As a technology company, SmartFinancial simplifies the insurance-buying experience with a transparent insurance-technology platform that matches shoppers with the right insurance products. This makes the entire process of shopping for insurance simpler and more efficient.

With inflation on the rise and so much uncertainty with the economy, budgeting and saving money is more important than ever. A smart way to save is to make sure you shop and save on your insurance. Below are some common questions and answers that can help you do just that.

With prices soaring, what are the best ways consumers can save money on insurance?

Compare prices for all types of insurance every six months because each insurer rates each person differently and rates change daily. Use a comparison site like SmartFinancial to save time.

What types of insurance coverage changes lead to the biggest savings?

Raising your deductible is the easiest way to see big savings for both home and car insurance. Also, ask your insurance agent about the types of discounts the carrier offers.

How much money can consumers save by updating their insurance yearly?

You can even save by comparing insurance rates every six months. Why not? You can save up to 40% on premiums.

When are the best times to compare insurances? Is there a specific season or life event that signals a chance to save money on insurance?

Many life events may make you eligible for a lower rate. You may end up saving with an existing policy or a new one, if you get married or move to a better neighbourhood or if you get a new job or buy a home. If your credit score improves, make sure to compare insurance rates. If your rates increase, you should shop around to see if another carrier can offer you a better deal. If you haven’t compared prices in over six months, you’re probably paying too much for insurance.

Is the cost of insurance also rising with inflation?

If you’re buying insurance now, you may be paying more due to inflation, but not if you shop around for a competitively priced policy. If you’ve been insured for over six months, you may be underinsured as a result of inflation so that your limits are too low to cover an accident without you being responsible for an outstanding balance. Inflation is heavily affecting insurance coverage limits, which are no longer adequate for rising prices in parts and labour. You may want to consider increasing your limits in case you do need repairs on your car or home.

How is SmartFinancial utilising technology to help consumers adjust to inflation?

You can still find an affordable insurance policy despite inflation if you compare rates and insurers. SmartFinancial takes away the legwork of comparing prices, which can help you find the most affordable policy available in your area. After users share their information one time, they are offered competing rates from the larger insurance companies all the way to the small local ones.

With inflation on the rise and so much uncertainty with the economy, budgeting and saving money is more important than ever.

Do consumers receive any negative consequences for switching insurances, such as financial penalties or other fees?

Whether or not you’ll be fined with penalties and fees depends on a few factors. Different insurance companies have different policies. You may or may not get your policy prorated for the amount of time your policy was active. You may or may not get fined for cancelling, depending on the terms of your contract. The best time to switch is just before your renewal date to make sure you don’t get fined. Also, make sure to have an active policy before cancelling your old one so you have no gaps in coverage.

How does SmartFinancial keep the human element in an industry and world, that is vastly increasing the presence of automated and chatbot solutions for customer service?

SmartFinancial is built by people and powered by technology. We have call centre concierges all across the country for people who would rather speak with a live agent for a free quote rather than filling out a questionnaire online.

What is the one thing you wish everyone knew about insurance? 

Insurance is not meant to be used unless it’s a cost that would otherwise be a great financial burden. Use it when you can’t afford to pay out of pocket. As a rule of thumb, never file a claim for any repairs that are below or slightly over your deductible amount. It’s just not worth it. Several claims can lead to a higher insurance rate.

A credit card processor is a third party that connects the consumer and the bank, merchant, and credit card network. This organisation is vital in completing payments made using credit or debit cards. 

This industry is evolving and becoming more extensive than ever, making companies confused about whom they will entrust this aspect of their businesses. If you are still on the hunt for the best credit card processor, here are the things that you should consider before deciding which one to pick. 

How Much Does The Service Cost?

The first thing you should take into account is the cost of the card processor. It would be best if you considered that you are running a business and need to choose services that cost the lowest. Below are the standard fees that card processing companies will charge you.

Application Fee

The first thing you will have to pay when acquiring a card processor is the application fee. You will need to settle this fee to process your application and schedule your business for the setup. 

Setup Fee

Once you have paid the application fee, the next step for your application is to set up the card processing equipment, which will require you to pay another fee. It will cover the installation cost, like the labour and equipment of the technician. 

