Small Loans – Tips for Newcomers on Small Loans
By Jack Zwicker

Jack Zwicker is a business and real estate lawyer, negotiator, and lecturer and practises in Markham, Ontario.

As a recent immigrant to Canada, you may be looking at setting up a new business or buying an existing one. No matter which approach you take, you will likely need financing to buy inventory and equipment. And whether you buy or lease the premises from which you intend to operate, you will probably have to spend some money in improving its appearance so as to make it attractive to your customers.

Small Loans Tips

If you are more comfortable investing your own funds without depending upon on any family members for small loans, you should be aware that business financing is available from chartered banks, credit unions, caisses populaires, and other financial institutions such as the Business Development Bank of Canada, a federal crown corporation, under the Canada Small Business Financing Program. In fact, there are more than 1,500 lenders with over 15,000 branches across Canada who can assist in making small loans. These lenders make all of the required credit decisions,provide the loan funds, and ensure through their own lawyers that adequate security is taken to support these small loans.

small loans are available to investors in both new and existing ‘for profit’ businesses whose estimated annual revenues do not exceed $5,000,000 in the first year of the small loans. However, non-profit clubs, charitable businesses, and farming businesses do not qualify.

Small Loans

Canada Small Business Financing loans or CSBF’s are available to finance up to 90 percent of the cost of purchasing or improving real estate; the purchase of ‘leasehold improvements’ or the cost of making improvements to existing leasehold improvements, and the purchase or improvement of new or used equipment. Under this program, the maximum loan is capped at $250,000. In addition, CSBF loans are available to qualified businesses to assist in ‘leasing’ new or used equipment, should that option make better financial sense than buying the equipment. The rates of interest which lenders may charge are limited to no more than three percent above bank prime on loans with a floating rate, or no more than three percent above the lender’s residential fixed mortgage or small loans rate based upon the term of the small loans.

Most small Canadian businesses that are starting up will not reach the $5,000,000, the first year revenue limit, which means that very few small loans will not qualify for financing. And because the Government of Canada guarantees 85 percent of the loan, banks, credit unions, caisses populaires, and similar financial institutions are comfortable extending these loans in the knowledge that the federal government will guarantee 85 percent of the lender’s losses.

Before dealing with your lender, you will need to have incorporated a ‘for profit’ company. Under the CSBF program, small loans can be made only to incorporated companies and not to individuals or unincorporated partnerships. Because the corporation is always the borrower, the small loans will be advanced to it and the corporation will be required to extend its own guarantee. Should the corporation purchase real estate from which the business is to operate, the lender will insist upon registering a mortgage against that land. As well, you and any other shareholders in the corporation will be required to personally guarantee 25 percent of the small loans amount.

Small Loans

You should also be aware that any CSBF’s involve a loan administration fee of two percent which is charged at the time that the loan is advanced and security registered. These fees help to finance the program.

While small loans financing is readily available to investors in new or existing businesses, it is important to prepare a detailed business plan, to incorporate a ‘for profit company’, and to be ready to supply the lender with detailed information regarding the assets over which security will be taken, all of which will take time. The lender will arrange for an appraisal of the assets that are to be secured. And the small loans application process, the appraisals and the legal work that the lender’s lawyer has to complete are not done overnight. A typical CSBF loan application may require several months from start to finish. And you will need to retain your own lawyer to work along with the lender’s lawyer in completing the small loans documentation, and in obtaining the small loans advance.

So it is important to leave yourself sufficient lead time. Be careful then not to commit to any premature closing dates either with the seller of an existing business, or of real estate, or with a landlord without first ensuring when CSBF loan funds will actually be available to you.

Find more about this small loans articel from http://www.cnmag.ca/issue-14/175-tips-for-newcomers-on-small-business-loans or just click Small Loans to go there

Small Loans – Top Tips On How To Get Small Loans

Small Loans – 10 tips to snag a mortgage loan in 2011  

By Holden Lewis

Mortgage lenders tightened their standards after the subprime mortgage mess and that won’t change in the coming year. But there are mortgage loans to be had. Follow these tips in 2011 to secure a mortgage loan at an interest rate and under terms that are right for you.

