Despite the many great advantages that can be gained through the use of seller carry bank financing, not many people have a great deal of knowledge about this particular financial arrangement. Simply put, this arrangement is usually made between a buyer and seller, most commonly for large sales such as a house or car. If the buyer cannot produce the money right away, the seller can choose to make an arrangement in which they take out another mortgage on the home or other financial arrangement on the item in question and will in return receive a certain amount of the payment on a (usually) monthly basis for an agreed-upon period of time until the purchasing party can make other financial arrangements for the purchase in question. However, this seems risky for the seller. Why do investors use this payment method?
First, sellers utilizing seller carry back financing can charge much higher interest rates than those found in banks or other traditional lending companies. Therefore, by instituting this payment method (even for a short period of time) they can increase their overall profits by a considerable amount. Furthermore, the seller usually retains the security of the property in question. Therefore, they have the financial stability of the home or other item itself to fall back on if the buyer fails to uphold their end of the bargain. If the deal goes bad, the seller will still have the option to sell the home, property or other item to make up for the money invested beforehand
Expanding on this security, if for any reason the seller needs their money immediately (for illness, surgery or any other critical and sudden needs), they do have options. Sellers have the chance to purchase the mortgage in question. By examining several figures such as the remaining payments, the current interest rates and the number of years remaining on the mortgage in question, the investor can figure out exactly how much money they will gain on in the end as well as how much they can earn on the spot.
There are many reasons why investors would choose to use seller carry back financing. Overall, this method is profitable, and provides certain safeguards against many risks which may be found in similar investment strategies. Furthermore, those new to investing can (with a little leadership from a more experienced investor) easily enter into this kind of arrangement in the current market. It provides a lucrative arrangement for newbies and professionals alike, and ensures a security which few investment organizations offer to anyone.
After you’ve found the perfect piece of land to build on, the next natural step is to get financing. Securing money for undeveloped property is different from other types of financing, though. Before you start shopping around to find the best financial deal, read this introduction to learn the ins and outs of getting a loan.
What Kind of Loan do You Need?
The first thing to determine when financing land is what kind of loan you need. You may get a loan for either a lot or for land. If your property is vacant and undeveloped, you typically need a land loan; the difference is in how finished your property is. The size of your land may also determine what kind of loan you may apply for, as some large, undeveloped properties are more likely to be classified as vacant lots. Terms for land loans are sometimes more strict because a soon-to-be-constructed new home cannot be used as collateral. However, planning to build a commercial building or home makes it simpler to secure financing.
Are the Terms Different?
The terms for land loans are often different than those of other loans. The property itself serves as the collateral, making land loans a risky investment for lenders. Because of this, interest rates and down payments are sometimes higher you might find with other loans. Down payments are often required to be at least 20 percent and at times range up to 50 percent if you don’t have plans for immediate development. Land loans also tend to be shorter than the average loan, with lenders giving you between a few months and a few years to pay off your loans. This is because your lender is planning on your land being developed relatively soon. Additionally, land loans are frequently amortized over shorter time periods.
How Do You Get Them?
You have several different options for getting a loan for your undeveloped property. If you plan to develop your land immediately, you might seek financing through a bank or credit union. The offered rates are usually competitive; however, they may not finance land over certain acreages. Another option is seller financing. The terms of these loans are between you and the previous land owner; this is typically short-term financing. Because seller financing terms can differ, you may want to have an attorney’s advice if you choose to go this route. To increase your chances of securing funding, take the time to show your lender that you have a workable plan for your land and that it meets all zoning requirements.
Financing your undeveloped property doesn’t have to be difficult. You simply need to know where to start.
Whether you’re growing your small business, looking to buy out the owners of the business you manage, or just hoping to restructure your capital, private equity financing is a solid solution to inject funding into your business. This type of financing works by allowing an investment firm to put money into a privately traded company, in exchange for a stake in the company. One of the most common forms of this kind of financing is mezzanine financing. Mezzanine financing is a subordinate debt. That means that the debt you owe to the investors gets paid off after the primary debtors in the event of bankruptcy. This arrangement allows you to get the capital you need without leveraging your assets as collateral.
Those hoping to grow a business know that you need growth capital to do so. Banks may be unwilling to lend growth capital unless you have a very long history of good financial decisions behind you. Private equity financing might be the solution you need. Those seeking out growth capital specifically would do well to look to mezzanine financing, because it allows you to obtain funding while offering rights to convert the debt to equity interest or ownership in the future. Once you’ve grown your company using the capital that’s provided, the equity interest will look very different. The collateral requirements for this kind of financing are minimal, making it ideal for a small business.