Monthly Statement Charges

When you start using the credit card processor to accept payments from your customers, you will need to pay the service provider a monthly statement fee. You pay a fee for the processor to mail you the statement every month. 

Gateway Access Fee

Another monthly fee charged to you is the gateway access fee. This payment is for the data transaction between the payment processor and the bank. 

Interchange Fee

Your business performance will be charged every transaction, which they call the interchange fee. 

Monthly Minimum Fee

The credit card processor will collect a minimum fee from you even if your sales are low.

Software Compatibility

After figuring out which processor works best based on your budget, the best thing you must consider is the software compatibility. Although most payment processors work well with any software, it is still best to investigate further and ensure that it is indeed compatible. Additionally, you might also want to consider other features of the card processor, like an option to accept digital wallets as payments, as it is becoming a popular payment option nowadays. 

Security Of The Process

Security is a significant concern, especially for this kind of financial transaction. No matter how small or big your business is, security should be your top priority. You must already be aware of fraud and security breaches in this kind of transaction. It is why you should be vigilant and ensure that the processor you choose can provide you with the best security and fraud prevention system. Regarding this concern, opting to acquire a card processing service from the best in class card processor can be viable. Therefore, choose the best and trustworthy names when choosing the credit card processor you will use. 

Pre-Termination Fee

Although a pre-termination fee is still a fee, it is not considered part of the card processor cost. A pre-termination fee will only come into account when you decide to stop the service before your contract matures. The fee for the early termination of your contract may vary from one service provider to the other. It is why you must figure out how much is at stake just in case.

Early termination of the contract is inevitable, especially if you are not happy and satisfied with the service provided by the card processor. Commonly, credit card processing companies charge a pre-termination fee from a couple of hundreds to thousands of dollars.

When choosing a credit card processing company, you should consider those that only charge $400 or lower. It will help you avoid paying a considerable amount of money whatever happens.

The Ease Of Use

The ease of use should be your next concern when choosing a credit card processor. It would be best if you went for a processor that is easy to understand and use. This way, you will never have to encounter any problems related to its operation along the way. Additionally, an easy-to-understand system is also easy to troubleshoot when issues arise. Plus, if your card processor is easy to use, you will never have difficulty teaching your employees how to use it. 

Taking Everything Into Account

You might find it complicated to choose which credit card processor is best for you. However, considering all the factors mentioned above, you are now well aware of what to look for in one. Use this information to help you pick the suitable processor that will help you run your business' payment system.

Here, we’ll look at the components you should include in your marketing plan and how your method of accepting payment can impact your business.

Let’s get started:

Developing a Marketing plan

Effective marketing requires time, money, and preparation. To stay on a budget and schedule when marketing your business, you need to have a marketing plan. A marketing plan involves the steps you’ll take to market your business to potential customers.

Your Business plan needs to include the basic essential elements of your marketing strategy.

Essential Sections of a Marketing Plan

Most marketing plans include these components. As usual, only use what works best for your business.

Market Research

Research is a key component of a marketing plan. You can start by checking with your local library offering market reports. You can even access some library cards online.

Study the size of the market in the industry, customer buying habits, market growth or decline, and other current trends.

Target Market

A detailed market description can help identify your potential buyers. Consider the market size, unique traits, demographics, and demand trends.

Competitive Advantage

Describe what puts your products or services ahead of other products. It could be a lower price, a better product, or excellent customer service. Having eco-friendly certification, or “made in the USA” label, can mean a lot to customers.

Sales Plan

How will you sell your product or service to your customers? List the sales methods you plan to use, for instance, retail, wholesale, or online. Let your customers know each step to take when they decide to buy.

Marketing Strategy

Your marketing strategy will determine whether you’ll reach your sales goal or not. Ask yourself, “how do I find and attract potential buyers?”

Look at the entire market and then come up with specific tactics to use, such as events, email, direct mail, content strategy, social media, couponing, street teams, seminars, webinars, partnerships, and any activity that can help reach potential customers.

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Budget

How much do you want to spend on your marketing plan? Here try to be as accurate as possible. You’ll need to track your costs when executing your plan.