Small Loans – 10 tips :

 Small Loans - Have the right credit score

The best combination of interest rate and points requires a higher credit score than in the past. Before the crisis, the best mortgage loans or small loans came with credit score of 720. Then the industry went back to basics. Now the best deals often need a 740 credit score.

  Small Loans - Protect and preserve your credit

Multiple credit inquiries will cause your credit score to fall. For that reason, some would-be borrowers are wary of shopping around for a mortgage loan or small loans. They worry that if two or more lenders pull credit reports, their scores will go down. But the effect of rate-shopping is more complicated than that.

Small Loans

When mortgage lenders make multiple credit inquiries within a few weeks of one another, those multiple inquiries are treated as one. Yes, it will cause the score to drop. But the hit is likely to be minor because multiple inquiries are treated as one.

One credit-scoring method treats all mortgage credit inquiries made within 45 days as one inquiry; an older, less-generous method lumps together all mortgage credit inquiries made within just 14 days.

 Small Loans - Shop Around

The interest rate is important, but there are other costs to consider, such as discount points and even the type of mortgage loan or small loans. When shopping for best rates, compare combinations of discount points and loan or small loans types.

For example, if your best guess is that you’ll live in the house for eight years before moving, compare the total fees and monthly payments that you would make under three or four different loan deals. Ask yourself how much it would cost to pay zero discount points and get a higher interest rate compared to paying discount points in exchange for lower rates? What about a 5/1 or 7/1 adjustable-rate mortgage?

 Small Loans - Know your borrowing limit

Whether or not you get an FHA-insured mortgage loan, let the Federal Housing Administration be your guide to how much debt to take on.

For most borrowers, the FHA caps house payments at 31 percent of gross (pretax) monthly income. If you earn the median household income of about $4,200 per month before taxes, then your house payment — principal, interest, taxes, insurance and association dues — should be no more than 31 percent of that, or $1,302.

 Small Loans - Don’t reset the calendar to 30 years

When refinancing a 30-year mortgage loan, many borrowers restart from the beginning, scheduling the payments so they pay off the loan in 30 years. You don’t have to do it that way. When you refinance a 30-year loan that you’ve had for five years, pay off the new loan in 25 years. Just ask the lender to amortize the loan for the remaining period of the old loan. Bankrate.com’s mortgage payoff calculator can help.

 Small Loans - Consider a no-closing-cost refi

You’re fortunate enough to have positive equity, but you don’t have a lot of cash lying around. If you think that means you can’t refinance, think again. You might be able to refinance the mortgage loan yet pay little out of pocket in a no-closing-costs refi.The lender doesn’t eat the closing costs out of a sense of generosity. After all, we are talking about a bank. With a no-closing-cost loan, the bank charges a slightly higher rate. You end up paying closing costs over time, instead of all at once.

 Small Loans - Small down payment? See the feds

Most lenders require borrowers to have down payments of at least 10 percent of the home’s price. In the case of refinances, lenders want borrowers to have at least 10 percent equity. That leaves out a lot of borrowers and refinancers. But there are options for people without much savings or equity.For borrowers with good credit, the FHA requires a down payment (or equity) of 3.5 percent.

Small Loans

The Department of Agriculture’s rural development program guarantees mortgage loans and small loans with zero down payment. Those loans are limited to designated rural areas. The Department of Veterans Affairs offers zero-down mortgages for qualified veterans.

 Small Loans - Small loan? Act early

This tip is based on the Dodd-Frank Wall Street Reform and Consumer Protection Act and concerns mortgage loans or small loans of a relatively small amount of less than $100,000.New restrictions on how loan officers are paid go into effect April 1, 2011. The law forbids lenders from basing loan officer compensation on interest rates or other loan terms. Essentially, a broker or loan officer will be able to earn more money only by lending more money. As an unintended consequence, loan officers are likely to chase bigger loans, and they won’t want to spend as much time working on smaller loans. For borrowers getting small mortgages or small loans, customer service could suffer.

