finance
monthly
Personal Finance. Money. Investing.
Contribute
Newsletter
Corporate

According to Dominic Buch, Co-Founder and Managing Partner at Caple, in order to support that growth, many CFOs will be expected to examine and recommend suitable funding solutions.

Finding an appropriate form of finance is more complex than it used to be. For most of the twentieth century, business lending was based on the value of a company’s assets such as property, stock or invoices.

To help firms access funding, finance directors have therefore developed a good understanding of how lenders would assess their company’s physical assets.

However, today, companies are more likely to be investing in intangible assets such as data, software or a strong brand than tangible ones.

This investment in intangible assets has spurred growth and innovation. But using them as collateral to borrow against remains difficult. Although value is built in intangible assets, finance is raised against tangible ones.

Without a new approach to funding, finance directors, especially in asset-light sectors such as professional services, technology or media, may struggle to find suitable funding for their business.

The growth of the intangible economy

As most finance directors would recognise, companies now build and grow through investment in intangible assets, alongside a continued focus on human capital.

We can see this from the businesses that succeed today.

Airbnb is valued at $35bn because of its network and data, not because it owns apartments. Google has become a global behemoth because of its algorithms.

These companies are valued so highly because of their intangible assets, including the skills of the people that develop them.

The same is true of many smaller but growing businesses too. Service-based businesses contribute around 80% of UK GDP and more than £160bn in annual exports.

For instance, growing financial firms, technology companies and media businesses rely on intellectual property and brand to stand out from their competitors.

But because financial standards have not kept pace with these changes, finance directors may struggle to accurately value their asset and their business.

The challenge accessing capital

Intangible assets present a challenge to traditional lending models based around recoverable security such as property or machinery.

If a company with physical assets goes out of business, a bank can recover its money by selling those assets. Lending decisions can therefore be centred around the value of the assets, rather than the performance of the business.

Intangible assets are less transferable, they cannot easily be recovered and sold to a new owner.

As a result, businesses with intangible asset bases find it more difficult to access debt finance, regardless of the strength of its operations and the associated cash flows.

When asset-light service-based businesses sector are such a vital part of the UK economy, this puts a brake on growth.

How unsecured lending can help

Traditionalists will say equity funding through venture capital or private equity is the solution. Often that holds true.

However, as finance directors will know, third party investment, does not suit every sector, firm or business owner. It also dilutes ownership.

Instead, asset-light companies can now benefit from unsecured lending, based on an understanding of the future cash flows generated by the business, rather than the value of physical assets.

Working with external advisers such as an accountant or business advisor, finance directors often play an important role in helping their business access the right funding.

Both by identifying suitable lenders and in supporting the development of the forecasts and business plans central to a credit process based on future cash flows.

When expanding businesses are important for both jobs and growth, we need to do all we can to help fund them.

We need a new approach to lending where finance directors can help their firms access the right growth funding for them.

In this article, we provide some tips that could help improve your credit score, allowing you to easily qualify for a car loan or personal loan. So, without wasting any time, let's look at some tips on how you can improve your credit score.

Rectify the mistakes from your credit report

There is no doubt that sometimes incorrect information does severe damage to your credit score. So, you must carefully check your credit report to see if there are any mistakes in it. We recommend checking the report at least once a year because your credit score is profoundly affected by the information found on your credit report. Make sure that you get these problems resolved promptly; otherwise your credit score will be severely affected by these errors.

You may consult your national credit bureau, like the Credit Bureau Singapore (CBS), if you want to report the accuracy of any item of information like overdue balances, previous inquiries, and account status. The credit bureau will highlight in your report that the following information is under investigation.

Pay bills on time

A missed credit card bill payment is a dangerous element that damages your credit score in the long run. It will take a lot of time to improve your credit score if there are any missed payments in your report. Banks and other financial institutions will evaluate the risk by carefully analyzing your credit card payments. So, if you want to maintain a high credit rating, you must pay your credit card balances in full every month.

Multiple New Credit Applications Are Also A Threat

The eligibility criteria and requirements are different for every bank. Therefore, we cannot state a particular number of new applications that may harm your credit score. However, your credit score will be severely affected if you've applied for many new credit facilities in a very short period.

Keep Your Credit Active

The lender will also check if you're a responsible user of credit or not. So, if you're not utilizing your credit cards after paying off all your credit card bills, it may have an adverse impact on your credit rating. You must regularly build a history of on-time repayments by using your credit cards after a specific period. The regular use of credit has a significant impact on your reputation.

Keep it Simple

Managing credit is not a problem at all. All you need to do is to keep things simple and smooth. Here are a few habits you must follow in the long run if you want to maintain a good credit score:

Building your credit health is entirely in your control. So, consistency is key. With the tips below you’ll have no problem pushing your score right back up.

First of all, you need to identify the industry you’d like to start your business in. And then you’d have to conduct proper market research in order to decide whether this idea will bring you fruitful results or not. Moreover, you’d have to talk to a few friends that could help you in pursuing your goals.

