The Basics of Borrowing Money

Written by Jose Aguilar


Are you thinking about starting a business but have no money to do it with. Well, you're not alone. This article will tell yourepparttar basics of borrowing money

A loan is money that is borrowed, and has to be paid back along with interest. Ifrepparttar 142536 money is borrowed from an institution such as a bank, this is called a commercial loan. Money that is borrowed from a friend or a relative is called a personal loan.

The borrower, or debtor, isrepparttar 142537 business or individual that takes outrepparttar 142538 loan. The lender, or creditor, isrepparttar 142539 source from whichrepparttar 142540 money was borrowed. The term, or period, isrepparttar 142541 time that is specified during whichrepparttar 142542 borrower has to userepparttar 142543 money borrowed before he has to repayrepparttar 142544 loan. The maturity of a loan is when a loan term reaches its end. The Principal isrepparttar 142545 amount that is borrowed fromrepparttar 142546 lender.

When you or your business borrows money,repparttar 142547 lender wants to know when they will get their money back. Keep this in mind when you are looking for a lending source.

Ifrepparttar 142548 business is not able to repayrepparttar 142549 loan,repparttar 142550 lending source has a right to legally come after assets to recoup it's money. The extent to which you are personally liable depends onrepparttar 142551 business structure your business is operating under.

If you are approved for a loan, that you will have to make scheduled payments (typically on monthly basis) plus interest. A loan can sometimes be set up as a balloon loan. A balloon loan will typically require smaller initial payments and one lump sum of what was borrowed asrepparttar 142552 final payment atrepparttar 142553 end ofrepparttar 142554 term.

Borrowing from Institutions

Business loans generally fall into two main categories: short term and long term loans. A short term loan is a loan that is to be payed back within one year. Examples of short term loans include:

  • Working capital loans
  • Accounts receivable loans
  • Lines of credit
Long term loans are loans that are to be payed back typically from one to seven years. Long term loans are typically used for:
  • an expansion of a business
  • the purchase of equipment
  • real estate
Most business loans that are used for starting a business are long term loans.

When you approach an institution for a business loan, it will be looking at you asrepparttar 142555 business owner as closely as it will be looking atrepparttar 142556 business itself. One ofrepparttar 142557 ways lending institutions make money is by lending money and they want to be as sure as possible that they get back their money withrepparttar 142558 interest owed.



Ask for more - you may get it!

Written by Graham Yemm


As a purchaser, do you push suppliers on price alone? OK, it is a fair tactic when so many sellers will give in, but does it lead to long-term gain? What other ways could you get a better deal for your organisation? Maybe extended credit terms or volume rebates?

Whichever side you are on, what difference could 2% make to your company? Just to get another 2% on a selling price – and/or 2% less on your purchases? How much extra profit will this produce?

Developing your ability to negotiate more firmly and flexibly is not a contradiction in terms, it can berepparttar foundation for increasing business success and also improving relationships. The simple definition of negotiation is: “To work or talk (with others) to achieve a transaction, settlement, an agreement. (from Latin negotiari – do business with)”

Typically, there are four options forrepparttar 142477 outcome of a negotiation – andrepparttar 142478 desired one isrepparttar 142479 “win-win” unless you are just going for a one-off deal and you may want to opt forrepparttar 142480 “I win – you lose” choice, although that is not really necessary!

We can all improve ourselves as negotiators by following a few simple steps and treating situations as more than just a bargaining joust. It will also help your cause if you consider situations as something to be resolved and not as a battle to be won! As with many things in life,repparttar 142481 key to success is inrepparttar 142482 planning and preparation. This will impact your confidence, and behaviour, when withrepparttar 142483 other party. The more prepared you are,repparttar 142484 greaterrepparttar 142485 chance of you achievingrepparttar 142486 deal you want.

One ofrepparttar 142487 first things to consider in your planning stage is “the balance of power”. Imagine a set of scales – and listrepparttar 142488 pressures or drivers each side faces:

I wonder what you find? Many similarities? When you recognise that both sides might be facing similar pressures you can take heart! Another way to use this is to assess what driversrepparttar 142489 other party is facing, and you can do to reducerepparttar 142490 ones on your side to increaserepparttar 142491 “leverage” you have.

To help you with planning and handling negotiations you may find it useful to work throughrepparttar 142492 “AIMING HIGH” process.

AIMING HIGH

A ssess: Consider situation, balance of power, leverage. What is going to be needed for a win/win outcome. What isrepparttar 142493 previous experience with this contact? How much do you needrepparttar 142494 deal – how much do they need it? What might berepparttar 142495 barriers? What have you to offer that is unique?

I nterests: What are your needs, wants and desires? What are theirs? Think about their interests – put yourself in their shoes – what do they need – what are their drivers (business and personal)?

M ake time: Planning and preparation is key – create time for it. Do not be rushed – do not negotiate under (or “un”) prepared. Also, make time forrepparttar 142496 actual meetings – time pressure can be a problem in a negotiation –repparttar 142497 party feeling under most pressure will often makerepparttar 142498 biggest moves.

I nnovate: Remember, it is not just “their” problem – if a genuine negotiation is to take place it is a joint one! Think about – then rethink – “the pie” and how it can be shaped and cut. Look got different ways of approachingrepparttar 142499 situation.

N eeds: What are their key needs – and wants – and objectives? What are yours? Check back that your ideas can satisfy these – for both parties.

G enerate options: Put your package together – consider allrepparttar 142500 tradable items – those you want and those you can give. The more optionsrepparttar 142501 better. Whetherrepparttar 142502 buyer orrepparttar 142503 seller, think aboutrepparttar 142504 package in terms of more than price.

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