The COVID-19 EIDL program, a federal initiative designed to support small businesses during the pandemic, has ceased accepting new applications, highlighting the transition towards other funding avenues including traditional SBA loans [1]. Despite the closure, the impact of the program is evident with the SBA approving over 3.9 million EIDLs, totaling more than $378.4 billion, alongside significant distributions in EIDL advances and targeted advance payment grants, signaling a considerable effort to mitigate the pandemic’s economic implications [2].

With the pandemic waning, attention shifts to EIDL loan forgiveness aspects, amidst speculations that the coming 2024 election cycle might prompt the federal government to consider forgiving portions of these loans [3]. This transition period serves as a critical juncture for businesses navigating their repayment obligations, exploring options like sba disaster loan assistance, eidl forgiveness, and updates on eidl loan default strategies to manage their financial future [1]

Eligibility Criteria for EIDL Loan Forgiveness

Understanding Forgivable and Non-Forgivable Aspects of EIDL

1. Non-Forgivable EIDL Loans

• The primary COVID-19 EIDL loan is designed to be repaid and does not qualify for forgiveness under the
  standard terms of the agreement [1][3][4][7].

      2. Forgivable Advances and Grants

• EIDL Advance: Businesses could receive up to $10,000 that does not require repayment [1].
• Targeted EIDL Advance: Specifically for businesses in low-income communities, offering up to $10,000 with no repayment needed [4].
• Shuttered Venue Operator Grant (SVOG): Provides up to $10 million in forgivable assistance, significantly
  supporting eligible venues affected by COVID-19 [4].

Criteria for Loan Forgiveness

• PPP Loans: Forgiveness is possible if businesses maintain employee levels and compensation, with funds used on eligible expenses such as payroll, rent, and utilities. Recent updates have expanded forgivable expenses to include operations, property damage costs, supplier costs, and worker protection expenditures [4].
• SBA Offer in Compromise: This might be available for EIDL loans under specific circumstances, although it is not guaranteed and requires demonstrating an inability to repay.
• Special Conditions: Some borrowers who have received an EIDL may be eligible for forgiveness through the SBA under certain rare conditions, which require meeting stringent criteria

Options for Businesses Struggling with Repayment

• For those unable to meet the repayment terms, renegotiating the loan terms or exploring forgiveness options through the SBA’s Offer in Compromise may provide necessary relief [5].

Understanding the Terms of EIDL Loan Repayment

Loan Terms and Conditions

1. Loan Amount and Usage: The COVID-19 EIDL provides essential working capital for expenses such as payroll, rent, and utilities. The maximum loan amount has been set at $2 million for loans exceeding $500,000 [1].
2. Interest Rates and Loan Duration: Loans carry a fixed interest rate of 3.75% for businesses and 2.75% for
   private non-profit organizations, with a long-term repayment schedule of 30 years, ensuring manageable
   repayment plans [4].
3. Deferment and Prepayment: Borrowers benefit from a 24-month deferment period from the loan origination date, with no penalties for prepayment, allowing businesses flexibility during uncertain economic times [1][7].

Collateral and Guarantees

• Collateral Requirements: Loans exceeding $25,000 require collateral, with a one-time $100 fee for filing a lien on business assets. For loans over $200,000, a personal guarantee is necessary, potentially involving personal assets if the borrower defaults [1][8].
• Loan Security: Additional costs are incurred for filing liens on real estate when applicable, securing the loan
  further and protecting both the lender and borrower interests [1].

