COPPELL, Texas–(BUSINESS WIRE)–Caliber Home Loans, Inc. (“Caliber”), a national mortgage lending and servicing organization; part of the Newrez Family of Companies, is proud to announce that Bryan Bergjans, SVP, National Director Military & Retail Production, has been named to the 2023 Employee Veteran Leadership Awards (EVLA) list by Military Friendly®. The EVLA list recognizes veterans who have made significant contributions to their organizations and communities through their leadership, dedication, and commitment to excellence.
Bergjans, a Lieutenant Commander in the U.S. Navy Reserves, has been with Caliber Home Loans since 2016 and has played a critical role in helping the company become one of the top lenders for military service members and veterans. As the Head of Military Lending, Bergjans is responsible for overseeing all aspects of Caliber’s military lending operations, including sales, marketing, customer service and community outreach.
“I am honored to be recognized by Military Friendly® for this prestigious award,” said Bergjans. “I am fortunate to work for a company that is committed to supporting our military service members and veterans, and I am proud to be part of a team that is dedicated to making a difference in their lives.”
The EVLA list is compiled annually by Military Friendly®, a leading organization that provides resources and support for veterans and military families. The list recognizes veterans from across the country who have demonstrated exceptional leadership and made significant contributions to their organizations and communities.
“At Newrez and Caliber, we are committed to creating an inclusive and supportive environment for our military service members and veterans,” said Baron Silverstein, President of Newrez. “Bryan’s leadership and dedication to our military lending operations have been instrumental in helping us achieve this goal. We are proud to have him on our team and congratulate him on this well-deserved recognition.”
For more information on the Company’s commitment to our service members, visit https://military.caliberhomeloans.com/.
About Caliber
Caliber, part of the Newrez Family of Companies, is a proven leader in the U.S. mortgage market with a diversified, customer-centric, purchase-focused platform with headquarters in Coppell, Texas. Caliber is an approved Seller/Servicer for both Fannie Mae and Freddie Mac, an approved issuer for Ginnie Mae and is an approved servicer for VA, FHA, and the USDA. Caliber carries multiple servicer ratings from Standard & Poor’s, Moody’s, Fitch and DBRS.
About Military Friendly®
Military Friendly® is the standard that measures an organization’s commitment, effort, and success in creating sustainable and meaningful benefits for the military community. Over 1,500 organizations compete annually for Military Friendly® designation. Military Friendly® ratings are owned by Viqtory, Inc., a service-disabled, veteran-owned small business. Viqtory is not affiliated with or endorsed by the U.S. Department of Defense or the federal government. Results are produced via a rules-based algorithm. Military Friendly® is a registered trademark of Victory Media, Inc. and is not affiliated with Caliber Home Loans, Inc. or Newrez LLC. The data-driven Military Friendly® lists and methodology can be foundat https://www.militaryfriendly.com/mfcguide/.
The information contained on, or accessible through, any websites included in this press release is not incorporated by reference into, and should not be considered a part of, this press release.
Choosing the right checking account can be a daunting task, especially with the variety of options available. The type of checking account you choose can significantly impact your ability to manage your finances, pay bills, and save for the future. This article aims to help you understand the different types of checking accounts and guide you in selecting the best one for your needs.
10 Types of Checking Accounts
Here are 10 different types of checking accounts, each tailored to meet different needs and tastes.
1. Traditional Checking Account
A traditional checking account is a basic bank account that allows you to deposit and withdraw funds, write checks, and access your money through ATMs. These accounts are simple to use and are ideal for individuals who require a standard checking account for everyday transactions.
Pros:
Easy to open and use
Widely available at most financial institutions
Typically offers free or low-cost access to ATMs
Cons:
May charge monthly maintenance fees
Low or no interest on account balance
Limited features compared to other types of checking accounts
Best suited for: Individuals seeking a basic checking account for everyday transactions
2. Premium Checking Account
Premium checking accounts offer a variety of enhanced features and benefits, such as higher interest rates, lower fees, and access to exclusive services. These accounts are designed for customers who maintain higher account balances and require additional perks.
Pros:
Enhanced features and benefits
Lower fees or waived fees for certain services
May offer higher interest rates than traditional checking accounts
Cons:
Requires a higher minimum balance to avoid monthly maintenance fees
May not be available at all financial institutions
Not ideal for individuals with low account balances
Best suited for: Customers with high account balances seeking additional perks and services
3. Interest-Bearing Checking Account
Interest-bearing checking accounts allow you to earn interest on your account balance, similar to a savings account or money market account. These accounts are sometimes referred to as high-yield checking accounts. They typically require a higher minimum balance to avoid monthly fees, but they can be a practical option for those looking to grow their money while still having easy access to funds.