Measure and Update Your Plan

Be sure to check how marketing costs compare with generated revenue. You’ll want to ensure you’re getting a good return on investment.

Some tactics, such as word-of-mouth, are hard to measure. So get creative and get advice from other people. The key thing here is to be consistent in measuring the effectiveness of your marketing efforts.

Selecting Payment Methods

Do you know the kind of payments you accept can affect your marketing and sales? Be sure to choose secure, cost-effective forms of payments. Such payments offer a positive experience for your customers. No matter what payment methods you accept, you’ll require a business bank account.

No matter what payment methods you accept,

you’ll require a business bank account.

Credit Cards

To accept debit and credit cards, you’ll need either an account with a third-party payment processing company or a merchant services with your bank.

In addition to the cost of setting the required equipment, you’ll be charged a processing fee for each debit or credit card transaction.

Accepting debit and credit cards can expose you to fraud risk, but most providers offer a certain degree of protection for your business.

Checks

To accept checks, you need to have a business bank account.

To avoid fraudulent or bad checks, you need to develop a policy for accepting checks. For instance, you can decide to only accept checks from in-state banks. Or require checks to include only the validity of given checks by taking a photo of them using mobile banking apps (some banks allow instant check clearance using mobile apps) making the transaction much more fluid.

Checks can not only be used to receive payments from customers, but they are a nifty financial tool for making business payments. The best thing is that you can buy your checks online, thus saving money when reordering business checks. You just need to google online and choose a vendor that matches your needs.

Cash

Some small businesses only accept cash because it’s easy, fast, and inexpensive.

However, this option increases the accounting time and security risk. Be sure to develop a secure way to hold your cash, like a safe and register.

Online Payments

If you run an online business, you have the option of using an online payment service to accept payment through your website.

Typically, online payment services accept debit and credit cards. You’ll be charged a small fee to accept payment online.

As well as the issues of cultural and language differences, there are also challenges of positioning yourself successfully among competitors and marketing your brand so that it stands out. However, the main issue that you will have to address is that of your budget. It might be easier than ever to expand your business reach, but that doesn't mean that it comes without costs. Knowing the cost of international expansion makes it easier to get right, and keeps your business safer. If you're considering international expansion, remember to factor in the following expenses.

The Budget Big Three

There are going to be many costs to take into account, but the big three should be your priority. Make sure that you understand:

• Exchange rate
• Interest rates
• Inflation rates

Take the time to understand how the big three work in your new geographies and your financial planning will be more realistic and much healthier. Never assume that everything is the same from country to country. In some nations, costs will even vary by municipality, so you’re going to need to dedicate some time to some serious and in-depth financial planning.

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Physical Requirements

While it is possible to start selling your product around the world from your existing office, many countries will require you to have a physical outlet in their country. Knowing the local laws and getting your premises organised before you even start to sell is essential. Renting a property can be a big cost so you need to know if it’s needed. You will also need to decide whether you’re going to hire local workers to run your international branch. That will mean knowing the laws regarding wages and working hours. Look for help from those that can assist you. Companies like INS Global can make sure that you have got your budgeting right when it comes to paying the right minimum wage in China, which can be made very complex very quickly due to different municipalities having different minimum wages. Always find people, services, and resources on the ground and you’ll make it easier to leverage your position in a new market.

Your Exit Plan

One of the main cost considerations that many first-time entrepreneurs overlook is the cost of closure. Not every new business expansion is going to be a success, and it’s not good practise to simply pack up and head elsewhere. A budgeted exit plan is essential, even if it’s something that you end up never needing. You might find in some countries that closing a business is a lot more expensive than opening one, so your research is going to be essential. The last thing that you want is to lose more money than expected through the exit process. That can affect your already established brand security at home, and that’s an unnecessary risk that can be avoided with some simple foresight.

From e-commerce companies that are working from a home office to mega-corporations extending their reach further than ever, accessing the global audience has never been easier. However, as with any business growth, there are inherent risks. Budget is going to be a major factor in terms of your success, so make sure that your research is robust and that you have the finances needed to cover every aspect of your predicted expenses. Get your bottom line right and your international growth will be safer, more natural, and more profitable.