Repayment and Default Risks

• Repayment Commencement: After the 30-month deferment period, borrowers are obligated to commence
  monthly payments as stipulated in the original loan agreement. This includes managing loan balances through the MySBA Loan Portal [7].
• Consequences of Default: Defaulting on loan payments can lead to severe consequences, including the seizure of business and personal assets, wage garnishment, and potential legal action, emphasizing the importance of understanding and adhering to repayment terms

Options for Businesses Struggling with EIDL Loan Repayment

Hardship Accommodation Plan (HAP)

1. Introduction of HAP: In response to financial distress faced by borrowers, the SBA introduced the Hardship
   Accommodation Plan in February 2024. This plan is specifically tailored for COVID-19 EIDL loan recipients who encounter short-term financial hurdles [7].
2. Flexible Payment Options: Under HAP, eligible businesses can significantly reduce their payment obligations to just 10% of their regular monthly payments for a period of six months. This reduction aims to alleviate financial pressure and provide breathing room for businesses to stabilize their finances [7].
3. Eligibility and Enrollment: To benefit from HAP, borrowers can enroll 60 days before their first payment is due. Importantly, this plan is accessible even to those who are currently in default, demonstrating the SBA’s
   commitment to supporting businesses in continuing their operations despite financial challenges [7].

Counseling and Support Services

• SBA Resource Partners: The SBA also offers extensive counseling and support through its network of Resource Partners. These services, which are often free or low-cost, are designed to help small businesses navigate their financial landscapes by offering guidance on business planning, capital access, and other critical business operations [7].
• Direct Assistance: For direct queries or issues related to loan servicing, borrowers are encouraged to contact
  COVID-19 EIDL Customer Service. This service provides tailored support for loan-related concerns, including
  renegotiations of loan terms or inquiries about available relief options [7].

Restructuring and Alternative Options

• Renegotiating Loan Terms: If the standard repayment terms become untenable, borrowers have the option to negotiate with the SBA for modified terms. This could include lower monthly payments, extended loan durations, or even discussions around loan forgiveness, depending on individual business circumstances [5].
• Bankruptcy and Settlements: In extreme cases where businesses cannot meet their loan obligations, bankruptcy might be considered. Options such as Chapter 11 Subchapter V can provide a pathway for restructuring secured EIDL loans, potentially allowing businesses to continue operating while managing their debts more effectively [8].
• SBA Offer in Compromise: For businesses that have ceased operations and are unable to fully repay their loans, the SBA’s Offer in Compromise allows for negotiation of the loan balance. This process, however, requires the business to be closed or sold, and the SBA must determine that the offer represents the maximum achievable recovery [9].

These measures collectively aim to provide a spectrum of solutions for businesses facing difficulties with EIDL loan
repayments, ensuring that they have multiple avenues to manage their financial obligations effectively.

Conclusion

Through the exploration of the COVID-19 EIDL program’s intricacies, including its forgiveness aspects, eligibility
criteria, and options for businesses grappling with repayment challenges, it becomes clear that the pandemic’s
economic footprint necessitates a multifaceted approach to financial recovery. The SBA’s efforts, underscored by the
approval of over 3.9 million EIDLs and the introduction of flexible repayment solutions like the Hardship
Accommodation Plan, reflect a commitment to supporting small businesses in their journey towards stabilization. These measures, alongside potential policy shifts in light of future political landscapes, underscore the dynamic nature of the program’s response to evolving economic challenges.

As businesses navigate the post-pandemic economic landscape, understanding the available avenues for loan
forgiveness, repayment assistance, and financial counseling remains crucial. The broader implications of these elements not only highlight the significant impact of federal initiatives in mitigating the pandemic’s adverse effects but also stress the importance of proactive financial management and planning for small businesses. Moving forward, continuous monitoring of policy changes and the exploration of new support mechanisms will be pivotal in ensuring the resilience and sustainability of businesses affected by the COVID-19 pandemic.

FAQs

1. Can EIDL loans be forgiven by the government?

EIDL loans are not eligible for forgiveness. The full amount borrowed must be repaid.

2. How can I find out if my SBA loan is eligible for forgiveness?

To check the status of your SBA loan forgiveness, you can use the SBA direct forgiveness portal. Alternatively, if you
submitted your application through a lender, you can contact your lender for updates on your forgiveness application.

3. What are the consequences if I fail to repay my EIDL loan?
If you default on your EIDL loan, the Treasury Department has the authority to garnish your wages and seize any
federally held assets, such as income tax refunds. For EIDL loans exceeding $200,000, personal assets may also be at risk.

