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Should You Borrow From A Money Lender? Here’s Why Or Why Not

Should you borrow from a money lender? Money lenders have no positive reputation among people and are always connected to some serious crimes.

In this line, crimes occurring under unknown circumstances have money lenders or loan sharks on their lists of people to investigate. However, money lenders can operate legally as well. By the definition, money lenders lend money while the other side pays the sum and the interest. These interests are a dangerous zone since most money lenders cross the line and turn into loan sharks. On the other hand, when legally operating there are no problems with interest since they are regulated by law.

Here are some advantages and disadvantages of borrowing money from money lenders.

Who Are Money Lenders?

There is a considerable difference between loan sharks and money lenders. Namely, money lenders are authorized by the Financial Conduct Authority (FCA), to be able to lend money legally. On the other hand, loan sharks are not registered by FCA, and lend money from home with very high rates, and interests, giving you no paperwork of the deal arranged. Loan sharks are known to have a lot of customers, and they lend money as a kind of business. Problems begin once the payback period starts. They tend to collect the lent money by using some methods like threats, violence, blackmails, and taking away your valuables and credit cards. There are some extreme cases where they forced non-payers into prostitution and drug dealing.

Money Lenders and Banks?

Legally approved money lenders are able to provide six times your monthly income, while banks can provide you ten times your monthly income. You should bear in mind that banks will ask you to have at least $20.000 per year and good credit history. When it comes to approval speed in this licensed money lender vs bank battle, the point goes to money lenders. Namely, money lenders may release money within 30 minutes, or during the same day, when the application is filled. and if everything is right with the documentation. The speed is the result of many factors. Firstly, money lenders do not require collaterals, which are otherwise mandatory for taking a loan in the bank. Moneylenders lend you unsecured loans, but the small amount of money they can pay you prevents you from falling into some deeper debts.

Interest Rates

This is one of the most important factors when it comes to lending money, especially from money lenders. This is because of the previously mentioned loan sharks who tend to increase interest rates and therefore make your debt even deeper. However, there are regulations for legally approved money lenders. Officially, money lenders can charge you with an interest rate from 1-4%, but this rate depends on the moneylender. Therefore, comparing interest rates and offers in the banks, and other money lenders can help you land the best option. However, it is extremely important to make sure that the moneylender you are getting a loan from is legal and certified in FCA.

Requirements

When comparing to banks, it is important to say that banks have a long list of eligibility and requirements and it is due to the fact that they can lend a huge amount of money. On the other hand, legal money lenders will ask you for a couple of documents helping them establish the most important information-income, employment, and identity. Once this information is established, you will be given your loan, for less than an hour, or within the same day. Some of the mandatory information includes at least 21 years old, NRIC card, any letter that has recently been sent to your address (utility, bills, etc.), and some other documents that are possibly required by a money lender. While banks require full-time employment, employment certificate, NRIC photocopy, 2 years notice of assessment, 3 months computerized payslips, at least $20.000 of annual income, etc. If you are getting some bigger sum from the bank, then they will probably ask you for collateral, or hard money loans. This means that you will be able to compensate for the taken money with the asset, or your collateral will pay for your loan, while money lenders are not approved to lend any of these loans.

In sum, it is very important to accentuate that there is a considerable difference between loan sharks and legal money lenders While loan sharks may use some of the very violent methods for taking money back or even bringing entire families to criminal acts, money lenders are legally limited and are allowed to lend small amounts of money that will not push people in deeper debt.

Advice For Small Business Owners: How to Avoid Closure

Unfortunately, there are a lot of small businesses out there which are currently struggling more than ever. It has been a busy year for business and now there are plenty of new companies cropping up each day. The competition is getting fiercer and is it becoming more difficult to stay afloat.

Most small businesses fail due to financial issues. Today, we will be discussing what small business owners can do to avoid closure whilst increasing that all-important profitability.

Assess Your Finances

To determine the success of your business and whether you can afford to keep operations running, it is important that you regularly assess your finances. Start by tracking how much money goes out of the business compared to what is going in. Ask yourself – is the cash flow steady enough?

If it is not, then you will need to start looking into areas where you can cut costs. Investigate all areas of operations and you will be sure to find areas that can afford a cut back. If you need to find ways to cut costs in your small business, then you can also turn to the internet for help. It is packed full of helpful blogs and articles which can steer you in the right direction.

Pay Off Your Debts

Any debt that your business owns will need to be paid. You can try ignoring them, but they won’t go away, and they will only make your financial situation a lot worse. When it comes to paying off your debts you should prioritise them. Some will be more important to pay off than others. Taxes are one of the most critical debts for small businesses. It is important to remember, tax money belongs to the government and not your business. So, you should always place this as a number one priority.

Failure to pay off your debts could result in the closure of your business. Future Strategy know all too well about that as they have helped hundreds of small business owners in the closing down of their businesses over the years. It is a complex process and one you want to try and avoid.

Don’t Hesitate to Talk to Lenders

Clear lines of communication are crucial in business. If you are in times of financial hardship it can help to have a good relationship with your lenders at it can help to ease the situation of a late payment. For example, if you are unable to make scheduled payments on your business loans then speak to the lender at your nearest convenience. If you default a loan, it can have serious consequences. You may be subject to a late fee or lower your credit score. You may be able to avoid this if you can promptly explain your situation to your lender.

Being confident with communication doesn’t come naturally to all business owners. This is why it is advised that you look into ways that you can brush up on these skills. You can learn more about how to get confident with communication through various online resources.