Usually, people are afraid of starting a business due to fear of failure. But there is another thing that can become a hurdle, and that’s a lack of money. Some people have enough money in their savings account to fulfill their start-up dream. But many people don’t have enough money to pursue their goals. Fortunately, there are several ways you can fund your start-up.

In this article, we’ll take a look at four of the most useful ways you can fund your start-up. And you won’t have to make any sacrifices if you consider these methods.

Crowdfunding

Start-ups and creative people have been using crowdfunding as a valuable option for years. These individuals don’t waste their time finding angel investors for hundreds of thousands of dollars. They use a creative approach to raise money through smaller contributions from the masses. If you want to launch a product or design without knocking down the doors of venture capitalists, crowdfunding can be the ideal solution for you.

The advantage of using this technique is that it helps in marketing your product way before you officially launch it. You can analyze the feedback and consumer interest to decide if your idea will work in the industry or not. Indiegogo and Kickstarter are the most common crowdfunding websites you can raise funds for your startup business on.

However, you need to understand the terms and conditions of these websites before sharing your idea. For example, Kickstarter only accepts the ideas of individuals that belong to a limited number of countries. Unfortunately, the residents of Singapore cannot avail of this opportunity. However, you can take help from a business partner that belongs to a country that is allowed by Kickstarter.

Grants

Getting a grant can be a great way of funding your business in Singapore. The Singapore government is continuously helping SMEs that are willing to bring change to the industry. The first-time entrepreneurs must consider going for the Spring Singapore ACE grant. For every S$3 raised by the entrepreneur, the Spring Singapore will match S$7 for up to S$50,000. In other words, you’d have to raise around $21,429 if you want to receive the maximum grant of S$50,000.

Spring Singapore will give the grant over 2-3 tranches, and they won’t take equity in your organization. The most remarkable benefit of using this scheme is that it also helps in finding a suitable mentor for your start-up in the first year. Depending on the sector or industry, you can use several other local grants that are particularly designed for start-ups. For clean and high-tech companies, the Spring Singapore offers additional funding schemes while the social enterprises can take advantage of the ComCare enterprise fund.

Grants like these, often offered by governments worldwide, can help in giving a great financial boost to your start-up. However, you must carry out the proper research to find detailed information about any grants available.

Incubators and Accelerators

The chances of obtaining seed funding can be increased if you consider getting into a business incubator or accelerator. The major difference between an incubator and an accelerator is that the incubator starts with organizations that are at an initial level of the development process. On the contrary, the accelerator requires you to work with the mentors for a set period before graduating.

Although there are only a few seed funding programs available nowadays, you can get the targeted resources and support for your startup by joining an incubator or accelerator. The chances of growing a startup business are ultimately increased when you work with successful entrepreneurs.

Loans

If your friends and family members are unable to provide financial help, you could get help from a bank or licensed money lenders to get a loan. A loan can be the right option if you want to retain full control over your company, as it makes you feel free from giving equity to investors.

OCBC has designed a collateral-free loan program that is available for start-ups. The loan is known as the OCBC Business First Loan. It provides you with access to $100,000, and this loan is particularly available for companies that have started around six months ago. The only problem with this loan is that it can only be approved if you have a guarantor. If you have a completely new and untested business model, you must be very careful about taking out this loan.

Similarly, you must think carefully before taking out a loan if you are not expecting revenues in the short to medium term.

Another useful option to fund your startup is taking out a personal loan. Some banks like Standard Chartered CashOne offer a low minimum income requirement with attractive interest rates. Similarly, the ANZ MoneyLine Term Loan comes with the interest rates of as low as 6.6% per year.

Entrepreneurs can now fulfill their start-up dream with the help of these funding options. You should do some research to find out the funding option that will better accommodate your needs. We recommend going for the options that come with lower risks. Thus, you’d be able to focus on the growth of your business thereon.

For many small enterprises an injection of cash is required at some point - either at the start-up stage, in preparation for growth, or simply to stay in the game.

However, many small business owners set out with blind optimism and underestimate the level of funds required to keep a business afloat. Oliver Spevack, Chartered Accountant and co-founder of OS Accounting specialises in supporting start-ups and SMES.

He says: “Poor financial planning can cripple a small business and lack of funds is one of the common reasons why new businesses run into problems and fail.

“So many small businesses that come to us have no business plan and no idea how to raise capital. They are completely unaware of the grants and tax relief schemes available to them.”

Funding can make or break a small business. Let’s take a look at the options available.

Family and friends

The cheapest way to borrow money is by getting an interest-free loan from family or friends. You may be able to negotiate a longer-term payment plan than you would get with a traditional loan through a bank, or agree to pay the money back in a lump sum once your company reaches a certain profit or turnover target. You probably won’t have to give a share of your business away either.

