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Finance

Credit History

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Definition of a Credit History

Credit history is a record of a consumer’s ability to repay debts and demonstrated responsibility in repaying debts. A consumer’s credit history includes the following:

  • Amount of available credit used
  • Whether bills are paid on time
  • Number of recent credit inquiries
  • Number and types of credit accounts
  • How long each account has been open
  • Amounts owed

It also contains information regarding whether the consumer has any bankruptcies, liens, judgments or collections. This information is all contained on a consumer’s credit report.

Breaking Down Credit History

Potential creditors, such as mortgage lenders and credit card companies, use the information in a consumer’s credit history to decide whether to extend credit to that consumer. This information is also used to calculate the consumer’s FICO score.

Why the Length of Credit History Matters

When creditors review an applicant’s credit history in order to determine whether or not to provide financing to them, recent activity is not the only factor being assessed. The length of time that credit accounts have been open and active will also be taken into consideration. Furthermore, the patterns and regularity of repayment over longer periods of time will weigh more favorably in the assessment. It has sometimes been suggested that a borrower continue make installment payments rather than outright pay off outstanding debt in order to continue to build up a positive credit history. This would include paying off interest, not just the minimum amount, in order to continuously reduce the debt over time.

For those without any credit history, one can be established by taking out a small personal loan but with Funny SA financial service you can access business and large loans from bank and investor will feel safe dealing with you. Such usage lets the borrower demonstrate how well they can manage their credit on a limited scale before taking on larger amounts of debt.

It is possible for a borrower to see their credit history wiped clean if they have paid off all their debts and do not take out a loan, credit card, or other form of financing for a number of years. This interval can be seven or 10 years. Even borrowers who had an extensive prior creditor history could effectively start over if such long gaps occur.

Finance

Equity Lines of Credit & Equity Loans

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Equity Lines of Credit & Equity Loan Principles 

Equity lines of credit & equity loans both use the equity in your business – that is, the difference between your business’s value and your mortgage balance – as collateral.

One of the biggest perks of home ownership is the ability to build equity over time. You can use that equity to secure low-cost funds in the form of a “second mortgage” – either a one-time loan or a Equity lines of credit & equity loans. There are advantages and disadvantages to each of these forms of credit, so it’s important to understand the pros and cons of each before proceeding.

Because the loans are secured against the value of your company, equity loans offer extremely competitive interest rates – usually close to those of first mortgages. Compared to unsecured borrowing sources, like credit line, you’ll be paying far less in financing fees for the same loan amount.

But there’s a downside to using your company as collateral. Equity lenders place a second lien on your company, giving them the right to eventually take over your business if you fail to make payments. The more you borrow against your company or condo, the more you’re putting yourself at risk. This is why you need Funny SA financial firm services to issue financial instrument and take the risks of losing your condo or company by giving you a financial backing from a tip rated bank to help secure a loan and attract investors in doing business with you.

Business

Revolving Credit

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Definition of a Revolving Credit

Revolving credit is a line of credit where the customer pays a commitment fee to a financial institution to borrow money and is then allowed to use the funds when needed. It usually is used for operating purposes and the amount drawn can fluctuate each month depending on the customer’s current cash flow needs. Revolving lines of credit can be taken out by corporations or individuals.

What You Need to Know About Revolving Credit

The maximum amount for a revolving credit is fixed when the financial institution, typically a bank, reaches an agreement with the customer. Along with the commitment fee, there are interest expenses for corporate borrowers and carry-forward charges for consumer accounts.

Financial institutions consider several factors about the borrower’s ability to pay before revolving credit is issued. For an individual, the factors include credit score, current income and employment stability. For an organization or company, a financial institution reviews the balance statement, income statement and statement of cash flows.

Revolving credit is useful for individuals or entities that experience sharp fluctuations in cash flow or face unexpected expenses. Because of the convenience and flexibility, a higher interest rate typically is charged on revolving credit compared to traditional installment loans. Revolving credit typically comes with variable interest rates that may be adjusted.