Some loan officers and brokers will be conscientious and will treat customers equally, regardless of loan size. But keep the regulation in mind.

 Small Loans - Make an extra payment any time of the year

You’ve heard that making an extra mortgage payment at the end of each year will shorten the repayment time. That’s true. But the extra payment doesn’t have to come at year’s end. An extra payment is effective any time of the year — the important thing is to pay it consistently.If money is tight during holiday season, maybe it would feel less painful to make the extra payment after receiving a tax refund, or after an annual bonus, or at some other time of year.

 Small Loans - Behind on your house payments? See a counselor

Delinquent homeowners who receive HUD-certified foreclosure counseling are more likely to keep their houses and not lose them to foreclosure, according to a study commissioned by NeighborWorks America, a national network of more than 240 community development and affordable housing organizations, based in Washington, D.C. When late borrowers get counseling, they are more likely to get a mortgage modification and their payments are reduced more.

Small Loans

Read more: 10 tips to snag a mortgage loan in 2011 http://www.bankrate.com/finance/mortgages/10-tips-to-snag-a-mortgage-loan-in-2011-1.aspx#ixzz1ci4mbsSR or you can just click Small Loans to get there.

Small Loans – 6 Tips For Getting A Small Business Loan

The loan underwriting process is becoming more demanding for small businesses, and it’s essential for any start-up or those wishing to expand to be diligent in knowing all the ins and outs of getting a  small loans. Heading into 2011, there are some expert tips that can give any small company an advantage in the lending market. Here are the top six suggestions from industry professionals for getting access to the cash you need to fund your small business. (Incorporating these steps will help your business thrive in a competitive market. See In Small Business, Success Is Spelled With 5 “C”s.)

Small Loans TUTORIAL: Budgeting Basics

1. Small Loans – don’t Quit Your Day Job
Helena Hauk, a business consultant who was recently named the SBA Financial Services Champion for her role in facilitating over $20 million in SBA loans in 2010, has states that “lenders are looking for a secondary source of repayment.” She suggests that it may be wise for the borrower or spouse to keep their day job for covering their personal expenses, and that the lender may want to see that day-job income in addition to a separate source used to repay the business loan.

2. Small Loans - Offer Something of Value

The days of getting something for nothing are gone, making it necessary for  small loans applicants to have a significant source of collateral before they secure a loan. Helena emphasizes the importance of having it for those who are applying for working capital, inventory, or equipment. She also adds, “Be prepared to have a second lien taken on rental property, for example.” Hefty loans will not likely be offered to those with few assets and no real property to secure against.

3. Small Loans - Keep Meticulous Records
The one-page loan application is almost unheard of in today’s economy, causing borrowers to come to the table with piles of qualifying information before their loan will be considered. If you haven’t made hard copies of those items most likely to be required, it’s best to have them ready before you’re asked. In addition to the business application, personal financials and tax returns are commonly requested, shares Helena.

4. Small Loans- Plan on Providing a Plan
Another useful tool for convincing a lender that their dollars are safe with you is a no-nonsense business plan. ”Include all the details relevant to telling the story of how the business will operate, who will operate it and what experience the owners/managers have,” Helena advises, “as well as relevant and conservative projections.” This is one area where you don’t want to skimp. (Learn cost-saving measures to strengthen your business even when the market is weak. Check out Build Your Small Business During Downswings.)

5. Small Loans- Character Counts
In addition to the numbers that will be crunched during the application process, a lender will also be making a note of the personal impression you make. “The lender decides subjectively whether or not you are sufficiently trustworthy to repay the small loans or generate a return on funds invested in your company,” reveals Denise Beeson, a small business loan officer and consultant. In addition to educational background, business and industry experience and quality of your references, the background and experience of your employees may also be considered.

