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Debt consolidation loans: Simplifying your debt miseries
In an environment of financial slowdown, the monetary stability of the people seem to go down at a very steady pace. Usually loans and the like means are resorted to by the people because of two reasons. Firstly, when they have to face some unexpected events such as fire, robbery, flood etc, which put them into a dire need of some finance, which they are then not financially capable to survive on their own. On the other hand, at times, people resort to various loans for their personal purposes such as purchasing new land, machinery, home contents and many other things, which force the people to opt for various loans. The debt consolidation loans are very popular loans throughout the world. These loans have come out to be very efficient and useful means for those people, who are mired in deep debt-crises. In simple terms, it can be defined to a process of taking one loan to pay off multiple debts.
Thus, such loans are very helpful to minimize the debt burden. Numerous financial firms have come into existence, which provide such loans in an efficient and effective way. Thus, if someone is drowned in the crises of debts, then he can resort to one of such effective means from a large number of counseling firms, which would assist the debt-ridden people in every way they want. These counseling firms would negotiate with the creditors on the behalf of the debtors in order, to chalk out a logical and manageable mode of repayment. Thus, you can subside the complications and burdens of the multiple debts with the help of such firms. You need not agonize about your financially troubled situations. Numerous online portals have come into being, which assist the people about such loans and provide most effective plans to overcome their beleaguered credit status. The debt consolidation loans are basically meant for bringing your poor financial condition back on track.
There are various debt management agencies, which offer systematic programmes to assist an individual to overcome the debt burdens. The debt consolidation loans in UK are very popular, people are resorting to such loans as and whenever any need arises. These loans are very helpful for the people who are debt-struck and who do not have any other credit means to pay off all their debts. These people are highly recommended to meet an appropriate counselling firm, which would assist them in every way possible way in order, to shed off all their debt miseries and complications. With the help of such loans, all the debts will be converted into one feasible and simple payment mode, which you can easily sustain. The debt consolidation loans are available in both the cases i.e., secured and unsecured. In case of secured loans, your interest rate will be lowered and in case of unsecured loans, the interest rate will be increased a bit comparatively. Hence, one should be very careful while selecting such loans because a large number of firms offers different sorts of debt consolidation plans in order, to attract the needy people. Hence, further worsening the situation will not be justified anymore.
How to Borrow Money, Part 1
There are two types of financing: equity financing and debt financing.
The most frequent source of funding for a small and mid size businesses is to borrow money. Getting a loan usually is not an easy and short process.
It is always a good idea to learn as much as you can in advance about the factors that important in the decision-making process of banks and other lenders when they consider your loan application. For more detailed information you may refer to my other articles.
When looking for funding, you should consider your company’s debt-to-equity ratio, which is defined by dividing amount of borrowed money by amount of invested in the business. The lower the ratio is: more invested and less money borrowed, the easier for you will be to get financing and at more favorable terms.
The decision what financing to pursue works on case to case basis, but the general rule of tomb is: if you have a high debt to equity ratio you should seek equity financing and vice versa.
In the most cases it is impossible to get 100% financing. Institutions want to see at least 20% of equity in a business. Building equity can be achieved by investing owners cash or build it through retained earnings, but by itself does not guarantee that you get financing for a business.
Equity Financing
Equity financing means financing a business by selling ownership interests to investors or, the money is raised in exchange for a share of ownership in the business or having the right to convert other financial instruments into stock. It is the way raise funds without incurring debt, or without obligation to repay a specific amount of money at a particular time.
Equity sources can be divided into two groups: non-professional such us relatives, friends, and employees, etc. and professional that can be divided into two sub groups: Private such as Angels and Venture Capital and Institutional such as Hedge Funds and Government Assessed Sources. Most of professional groups specialize in particular industries.
Venture Capitalists may review thousands of proposals a year, but invest only in a few that have bigger prospective returns on the capital, great management team, industry growth, competitive advantage and solid exit strategies (e. g. IPO). Venture Capital firms usually passively involved in a companys management, unless business fails to perform as projected.
Many people think that Venture Capital firms finance new businesses, but in the most cases they prefer established companies with stable cash flow. If you need money for a start up look for an Angel (Private) Investors. Angels might work alone or in groups (sometimes as big as few hundred people) and usually actively involved in companys management.
Pros and cons of equity financing
Company shares give you two major rights: participation in the future companys profit-sharing and decision-making processes. The biggest drawback of equity financing is that you relinquish those rights to an outsider.
To be continued.
Yury Iofe, MBA
Universal Business Structured Solution
More educational resources by Yury Iofe:
www.ubssolution.com