4 Benefits of Leveraging an Alumni Network to Grow Your Business

Corporate alumni networks are one of the top reservoirs with a higher potential for business growth. Unlimited number of people have secured jobs through people they know, with several studies showing that about 60-80% of the job roles are earned through professional connections. Despite such networks being cost-effective and easy to build, they remain largely untapped. Your success in any alumni network depends on your understanding of the network-specific mechanics and the involved law of attraction.

So, can you leverage an alumni network for your business’s growth? Read on to find out the importance of a strong alumni network to your business.

4 Reasons Why an Alumni Network Matters to Your Business

When most people hear of alumni networks, they think about job connections. While this is one of the main benefits, a strong alumni network is beneficial to the businesspeople as well. Let’s look at some of the reasons why an alumni network should matter to you as a business owner.

  1. Guarantees a Robust Talent Pool

Any business can benefit immensely from a strong talent pool, there’s no doubt about that. Take the example of ex-PayPal employees; they make the who’s who of Silicon Valley. The PayPal alumni network comprises senior managers and founders of innovative brands like Tesla, YouTube, and LinkedIn.

Members of an alumni network can offer resources, energy, and time in support of one of their own and this can be beneficial to your business if you are a member of such a network. For instance, in such networks, the members share updates on current roles, business opportunities, as well as projects they are working on. Therefore, you can expand your organization’s talent pipeline by ensuring that your employees are active in their alma mater.

  1. They Represent Your Brand

If you are the likes that do not keep in touch with ex-staff, you need to rethink about it. The fact that an employee left doesn’t make them an enemy. In fact, remaining in touch with such employees can grow your employee value proposition. Sharing the same sentiments, Reid Hoffman, the CEO of LinkedIn pointed out that ex-employees possess a high level of credibility compared to current employees, especially when they recommend your products or support your brand on social media platforms.

  1. Assists in Securing New Clients

One of the significance of being in a strong alumni network platform is the trust it builds. You will find it easier to secure new clients through a member of your alumni than doing it all by yourself. From a marketing angle, your alumni members are a great resource in your business because they build trust between your brand and clients easily. Therefore, keep such networks active and your business will get new referrals more often.

  1. Help You Rehire Quality Ex-employees

Rehiring outstanding ex-employees is considered a great business practice. In such a case, you save a lot in terms of costs and time compared to having to recruit someone fresh who doesn’t know your business processes.

There is a high tendency for companies to rehire an ex-employee because of the benefits that boomerang employees bring to the organization. For instance, such employees have highly diverse work experience, understand your company’s operations, and are probably more productive compared to the brand-new hires.

Nurture a Strong Alumni Network to Grow Your Business

Even with all these benefits, a large number of business owners are yet to take advantage of corporate alumni networks. If you have not encouraged your employees to participate in their alumni networks or if you are not a member of one, start today. It will come in handy for your business’s growth on matters of talent, clients, brand reorientation, and rehiring quality staff among other aspects.

Get Cash When You Need It: 4 Must-Know Ways to Make Quick Cash

In May 2020, it was reported that 21 million Americans are jobless.

While that’s not the only reason you may need fast must, it certainly may be a reason you find yourself needing cash quickly.

In this article, we’ll discuss a few ways you can legitimately make quick cash to give your bank account a boost when you need it.

Read on for some of our top ideas.

1. Sell Items Online

Need cash super fast? One way is to part with unwanted or unused items on Craigslist, Amazon, Depop or eBay. If you’ve got tech items or designer items, you’ll likely be able to get a pretty penny quickly. Even in a recession, there are tons of people out there who are looking for these items.

While you may not be able to get top dollar if you need money immediately, and thus can only accept what people offer, you’ll usually still get something for it.

2. Sell Your Car, or Get a Title Loan

If you need cash immediately and don’t rely on your car to get you places, selling it may be a good move for you. Or, you may think about getting a title loan.

Getting cash for cars is almost always a sure-fire bet. Even if your car isn’t running or you think it’s a hunk of junk, there will still be someone who wants it–or wants to use it for parts.

A title loan allows you to take out a loan on the title of the car. While this can be seen as risky, it can also give you immediate cash.