Social media crowdfunding

Crowdfunding has become an increasingly popular option for funding a small business in recent years. It does, however, require a strong promotional strategy, increased transparency, and the possibility of giving up a stake in your business. See more on the different types of crowdfunding and the best crowdfunding sites to launch on here.

Business loans

A wide range of lenders offer loans to small businesses, from traditional banks to online specialists. Small business loans are also available from the government. The British Business Bank (the government’s publicly owned development bank) was set up to help small businesses in the UK access funding. The bank offers start-up loans from between £500 to £25,000 and helps small enterprises understand and access funding options.

See some frequently asked questions on small business loans here.

Angel investors

Not a suitable option for businesses that want to retain 100 per cent control over their business, but angel investors do offer funding opportunities and can often bring some expertise to small businesses.

Essentially, an angel investor is a person, or group of people, who provide funding in exchange for a part of the business. They can be silent (i.e. just provide a capital injection) or can be active and offer advice and expertise to help grow the business.

BBC2’s Dragons’ Den has become the template for what happens when a small business needs investment from an angel investor.

Read more on the pros and cons of angel investors here.

[ymal]

Venture capitalists

Venture capital is similar in its concept to an angel investment – there are, however, differences. Essentially both offer funding in exchange for a share of the business. The main difference is that angel investors work on their own, whereas venture capitalists are a division of an organisation or an organisation in their own right.

Venture capitalists are only interested in businesses that are likely to make a high return. They look for small businesses that have the potential to grow into large companies.

Research and development grants

Small business grants are one of the best sources of funding available to start-ups, developing and established small businesses. There are many private and government schemes available. The qualifying criteria varies hugely, but there are literally hundreds of schemes from Princes Trust Grants to global investor, Unltd Social Enterprise Funding.

Many of the grant schemes available to small businesses are industry or location-related, such as the Energy Entrepreneurs Fund which supports the advancement of energy technology or council-run business development grants, which may also have industry-related criteria.

Tax relief schemes

Not strictly funding, but tax relief schemes are another underused resource that can provide a considerable boost to a small business’s funding pot. The tax breaks commonly overlooked by small businesses include:

Let’s take a brief look at each of these.

R&D Tax Credits – a government scheme designed to reward and encourage greater innovation across the UK business sector, which can amount to tens, even hundreds of thousands of pounds, every year. See more about the government scheme here.

Annual Investment Allowance – a government scheme offering tax relief to British businesses on qualifying capital expenditure, specifically on the purchase of business equipment.

EIS and SEIS – these are government backed investment schemes that encourage investment in small and medium-sized companies.

Enhanced Capital Allowance – the government ECA scheme was introduced in 2001 to encourage businesses to invest in energy-saving equipment. Businesses can claim 100%  first year tax relief on qualifying equipment.

Employment Allowance - The government’s EA scheme was introduced in April 2014 to incentivise recruitment in smaller businesses - this is worth up to £3,000 per year to set against an employer’s Class 1 NIC bill. Single director companies without employees do not qualify.

What is the enterprise investment scheme and could it be useful to you and your business? Below Tony Stott, Chief Executive of Midven, has the answers.

The Enterprise Investment Scheme, we believe, is one of the investment sector’s best-kept secrets. Despite helping 26,000 privately-owned small businesses to access £16bn worth of funding for growth over the past 25 years, and securing attractive tax-efficient returns for investors in the process, the scheme has a relatively low profile.

That is now changing, however, as savers seek out new opportunities to plan for their long-term financial needs in the face of increasing restrictions elsewhere.

Most obviously, the once-generous rules on contributions to private pension plans have been steadily curtailed. Today, most investors are limited to annual pension contributions of no more than £40,000; moreover, higher earners, with annual incomes of more than £150,000, get a smaller allowance – as little as £10,000 a year for those with incomes of more than £210,000. The lifetime allowance, which levies tax charges on pension funds worth more than £1.03m, is also a problem for increasing numbers of people.

By contrast, the EIS offers much more generous allowances, with investors able to put up to £1m a year into qualifying companies. For many savers, the scheme therefore represents an increasingly valuable opportunity as a complement to pension saving, particularly as it may also be a more flexible option. Investors must hold on to their EIS shares for only three years to retain their tax incentives; pensions, by contrast, can’t be accessed until age 55 at the earliest.

[ymal]

Those tax incentives are certainly alluring, spread across income tax, capital gains tax and inheritance tax:

Understanding the investment opportunity

It’s important, however, not to let the tax tail wag the investment dog. After all, tax reliefs aren’t much use to investors who end up losing their starting investment.

It’s only fair to point out that the Government offers these tax breaks partly because it recognises the high risk of EIS qualifying companies, due to their illiquid nature. To be eligible for the scheme, companies must meet some restrictive tests: amongst other criteria, they must have assets of no more than £15m, fewer than 250 employees and be less than seven years’ old. These small, early-stage businesses are, by their nature, more likely to fail than larger more established companies.