People who frequently travel to various places around the world aren’t necessarily rich; they just know how to save for their trips and cut unnecessary costs. If you can do the same, you will certainly be able to travel wherever you want with minimal cost. Visiting a new place can be so exciting, and you may start spending on unnecessary things.

To avoid that, you will have to stick to your plan, and only do the things that you planned for before traveling. That way, you will be able to cut unnecessary expenses and enjoy the trip as much as you want.

Have a Plan

Once you decide to travel, you will need a good saving plan. The first step in planning is being honest with yourself and matching your trip to your financial situation. That way, you will know if your plan is unrealistic and needs more work. You should know an estimation of your trips' overall cost, so you can understand how much you need to save and identify the expenses that you can cut during your trip.

Book Early

Flight prices change drastically, from one day to the next. Being able to book your flight early gives you the added benefit of finding cheaper fares. Do your research, and look for the right flight for you. Usually, non-direct flights are cheaper than direct ones, so bring a book along for those hours in transit. You’ll be smiling at the cost saved.

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Leaving Your Car Behind

While planning for your trip, you will realize some small costs that end up adding to the total expense, such as taking a taxi from and to the airport. If you’re taking your car to the airport, do your research. There are many airport parking options that you can benefit from. If you’re in Florida, Parking at Fort Lauderdale airport can be more affordable than requesting a ride, and you can be sure your car will be safe while you're traveling.

Opt for Private Accommodations

It is no secret that services like AirBnb have made things a lot easier for the frequent traveler. If you think about it, the cost of staying at a hotel, even with its benefits, might not really be worth it. After all, you’re a tourist, and how much time are you really going to spend in the hotel? More often than not, you’ll be walking around all day, and all you really need is a place to lay your head at night.

Once you set your goals and cut all the unnecessary costs before and while you're traveling, you will be able to travel more than once a year and enjoy the trip. Planning for the trip and knowing how much it’s going to cost is an essential factor when you’re looking to save money. So do the research, and with these nifty tips, you’ll be enjoying your trip to the fullest, even on a budget!

In its latest report Late Payments: The Cost to Business and Our Health, Hitachi Capital UK has investigated the mental health impact of late payments on the UK’s SMEs and freelancers. The research finds that there is an urgent need for action to alleviate the emotional and financial burden of the issue, acknowledged by Government as an inhibitor to the growth of the UK economy.

From a sample of 1,000 SMEs and freelancers based in the UK, a sizeable 11% of surveyed freelancers have been diagnosed with a clinical condition due to clients failing to pay invoices on time. This figure equates to over 200,000 freelance employees in the UK^₂, with the most common conditions anxiety (61%), stress (45%) insomnia (41%) and depression (27%).

In addition to highlighting the harmful effects of late payments, Hitachi Capital UK’s research outlines the prevalence of late-paying clients for freelance businesses. Two-thirds (65%) of respondents have experienced at least one instance where a client has failed to pay within an agreed payment period.

The research has exposed the drain of late payments on productivity and resource among freelancers, who are now spending an average of 77 minutes each day chasing clients. Almost half (49%) of freelancers are spending 1-4 hours each day chasing late payments, losing valuable time to grow their business and service existing customers.

The majority of freelancers surveyed were unfamiliar with the preventative measures available to them, with over a third (35%) unaware that interest can be claimed on late payments from clients. Similarly, only 15% of freelancers are aware that late paying clients can be taken to the Small Claims Court.

Robert Gordon, CEO of Hitachi Capital UK, said: “The current focus on Brexit has detracted from some of the most pressing issues affecting SMEs. It is high time that we hold poor payers to account for failing to pay on time and in full, acknowledging the effect that cash flow shortages can have on the wider health of the economy.”

Hitachi Capital UK’s extensive research has already found that that late payments are costing almost a third of SMEs at least £10,000 a year; with 40% of SMEs having used their own money to close cash flow gaps within their business. An overwhelming majority of these respondents (80%) invested their own savings to cover operational costs and keep their businesses afloat.

