Before offering business finance to a business plan, any investors will hopefully go through a rigorous testing process where the entrepreneur's business plan will be analysed, the financial forecasts scrutinised and the marketing research pondered upon. Whether an online business or regular, similar processes will be in place. You are putting your money into someone elses idea with the intention of bot contributing the business and also ultimately getting a healthy return. So what are you looking for from an investment point of view? Here are a a few issues that I hope you will consider before choosing whether or not to back the business in question.
In the spirit of transparency, please see my list below and let me know if you think I am missing any core issues.
The Basics
Can I understand the business?
what is the product?
what is the value?
who is the buyer and why would they buy?
can the buyer quantify the value? If so, what unit?
The Market
Is the market attractive?
Growth rates?
Profitability?
Is there a fundamental disruption that is the basis for the opportunity and limits the incubments' competitive response?
Market
Market --> SaaS, Open Source
Product --> core innovation
Is the product delivered in a buyer appropriate way?
open source for infrastructure
SaaS for a business app buyer
REST/SOAP/JavaScript for a web service
Is the core value tied to a technical innovation?
ex. HWVP's portfolio company examples = Baynote's collective intelligence algorithms and Move Networks' streaming protocols
Requirements and Obstacles
Are their frictions in....?
time and resources required to test the value proposition?
time and resources required to deploy?
time and risk to realize value?
Is there a good market comparable for both the business model and the exit multiple?
What unit scales the revenue model?
page views, sales heads, downloads, sessions?
Is the architecture scalable and does it leverage the best available infrastructure - EC2, S3, Rackspace, etc?
Dependencies
Are there exogenous dependencies?
carrier or MSO deals?
RFID deployments, etc?
Is there a market master?
WMT or MSFT or Dell....
The Entrepreneur
Who is the incumbent? How will they react?
Who are the other new companies in the space?
Is the team able and honest?
Prior track record of working together?
Is the CEO special?
What is his/her motivation, passion, strength?
Where do they need help and complement?
The Investment
Are the round size and pre-money reasonable?
Is the model reasonable (profit margins, growth, burn)?
Is the plan capital efficient?
how much money for 18 months?
margin of safety?
are their clear milestones in the plan that will allow for an objective assessment of value creation - ie a new investor
Opportunity and Possibility
Can this be a home run?
What are the core risks?
why will the company fail? is their a plan in place to mitigate such risks?
What are the KPIs - ie leading indicators to measure and track the company's progress?
Is the cap table clean and the paid-in capital reasonable?
Is the progress to date commensurate with the money in?
Has the money in to date been productive?
While I am sure there are risk and questions not raised above, the goal is to systematically measure a prospect against a consistent analytical framework that, hopefully, ensures smooth take-offs, flights, and landings.
Friday, 17 December 2010
Monday, 13 December 2010
What to include in a business plan
Although every business plan is different as the purpose and the audience for whom it is written for governs the structure and wording within the business plan, most business plans will still consists of three main sections.
- The Executive Summary
- The Main plot
- The Financials and Finance
Arguably, is the most important part of the plan, the Executive Summary normally consists out of one or two pages providing the reader with a synopsis of what is to come. This section can really be seen as a bite-size version of the plan. The reason why it is so important is that, as with most first impressions, the reader will quickly decide if this is something that is of interest or. If yes, the rest of the business plan will be read, if not, well, your plans is probably destined for the waste paper basket and you will have to continue your search for an sympathetic eye. Think of your executive summary as a longish elevator pitch.
The Main Plot provides the reader with a more detailed account of the important areas of your business. This is the ideal place for you to ensure and that you have thought through the functional areas of your business such as strategy, the products and services, the people, the competition the market, and most importantly your sales & marketing plan. Of course you are not only writing the business plan for yourself and this section will also be targeted at the chosen audience who you want to impress. Remember that most of the business plan can be used as a selling document as you are off course intending on getting a second party to take action. Whether the action is to provide you with finance or simply to impress a future business partner or grant provider. Get your fax correct and don’t oversell, as this can be highly off-putting.
The financials will consist of your Profit & Loss, Balance Sheet and Cash-flow forecasts with full assumptions. This section can often develop a life of its own, especially where you re trying to justify a certain amount of funding needed for the business. You must resist the temptation to sound to optimistic as lenders will quickly recognise when your forecasts are unrealistic. Make sure you consider the realities of delivering your products or services and the possibilities of obtaining new business.
One of my favourite quotes comes from John Chambers, CEO of Cisco Systems, "Deal with the world the way it is, not the way you wish it was." Another possible pot hole here is to not under estimate the amount of finance that your business needs. Its common for first time owners to over estimate their income for the first year and hence under forecast the amount of business finance needed. This often results in a red faced entrepreneur having to go back to bank or VC asking for an additional round of funding. Be realistic. Your business does not have to be cash machine to get start-up capital, it simply has to be viable while entering a market with potential.
Saturday, 4 December 2010
The reality of finding finance for a new business
Finding business finance for your business plan is often much more challenging that what people may realise. Luckily us entrepreneurs are a hardy bunch and a few obstacles and challenges along the way will 99% of the time simply make us more determined. You will obviously have written a business plan by now and then the fun really starts. But you should not confuse a challenging financing process with a poor business idea which just simply does not deserve the funding you are looking for. Make sure that you have done sufficient marketing research to determine that someone else that you and your friends & family believes in the product and that will be a demand for the product once it gets to the market.
I am providing this information because so many people here post requests for funding to cover 2 to 3 years of product creation or R&D. Then when they are ignored, they get angry.
Let's look at the typical stages in a successful company's financing. Although there are rare exceptions to this sequence, in most cases it looks like this:
If you are realistic about what types of scenarios attract investors, you won't get angry. Instead you will work to create an opportunity that will be attractive to investors at every stage.
If you think that you are going to attract money to cover your living expenses and provide a bit of fun money while you create the product for 2 or 3 years, you are in for nothing but frustration.
-Seed Round
At this stage you have no more than an idea. You are going to build the next Facebook or Google or Apple...only it will take a year or two of work before there is something that can be sold. Or maybe it's a dull little business which excites only you?
So, who comes in at this stage if you should be lucky enough to attract any money? The answer is the "3Fs", otherwise known as Family, Friends, and Fools. Yes, this means your parents and rich frat buddies from your days at Harvard or Yale. What's that? Your family is not wealthy and you didn't attend an Ivy League college? In that case, you are going to have to finance your seed stage the most common way: with a day job.
-Angel Round
Angels come in with money when you have started selling. They jump aboard because you now have tangible proof of concept. You're finally walking your talk. It's no longer all just hot air coming from the founder. Be honest, talk is cheap.
-Venture Capital A-Round
VCs step in when the business looks like it has potential for an IPO or acquisition a few years down the road.
-Venture Capital B-Round
Wall Street is starting to take notice of the company. Therefore, the VCs want to maximize its forward momentum.
-Venture Capital C-Round
The IPO is now in sight and the C-round is used to "fatten the pig" as much as possible in addition to preparing the company for it. Often this preparation includes replacing management with C-level officers who are known to and respected by Wall Street.