That said, the best of these privately-owned companies also tend to deliver much more exciting returns than their larger counterparts trading on recognised stock exchanges. And investors can mitigate the risks of EIS investment through diversification. While would-be EIS investors do have the option of investing in individual companies with EIS-qualifying status – including many businesses on equity crowdfunding platforms – it is also possible to get exposure through a managed fund of such businesses run by a specialist asset manager. Such vehicles represent a potential way to spread your bets.

There are no sure things in investment, but the tax breaks on the EIS, allied with the opportunity to build a portfolio of shares in potentially high-growth companies, are an tempting mix for long-term savers. They are likely to be particularly attractive to those who are running out of pension allowance.

Indeed, the secret appears to be getting out there, with official figures suggesting EIS popularity has surged in recent years.

Figures from HM Revenue & Customs reveal that in the 2016-17 financial year, the most recent period for which data is available, some 3,470 companies raised a total of £1.8bn of funds under the EIS, though this was an initial estimate that HMRC expects to increase. In 2015-16, 3,545 companies raised £1.9bn of funds.

This won’t be a scheme for everyone. Investors will need to be prepared to accept the risk of partial or total losses, significant volatility over the short term, and to be patient. But for investors seeking out new opportunities to maximise the financial provision they are making for the long term, then EIS may be worth considering with your independent financial, legal and tax advisor.

Bridging loans can pretty much be used by anyone that needs to make a purchase in a short amount of time. However, here are just five of the most common reasons as to why an investor may need a bridging loan:

Chain Break Finance

It isn’t uncommon for a property chain to break in one of the final stages of a transaction, and it can be incredibly annoying for the investor or developer involved. A bridging loan, also known in this case as ‘chain break finance’, can be used to cover your finances while you find a new purchaser for your property.

The sale of the property will therefore continue to go ahead. Without a bridging loan, the purchase of that property would have fallen through completely.

Property Auctions

Some property investors visit auctions not expecting to purchase anything at all, and therefore won’t have any funds sorted prior to visiting. However, if a great opportunity arises at an auction, it would be a shame to have to let it go to someone else. This is again where a bridging loan comes in useful.

Property Refurbishments

Most mainstream lenders refuse to lend to investors that are developing a property that isn’t really in the best condition. However, bridging lenders (also development finance brokers) consider both the future value of the property, as well as the overall ROI, and make their services readily available as they will be able to see the benefit.

If you’re interested in purchasing an abandoned property, then it might be worth checking out this post first for some handy advice.

Property Conversions

If someone is in need for some quick funding in order to finance the conversion of a property or maybe even add an extension, then a bridging loan could be used for this.

Business Funding

Bridging loans can cover everything from initial business establishment costs to unexpected shortfalls, and even urgent tax payments that may be required, and this can often be a life saver for most business men and women who need to pay large sums within a short amount of time.

If you think that you fit into one of the categories above, and you’re in need of bridging finance, then get in touch with a reliable independent finance broker, such as Pure Commercial Finance, who will be able to help.

 

Investment loans, for example, would turn into profits in the near future while bad loans would result in recurring debts, bad credit score and higher interest rates. Car title loans are some of the popular personal loans sourced from private lenders as opposed to traditional sources such as banks and cooperatives.

More often, lenders financing, car title loans would need the applicants to undergo some credit check. While this is a crucial stage in any lending business, the procedure sometimes spoils the only chance an applicant had in order to acquire the so-much-needed money. In the tight economy, car owners who opt for the car title loan usually have a poor credit score with the other lenders and the only way to obtain a loan is to use their car title as security.

Over the years, car owners wishing to obtain a car loan, often don’t want to go through the credit check process since it can worsen their credit score. This has resulted in a friendlier way of obtaining loans without risking their credit reputation. Certain lenders give title loans with no credit check where car owners have to submit a few documents for consideration. Some of the most important aspects used by such lenders to evaluate the applicant’s ability to repay the loan are the presence of a steady income stream and the vehicle’s value.

Listed below are some tips that can help you decide, if you want to get a title loan or not.

Is it a good or bad idea?

This is a simple question with a straightforward answer. It depends on your urgency and of course the condition you’re in. Everyone at some point in time undergoes some financial emergencies such as paying hospital bills, overdue debts, etc. Taking a reasonable instant loan you can get is probably a good idea and a solution to such financial constraints.

A car title loan with no credit check will come in handy if you’re in need of some quick cash without ruining the already-damaged credit reputation. Since banks and cooperatives won’t buy your idea of borrowing a loan with poor credit, the only good idea is the no credit check car title loans. Again, going for a loan to fund some luxuries is a bad idea. Car title loans may come with slightly higher interest rates and you don’t want to pay such interest after funding some mediocre causes.