Commenting on the findings, Simon Blake, Chief Executive, Mental Health First Aid England, added: “Being self-employed or working in an SME can present a number of challenges to our health and wellbeing - including the pressure of managing a consistent cash flow. The link between late payments and mental health issues is a worrying trend and requires quick action to ensure that people are not left to suffer in silence.

“This is one of the many reasons why we are working towards a future where people in every type of community have the training and resources to support their own and others’ mental health. People from all walks of life - whether working as freelancers, in SMEs or in larger businesses – should be empowered to seek and offer support if they are struggling with their mental health.”

Of greater concern is the impact of late payments on the long-term health of the UK economy, which is estimated to have cost UK SMEs at least £51.5 billion in the last 12 months, but the true figure is likely to be much higher.

The new research from Hitachi Capital UK has determined the financial burden on the UK’s 5.6 million SMEs as a result of late paying customers and uncovered the extent to which an epidemic of late and unfair payments is hampering productivity and growth.

Over a quarter of SMEs (27%) have experienced a profit squeeze because of late payments, and 12% have had to defer staff pay, equating to an estimated 1.95m UK employees that are left empty-handed on payday.

With many SMEs already struggling to maintain liquidity, the research highlights the extent to which late paying customers represent a drain on resources. Around 40% of respondents have been forced to use their own money to address cash flow gaps in their business. The vast majority of these respondents (80%) have invested personal savings to keep their business afloat or operational.

Critically, the research exposed a need for SMEs to take measures to maintain cash flow over the course of the year to mitigate damage caused by unreliable customers. Nearly three quarters of SMEs (74%) have had a customer fail to pay during their agreed terms at least once during the last 12 months, and 34% of SMEs report customers using their position to delay or reduce payment.

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With 21% of SMEs also turning down a contract because a customer was known to be a bad payer or offering unfair payment terms, the use of external funding options is an increasing necessity to offer a safety net when business is stalling. Today’s research indicates that awareness of potential solutions such as invoice finance remain too low.

Robert Gordon, CEO of Hitachi Capital UK, said: “An imbalance of power between clients and suppliers, often driven by larger players abusing their position, has led to a widespread late payment culture that is damaging UK SMEs. As our research has shown, if we let this go unchecked, huge numbers of businesses will continue to experience cash flow pressures at a time of wider economic uncertainty.

“This has ramifications not only for SMEs, but for entire supply chains and a fair, competitive and supportive business environment is critical for the country’s wider economic success. It’s imperative that we not only acknowledge this issue and crack down on late payments, but also take practical steps to ensure businesses are given the required support and penalties are put in place for the worst offenders.”

The findings come amid a range of new Government measures – proposed by the previous Government but currently on hold – of tougher sanctions to address late payments, including greater powers for the Small Business Commissioner to enforce best practice and revisions to the Prompt Payment Code. Of those surveyed, over two-thirds of SMEs (68%) would support legislation making it illegal to miss a payment deadline, with over half of respondents (57%) spending nearly a day a week chasing outstanding invoices, suggesting that late payments are contributing to the productivity deficit within the UK economy.

In analysing the sector landscape, professional services was identified as one of the worst offenders, with 17% of SMEs identifying this grouping as a leading culprit for late payments.

The South East was the region with the highest proportion of SMEs reporting financial issues caused by late payments, representing 18% of the total number of responses, followed by Greater London at 16%.

Andy Dodd, Managing Director, Hitachi Capital Invoice Finance, added: “As one of the UK’s leading finance providers, we understand first-hand the impact that late payment can have. Many SMEs struggle to maintain liquidity and this remains an underlying threat to their personal finances and ultimately the survival of their businesses.

“Fortunately, there are a number of solutions available to small businesses. Firstly Invoice Finance which provides an immediate advance, normally of up to 85% of the invoice value, to provide instantaneous cashflow injection. Secondly, using a good credit control provider, perhaps aligned to Invoice Finance – it’s an area that frequently neglected, but should be front-of-mind amongst SMEs.”

Bunk looked at the cost of a rental deposit and the cost of renting for a decade. Bunk then compared this cost to the financial barrier of a mortgage deposit, and the cost of monthly mortgage payments over a 10-year fixed term at a rate of 2.58%.