-The IPO
This is the big pay-off at the end of years of hard work. It means liquid stock selling at, hopefully, a high P/E multiple. (The second best alternative is to be acquired by a large company such as a member of the Fortune 1000.)
Welcome to Planet Earth. That's how 99% of start ups get through the seed stage and if you are having difficulty in succeeding here refer yourself to the opening paragraph and assess into which category you fall. Best of luck as you will probably need it.
I am providing this information because so many people here post requests for funding to cover 2 to 3 years of product creation or R&D. Then when they are ignored, they get angry.
Let's look at the typical stages in a successful company's financing. Although there are rare exceptions to this sequence, in most cases it looks like this:
If you are realistic about what types of scenarios attract investors, you won't get angry. Instead you will work to create an opportunity that will be attractive to investors at every stage.
If you think that you are going to attract money to cover your living expenses and provide a bit of fun money while you create the product for 2 or 3 years, you are in for nothing but frustration.
-Seed Round
At this stage you have no more than an idea. You are going to build the next Facebook or Google or Apple...only it will take a year or two of work before there is something that can be sold. Or maybe it's a dull little business which excites only you?
So, who comes in at this stage if you should be lucky enough to attract any money? The answer is the "3Fs", otherwise known as Family, Friends, and Fools. Yes, this means your parents and rich frat buddies from your days at Harvard or Yale. What's that? Your family is not wealthy and you didn't attend an Ivy League college? In that case, you are going to have to finance your seed stage the most common way: with a day job.
-Angel Round
Angels come in with money when you have started selling. They jump aboard because you now have tangible proof of concept. You're finally walking your talk. It's no longer all just hot air coming from the founder. Be honest, talk is cheap.
-Venture Capital A-Round
VCs step in when the business looks like it has potential for an IPO or acquisition a few years down the road.
-Venture Capital B-Round
Wall Street is starting to take notice of the company. Therefore, the VCs want to maximize its forward momentum.
-Venture Capital C-Round
The IPO is now in sight and the C-round is used to "fatten the pig" as much as possible in addition to preparing the company for it. Often this preparation includes replacing management with C-level officers who are known to and respected by Wall Street.
-The IPO
This is the big pay-off at the end of years of hard work. It means liquid stock selling at, hopefully, a high P/E multiple. (The second best alternative is to be acquired by a large company such as a member of the Fortune 1000.)
Welcome to Planet Earth. That's how 99% of start ups get through the seed stage and if you are having difficulty in succeeding here refer yourself to the opening paragraph and assess into which category you fall. Best of luck as you will probably need it.
Sunday, 21 November 2010
Social Network for Fashion raises $millions in finance
Tumblr a online business— which has been compared to Facebook and previously attracted just over $10 million with their business plan from Spark Capital and Union Square Ventures (both key investors in Twitter) — was recently able to raise between $25 million and $30 million in additional business financing, valuing the business at an estimated $135 million. Famed Silicon Valley VC firm Sequoia Capital was the lead investor. “I will say, it is nice to be well-received on the West Coast,” Tumblr’s president, John Maloney, told Business Insider.
According to comScore, microblogging platform Tumblr hit an “inflection point” sometime last June. Page views on Tumblr.com — which lets users create mixed-media blog posts with the kind of extreme simplicity and immediacy not found in traditional blogging platforms — began to surge. By October 2010, page views in the U.S. were up a staggering 1,540 percent from the year before. According to the New York-based company, Tumblr now has 47 million unique visitors per month, 2.7 billion page views per month, and over 9 million users, with approximately 30,000 new users joining the platform every day.
Interestingly, Tumblr has been very well-received in the fashion community, as well, giving rise to a universe of fashion-related microblogs. “Over the past year, fashion has emerged as one of the fastest growing segments of the Tumblr community, with 20% of our top 1000 blogs related to fashion,” said Rich Tong, a co-founder of Weardrobe (sold to Like.com in 2009) and Tumblr’s new fashion director.
It’s not surprising then that Tumblr founder David Karp told TechCrunch last week that Tumblr wants to be “the best place in the world for the best creative communities,” with fashion at the core of this focused strategy.
Many of the most popular fashion Tumblrs are personal style blogs like whatiwore and triciawillgoplaces, vintage and craft-focused blogs like psimadethis and hawtvintage, and street style blogs like fuckyeahstreetstyle and lookbookdotnu, launched by the eponymous look-sharing site. But a recent post on Refinery29 entitled “The Best Fashion Tumblrs To Follow Now” reflects the striking diversity of fashion blogs that have sprung up since the platform was launched in 2007. The list includes shoelust, theimpossiblecool, and textbook, a Tumblr dedicated to answering the question “What would Holden Caulfield wear?”
Industry insiders have embraced the platform as well. Purple Fashion editor Olivier Zahm and photographer Terry Richardson, for example, both use Tumblr to publish informal, spontaneous and highly popular personal diaries, Purple Diary and Terry’s Diary.
On one level, Tumblr has struck a chord with the fashion community because, like fashion itself, the platform is both immediate and highly-visual. While Tumblr posts can be text, images, quotes, links, chats, audio clips or videos, 50% of all posts are photos. “As a platform Tumblr is almost purely visual,” said Francine Ballard, founder and editorial director of Designer Social, an online showroom that operates a Tumblr. “Most of what gets reblogged is prompted by a sort-of visceral response. So by definition, it has the potential to be a fantastic medium for fashion.”
Indeed, Tumblr has found particular resonance amongst fashion creatives, who use the platform to aggregate and share the inspiration they find online. “I use Tumblr as a way for my creative team to share things that they are inspired by,” said Diana Hong, creative director at digital fashion agency CreateThe Group and an early adoptor of the platform.
Tavi Gevinson, best known for her blog The Style Rookie, also maintains a microblog called Slow Motion Crawl, which she migrated from Blogspot to Tumblr early last year. “It’s much more informal, more for archiving and self-reference than anything else. My favorite thing is how convenient it is for storing inspiration — when I compile images for a post on Style Rookie, I usually find them all in my Tumblr archives.”
But as well as being radically visual, quick and convenient — a Tumblr bookmarklet, as well as Tumblr mobile apps for Blackberry, iPhone and Android, make it incredibly simple to share content — Tumblr is fundamentally different from traditional blogging platforms because it comes with a built-in community. On Tumblr, users can “follow” and “reblog” other bloggers, whose posts appear in realtime streams on a Tumblr “dashboard,” much like on Twitter.
“It’s so addictive because you follow your favourite Tumblrs, which give you the best of the internet, so you just keep clicking through your dashboard and finding more and more that you like,” said Tavi.
“Tumblr seems to now have an audience of regular users and we decided it would be beneficial to drive traffic back to the site, as well as being a source of inspiration,” said Alistair Allan, digital director at Dazed Group, which operates popular fashion, art and music website Dazed Digital and, last month, launched dazeddigital.tumblr.com, a Tumblr that highlights favourite items from Dazed Digital each day.