4. What happens to my SBA EIDL loan if my business shuts down?
If your business closes, you may still be responsible for repaying the EIDL loan. This can occur if you signed a personal guarantee or pledged property as collateral when securing the loan.

References

[1] – https://www.sba.gov/funding-programs/loans/covid-19-relief-options/eidl
[2] – https://sgp.fas.org/crs/misc/R47509.pdf
[3] – https://www.jasontees.com/eidl-forgiveness-can-sba-eidl-loans-be-settled/
[4] – https://www.investopedia.com/how-to-get-your-covid-19-loan-forgiven-4844034
[5] – https://www.smarterfinanceusa.com/blog/economic-injury-disaster-loan-eidl-forgiveness-renegotiation
[6] – https://www.hostmerchantservices.com/articles/is-your-eidl-loan-forgivable/
[7] – https://www.sba.gov/funding-programs/loans/covid-19-relief-options/covid-19-economic-injury-disaster-loan/manage-your-eidl
[8] – https://www.bransonlaw.com/blog/cant-repay-your-sba-covid-loan-bankruptcy-might-help/
[9] – https://www.business.com/articles/sba-loan-forgiveness/
[10] – https://www.nav.com/blog/9-options-if-your-small-business-cant-pay-its-bills-due-to-coronavirus-558303/

Getting a mortgage is one of the biggest commitments that you’ll ever make in your life. But it’s harder than ever before to get a mortgage, and in many cases, it’s even more difficult to pay it off. Ever since the banking crisis in 2008, banks have been massively restructuring and restricting the amount of loans that they’re willing to underwrite. Of course, in a way, this is a welcome step in the right direction – it prevents people who are unable to pay for their mortgage or who may become unable to pay their mortgage from borrowing more than they can afford – which was one of the major factors in the crash in the first place.

Now, it seems to have gone a little bit too far the other way – it’s incredibly difficult to get a mortgage, even if you have a deposit in place and are able to meet the monthly repayments, because there needs to be affordability in place, which generally means that you’ll need to be earning at least five or six times your yearly repayments in terms of your salary. For many people, this is a huge stretch, and the only way that you’ll be able to prove your affordability – that you can pay the mortgage back – is with a larger deposit. Again, this is often too much of a stretch, particularly if you’re a first time buyer. Many banks are asking for a least a 35% deposit, which is pricing many first time buyers out of the market, or requiring them to buy a house somewhere that they don’t really want to, simply so that they can get a foot on the ladder.

Because of this, more and more people than ever before are staying at their parent’s homes well into their 30s, simply because they don’t really have another option. In order to actually get a mortgage, unfortunately, you’ll likely need a squeaky clean credit report (i.e. no defaults on any of your credit accounts, no bankruptcies, no large amounts of credit and not too many credit accounts). If you’re currently at more than 30% of your total credit limit on all of your credit cards, that will most definitely count against you. Too many credit searches can also have a negative impact, as can repeated applications for credit cards and credit accounts, for example store cards, can make it seem as though you don’t have enough money – which is why you keep asking for credit.

Where possible, withdraw a spending budget each week – for example, $200 (or whatever is manageable for you), and use that to pay for everything throughout the week, such as your grocery shopping or your gas. It’s much easier to keep track of your spending if you buy things in cash rather than on your card, because if you can physically see the money as you spend it, you’re far less likely to. On your mortgage application, your weekly spending will also be far less messy, so it’ll help you to budget and help your application.

Read the next in our mortgage series in a few weeks.

Debts can be devastating – especially if they eat up your monthly income and you end up spending more money on paying back your loans than you have left for the rest of the bills, or for your food or for your clothes. Getting a loan is often the easy part, especially if you have good credit as it seems like lenders are just queuing up to throw money at you.  The more credit available to you, often, the easier it is to get into a horrible amount of debt, particularly if you’ve borrowed from a short-term payday loan firm. But although it can feel like an endless cycle that you can’t get out of, it isn’t – you just need to get your head screwed on and get knuckled down. It won’t go away if you bury your head in the sand and you’ll need to put the work in, but it’s definitely possible. You’ve probably heard about all of the success stories, and although many are used for marketing purposes, there are real people with real successes – and you can be one of them.