Across the UK the average monthly rent is £676. With the newly introduced five-week cap, that means a rental deposit costs an average of £845 and renting at this average monthly rate over a 10-year period would cost a total £81,120 – a total cost of £81,965 when including the deposit.

The current average UK house price is £226,798 and so a 10% deposit would set you back £22,680. This leaves a loan amount of £204,118 and at a 10-year fixed rate of 2.58% would mean a total repayment of £231,798, a total of £254,478 including the deposit.

The current average UK house price is £226,798 and so a 10% deposit would set you back £22,680.

This means, that renting is £172,513 cheaper than owning a home over a 10-year period when it comes to the upfront and monthly costs, with the one big difference being the bricks and mortar investment secured at the end.

This saving is most notable in Cambridge with a difference of £341,090 over 10-years between renting and buying, with the saving in London also topping £316,247.

In Bournemouth, renting over 10-years is £183,376 cheaper than buying, with Bristol (£177,613), Edinburgh (£166,547), Cardiff (£143,984), Southampton (£138,617), Portsmouth (£137,240) and Plymouth (£128,480) all home to some of the biggest savings.

The lowest saving is in Glasgow where renting for 10-years is just £43,145 cheaper than buying in the city.

Co-founder of Bunk, Tom Woolard, commented: “Of course the big difference between renting and buying is that one leaves you with a sizable financial asset as a reward for your years of hard work making mortgage payments.

However, more and more of us are opting to rent long-term and what we wanted to highlight is that while the rental market is generally viewed in a negative light due to high rental costs, it is actually a considerably cheaper option when compared to homeownership, even with almost record low-interest rates. 

Not only this but those that feel resigned to renting due to the high financial barrier of buying actually have a much better opportunity to save compared to those paying a mortgage. Whether they choose to use this for a deposit further down the road or simply to enjoy a better quality of life is up to them.”

During this time of financial uncertainty, many opt for emergency small term loans to cover the cost, however these are for financial emergency only and alternative funding will be needed. Here we are going to give you our top tips for saving money and avoid using your credit card.

Make A Shopping List

One of the main ways to avoid making payments on your contactless credit card is to have a shopping list and stick to it. In doing this, you can ensure that you have bought all the food that you need for the week at one time without spending large sums of money as a result. By having everything in the house that you could need, this reduces the need for you to travel to the shops and get tempted by a chocolate bar or other sweet treats that can be bought on impulse with your contactless card.

Avoid Fast Food

Although it may seem tempting to opt for fast food when you have had a long day in the office, it is important to avoid this temptation. One of the ways that you can do this is through making food the night before and freezing it. This not only helps you to maintain a healthy lifestyle, but it saves you money as a result. This is ideal particularly for students as this will allow them to save excess money and maintain a healthy diet.

Don’t Use Mobile Banking

Mobile banking is something that you should definitely avoid if you are looking to save money. This is because applications such as Google Pay, and Apple Pay make it easy for you to pay for items with a fingerprint or simple passkey. This will not aid you in saving money as this makes it to easy to overspend and end up buying items that you do not need. One way that you can get around this is through travelling to the bank to look at your finances or even restricting your online banking to one desktop.

Pay By Cash Not Card

When going out for a night on the town or on a shopping trip, it is very easy to opt for a contactless payment to purchase items quickly, but what about just taking cash? By taking cash with you and leaving your card at home, you restrict yourself to the amount of money that you can spend. This is particularly important if you are limited on funds as this allows you to budget accordingly and ensure that you do not overspend at any point. If an item is out of your budget at this time, you must then wait till next month to afford it.

Buy Your Own Lunch

Although this may seem like an extremely small transaction per day, purchasing lunch can actually amount to a large portion of your spending per month. In order to combat this and save yourself more money, begin packing your own lunch. This could save you an average of £5 per day which can amount to a large amount at the end of every month. This can then be saved and placed within a bank account for a financial emergency or a treat later in the year.

Whether you are looking to completely avoid using your card on a daily basis or you are looking to limit the amount that you are spending in general, you can be sure to find the solution that works for you by following one of these top tips.