“Many publications primarily care about Tumblr as a traffic driver, but we’ve noticed that the ones who use Tumblr to express a point of view are the ones who succeed within the community,” said Tumblr’s Mr. Tong, commenting on the Dazed Digital offering. “Once they do that, the traffic takes care of itself.”
Notably, Tumblr has managed to attract a passionate community that’s largely composed of young and influential, design-focused people. For fashion media brands, this is an extremely attractive, high-value demographic who have an almost insatiable appetite for content and share their discoveries with their social graph, both on Tumblr and across the web. “Our community loves original content — and loves reblogging it straight from the source,” said Mr. Tong.
Conveniently, a Facebook app and publish to Twitter feature neatly integrate Tumblr into the two most important social networks on the internet, enabling the platform’s influential userbase to easily distribute content to friends and followers.
It’s no surprise, then, that major fashion publishers like Vogue and Elle have recently launched Tumblrs. “The demographics of the Tumblr audience are very much in line with the demographics of our readers: typically young, fashion-minded people with a strong appreciation for pop culture,” said Keith Pollock, editorial director of Elle.com.
The platform also allows fashion media brands to speak to consumers in a softer, more personal tone. “Tumblr provides a great opportunity for brands and publishers to step out of their strict editorial guidelines and create a down to earth, approachable voice,” said Mr. Tong. What’s more, Tumblr makes it easy to establish the kind of genuine reciprocal relationships that turn fans and followers into brand loyalists. “By following users you think create great content, liking their posts and reblogging their content as well, you establish a very passionate and loyal following,” explained Mr. Tong.
But it’s not just media companies who are getting in on the action. LVMH-backed ethical fashion brand Edun operates a Tumblr called Eye of Edun, where the company shares behind the scenes imagery and visual inspiration. “Tumblr is embraced by artists and creative communities more so than other blogging platforms,” said Edun’s brand director Bianca Barattini. “Edun.com tells our entire story, from backstory to mission and offers a shopping experience, while the Tumblr is purely inspiration.”
But it may not be long before fashion brands start to integrate commerce into their Tumblrs. Last Thursday, a small startup called Of a Kind, which offers limited edition items from emerging designers, became the first store to launch on Tumblr. “Building our site on Tumblr seemed like an obvious move — it has allowed us to put our content in front of early adopters in a place where they were already congregating,” said co-founder and president Erica Cerulo. Tumblr does not technically support e-commerce, but Of a Kind was able to easily connect their Tumblr to Shopify, a simple digital commerce app, to offer a fully shopable experience.
Asked if Tumblr would be adding e-commerce functionality in the future, Mr. Tong responded: “We haven’t yet pursued supporting that feature set, but given the virality of our network, we’re definitely exploring ideas on how best to integrate the e-commerce component into our user experience.”
With the possibility of commerce-enabled Tumblrs on the horizon, the existing opportunities for content distribution and audience engagement, and the minimal time and effort it actually takes to start blogging on Tumblr, we suspect it won’t be too long before smart fashion brands see Tumblr as an indispenable tool in their social media arsenal, alongside Twitter and Facebook.
If fashion and creative communities are at the heart of Tumblr, BoF must be there too. You can now follow us on Tumblr: businessoffashion.tumblr.com
Vikram Alexei Kansara is Managing Editor of The Business of Fashion.
According to comScore, microblogging platform Tumblr hit an “inflection point” sometime last June. Page views on Tumblr.com — which lets users create mixed-media blog posts with the kind of extreme simplicity and immediacy not found in traditional blogging platforms — began to surge. By October 2010, page views in the U.S. were up a staggering 1,540 percent from the year before. According to the New York-based company, Tumblr now has 47 million unique visitors per month, 2.7 billion page views per month, and over 9 million users, with approximately 30,000 new users joining the platform every day.
Interestingly, Tumblr has been very well-received in the fashion community, as well, giving rise to a universe of fashion-related microblogs. “Over the past year, fashion has emerged as one of the fastest growing segments of the Tumblr community, with 20% of our top 1000 blogs related to fashion,” said Rich Tong, a co-founder of Weardrobe (sold to Like.com in 2009) and Tumblr’s new fashion director.
It’s not surprising then that Tumblr founder David Karp told TechCrunch last week that Tumblr wants to be “the best place in the world for the best creative communities,” with fashion at the core of this focused strategy.
Many of the most popular fashion Tumblrs are personal style blogs like whatiwore and triciawillgoplaces, vintage and craft-focused blogs like psimadethis and hawtvintage, and street style blogs like fuckyeahstreetstyle and lookbookdotnu, launched by the eponymous look-sharing site. But a recent post on Refinery29 entitled “The Best Fashion Tumblrs To Follow Now” reflects the striking diversity of fashion blogs that have sprung up since the platform was launched in 2007. The list includes shoelust, theimpossiblecool, and textbook, a Tumblr dedicated to answering the question “What would Holden Caulfield wear?”
Industry insiders have embraced the platform as well. Purple Fashion editor Olivier Zahm and photographer Terry Richardson, for example, both use Tumblr to publish informal, spontaneous and highly popular personal diaries, Purple Diary and Terry’s Diary.
On one level, Tumblr has struck a chord with the fashion community because, like fashion itself, the platform is both immediate and highly-visual. While Tumblr posts can be text, images, quotes, links, chats, audio clips or videos, 50% of all posts are photos. “As a platform Tumblr is almost purely visual,” said Francine Ballard, founder and editorial director of Designer Social, an online showroom that operates a Tumblr. “Most of what gets reblogged is prompted by a sort-of visceral response. So by definition, it has the potential to be a fantastic medium for fashion.”
Indeed, Tumblr has found particular resonance amongst fashion creatives, who use the platform to aggregate and share the inspiration they find online. “I use Tumblr as a way for my creative team to share things that they are inspired by,” said Diana Hong, creative director at digital fashion agency CreateThe Group and an early adoptor of the platform.
Tavi Gevinson, best known for her blog The Style Rookie, also maintains a microblog called Slow Motion Crawl, which she migrated from Blogspot to Tumblr early last year. “It’s much more informal, more for archiving and self-reference than anything else. My favorite thing is how convenient it is for storing inspiration — when I compile images for a post on Style Rookie, I usually find them all in my Tumblr archives.”
But as well as being radically visual, quick and convenient — a Tumblr bookmarklet, as well as Tumblr mobile apps for Blackberry, iPhone and Android, make it incredibly simple to share content — Tumblr is fundamentally different from traditional blogging platforms because it comes with a built-in community. On Tumblr, users can “follow” and “reblog” other bloggers, whose posts appear in realtime streams on a Tumblr “dashboard,” much like on Twitter.
“It’s so addictive because you follow your favourite Tumblrs, which give you the best of the internet, so you just keep clicking through your dashboard and finding more and more that you like,” said Tavi.
“Tumblr seems to now have an audience of regular users and we decided it would be beneficial to drive traffic back to the site, as well as being a source of inspiration,” said Alistair Allan, digital director at Dazed Group, which operates popular fashion, art and music website Dazed Digital and, last month, launched dazeddigital.tumblr.com, a Tumblr that highlights favourite items from Dazed Digital each day.