Pros:
Earn interest on account balance
Retain easy access to funds for everyday transactions
May offer additional benefits, such as lower fees
Cons:
Higher minimum balance requirement
Interest rates may be lower than savings accounts or money market accounts
May charge a monthly maintenance fee if minimum balance is not met
Best suited for: Customers looking to earn interest on their checking account balance
4. Rewards Checking Account
Rewards checking accounts offer cashback or rewards for everyday transactions, such as using your debit card for purchases or setting up direct deposits. These accounts can help you earn extra money for your spending habits while still providing standard checking account features.
Pros:
Earn rewards or cashback for everyday transactions
Competitive interest rates
May have additional perks and benefits
Cons:
May require a higher minimum balance to avoid fees
May have more restrictions than a standard checking account
Rewards may be subject to limitations or expiration dates
Best suited for: Customers seeking rewards or cashback for their everyday transactions
5. Senior Checking Account
Senior checking accounts cater to individuals aged 50 or 60+, depending on the financial institution, offering age-specific benefits and discounts. These accounts may have lower fees, higher interest rates, and special perks tailored to the needs of seniors.
Pros:
Age-specific benefits and discounts
Lower fees or waived fees for certain services
May offer higher interest rates than traditional checking accounts
Cons:
Limited availability to individuals within a specific age range
May have fewer features than premium checking accounts
Not ideal for individuals outside the eligible age range
Best suited for: Individuals aged 50 or 60+ seeking age-specific benefits and discounts
6. Student Checking Account
Student checking accounts are specifically designed for college and university students, offering low or no fees and minimal account requirements. These accounts often provide free access to online and mobile banking, making it easy for students to manage their finances while at school.
Pros:
Low or no monthly maintenance fee
Minimal account requirements
Access to online and mobile banking
Cons:
May have lower interest rates
Limited features and benefits
Account may convert to a regular checking account after graduation
Best suited for: College and university students looking for low-fee or no-fee accounts with minimal requirements
7. Business Checking Account
Business checking accounts are designed for small business owners and entrepreneurs, offering specialized account services, such as payroll management and invoicing. These accounts typically have higher transaction limits and may offer additional perks tailored to the needs of a business.
Pros:
Specialized account services for businesses
Higher transaction limits
May offer additional perks and benefits tailored to business needs
Cons:
May have higher monthly fees than personal checking accounts
May require a higher minimum balance to avoid fees
Not suitable for personal use
Best suited for: Small business owners and entrepreneurs needing specialized account services
8. Checkless Checking
Checkless checking accounts cater to individuals who prefer online and mobile banking and rarely write checks. These accounts typically offer low or no fees, as well as a debit card, and access to digital tools for managing transactions, such as bill pay and mobile check deposit.
Pros:
Ideal for those who rely on online and mobile banking
Low or no monthly fees
Digital tools for managing transactions
Cons:
Not suitable for individuals who frequently write checks
May have fewer features than other checking accounts
Limited access to paper checks
Best suited for: Individuals who prefer online and mobile banking and rarely write checks
9. Private Bank Checking
Private bank checking accounts are designed for high-net-worth individuals requiring personalized banking services and tailored solutions. These accounts often provide access to dedicated financial advisors, higher transaction limits, and exclusive investment opportunities.
Pros:
Personalized banking services and tailored solutions
Access to dedicated financial advisors
Higher transaction limits and exclusive investment opportunities
Cons:
High minimum balance requirements
Limited availability to high-net-worth individuals
May have higher fees than regular checking accounts
Best suited for: High-net-worth individuals requiring personalized banking services and tailored solutions
10. Second-Chance Checking
Second-chance checking accounts are designed for individuals with a history of banking issues, such as overdrafts or bounced checks, looking to rebuild their financial reputation. These accounts may have higher fees or additional restrictions but can help individuals establish a positive banking history over time.
