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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.

[…]

5 Steps for Negotiating Private Student Loan Relief

Is it true that all good things come to those who wait?

For some struggling student-loan borrowers, that may finally be the case as Wells Fargo and Discover Financial Services—the nation’s second- and third-largest private education lenders—have recently announced plans to take more substantive measures to help.

The decision to modify a delinquent loan is a tough pill for lenders to swallow for a couple of reasons. Foremost is the concern that once the word gets out, less-troubled borrowers will claim distress or worse: Purposefully withhold their payments in order to score a better deal. The second has to do with lenders’ reluctance to come clean about the true nature of the loans they have on the books.

When full repayment at originally agreed-to rates and terms becomes uncertain, financial institutions will flag the loan so that they may more closely track remittances while looking for signs of deteriorating creditworthiness. But when the borrower is in or on the verge of default, the loan becomes nonperforming—probably the dirtiest word in a lender’s vocabulary.

To a lender, nonperforming loans are dead assets. That’s because going forward, every payment it receives for those loans must go toward reducing the outstanding principal, which means that no interest income may be recorded even if the borrower is able to pay all or part of the interest that’s due. Not only that, but the lender is also compelled to estimate the loan’s ultimate recoverability in the event of that default. It does so by subtracting from the principal balance its estimated value of the underlying collateral, if any. The difference is promptly written (charged) off.

By that accounting, nonperforming education loans—which are not collateralized—should be fully charged off, even though the debts are virtually impossible for the borrower to discharge in bankruptcy.

Consequently, private student lenders do all they can to avoid this from coming to pass, whether by agreeing to temporarily reduce or discontinue payments, or by actively managing a chronic delinquency so the contract doesn’t stray into nonperformance land.

The problem, however, is that these short-term tactics do little more than drop-kick the unsettled matter, frankly, at the expense of the borrower. Between late-payment fees and the compounding effect on all that deferred interest (known as negative amortization), the debt swells in value.

So when the lender decides it has no other option than to permanently modify the loan it wishes it hadn’t made in the first place, it can take any one or a combination of the following actions: lengthen the term, lower the interest rate and/or forgive a portion of the principal.

As you might expect, there is a pecking order for all this—one that favors lenders over borrowers.

Since nonperforming loans produce no income for the lender until the loan balance is repaid, it follows that the recovery of that principal is paramount. It also makes sense for the lender to collect at least some of the interest that it will be able to count as income once the loan is paid off. Therefore, a lender’s first offer will be to extend the loan’s duration.

Too bad the borrower ends up paying more in order to pay less.

You see, the longer a debt remains unpaid, the more interest it accrues. For example, a $30,000 private student loan that’s repaid over 10 years at 10% interest will cost $17,574 to finance over its life. But if the term were to be stretched to 15 years and the rate were to remain unchanged, even though the monthly payment will decline, that restructure will cost the borrower an additional $10,454—59% more for a total of $28,029 atop the originally borrowed $30,000.

So what’s a struggling education borrower to do when he’s already been granted the relief he needs for his government loans but his private lenders haven’t been as accommodating? Five things.

1. Make an Airtight Case for Relief

Be prepared to prove that you’ve tightened your budget to the point that you’re earning as much as you can and have eliminated all discretionary expenditures. The lender may ask for your bank and credit card statements for verification.

2. Don’t Settle for Temporary Measures if Your Problem Is Anything but Temporary

Lenders and their loan-servicing agents prefer bandages to surgery. If the financial distress you’re experiencing is permanent in nature (lower-paying job or disability, for instance), press for a solution that speaks to your reality. Escalate the matter to a supervisor or manager if you meet resistance.

3. Pay Attention to the Structure

Some lenders offer hybrid restructures, where interest rates are reduced for a few months or years. Sure, the payment will decline for a while and the interest you’ll pay overall will be less, but take care to determine whether you can live with the higher payments later on. If not, reject the offer.

4. Focus on the Fees

Whenever possible, lenders will seek to collect as much as they can in fees for arranging the relief you need. Not only are fees another form of interest in this context, they also represent the surrender of cash—a resource that’s already in critically short supply.