Find Out What You’re Dealing With

You can’t start dealing with your debt unless you know exactly how much you’re dealing with. Many people pay their credit card bills automatically each month, which means that the minimum payment comes out of your account each month.  This amount changes depending on how much debt you’ve paid off, and if you don’t keep an eye on your payments each month it can be really easy to lose track of just how much debt you have. Sit down with all of your statements, including “buy now pay later” accounts and work out exactly how much money you owe. Next, take a look at how much money you spend on paying off those bills each month. How much of your monthly budget goes on paying off those debts? How much money do you have left over? And what are you spending that money on?

Living on a Budget

It’s the most frequently suggested way of paying off debts and freeing up more money to put towards your debts, but it does have less of an impact than you might think. However, it’s definitely worth doing, even if you end up putting those extra dollars towards a college fund or an emergency fund rather than towards your debts. Look at how much money you spend on your electricity bills and gas bills, your cable TV, your smartphone, your cell bill, your Wi-Fi bill, your food, drinks, clothes and any extra money that you use for leisure purposes, like going to the cinema or popping out for a meal. Chances are, you’ll spot numerous places for you to cut back on – visit a few comparison websites to slash money off of your bills and switch to cheaper brands of food at the supermarket. So far, so obvious, right?

Bring in More Money

This is an option only for some – if you can afford to spend the extra time out of the house, or the childcare costs associated with having to go back to work – then adding an extra day or two at work and bringing in extra money will be a huge help in paying off those bills. But of course you should only do extra work if you are able to. If you’re in retail, for example, and working five days a week you could always ask for an additional day each week. Or, grab a weekend job. It’s not worth working 18 hours a day if you can get by on what you’re making at the moment, so don’t push yourself too far – just strike a balance between what you can do and what you need.

Study Hard

It’s very possible that you’ll qualify for financial aid if you decide to study. There are literally thousands of night schools that offer degrees in everything from psychology to art history and if you qualify for financial aid, studying can mean that you end up with a better job – and a better salary. With that better salary, you’ll be able to pay off your debts more quickly. If you’re in a position that can attract a higher salary if you’re more qualified, this is definitely an option worth considering. For example, if you’re a classroom assistant, you could study for a degree in education and qualify as a teacher, which will pay a much higher salary.

Pay Off Smaller Debts

If you’ve got lots of debts, it’s really important that you prioritize – figure out which debts need to be paid off first in order to maximize the amount of money that you’re paying out each month. The debts you should be concentrating on are those that have the highest interest rates, but it’s also a good idea to pay off the smallest debts first – get them out of the way and then that’s one less thing to worry about! Clearing that small debt means that you can put the money that you were using to pay off that debt towards the larger debts that you have with higher interest rates. The fewer debts you have, the better, after all.

Balance Transfers

If you qualify, balance transfers are a fantastic way to reduce your debt. Transfer all of your debt to a 0% interest card. Provided you pay off the debt within the 0% time period, you’ll be able to get away with paying off your debt with no interest on top – and chances are, at the moment, you’re spending anywhere between 30-40% of your total debt in interest payments. Without that 30%, you’re freeing up a lot more money in your pocket.

Loan debt can be scary, especially if you have other forms of debt too. Knowing how to prioritize your debts and how to pay them off to improve your credit score and to help you chip away at the debt is really important, so take a look at this guide to controlling loan debt to learn exactly what you need to do to get your debt back under your control.

Know Your Enemy

Instead of burying your head in the sand, take a look through your bank statements and any statements from your lender to learn exactly how much debt you’re in. If you don’t know how much you have to pay, you won’t be able to start making the necessary changes in order to control that debt. Know your enemy and at least you know what you’re up against.