6. Small Loans - Check and Recheck Your Credit
Even if you’re certain that your credit history contains no surprises, take another moment before you turn in that final application and be certain that nothing new has cropped up. Since your credit is one of the most influential factors in approving a loan, there is really nothing more important to safeguard against errors or miscommunications. Your free credit history from any of the free reporting agencies should suffice. Just make sure that you allow enough time to repair damaging information before it can affect the final loan application.

Small Loans - The Bottom Line

When it comes to getting approved for a business loan or small loans , the devil really is in the details. If you have any questions as to whether you’ve left out important information that can help you get much-needed financing, turn to a small business professional for help. (Money in the bank and newfound free time make this grueling process worth the trouble. Refer to 7 Steps To Selling Your Small Business.)

Read more about small loans at : http://financialedge.investopedia.com/financial-edge/0511/6-Tips-For-Getting-A-Small-Business-Loan-In-2011.aspx#ixzz1cW0tuYWv or just click small loans

Small Loans- Five Tips for Securing a Loan
Written By Rob Reuteman, FOXBusiness

One of the toughest tasks any small business owner will face is getting a loan or Small Loans. And nearly three years after the recession struck and the credit markets froze, the current economic situation remains quite challenging.

“Three years ago, lending froze up,” said Mike Lubansky, senior financial analyst with Raleigh-based Sageworks. “Certain banks are still not financially healthy, not able to do as much lending as they might like. Regulators require them to have higher levels of capital, more loan-loss reserves. And for the ones that are healthy, their standards are definitely a bit tighter.”

Lubansky spends much of his time helping small business owners better understand their current finances and future needs. Since he also works with financial institutions, he’s in a good situation to size up the lending problems that continue to plague small business.

The Small Business Administration SBA reported earlier this year the total value of small business loans or Small Loans was about $652 billion in 2010, down from $712 billion in 2008. But there is good news: A March Capital One Bank survey found 85% of small business owners reported they were able to get the financing they need this year.

Prior to 2008, Lubansky said certain lenders were more relationship based and perhaps not as stringent in paperwork requirements when deciding on small loans. Now lenders are back to following standards they should have followed in the first place. “Some banks are still in a tight spot, but overall the atmosphere is much better for lending.”

Jay Davidson, chairman and CEO of First American Bancorp in suburban Denver said banks are very risk averse right now. “Small business owners should prepare for a very in-depth process that will help the borrower understand his own risk.”

Lubansky offered the following tips for small business owners looking for a loan or small loans:

small loans Tips

1. Small Loans - Find the right bank.
Business owners mistakenly think all banks are the same when it comes to getting a loan or small loans, Lubansky said. Wrong. Some specialize in small loans for smaller businesses or startups, while others prefer to lend to more established firms.

Larger banks use “a more formulaic method” when reviewing small loans applications, while smaller community banks tend to scrutinize each application on a case-by-case basis, he said.

For example, some banks specialize in construction lending. If you’re a software company, they won’t be as familiar with your business; a bank specializing in lending to manufacturers would be a better fit. Having a banker who is knowledgeable in your industry will come in handy when discussing your business needs.
Some big banks were heavily involved in credit default swaps and may still be recovering capital, which means they’ll have less to provide you.

Lubansky says one easy way to assess a bank’s capacity to loan is to check its “Texas Ratio,” which is one measure of a bank’s financial strength and sometimes is an indicator of banks that may fail. A Texas Ratio score above 150 is an indication of potential trouble, Lubansky said.

The SBA’s site, allows you to enter your zip code to begin searching for a potential lender nearby.
When considering a bank, The National Federation of Independent Business advises you to ask the following questions: Does it participate in Small Business Association loan programs or other government-guaranteed loans? What criteria does it hold for qualifying for small loans? What is the minimum balance required and fees associated with a small business account? Does it offer night deposits and online banking? What are the interest rates on both credit cards and small loans?

2. Small Loans - Create a relationship with a bank, or banks, before you need a loan or small loans.
Just as you would be more likely to lend money to a friend over a stranger, a bank will be more receptive to your loan request if they know you, Lubansky said.