5. Prepare a Counteroffer

More than anything else, if financial institutions are after principal recovery, why not begin the negotiations by offering to do just that? Continuing with the previous example, if you can afford to make 10 years’ worth of payments at the 15-year rate (which calculates to $322.38 per month), and if $30,000 worth of debt divided by 120 months is $250 per month, why not begin the negotiations at that level and “settle” for $322.38? The lender will end up earning 5.28% on its loan instead of 10% and you’ll end up paying $8,686 in interest as opposed to $17,574—roughly half.

Certainly, that’s not a great outcome for the lender, but when an unsecured loan is headed into default, from the institution’s perspective, cutting a crummy deal today sure beats the time, expense and uncertainty of dragging the matter through the courts tomorrow.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

More from Credit.com
How Long Will I Be Paying My Student Loans?How Student Loans Can Impact Your CreditHow to Consolidate Your Student LoansFinanceFinancial Aid […]

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.

[…]

Verify if you are loan worthy

You may have worked hard to put together money for the down payment of a particular loan. But unless a prospective lender thinks that you are loan-worthy via your Cibil report, your plans of getting access to easy credit may get squashed. So here’s the mantra you should know — the six C’s of credit.

Character

Your credit report is a reflection of whether or not you have good credit character. Good financial credit character is displayed by someone who meets his financial obligations on time such as credit card bills and other loan EMIs.

Even if you are sure that you are doing so, it is prudent to check your Cibil report at least once annually to see if everything is in order and your financial obligations appear as they exist in your credit report.

Capacity

When you make a loan application, your lender will ask you to submit a whole lot of income-related documents such as salary slips and IT returns.

This is to judge whether you have the ability to make a timely repayment of the loan. A bank will process your loan application only after it is convinced that you have enough cash left after paying off current fixed monthly financial obligations.

Cash flow

How much of your income is left once you meet your other debt obligations and your bills? This portion of your income stream will qualify as cash flow, and the lender needs to be assured that you have enough of it.

Capital

While assessing your loan eligibility, the lender will also look at your capital or the amount you are left with after you have met your debt obligations.

If you have a property in your name, it will work in your favour. The lenders need to be assured that you have enough capital to fall back on to be able to handle a new credit.

Collateral

Once again, your property, if you own any, can be shown as collateral when applying for a loan.

In case you are not able to meet debt repayments, the collateral will go under the possession of the bank which will sell it off to repay your loan.

Conditions

To assess your loan eligibility, the lender will scrutinise other conditions such the stability of employment. If you have been job hopping too often, instability will work against you.

A prospective lender will not be impressed by frequent jumps in your career.

Contributed by Creditvidya.com, an online educative tool to help customers stay on top of their credit

(This article was published on November 2, 2014)

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Belvedere Resources Ltd: Private Placement and Loan

VANCOUVER, BRITISH COLUMBIA–(Marketwired – Oct 15, 2014) – Belvedere Resources Ltd. (TSX VENTURE:BEL) (“Belvedere” or the “Company”) is proposing to undertake a non-brokered private placement to raise up to C$ 1 million through the issuance of up to 7,142,857 common shares of Belvedere at a price of C$ 0.14 per share. In addition, Zila Corporation, a company in which a director of Belvedere has a controlling interest, has agreed to lend C$ 200,000 to the Company (the “Loan”) for general working capital purposes. The Loan is to be repaid in cash within six months or upon completion of the private placement, whichever occurs first. The Loan is secured against the assets of the Company and is non-interest bearing. An arrangement fee of C$ 5,000 will be paid by the Company to the Lender in connection with the Loan.

The Loan will constitute a related party transaction under Multilateral Instrument 61-101 (“MI 61-101”). The transaction will be exempt from the formal valuation and minority shareholder approval requirements of MI 61?101, as the Company intends to rely on the exemptions found in sections 5.5(a) and 5.7(1)(a) of MI 61-101 on the basis that the fair market value of the transaction will not exceed 25% of Belvedere’s market capitalization.

The net proceeds from the private placement will be applied to repay the Loan and to the general working capital of the Company and development of mineral assets.