Requirements for the no credit check car title loans

When you’ve found a car title lender giving no credit check car title loans; you’ll be required to have certain documents with you. These are:

When no lending company would listen to your stories, the only way out of financial shortages is to use the resources you already have with you. Your vehicle is an important asset during such times and you can use it to your own advantage. Regardless of the existing credit score, the no credit check car title loans give you a chance to redeem your hopes without having to beg for what you deserve.

Matt Robinson, Commercial Director at Ping Finance, believes that now is the right time for SMEs to borrow, and here takes Finance Monthly through the reason why.

Low Interest Rates

In the UK, interest rates are still incredibly low. Despite a 0.25% increase back in August 2018, bringing the interest rate up to 0.75%, the UK interest rate is still way below the average that it has been in the past, and this is only a good thing for those borrowing.

At one time, during the Thatcher leadership, interest rates rose to a staggering 17% to combat inflation. Interest rates continued to rise into the late 1980s due to the pressure of increasing house prices. The election of Tony Blair in 1997 gave the control of setting the base interest rate to an independent Bank of England. Interest rates then began to steadily decline, hitting 3.75% in 2003, before increasing again up to 5.5% in 2007. Since then, interest rates have dropped drastically due to the impact of the global financial crisis, falling all the way to 0.5% in March 2009, and then a further drop to 0.25% in 2016.

After the recent rise to 0.75% in August, Mark Carney, governor of the Bank of England, said there would be ‘gradual and limited’ interest rate rises in the future. With Brexit uncertainty on the horizon, predictions for the next couple of years are speculative at best. Therefore, there has never been a better time for the likes of SMEs to borrow. Even with the slight increase, we are currently experiencing one of the lowest interest rates in the UK’s history, and with the likelihood of increases on the way in the next couple of years, borrowing right now is a smart move.

There Have Never Been More Options

Nowadays, SMEs have the luxury of being able to be as picky as ever when it comes to their financing options. The alternative finance market has exploded since banks began to withdraw following the recession; traditional loans are no longer the only option for small businesses looking to borrow.

Crowdfunding, for example, can be an effective way to raise capital by allowing people to make small investments in a project or business. Online lenders can be contacted via online applications, and funds can be transferred into accounts in as little at 24 hours.

Peer-to-peer lending creates a form of borrowing and lending between individuals without a traditional financial institution being involved and can turn out to be a cheaper alternative to borrowing from a bank or building society.

Financial technology, asset-based lending, invoice finance and challenger banks are some other alternatives to traditional high street bank lending. These alternative lenders use algorithms and data manipulation to streamline the loan approval process from weeks down to days at most. With so many viable financial services available, there has never been a better time for SMEs to take advantage of all these different options.

Competition Between Lenders

In a similar vain to there being so many different financial options, there is also heavy competition between lenders. With so many lenders vying for your business, they are doing everything possible to make their services seem more appealing to potential clients. Lower interest rates in conjunction with reduced fees or no fees are just some of what’s being offered by many lenders in a bid to secure your business.

From the perspective of an SME, you have the power to shop around and discover the best deal for you. With so many lenders competing to provide the most enticing offers, SMEs can take advantage of this and get a better deal than they would if they had to go with the first offer they were quoted.

More Business Support

It has never been easier to start a business than right now. There is a lot more guidance and knowledge out there to help people bring their ideas and ambitions to life, and most of it can be accessed for free online.

One of the biggest barriers to starting a business has always been start-up cash, and whilst that is still the case, it’s not as much of a problem as it used to be. Online platforms not only create a global marketplace for SMEs, but it’s easier than ever to contact investors and lenders and start generating cash flow to get your business off the ground.

Obtaining funding is not the only barrier to starting a business; general business support is crucial for SMEs to become successful and be able to pay back their loans. Networking, paid mentorship, free courses, government led schemes, books and the wealth of information on the internet can all be utilised by SMEs to help grow a successful business.

Post-Crash Borrowing

Since the market crash in 2008, there has been a shift in attitudes when it comes to lending. There is a greater focus on lenders to look after borrowers, stamping out shady practices and creating a better environment for those who want to borrow. As 2008 becomes a distant memory, lenders’ appetites for risk has increased, and SMEs can take advantage of this current culture of encouraged lending.

 

 

You came to the right place. In this article, we will see how to apply and secure a personal loan.

What to Do Before Applying for a Personal Loan

1. Check Your Credit Score

A higher credit score will make it easy for you to get a loan. If your credit score isn’t good enough, then take steps to increase it before applying for a loan.

You can get a loan with a low credit score but at a higher interest rate.

2. Consider Different Lender Options Online

People usually go to banks to take a loan. Since the banks would be aware of your financial credibility, they would be flexible in offering you a loan.

However, you can also consider other lenders and any Non-Banking Financial Company (NBFC). Verify their credibility before approaching them. Check for loan costs, interest rates, terms and tenure.

3. Compare the Interest Rates

Shop around to check what interest rates different lenders are offering. Compare the loan amounts and the required monthly payments too. Some financial institutions may offer you an unsecured personal loan while a local bank may offer better interest rates.