Making the Minimum Repayment

At the very least, each and every month you need to make the minimum repayment. It won’t shift your debt and it won’t shift it quickly, but at least you’re making a contribution to paying the debt back. This really only makes a dent in the interest, but making the minimum repayments ensures that you won’t get into further debt and it will also help to improve your credit score, too.

Paying What You Can

If you can afford to pay $50 a month for example, at the very beginning, set up a direct debit so that you continue to pay $50 each and every month. Minimum repayments change massively depending on how much debt you have left and the less you have to pay back, the less you have to pay each month – but this also means that it’ll take much longer to pay the debt back. Paying back $50 each month will clear the debt far more quickly, so it’s worth keeping this in mind. You can pay back as much as you like each month, you don’t just have to make the minimum repayment – so don’t let the lender bully you into only making your minimum repayments.

If You Can’t Make Your Repayments

If you can’t make your repayments, make sure that you give your lender a call and explain the situation to them. Failure to do this and failure to make the repayment will simply cause you to miss a payment which will have a huge impact on your credit score. Call them up and explain that you can’t afford to pay the bill this week, or tell them how much you’ll be able to pay. Most companies will be happy to let you do a payment plan as it means that they’re still getting paid – plus, they get to retain you as a customer and they’ll also make interest from you too. People are always kinder than you think they’ll be, so don’t be afraid to ask them if you can set up a payment plan.

Be Sensible

If you’re in debt, you really need to reign in your spending. Spend only what you can afford and think clearly about what you really need. You might love those shoes, but do you really need them? No, not if you’re in debt. Spend your money on your bills, making your loan repayments and paying for food for your family. Save up any money that’s left over and make contributions to your debt as and when you can – that way, you’ll chip away it, reducing the debt without putting any additional strain on your household budget.

As the cost of education is rising high, student loan has become inevitable for numerous consumers. Only taking out a student loan isn’t the last thing that consumers need to worry about. It’s also important to think about the repayment. Now, tough financial conditions often make it difficult for consumers to pay off the student loan successfully. However, if you’ve taken out federal student loan, then things can be a bit easier for you. You can eliminate your student loan debt with the help of student loan forgiveness program.

How federal student loan forgiveness may come to your aid?

Through the special loan forgiveness program you can get all or a portion of your student loan cancelled. For the Direct Loan borrowers, there is a range of programs available. The programs are:

• Forgiveness for volunteer work

• Military loan repayment

• Public Service Loan Forgiveness

• Teacher Loan Forgiveness

• NHSC Medical Loan Repayment Program

These specific programs help troubled debtors in the following way:

1. Helps debtors who work as volunteers: If you work in any volunteer organization like AmeriCorps and PeaceCorps, then getting loan forgiveness won’t be tough for you. By working as a volunteer you can easily apply for the deferment of your Perkins and Stafford loans. Of course you must have working experience of at least 12 months.

2. Specific programs are there for teachers and military officials: Just like volunteers, there are separate programs for teachers and military officials as well. You may search through the website of Department of Education for teacher’s programs and contact the local recruitment office to get details about the programs for military people. In this way you’ll be able to find out the best program for yourself.

3. Program for public servants are available as well: The Public Service Loan Forgiveness is meant for people who work in public service field. To qualify for the Public Service Loan Forgiveness you need to be regular on your loan payments. If you’ve successfully made 120 regular payments, then you can apply for the program.

So, if you’re struggling to pay off your federal student loan, then opt for student loan forgiveness. This will help to keep your debts under control.

Are you in the market to look for the small business financing options? If you had the idea to set up a new business of your own and you have everything ready for the venture, the only thing that is lacking might be the funds. You need not worry about the funds as there are different loan programs that you can take resort to. Before you move into the small business loan market, you have to make sure you know each and every option that is available. Here are the options that you may take into account. Continue reading →

Student loans play a huge part in the higher education of millions of American students. There are approximately 20 million students and of those students, over 60% use student loans in order to pay their way through college and to fund their living costs. Higher education tends to be subsidized much more in other parts of the developed world, but in the US, a lot of higher education is instead subsidized by students and families. However, those who are not in the position to fund their own way through college are often eligible for help in the form of a student loan. There are a huge number of loans and which loans you are eligible before vastly differs from state to state and criteria at certain colleges. Learn more about some of the different types of student loan with our need-to-know guide.