A management buyout can be complicated if not done properly. You want to retain the right to provide the direction for the company, as you have done as the management of the business, but you need the capital to buy the business from its current owners. Mezzanine financing allows you to stay in control while granting you the funding to complete the purchase. Investors are aware that as the current leadership of the company, you know what it takes to keep the business stable, so use that experience to fund your purchase.
The saying goes “you need money to make money,” but in many cases you need money to move money, too. You can use private equity financing to restructure your capital arrangement. Restructuring capital allows shareholders to change voting rights, decrease expenses, improve efficiency and more. If your business has grown significantly since inception, it might be time to examine your capital structure and determine if using private equity financing to reorganize and optimize is the right move for you. As the business grows, so do its needs. You can be sure to meet those needs properly via a restructuring funded by mezzanine financing.
If you own any rental properties, you’ll need good management to make the most out of them. A well-managed property appreciates in value faster, as well as earning you money from leasing and other sources. Remember these tips when selecting the best company to manage your holdings.
Property management covers a wide range of responsibilities. There are four primary duties handled by a managing company. First, they handle the minutiae of the rental agreements, accepting rent or contracting leases. They also screen applicants, evaluating their credit history and general ability to pay. Managers are responsible for maintenance of a property, usually within the budget restrictions laid down by the property owner. Lastly, they must maintain tax and other legal records that arise in the course of their other duties.
To find a property management company capable of handling these diverse obligations requires a careful examination of the candidate companies. Before hiring a manager, property owners should conduct interviews to evaluate experience and competency. There are multiple factors which should be considered. Some of the basic information needed to make a decision is whether the company is licensed to manage properties, and what kinds of properties do they generally deal with. For instance, a company that usually manages single-family homes is not usually the best choice if most of your real estate holdings are commercial or apartment complexes.
You should also test the management company’s knowledge of the field. Asking about vacancy rates, what local areas they consider to be good rental markets, and what rental properties they personally own can tell you how well they really comprehend the business. Don’t be embarrassed to ask how they would improve your property’s profits; you’re hiring them to make you money, so you need to know how skilled they will be at accomplishing this.
Before you enter into a contract with a property management company, make sure you understand their financial handling. Ask to see copies of paperwork and lease agreements, and clarify how you’ll receive rent, whether by direct deposit, check or other method. Examine their fee structure as well, and find out whether maintenance and repairs will be paid at cost or cost-plus. If you have any questions or concerns about the contract, clarify before you sign, assuring that both parties have a clear understanding of the respective responsibilities entailed by the document.
Selecting the right company to manage your rental properties is important for your profit margin. By asking the right questions, you can find a company with the most suitable abilities in property management for your holdings.
There are many considerations entrepreneurs make when running their businesses, but picking office space probably ranks as one of the most important. Until office space is established, entrepreneurs may feel they are caught in a state of flux, and it is hard to keep the business moving forward. In many cases, they deem it more appropriate to consider leasing office space rather than buying it.
They Find the Premises Are Suitable, But Not Ideal
Although many lease agreements are signed for one-year terms, it is also possible for entrepreneurs to work out lease agreements with their landlords that are much shorter in duration. Therefore, leases offer much more flexibility than purchases do, because entrepreneurs can just decide not to re-sign agreements once the initial terms run out if they are not satisfied, or if they find better options.
They Can’t Afford to Own Right Now
A property purchase requires an entrepreneur to have access to a lot of funding. Furthermore, because office space is such a major purchase, a smart entrepreneur would want to be in a very stable position before deciding to buy.
However, especially in the early stages of running a business, entrepreneurs find they cannot comfortably commit to property ownership. Not only is the price of property too much for them to bear, but many also cannot cope with maintenance costs. One perk of leasing office space is that an outside company usually takes care of keeping the property maintained, so entrepreneurs don’t have to shell out money when things break down.
They Are New to the Area
Some entrepreneurs get started in cities that are largely unfamiliar to them because they have good information the locations are ripe for whatever they’re offering. Before making a property purchase, it’s crucial to understand things like crime rates, economic trends and the amount of business growth in the community.
Some of those factors are impossible to understand fully without extensive first-hand experience. With that in mind, leasing office space is a good choice for entrepreneurs that just want to get a feel for an area without committing to definitely doing business there for the foreseeable future.
Businesses that are able to adjust their operations to cope with challenges are often best able to weather those storms. However, a property purchase can be very limiting if an entrepreneur discovers an unexpected downside and no longer wants to stay in the area.