Apart from comparing personal loan interest rates, check what other charges you may have to bear. These may include processing fees, payment penalties, and foreclosure charges.

4. Check your Eligibility

Banks or other lenders require you to be salaried or self-employed to be eligible for a loan. You should be in a particular age bracket as well.

5. Check the Documentation Required

Check all the documents you require to apply for the loan. These may include your recent payslips, letter of employment, current address, photographs, etc.

6. Choose the Appropriate Lender

Choose a lender who gives you a flexible tenure and different EMI options to pay off the loan. Use an EMI and personal loan interest calculator online to estimate your monthly cash outflow.

7. Read the T&C Document Carefully

Make sure you understand all the terms and conditions before you apply and secure the loan. If you have any queries, ask the lender immediately.
Once you complete the above-mentioned steps, you can apply for the loan – either online or through the financial institution’s app.

How to Apply for a Personal loan

8. Online Application

Fill up the online form and upload all the required documents. In this step, you need to mention:

  1. Desired loan amount
  2. Contact details
  3. Email ID

This is the stage when all the documents will be verified. The financial institute will check whether you are eligible for the loan or not. Once all the documents are verified, you will get an instant e-approval.

After the verification, the loan disbursal process will be initiated. You will have to e-sign the loan agreement document. By doing this, you agree to abide by the terms and conditions of the lender.

Once you e-sign the document, disbursal process will be started. Provide your bank account details where the loan amount will be disbursed.

9. Requests through E-mail or Phone Banking

Leave a request for a personal loan with the bank either through the customer service centre or an e-mail. The financial institute will review your eligibility and contact you to take the process ahead.

10. Offline Request at the Bank

If you don’t want to go the online route, go to the nearest bank of your choice. Talk to a relationship manager and request a loan.

Getting a personal loan has become a very simple process. You can use instant personal loan apps and have the loan amount in your bank account in no time.

Here Alpa Bhakta, CEO of Butterfield Mortgages Limited, explains what factors and characteristics brokers and borrowers need to be on the look out for when selecting a lender. As part of the feature, she'll also delve into how the rise of challenger banks has affected the prime property and mortgage markets.

Between 2016 and 2018, as many as 4,214 new products were introduced into the residential mortgage market. It’s a remarkable statistic, and one that reflects the broadening range of options available to homebuyers.

Today, mortgage lenders have larger product portfolios, with subtle variations in their terms and rates meaning they provide multiple iterations of what is fundamentally the same offering. At the same time, the rise of “challenger banks” means there are more and more new players entering the industry, in turn giving borrowers entirely new companies to approach.

One would naturally assume this is a positive trend, something to be welcomed and celebrated. However, in truth, despite the increase in the number of mortgage products available to consumers and investors, challenges still remain.

As with any market that expands steadily over a long period, the wealth of options to choose from can prove overwhelming. Indeed, filtering through thousands of potential mortgages to find the best product from the right lender is perhaps more difficult than ever.

The value of intermediaries

Earlier this year, Butterfield Mortgages Limited carried out an interesting piece of research delving into the UK’s mortgage market––or more specifically, the UK’s high net-worth (HNW) mortgage market––to establish borrowers’ opinions of the products available.

The independent survey of more than 500 HNW individuals revealed that even for the wealthiest members of society, there are still significant barriers to securing a mortgage. For example, one in nine said they had been turned down for a mortgage in the past decade.

Furthermore, 79% said they think too many lenders are currently employing overly restrictive “tick box” methods when assessing mortgage applications; 60% believe it is becoming increasingly difficult to secure a mortgage for a non-primary residential purchase; and 67% of UK HNWs feel banks do not adequately cater to the needs of property investors and buy-to-let landlords.

The results illustrate how the wealth of options available to mortgage applicants is not always a good thing. In fact, it means there are more unsuitable products and lenders that a borrower must filter though.

Enter the intermediaries. Brokers and wealth advisers have a more important role than ever in guiding their clients, such as HNWs, towards the best and most appropriate mortgage products. Indeed, the aforementioned BML research showed how 73% of HNWs rely on brokers to help them find mortgages.

The larger the mortgage market becomes, the more valuable expert help will be in connecting borrowers to suitable lenders and products.

Choosing the right lender

It’s nearing three years since the EU referendum, and as if anyone needed reminding, Brexit has dominated political and economic discourse throughout this period. In a word, the result of the on-going Brexit saga has been uncertainty.

A lack of clarity regarding what the UK’s financial and political future will look like has resulted in hesitancy among consumers, investors and businesses alike. In the mortgage market, this means further due diligence is required from borrowers and brokers to ensure they work with lenders who are not at risk of succumbing to the challenging conditions currently gripping the market.

