Business Plans for Getting a Business Loan

Unlike a business plan that is specific for an investor, a document specific for a lending institution will be somewhat different. This is due to the fact that you are going to need to focus much more heavily on your credit, the tangible assets to be purchased with loan funds, and how the business will be able to repay its obligations over a specific period of time. When you are writing a business plan in order to obtain a business loan then you are going to want to immediately outline the anticipated terms of your credit facility. This includes discussing the total loan amount, anticipated interest rate, and the term of the credit. This should be placed directly within your executive summary as well as the financial section of the business prospectus.

Your business plan should consist over several components that focus on how you intends to repay your loan. A well developed profit and loss statement as well as a cash flow analysis will allow a banker or a financial institution to understand how the business will support this debt obligation. Within your financial section, you should create and include a full loan amortization schedule that will showcase on a month to month basis the ongoing interest payments, repayments of principal, and total outstanding loan balance. If you do not know how to properly develop this aspect of your business plan then you should have your certified public accountant produce this section of your document. Additionally, there are many online programs that can calculate a business loan amortization table for you.

One of the very important aspects that you need to provide a focus on, in regards to your business plan, is to showcase the tangible assets that will be acquired. You should heavily discuss how these assets can be used as collateral for your loan. It should be noted that you may be required to provide a deprecation schedule. This is important because, over time, most assets lose their value. In the case that you are acquiring real property then you are going to want to showcase how this property may appreciate over the life of the business loan. You may need to have a property appraiser assist you with this matter as banks and financial institutions have become very stringent regarding financing that is specific for tangible asset and property purchases. We are going to continue to provide you with a tremendous amount of information regarding these matters though our series of articles dedicated to business planning.

Loan Amortization Schedules

An “amortization schedule,” in general, is a record of loan or mortgage payments. This record includes the payment number, date, amount, breakdown of principal and interest, and the remaining balance owed after the payment. An amortizing loan’s periodic repayments contain an amount designated for the reduction of the principal, so that the balance will eventually be reduced to zero. The time necessary for the balance to reach zero is calculated in an amortization schedule.

What is Fixed Rate Amortizing Loans?

The monthly payments for interest and principal remain consistent and never change in fixed rates. The monthly payments will typically be stable even if property taxes and homeowners insurance increase. In a fixed rate-amortizing loan, the interest rate remains fixed for the life of the loan. The monthly payments remain level for the life of the loan and are prearranged to pay off the loan at the end of the loan term. An example of a fixed rate loan is a 30-year mortgage that takes 22.5 years of level payments to pay half of the original loan amount.

Importance of Principal and Interest in Amortization Loans

The method in which the principal and interest are applied is very useful to understanding amortization loans. For example, in an amortization schedule, the majority of the payment applies to interest early in the loan, with a small amount applied to paying off the principal. As the loan matures and there is less principal remaining to be repaid, more of the payment is applied to repaying the principal since there is less interest owed to the lender. Only a small amount of interest is paid by the monthly payment by the end of the loan, and most of it applies to the principal.

Loan Amortization

Amortization is the repayment of a loan. It is usually used in conjunction with a time frame. For example, a 30 year loan term amortizes over a 30 year time frame.

The longer the term is for a loan the slower it amortizes. This slower amortization means a lower monthly payment. It can also mean more interest paid out over the life of the loan.

A typical loan payment involves two components:

part of it is the interest payment,

and part of it paying off the principal

A constant payment on a 30 year fixed loan term amortizes each month over a period of 360 months. This is normal amortization.

Amortization can also work in reverse. Minimum payment option loans, such as “1% loans” that you see advertised can give a borrower the option to pay less than an interest-only payment (the “minimum payment”). An interest-only payment keeps a loan the exact same size. It is not being paid off. Ever penny over the interest-only level is used to pay off the principal. If you pay less than the interest-only level, then you are actually adding to the size of the loan. An increase in loan size is known as “negative amortization”.

You will see 1% loans marketed under such names as:

minimum option ARMs

minimum payment loans

pick a payment loans

Lenders have been experimenting with longer and longer loan terms for mortgages. First 40 year loan terms were offered. Now some lenders are offering 50 year loans.

The Best Car Insurance Rates

If your car insurance is due for renewal and you are considering buying another policy then this article will provide you with important facts that you should know about. Car insurance policies are getting increasingly expensive and you should do all that you can to reduce your costs. How much you have to pay for your car insurance is dictated by a variety of factors as they apply to you and your vehicle.

In this article we will examine coverage limits, your age, gender and marital status, your location and insuring other household members. All of these factors will have a great influence on how much you will have to pay for your policy.

Coverage limits are generally dictated by the price that you are willing to pay for your insurance. A higher level of coverage will generally result in higher premiums. The best way to find a good value policy is to comparison shop. Nowadays it is generally accepted that the best way to do this is by using a car insurance comparison website.

Your age, gender and marital status will have a great effect on the auto insurance rates that you are offered. Insurers rate drivers using a variety of criteria, if you are a young single male driver you will usually have to pay higher rates. If you are a middle-aged female married driver then your rates will be lower. Insurers calculate the best car insurance rates for you by comparing levels of risk. Those groups which are statistically more likely to be involved in an accident have to pay correspondingly higher rates.

Location plays an important part in deciding how much your premiums will cost. Drivers who live in an urban environment will usually pay more than those from a rural area. This is because drivers who live in cities and heavily populated areas are more likely to be involved in an accident, or to have their car stolen or vandalized. Insurers generally offer better rates if you’re able to demonstrate that you keep your vehicle in a garage at night. You may also be able to improve the security arrangements of your automobile by fitting an alarm, immobilizer and steering wheel lock.

Insuring other household members will have an influence on the cost of your policy and the best car insurance rates that you offered. If you have teenage family members living with you and they are added to your policy, then your costs will increase. This may still work out cheaper than if your teenage driver were to have a separate policy in their own name.

In conclusion, there are a variety of different factors which can affect your ability to be offered the best insurance rates. Some of these are coverage limits, how old you are, whether you are male or female and whether you are married or single. Your rates will also be affected by the area where you live and whether other household members are included in your policy.