Pros:
Opportunity to rebuild financial reputation
Access to standard checking account features
Easier to open than other regular checking accounts
Cons:
Higher fees or additional restrictions
May require completion of a financial education course
May have fewer features than other checking accounts
Best suited for: Individuals with a history of banking issues looking to rebuild their financial reputation
How to Choose the Right Checking Account
Selecting the right checking account is crucial for managing your finances effectively. It’s important to consider your financial goals, banking habits, and preferences when evaluating checking accounts. Here’s a comprehensive guide to help you make an informed decision:
Identify your needs and preferences: Start by determining what features are most important to you, such as low fees, high interest rates, ATM access, online banking, or specific account perks. Consider your banking habits, such as how often you use ATMs, write checks, or make transactions, to help you find the right fit.
Review account types: Familiarize yourself with the different types of checking accounts above and assess the pros and cons of each account type to determine which suits your needs best.
Compare financial institutions: Investigate various banks and credit unions to compare their checking account offerings. Research the reputation, customer service, and convenience factors of each institution. Don’t forget to consider online banks, which may offer competitive rates and low fees.
Evaluate fees and charges: Carefully examine each account’s fee structure, including monthly maintenance fees, ATM fees, overdraft fees, and any other charges. Some accounts waive fees if you maintain a certain minimum balance, set up direct deposit, or meet other requirements.
Consider interest rates and rewards: If earning interest on your account balance or receiving rewards for everyday transactions is important to you, compare the interest rates, annual percentage yields (APY), and rewards programs of various accounts. Keep in mind that higher interest rates or rewards may come with additional requirements or fees.
Assess accessibility and convenience: Consider how easy it is to access your account and perform transactions, such as depositing checks, withdrawing cash, or making payments. Look for accounts with extensive ATM networks, user-friendly mobile apps, and convenient branch locations, if applicable.
Evaluate overdraft protection options: Understand the different types of overdraft protection available, such as linking your checking account to a savings account or a line of credit. Compare the costs and benefits of each option to find the best solution for managing your account.
Read the fine print: Before opening a new checking account, carefully review the terms and conditions, including any limitations or requirements that may impact your banking experience. Ensure you’re aware of any potential fees, restrictions, or changes to the account’s features over time.
Bottom Line
Understanding the different types of checking accounts can help you choose the right one for your needs. When selecting a checking account, consider your financial goals, banking habits, and preferences.
Research and compare options from various financial institutions to find the best checking account for you. By choosing the right checking account, you can better manage your finances and work towards a secure financial future.
What Is the Real Return of an Investment? – SmartAsset
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When measuring investment performance, it’s helpful to understand its real return. The real return on investment is what you earn after returns are adjusted for inflation and taxes. Nominal returns, on the other hand, don’t account for those deductions. Understanding the real return on investment matters, as it can tell you more accurately how much purchasing power it’s likely to yield.
You can talk to a financial advisor about how to create a strategic investment plan.
How Is Real Return Calculated?
Finding an investment’s real rate of return involves a fairly simple formula. Here’s an example:
To find the real rate of return on investment, you need to know the nominal rate and the inflation rate. The nominal rate is the stated interest rate or return that you can expect to earn on an investment. The inflation rate measures changes to the prices of consumer goods and services over time.
As a general rule of thumb, nominal rates are always higher than real return rates. That makes sense since the nominal rate doesn’t account for inflation or taxes. The nominal rate and the real rate of return may align more closely when inflation is close to or at zero, or the economy is experiencing a period of deflation, both of which are rarities.
Real Return Example
It’s easy to gauge the effects of real return, even if you’re not doing a step-by-step calculation. For example, let’s say that you deposit $20,000 into a CD. The bank is offering a 5% APY, which represents the nominal rate you could earn on your money. Over a 12-month period, you’d earn $1,000 in interest.
But what if the inflation rate is 2.5%? That cuts the purchasing power of the $1,000 in interest you earned in half. So now, that money is technically worth $500, which represents your real return.
That just accounts for the impact of inflation on your CD earnings. CD interest is considered taxable income by the internal revenue service (IRS), along with interest earned on other types of savings accounts. Once you factor in what you might owe in taxes on the interest, that can shrink your real return even further.
Are There Any Flaws With Real Return?
Calculating the real rate of return requires you to factor in taxes and inflation. That’s a good thing, as again, it can give you a more realistic picture of how much spending power a particular investment is generating.
There is, however, one thing that real return doesn’t account for. This formula doesn’t incorporate the fees you might pay to own an investment, and that can include:
Managing investment fees is important as those additional costs can detract from the total returns that you get to keep. Choosing tax-efficient investments, such as low-cost index funds or exchange-traded funds (ETFs) with a low asset turnover ratio, can help to minimize your fee expenses.
