tag:blogger.com,1999:blog-3549735820293270852024-03-13T16:12:31.241-07:00LOAN VICTIMdon't be a victim of loan fraud or predatory lending4n1http://www.blogger.com/profile/02940492407940386187noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-354973582029327085.post-51857696619765227562009-10-22T22:31:00.000-07:002010-01-08T20:34:37.918-08:00How to Find Out If You Are a Victim of Predatory Lending? Do Your Own Audit?<div style="styleDocument: [object]"><span style="styleDocument: [object];font-family:arial;color:#ff9900;" ><strong style="styleDocument: [object]">DO YOUR OWN LOAN FORENSIC LOAN AUDIT</strong></span></div><div style="styleDocument: [object]"><span style="styleDocument: [object];font-family:arial;" ></span> </div><div style="styleDocument: [object]"><span style="styleDocument: [object];font-family:arial;" >Today, we are going to discuss rampant issue of predatory lending and how to diagnose if you have become a victim of predatory lending. We will give you a list of red flags, and you have to outline all these areas of red flags in a separate sheet while you show your documentation to any Attorney. Remember, and read again my post about the so-called loan forensic audits. I still, truthfully do not agree with what they do. They contact continuously and send me a “sample” forensic audit, and I consider it just a highly computerized data sheet. It is just a plain fraud being perpetrated upon homeowners in Nevada. The homeowners think that if there are violations, someone can automatically sue and their lenders would bargain with them. That simply is untrue. You need to find a competent attorney to handle your case and that too is subject to finding many loan violations on your docs, not simply some perfunctory technicalities whose bubble can be burst in the first motion in a court of law.</span></div><span style="styleDocument: [object];font-family:arial;" ><div style="styleDocument: [object]"><br />I want you to save some money here. Remember, if they find any violations who is gonna sue? (Remember, who love ya baby!) Again, this is not meant to make you specialist. As usual always consult a </span><a href="http://mymaliklaw.com/"><span style="font-family:arial;">Nevada licensed attorney</span></a><span style="styleDocument: [object];font-family:arial;" >. The warning signs of a predatory loan are broken down into three categories:</span></div><span style="styleDocument: [object];font-family:arial;" ><div style="styleDocument: [object]"> </div><div style="styleDocument: [object]"><br /><strong style="styleDocument: [object]"><span style="styleDocument: [object];color:#ffff00;" >What Happened Before Signing?</span></strong></div><ol style="styleDocument: [object]"><li><div style="styleDocument: [object]">What happened leading up to the signing of the loan documents? The Marketing and Sales of Mortgage Loans</div></li><li><div style="styleDocument: [object]">What happened at the closing?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Post closing behavior of your lender.</div></li></ol><p style="styleDocument: [object]"><span style="styleDocument: [object];color:#ffff00;" ><strong style="styleDocument: [object]">Now, we are going to discuss all these one by one.</strong></span></p><ol style="styleDocument: [object]"><li style="styleDocument: [object]"><div style="styleDocument: [object]">Were you a victim of aggressive solicitation of targeted lending practices?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was you steered to high rate lenders?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there any door to door solicitation of home improvement or financing arranged by contractor or mobile home dealer?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there any large fee or kickbacks promised to the mortgage broker? Remember the YSP (Yield Spread Premium)</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was loan made or promised to mentally incapacitated, older, retired or fixed income group?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was it started as a no-doc loan?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was this loan in excess of 100% loan to value ration (LTV)?</div></li></ol><p style="styleDocument: [object]"><br /><strong style="styleDocument: [object]"><span style="color:#ffff00;">The Application Process</span></strong></p><ol style="styleDocument: [object]"><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there any falsification on loan application?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was signature forged?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was co signer properly introduced into the documents?<br /></div></li></ol><p style="styleDocument: [object]"><strong style="styleDocument: [object]"><span style="color:#ffff00;">The Loan</span></strong></p><ol style="styleDocument: [object]"><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was this a high interest rate (APR)?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there high fees and closing costs?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was a balloon payment involved?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there a negative amortization?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there high appraisal costs?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there an inflated appraisal?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Were fees highly aggressive?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there any back dating of any documents?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there a charging of duplicative services?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Did it require credit insurance?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there mandatory arbitration clauses?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was the loan falsely identified as a line of credit or a business loan?<br /></div></li></ol><p style="styleDocument: [object]"><strong style="styleDocument: [object]"><span style="color:#ffff00;">The Closing</span></strong></p><ol style="styleDocument: [object]"><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there rushed loan closing?