3. Put up an Extra Room on AirBnB

Do you have an extra room or an extra property, you can rent on AirBnB? If so, you may wish to consider doing so to help supplement your income.

This is especially helpful if you live in a location that a lot of people vacation to, as it can really give you a dramatic boost in income. And it can be done relatively quickly or easily.

Renting out a whole property is also a great idea, as it means you don’t need to spend time with your guests or engage in conversations with them. Many people rent out rooms, or parts of houses, without needing to directly communicate with the individuals, so it’s a great idea.

4. Detail Cars

If you’re on this site, it’s obvious you love cars. Why not detail some, or wash them, for a fee? There’s likely someone who needs it done right now!

Making Quick Cash

This list represents only a few ways to make quick cash. If you have ingenuity, it’s all you need to make a quick buck when times are rough. And if you can, save as much as possible to avoid a scramble for cash in the future.

Do you want more on all things cars, sports, and travel? If so, visit the rest of our site!

5 Questions to Ask Before Buying Business Insurance

Well over 30 million businesses are operating in the United States. One thing they have in common, no matter who they cater to or what they’re selling, is that they could benefit from some form of business insurance.

Insurance creates peace of mind for business owners as they navigate the murky waters of catering to customers, managing inventory, and everything in-between. In some cases, insurance may even be a legal requirement.

Below, we dive deeper into the process of buying business insurance, specifically, questions you should ask yourself or an insurance agent before selecting a policy.

1. Why Is It Important for Me to Have Insurance?

Understanding why it’s important to have insurance can help you be more proactive in buying a comprehensive policy. This question can be answered in broad or specific strokes.

For a specific answer, work with an insurance agent that can analyze your business and provide specific guidance as to where your company is exposed. A broad answer as to why insurance is important is that it allows your business to survive adversity which almost certainly will come up.

As we mentioned in this post’s introduction, some forms of business insurance may also be a legal requirement (worker’s compensation insurance for example).

2. What Kind of Insurance Do I Need?

Buying business insurance can be an overwhelming process because there are several types of insurance you’ll need to purchase to create a comprehensive policy umbrella. If you have to ask questions like, “What are paid up additions?” or “What is the difference between property and liability coverage?”, you should speak to a knowledgeable agent.

Agents can walk you through all of their insurance products and clue you in on which products are most common for people in your position.

3. How Much Should My Policy Limit Be?

On top of there being different types of insurance coverage, each coverage type carries a different policy limit. The higher your limit is, the better covered you’ll be but the more expenses you’ll need to incur to maintain your coverage.

As a rule of thumb, your policy limit should be high enough to cover your business and personal assets in the event of a lawsuit.

4. How Does the Claims Process Work?

This is a question for your agent. Different insurance providers can have very different claims processes. You’ll want to make sure yours makes it relatively simple for you to get your hands on the money you’re entitled to after an accident takes place.

5. Where Can I Buy the Best Insurance?

There are several insurance agents out there. Which one is the right one to do business with?

Answering that question will take research and time so do your diligence to ensure that the policy you buy is backed by a reputable organization.

Buying Business Insurance Is Well Worth the Stress

Several businesses are uninsured or underinsured because they don’t want to go through the trouble of buying business insurance. Believe us when we say though that if the livelihood of your company matters to you, the trouble of sorting through policies is well worth it.

We hope our post moves you to get covered today and our team welcomes you to read more of the helpful content on our blog should you need additional guidance.

How to Choose the Right Life Insurance Plan

Life insurance can be intimidating. You’re probably overwhelmed by the idea of taking care of your family and loved ones if you were to pass away.

But understanding the different types of life insurance plans and how these policies work will keep you feeling secure. It’s important to stay informed so you can make the right decision for your family and finances.

Keep reading to learn how to choose the right life insurance plan!

What Is Life Insurance?

Before we dive into the different types of plans, it’s important to cover the basics of life insurance. Life insurance is a contract between the policyholder and the insurer.

In this contract, the insurer is guaranteeing payment of a death benefit to the named beneficiaries when the insured person passes.