“Many publications primarily care about Tumblr as a traffic driver, but we’ve noticed that the ones who use Tumblr to express a point of view are the ones who succeed within the community,” said Tumblr’s Mr. Tong, commenting on the Dazed Digital offering. “Once they do that, the traffic takes care of itself.”
Notably, Tumblr has managed to attract a passionate community that’s largely composed of young and influential, design-focused people. For fashion media brands, this is an extremely attractive, high-value demographic who have an almost insatiable appetite for content and share their discoveries with their social graph, both on Tumblr and across the web. “Our community loves original content — and loves reblogging it straight from the source,” said Mr. Tong.
Conveniently, a Facebook app and publish to Twitter feature neatly integrate Tumblr into the two most important social networks on the internet, enabling the platform’s influential userbase to easily distribute content to friends and followers.
It’s no surprise, then, that major fashion publishers like Vogue and Elle have recently launched Tumblrs. “The demographics of the Tumblr audience are very much in line with the demographics of our readers: typically young, fashion-minded people with a strong appreciation for pop culture,” said Keith Pollock, editorial director of Elle.com.
The platform also allows fashion media brands to speak to consumers in a softer, more personal tone. “Tumblr provides a great opportunity for brands and publishers to step out of their strict editorial guidelines and create a down to earth, approachable voice,” said Mr. Tong. What’s more, Tumblr makes it easy to establish the kind of genuine reciprocal relationships that turn fans and followers into brand loyalists. “By following users you think create great content, liking their posts and reblogging their content as well, you establish a very passionate and loyal following,” explained Mr. Tong.
But it’s not just media companies who are getting in on the action. LVMH-backed ethical fashion brand Edun operates a Tumblr called Eye of Edun, where the company shares behind the scenes imagery and visual inspiration. “Tumblr is embraced by artists and creative communities more so than other blogging platforms,” said Edun’s brand director Bianca Barattini. “Edun.com tells our entire story, from backstory to mission and offers a shopping experience, while the Tumblr is purely inspiration.”
But it may not be long before fashion brands start to integrate commerce into their Tumblrs. Last Thursday, a small startup called Of a Kind, which offers limited edition items from emerging designers, became the first store to launch on Tumblr. “Building our site on Tumblr seemed like an obvious move — it has allowed us to put our content in front of early adopters in a place where they were already congregating,” said co-founder and president Erica Cerulo. Tumblr does not technically support e-commerce, but Of a Kind was able to easily connect their Tumblr to Shopify, a simple digital commerce app, to offer a fully shopable experience.
Asked if Tumblr would be adding e-commerce functionality in the future, Mr. Tong responded: “We haven’t yet pursued supporting that feature set, but given the virality of our network, we’re definitely exploring ideas on how best to integrate the e-commerce component into our user experience.”
With the possibility of commerce-enabled Tumblrs on the horizon, the existing opportunities for content distribution and audience engagement, and the minimal time and effort it actually takes to start blogging on Tumblr, we suspect it won’t be too long before smart fashion brands see Tumblr as an indispenable tool in their social media arsenal, alongside Twitter and Facebook.
If fashion and creative communities are at the heart of Tumblr, BoF must be there too. You can now follow us on Tumblr: businessoffashion.tumblr.com
Vikram Alexei Kansara is Managing Editor of The Business of Fashion.
Wednesday, 6 October 2010
Business finance available at the Cape Town Business plan competition
Great blog article on the Cape Town business plan competition, currently inviting business plan entries from Cape Town based entrepreneurs. The competition organized by Bandwidth Barn are hoping to make the initiative an annual occurrence, ensuring business finance is made more accessible to entrepreneurs in the region.
Both banks and the government has come under continued pressure to provide further funding to businesses hoping that such finance will create a enterprise culture in the Western Cape region. The idea is obviously for initiatives such as this to first of all support job creation in the area and also to boost the economy as a whole.
Right from the moment someone thinks of a business idea, there needs to be cash. As the business grows there are inevitably greater calls for more money to finance expansion. The day to day running of the business also needs money.
One of the main reasons a business needs finance is to start up in the first place. Depending on the type of business, it will need to finance the purchase of assets, materials and employing people. There will also need to be money to cover the running costs. It may be some time before the business generates enough cash from sales to pay for these costs. Link to cash flow forecasting.
Entrepreneurs have expressed their excitement for the opportunity and we trust that it will go from strength to strength.
Both banks and the government has come under continued pressure to provide further funding to businesses hoping that such finance will create a enterprise culture in the Western Cape region. The idea is obviously for initiatives such as this to first of all support job creation in the area and also to boost the economy as a whole.
Right from the moment someone thinks of a business idea, there needs to be cash. As the business grows there are inevitably greater calls for more money to finance expansion. The day to day running of the business also needs money.
One of the main reasons a business needs finance is to start up in the first place. Depending on the type of business, it will need to finance the purchase of assets, materials and employing people. There will also need to be money to cover the running costs. It may be some time before the business generates enough cash from sales to pay for these costs. Link to cash flow forecasting.
Entrepreneurs have expressed their excitement for the opportunity and we trust that it will go from strength to strength.
Wednesday, 23 June 2010
South African Business and Arts Grants announced
Recipients of the first cycle of Business and Arts South Africa Supporting Grants for the 2010/2011 financial year have been announced.
A total of 15 business plans and projects were given project-specific grants – a significant boost for South Africa’s cultural landscape. The grants cover a broad scope of arts projects – from visual arts to dance; theatre; music; and more.
The 2010/2011 Business and Arts South Africa Supporting Grants are awarded five times in the financial year after deliberation by the organisation’s board. In a carefully designed and monitored process, both the arts applicant and the sponsor complete application forms.
Available on www.basa.co.za, these forms are designed to encourage the two partners to work together and identify areas of potential benefit. Business and Arts South Africa allocates funds to the project once it has assessed how the partnership benefits both the sponsor and the recipient. This is in keeping with the organisation’s belief in taking arts projects from “seed to strength to sustainability.”
The full list of recipients and sponsors (see below) is an impressive one and covers a range of different-sized arts projects being mounted across the country.
Applications for the second cycle of Business and Arts South Africa Supporting Grant s are now open. The closing date for this next cycle is 7 July, with recipients being notified on 4 August.
Details of the next cycles are available on the Business and Arts South Africa website, www.basa.co.za.
Supporting Grants: 2010
Organisation: Big Time Dance Troupe
Project: Queen E and her Entourage
Sponsor: Ellies (Pty) Ltd
Organisation: Rotary Club of Kloof
Project: Art and Music in the Hills
Sponsor: TBWA Hunt Lascaris – Durban
Organisation: New Music SA
Project: eMusic Indaba
Sponsor: SAMRO
Organisation: Cosmos Productions
Project: Theatre for Change Tour
Sponsor: Protea Hotels
Organisation: Africa Ignite
Project: Showcasing Kwa-Zulu Natal proud art, craft and heritage at the King Shaka International Airport
Sponsor: Airport Company South Africa Limited
Organisation: Aid to Artisans South Africa Trust (ATASA)
Project: South Africa Handcraft Exhibition featuring the women artists of the Ndebele
Sponsor: Nando’s Chickenland (Pty) Ltd
Organisation: Tshwane Leadership Foundation
Project: Feast of the Clowns
Sponsor: City Property Administration (Pty) Ltd.