Broadly speaking, student loans are split into two categories: federal loans and private student loans. Federal loans are funded by government and private student loans by private lenders, such as state-affiliated non profit organisations, institutional loans provided by specific schools and loans from banks.

Federal Loans

Federal loans can be paid to students, or to parents. When loans are paid to students directly, there are a huge number of qualifying criteria. For example, when students are enrolled in at least half-time status, they do not need to make payments on their loan. When they drop below half-time, the loan account enters what is called a “grace period” of six months, whereby no payments have to be made for six months. After this time, payments usually begin unless the student goes back into half-time classes or more. However, if they drop below half-time again, they will not get a second grace period. Amounts paid to students can often be limited.

Disabled students can often qualify for a 100% loan dischargement, provided that they meet the criteria. Loan forgiveness can also apply to teachers in critical subjects and in schools where more than 30% of the pupils qualify for a reduced-price lunch. Individuals who enter full time employment in a public service or sector position, or who serve full time in the AmeriCorps or Peace Corps, will also qualify for loan forgiveness when they make 120 consecutive loan repayments over a period of 10 years, with no missed payments. However – and this is definitely worth remembering – loan forgiveness does actually count as income by the Inland Revenue Service.

Federal Loans to Parents

Federal loans to parents tend to have much higher limits, simply because parents tend to be much more able to meet loan requirements and to pay the loans back. However, payments start immediately, regardless of whether the student is in full or half time education.

Private Loans

There are a huge range of private loans. Generally speaking, however, private loans can be made to either students or parents and often have much higher limits than federal loans. Payments do not usually start until after graduation and can sometimes be deferred further if the student enters a graduate or further education program – but, interest does start to accrue as soon as the loan is paid. While federal loans typically cover college tuition only, private loans can generally be used to cover tuition, computers, accomodation and board, educational materials such as books and computers, past due balances and more. Private loans do not have to be exclusive of federal loans – they can be used to supplement any federal loan that the student receives.

Other Forms of Federal and Private Loans

There are a number of very specific federal and private loans that can be made directly to the parent, school or student, and that can be used as the main loan or as a supplementary loan.

• Stafford Loans. Stafford loans are the most common federal loan. They can be subsidized, depending on income and financial need, or unsubsidized and not based on financial need. Interest rates are typically less than 7%.
• Perkins Loans. Perkins loans are supplementary federal loans for students that demonstrate extraordinary or exemplary financial need. They can usually borrow up to $5,500 per year, or $8,000 per year if they’re in a graduate program. Interest is fixed at 5% for Perkins loans and repayment does not start until 9 months after the student completes their studies.
• Parent PLUS Loans. Parent PLUS loans are exclusively for parents, adoptive parents and in some cases, stepparents of a student. These loans are not based on financial need and instead eligibility depends on credit history. For those with a credit history that isn’t quite good enough to qualify, co-signees can sometimes be used in order to guarantee the loan. There are no lending limits with a Parent PLUS loan and instead, parents can borrow up to the value of their child’s attendance at the school (rates determined by the school), minus any other aid (not loans) received. Payments can commence as soon as the loan is paid, but in some cases can also be deferred until six months after the student drops below half-time studies or completes or withdraws from their program.
• Grad PLUS Loans. Grad PLUS loans are available for professional students in half-time studies, graduate students or students in a graduate program. They can borrow up to the total cost of their education, minus any aid (not loans) received.

Consolidation Loans

Consolidation loans are a form of loan designed to help you extend your repayment to 30 years, rather than 10 years. Extending repayment will usually increase interest rates but this can be a really useful way to lower repayments if you are on a low income.

Institutional Loans

Institutional loans are similar to private and alternative loans and are simply additional aid that is provided directly from your school. Private loans are similar, but are provided by banks and other financial institutions instead and these are usually incredibly useful for students who do not qualify for other forms of financial aid.