For the contract to remain, the policyholder will pay a premium upfront or over time. Also, some policies will expire so it’s important to understand the different types.

For example, term life insurance policies will expire after a number of years that’s been defined. But permanent life insurance policies remain active until the insured person dies or stops paying the premiums.

What to Consider Before Choosing a Type of Life Insurance

When evaluating the different types of plans, you should also keep a few factors in mind. Not every policy will be right for you and your situation, so it’s important to evaluate your needs and priorities first.

Ask yourself what role you want your life insurance to play in your general financial plans. This is important if you’re looking for affordable life insurance to help financially support your family in the years when they’ll need it most. In that case, you’re looking for a term life policy.

But if you want coverage throughout your life that will build in value, you should opt for a permanent life insurance policy.

Along with your future needs, ask yourself how much you can afford now. If you’re looking for more coverage for a lower cost, you may want to opt for term life insurance.

Also, consider your current health. If you’re a reasonably healthy person, a medically underwritten policy could be the best and most affordable for you. But if health is a concern, a different type of policy, like accidental death, could be a better option.

What Are the Different Types?

Understanding the different types of life insurance will help you to choose what’s best for you. Below, we’ve outlined a general breakdown of each type before getting into the specifics of some.

Defining Types of Life Insurance

The first type, which we’ve already mentioned a few times above, is term life insurance. This is a policy that will last a certain number of years after the death of the holder and then will end.

Level term means that the premiums you pay will be the same each year. But increasing term is referring to premiums that are lower when you’re younger and increase yearly.

Permanent life insurance, also mentioned above, will remain for the insured’s life unless the policyholder stops paying the premiums. This can be a more expensive option.

Single premium means that the policyholder will pay upfront for the entire cost of the premium.

Whole life insurance means that it will continuously increase in value. This is a type of permanent life insurance.

Universal life insurance is also a type of permanent insurance that has a cash value which will earn interest. With this policy, the death benefit and premiums can change and be adjusted with time.

Guaranteed universal will not build in value but will have lower premiums than whole life. With variable universal life insurance, the policyholder will be able to invest the policy’s value.

Lastly, guaranteed issue insurance is also a type of permanent life insurance that’s available to people with medical issues. This basically insures people who are high risk.

Understanding Term Life Insurance

Now that you know more about each type of life insurance, it’s helpful to give an overview of some of the more popular types. Term life insurance is easy to understand and to buy.

With this type of coverage, your policy will last for a designated period of time. The typical amounts of time are 10, 15, 20 or 30 years. Once the term length is up, the coverage will end, but it can also be renewed.

This is a popular insurance choice since it offers coverage during the years when your family will likely be the most in need. It’s also typically at a reasonable price, depending on the term length and the amount you purchase.

Understanding Medically Unwritten Term Life Insurance

Another popular choice is medically unwritten term life insurance. This will take your age, lifestyle and family health into consideration. You’ll then be determined for eligibility and price that’s been designed for you.

This typically offers more options and can be purchased usually without a medical exam if the person qualifies.

This type of insurance can also be affordable and is particularly helpful for people who are already healthy and want to save money.

Both term life and medically unwritten term life are certainly not the only types of life insurance policies and may not be right for you. Check out more info to better understand which policy will suit your needs.

Evaluating the Types of Life Insurance Plans for You

Choosing the right life insurance plan means understanding the types of life insurance plans that are on the market.

Above, you can read through an overview of each type and dive into a few specifics. Remember to also evaluate your current needs before purchasing any plans.

Keep reading from our blog to get more helpful money-saving tips!

The Costs Of Opening A Takeaway Business

If you’re looking for new ways to make money, the good news is that there are a wide range of options available to you. Some people like to create a new product while others like to open a store that sells the products that others have made.

One of the common money-making strategies, though, involves opening a takeaway business.

If you’re interested in taking this route yourself it’s important to be prepared, so let’s take a look at costs and considerations you need to be aware of.

The Location

The first cost that you are going to encounter when you are opening your own takeaway business is the cost of the place that it will be based. You might need to rent out a property or buy it if you can afford to do so. You’ll need to find somewhere that is reasonably priced but is also in a good location in terms of footfall. Takeaways often work well in residential areas, so you shouldn’t feel like your have to limit your options to a town centre or major thoroughfare.