It’s also important to keep in mind that every investor’s tax situation is different and that inflation is not static. Even small changes to the tax code or slight increases in prices for consumer goods and services can have a significant impact on real return calculations.
How to Maximize Real Return
Getting the most return possible for your money is challenging, as certain factors may be outside of your control. While there are things you can do to pay less in fees for your investments, there’s not a whole lot that you can do directly to control inflation or changes to the tax code.
What you can manage is how you deal with the impact of both on your investments. With regard to inflation, that can mean choosing investments that tend to offer a higher rate of return overall. Stocks, for instance, can outperform certificates of deposit (CD) rates or money market funds. However, investing in stocks does carry more risk.
You can also choose investments that move with inflation or are otherwise inflation-proof. Real estate is a great example. Property tends to appreciate in value over time and when inflation goes up, rental prices can increase in tandem. If you’re renting a property out, then you can ride with the tide so to speak when it comes to how much you charge.
Minimizing the Effects of Taxation
In terms of taxation, there are a few strategies you can use to minimize the effects. Some of the best ways to save on taxes as an investor include:
Choosing longer-term investments, which are subject to the more favorable long-term capital gains tax rate.
Contributing to tax-advantaged accounts, such as 401(k) or individual retirement accounts (IRAs).
Allocating less tax-efficient assets, such as traditional mutual funds, to an IRA or 401(k).
Harvesting tax losses to offset capital gains.
Claiming all eligible deductions in order to shift into a lower tax bracket.
Bottom Line
Understanding real return is important when deciding how to invest money. The more purchasing power you have, the further your dollars can go. If you’re just looking at nominal returns, you can end up with a skewed sense of how much your investment might be worth. For example, say that you’re eyeing an investment that has delivered a 15% rate of return to investors over the last 10 years.
That sounds good but it doesn’t tell you how inflationary changes or updates to the tax code may have affected the earnings investors actually got to keep over that same period. It’s possible that once inflation rates and taxes are factored in, the net return is negative or zero. That’s something you’d like to know before you invest. Talking to a financial advisor can help you come up with a plan for managing taxes on investments so that you can get the best real return possible for your money.
Investing Tips
If you need help calculating the real return on investment, consider talking to a financial advisor. A financial advisor can walk you through the numbers when deciding what to include in your portfolio. And finding one doesn’t have to be difficult. SmartAsset’s financial advisor matching tool makes it easy to connect with three vetted financial advisors who serve your area. It takes just a few minutes to get your personalized advisor recommendations online. Get started now.
Many investors confuse an investment’s returns with its yield. You never have to make that mistake again, though. Learn the difference between these two key concepts, along with how a combination of strong yields and steady returns can help you meet your financial goals.
Rebecca Lake, CEPF®
Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
Life insurance is a vital element of most all financial plans. One of the biggest reasons for this is because the proceeds that are received by life insurance policy beneficiaries can be used for any number of financial needs, such as the payoff of debt (including a home mortgage), as well as the payment of everyday living expenses. This could be especially beneficial if the insured were a family’s primary breadwinner.
Before you purchase a life insurance policy, it is essential to ensure that you will be getting the proper type of coverage, as well as the right amount of protection for your specific needs. Knowing that the underlying insurance company is reliable and stable financially is another important piece of the puzzle, as you will want to know that the insurer can pay out it’s allotted claim if or when the time should come. One company that has an excellent reputation for its financial stability, as well as its timely payment of policy holder claims is Liberty Mutual.
The History of Liberty Mutual Insurance Company
Liberty Mutual has been in the business of helping consumers and businesses protect what is important to them for more than 100 years. The company was initially founded in the year 1911 when the Massachusetts Legislature passed a law that required employers to protect their employees with workers’ compensation insurance.
The company was originally known as the Massachusetts Employees’ Insurance Association or MEIA, and it officially began its operations on July 1, 1912. The company began as a mutual insurer, which means it was owned by its policy holders, as versus having to answer to a group of stock holders. The company is still a mutual insurer today.
Throughout the years, the company has grown and expanded – and today it is a top U.S. insurer. Liberty International has grown from a collection of smaller local businesses into a multi-billion, multi-national entity that has operations in Europe, Latin America, and Asia Pacific, in addition to the United States.
Other components of this entity include:
Liberty International Underwriters
Liberty Specialty Markets
Liberty Mutual Surety
In addition to offering products and services that can assist clients with growing and protecting their wealth, Liberty Mutual is also a large sponsor of sporting events, as well as charitable organizations. The company’s primary headquarters is in Boston, Massachusetts.