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Were the terms at closing different from what the borrowers thought they would get?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there a faiure to give clients at the time of closing?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was the right of cancellation properly disclosed?<br /></div></li></ol><p style="styleDocument: [object]"><strong style="styleDocument: [object]"><span style="color:#ffcc00;">After Closing</span></strong></p><ol style="styleDocument: [object]"><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there a failure to pay off debts as promised?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there a flipping of the loan?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]">Was there a flipping of the property?</div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]"></span><a style="styleDocument: [object]" href="http://go2.wordpress.com/?id=725X1342&site=lvattorneyma.wordpress.com&url=http%3A%2F%2Fmymaliklaw.com%2F"><span style="styleDocument: [object];font-family:arial;" >Was there abusive collection practices?</span></a></div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]"><span style="styleDocument: [object];font-family:arial;" >Was there any excessive prepayment penalty?</span></div></li><li style="styleDocument: [object]"><div style="styleDocument: [object]"><span style="styleDocument: [object];font-family:arial;" >Was there any incomplete or inadequate home work done?</span><br /></div></li></ol><p style="styleDocument: [object]"><a style="styleDocument: [object]" href="http://go2.wordpress.com/?id=725X1342&site=lvattorneyma.wordpress.com&url=http%3A%2F%2Fmymaliklaw.com%2F"><span style="styleDocument: [object];font-family:arial;" >More Later (My mission is to help homeowners)</span></a><br /><span style="styleDocument: [object];font-family:arial;" > </span></p><p style="styleDocument: [object]"><span style="styleDocument: [object];font-family:arial;" ><br /><em style="styleDocument: [object]">From:<br />http://lvattorneyma.wordpress.com/how-to-find-out-if-you-are-a-victim-of-predatory-lending-do-your-own-audit/</em></span></p>4n1http://www.blogger.com/profile/02940492407940386187noreply@blogger.com36tag:blogger.com,1999:blog-354973582029327085.post-45958946731338352932009-10-12T12:18:00.000-07:002009-10-12T01:10:19.127-07:00Don't Be A Victim Of Loan Fraud<span style="font-family:arial;"><strong><span style="color:#ff0000;">Protect Yourself from Predatory Lenders</span></strong> </span><br /><span style="font-family:arial;"><br />Buying or refinancing your home may be one of the most important and complex financial decisions you'll ever make. Many lenders, appraisers, and real estate professionals stand ready to help you get a nice home and a great loan. However, you need to understand the home buying process to be a smart consumer. Every year, misinformed homebuyers, often first-time purchasers or seniors, become victims of predatory lending or loan fraud.<br /><br /><span style="color:#000099;">Don't let this happen to you!</span><br /><span style="color:#000099;"></span><br /><span style="color:#000099;"></span><br /><strong><span style="color:#ff0000;">11 Tips On Being A Smart Consumer</span></strong><br /><ol><li>Before you buy a home, attend a homeownership education course offered by the U.S. Department of Housing and Urban Development (HUD)-approved, non-profit <a href="http://www.hud.gov/offices/hsg/sfh/hcc/hcc_home.cfm">counseling agencies</a>.</li><li>Interview several real estate professionals (agents), and ask for and check references before you select one to help you buy or sell a home.</li><li>Get information about the prices of other homes in the neighborhood. Don't be fooled into paying too much.</li><li>Hire a properly qualified and licensed home inspector to carefully inspect the property before you are obligated to buy. Determine whether you or the seller is going to be responsible for paying for the repairs. If you have to pay for the repairs, determine whether or not you can afford to make them.</li><li>Shop for a lender and compare costs. Be suspicious if anyone tries to steer you to just one lender.</li><li>Do NOT let anyone persuade you to make a false statement on your loan application, such as overstating your income, the source of your downpayment, failing to disclose the nature and amount of your debts, or even how long you have been employed. When you apply for a mortgage loan, every piece of information that you submit must be accurate and complete. Lying on a mortgage application is fraud and may result in criminal penalties.</li><li>Do NOT let anyone convince you to borrow more money than you know you can afford to repay. If you get behind on your payments, you risk losing your house and all of the money you put into your property. </li><li>Never sign a blank document or a document containing blanks. If information is inserted by someone else after you have signed, you may still be bound to the terms of the contract. Insert "N/A" (i.e., not applicable) or cross through any blanks.</li><li>Read everything carefully and ask questions. Do not sign anything that you don't understand. Before signing, have your contract and loan agreement reviewed by an attorney skilled in real estate law, consult with a trusted real estate professional or ask for help from a housing counselor with a HUD-approved agency. If you cannot afford an attorney, take your documents to the HUD-approved <a href="http://www.hud.gov/offices/hsg/sfh/hcc/hcc_home.cfm">housing counseling agency</a> near you to find out if they will review the documents or can refer you to an attorney who will help you for free or at low cost.</li><li>Be suspicious when the cost of a home improvement goes up if you don't accept the contractor's financing.</li><li>Be honest about your intention to occupy the house. Stating that you plan to live there when, in fact, you are not (because you intend to rent the house to someone else or fix it up and resell it) violates federal law and is a crime.