Organisation: Ifa Lethu Foundation
Project: Home and Away – A return to the south
Sponsor: G&D Apparel
Organisation: Field Band Foundation
Project: Field Band Foundation
Sponsor: Ogilvy (Pty) Ltd Durban
Organisation: Johannesburg Art Gallery
Project : My Private Universe
Sponsor: Stokvel Cellular (Pty) Ltd.
Organisation: Baxter Theatre Centre
Project: Remix Dance Company: Loveaffair
Sponsor: Red Lake Trading 10 (Pty) Ltd
Organisation: Kearsney College
Project: Kearsney Choir Tour to World Olympics Game (July 2010) – Return upbeat Festival (August 2010)
Sponsor: The Jonsson Group (Pty) Ltd.
Organisation: University of Witwatersrand
Project: Drama for Life Progr amme
Sponsor: German Technical Co-operation (GTZ)
Organisation: Individual (Dr Fred Scott)
Project: Eleven Soccer and Art South Africa 2010 Project
Sponsor: Commerzbank South Africa
Organisation: Buntuzim Media Production
Project: Maboneng – Alex Multi Arts Experience
Sponsor: Santam Ltd
A total of 15 business plans and projects were given project-specific grants – a significant boost for South Africa’s cultural landscape. The grants cover a broad scope of arts projects – from visual arts to dance; theatre; music; and more.
The 2010/2011 Business and Arts South Africa Supporting Grants are awarded five times in the financial year after deliberation by the organisation’s board. In a carefully designed and monitored process, both the arts applicant and the sponsor complete application forms.
Available on www.basa.co.za, these forms are designed to encourage the two partners to work together and identify areas of potential benefit. Business and Arts South Africa allocates funds to the project once it has assessed how the partnership benefits both the sponsor and the recipient. This is in keeping with the organisation’s belief in taking arts projects from “seed to strength to sustainability.”
The full list of recipients and sponsors (see below) is an impressive one and covers a range of different-sized arts projects being mounted across the country.
Applications for the second cycle of Business and Arts South Africa Supporting Grant s are now open. The closing date for this next cycle is 7 July, with recipients being notified on 4 August.
Details of the next cycles are available on the Business and Arts South Africa website, www.basa.co.za.
Supporting Grants: 2010
Organisation: Big Time Dance Troupe
Project: Queen E and her Entourage
Sponsor: Ellies (Pty) Ltd
Organisation: Rotary Club of Kloof
Project: Art and Music in the Hills
Sponsor: TBWA Hunt Lascaris – Durban
Organisation: New Music SA
Project: eMusic Indaba
Sponsor: SAMRO
Organisation: Cosmos Productions
Project: Theatre for Change Tour
Sponsor: Protea Hotels
Organisation: Africa Ignite
Project: Showcasing Kwa-Zulu Natal proud art, craft and heritage at the King Shaka International Airport
Sponsor: Airport Company South Africa Limited
Organisation: Aid to Artisans South Africa Trust (ATASA)
Project: South Africa Handcraft Exhibition featuring the women artists of the Ndebele
Sponsor: Nando’s Chickenland (Pty) Ltd
Organisation: Tshwane Leadership Foundation
Project: Feast of the Clowns
Sponsor: City Property Administration (Pty) Ltd.
Organisation: Ifa Lethu Foundation
Project: Home and Away – A return to the south
Sponsor: G&D Apparel
Organisation: Field Band Foundation
Project: Field Band Foundation
Sponsor: Ogilvy (Pty) Ltd Durban
Organisation: Johannesburg Art Gallery
Project : My Private Universe
Sponsor: Stokvel Cellular (Pty) Ltd.
Organisation: Baxter Theatre Centre
Project: Remix Dance Company: Loveaffair
Sponsor: Red Lake Trading 10 (Pty) Ltd
Organisation: Kearsney College
Project: Kearsney Choir Tour to World Olympics Game (July 2010) – Return upbeat Festival (August 2010)
Sponsor: The Jonsson Group (Pty) Ltd.
Organisation: University of Witwatersrand
Project: Drama for Life Progr amme
Sponsor: German Technical Co-operation (GTZ)
Organisation: Individual (Dr Fred Scott)
Project: Eleven Soccer and Art South Africa 2010 Project
Sponsor: Commerzbank South Africa
Organisation: Buntuzim Media Production
Project: Maboneng – Alex Multi Arts Experience
Sponsor: Santam Ltd
Small Business Grants For Women
If you've got an excellent business plan but you just don't have the finances to get it off the ground then you need to have to think about applying for some small business grants for women. But having a good thought is only part in the battle. Here are some factors you'll need to have to take into account when applying for small business grants for ladies.
Your credit history – The difference between applying for a grant and applying to borrow money is that you'll eventually need to pay the loan back – with interest – but you won't have to repay the grant. Even so, when applying for modest enterprise grants for ladies it's very best that you have a spotless credit rating. If you could have negative reports on your credit report take steps to clear them up before you start applying for grants.
Your business enterprise idea – You can find various kinds of grants – federal grants, local government grants and even grants from private enterprises or individuals. Each organization looks for something various in the enterprises they decide to award grants to. For example, the Federal government likes to grant funding for companies that will help your community including a medical center or arts center or childcare facility. You'll have far more success as qualifying for grants if you match your organization to the requirements in the provider.
Your organization strategy – No matter which kind you apply for you are going to need to submit a detailed company program. This must consist of the amount of dollars you have to have, what you intend to spend the cash on, how you expect that income to assist your organization, what form of return you assume to see on the investment. Including pie charts and graphs will make your presentation look far more expert. If you've never prepared a organization program before you might want to consult with a professional to ensure much better response on your applications.
Your application – It is perfectly acceptable for you personally to apply for additional than 1 kind of grant. But no matter how numerous you apply for your application has to be filled out in it is entirety. Again, if you're not familiar with, or comfortable with, this step in the course of action it may well be ideal in case you consult a specialist.
These small company grants for women are a wonderful opportunity to suit your needs to create your mark and burst via that glass ceiling. And that grant money is readily offered for anyone who wants to utilize. And that's generally the problem – too a lot of females aren't familiar with writing a company strategy or cleaning up their credit report.
But you DO know how to run a business and you DO know you have a fantastic idea. Do not let your unfamiliarity with the grant process stand in your way of owning your own business enterprise. Most grants that you simply apply for will be really specific about the details that they want. Answer all of their questions and get creative wherever possible to make your application stand out above the rest. You'll find hundreds of small business grants for women and there's one that's just appropriate for you!
Learn more about small business grants for women. Stop by Catherine Yeatts's site where you can find out all about women's business grants and what it can do for you.