The private placement is subject to acceptance and approval by the TSX Venture Exchange.

BELVEDERE RESOURCES LTD.

David Pym, CEO; Suite #404, Vancouver World Trade Centre, 999 Canada Place, Vancouver, B.C. V6C 3E2, Canada

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Commodity MarketsFinance Contact:

Belvedere Resources Ltd.

David Pym

CEO

+1-604-844-2838

Belvedere Resources Ltd.

Steven Cuthill

CFO

+1-604-513-0007

www.belvedere-resources.com […]

Obtaining A High Risk Personal Loan – Payday Loans

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If you are a person who has bad credit you might find yourself in need of a loan at one time or another. When you have bad credit you will be stuck getting a high risk personal loan often times just to make ends meet. Other times the loan might be needed simply because you have an unexpected expense such as a medical bill or unexpected repair of some sort. It does not matter why you need a personal loan the fact is because you have bad credit you will have the option of a high-risk personal loan. This article will discuss the options that will be available to you when it comes to getting a loan such as this.

Finding A Lender

Finding a lender to lend you money if you have bad credit will be difficult especially if you do not have collateral to offer them. Once you do find a lender you will find that the loan you will be offered will have a very high interest rate and the amount of money you will be able to borrow will not be much. But believe it or not it is not hard to find a lender to lend you money when you have bad credit.

One of the first places you should turn to when you are in need of a loan is your own personal bank. By applying for a loan where you do your every day banking the no credit lender will be able to see how you handle your day-to-day finances. This is not a guarantee that you will be offered a loan and if you do the interest rate that will be offered will be very high. But you might still get the money you need.

The other popular place to find a high-risk personal loan is through the Internet. Online lenders are more likely to lend you money if you have bad credit than a traditional lender. It is important to mention that even though these loans are a little easier to obtain they will still come with high interest rates and possibly a low dollar amount to be given.

Repairing Your Credit

Just because you have bad credit it does not mean that your credit is damaged for life. When you obtain a high-risk personal loan this could be the answer to your road to credit recovery. By making your payments on time every time and paying your loan off in full you could see that your credit score and credit history will improve over time therefore helping to repair your credit.

Conclusion

High-risk loans might be a little pricey when you are approved for one but it can give you the money that you need when you need it and it can also be used to repair your credit. You should do your research when shopping for a loan to be sure that you are getting the best loan available to you for your needs. Be sure to do the comparison to be sure that you are not getting yourself into a larger financial debt.

[…]

What are payday loans? | Miller & Miller Law, LLC

Living paycheck to paycheck means that an unexpected expense could make it difficult to pay rent, car payments or minimum credit card payments. And we all know that failing to pay these bills has serious consequences such as eviction, auto repossession and declined credit cards. That’s why this desperate situation causes many people to turn to payday loans for help.

Payday loans are short-term loans — typically for $500 or less — that are typically due to be paid back on the date of the borrowers next paycheck. In order to qualify for these loans, the borrower must provide the lender with a check for the full balance of the loan or access to his or her checking account so that the lender has the ability to garnish the loan amount when it is due.

The loans also come with a fee that is usually 10 to 30 percent of the amount borrowed. “Renewals” or “rollovers” are common with payday loans, and they allow the loans to be paid back at a later date after more interest and/or fees are charged. These options make it possible to owe hundreds of dollars in fees in addition to the original loan amount.

For these reasons and several others, consumer protection agencies warn the public to be weary of payday loans and to avoid them, if possible. Officials also keep a close watch on payday loan operators to make sure that they are not violating the law or the rights of consumers.

Check back later this week to read about a class action lawsuit that is pending against an online payday loan provider.

[…]

Getting A Car Title Loan

Strapped for cash? Even financially stable families may sometimes find themselves in a situation where they need cash fast. Unforeseen events can strip a person’s savings or continued financial difficulties may cause a family to look for any means of finding a short-term loan.

You’ve probably heard of payday loans – the loan that has caught the attention of federal and state lawmakers in recent years (see Beware of Payday Loans) – but that’s not your only option.