</li></ol><p></p><p><span style="color:#ff0000;"><strong>What is Predatory Lending?</strong></span></p><p>In communities across America, people are losing their homes and their investments because of predatory lenders, appraisers, mortgage brokers and home improvement contractors who:</p><ul><li>Sell properties for much more than they are worth using false appraisals. </li><li>Encourage borrowers to lie about their income, expenses, or cash available for downpayments in order to get a loan. </li><li>Knowingly lend more money than a borrower can afford to repay. </li><li>Charge high interest rates to borrowers based on their race or national origin and not on their credit history. </li><li>Charge fees for unnecessary or nonexistent products and services. </li><li>Pressure borrowers to accept higher-risk loans such as balloon loans, interest only payments, and steep pre-payment penalties. </li><li>Target vulnerable borrowers to cash-out refinances offers when they know borrowers are in need of cash due to medical, unemployment or debt problems. </li><li>"Strip" homeowners' equity from their homes by convincing them to refinance again and again when there is no benefit to the borrower. </li><li>Use high pressure sales tactics to sell home improvements and then finance them at high interest rates. </li></ul><p><br /><br /><strong><span style="color:#ff0000;">What Tactics Do Predators Use?</span></strong></p><ul><li>A lender or investor tells you that they are your only chance of getting a loan or owning a home. You should be able to take your time to shop around and compare prices and houses. </li><li>The house you are buying costs a lot more than other homes in the neighborhood, but isn't any bigger or better. </li><li>You are asked to sign a sales contract or loan documents that are blank or that contain information which is not true. </li><li>You are told that the Federal Housing Administration insurance protects you against property defects or loan fraud - it does not. </li><li>The cost or loan terms at closing are not what you agreed to. </li><li>You are told that refinancing can solve your credit or money problems. </li><li>You are told that you can only get a good deal on a home improvement if you finance it with a particular lender. </li></ul><p><br /><span style="color:#ff0000;"><strong>Remember :</strong></span> </p><p>If a deal to buy, repair or refinance a house sounds too good to be true, it usually is!</p><p><br />Housing counselors working at HUD-approved agencies can help you be a smart consumer. To find a counselor near you, call (800) 569-4287 or go to HUD's <a href="http://www.hud.gov/offices/hsg/sfh/hcc/hcc_home.cfm">housing counselors</a> list online. </p><p><br /><em>From : http://www.hud.gov/offices/hsg/sfh/buying/loanfraud.cfm</em><br /></span></p>4n1http://www.blogger.com/profile/02940492407940386187noreply@blogger.com2tag:blogger.com,1999:blog-354973582029327085.post-65119429416409839352009-10-10T01:10:00.000-07:002009-10-12T01:13:06.380-07:00PREDATORY LENDING<span style="font-family:arial;font-size:100%;"><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">(WHAT CONSUMERS SHOULD KNOW)</span><br /><br /><span style="COLOR: rgb(51,255,51)">Predatory Lending refers to the use of unfair and abusive mortgage lending practices that result in a borrower paying more through high fees or interest rates than the borrower’s credit history warrants. It involves fraudulent practices that target vulnerable consumers and plays on the hopes and dreams of innocent people whose investment in home is their security. Due to the complicated nature of mortgage transactions, it is often difficult for individuals to tell the difference between legitimate and predatory loans</span><br /><br /><span style="COLOR: rgb(51,255,51)">· The following information is made available by</span><br /><span style="COLOR: rgb(51,255,51)">· American Bankers Association Education Foundation</span><br /><span style="COLOR: rgb(51,255,51)">· NeighborWorks ® America</span><br /><span style="COLOR: rgb(51,255,51)">· Federal Home Loan Banks</span><br /><span style="COLOR: rgb(51,255,51)">· Council of Federal Home Loan Banks</span><br /><br /><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">Protect Yourself from Lending Abuse</span><br /><br /><span style="COLOR: rgb(51,255,51)">Abusive or "predatory" lenders target people who are strapped for cash. But the loans they push usually have sky-high interest rates and fees. They're often illegal, too. You need to know how to tell a "good" loan from a bad one. Otherwise, you could end up paying too much, hurting your credit rating—and even losing your home.</span><br /><br /><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,204,0)">Ask yourself:</span><br /><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">Do I feel pressured?</span><br /><br /><span style="COLOR: rgb(51,255,51)">· Watch out for harassing phone calls or solicitations from lenders who say they can give you nextday approval.</span><br /><span style="COLOR: rgb(51,255,51)">· The same goes for lenders who offer "guaranteed" low-interest loans—as long as you apply over the phone and pay them money today.</span><br /><br /><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">Have I shopped around for the best deal?</span><br /><br /><span style="COLOR: rgb(51,255,51)">· Check with other lenders, including local banks, for their rates and total costs.</span><br /><span style="COLOR: rgb(51,255,51)">· Compare the interest rates and the total costs for your loan with those of other lenders.</span><br /><span style="COLOR: rgb(51,255,51)">· Beware of high up-front fees and percentage "points." They can turn a loan with low monthly payments into one that actually costs you more in the long run.</span><br /><br /><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">Is it too good to be true?</span><br /><br /><span style="COLOR: rgb(51,255,51)">· Watch out for telemarketers, TV ads or door-to-door salespeople who offer easy or uick-approval loans for houses, cars and home repair but do not disclose the details. Read the fine print to make sure what you're told is what you're getting.