Your credit history – The difference between applying for a grant and applying to borrow money is that you'll eventually need to pay the loan back – with interest – but you won't have to repay the grant. Even so, when applying for modest enterprise grants for ladies it's very best that you have a spotless credit rating. If you could have negative reports on your credit report take steps to clear them up before you start applying for grants.
Your business enterprise idea – You can find various kinds of grants – federal grants, local government grants and even grants from private enterprises or individuals. Each organization looks for something various in the enterprises they decide to award grants to. For example, the Federal government likes to grant funding for companies that will help your community including a medical center or arts center or childcare facility. You'll have far more success as qualifying for grants if you match your organization to the requirements in the provider.
Your organization strategy – No matter which kind you apply for you are going to need to submit a detailed company program. This must consist of the amount of dollars you have to have, what you intend to spend the cash on, how you expect that income to assist your organization, what form of return you assume to see on the investment. Including pie charts and graphs will make your presentation look far more expert. If you've never prepared a organization program before you might want to consult with a professional to ensure much better response on your applications.
Your application – It is perfectly acceptable for you personally to apply for additional than 1 kind of grant. But no matter how numerous you apply for your application has to be filled out in it is entirety. Again, if you're not familiar with, or comfortable with, this step in the course of action it may well be ideal in case you consult a specialist.
These small company grants for women are a wonderful opportunity to suit your needs to create your mark and burst via that glass ceiling. And that grant money is readily offered for anyone who wants to utilize. And that's generally the problem – too a lot of females aren't familiar with writing a company strategy or cleaning up their credit report.
But you DO know how to run a business and you DO know you have a fantastic idea. Do not let your unfamiliarity with the grant process stand in your way of owning your own business enterprise. Most grants that you simply apply for will be really specific about the details that they want. Answer all of their questions and get creative wherever possible to make your application stand out above the rest. You'll find hundreds of small business grants for women and there's one that's just appropriate for you!
Learn more about small business grants for women. Stop by Catherine Yeatts's site where you can find out all about women's business grants and what it can do for you.
Wednesday, 27 January 2010
The likelihood of venture finance becoming more available.
Interesting blog post from ROSALIND RESNICK a few weeks ago, talking about the likelihood of venture finance becoming more available.
Last week, as I was testing out the very latest business plan software technology, I got a call from a client of mine I hadn’t heard from in a while. Turns out, when he and his partner couldn’t raise money from investors to launch their business last year, they did what many intrepid entrepreneurs do. They went back to corporate America and got jobs, and used their own money to build the prototype they needed to prove that their concept was more than just a business plan and a dream.
Now that they’ve launched their product, signed up their first pilot customer and started generating revenue, is it time to start pitching venture capital firms again, they want to know. After all the bad news they’d read about VC funding last year, did the VC industry still have a pulse?
According to the quarterly MoneyTree report released last week by PricewaterhouseCoopers and the National Venture Capital Association, the answer may be “yes”–and not just for later-stage companies but for startups and early-stage ventures, too.
First, the bad news: Venture capital investment in 2009 declined to its lowest levels in more than in a decade, the report found. Last year, venture capitalists put $17.7 billion in 2,795 deals nationwide, the lowest level of dollar investment since 1997. This marked a 37 percent decline in dollars and a 30 percent decrease in deal volume from 2008.
Now, the good news: In the fourth quarter of 2009, VCs put $5 billion to work in 794 deals. But while funding declined 2 percent from the third quarter of 2009, the number of deals actually grew by 15 percent. The report also had good news for startups: While first-time financings fell to the lowest dollar and deal level since the report began tracking VC investing in 1995, the Q4 numbers showed increases in the number of first-time and early-stage deals completed.
Does this mean the ice is finally thawing?
“The venture capital industry had no choice but to slow the investment pace in 2009,” Mark Heesen, president of the National Venture Capital Association, said in a statement. “The weak exit environment resulting from an unstable public market combined with a challenged limited-partner base sent a strong message to the venture community to pull back the reins–and the VC’s listened. Now that the economy has begun to show signs of improvement, we expect to see dollars flow more freely back into those sectors that offered the most promise before the recession began–clean technology, life sciences and IT.”
With bank financing still tight for small businesses, the VC turnaround couldn’t come at a better time for cash-starved startups and early-stage companies. Seed-stage companies attracted 9 percent of dollars and 11 percent of deals in 2009 compared with 6 percent of dollars and 12 percent of deals in 2008, the report found. Early-stage investments saw double-digit increases in the fourth quarter, with $1.6 billion going into 277 deals, a 32 percent increase in dollars and 26 percent increase in deals from Q3.
Now, don’t get me wrong. Despite the fact that you may have used top of the range business plan software the create your business plan, startups and early-stage companies face long odds when it comes to raising venture capital–even in good times. Still, it’s exciting to see the river of VC money starting to flow again. It may be winter in the financial markets now, but you don’t need to be an economist to see that spring is right around the corner.
Last week, as I was testing out the very latest business plan software technology, I got a call from a client of mine I hadn’t heard from in a while. Turns out, when he and his partner couldn’t raise money from investors to launch their business last year, they did what many intrepid entrepreneurs do. They went back to corporate America and got jobs, and used their own money to build the prototype they needed to prove that their concept was more than just a business plan and a dream.
Now that they’ve launched their product, signed up their first pilot customer and started generating revenue, is it time to start pitching venture capital firms again, they want to know. After all the bad news they’d read about VC funding last year, did the VC industry still have a pulse?
According to the quarterly MoneyTree report released last week by PricewaterhouseCoopers and the National Venture Capital Association, the answer may be “yes”–and not just for later-stage companies but for startups and early-stage ventures, too.
First, the bad news: Venture capital investment in 2009 declined to its lowest levels in more than in a decade, the report found. Last year, venture capitalists put $17.7 billion in 2,795 deals nationwide, the lowest level of dollar investment since 1997. This marked a 37 percent decline in dollars and a 30 percent decrease in deal volume from 2008.
Now, the good news: In the fourth quarter of 2009, VCs put $5 billion to work in 794 deals. But while funding declined 2 percent from the third quarter of 2009, the number of deals actually grew by 15 percent. The report also had good news for startups: While first-time financings fell to the lowest dollar and deal level since the report began tracking VC investing in 1995, the Q4 numbers showed increases in the number of first-time and early-stage deals completed.
Does this mean the ice is finally thawing?
“The venture capital industry had no choice but to slow the investment pace in 2009,” Mark Heesen, president of the National Venture Capital Association, said in a statement. “The weak exit environment resulting from an unstable public market combined with a challenged limited-partner base sent a strong message to the venture community to pull back the reins–and the VC’s listened. Now that the economy has begun to show signs of improvement, we expect to see dollars flow more freely back into those sectors that offered the most promise before the recession began–clean technology, life sciences and IT.”