We’ve still got a lot to tell you about student loans – so come back soon for part two of our guide.

The personal loans market is back to its competitive best, with a huge range of personal loans up to $15000 available at a very reasonable APR of just 5.6%. These interest rates are the lowest we’ve seen since before the recession, so now is most definitely the time to apply! To help you out, we’ve come up with three quick tips to help you take out and secure a personal loan.

Shop Around

Although you should be doing this for each and every financial product you purchase, it’s especially important that you shop around when looking for a personal loan. This doesn’t mean that you have to actually apply for each loan (doing this and getting rejected could really impact your credit score) but it’s worth taking a look online or popping into the local branches of some banks to take a look at their lending rates and how much money they’re willing to lend. Banks often say that they offer their cheapest loan rates to existing customers but this is not always true and you might find cheaper loans out there from companies or banks that you might not have even considered.

Go Through the Preliminary Application Process

Many loans have a preliminary application process and this is a great way to test whether you’ll get accepted for the loan and how much APR you’ll pay. Most preliminary loan applications are fairly short and you’ll only need to provide information like how much money you make each year, whether you’re in any debt and how much money you can afford to pay back each month. During the preliminary application, no credit scoring information is taken and you will not be credit checked. This is really important, as if it comes back that you are not suitable for the loan, it won’t affect your credit score in any way. Once you’ve narrowed down the selection of possible loans to three or four, it’s worth going through the preliminary application for each of them – how much APR you’re likely to pay could differ from the advertised price, so this is a great way to learn more about exactly how much you’re going to have to pay.

Take a Look at the Small Print

Some loans might sound fantastic on the surface, but when you look at the small print, have a number of terms and conditions that might be difficult to adhere to. For example, loans offered to current account customers might require you to pay in a set amount of money each month. Supermarket loans might require you to have a loyalty card and have used it within the past six months, while others might require you to have a set amount of points. Take a look at the small print and only apply for the loan if you know that you can adhere to the terms and conditions. If not, the loan isn’t for you and you need to keep looking around.

Applying for loans can be a difficult and lengthy process, so adhering to these clever tips before you get started could save you a lot of time and effort.

Unsecured loans are loans that are not secured against any assets. An unsecured loan is often provided by a bank, of a value up to about $25,000, or from a general lender, whereas a secured loan is usually provided by a bank. A secured loan differs from an unsecured loan in that it is secured against assets, such as your property. When you fail to pay a secured loan, the bank can satisfy that loan by foreclosing on your property – and if you fail to make the payments, you could lose your home. On the other hand, you can usually get more money if the loan is secured against an asset, and if you have the means to pay the loan back, it’s an excellent way to secure extra funds. Learn more about unsecured loans and secured loans with this simple guide.

Unsecured Loans

Unsecured loans with a low interest rate are now harder to come by than loans with higher interest rates or secured loans with a low interest rate. Why? Banks want to make absolutely sure that they’ll get their money back – the banking crisis and the fact that thousands of people are in debt because of wanton lending over the last ten years means that they are more cautious than ever before and so most of the time, the only people that banks will lend unsecured loans to are those with excellent credit.

You can get unsecured loans of between $3,000 and $25,000, depending on your credit and your income. Most lenders will be flexible and will let you make overpayments and will also allow you to pay the loan back early. In some cases, you will have up to 25 years to pay the loan back. With unsecured loans, you don’t have to worry about losing your home if you fail to make your repayments, although if you do fail to pay the loan back on time, it will have a major effect on your credit score and could seriously affect your ability to borrow in the future.

Secured Loans

Loans that are secured against a property with a mortgage in place are known as second charges, whilst loans that are secured against a property that is owned outright with the mortgage completely paid off are known as first charges. Secured loans used to be seen as a last resort, as people didn’t really want to have to secure a loan against their property – and secured loans might also carry a higher interest rate. On the other hand, people can usually get between $3,000 and $100,000 for a secured loan – as it is secured against an asset – and the loan can be paid off over a period of up to 25 years. If you’re self-employed, if your credit score is poor, if you’ve recently changed jobs or if you’ve recently moved house, a secured loan might well be your only option.

