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Money Coach

December 2010 - Posts

  • Got a small business? An SBA loan may be just what you need

    The U.S. Small Business Administration offers numerous loan programs to assist small businesses. Keep in mind however, that the SBA is typically not a lending institution. Instead, it guarantees loans made by private banks and other lending institutions.

    The SBA's Basic 7(a) Loan Guaranty program is what immediately comes to mind when someone mentions SBA loans. It's the primary loan program the SBA offers to help qualified small businesses secure loans that they might not otherwise qualify for through normal lending channels without the government's guaranty. It is also the most flexible of the SBA loans offered by the SBA because 7(a) SBA loans can be guaranteed for a variety of general business purposes.

    Money secured through Basic 7(a) SBA loans can be used for a variety of business purposes including funding for working capital, machinery and equipment, furniture and fixtures, land and buildings, tenant improvements under lease agreements, and, under special conditions, refinancing prior debt. Basic 7 (a) SBA loans can run for maturity periods of up to 10 years for working capital and generally up to 25 years for fixed asset financing.

    SBA loans under the 7(a) program are made to existing small businesses as well as start-up companies through commercial lending companies. The vast majority of small businesses are eligible to qualify for these loans provided they:

    • Intend to operate for a profit
    • They are engaged or plan to engage in business within the U.S.
    • Have some owner equity of their own to invest in the business
    • Look to alternative funding methods first, such as personal assets

    Certified Development Company 504 loans provide long-term, fixed-rate financing to small businesses for the purpose of acquiring real estate or machinery or equipment for expansion or modernization. SBA 504 funding usually includes 10 percent equity from the borrower along with a loan of at least 50 percent of the total amount from a private-sector lender and a loan provided by a certified development company in an amount up to 40 percent, which is funded by a fully guaranteed SBA note and which holds a second lien on the acquired real estate, machinery or equipment.

    504 SBA loans are targeted to small businesses that need financing for "brick and mortar" stores or physical plants.

    To be eligible for these SBA loans, the business must be operated for profit and not have a tangible net worth in excess of $7.5 million and does not have an average net income in excess of $2.5 million after taxes for the preceding two years. 504 SBA loans nay not be used for speculation or investment in rental real estate.

    SBA loan pre-qualification focuses on the applicant’s character, credit, experience and reliability rather than the applicant's assets. The pre-qualification review is based on key financial ratios, credit and business history, and the loan-request terms.

    An SBA-designated intermediary works with the business owner to review and strengthen the loan application. An SBA-designated intermediary may be a local Small Business Development center or a for-profit organization. Small Business Development Centers serving as intermediaries don't charge a fee for loan packaging, but for-profit organizations do.

    Contact your local SBA office for more details.

    Posted Dec 30 2010, 01:18 PM by moneycoach with no comments
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  • Plan ahead and save your budget during the holidays

    The holidays can be an expensive time of year. Just when your budget has recovered from the hit it took when you bought the turkey and all the trimmings, you realize you've got all your Christmas shopping to do. All of these holiday activities add up. 

    But there's no reason to break the bank. You can celebrate well and spend wisely at the same time. It's a little late for some of this advice, but take heed for next year.

    Make a budget. Set the amount you're willing and able to spend, including gift giving, decorating, entertainment and travel. Then stick to it. 

    Start shopping for holiday decorations early. Begin looking for these items between Halloween and Thanksgiving. Or you could get a jump on next year by shopping right after Christmas, when many items are at least 50 percent off.

    Shop for gifts year round. Don't wait until the last minute. Shopping early can prevent you from getting into the holiday rush and overspending in a panic. Plus, if you spend a little here and a little there, Christmas will have a smaller impact on your wallet come December.

    Scale down the entertainment. Sometimes the smaller, more intimate parties mean the most. Instead of hosting a big blowout, host a quiet dinner party. 

    Scale down your gift giving. Sometimes you just can't afford to get something for everyone. Remove the people from your list that you rarely speak with and send them a card instead of a gift. And remember that the people you give gifts do don't need something flashy or expensive. It's the thought that counts.

    Avoid putting too much on your credit card. It may seem like a good idea at the time, but you'll pay for it big time in January. Paying with cash is always best.

    Remember, planning ahead is key – and starting to plan on Dec. 26 for next year is a good place to start.

    Posted Dec 09 2010, 02:16 PM by moneycoach with no comments
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  • How much should I tip when I eat out?

    Ask any server in a restaurant and they'll tell you the same thing…people don't understand how much to tip.

    How much you should tip at a restaurant depends on the size of your party, the class of the restaurant and the quality of the service. But how much should you tip for eating at a counter? 

    Providing the service was good, a tip of 15 percent of the bill before tax is a good rule of thumb. If you happen to live where the state tax is between 7 and 8 percent, you can calculate the tip easily by looking at the amount your are taxed and simply doubling it. You can then round this amount off higher or lower, depending on the service and your state's tax percentage. 

    For example, if the state tax is 8 percent, and your bill is $48.70, the tax will be $3.90 for a total bill of $52.60. To quickly calculate the tip, double $3.90 for a total tip of $7.80. Since this is 16 percent, you can round down to leave a $7 tip. If you are dining with a large party, a 20 percent tip is appropriate.

    If you eat at a lunch counter, where service isn't considered a large part of the meal, 10 to 12 percent is an adequate tip.

    But remember that wherever you eat, if the food was bad but the service was good, complain to the manager about the food, and don't forget to tip your server. 

    No matter the restaurant, tipping a few percent more is always a good idea when the server has had to work hard for your table or has gone out of his or her way to make your meal pleasant. Waiting on tables is hard and frustrating work that involves little thanks. 

    Some restaurants now add a surcharge to the bill that's supposed to be a built-in tip. This money is theoretically divided up among busboys and other staff, but many restaurants keep this fee, and the customer is still expected to tip. 

    If your bill comes with a surcharge, ask the server if he or she gets a portion of the money. If the answer is no, leave a tip. 

    Following these guidelines for how much you should tip at a restaurant will keep you in good standing and help ensure that repeat visits are as pleasant an experience as possible.

    Posted Dec 02 2010, 01:50 PM by moneycoach with no comments
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