What would happen to the US if it paid off its debt?

How does development finance work and what are the criteria? Below Gary Hemming at ABC Finance explains the ins and outs of project financing and development loans in the property sector and beyond.

1. What is development finance?

Development finance is a type of short-term, secured finance which is used to fund the conversion, development or heavy refurbishment of property or properties. Property development finance can be used for a range of different building projects but tend to be used for ‘heavier’ projects, which require serious building works.

Projects which require ‘lighter’ works, such as internal refurbishment are likely to be better suited to a bridging loan.

2. How does it work?

Development finance can be more complex than residential mortgages, with funds advanced upfront and then throughout the build.

Funds are initially advanced against the value of the site, with most lenders happy to advance up to 60-65% of the value.

Once the build has begun, further funds are released at agreed intervals, with lenders often willing to advance up to 100% of the build costs. In order to agree to each stage release payment, the site will be re-inspected by either a lender representative or monitoring surveyor. If they feel that works are being done to a high standard and there is sufficient value in the site to release the next stage, funds will generally be released quickly.

The reinspection and further staged drawdown are then repeated until the project is completed.

3. How is the interest paid?

The interest is retained by the lender as each stage is drawn down, meaning there are no monthly payments to make. When the development is complete, the loan is redeemed along with any interest that has accrued.

This generally suits both the borrower and lender as cash flow can be difficult to mage during a build. As such, the removal of monthly payments makes the loan easier to manage for all parties.

4. How much does it cost?

The rate charged will depend on several factors, with the main ones being

• The developer's experience and track record
• The scheme being undertaken
• The location of the development
• The amount of funding required
• The loan to value/loan to GDV requested

Larger loans of say £500,000 or above will usually be between 4-9% per annum depending on the above factors.

Smaller loans of say below £500,000 will usually range from 9-12% per annum however if the deal is strong you could pay around 6.5% per annum. Usually, lenders price each application individually.

In addition to the interest charged, the will usually be a number of other fees, the main ones are:

• Lender arrangement fee – this is usually 1-2% of the loan amount
• Lender exit fee – this is not always charged but can be 1-2% of the loan amount.
• Valuation & monitoring surveyor fees – these can vary and it is almost impossible to offer a guide due to the number of variables.
• Broker fees – most brokers will expect to earn 1% for arranging a property development loan. Where they are not paid by the lender, they will usually charge it as a broker fee directly to you.

5. Understanding the maximum loan available

Property development finance lenders use a number of key metrics to calculate the maximum loan, they are:

• Loan to value (LTV) – The loan to value ratio is used to calculate the maximum available advance at any one time. The monitoring surveyor will revalue the site throughout the build to ensure the lender is never overexposed.
• Loan to cost (LTC) – Most lenders will want to know that you are putting up a certain amount of the money yourself, loan to cost is used to calculate this. For example, a maximum loan to cost of 90% would mean that the lender is not willing to put more than 90% of the total cost of works into the scheme. You would, therefore, have to pay at least 10% of the total project cost by way of deposit.
• Loan to gross development value – Otherwise known as loan to GDV, is the maximum percentage of the loan that the lender is willing to offer. If a £1,000,000 scheme had a maximum loan to GDV of 70%, the maximum total facility would be £700,000.

The lender will combine all 3 of these metrics to calculate the maximum loan. Where there is a conflict between the 3 figures, the lower of the 3 will be chosen to cap the loan.

6. What happens when construction works are complete?

When the works are complete, the loan will generally need to be repaid. Often, people look to refinance to a term loan such as a mortgage or switch to a development exit product whilst the site is sold as this can be cheaper than the development finance, maximising profit.

The facility will be set up to last for only the build period, with a grace period to allow time to refinance or sell. Development finance should never be used as a long-term finance solution.

If the recent software failures in the financial industry are anything to go by, then disruption to payment systems are becoming the ‘new normal’. This week David O Riordan, Principal Technical Engineer, SQS Group, delves into the benefits of blockchain, in particular in the aftermath of a software disaster.