Over recent months the likes of Secure Trust Bank, Amicus Finance and Fleet Mortgages have withdrawn from the lending market or frozen their activities. As FT Adviser reported in January, the combination of Brexit and increased competition has forced some companies out of the market, while other lenders are pulling out of deals at the last minute.

One of a borrower’s greatest fears is that he or she will choose a mortgage lender who enters financial difficulties and this, in turn, has the potential to compromise their own finances. To avoid this, one must establish the relative security of different lenders based on the strength and longevity of their funding lines, as well as their past track-record of weathering turbulent periods, such as the 2008 global economic crisis.

The number of products and lenders in the mortgage market is on the rise. Meanwhile, Brexit uncertainty has presented new challenges to both traditional and challenger lenders. Consequently, selecting the right mortgage from the right provider requires more due diligence than ever.

After all, there are specialist lenders with expertise in providing bespoke mortgages for even the most niche borrowers in the most unique situations. Finding them may take work, but ultimately the health of the mortgage market reflects the ever-present demand among both domestic and international buyers for bricks and mortar assets here in the UK, and this certainly is something to celebrate.

A low Annual percentage rates (APR) loan is almost always provided to people whose credit score is excellent. You can easily do a lot to improve your odds of getting a low interest rate by reversing your credit damage. Besides your credit rating, there is very little left to get any bank loan with a low-interest rate.

In the following paragraphs, we show you four tips for improving your credit history if it's not good.

1. First Things First

(Image source: a3papersize.org)

Boost your credit score. Low Annual percentage rates loans are usually provided to applicants with stellar or high credit ratings. To improve your credit rating, remove as much of your financial obligations as you possibly can and repay what you owe in a timely manner. Also, steer clear of making too many credit enquiries. Every time, you make your credit enquiry by applying for a credit card or loan, it ruins your credit track record.

2. Submit an Application for Loans Using Collaterals

Unsecured loans have high interests’ rates even if you have a good credit rating. Therefore, in order to get a low Annual percentage rates loan, consider getting a personal loan as an alternative. For instance, you can use the car title as collateral. Normally the value of the security must be comparable to the particular amount of loan you want to acquire. Secured loans generally come at lower interest rates than unsecured loans. If you are getting confused with the interest rates on personal loans, you better try www.Zmarta.fi to compare the options from more than 25 banks and lenders in your area.

3. Using A Co-Signer

The next tip of a low Annual percentage rates loan is to get a co-signer. This is actually known as co-debtor. You can ask your family member (spouse, parents or sibling) who have a good credit score to sign the loan with you. Once you have a co-signer, loan providers consider their credit history before deciding the interest rate at which they give you the loan.

The Annual Percentage Rate will be lower in case your co-signer has an excellent score. Make sure that you don't go delinquent on your loan because if you do, then your co-signer will be responsible for making payment on the rest of your loan and the interest. Besides, it'll adversely affect his / her credit score so be aware of this.

4. Essential Cost Comparisons

There are different loan companies with different interest rates. So, try to do some essential price comparisons using loan comparison sites. Once you have compared some loan providers, make contact with a couple of them and ask for an offer. They'd take the details you provide and determine the interest rate and monthly payment, and send you all you need to know on that loan. You better opt for the one with the lowest Annual percentage rates. Stick to the tips above, and within 6-12 months you will see your credit rating start to improve.

Sam Smith from finnCap Group says that for small to medium-sized companies with scale-up plans, this more uncertain climate poses questions about whether they can access the financing they need to fund their growth.

However, sources of capital to back growth companies have actually increased. Government supported institutions such as the British Business Bank, regional growth funds, the bank financed BGF and its early-stage-funding subsidiary BGF Ventures are all helping SMEs with their funding needs.  Alternatively, there are Peer2Peer lenders, venture capitalist and private equity houses with significant funds to deploy. Meanwhile, AIM as one of Europe’s best scale up exchanges remains a resilient source of capital. At finnCap, we work with a wide range of these institutions to supply funding opportunities for growing companies looking to scale up and the insights we have drawn from these relationships inform our view of the changing fundraising arena outlined below and how growth companies can best steer through this more complex environment.

Funding outlook more challenging

There are currently clear concerns about financing growth. These stem from a range of factors, including equity and bond market dislocation, the likely withdrawal of the EIB from the UK and largely Brexit inspired uncertainty around GDP growth and Brexit. In 2017 the EIB group lending was €654m to UK SMEs, which was some 42% of the organisation’s total funding commitments.

Meanwhile, banks which, following the 2008 financial crisis, have scaled back their lending to small and mid-cap businesses, are a continuing source of concern. SMEs make up 99% of private businesses in the UK and account for more than half of all employment and turnover. However, lending to small businesses last year remained static, with the £7bn of new loans drawn in the third quarter of 2018 compared with £7.1bn in the previous quarter, according to the most recent data from UK Finance.

Lending to small businesses last year remained static, with the £7bn of new loans drawn in the third quarter of 2018 compared with £7.1bn in the previous quarter, according to the most recent data from UK Finance.