Once you identify a bank that suites your business needs, open an account with them and use it to demonstrate your dependability. Establish a line of credit and demonstrate your reliability by paying it back consistently, Lubansky advised. “That will be a positive when you want a larger amount.”

For established businesses, small credit  and small loans lines of $10,000 to $50,000 often require a simple one-page application with no financial statements or tax returns necessary.

Startups of Small Loans will need more documentation, usually a business plan and financial statements with a starting balance sheet and a projection of what it will look like in a year.

Lubansky also suggests “spreading around your relationships,” by establishing a business account with more than one bank. If one bank turns down your small loans request, you’ll have a fallback banker who is familiar with your business needs.

3. Small Loans – Embrace risk.
There’s a good reason banks are often not eager to part with money when it comes to small businesses: they have a notoriously high failure rate. You need to prove your credit worthiness for small loans.

When discussing a potential small loans, don’t be afraid to discuss the risk with your bank, Lubansky said. “Every business has risk, and if you do not talk about it, the bank will assume that you have not taken it into account.”

A bank wants to be assured that you know your business well enough to anticipate its upsides and downsides of your future Small Loans. Lubansky recommends accounting for both good and bad situations in your application. “While you may be pleasantly surprised when fortunes swing your way unexpectedly, a bank may be worried. Why? If you can’t predict a good surprise, why should they trust you to account for the bad surprises?”

Davidson said lenders will be impressed that you have anticipated negative events. “We can all make the numbers sing, but that is not the objective of the lender – he wants to see that the borrower will pay him back, even in difficult times. The borrow needs to be brutally honest, first with himself and then with others.”

4. Small Loans- Anticipate.
Rehearse, rehearse, rehearse for your small loans. When a banker asks a question about your business, it should not be the first time you’ve thought of the answer. “Having strong, well-rehearsed responses to questions demonstrates that you have done your homework and have a thorough understanding of the situation,” said Lubansky.

Be prepared to answer: How much money do you need? What are you going to do with it? When will you repay? What will you do if you don’t get the small loans?

Need a practice partner? Try SCORE which has 11,500 volunteer business counselors that are trained to serve as counselors and mentors to business owners across the country. And it’s free. Find the one nearest you here.

Never underestimate the power of the personal relationship with a banker, the NFIB advises. After reviewing your plan with you, your banker will likely take the information to the bank’s daily or weekly planning meeting and present it to the group. A good personal recommendation could tip the balance in your favor.
Banks value businesses that do their homework and take the small loans review process seriously. Being prepared is the best way to ensure your bank that no matter what contingency arises, you have planned accordingly and will still be able to pay the loan.

If you are caught off guard with a question, don’t lie.

“Don’t try to BS your way through small loans interview,” Davidson said. ”Where the borrower may go through this process once or twice in their life, bankers do it time and again. After years in the business, a good banker can see through any anomalies, and certainly any fabrications.”

5. Small Loans - Be prepared to apply to multiple banks.
No matter how much preparation you may do, sometimes things might not go your way.

It’s fairly common for businesses to apply to multiple banks before they get approved forsmall loans. “In our current economic state, persistence and perseverance are needed to successfully secure bank small loans,” said Lubansky.

Small Loans 12 Tips for Getting Your Loan Approved
By Isabel M Isidro

Securing a bank loan or Small Loans to finance your small business is getting to be more difficult. Here are twelve basic steps you must take before going to the bank for a small loans or business loan.

Finding the money needed to start a new business is almost always one of the most difficult obstacles new owners face. The most likely (and easiest) sources of capital are your families, friends and own savings. However, you should not overlook institutional sources as well.

Without a previous track record in business, securing a bank loan or small loans may be difficult. Banks cite risk factors and increasing costs of servicing small accounts as the primary reasons for minimizing their exposure to small businesses. Still, it can be done. Here are the steps that you should take to improve your chances of getting that much-needed small loans or bank loan:

small loans Tips

1. Keep in mind that to stay in business banks need to make small loans. Do not be afraid to ask for one. That is what the loan officer wants you to do. To increase your chances of getting small loans, look for a bank that is familiar with your industry and who has done business with companies like yours. Seek out banks that are active in small business financing. Some banks lend on a conventional basis (lending money without government support), while some banks participate in government programs (in the form of government participations involving direct government funds or small loans guarantees). However, be aware that banks often demand stiff collateral requirements for start-ups.