Car title loans are similar to payday loans except that you have to pledge your car as collateral. It’s not just a pledge on paper. You actually give the lender your car title. Some may even ask for a second set of keys. If you don’t pay, the lender will take your car and sell it to pay back the loan.

How a Car Title Loan Works

You can get a car title loan either online or from a local lender. Complete the application, supply the required documentation – including a car title without any liens against it – sign the paperwork and the loan is yours. In most cases the lender won’t perform a credit check.

While it may be easy to get a car title loan, think hard before you ask for one: For starters, look at the interest rate. Some states limit the interest rate of car title loans to 30% per year, but others may allow lenders to charge rates of 25% or more per month. This equates to an APR, the interest rate expressed in an annual rate, of more than 300%. Along with interest charges, the lender may tack on additional fees. According to the Center for Responsible Lending, loan rates are often 20 to 30 times higher than credit card rates.

Car title loans are short-term – often 30 days. If you can’t repay the loan, it will probably be rolled over. The average car title loan will be rolled over eight times. If you hold the car title loan for one year at a 300% APR, you will pay about $1,111 on a $500 loan not accounting for fees.

Not All States Allow Car Title Lending

Only 21 states allow car title lending, but 16 allow for lending at triple-digit APRs. Some lenders make loans in certain states due to loopholes in the law while others change the terms of the loan to fit state law. Before looking for a title loan, either online or at a physical location, learn the laws of your state. Look at this graphic to see if your state allows car title loans.

Before You Take Out a Car Title Loan

First, exhaust every other possible source of short-term cash. You are risking your car – for high interest rates and fees – to get a loan worth far less than your car. One study showed that 60% of New Mexico car-title borrowers had their car repossessed as a result in the year the data were gathered.

Second, read everything in detail. Know the interest rate, the fees, repayment and rollover policies, and the laws in your state governing car title loans

Finally, don’t borrow more than you’re sure you can pay back in 30 days. Don’t allow the loan to roll over.

The Bottom Line

Before getting a car title loan, consider any other way of raising money first. Consumer.gov advises checking with your bank or credit union for a short-term loan, negotiating with your creditors, borrowing from family members, or using money saved for other purposes.

The terms of car title loans are such that you should consider one a last resort.

[…]

+1 Payday Loans in Ponca City cash up $1000 now | Online Payday …

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Using Payday cash advances to Help You Get By way of a Fiscal Parking brake

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Payday advances are temporary payday advances on your own wage. They’re loans that will be borrowed for just a short period of time only. Most borrowers just have the money to get a week or two, until they receive your regular wage. This post offers top tips on how to use this sort of credit that will help you in an emergency when you have depletes cash.

Payday loans undoubtedly are a formal credit facility and that is offered by a private lender. Private lenders who offer Pay day loans should have the required licences. You should check your lender is registered and licenced by checking their website. If you are unsure, you are able to ask the financial institution for details of their credentials.

Ponca City An individual will be pleased with the provider you have decided, you ought to spending some time reading around the loans they offer. Browse the stipulations with the loan and ensure you completely understand your rights and responsibilities as the borrower. Development of the child items you because borrower, are investing. Your rights as the borrower make reference to what your lender will do in your case.

As being the borrower, after you accept the money and sign the financial lending agreement, you might be promising to repay the lending company the whole Cost of Credit on the agreed repayment date. You happen to be also agreeing to abide by the lender’s stipulations which will include any extra fees if you’re not able to make your repayment for the set date. Your lender is committed to supplying you with the credit, with interest, for the agreed period. They’re going to keep your information safe and protect your privacy being a valued customer.

Ponca City long term payday loan In the event you successfully repay your loan as agreed, there won’t be any issue, and will also be capable to carry on with every day life and finances as normal. If however, you might be unable to honour your credit agreement, you could possibly incur additional fines or fees. If you feel you won’t have the ability to repay your loan, you must speak to your lender with the earliest to talk about the options and arrange when you are able increase the risk for payment.

Ponca City To find the absolute best at a Payday loan, you must calculate how much you can afford to repay of course your other monthly expenses are dealt with. This ‘disposable’ earnings are what you might comfortably use to financing. By calculating the complete Tariff of Credit, you’ll know precisely the amount you can afford to gain access to.