These are just some of the numerous reasons some entrepreneurs have decided it’s better to lease property than own it. If you aren’t ready to make a sizeable investment, perhaps you’ll follow their lead.
Every medical practice is in existence because the doctor or doctors involved wanted to help people. The people that need their help the most are the ones that have trouble paying the high deductible that is imposed by their health insurance company. If you’re not getting paid the deductible amount, you are in essence giving your patients credit. In order to avoid closing down your practice because of non-payment from your patients, you may want to set up some sort of patient financing system for them.
For over 20 years, the credit card industry has been issuing credit cards that have been specifically created to pay the medical expenses that patients incur. There was a time when only very expensive procedures like orthodontics, plastic surgery, and eye surgery were paid for with medical credit cards. Currently, there are over 175,000 practices that use credit card financing. Unfortunately, not everyone is eligible to receive this card. Some people have been turned down because of their low FICO score. Their low scores have been attributed to the recession and unemployment. After being turned down for this type of patient financing, some people have decided not to see a doctor even though they need to.
People that have qualified for the card are having a hard time paying their bill because of the high-interest rate, which is 10% higher than regular credit cards. Some are saying that the terms of the credit card weren’t fully explained and that people weren’t informed that there were ways that they could steer clear of the penalties, fees, and deferred interest. Others that are struggling to pay their medical bills will end up having to declare bankruptcy. The need for some sort of a patient financing arrangement that won’t send people to the poorhouse is greatly needed.
If you are a physician with your own practice, you are also a businessperson. In order to continue helping people that need it, you must also make sure that your business doesn’t have to close its doors because you weren’t paid for your services. This means that having a payment system in place might be a prudent business strategy. Your practice could set up a billing system that allowed for monthly deductions from your patient’s debit or credit card. Your patients could use their own credit cards that carry a lower interest rate. The billing system would send out confirmation emails when the payments were deducted.
As a doctor, your desire to help those in need cannot be sidelined by your own unpaid bills. When a good patient financing system is in place, both you and your patients will benefit.
Construction companies are choosing to lease heavy equipment at a greater frequency these days, and for good reason. There are a number of advantages to leasing when compared to buying equipment outright, especially for businesses that are just starting out. If you are in the process of deciding whether leasing or buying is a better choice, here are a few reasons why some companies are choosing to lease and why they believe it is better for their bottom line.
More companies are leasing heavy equipment because it offers them a tax break. For example, monthly payments for leasing can be deducted as operating expenses at the end of the year. This means that if you lease heavy equipment at an operating fee of $2,500 a month, this will result in a total deduction of $25,020 on your business taxes. In contrast, buying or renting equipment does not allow you to include such deductions.
Because heavy equipment is subject to obsolescence, companies are turning to leasing so that they can turn in older models at the end of their lease in favor of new ones that include upgraded features and allow their employees to work more efficiently. If a machine or large vehicle should become obsolete or no longer meet construction safety standards, the company leasing it can turn it in and adjust the remainder of the cost toward the lease of an updated model. Equipment that was purchased outright and is now obsolete will be difficult to sell, resulting in a loss of money for the company.
Business owners who have only just launched their own construction companies lease heavy equipment because the payments are less of a drain on working capital. For example, if the company is in need of a new cement truck, buying one will require a sizeable down payment and other fees that are connected with buying a vehicle, and the monthly payments are typically higher as well. Companies that choose leasing instead will avoid having to make large down payments, make lower monthly payments that can be adjusted during times when construction work slows and allows them to save working capital.
The decision to lease heavy equipment is one that must be made depending on your company’s specific needs and goals. However, there are many advantages to leasing that may allow you to save time and money. Before you lease, shop around for the best interest rates and look into which lenders offer flexible terms that will allow your company to grow.
Merchant cash advances are a type of funding designed for businesses that are not loans, but cash advances that have a unique application process, set of qualifications and repayment. In exchange for a percentage of their future revenue from credit cards, merchant cash advance, or MCA, providers offer a lump sum payment to business owners in need of increased capital.
What Types of Businesses Can Benefit From Merchant Cash Advances?
Businesses that rely on credit card sales for a large portion of their sales can usually qualify for an MCA. MCAs are designed for businesses that need quick access to cash for their business and may not qualify for a traditional loan from a bank due to poor credit or a lack of collateral. Other owners may prefer the payment plan for MCAs, which are directly linked to credit card sales.
What Can Be Done With an MCA?