</span><br /><span style="COLOR: rgb(51,255,51)">· Avoid lenders who say bad or no credit is "no problem." Lenders you can trust don't do business this way.</span><br /><br /><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">Can I trust the lender?</span><br /><br /><span style="COLOR: rgb(51,255,51)">· Get references and check them out. Don't rely on the lender's word.</span><br /><span style="COLOR: rgb(51,255,51)">· Call your local Better Business Bureau and ask if it has had complaints about any of the lenders you are considering.</span><br /><br /><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">Do I understand the loan terms?</span><br /><br /><span style="COLOR: rgb(51,255,51)">· Before borrowing, you should know exactly what you're getting and what you're paying. Never be afraid to ask the lender to explain any fees, terms or conditions you don't understand. And never sign a blank form.</span><br /><span style="COLOR: rgb(51,255,51)">· Make sure what you sign is what you agreed to verbally. Don't sign any contract that does not agree with what the salesperson presented.</span><br /><br /><span style="COLOR: rgb(255,0,0)">Also:</span><br /><br /><span style="COLOR: rgb(51,255,51)">· Ask yourself if prepaying for credit life insurance is the best way for you to go. It will protect your family by paying off the loan if you get sick or die. But paying it up-front can add to the monthly cost of your loan.</span><br /><span style="COLOR: rgb(51,255,51)">· Think twice about a loan that has a large amount due at the end of the scheduled payments. This</span><br /><span style="COLOR: rgb(51,255,51)">one final, or "balloon," payment could be beyond your ability to repay.</span><br /><span style="COLOR: rgb(51,255,51)">· Watch out for lenders who tell you not to worry if you find you can't pay your mortgage—they'll help</span><br /><span style="COLOR: rgb(51,255,51)">you refinance your loan if you need to. Predatory lenders make money from the high fees and</span><br /><span style="COLOR: rgb(51,255,51)">closing costs they'll charge you to refinance the loan they knew you couldn't afford to repay in the</span><br /><span style="COLOR: rgb(51,255,51)">first place.</span><br /><span style="COLOR: rgb(51,255,51)">· Never sign a loan contract until you have all the facts—and understand every part of what you're</span><br /><span style="COLOR: rgb(51,255,51)">signing. Ask for advice from someone you trust: a banker, an accountant or a family member or</span><br /><span style="COLOR: rgb(51,255,51)">friend who has had experience with getting and paying back loans. Or call a local nonprofit credit</span><br /><span style="COLOR: rgb(51,255,51)">counseling agency for free help (you'll find them in the Yellow Pages).</span><br /><span style="COLOR: rgb(51,255,51)">· Remember that you have the legal right to change your mind for any reason within three days of</span><br /><span style="COLOR: rgb(51,255,51)">signing most loan contracts that use your home as the security.</span><br /><br /><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">Report Abusive Lenders</span><br /><br />I<span style="COLOR: rgb(51,255,255)">f you have been a victim of lending abuse, let others know! Your complaint could save others from being</span><br /><span style="COLOR: rgb(51,255,255)">victims, too. Call your local office of consumer affairs or your state Attorney General's office—they're listed</span><br /><span style="COLOR: rgb(51,255,255)">in the Government section of the phone book.</span><br /><span style="COLOR: rgb(51,255,255)">Report your experience to the Federal Trade Commission. It watches out for predatory lending scams and</span><br /><span style="COLOR: rgb(51,255,255)">frauds.</span><br /><br /><span style="COLOR: rgb(255,0,0)">· Call toll-free 1-877-FTC-HELP (382-4357),</span><br /><span style="COLOR: rgb(255,0,0)">· Write to Federal Trade Commission, CRC-240, Washington, D.C. 20580.</span><br /><span style="COLOR: rgb(255,0,0)">· Or go to http://www.ftc.gov/ to file a complaint online.</span><br /><span style="COLOR: rgb(255,255,153);font-size:85%;" ><br /><span style="COLOR: rgb(255,153,255)">from : Advances, Colorado Division of Housing</span></span><br /></span>4n1http://www.blogger.com/profile/02940492407940386187noreply@blogger.com13tag:blogger.com,1999:blog-354973582029327085.post-66344499650313218292009-10-08T00:56:00.000-07:002009-10-12T01:13:32.307-07:00Protect Yourself from a Bad Home Loan<p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">What is predatory home lending?</span><?xml:namespace prefix = o /><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p>If you need money and own a home, you may consider refinancing your mortgage or getting a home equity loan. (Equity is what your home is worth, minus what you owe for it. With a home equity loan, the lender takes an interest in your home.) Responsible lenders will not make a loan without determining that you are able to repay it. A predatory lender may not look at whether you can afford to repay the loan - just whether there is enough equity (what your home is worth, minus what you owe for it) in your home to make a profit by selling your home if you don't pay it off. Others may squeeze the equity from your home by taking cash from the financing deal, leaving you owning less of your home than you did when you started. Predatory lenders often use high-pressure sales people, charge inflated interest rates and outrageous costs, have unaffordable repayment terms, and use harassing collection tactics.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">What does this mean for me?</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">If you fall behind on paying a home loan, the lender can take your home through foreclosure. The lender then owns your home. Once the damage is done, it is very hard to undo, and most people never get their homes back. Your home equity is just like money and should be protected.