It is important to try and do is take your time, consider the options, and do not rush in any type of credit. Should you locate lender who attemptedto sell that you loan or harasses you, chances are they’ll needs to be avoided. Lenders should treat you with respect and courtesy. The top lenders will answer your queries and do all they could to assist you. This will include aiding you with the form or groing through the conditions and terms with you.

It has to be said however, that almost all applicants complete the contour online and submit it independently. And most lenders will be able to successfully borrow the funds needed, then repay the financing, and never having to contact the lending company directly. But when you are dealing with a trusted and reputable lender, the choice is usually there for you personally if you need it.

Ponca City payday loans omaha ne Cash advance loans don’t take on long eighteen , you are. You should only desire a matter of minutes to finish the approval. Although process is quick and easy, lenders go very seriously. The job will be processed carefully plus the information stored securely, just as it might be which has a bank or any other financial institution.

If you would like an online payday loan, choose your lender carefully then complete the appliance accurately. Figure out how much you can afford to borrow make sure you create the repayment within the agreed date. Should you this, it is possible to obtain the best from a Payday advance and employ this type of credit that will help you when you need it most.

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[…]

Copper North Announces Loan Conversion

VANCOUVER, BRITISH COLUMBIA–(Marketwired – Jun 17, 2014) – Copper North Mining Corp. (“Copper North” or the “Company”) (TSX VENTURE:COL) announces that it will repay the loan (the “Loan”) provided by an insider of the Company (the “Lender”) through a combination of shares and cash as part of its on-going efforts to reduce the Company’s outstanding debt. The conversion of the Loan to equity allows the Company to significantly improve its balance sheet while spending a minimal amount of cash.

As announced on May 8, 2013, the Lender provided Copper North with the $300,000 Loan that carried an interest rate of eight percent (8%) per year. In consideration of the risk taken by the Lender, the Lender was also entitled to a bonus of shares equal to 20% of the principal amount of the Loan.

In accordance with the loan agreement, the Company will repay all amounts due to the Lender under the Loan with a combination of cash and shares. The Company will pay $43,000 in cash and issue 6,860,000 common shares at a deemed price of $0.05 per share to settle amounts owing to the Lender for principal, interest and bonus shares. The issuance of shares is subject to approval by the TSX Venture Exchange. The shares will be subject to a four month and one day hold.

On behalf of the Board of Directors,

Dr. Harlan D. Meade, President, CEO, and Director

About Copper North

Copper North is a Canadian mineral exploration and development company. Copper North’s assets include the Carmacks Copper Project located in the Yukon, and the Redstone Property located in the Northwest Territories. Copper North trades on the TSX Venture Exchange under the symbol COL.

Cautionary Note Regarding Forward-Looking Information

This news release includes certain forward-looking information or forward-looking statements (collectively, “Forward-Looking Information”) for the purposes of applicable securities laws. Forward-Looking Information includes, but is not limited to, statements with respect to the Loan and the repayment thereof. In certain cases, Forward-Looking Information can be identified by the use of words and phrases such as “will”, “plans” or “expects”. These statements address future events and conditions and, as such, involve known and unknown risk, uncertainties and other factors, which may cause the actual results to differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company’s expectations include, among others, regulatory approvals and availability of capital. In making the forward-looking statements, the Company has applied several material assumptions, including, but not limited to, the assumptions that the Company will obtain regulatory approval. Although the Company has attempted to identify important factors that could affect the Company and may cause actual events to differ materially from those described herein, there may be other factors that cause events not to be as anticipated or intended. There can be no assurance that Forward-Looking Information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on Forward-Looking Information. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise except as otherwise required by applicable securities legislation.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Commodity MarketsStocks & OfferingsTSX Venture Exchange Contact:

Copper North Mining Corp.

Dr. Harlan Meade

President and CEO

604.638.2505

Copper North Mining Corp.

Julien Francois

Chief Financial Officer

604.638.2505

info@coppernorthmining.com
www.coppernorthmining.com […]