With bank financing still tight for small businesses, the VC turnaround couldn’t come at a better time for cash-starved startups and early-stage companies. Seed-stage companies attracted 9 percent of dollars and 11 percent of deals in 2009 compared with 6 percent of dollars and 12 percent of deals in 2008, the report found. Early-stage investments saw double-digit increases in the fourth quarter, with $1.6 billion going into 277 deals, a 32 percent increase in dollars and 26 percent increase in deals from Q3.
Now, don’t get me wrong. Despite the fact that you may have used top of the range business plan software the create your business plan, startups and early-stage companies face long odds when it comes to raising venture capital–even in good times. Still, it’s exciting to see the river of VC money starting to flow again. It may be winter in the financial markets now, but you don’t need to be an economist to see that spring is right around the corner.
Tuesday, 19 January 2010
Second Mortgage Vs. A Home Equity Loan
If you own your home and need a loan for whatever reason you have probably considered a second mortgage or a home equity loan to help you pay your bills, buy a new car, or pay for some other investment. However, you probably don't know whether a second mortgage is better or worse than a home equity loan for your particular situation. However, don't despair because there are some tips that will help you decide whether asecond mortgage or home equity loan is for you.
Second Mortgage Tip #1 One Time Expenses
A second mortgage is the preferred option if you have a one time big expense you need to cover. Examples of this include remodeling your kitchen, paying for a wedding, or buying a new car. In these instances asecond mortgage will probably work best for you; however this will depend on the equity in your home and your credit score.
Second Mortgage Tip #2 Recurring Expenses
If you are going to have recurring expenses then you might not want a second mortgage because a home equity loan will work out better for you. The second mortgage is best for large amounts of money at once while recurring expenses like tuition are better paid for with a home equity line of credit.
Second Mortgage Tip #3 Repayment
You will also need to consider your ability to repay and which option will suit you best. A second mortgage can be financed similarly to your first mortgage, while the home equity loan can be paid back more like a credit card. Consider your financial position and ability to make monthly payments before applying for either asecond mortgage or a home equity loan.
If you still don't know whether a second mortgage or home equity line of credit is for you, then talk with your lender and see what is recommended for your equity, credit, and ability to repay the loan.
Second Mortgage Tip #1 One Time Expenses
A second mortgage is the preferred option if you have a one time big expense you need to cover. Examples of this include remodeling your kitchen, paying for a wedding, or buying a new car. In these instances asecond mortgage will probably work best for you; however this will depend on the equity in your home and your credit score.
Second Mortgage Tip #2 Recurring Expenses
If you are going to have recurring expenses then you might not want a second mortgage because a home equity loan will work out better for you. The second mortgage is best for large amounts of money at once while recurring expenses like tuition are better paid for with a home equity line of credit.
Second Mortgage Tip #3 Repayment
You will also need to consider your ability to repay and which option will suit you best. A second mortgage can be financed similarly to your first mortgage, while the home equity loan can be paid back more like a credit card. Consider your financial position and ability to make monthly payments before applying for either asecond mortgage or a home equity loan.
If you still don't know whether a second mortgage or home equity line of credit is for you, then talk with your lender and see what is recommended for your equity, credit, and ability to repay the loan.
Guide To Homeowner Loans
A homeowner loan is a loan that is only available to people who own their own home. This type of loan is secured against your home and is also known as a Secured Loan. Because your home is used as the security against the loan, failure to keep up with your repayments may led to you losing your home.
The Advantages of a Homeowner Loan
Because your own home is used as the security in a homeowner loan you will be able to borrow a lot more money than you would be able to with a personal loan. Personal loans usually allow you to borrow up to 25,000 pounds whereas a homeowner loan can let you borrow a lot more than this.
Also as your own home is used as the security for a homeowner loan it means that lenders can often overlook some problems that you may have with your credit history or ability to get a loan from elsewhere. This means that people who are self-employed, have problems proving their income or have a bad credit rating may still be able to get a homeowner loan.
The Disadvantages of a Homeowner Loan
The biggest disadvantage of a homeowner loan is that your home is at risk if you do not keep up your repayments on the loan. Therefore you should think very carefully before using your home as security for a loan, and be honest with the lender from the start to ensure that you can realistically keep up with your repayments until the loan is paid off.
You need to think long-term when it comes to a homeowner loan as these can sometimes take some years to pay off depending on the amount you are borrowing and the company you are borrowing from. You need to be sure that you are financially stable for the foreseeable future and be prepared to deal with an unforeseen circumstances that may affect your ability to repay the loan.
If you are using your home as security for a homeowners loan then you need to consider if the purpose for the loan worth risking your home over? Finally, if thehomeowner loan is being used to consolidate existing debt, you need to make sure that you have made the necessary plans to ensure that all avenues of the existing debt are controlled to prevent a similar situation from arising again in the future.
The Advantages of a Homeowner Loan
Because your own home is used as the security in a homeowner loan you will be able to borrow a lot more money than you would be able to with a personal loan. Personal loans usually allow you to borrow up to 25,000 pounds whereas a homeowner loan can let you borrow a lot more than this.
Also as your own home is used as the security for a homeowner loan it means that lenders can often overlook some problems that you may have with your credit history or ability to get a loan from elsewhere. This means that people who are self-employed, have problems proving their income or have a bad credit rating may still be able to get a homeowner loan.
The Disadvantages of a Homeowner Loan
The biggest disadvantage of a homeowner loan is that your home is at risk if you do not keep up your repayments on the loan. Therefore you should think very carefully before using your home as security for a loan, and be honest with the lender from the start to ensure that you can realistically keep up with your repayments until the loan is paid off.
You need to think long-term when it comes to a homeowner loan as these can sometimes take some years to pay off depending on the amount you are borrowing and the company you are borrowing from. You need to be sure that you are financially stable for the foreseeable future and be prepared to deal with an unforeseen circumstances that may affect your ability to repay the loan.
If you are using your home as security for a homeowners loan then you need to consider if the purpose for the loan worth risking your home over? Finally, if thehomeowner loan is being used to consolidate existing debt, you need to make sure that you have made the necessary plans to ensure that all avenues of the existing debt are controlled to prevent a similar situation from arising again in the future.
125 Home Equity Loan
The real estate market slow down may be causing you some big problems. If you are like most home owners, you probably intended to stay in your home for a few years (average is five to seven years), then move onto a home that better fits your needs. But with a market slow down, it may be difficult to sell your home and move up. Have you ever heard of the125 home equity loan?
One option to consider is making improvements to your home or remodeling. But what do you do if you do not have the funds to remodel? Most remodeling projects require a lot more money than the average savings account. But you still have some options.
In this situation, lots of people turn to home equity loans. But even if you do not have a lot of equity in your home, you may be able to get enough money for your remodeling project. Instead of a traditional home equity loan, you could take a125 home equity loan, sometimes referred to as a 125% no equity loan.
Basically, this loan is available to home owners to allow and allows them to borrow up to 25% more than the worth of the home. If this loan sounds too good to be true, you should be aware that there are some restrictions to these loans and they vary from state to state.
These loans are available to home owners with excellent credit. Borrowers can take a loan up to $125,000, of which, no more than $50,000 is cashed out. The home owner must use the money to improve the home. The loan can either be used as a first or second mortgage.