The VISA card payment outages, Faster Payments issues and disruption to card payments at BP petrol garages, all within the first half of 2018, have caused many to question the regulatory environment around financial institutions. And with the Bank of England and FCA requesting banks to report on how prepared they are for IT meltdowns, stating that any outages should be limited to just 48 hours, the finance industry is under real scrutiny when it comes to technology.

Corporations are now expected to have a Disaster Recovery (DR) and business continuity plan put into place to avoid falling victim to software failures. Nevertheless, what business leaders need to understand is that while no IT solution is completely foolproof, and will likely go down from time to time, the key is knowing how a potential internal failure can be mitigated without affecting the overall performance. This can only be achieved with a well-practiced DR plan that is second nature to the responsible parties and can be executed in the desired timeline. However, this can be both costly and time-consuming to set up. How can such incidents be minimised, or potentially eliminated, in the future? Blockchain is an alternative technology solution business leaders should consider, as it has fraud protection already built-in and is highly resistant to all type of attacks and failures.

Blockchain for Business Continuity

Built-in Fraud Protection:

Blockchain is a de-centralised platform, where every node in the network works in concert to administer the network and no single node can be compromised to bring down the entire system. It is a form of distributed ledger where each participant maintains, calculates and updates new entries into the database. All nodes work together to ensure they are all coming to the same conclusions, providing in-built security for the network.

Most centralised databases keep information that is up-to-date at a particular moment. Whereas blockchain databases can keep information that is relevant now, but also all the historical information that has come before. But it is the expense required to compromise or change these databases that have led people to call a blockchain database undisputable. It is also where one can start to see the evolution of the database into a system of record. In the case of VISA and other payment systems, this can be used as an audit trail to track the state of transactions at all stages.

Ingrained Resiliency:

Additionally, blockchain removes the need for a centralised infrastructure as the distributed ledger automatically synchronises and runs across all nodes in the network by design. As a result, Disaster Recovery (DR) is essentially built in, eliminating the need for a synchronised DR plan. The inability to alter entries in the ledger also contributes to the overall security of the blockchain, improving resilience against malicious attacks.

This is unlike traditional large centralised systems where resilience is provided by failover within a cluster, as well as site-to-site Disaster Recovery at a higher level. Disaster Recovery plans and procedures can be costly due to a large amount of hardware and data replication required. Furthermore, most businesses often do not execute it, so when disaster strikes, corporations are not prepared to deal with the aftermath; as seen with VISAs outage problems.

The Downside of Decentralised Blockchain Technology

Performance:

While blockchain can be used as a system of record, and are ideal as transaction platforms, they are slow compared to traditional database systems. The distributed networks employed in blockchain technology means they do not share and compound processing power like traditional centralised systems. Alternatively, they each independently service the network; then compare the results of their work with the rest of the network until there is an agreement that an event has happened.

Confidentiality:

In its default, blockchain is an open database. Anyone can write a new block into the chain and anyone can read it. Private blockchains, hybrid limited-access blockchains, or ‘consortium’ blockchains, can all be created, so that only those with the appropriate access can write or read them. If confidentiality is the only goal then blockchain databases offer no benefit over traditional centralised databases. Securing information on a blockchain network requires a lot of cryptography and a related computational liability for all the nodes in the network. A traditional database avoids such overhead and can be implemented ‘offline’ to make it even more secure.

Blockchain for Disaster-Relief?

As an emerging digital disruptor technology, no one can say for sure where blockchain technology will ultimately lead. While many have disregarded this technology, the potential is certainly there to attempt to solve some of the most common problems in the digital space.

However, with high customer demands on the increase within financial services and with the combination of a widespread network and substantial cost pressures, IT outages will continue to impact consumer experience. Businesses can minimise potential damage by managing communication effectively and dealing with the technical nature of the outage quickly. With a comprehensive and well-rehearsed data recovery plan, it can not only mitigate outages but maintain standards of service too. This will encourage customer retention, loyalty and growth. Therefore, blockchain should be considered, as it has a built-in check and balance to ensure a set of colluding computers can’t ‘game’ the system; as the network is virtually impossible to crack. As blockchain processing efficiency improves, it will increasingly become a more viable proposition, potentially making traditional disaster recovery unnecessary in the future.