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">What danger signs should I look out for?</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Watch out for ads making promises like: "No Credit? No Job? No Problem!" or<o:p></o:p><br />"Don't worry, you have plenty of equity in your home to qualify for a loan" or<o:p></o:p><br />"No up-front fees, no income verification." If the deal sounds too good to be true, it probably is.</span></p><br /><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">What can I do to protect myself?</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p><span style="COLOR: rgb(51,255,255)">Shop around</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Don't trust door-to-door loan sellers, unsolicited telephone callers, or mailersyou receive from companies offering you a "bargain". If you really need or want a home loan, you should make the first contact.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Don't take the first loan you are offered. Shop around with other lenders to compare.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Steer clear of high-pressure sales tactics, such as claims that an offer is good only for a limited time. Ask yourself why someone with a legitimate offer would push you to make a decision without time to think it over. If it's really a good deal for you, chances are it will still be there after you've had time to think.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Look at more than the monthly payments. A lower monthly payment is not always a better deal. Look at how long the loan lasts and the total costs of the loan. Make sure that the interest rate and fees are competitive and fair.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Deal with a reputable company. Get references by asking for names of some clients. Check with the Better Business Bureau, the Department of Consumer Affairs and the Banking Commissioner to see if there are complaints against the company.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Choose your own attorney. You have the right to choose the attorney who closes your loan. Pick one who will answer all your questions and give you independent advice.<o:p></o:p><br /><br /><span style="COLOR: rgb(51,255,255)">Watch out for bad loan terms</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Avoid "balloon" payments or loans known as "interest only, non-amortizing or partially amortizing". With this type of loan, you still owe the money you borrowed after you make all the regular payments. You must make one large, final payment, known as a balloon payment. If you can't make this payment, or find other financing, you may lose your home through foreclosure.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Watch out for high interest rates and high fees and closing costs. Closing costs include attorney's fees, document preparation fees, and appraisal fees. Ask about any fees you don't understand.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Avoid prepayment penalties that can cost thousands of dollars if you choose to pay off your loan by refinancing at a later date. In South Carolina, a lender cannot charge you for pre-paying if your loan is under $100,000.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Before you purchase credit life or credit disability insurance, check to see whether you can purchase insurance from another source, which is usually cheaper. If you decide to purchase credit insurance, be sure not to finance the premium into your loan.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Steer clear of monthly payments you cannot afford. Just because a lender says you "qualify" doesn't mean you can afford the loan. If you cannot make the payments, you will lose your home.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Avoid the repeated refinancing of your loan. This can sink you deeper into debt, and you will lose all or some of the equity you have in your home.<o:p><br /></o:p><br /><span style="COLOR: rgb(51,255,255)">Ask lots of questions</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Don't be afraid to ask questions if you don't understand something, or if something does not seem right to you. You have the legal right to know:<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">The total cost of your loan, including all fees, points and charges What insurance is included, and that the purchase of most insurance is voluntary.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* The annual percentage rate<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* The monthly payments<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* How long you have to pay back the loan<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Don't sign:<o:p></o:p><br />a blank document or anything the lender promises to fill in later.<o:p></o:p><br />Any form with incorrect information<o:p></o:p><br />Anything you don't like or understand, even if the lender threatens to cancel the loan offer. You may be signing away your home without even realizing it!<o:p></o:p><br />It's okay to say "I don't understand and I will not sign this."</span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="COLOR: rgb(51,255,255)">Get outside help</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Ask someone you trust to look at your loan, possibly a family member or friend who understands financial matters. Remember - you have the right to choose your own attorney. Contact your local Consumer Credit Counseling Agency. They can tell you if the deal you are considering makes sense, and possibly help you find a better one.</span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="COLOR: rgb(51,255,255)">Keep copies of all your loan papers</span></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><br /><span style="font-family:Arial;font-size:10;"><span style="COLOR: rgb(51,255,255)"></span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">What should I do if I think I am a victim of a predatory loan?