Come back soon to learn more about all of the different types of loan on offer.

Whether you want to expand your current business or are looking for someone to invest in your start-up, at some time or another, most small businesses will need a small business loan. Business loans are necessary not only because they provide small businesses the financial support that they need, but also so that businesses can thrive throughout periods where the economy might not be particularly strong. For economies to thrive, consumers need to keep buying – and consumers can only keep buying if there are enough businesses out there providing them with the goods and services they need.

Learn how to get a small business loan, whatever your circumstances, with our step by step guide.

Get to Grips With Your  Credit Report

If you’re a new business, you may not have built up a credit score yet and so the lender will look to you and your credit report before agreeing to lend you any money. Before making an application, get to grips with either your credit report or your business’ credit report, to ensure that it is up to date and that there are no errors. Any errors will only make the whole application process much, much longer, while incomplete or missing information will also need to be updated before your application can be put through. At this stage, you should also check your credit score. Lenders often use the score as a guideline and if your score is particularly low, it’s unlikely that your loan application will get accepted. Equally, if you‘ve made numerous applications within the last few months that were rejected, it’s unlikely that the loan will be accepted. Be sensible with how you ask for credit, be sensible with your spending, keep spending on company credit cards to a minimum – less than 30% of the overall limit – and then make your application when your credit score has improved or once you’ve built up some credit. You’ll then be in a much stronger position and it’s more likely that your application will be accepted – if you follow the steps below.

Contact Lenders to See Which Documents You Need

The documents that you’ll need to make the loan application will differ massively from lender to lender, but generally, you’ll need proof of address – such as a bill to the address of your home or to the address of the business, proof of identity (which proof of identity depends on the lender), a loan proposal and a decent credit score. You should not have defaulted or been bankrupt within at least the last 12 months, you should be up to date on all bills both personal and business related and you should also have not missed a rent or mortgage payment within the last 12 months – again, either on your personal property or your business premises. You might also need to include past business tax returns, especially if you’re an established company. This will give any prospective lenders a good idea of how much money your company makes, although tax returns don’t display how much money you were able to write off – so some lenders might require that you supply them with three year’s worth of bank accounts or year-end statements showing profit and loss. Lenders want to know when you’re going to be able to pay the money back and so most of them will make sure that you’ll be able to pay the money back before they give you a penny.

Craft a Business Plan

Most of the time, you’ll need to craft a business plan in order for lenders to see exactly what you need the money for, why you need it, what you’re planning to do with it, how you think it will improve your business and when you’ll be able to pay the loan back. There are a few key things that you’ll need to include in the business plan, and these are:

• Exactly how much money you need and why
• What you’re planning to do with the money once you receive it
• How you think the money will improve your business as well as some projections for the next few years of the business – i.e., if you receive this money, how much money you think you’ll make because you’ve been given the money and how much money you think you’d make if the loan application was rejected. Emphasise how much you need the money because of what it could do for your business
• Use the last point to emphasise that you’ll be able to pay the loan back in a reasonable amount of time because you’ll make money due to having sufficient cash flow in your business

If you need to, get a professional to write out your business plan for you, especially if you’re new to business and if you’ve never written a business plan before. If your business is completely new and you cannot reasonably make projections for the cash flow, supply the lender with a study of your market and if you’re exploring a new niche, gather enough evidence to show that it is profitable.

Ask About the Small Business Administration’s Guarantee

If the lender rejects your loan, ask them about whether they could guarantee your loan underneath the small business administration’s guarantee. The SBA guarantees loans that the lender wouldn’t otherwise be able to afford to make, so if they’re worried about your risk level or whether or not you’re a good loan prospect, the SBA could help. There are a number of certain qualifying factors that you’ll need in order to be able to get a loan through the SBA but if you qualify, the loan will then be supplied through your financial lender. To learn more about the qualifying factors for an SBA loan, speak to your financial lender.