Takeaway Insurance

Another thing that you will need to think about when you are opening your takeaway business is the cost of the insurance policy. Takeaway insurance is relatively easy to come by but it can be quite expensive. This is why you need to make sure that you are comparing quotes for the best takeaway insurance policies and that you understand what is included. Each takeaway restaurant is different, and your insurance needs to be tailored too, so make sure to find the right one for you.

Hiring Staff

The cost of staff is one that you are really going to need to think about if you want your takeaway business to succeed. While you might find yourself working in the business, you will still need others to work when you are not there or to help out when things get busy. You’ll need chefs or cooks as well as counter staff, so make sure to spend your money wisely when hiring.

Cost Of Ingredients

A further cost that you are going to need to consider when opening a takeaway business is the cost of the ingredients that you are going to use. While you might want to make sure that you have everything that you need and offer high-quality food, you also need to think about the cost. If your business isn’t too busy on certain days, ingredients can go to waste and this will affect your profits. Make sure to figure out the cost of ingredients before you order any.

Advertising

In many local areas in the UK, there are plenty of takeaways to choose from. This is why advertising is important for these kinds of businesses to succeed. Whether you choose to go for a digital marketing campaign or you send out leaflets locally, you should find that this will eat into your budget. Make sure to account for this in the initial stages.

If you are planning on opening a takeaway business in 2020, you should make sure to consider all of the costs that we have discussed here in this article.

Personal Loan: What To Know Before You Apply

If you are getting a loan for the first time, then it is safe to say that it can be a daunting experience. All these financial jargon, conditionalities, terms of the agreement, contract signing, and these numerous documents can be hard to keep a track of. And for first-timers, this entire experience can sometimes be intimidating. But it gives you all the more reasons to approach it.

Applying for a personal loan is a fairly simple process even if getting it approved is not. All you have to do is to submit a personal loan application to your lender. If you are opting for a personal loan, regardless of the reason that whether you want to consolidate your debt or pay off unexpected expenditures or that you want to upgrade your home then there are few things that you should consider. One of the reasons why people are turning towards personal loans is to simply improve their living standards. This number has exponentially increased since the financial crisis of 2009 as personal loans are a good way to improve your current financial situation. Nevertheless, if you are planning to opt for the one you must know a few things before you apply for it so that your experience happens to be a lot easier and smoother and you are aware of what to expect and what you can gain out of it.

  1. Your Credit Score

One of the things that you should be aware of before applying for a loan is your credit score. Many things depend upon your credit score so it is a good idea to maintain it from the beginning so that you do not face any problems later. The reason for having a good credit score is crucial because the approval of your application along with the terms that you have to fulfill is largely dependent upon your credit rating. Many lenders will simply refuse to give you a loan if you have low credit ratings simply because that will make you unreliable and will charge you a higher interest rate so that their investment is comparatively safe. You can access your credit rating through various sites and can even access the report. You should read through the report carefully since it will tell you why you received a low rating which could be due to incorrect personal information or something else.

  1. Reduce Your Credit Utilization Ratio

This is another step that will help you to improve upon your credit rating so that you can get favorable terms when you are applying for a loan. One of the ways credit ratings are set is through your utilization ratio. If you are not aware of what utilization ratio is, it is simply the amount of the debt which is outstanding compared to your total line of credit. For example, if you have $20,000 available in debt, and have borrowed around $5000 then your utilization rate is at 25%. Your credit score will improve when your utilization ratio drops below 10% so make sure that you borrow less money when you are going to apply for a loan otherwise your credit score will decline. A great aspect of the utilization ratio is that it is calculated every month which means that you can save money for a couple of weeks and pay off your loans before applying for the personal loan so that you can have a higher credit rating.

  1. Maintain A Budget

Another thing to remember before applying for a loan is to know whether you can afford the loan or not. You can figure it out by making a budget so that you can know in advance whether it would be viable for you to borrow the money at this stage and you can plan things accordingly. You should subtract your expenses from your income and see whether you can afford to make the monthly payments regularly. If not, you will have to either increase your income or cut down your expenses so that you can make the regular monthly payments. It will hurt you a lot financially if you borrow money but are unable to make the monthly payments consistently which will not only hurt your credit score but will also cost you financially.