</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">You have three days to cancel your loan when you are re-financing or taking out a second mortgage. Act quickly if you were pressured into signing a loan you don't want or can't afford. Federal Law gives you 3 days to change your mind.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Contact an attorney immediately if you have any questions about whether your lender violated the law. If you cannot afford an attorney, contact the Legal Aid Telephone Intake Service at (803) 744-9430, or toll-free at (888) 346-5592.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">File a complaint with the SC Department of Consumer Affairs, at (803) 734-4200<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">or toll-free within South Carolina at (800) 922-1594, or the Board of Financial<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Institutions, at (803) 734-2001.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Spread the word about bad lenders to your neighbors and friends.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Made available by the South Carolina Appleseed Legal Justice Center,P.O. Box 7187, Columbia, SC 29202 (803)779-1113<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">Modified from materials developed by the Coalition for Responsible Lending,<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;">based in part on materials produced by the Community Reinvestment Association of NC, the Consumer's Union and AARP.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="COLOR: rgb(255,153,102)">from: http://www.scjustice.org/pdfs/Protect%20yourself%20long%20version2.pdf</span><o:p></o:p></span></p>4n1http://www.blogger.com/profile/02940492407940386187noreply@blogger.com3tag:blogger.com,1999:blog-354973582029327085.post-9258472988118731162009-10-08T00:13:00.000-07:002009-10-12T01:34:55.445-07:00Fact Sheet: Choosing the Right Education Loan and Lender<p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:100%;"><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">Borrowing Wisely</span><?xml:namespace prefix = o /><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:100%;"><o:p></o:p><span style="COLOR: rgb(51,255,51)">Many students and parents find it necessary to borrow money to help pay for college. If you plan to borrow money, it is important to choose the right type of education loan and lender. It is very important to borrow wisely -- and to borrow as little as possible without sacrificing the scope or quality of your education. Every dollar you borrow now must be paid back later with interest which will have a definite impact on your life after college.</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:100%;">Think about it – if you borrow $2,500 a semester during four years of college, what you pay back could be nearly $250 per month for 10 years. Plus you’ll be paying nearly $10,000 additional dollars in interest. In practical terms, you’ll be paying a $250 per month until you’re 32 years old. Imagine if you borrowed $5,000 per semester – a $500 per month loan payment could make a real difference in what you can afford to buy after graduation. The debts you have and how you handle them influence your credit history which is used to determine the decision you’ll get on future loans.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:100%;"><o:p></o:p><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">Choosing the Right Loan</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:100%;"><o:p></o:p>There are different types of education loans and which one you pick will make a real difference. Federal loans are lower interest than private loans and usually offer extra ways to reduce the amount you pay. The repayment period for federal student loans doesn’t start until after you leave college and gives you at least 10 years to pay. There are federal loans for your parents too. Two good reminders – borrow federal loans first and borrow only what you really need for college.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:100%;"><o:p></o:p><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">Choosing the Right Lender</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:100%;"><o:p></o:p>Selecting the right lender for your education loan is important too. You probably realize by now that a loan is something you will carry with you for quite a while – typically 10 years or more. That’s why you should ask prospective lenders these questions:<o:p></o:p></span></p><ol style="COLOR: rgb(51,255,51)"><li><span style="font-family:Arial;font-size:100%;"><o:p></o:p>Is the lender for-profit or nonprofit?<o:p></o:p></span></li><li><span style="font-family:Arial;font-size:100%;">How long has the lender been making education loans?<o:p></o:p></span></li><li><span style="font-family:Arial;font-size:100%;"><o:p></o:p>Do they offer federal and alternative (or private) loans or only alternative loans?<o:p></o:p></span></li><li><span style="font-family:Arial;font-size:100%;"><o:p></o:p>What are the interest rates on their loans? Are they the same for every borrower?<o:p></o:p></span></li><li><span style="font-family:Arial;font-size:100%;"><o:p></o:p>Is the lender focus only on education? Do they provide information on college access, scholarships, grants,<o:p></o:p> and loans?<o:p></o:p></span></li><li><span style="font-family:Arial;font-size:100%;"><o:p></o:p>Is the lender affiliated your state?<o:p></o:p></span></li><li><span style="font-family:Arial;font-size:100%;"><o:p></o:p>Will the lender make and service your loan or will it be sold or transferred for service once it is made?<o:p></o:p></span></li><li><span style="font-family:Arial;font-size:100%;"><o:p></o:p>How easy is it to access the lender by web, phone or in-person when you have questions?<o:p></o:p></span></li><li><span style="font-family:Arial;font-size:100%;"><o:p></o:p>At the time your loan is being made, does the lender offer any credits or fee waivers to save you money? If<o:p></o:p> so, what are they and how much will you save?