Various Classifications of Revolving Credit

The credit limit is the maximum amount of credit a financial institution is willing to extend to a customer seeking the funds. The most common examples of revolving credit include home equity lines of credit and personal lines of credit.

Revolving Credit vs. Installment Loan

Revolving credit differs from an installment loan, which requires a fixed number of payments over a set period of time. Revolving funds require only the payment of interest plus any applicable fees.

Revolving credit implies than a business or individual is pre-approved for a loan. A new loan application and credit reevaluation does not need to be completed upon each instance of utilization of revolving credit. Revolving credit is intended for shorter-term and smaller loans. For larger loans, financial institutions require more structure, including installation payments.

Revolving Credit vs. Credit Cards

There are numerous differences between a revolving line of credit and a business credit card. First, there is no physical card involved in using revolving credit as in the case of a credit card. Second, revolving credit does not require a purchase to be made. Revolving credit allows money to be transferred into a customer’s bank account for any reason without requiring an actual transaction for use of that money to be made. This makes revolving credit similar to a cash advance as funds are available upfront. Revolving credit also typically has significantly lower interest rates compared to credit cards.

Speak with the Right Financial Firm For You

Finding the right financial firm that fits your needs doesn’t have to be hard. If you’re ready to be matched with best financial firm that will help you achieve your financial goals, get started now.

Finance

Lender (SBLC/BG)

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Definition of a Lender

A lender is an individual, a public or private group, or a financial institution that makes funds available to another with the expectation that the funds will be repaid. Repayment will include the payment of any interest or fees. Repayment may occur in increments (as in monthly mortgage payment) or as a lump sum.

Lenders may provide funds for a variety of reasons, such as a mortgage, automobile loan or small business loan. The terms of the loan specify how the loan is to be satisfied, the period of the loan, and the consequences of default. One of the largest loans consumers take out are home mortgages.

Important Considerations

Qualifying for a loan depends largely on the borrower’s credit history. The lender examines the borrower’s credit report and more. The report helps the lender determine whether the borrower is comfortable managing payments based on current employment and income.

The lender may also evaluate the borrower’s debt-to-income (DTI) ratio comparing current and new debt to before-tax income to determine the borrower’s ability to pay. Lenders may also use private investigating firm to check score in the borrower’s credit report to determine creditworthiness and help make a lending decision.

When applying for a secured loan, such as an auto loan or a home equity line of credit, the borrower pledges collateral this is what we provide to borrower to present to banks or investor. The lender evaluates a borrower’s available capital. Capital includes savings, investments and other assets which could be used to repay the loan if household income is insufficient. This is helpful in case of a job loss or other financial challenge. The lender may ask what the borrower plans to do with the loan. Other factors may also be considered, such as environmental or economic conditions.

Lender Instance

Banks, savings and loans, and credit unions may offer Small Business Administration (SBA) programs and must adhere to SBA loan guidelines. Private institutions, angel investors, and venture capitalists lend money based on their own criteria. These lenders will also look at the nature of the business, the character of the business owner and the projected annual sales and growth for the business.

Small business owners prove their ability for loan repayment by providing lenders both personal and business balance sheets. The balance sheets detail assets, liabilities and the net worth of the business and the individual. Although business owners may propose a repayment plan, the lender has the final say on the terms.

  • A lender is an individual, a public or private group, or a financial institution that makes funds available to another with the expectation that the funds will be repaid.
  • Repayment will include the payment of fees.
  • Repayment may occur as a lump sum.
Finance

Fixed-Income Security

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Definition of Fixed-Income Security

A fixed-income security is an investment that provides a return in the form of fixed periodic interest payments and the eventual return of principal at maturity. Unlike a variable-income security, where payments change based on some underlying measure such as short-term interest rates, the payments of a fixed-income security are known in advance.

Advantages of Fixed-Income Securities

Fixed-income securities provide steady interest income to investors throughout the life of the bond. Fixed-income securities can also reduce the overall risk in an investment portfolio and protect against volatility or wild fluctuations in the market. Equities are traditionally more volatile than bonds meaning their price movements can lead to bigger capital gains but also larger losses. As a result, many investors allocate a portion of their portfolios to bonds to reduce the risk of volatility that comes from stocks.