  1. Analyze The Loans

Although you may be familiar with one or two types there are varieties of loans that are offered for different reasons. Some of these loans may even be more stable or reliable compared to others and it is important that you about the lender that you are dealing with when applying for the loan. You should be in a position where you can analyze the lender before committing yourself to him such as knowing about the history of the lender, the reviews that the company has received from its previous customers and general feedback about the services which are provided by the lender. Another thing that you should be aware of is the additional fees that come up with the loan. These fees differ from lender to lender and can cost you a lot if you are unaware of the terms of the agreement. Make sure that you ask about them in advance so that you are adequately prepared to deal with them when necessary.

  1. Prepare Your Information

It is highly convenient to apply for personal loans since the process is not as rigorous when compared to other loans such as mortgage applications and many others. You do not need to file tons of paperwork and provide extra documentation when applying for the loan. However, it is necessary to understand that you still need to present the necessary information which is required by the loan application. The typical process for applying will last for 15 minutes and your request could get approved within minutes. However, some companies will ask you to provide your security number and tax returns so that they can check whether you will be able to make the loan payments.

Conclusion:

Personal cash is a good option if you need extra money but there are some things which you should be aware of before you go and apply for the loan. You need to be aware of your credit score and look at all of the options that are available so that you can get the terms that suit you best and you do not have to pay high fees to receive the loan. Also to note is that you should earn sufficient money so that you can regularly make the monthly payments which could be a problem for you if you are struggling to do it consistently.

10 Questions Banks Will Ask When You Need A Business Loan

Entrepreneurs, new to the business world or old players, one thing that you all will need for the growth of your business is enough capital. Many people around us never get the chance to turn their business plans into reality just because they don’t have sufficient capital or, they are never able to unleash the true potential of their business and grab the opportunities they want to expand their business. The best-case scenario is; you have all the money you need to start with your updated business plan or capital to invest in your business to increase its volume or tap new opportunities.

But what if you do not have the desired amount of money and you are courageous and confident enough to take risks for your business ideology? A loan is your way out for sure, there are several types of loans available in the financial and banking sector that are broadly classified into Secured Business Loans and Unsecured Business Loans. Secured business loans are backed up by collateral hence provided with low-interest rate whereas unsecured loan involves great risk of default at the end of lender that is why they are charged with high-interest rates but are a great deal for borrowers because of the limited liability.

With Secured or Unsecured loans bank is going to give you a real tough time that you will start wondering, Do I really need this loan? But not to worry about that is what we are here for? We will discuss the 10 most crucial questions that banks ask while giving business loans that will help you to succeed in the most intense interrogation session.

1: What is the exact amount of money you need?

This question sounds very basic and easy to answer but it has the most important answer hidden in it; that is do we really need the amount of money we are asking for? Is there any possibility that we can settle for less amount? Are we exaggerating our business need and potential? All these questions are hidden in one question, what is the amount of money you need? You have to quote the amount with complete rationale, a well thought upon figure should be your answer not just a random ballpark figure.

2: What business belongings do you have?

Wondering what bank has to do with your collateral?  Banks are always interested to know what will be the other options for recovery in case you default. This might sound horrible to you but banks have to keep every aspect into consideration. If your business is new, and they are not sure about the exact potential, they need some fixed assets’ security that back your business. Usually, for small businesses or startups, personal assets that include a house or land ownership keep as collateral.

3: What is your business plan?

In this scrutiny, your business plan will play the most crucial role. Banks need to see. Does your business plan have what it takes to stand out? They will not demand a pile of documents, they rather need a brief business plan through which they can see prospects and potential of your business. It is one of the most crucial steps and you need to be very well versed with all market conditions in which you operate, to get through this.

4: Does your business have the potential to survive in the market?

Must be wondering how many times you have to prove your potential? You have to reassure banks in every question that you are capable and your business is capable of the growth that you have chalked down on the paper. Be ready to answer every tiny detail not only related to your own business but related to your competitors as well.