There may be several instances when a business owner may want to apply for an MCA. If a company is experiencing growth, merchant cash advances can maintain cash flow even during hectic times. It is difficult for a business to grow without working capital to make it happen. Another way to use an MCA is for anticipated times of high need. If your business experiences a busy time of year, you can get money to pay for extra staff or inventory. A great thing about advances is that there are little or no limits on how you can use them to help your business, whether it is for payroll, inventory, implementation of new concepts, expansion, remodeling or something else.
Merchant cash advances are a relatively new funding option for business owners. They have become widely used because of the advantages they have over traditional loans. A big reason that business owners use MCAs is their approval process. Owners can apply for an advance online, without the need to mail, fax or scan any paperwork. The process is simple, only consisting of a few forms. Turnaround time for approval is fast as well, and funds can usually be delivered in a week or so. Qualified applicants do not have to go through an extensive credit check, nor do they need to use personal assets as collateral. Repayment is based on sales. Providers withhold a percentage of all credit card sales until the balance is repaid. Payment is dependent on revenue.
It is no wonder that merchant cash advances are becoming a more popular choice with small business owners, giving them the capital the need to grow their companies.
Like a water wheel requires a constant stream of water to keep turning, so too does a shipping or freight company need steady revenue to keep its fleet moving. However, money may not always be on hand even when you’re working constantly. The reason is that the invoices you give your customers aren’t often paid immediately. Most of the time, there is a delay, which can be as long as weeks or months, before you receive payment. This time waiting for your owed reimbursement may mean that you won’t have the funds to handle large shipment requests, depriving you of business.
One solution to this problem that is growing in popularity is truck factoring. Factoring is a financial transaction in which a business sells its unpaid accounts to a third party. In the case of shipping companies, this means that you can get funds for those invoices right away, allowing you to afford taking on new accounts.
This practice affords a number of benefits. Primary among these is speed of service. Rather than having to wait for an invoice to be paid, you will have the cash on hand immediately, giving your company the flexibility to accept new contracts and grow the business more quickly than if you had to wait for your customers to pay you off. It also means you can offer your customers payment plans tailored to their circumstances instead of your own, increasing the likelihood of future business deals with them. A
Another advantage of truck factoring is ease of implementation. It can be difficult and expensive to set up the infrastructure for collection. Some factoring companies offer back office support, taking on the billing activity for your company and saving you the time and effort of managing it yourself. It’s also easier to get approval for factoring than for traditional loans. While most standard lending institutions look at a company’s credit, which may not yet be established especially for a newer company, in factoring what matters is whether your customers have good credit. You also don’t need to surrender any of the company’s equity for factoring, the way you may possibly have to do in the case of a regular loan.
With truck factoring, you can get the funds your company needs in a timely fashion, letting you continue to take on business without any delays or interruptions, and can avoid the expenses of handling invoice collection. Taking advantage of these benefits will allow you to focus on the more important aspects of developing your shipping business.
Lending has become a competitive business as entrepreneurs struggle to find ways to begin or sustain their ventures within the United States’ rebounding economy. Rumor has it that big banks don’t issue small business loans, and for the most part that isn’t true. This remains a popular way for smaller companies to secure funding when they qualify. When they don’t, however, there are plenty of other sources of financing available to the small business community.
Small Business Administration
If you don’t qualify for a bank loan, the SBA has different financing that is suited to mom-and-pop ventures, including grants that do not require pay back. For a loan, the process is fairly straightforward, and the money lent usually comes with a low interest rate. Remittance is long-term, giving the business owner more time if needed to pay back the borrowed funds.
Small business loans have gone alternative, and many owners are looking at options such as crowdfunding, angel investing, and nonprofit organizations that offer microloans to secure their much-needed financing. These financing types give entrepreneurs the cash flow they need to start up their venture or cover their expansion, and in some cases, such as crowdfunding, the money might not need to be paid back. If it does, the financing comes in at much lower interest rates than other forms of alternative lending, such as merchant cash advances and peer-to-peer lending.
Many small business owners finance their dreams themselves, whether through personal credit cards or other assets or via family and friends. One advantage to using your personal credit card for business necessities is that your purchases will be protected; business credit cards do not offer consumer protection plans.
Other assets include personal savings, which might be tapping into your nest egg but is also financing your needs in full without the need to pay back small business loans with interest. If you have family and friends willing to finance your venture, you might find the money coming to you as a gift, or at least with a reduced interest rate compared to bank and alternative loans.
Small business loans are ripe for the taking; it just depends on your personal preferences in financing your business. You might be a traditionalist who wouldn’t consider anything other than a big-bank loan, or you might be a rebel ready to crowdfund your dreams to reality. Whatever way you choose to finance your business, make sure you keep your eye on the prize and turn your dream into a profitable venture.