It’s important to note that the prices of bonds and fixed income securities can increase and decrease as well. Although the interest payments of fixed-income securities are steady, their prices are not guaranteed to remain stable throughout the life of the bonds. For example, if investors sell their securities prior to maturity, there could be again or loss due to the difference between the purchase price and sale price. Investors receive the face value of the bond if it’s held to maturity, but if it’s sold beforehand, the selling price will likely be different from the face value.

However, fixed income securities typically offer more stability of principal than other investments. Corporate bonds are more likely than other corporate investments to be repaid if a company declares bankruptcy. For example, if a company is facing bankruptcy and must liquidate its assets, bondholders will be repaid before common stockholders.

Corporate bonds are backed by the financial viability of the company. In short, corporate bonds have a higher risk of default than government bonds. Default is the failure of a debt issuer to make good on their interest payments and principal payments to investors or bondholders.

Fixed-income securities are easily traded through a broker and are also available in mutual funds and exchange-traded funds. Mutual funds and ETFs contain a blend of many securities in their funds so that investors can buy into many types of bonds or equities.

Business

Commitment Fee

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Definition of a Commitment Fee

A commitment fee is a banking term used to describe a fee charged by a sblc providers to a borrower to compensate the lender for its commitment to lend. Commitment fees typically are associated with unused credit lines or un-disbursed loans. The lender is compensated for providing access to a potential loan through a commitment fee, since it has set aside the funds for the borrower and cannot yet charge interest.

Understanding Commitment Fee

A commitment fee generally is specified as either a flat fee or a fixed percentage of the un-disbursed loan amount. The lender charges a commitment fee as compensation for keeping a line of credit open or to guarantee a loan at a specific date in the future. The borrower pays the fee in return for the assurance the lender will supply the loan funds at the specified future date and at the contracted interest rate, regardless of conditions in the financial and credit markets.

Legal Qualification of a Commitment Fee

Legally, a commitment fee is different from interest, although the two often are confused. The key distinction between the two is that a commitment fee is calculated on the un-disbursed loan amount while interest charges are calculated by applying an interest rate on the amount of the loan that has been disbursed and not yet repaid.

Interest also is charged, and paid, periodically. A commitment fee, on the other hand, often is paid as a one-time fee at the closing of the financing transaction. A further commitment fee may be charged by a lender at the renewal of credit facilities. In the case of open lines of credit, a periodic commitment fee may be charged on the unused portion of the available funds.

In most cases, if the borrower decides not to move forward with the loan, the commitment fee still is payable to the lender.

Instance Calculating a Commitment Fee

In the case of a one-time loan, the commitment fee is negotiated between the lender and the borrower. The fee can be a flat amount, such as $1,000,000, or a percentage of the loan amount, such as 5%.

For an open line of credit, a formula is used to calculate the average available amount of credit on a periodic basis, often quarterly. The fee is then calculated by multiplying the average unused commitment by the agreed-upon commitment fee rate and again by the number of days in the reference period.

Finance

International Finance

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Definition of International Finance

International finance is sometimes known as international macro economics is a section of financial economics that deals with the monetary interactions that occur between two or more countries. This section is concerned with topics that include foreign direct investment and currency exchange rates.

International Finance Corporation

The International Finance Corporation (IFC) is an organization dedicated to helping the private sector within developing countries. It provides investment and asset management services to encourage the development of private enterprise in nations that might be lacking the the necessary infrastructure or liquidity. for businesses to secure financing. {Note: International finance also involves issues pertaining to financial management, such as the political and foreign exchange risk that comes with managing multinational corporations.]

Understanding More About International Finance & International Finance Corporation

International finance research deals with macro economics that is, it is concerned with economies as a whole instead of individual markets. Financial institutions and companies conducts international finance research, external trade and development of markets in countries around the world.

The IFC ensures that private enterprises in developing nations have access to markets and financing. Its most recent goals include the development of sustainable agriculture, expanding small businesses’ access to micro finance, infrastructure improvements, as well as climate, health, and education policies.

The International Finance Corporation as a Partner Organization

The IFC views itself as a partner to its clients, delivering not only support with financing but also technical expertise, global experience, and innovative thinking to help developing nations overcome a range of problems, including financial, operational, and even at times political.

The IFC also aims to mobilize third-party resources for its projects, often engaging in difficult environments and leading crowding-in private finance, with the notion of extending its impact beyond its direct resources.

  • International finance is a section of financial economics that deals with the monetary interactions that occur between two or more countries.
  • The growing popularity and rate of globalization have magnified the importance of international finance.
  • International Finance is concerned with topics that include foreign direct investment and currency exchange rates.
Business

Financial planning (business)

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Financial planning is the task of determining how a business will afford to achieve its strategic goals and objectives. Usually, a company creates a Financial Plan immediately after the vision and objectives have been set. The Financial Plan describes each of the activities, resources, equipment and materials that are needed to achieve these objectives, as well as the time frames involved.

The Financial Planning activity involves the following tasks:

  • Assess the business environment
  • Confirm the business vision and objectives
  • Identify the types of resources needed to achieve these objectives
  • Quantify the amount of resource (labor, equipment, materials)
  • Calculate the total cost of each type of resource
  • Summarize the costs to create a budget
  • Identify any risks and issues with the budget set.

Performing Financial Planning is critical to the success of any organization. It provides the Business Plan with rigor, by confirming that the objectives set are achievable from a financial point of view. It also helps the CEO to set financial targets for the organization, and reward staff for meeting objectives within the budget set.

The role of financial planning includes three categories:

  1. Strategic role of financial management
  2. Objectives of financial management
  3. The planning cycle

When drafting a financial plan, the company should establish the planning horizon, which is the time period of the plan, whether it be on a short-term (usually 12 months) or long-term (2–5 years) basis. Also, the individual projects and investment proposals of each operational unit within the company should be totaled and treated as one large project. This process is called aggregation.

Use of Loan or Investment Capital

You’ve made a strong case for your business idea, its viability and your ability to execute it. So how, exactly, do you plan to use any money that lenders or investors offer you? They’ll want to know. If you’re requesting a $100,000,000 SBLC for the use of loan or credit line, for example, you might break that down into the amount that will go toward equipment such as cash registers, shelving and refrigerated display cases; purchasing inventory; and carrying out your marketing campaign. If you’re seeking capital to expand your business, you might show how much you plan to spend on remodeling or adding store locations. If you’re selling business units, state the individual price per unit.

Proposed Repayment Schedule or Exit Strategy

Potential SBLC providers will want to know how and when you intend to repay the loan or line of credit, so you should put together a proposed repayment schedule and terms. They may not agree with your suggestion, but offering proposed terms shows that you are considering the loan from the lender’s perspective. Also our financial instruments stand as a collateral to secure the loan, with the backing of our issuing banks. Be aware that we the lenders do for different percentage depending of the face value of the financial instrument and a liquidation charges to finalize the delivery process.

Potential investors will want to know when their investment will pay off and how much of a return to expect. They will also want to see that you have an exit strategy to cash out on your investment – and theirs. Do you plan to sell the business outright to another individual or company? Hold an initial public offering and go public? What will your exit strategy be if the business is failing? At what point have you determined that you will cut your losses and sell or close down, and how will you repay investors if this happens?

Remember, no one has to lend you any money or invest in your company. When they are considering doing so, they will be comparing the risk and return of working with you to the risk and return they could get from lending to or investing in other companies. You have to convince them that your business is the most promising option.

Finance

Bond

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Definition of a Bond

A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments. A bond has an end date when the principal of the loan is due to be paid to the bond owner and usually includes the terms for variable or fixed interest payments that will be made by the borrower. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Owners of bonds are debt holders, or creditors, of the issuer.

Bonds are commonly referred to as fixed income securities and are one of three asset classes individual investors are usually familiar with, along with stocks (equities) and cash equivalents. Many corporate and government bonds are publicly traded; others are traded only over-the-counter (OTC) or privately between the borrower and lender.

How to go About Bonds

When companies or other entities need to raise money to finance new projects, maintain ongoing operations, or refinance existing debts, they may issue bonds directly to investors. The borrower (issuer) issues a bond that includes the terms of the loan, interest payments that will be made, and the time at which the loaned funds (bond principal) must be paid back (maturity date). The interest payment (the coupon) is part of the return that bondholders earn for loaning their funds to the issuer. The interest rate that determines the payment is called the coupon rate.

Most bonds can be sold by the initial bondholder to other investors after they have been issued. In other words, a bond investor does not have to hold a bond all the way through to its maturity date. It is also common for bonds to be repurchased by the borrower if interest rates decline, or if the borrower’s credit has improved, and it can reissue new bonds at a lower cost.

Bond Issuers

There are three main categories of bonds.

  • Corporate bonds are issued by financial companies.
  • Municipal bonds . Some municipal bonds offer tax-free coupon income for investors.
  • Government bonds issued by the Treasury with a year or less to maturity are called “Bills”; bonds issued with 1 – 10 years to maturity are called “notes”; and bonds issued with more than 10 years to maturity are called “bonds”. The entire category of bonds issued by a government treasury are often collectively referred to as “treasuries.”

Bonds Overview

A bond represents a promise by a borrower to pay a lender their principal and usually interest on a loan. Bonds are issued by governments, municipalities, and corporations. The interest rate (coupon rate), principal amount and maturities will vary from one bond to the next in order to meet the goals of the bond issuer (borrower) and the bond buyer (lender). Most bonds issued by companies include options that can increase or decrease their value and can make comparisons difficult for non-professionals. Bonds can be bought or sold before they mature, and many are publicly listed and can be traded with a broker.

Bonds that make a coupon payment are called “coupon bonds”. There are also other types of bonds issued by borrowers. The convertible bond may the best solution for the company because they would have lower interest payments while the project was in its early stages. If the investors converted their bonds, the other shareholders would be diluted, but the company would not have to pay any more interest or the principal of the bond.

The investors who purchased a convertible bond may think this is a great solution because they can profit from the upside in the stock if the project is successful. They are taking more risk by accepting a lower coupon payment, but the potential reward if the bonds are converted could make that trade-off acceptable.

While governments issue many bonds, corporate bonds can be purchased from brokerages. If you’re interested in this investment, you’ll need Funny SA financial service firm.

Finance

Financial Institution

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Definition of a Financial Institution

A financial institution is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange. Financial institutions encompass a broad range of business operations within the financial services sector including banks, trust companies, insurance companies, brokerage firms, and investment dealers. Virtually everyone living in a developed economy has an ongoing or at least periodic need for the services of financial institutions. Financial institutions can operate at several scales from local community credit unions to international investment banks.

The Principles of Financial Institutions

Financial institutions serve most people in some way, as financial operations are a critical part of any economy, with individuals and companies relying on financial institutions for transactions and investing. Governments consider it imperative to oversee and regulate banks and financial institutions because they do play such an integral part of the economy. Historically, bankruptcies of financial institutions can create panic.

  • A financial institution is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange.
  • Financial institutions encompass a broad range of business operations within the financial services sector including banks, trust companies, insurance companies, brokerage firms, and investment dealers.
  • Financial institutions can vary by size, scope, and geography.

Various Classification of Financial Institutions

Financial institutions offer a wide range of products and services for individual and commercial clients. The specific services offered vary widely between different types of financial institutions.

A commercial bank is a type of financial institution that accepts deposits; offers checking account services; makes business, personal, and mortgage loans; and offers basic financial products like certificates of deposit (CDs) and savings accounts to individuals and small businesses. A commercial bank is where most people do their banking, as opposed to an investment bank. Banks and similar business entities, such as thrifts or credit unions, offer the most commonly recognized and frequently used financial services: loans for retail and commercial customers. SBLC provider also act as payment agents via credit line, transfers, and currency exchange.