5: In what ways you will utilize the money?

You have to be categorically certain that in what ways you will be using the money you are borrowing. You cannot give them vague answers. Vague answers will make them doubt the genuineness of your needs. Tell them if you need to buy some machinery, equipment or a bigger workplace along with all the possible positive impacts they will bring to your business.

5: Complete credit details of your business:

Your credit details will tell the lender about the financial stability of your business. With the help of business credit details, they will be able to learn about your reputation in the business market, your track records. In other words, credit reports enable banks to evaluate the probability that how on-time you will pay back the loan.

6: All details of your business; account receivable and payable:

If you think this information is quite confidential to disclose to any third party, you better not. Banks when sanctioning the loans they act as your partner.  There is nothing that you can keep confidential from your partner, similarly, banks need to know everything to come up with a final stance about the financial stability of your business.

7: Is your business insured?

If everything turns out to be perfect, still, some factors can yield unfavourable results to your business and banks have to keep this into consideration as well. Any natural calamity, fire eruption or any unfortunate incident of the same nature can turn the situation upside down. For this banks need assurance that your business is insured and their money is recoverable in such incidents.

8: What are your personal belongings?

Your personal belongings are your private matter for sure but, if you are going for secured loans you have to disclose them to the bank. These details give banks the assurance that you are a reliable borrower and have strong grounds to pay back the loans.

9: What will be the future ratios to help decision making?

The most important part that covers the future possibilities to pay back the loans and decide the terms on which your financial stability will be accounted for. Laying down terms and conditions before the agreement is made between both the parties is very important for impartial disposal of the affairs.

10: What will be the possible ways of paying back the loan?

Technically this question should be asked initially but banks put more of their time in scrutinizing how genuine your case. Terms and conditions are usually preset according to the bank’s policy but there is always room for negotiation that you must avail.

Applying for bank loan is something everyone is afraid of, there is a general concept that after going through all the long-tiring documentations and detailed scrutiny banks still turn down loan requests and all the efforts and time you put go in vain, I won’t say it is not true but before taking your application to the bank do your personal scrutiny with all the points we have discussed above, this will surely increase your chances of getting your loan approved.

Why A Small Business Line Credit Is Better Than A Regular Loan

The purpose of the credit line may be different. Such a banking service may be needed both by small enterprises and private individuals. It can be issued to finance a long-term government project, to replenish the working capital of a commercial company or to solve the current problems of an individual. In the situation with private borrowers, the role of a credit line is most often played by a credit card with a renewable limit.

A credit line is a limited amount of borrowed funds of a bank, which are withdrawn from the account at a certain moment. In simple words – this is a loan that can be taken from the bank at the moment when it is needed most. The borrower pays interest only for the actual period of use of money. While taking a regular loan, the client pays interest on the entire amount, even if part of it has not been used up.

Lines are secured and unsecured. With long periods and large amounts of limits, the bank prefers to secure its own finances and insists on obtaining liquid collateral. Most often, the property is suitable for this purpose, which can be easily realized when making up for losses. When a credit line is secured, the lender offers a lower interest rate and loyal terms than under unsecured contracts.

The main differences of a credit line from a loan

A loan and a small business line of credit can be considered similar banking products. But most often, when analyzing them, two main differences are taken into account:

  • Whether renewal of the limit is required;
  • Money is needed now or later.

Credit lines are often used by law firms. They are drawn up to obtain an additional source of financing to reduce financial risks. The credit line becomes for the company an additional source of financing for core and current activities. For individuals, banks offer this product in the form of credit cards with a renewable limit.

Advantages of credit lines over regular loans

There are several advantages that distinguish credit lines:

  • ease of use of the loan: money can be taken in installments, and you do not need to conclude separate agreements each time;
  • the size of each loan is determined by the client himself – within the bank limit;
  • the method of receiving funds is agreed individually – you can choose the type of credit line;
  • interest is paid only for the actual time you use the money (unlike a loan, for which you pay interest in full, even if you used only a small part of the amount, and the rest is waiting for its time);
  • The interest rate for credit lines is usually lower than for a regular loan. For large CFs, the rate is calculated separately for each of the tranches, depending on the size of the amounts provided (the larger the amount and the shorter the period, the lower the rate), this allows you to save on interest.