2. As an entrepreneur, make sure that you are thoroughly prepared when you go to your banker’s office to request small loans. You need to show your bankers that small loans to you is a low-risk proposition. Have on hand a completed small loans application, copies of cash flow and financial statement projections covering at least three years, and your cover letter.

3. Learn to anticipate every question that he or she has. Remember, the combination of information and preparation is the most powerful negotiating tool in the world. A confident and thoroughly prepared borrower is four times more likely to have his or her small loans approved than a borrower who does not know the answer to some of the basic questions a banker asks. To show the extent of your preparedness, your business plan should also include answers to your banker’s questions. These small loans questions normally are:

How much money do you need? Be as exact as possible; although adding a little extra for contingencies will not hurt.

How long do you need it for? Be prepared to go into detail about what the money will do for you and why your business is a good risk.

What are you going to do for it? Businesses use loans for three things: to buy new assets, pay off old debts, or pay for operating expenses.

When and how you will repay for it? Your cash flow projections should provide a repayment time frame. Convince the banker of the long-term profitability of your business and your ability to repay the loan by using your financial projections and business plan.
What will you do if you do not get the loan?

4. Do not take an apologetic and negative attitude. Keep your negativity in check. Present yourself as an entrepreneur who can and will repay the small loans. Boost your image by providing your small loans officer with any promotional materials about your business, such as brochures, ads, articles, press releases, etc.

5. Dress in a professional manner for the interview. This is a business transaction, so treat it as such.

6. Do not stretch the truth in your small loans application. Broad, unsubstantiated statements should be avoided. The lender can easily check many of the facts on your application. If you cannot support statements with solid data, then don’t make them. Do your homework and spend time doing research to be able to support everything you say, including every single number in your projections. It is best to keep projections, assets lists and collateral statements on the conservative side.

7. Be sure all your documents are neat, legible and organized in a cohesive and attractive manner. Type all your small loans documents. Handwritten documents look unprofessional. Don’t forget to include a cover letter.

8. Do not push the small loans officer for a decision. Doing so might result in a rejection. Your banker cannot make a decision until all your documentation is complete. To ensure a speedy decision, make sure that your application is complete.

9. Be confident. An attitude of confidence enhances your chance of getting the small loans. Show that you can make a success out of the money that the bank will lend to you. Visualize in your mind the positive results of your bank application.

10. Keep trying one lender after another until you get your small loans. To improve your position as you change bankers and banks, the best way is to ask for a referral from a successful entrepreneur. Before you decide to approach a bank directly, find an associate, friend or acquaintance that is in good standing with the bank to give you a good referral. Bankers tend to deal more favorably those who were referred to them by their best customers.

11. Failure to discuss risk in your application. You must remember one thing: there is no business without risk. If you do not discuss risk, the bankers will assume that you haven’t thought about risk. Let’s face it – try as we might, we cannot plan for everything, for every contingency, for every turn of events. Bankers would want to know if you have planned for the major risks and how you intend to manage it.

Then, there is also the risk of too much success. The demand for your products or service may exceed well beyond your expectations, and they would want to know how you intend to handle success.

12. Remember that the first loan is usually the hardest to get. Bankers prefer to lend money to borrowers who have borrowed at least once and have paid back at least one loan on time. They are not venture capitalists that make high-risk loans regardless of the profit prospects of your business. Bankers prefer to lend to low-risk, low profit ventures than to high risk businesses or those with no record of accomplishment.

About the Author:

Isabel M Isidro is currently the Managing Editor of Power Homebiz Guides. Read her blog at PowerHomeBiz Small and Home Business Blog

This small loans article is from http://www.powerhomebiz.com/vol12/bankloan.htm or just click small loans to go there