In addition, equity markets remain turbulent with FTSE 100 losing 12.5% in 2018, with most of this downturn occurring in the final quarter of the year, and meaning that the index’s suffered its worst performing year since the financial crisis in 2008. Similarly, AIM also suffered losses in the final quarter of last year, despite outperforming the main market for the first three quarters.

 Government policy driven initiatives offer funding

Although the present financial climate does pose challenges, there is a range of funding alternatives available to companies searching for scale-up capital. Some of these opportunities in the funding landscape have stemmed from Government driven initiatives. As a national investment programme, the British Business Bank (BBB) was initiated to improve the supply and mix of funding available to SMEs through the development of a wide variety of initiatives.  Overall, in the four years to 2018, the BBB has facilitated some £5.2 billion of additional funding for SMEs through its range of programmes and partnerships. This includes the establishment of regional powerhouse funds such as the Northern Powerhouse and Midlands Engine, which offer a mix of equity and debt solutions, with the former providing SMEs with £31m of funding in its first year.

A further potential source comes from the Alternative Remedies Package (ARP), proposed by the European Commission and UK Government, which has the Royal Bank of Scotland (RBS) backing the £775m scheme to provide greater financing options for growth businesses. Some £425m makes up the Capability and Innovation Fund, which helps facilitate and encourage eligible bodies, including challenger banks, to develop and improve their financial products and funding services available to SMEs.

VC investment in UK SMEs was £5.96bn over the course of 2018, which was more than 1.5 times the level invested in fast-growth businesses in Germany.

Alternative sources of capital continue to fill the gap left by banks

In addition to Government supported initiatives, the funding landscape today is far broader than a decade ago with an array of capital raising opportunities to consider for companies searching to scale up. Private equity and venture firms have substantial funds to invest. For example, private equity houses invested some £3.2bn in UK SMEs in the first half of last year, which was up 12% year-on-year and the trend stayed strong over the second half of the year. Similarly, VC investment in UK SMEs was £5.96bn over the course of 2018, which was more than 1.5 times the level invested in fast-growth businesses in Germany.

The alternative lending industry, which includes challenger banks, private debt and Peer2Peer lenders, which emerged following the financial crisis – partly resulting from the unwillingness of banks to lend to SMEs - has matured over the past decade. As an example, Funding Circle as a leading P2P funder has become an increasingly important source of funds for businesses in recent years, accounting for around 10% of all lending to SMEs in 2017, according to the Cambridge Centre for Alternative Finance.

AIM remains Europe’s top destination for fast-growing firms looking to go public

Despite the instability of 2018’s last quarter, AIM is still well-positioned and remains Europe’s top market for fast-growing firms looking to go public. Last year it was responsible for 59% of the funding secured by growth companies across European bourses, raising £5.5bn across 398 separate deals. This compares well with £17.7bn for the entire main market in London.

In fact, AIM has performed well amongst the backdrop of Brexit. There were 42 IPOs on AIM in 2018 raising £1.6bn for growth companies, compared with 49 IPOs a year earlier raising £2.1bn – itself a 97% increase on the money raise in 2016. Furthermore, AIM still after 24 years continues to play a vital role in helping SMEs to scale up, while also including a range of more mature businesses, which have prospered on the market, offering a better balance of risk for investors.

The alternative lending industry, which includes challenger banks, private debt and Peer2Peer lenders, which emerged following the financial crisis – partly resulting from the unwillingness of banks to lend to SMEs - has matured over the past decade.

Scale-up funding still available

finnCap Group plc itself provides private fundraising, corporate finance, debt advisory, sell and buy side advisory and trading services to 125 public and private growth companies, to help them find the right investment for growth and access capital. Since it was established in 2007, finnCap has helped raise more than £2.6bn of new capital to support corporate clients.

finnCap Group plc’s listing on AIM last December illustrates our confidence in the market as a source of growth capital for companies and its key role in helping to further their growth. AIM also remains the first choice to raise capital for a wide range of companies from across the economy, with the sheer diversity of its constituents a key strength.

The broad range of alternatives and continuing attraction of AIM should be a salient reminder that scale-up capital is still available and Britain and the country’s growth businesses should be able to play a strong role in powering the growth of a more global Britain.

 

Website: https://www.finncap.com/

About Finance Monthly

Universal Media logo
Finance Monthly is a comprehensive website tailored for individuals seeking insights into the world of consumer finance and money management. It offers news, commentary, and in-depth analysis on topics crucial to personal financial management and decision-making. Whether you're interested in budgeting, investing, or understanding market trends, Finance Monthly provides valuable information to help you navigate the financial aspects of everyday life.
© 2024 Finance Monthly - All Rights Reserved.
News Illustration

Get our free monthly FM email

Subscribe to Finance Monthly and Get the Latest Finance News, Opinion and Insight Direct to you every month.
chevron-right-circle linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram