borrower might miscalculate and the loan might turn out to have been a bad idea, but at least the borrower had a choice.

On the other hand, if the amount of interest that could be charged on the loan were to be forced down via government regulation, then the firm or person making the loan would simply not offer the loan at all, as he or she would not feel their risk is justified by the legally-allowable interest rate.

Faced with a lack of loans, risky borrowers may then look to government and government-subsidized loans as an option, but we find here just another case of government offering itself as the (taxpayer-funded) solution to a problem it caused in the first place.

Image source: iStockphoto.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

[…]

What is a collateral assignment of life insurance?

A:

A collateral assignment of life insurance is a conditional assignment appointing a lender as the primary beneficiary of a death benefit to use as collateral for a loan. If the borrower is unable to pay, the lender can cash in the life insurance policy and recover what is owed. Businesses readily accept life insurance as collateral due to the guarantee of funds if the borrower were to die or default. In the event of the borrower’s death before the loan’s repayment, the lender receives the amount owed through the death benefit and the remaining balance is then directed to other listed beneficiaries.

The borrower must be the owner of the policy, but not necessarily the insured, and the policy must remain current for the life of the loan with the owner continuing to pay all necessary premiums. Any type of life insurance policy is acceptable for collateral assignment, provided the insurance company allows assignment for the particular policy. A permanent life insurance policy with a cash value allows the lender access to the cash value to use as loan payment if the borrower were to default.

Alternately, the policy owner’s access to the cash value is restricted in an effort to protect the collateral. If the loan is repaid before the borrower’s death, the assignment is removed and the lender is no longer the beneficiary of the death benefit. Insurance companies must be notified of collateral assignment of a policy, but other than their obligation to meet the terms of the contract, they remain disinterested in the agreement.

[…]

Car Title Loan Requirements

A car title loan is a short-term loan in which the borrower’s car is used as collateral against the debt. Borrowers are typically consumers who do not qualify for other financing options.

If you live in a state that permits car title loans (see States That Allow Car Title Loans), here’s how getting one works. The borrower brings the vehicle and necessary paperwork to the lender. Although some title loan applications are available online, lenders still need to verify the condition of the vehicle – and the completeness of the paperwork – prior to releasing the funds. The lender keeps the title to the vehicle, places a lien on it, and gives the money to the borrower.

The loan limit is generally 25% to 50% of the car’s cash value (see Car Title Loan Limits). The borrower repays the loan, plus fees and interest, within the time period allowed (usually 30 days) and reclaims the title, lien-free.

Documents You Need

In order to obtain a car title loan, also called a pink slip loan, in most cases a borrower must own the vehicle outright; there may be no liens against the title. Lenders also require certain paperwork, including any or all of the following:

Original vehicle title showing sole ownership Government-issued identification matching the name on the title Utility bill or other proof of residency matching the name on the title Current vehicle registration Proof of vehicle insurance Recent paystubs or other proof of ability to repay the loan Names, phone numbers and addresses of at least two valid references Working copies of the vehicle’s keys

Some lenders also require a GPS tracking device to be attached to the car, in case the borrower defaults and the lender wins the right to repossess the car. Some of these devices are designed to permit the lender to disable the car remotely.

You do not need good credit to get a title loan. In fact, most title-loan lenders won’t check your credit at all, since the loan depends entirely on the resale value of the vehicle. Likewise, you do not need to be employed to qualify for a title loan.

Rates and Fees

Car title loans are considerably more expensive than traditional bank loans. Interest rates vary, but in states where the interest rate is not capped, it is generally set at 30% per month, or 360% annually. This means that a consumer who borrows $1,000 will need to repay $1,300 at the end of the 30 days to avoid going into default.

Most lenders charge a lien fee of at least $25 to $30. In states where title lending is not regulated, some lenders also charge origination fees, document fees, key fees, processing fees or other fees. The fees add up quickly, and can amount to an additional 20% to 25% premium (or more) on top of the loan and interest charges. Be sure to add up all the fees when figuring the total cost of the loan.

The Bottom Line

The best candidate for a car title loan is someone who owns a vehicle outright, understands the potentially high cost of the loan and has a reasonable expectation of having access to the cash to repay the loan before the repayment period expires. If there is no clear and realistic plan for paying off the loan, a car title loan can amount to selling the vehicle for half or less of its value.

Many title-loan borrowers renew their loans several times, making the financing much more expensive overall. So, again, the most critical consideration is ability to repay the loan on or before its due date. For more information, see Getting a Car Title Loan.

[…]

Tax Guy: How to write off bad-debt losses

The issue of deducting bad debt losses has been a continuing source of controversy between individual taxpayers and the IRS for decades. Even so, you may be entitled to a tax write-off if you made what turned out to be an ill-fated loan to another party. Here’s what you need to know.

Bad-debt deduction basics

The IRS is always skeptical when individual taxpayers claim deductions for bad-debt losses. The reason: Losses from purported loan transactions are often from some other type of deal that went south. For example, you might have actually made a contribution to the capital of a business entity that turned out to be a loser. Or you might have advanced cash to a friend or relative with the unrealistic hope that you would be repaid without having anything in writing.

So to claim a deductible bad-debt loss that survives IRS scrutiny, you must be prepared to prove that the loss was actually from a soured loan transaction instead of some other ill-fated financial move.

Proving you made a loan

Over the years, the courts have identified the following factors as being relevant in proving that you made a bona fide loan.

1. Written loan document. If you don’t have one and get audited, you can pretty much kiss away any chance for claiming a bad-debt loss deduction.

2. Descriptions in other documents (for example, showing a loan receivable on your personal balance sheet).

3. Presence of a stated interest rate and a stated maturity date in the loan document.

4. Source of funds to repay the loan.

5. Your right to enforce repayment.

6. Intent of you and other party.

7. Borrower’s ability to obtain loans from other lenders.

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6 good reasons why you must go for personal loans

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But before borrowers jump in joy they must know about the drawbacks too!

Personal loans offer help for any urgent cash crunch. A medical emergency, payments for a laptop, funding a vacation, quick cash for marriage — whatever the need, personal loans are here to help.

Banks in India are more than willing to give a personal loan to the right applicant, but before jumping on to the bandwagon shouldn’t you know the benefits and drawbacks of taking a personal loan?

Here are the pros and cons of personal loans every borrower must know

The benefits

1. No questions asked about the end use of the money

Banks will simply give the cash and it’s up to the borrower, where to use it and how to use it. So, it is a very convenient monetary help.

2. No collateral, security or guarantors required

Personal loans are solely granted on the basis of an individual’s credit-worthiness. Banks do take into account the income, employment, continuity of business and other factors so as to establish the fact that the borrower will be able to repay the personal loan with interest in due time.

No collateral or security requirements are put forth by the banks for issuing a personal loan. This saves a lot of embarrassment and hassles.

3. Total confidentiality

Since there are no security or collateral requirements, personal loans can remain a secret between you and the bank. Moreover every bank has some privacy policies, which ensures adequate confidentiality.

4. Easy repayment

Banks provide personal loans for 12 to 60 months. Varying from bank to bank, these tenures allow easy repayment options to the borrower. The borrowed amount along with the interest rate is calculated for the entire tenure of the loan and a EMI is calculated which the borrower has to pay every month. Personal loans also come with a prepayment clause.

5. Simple documentation

With minimal eligibility and zero collateral requirements, personal loans from banks in India require minimal documentation. A proof of identity, income proof and residence proof will suffice in most cases.

6. Big loan amounts

Depending on a borrower’s repayment capacity, banks in India are willing to give a personal loan ranging from Rs 25000 to Rs 20,00,000. This makes a personal loan an ideal choice to meet big budget requirements.

Drawbacks

1. High interest rates

Personal loans are unsecured loans. In most of the cases banks won’t ask for a collateral, security or guarantee before issuing any personal loan, so it becomes a risky proposition for banks. To offset this risk, banks provide personal loans at higher interest rates.

Secondly, personal loan interest rates also vary from person to person. How much of a risk you are to the bank determines the terms and interest rates on your personal loan. A person with good existing loan repayment record, serving in a reputed public sector, government, MNC, or blue chip company is more likely to get a low interest rate personal loan than one who deviates from the standard norms.

A low risk borrower can get a personal loan at 16 per cent interest rates while it can climb up 30 per cent or more for others.

2. Not available to everyone

Banks enforce strict employment, income and residence criteria before issuing any personal loan. They’ll only put their money where they find that the risk involved is minimal. So, a larger percentage of applicants are rejected in case of personal loans.

3. No part prepayments

Prepayment of personal loan can be done as a whole. Banks in India generally do not allow part prepayment of any personal loan. Moreover, there is a prepayment penalty of 2-5 per cent on the outstanding amount, which has to be paid to the bank while making any prepayments.

Courtesy:

[…]

AssetAvenue Successfully Funds Austin Retail Loan

LOS ANGELES–(BUSINESS WIRE)–

AssetAvenue, a leading online peer-to-peer lending platform to invest and borrow money in commercial real estate, announced today it has fully funded an Austin Retail Building Loan.

The Austin loan is secured by a 100%-occupied, 55,000 square foot commercial retail property in Austin, TX, with long-term leases in place until 2025. The total loan size of $500,000 represents a 17% loan-to-value (LTV) based on a $2.9 million appraised value of the property. The two year loan has a projected annual return of 8.5%, paid monthly.

“This Austin loan was compelling to us because of its above average yield and low LTV,” said David Manshoory, Founder and CEO of AssetAvenue.

“The Austin loan satisfied each of our four pillars of value: Market Location, Property Condition, Borrower Strength and Loan Structure,” said Kevin Arrabaca, President of Real Estate at AssetAvenue. “Austin is one of the hottest job markets in the country, exceeding the national average for the past 5 years. Also, the property itself has tenants in place for over 20 years, which gave us comfort about the stability of the property’s cash flow and therefore the borrower’s ability to regularly make the monthly loan payments.”

For more information, please visit: www.assetavenue.com.

About AssetAvenue:

AssetAvenue is a leading online peer-to-peer lending platform providing accredited and institutional investors the opportunity to invest in fixed income loans secured by commercial real estate, while providing property owners and lenders with quick access to capital to fund their deals. AssetAvenue partners with lenders and borrowers to source loan investment opportunities up to $10 million and offers these opportunities to qualified investors. Family offices and institutional investors can also elect to participate in AssetAvenue’s Whole Loan Program. AssetAvenue’s best-in-class real estate team utilizes its proprietary analytics model to meticulously vet each loan opportunity before presenting the opportunity to the company’s registered members. Visit AssetAvenue.com to learn more.

Follow AssetAvenue on Twitter, Facebook and LinkedIn.

FinanceLoanscommercial real estate Contact:

Allison+Partners

Suzie Linville, 310-496-4439

Suzie@allisonpr.com […]

How the procedure of cash advance payday loans takes place …

If you want to get the easy application of the cash advance payday loans, then you must follow a strategic procedure which is having different chronological steps. If you are not aware of these steps, then you can definitely visit those online sites that are quite helpful in this regard. Get into the application page and read out the instructions out there for gaining a fair idea about the same. If you need more assistance, then you can also contact the online customer-care service of the site which can be accessed at any point of time and the online representatives are always ready to help you out in solving any of your queries. You can also take the help of any expert or broker regarding the same. These brokers have a huge knowledge regarding how to gain success in the concerned procedure and they provide proper guidance to their clients.

Need reviewing and qualification of requirements

The first step is to fix up your requirement which relates with the fixing up of the purpose and the exact amount of loan you are in requirement of. This is quite an essential step which needs to be followed by all the borrowers including corporate and normal ones. Next, you need to analyze your urgency that within what period you will require the money and according to that, you must apply. If you are in great hurry, then you must appeal the same but remember the date of repayment will be decided on the basis of your application amount and tenure. All the borrowers are not eligible for making application for cash advance payday loans and so before making the online application, you must check out the eligibility formalities. If the stated policies are convenient for you and your profile gets matched up with the application policies, then only you can mover aged for making application for this kind of loan. Certain minimum eligibility factors that are judged by the lenders include current occupation and its type, salary amount, savings amount after deduction of family expenses, Verified bank account status, age will be above 18 years and more.

Picking up the right lender

The selection of the right lender of merchant cash advance loans is of great importance. But if you think that all the times, the borrower has the right to choose the lender them it is not true at all. This is because in most of the cases the profiles of the borrowers are send to different lenders out which the lender who finds the profile suitable can go ahead and provides the opportunity to the borrower to make application for the loan amount. The creditworthiness of the borrower must be satisfactory enough in order to gain the confidence of the lenders. The lenders must also consider that their investments are going in the right place from where they will be able to gain lots of profits within the stipulated periods. The borrowers are advised to choose those lenders who provide flexible repayment terms and tenure.

The procedure of cash advance loans.

[…]

VWF Arranges $7.125 Million Loan on Anaheim, CA Apartment Building

EL SEGUNDO, Calif.–(BUSINESS WIRE)–

Venture West Funding, Inc., a mortgage company headquartered in El Segundo, CA, announced it has arranged a $7.125 million loan for the refinance of the Calabria Apartments located at 2230 W Lincoln Avenue in Anaheim, CA. The 47-unit apartment complex built in 1988 is exceptionally maintained and professionally managed. The borrower is an affiliate of Revere Investments, an experienced multi-family investor who has acquired 11 properties in Southern California in the previous 37 months.

Matt Douglas and Tyler Bradford of Venture West Funding arranged the financing through Banc of California. The non-recourse loan is at a very competitive 3-year fixed rate with interest only payments. Additionally, the loan features a two-year step-down pre-payment structure and low 3rd party fees to further add value for the client. According to Mr. Douglas, “Together with Banc of California we were able to fulfill the borrower’s unique objectives by providing advantageous loan terms at a very competitive rate. This refinance allowed the borrower to pull out equity while maintaining profitable cash-flow and pre-payment flexibility.” The Venture West team worked closely with the borrower and lender to ensure a successful and efficient loan closing.

Venture West Funding was founded more than 17 years ago and has placed more than $8 billion in loan originations since 2001. Venture West Funding is one of the largest firms of its kind operating throughout Southern California, and specializes in providing mortgage loans secured by apartment buildings, commercial properties and single-family homes to a wide variety of borrowers. Venture West Funding is headquartered at 2301 Rosecrans Avenue, Suite 3170, El Segundo, California 90245 (310.706.4450). The firm also maintains a full-service office in Orange County at 31371 Rancho Viejo Road, Suite 101, San Juan Capistrano, California 92675 (949.218.4002).

Venture CapitalLoans Contact:

Venture West Funding, Inc.

Thomas Santley, 626.441.1445

tsantley@socal.rr.com […]

Without having A Penny This Weekend? Get Bad Credit Payday Loans

posted by

bantaylansangan201434

in Uncategorized

If your lavish spending habits have acquired you a bad credit, get rid of it immediately. Opt for negative credit payday loans and get a answer to your financial crunch.

Bad credit payday loans are usually short term loans that are offered to meet the urgent requirement of cash. These loans are meant to fill in the time gap amongst two pay cheques.

Bad credit payday loans cater to the money needs when you have an unexpected automobile or medical bill, electricity bill, grocery bill or bill of an item bought from a sale or auction.

No credit check is essential while applying for negative credit payday loans. Persons who have earlier filed for bankruptcy can also apply for the loan. The loan provider is not concerned with your past. What he calls for is repayment inside the fixed time period.

Before applying for negative credit payday loans, the borrower needs to check the eligibility criteria. Source includes extra info concerning why to see about it. The loan qualification verifies the following factors-:

The borrower should be of 18 years of age or above.

He must have a typical job with a fixed earnings.

He ought to have a bank account.

The credit score of the borrower is significant in finding poor credit payday loans approved. Realizing the credit score will safeguard you against treachery by the lender and will assist you to get the loan at a favorable rate of interest.

Repaying negative credit individual loans is straightforward. When the borrower receives his paychecks, the loan term gets terminated automatically. The loan provider withdraws the fees from your bank account. If you want to eradicate this fee, you want to make the repayments earlier.

Applying for negative credit payday loans is quite straightforward. The borrower can submit the loan application on-line. He can even fill in the on the internet loan application form at midnight. It saves you time as you dont want to travel right here and there in search of the lender. The loan provider will demand you to present certain documents like the most recent electricity bill, driving license, bank statement and so on. If you need to learn supplementary info on payday loans, there are tons of on-line databases you could pursue. The loan request will be preceded instantly right after the lender receives the necessary proofs. The loan quantity gets directly deposited in your bank account in less than 24 hours.

Poor credit payday loans assist you to overcome your financial disaster. But these loans are not each and every borrowers cup of tea. For that reason, these loans really should not be utilized so usually. If you use negative credit payday loans twice a year, you undoubtedly want to maintain a check on your spending habits.

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