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Basics of Business Loans and Business Credit Cards





Business loans may be described as loans where the borrower would typically be a business instead of an individual and the lender may often be a bank. The lender often sets terms of interest rate and repayment schedule, to which the borrower would have to agree. Lenders may also differ in what types of loans they may offer. They might offer both secured and unsecured loans. Secured loans may require collateral either in the form of the business or in form of the main borrower's personal property, like a home.

The reasons a business might want to avail a loan may be various. Some of the reasons that a business might want a loan may be expansion, offering new services, launching a new segment of products or making purchases. The lenders may want to evaluate the current success of the business and its ability to be profitable. They may also generally assess the credit history of the business. In case a new company seeks a start up loan, the assessment would be difficult and hence it may mean that a loan may be issued if the owner of the business has excellent personal credit history.

Business loans may be approved only when a business would be able to show that the loan can be paid back easily. Business loans may be usually considered as high-risk loans and hence may not be an interesting business option to many financial institutions or banks. In case of smaller loans and small businesses, there might be government lending sources or companies that issue micro-loans that might be willing to extend a loan. It may however be noted that the rate of interest for business purposes might be high. Just like personal loans, the business would be required to make regular payments to the lender. Falling behind on payments would damage credit history and may make it very hard to get business loans in the future. Most businesses ought to be successful in order to keep borrowing. Banks and other lenders dont only look at credit rating but will also examine profits and projected profits that might be earned with new investment from business loans.

Business debts may be defined as debts incurred as a result of increased expenses and losses in the business. Though business debts are normal, debts in excess are bad. When business debts cross the limits, the impact may be bad on the business and may also disrupt the reputation of the business man. However, there are several services available which may help reduce the amount of debt. This business help may be sought from various online and offline business debt consolidation services. Business debt consolidation would be described as adding up of several debts which may have accumulated into a single debt amount and then deciding the repayment amount after negotiation with companies to which payments may be owed. This may be good as all payments may be summed up into one single payment and if bargained properly may be the rate of interest paid would be lower and thus easier and more manageable to make payments. It would be in the best interests of the business to seek the advice of a business debt consolidation advisor. Consolidation and negotiation of business debts may be profitable to both the sides. It may be profitable for you because you can repay the amount of business debt and still carry on the business and gain stability. It may be good for the financing company also as the company might lose out on any chances of recovery if it does not reduce the interest and on the other hand if it reduces interest rates, it may get back the entire loan amount minus interest, which it may not want to lose. So, this method is the best for both parties involved.

Business credit cards are credit cards issued to a company. Individual cards may be issued to authorized employees and officers of the company. In turn, these individuals may be free to use the cards for purchases approved by the corporation. Depending on the type of credit account extended to the company, the business credit card may have an established credit limit or may have no credit limit imposed. Generally, companies who make use of these cards develop specific guidelines that govern when and how the charge account can be used. It may not be unusual for one of the guidelines to place a cap on the amount of charges that can be placed on the account for entertaining clients, travel, or purchases of goods for use in the office. One of the benefits associated with many business credit card programs may be some type of rewards for the business using the account. The rewards may come in the form of points that may be issued each time charges are paid in full, or the rewards may be a cash-back bonus that may be applied to the balance of the card each time a charge is made. In any event, the presence of a rewards program allows the company to stretch resources while using the card to arrange company debt to best advantage. As with any type of credit account, companies wishing to obtain a business credit card may have to meet specific qualifications in order to obtain a favorable credit limit and lower interest rates. Issuers of the cards periodically review the status of the business and adjust the privileges and terms associated with the credit account accordingly.
About Author Sean A. Kelly :

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Article Added on Thursday, March 29, 2012
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