<o:p></o:p></span></li><li><span style="font-family:Arial;font-size:100%;"><o:p></o:p>During repayment, does the lender offer ways to reduce your interest rate or principal if you make your<o:p></o:p> payments on time? If so, how much?<o:p></o:p></span></li><li><span style="font-family:Arial;font-size:100%;"><o:p></o:p>During repayment, does the lender offer to reduce your interest rate if you use automatic draft and<o:p></o:p> electronic statements? If so, how much?<o:p></o:p></span></li><li><span style="font-family:Arial;font-size:100%;"><o:p></o:p>Are you guaranteed to keep the borrower benefits originally received on your loan as long as you<o:p></o:p> continue to meet eligibility requirements?<o:p></o:p></span></li><li><span style="font-family:Arial;font-size:100%;"><o:p></o:p>What will be the total cost of your loan with the lender?<o:p></o:p></span></li></ol><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:100%;">If you have sizable loans, even a one-half percentage point reduction will save you significant money over the life of the loan. Also, ask how often the interest will be capitalized, or added to the remaining amount of the loan. When interest is capitalized, you end up paying interest on your interest, as well as on the principal amount of the loan. Frequent capitalizations mean you pay more interest over the life of the loan.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:100%;">Flexible repayment plans are another plus to look for when choosing a lender. With a Standard repayment plan, you’ll pay the same amount every month. With a graduated repayment plan, you’ll pay a lower monthly amount at first and may end up paying more in interest, but the idea is that you spend less per month early in your career when you are earning less money, and pay more later on, when you can afford it. There are also income-based repayment plans that base your repayment schedule on your yearly income. Income-based plans, though they may result in smaller (and more manageable) monthly payments, usually increase the amount of interest you pay over the life of the loan.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:100%;">If you take out several education loans, you may be able to consolidate them into one loan, with one (usually averaged) interest rate and a longer repayment schedule. Again, loan consolidation can considerably ease your repayment schedule, but it will cost you more in the long run. If you are worried about meeting your monthly payment, ask about loan consolidation. Always keep in touch with your lender. A good lender is there to help you.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:100%;"><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:100%;"><span style="COLOR: rgb(255,255,204); FONT-STYLE: italic"><span style="COLOR: rgb(255,204,102)">from : www.cfnc.org/static/pdf/home/sc/pdf/FLFacts%20ChoosingLend</span>er.pdf</span><o:p></o:p><br /><span style="COLOR: rgb(255,204,102)">Visit CFNC.org for more financial literacy education.</span><o:p></o:p></span></p>4n1http://www.blogger.com/profile/02940492407940386187noreply@blogger.com4tag:blogger.com,1999:blog-354973582029327085.post-40349253985108253042009-10-03T23:34:00.000-07:002010-10-29T21:48:57.336-07:00How to Get a Small Business Loan<p class="MsoNormal"><span style="FONT-WEIGHT: bold; COLOR: rgb(204,0,0)"><span style="font-family:Arial;font-size:10;">How to Get a Small Business Loan</span></span><span style="font-family:Arial;font-size:10;"><?xml:namespace prefix = o /><o:p></o:p></span></p><p class="MsoNormal"><span style="font-family:Arial;font-size:10;"><o:p></o:p><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(51,204,255)">Before you go to the bank…</span><o:p></o:p></span></p><p class="MsoNormal"><span style="font-family:Arial;font-size:10;"><o:p></o:p><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,153,0)">Ask yourself these questions:</span><o:p style="COLOR: rgb(51,255,51)"></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p><span style="font-size:0;"></span>* What must I finance to support my needs?<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* What amount of financing will meet my needs?<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* When and for how long will I need these funds?<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* How will I generate sufficient cash flow to repay the loan?<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)"></o:p><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">If you’ve already started your business:</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p><span style="font-size:0;"></span>* Prepare a financial statement (balance sheet) listing all assets and all liabilities of the business and an earnings statement for the current period.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* Put together a financial statement of each owner, partner, or stockholder owning 20 percent or more of corporate stock.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* List collateral to be offered as security for the loan, with an estimate of the present market value of each item.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* State the amount of the loan requested and the exact purposes for which it will be used.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* Take the above material to your banker. Ask for a direct loan and if you are declined, ask the bank to make the loan under the Small Business Administration’s (SBA) Loan Guarantee Plan. If the bank is interested in an SBA guaranteed loan, ask the banker to contact the SBA for discussion of your application. In cases of guaranteed loans, the SBA will deal directly with the bank.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* If a guaranteed loan is not available, write or visit the nearest SBA office. To<o:p> </o:p>speed matters, make your financial information available when you first write or<o:p></o:p> visit the SBA.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p><br /><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">If you’re starting a new business:</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p><span style="font-size:0;"></span>* Describe the type of business you plan to establish.