As part of the credit line, the borrower can withdraw the entire available amount at once or take the money in installments at the moments when they are most needed. Calculation rules, interest rates, available limit and other conditions are established individually and prescribed in a bank agreement.

A credit line is a kind of promotion of loyal customers with high solvency and a positive financial reputation. As a rule, this product is characterized by certain amenities for the client, compared with the classic target loan. But young companies or individuals with low solvency or without any credit history may not approve such a product.

Credit line classification

Credit lines issued by banks are of several types. Some types may mix. Others are found only in pure form.

Non-revolving credit lines or simple

If you explain in simple words, then with this type of lending, the borrower gets the opportunity to withdraw money once within a specified period within the limit. Issuance of funds on a non-revolving credit line occurs only once – in one tranche.

In practice, this happens as follows: for example, a company purchases a large batch of goods and turns to the bank for a credit line. A financial institution signs a contract with a borrower. The client is looking for the best supplier, concludes a contract with him and after that transfers the payment from borrowed funds. Now the borrower pays the lender as under a classic loan agreement. After interest and the total amount of debt is paid, the credit limit for this type of lending does not resume and money cannot be withdrawn again.

Revolving or renewable

Such credit lines allow the borrower to borrow money within the established limit when he needs it before the expiration of the contract. In addition, the client can pay off the debt in installments or the total amount. When making payments, the limit is restored and becomes available again to the borrower.

This type of credit line is suitable for financing long-term contracts. For example, to purchase expensive equipment that will be supplied in parts. The bank draws up a credit line, and the borrower pays the supplier from each tranche. At the same time, the client pays the bank only for using the amount that was required at the moment, which reduces the cost of borrowed money.

Other types

Framework. The Bank opens a credit line for a specific project and all tranches that will be issued within the framework of the loan are specified in the initial framework agreement.

On- line credit lines – in this type the limit is restored to the original. If the borrower approved a line for 2 million, and he withdrew only 500 thousand and paid them off, then again all 2 million are available to him.

Contract Accounts. In this case, the credit company opens a single active-passive account for the borrower, all tranches come from it and all repayments come here. The client carries out all operations on one current account and it is convenient for him to analyze the income-expense within the approved limit and the entire duration of the contract.

The bank representative, together with the borrower, evaluates which type of credit line is most suitable for solving the tasks, and only after that draws up the contract.

Conclusion

So, to summarize, we can briefly remind ourselves that the Credit Line is a long-term loan issued in parts when a need arises.

The credit line provides for the establishment of a certain credit limit by the bank – the amount over which the client can no longer take one turn of the loan. And within the limit, the client can take a loan without additional negotiations and registration.

When a credit line is opened, the type of loan, the period of validity, the maximum amount of the loan are indicated in the loan agreement, and the settlement and money documents are listed that will be paid by using the credit line or the contract is indicated for which the credit line is opened to pay for deliveries. One important detail – when opening a credit line, the contract must indicate the maximum loan amount.

There are restrictions in credit lines, and in different types of credit lines, they can be different. For example, there are lines of credit with a limit on issuance or with a limit on total debt.

Credit line with a limit on total debt – in this case, we mean the total amount of all debt, which if the client pays on time and in full, then he is entitled to use the loan in the future. Or, if the borrower returned part of the money to the bank, then the volume of lending is restored – this is a revolving credit line.

A credit line with a disbursement limit is the total amount of all possible loans that a client can receive all the time when he uses a credit line. In this case, the repaid debt cannot increase the lending limit, therefore – this credit line is classified as non-revolving.

In general, this lending option is very convenient for both the bank and the client for several reasons. The bank, although not immediately, but still begins to make a profit from the loan issued, and the client gets the right at any time to use the reserve amounts in the account in case of a lack of equity. Thus, the borrower receives advantages and more freedom in managing their cash flows, which, undoubtedly, significantly increases its capabilities and allows the company to grow and develop.

Wealth Creation and Saving Strategies | OnMoneyMaking