If the loan is a first mortgage, there are some obvious tax benefits, but you should always check with a tax consultant before taking any tax deductions. One of the downsides of this loan is that when you do sell your home, you have to repay the loan, which could exceed the purchase price of your home. But fortunately, the improvements you make to your property should allow your home to appreciate in value, especially after the real estate market rebounds in the future.
Just because the real estate market is not moving in the direction you would hoped, there is no reason why you cannot have a home you will be comfortable in. Sometimes you simply have to change your plans and get creative.
There are almost as many options for mortgages as there are homes out there. Do not be afraid to ask for more information about the125 home equity loan, or get creative with mortgage solutions. With a little creativity, you can be in a home that is perfect for years to come.
One option to consider is making improvements to your home or remodeling. But what do you do if you do not have the funds to remodel? Most remodeling projects require a lot more money than the average savings account. But you still have some options.
In this situation, lots of people turn to home equity loans. But even if you do not have a lot of equity in your home, you may be able to get enough money for your remodeling project. Instead of a traditional home equity loan, you could take a125 home equity loan, sometimes referred to as a 125% no equity loan.
Basically, this loan is available to home owners to allow and allows them to borrow up to 25% more than the worth of the home. If this loan sounds too good to be true, you should be aware that there are some restrictions to these loans and they vary from state to state.
These loans are available to home owners with excellent credit. Borrowers can take a loan up to $125,000, of which, no more than $50,000 is cashed out. The home owner must use the money to improve the home. The loan can either be used as a first or second mortgage.
If the loan is a first mortgage, there are some obvious tax benefits, but you should always check with a tax consultant before taking any tax deductions. One of the downsides of this loan is that when you do sell your home, you have to repay the loan, which could exceed the purchase price of your home. But fortunately, the improvements you make to your property should allow your home to appreciate in value, especially after the real estate market rebounds in the future.
Just because the real estate market is not moving in the direction you would hoped, there is no reason why you cannot have a home you will be comfortable in. Sometimes you simply have to change your plans and get creative.
There are almost as many options for mortgages as there are homes out there. Do not be afraid to ask for more information about the125 home equity loan, or get creative with mortgage solutions. With a little creativity, you can be in a home that is perfect for years to come.
Getting Your Home Loan Approved
Home Loan Tip #1 Pay Your Bills
It is very important that you always pay your bills on time and never miss a payment. When you have this type of history paying bills your mortgage lender will believe you will be just as responsible with your home loan. If you want to be approved for a home loan, be sure you are current on all your payments and have been making them regularly for some time before you apply for a home loan.
Home Loan Tip #2 Employment History
In general, when an individual has been employed in the same job for at least two years, or at least the same type of job for that amount of time, a home loan approval is more likely. So, if you have been in your same job for a year and a half and are considering quitting or changing jobs, but are also looking at buying a house, wait until your home loan is approved before you make any changes. Once you have your home loan, you can make any changes.
Home Loan Tip #3 Pay Debt Down
Your debt to income ratio is considered when you apply for a home loan. If you really want to be approved for a home loan then you need to make sure you pay off as many debts as possible in order to look favorable to the home loan lenders. A home loan is approved for individuals who have a low debt to income ratio.
Home Loan Tip #4 Savings
Before applying for a home loan, make sure you have saved at least 20% of the down payment and also have enough money to cover several months of your home loan payment. When you have enough money in savings to cover you if you experience financial difficulty one month or even two or three then the lender will be more likely to approve your home loan.
It is very important that you always pay your bills on time and never miss a payment. When you have this type of history paying bills your mortgage lender will believe you will be just as responsible with your home loan. If you want to be approved for a home loan, be sure you are current on all your payments and have been making them regularly for some time before you apply for a home loan.
Home Loan Tip #2 Employment History
In general, when an individual has been employed in the same job for at least two years, or at least the same type of job for that amount of time, a home loan approval is more likely. So, if you have been in your same job for a year and a half and are considering quitting or changing jobs, but are also looking at buying a house, wait until your home loan is approved before you make any changes. Once you have your home loan, you can make any changes.
Home Loan Tip #3 Pay Debt Down
Your debt to income ratio is considered when you apply for a home loan. If you really want to be approved for a home loan then you need to make sure you pay off as many debts as possible in order to look favorable to the home loan lenders. A home loan is approved for individuals who have a low debt to income ratio.
Home Loan Tip #4 Savings
Before applying for a home loan, make sure you have saved at least 20% of the down payment and also have enough money to cover several months of your home loan payment. When you have enough money in savings to cover you if you experience financial difficulty one month or even two or three then the lender will be more likely to approve your home loan.
Home Equity Loan: What You Need to Know
The idea of getting a home equity loan while interest rates are low to help you pay off your bills, buy a car, or even pay for your child's education may seem like a great idea. However, you should educate yourself first so you know exactly what a home equity loan is and if it is really right for you.
The basic idea of a home equity loan is that you can borrow against the current equity in your home, so the more equity you have the larger home equity loan you can receive. In essence, to receive a home equity loan you are using your home as collateral, or the basis, for the home equity loan. If you do not pay the home equity loan back, then your home is at stake and may be foreclosed upon. This is sobering news many people are not aware of, so getting a home equity loan requires some thought and the ability to repay the home equity loan as well.
However, you might be reading this and actually interested in a home equity loan, but have no idea what equity is or if you have any. Equity is how much of your home you have paid for. So, you take the home's current value and subtract it from the amount you still owe, and that is how much equity you have in your home and what will ultimately be used to approve or deny your home equity loan application. For example, your home is currently worth $400,000 and you have $280,000 left to pay on your mortgage. Your current equity is $120,000.
You will need to know all of this information before you apply for a home equity loan to know if you have enough equity to even apply for a home equity loan. Plus, the more you know about applying for and negotiating rates for a home equity loan the better deal you will receive. Remember, knowledge is power and the more home equity loan knowledge you have the more powerful you will be able to negotiate.
The basic idea of a home equity loan is that you can borrow against the current equity in your home, so the more equity you have the larger home equity loan you can receive. In essence, to receive a home equity loan you are using your home as collateral, or the basis, for the home equity loan. If you do not pay the home equity loan back, then your home is at stake and may be foreclosed upon. This is sobering news many people are not aware of, so getting a home equity loan requires some thought and the ability to repay the home equity loan as well.
However, you might be reading this and actually interested in a home equity loan, but have no idea what equity is or if you have any. Equity is how much of your home you have paid for. So, you take the home's current value and subtract it from the amount you still owe, and that is how much equity you have in your home and what will ultimately be used to approve or deny your home equity loan application. For example, your home is currently worth $400,000 and you have $280,000 left to pay on your mortgage. Your current equity is $120,000.
You will need to know all of this information before you apply for a home equity loan to know if you have enough equity to even apply for a home equity loan. Plus, the more you know about applying for and negotiating rates for a home equity loan the better deal you will receive. Remember, knowledge is power and the more home equity loan knowledge you have the more powerful you will be able to negotiate.
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