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* Describe your experience and management capabilities.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* Prepare an estimate of how much you or others have to invest in the business and how much you will need to borrow.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* Prepare a current financial statement (balance sheet) listing all personal assets and all liabilities.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* Prepare a detailed projection of earnings for the first year the business will operate.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* List collateral to be offered as security for the loan, indicating your estimate of the present market value of each item.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* Take the above material to your banker. Ask for a direct loan and if you are declined, ask the bank to make the loan under the Small Business Administration’s (SBA) Loan Guarantee Plan. If the bank is interested in an SBA guaranteed loan, ask the banker to contact the SBA for discussion of your application. In cases of guaranteed loans, the SBA will deal directly with the bank.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><span style="font-size:0;"></span>* If a guaranteed loan is not available, write or visit the nearest SBA office. To speed matters, make your financial information available when you first write or visit the SBA.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p>The answers to these questions are central to the lending decision. And the information<o:p></o:p> you provide will help the banker make the decision as quickly as possible.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p><br /></o:p><span style="FONT-WEIGHT: bold; COLOR: rgb(255,102,0)">The Review Process</span><o:p><br /><br /></o:p>Every lender tries to understand the condition of the borrower’s business as well as its prospects. That’s why you’re asked to submit several types of financial statements. This information provides the banker a chance to see how critical aspects of your business<o:p></o:p> relate to each other.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p><span style="COLOR: rgb(255,204,51)">The following are some of the measurements of interest to bankers in gauging your company and its strengths:</span><o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p>Liquidity – The amount of cash and working capital a company has is very important to<o:p></o:p> bankers as an indication of how efficiently a company generates internal cash flow,<o:p></o:p> which can be used to repay the loan.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p>Leverage – The amount of debt on a company’s balance sheet, when compared to the<o:p></o:p> amount of equity in the business, will give the banker an idea of how leveraged (in debt)<o:p></o:p> the business is.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p>Inventory – Your banker will want an accurate count of your inventory, particularly if<o:p></o:p> you run a wholesale or retail operation. An accurate inventory count will also help<o:p></o:p> determine inventory turnover. Occasionally a physical count of your inventory will be<o:p></o:p> necessary.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p>Turnover (or Activity) – Activity refers to the turnover of receivables, inventory, and<o:p></o:p> sales. By measuring these variables in relation to one another and to fixed assets, the<o:p></o:p> banker gets an idea of how much activity results form the company’s day-to-day<o:p></o:p> operations.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p>Inventory Turnover – Inventory ratios may have the most value in monitoring internal<o:p></o:p> operations, although they provide useful background for a financing plan, as well. Your<o:p></o:p> nventory turnover ratio is delicate. It helps you achieve the right balance between<o:p></o:p> overstocking and under-stocking, a fine line to be sure. If you’re overstocked, you pay<o:p></o:p> interest on working capital as well as paying for inventory. You don’t want to pay double<o:p></o:p> duty. If you’re under-stocked, you could have stock-outs, which could give your business<o:p></o:p> a bad image and cause a loss of sales.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p>Receivables Turnover and Average Collection Period - Your own credit policy is one of<o:p></o:p> your most important marketing decisions. If your credit is too tight, you lose sales. If it’s<o:p></o:p> liberal, your carrying costs are higher than necessary. You must collect receivables within<o:p></o:p> a reasonable time for them to remain a liquid asset. The receivable turnover ratio<o:p></o:p> measures the amount of accounts receivable in relation to sales.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p>Gross Profit Margin – This ratio provides a clear indication of the basic ability of your<o:p></o:p> business to meet direct costs and operate profitably. Gross profits are net sales (minus<o:p></o:p> returned good, discounts, price reductions, etc.) minus cost of goods sold.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p>Return on Sales – This ratio is an overall measure of the profitability of the business. It<o:p></o:p> illustrates the percentage of projects remaining after direct expenses, overhead, unusual<o:p></o:p> items and taxes.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p>Your banker can help you calculate these ratios and others they will require. Ask your<o:p></o:p> banker or accountant to provide you with industry averages for your particular industry.<o:p></o:p>This can help you determine how your company stands in relations to your peers.<o:p></o:p></span></p><p class="MsoNormal" style="COLOR: rgb(51,255,51)"><span style="font-family:Arial;font-size:10;"><o:p></o:p><br /><span style="COLOR: rgb(153,255,255); FONT-STYLE: italic">Source: Iowa Bankers Association</span><o:p></o:p></span></p>4n1http://www.blogger.com/profile/02940492407940386187noreply@blogger.com0