Liberty Mutual Life Insurance Review
Today, Liberty Mutual is ranked as number 75 on the Fortune 500 list of largest U.S. corporations (based on the company’s 2016 revenue figures). As of year-end 2016, Liberty Mutual Insurance brought in roughly $38.3 billion in revenues for the year.
The company has invested its assets conservatively, to be ready to make timely payments of its policy holders’ claims. More than 87% of Liberty Mutual’s cash and invested assets are placed in Bonds, while another 4.1 percent is invested in cash and other short-term cash equivalents.
The life insurance and annuities that are provided by Liberty Mutual are issued by Liberty Life Assurance Company of Boston, with the company’s headquarters located in Boston, MA, and the service center based in Dover, New Hampshire.
Insurer Ratings and Better Business Bureau (BBB) Grade
Liberty Mutual Insurance is very stable financially – and because of that, it has received high ratings from the insurer rating agencies. These include an A (Excellent) from A.M. Best Company, an A2 (Good) from Moody’s Investor Services, and an A (Strong) from Standard & Poor’s.
Also, Liberty Mutual has been a qualified company of the Better Business Bureau (BBB) since April 26, 1931. The company has been given a grade of A+ by the BBB, which is on a general grade scale of A+ to F.
In the previous three years, Liberty Mutual has completed a total of 1,236 custom complaints, of which 242 of these complaints were closed out within the past 12 months. Of the total 1,236 complaints, 872 regarded problems with the company’s products and services. Another 276 were regarding billing and/or collection issues, 46 had to do with advertising and/or sales problems, and 22 were related to delivery issues. The remaining 20 were about guarantee/warranty issues.
Life Insurance Plan Options Offered By Liberty Mutual Insurance Company
Liberty Mutual insurance has a long list of life insurance policy options from which to choose. These include both term and permanent life insurance coverage. Term life insurance policies provide a death benefit, with no cash value build up. Because of this, a term life insurance policy can be quite affordable – especially if the insured is in good health at the time of the application for coverage.
Term life insurance policies are purchased for a set number of years, such as ten, fifteen, twenty, or even thirty. Typically, these policies will offer guaranteed coverage during the level term period, as well as a level amount of premium that cannot be increased.
With Liberty Mutual, coverage options for term life insurance policies include 10, 15, 20, or 30 years. These plans also have a variety of different optional riders that are available and can be added to help with further “customizing” the coverage.
The term life insurance policies offered through Liberty Mutual include the following:
Liberty Series Passport 10
Liberty Series Passport 15
Liberty Series Passport 20
Liberty Series Passport 30
Liberty Mutual also offers permanent life insurance product options. With a permanent life insurance policy, there is both death benefit protection, as well as cash value. The cash that is in the liquid section of the policy can grow on a tax deferred basis, meaning no taxes are due on the gain unless or until the money is withdrawn.
Policy holders can either borrow or withdraw cash from the cash value for any need they see fit, such as the payoff of debts, the supplementing of retirement income, or even to take a nice, long awaited vacation.
Liberty Mutual has both whole life and universal life insurance plans. While life offers level premiums, strong guarantees, and valuable protection that will last for the remainder of the insured’s lifetime. Whole life insurance will also steadily build cash value over time.
Many whole life insurance plans are offered through Liberty Mutual. These include the:
Liberty Series Whole Life – This plan provides level premium payments for the entire life of the insured – up to the policy anniversary that follows the insured’s 100th birthday.
Liberty Series Life (paid up at age 65) – This plan provides the ability to make level premium payments until the policy anniversary that follows the insured’s 65th birthday.
Liberty Series 20-Year Payment Life – With this plan, the policy holder will make level premium payments for 20 years. After that, the policy will be paid up.
Liberty Series Extra Value Life – The Liberty Series Extra Value Life plan is a “hybrid” policy that combines both permanent and temporary life insurance coverage. This allows for a premium that is usually lower than that of a whole life insurance policy.
Liberty Series Estate Maximizer Next Generation – With this plan, the insured is covered by a whole life insurance policy that is paid for via just one, single lump sum premium payment. This policy provides permanent life insurance protection and a death benefit that is larger than the original premium payment. The payment with this policy will increase in value over time by a factor that is based on the insured’s gender and age. The immediate increase in death benefit makes this life insurance a good match for those who wish to transfer assets in a tax advantaged manner.
There are also several options for universal life insurance that can be purchased through Liberty Mutual. Universal life insurance provides death benefit protection and cash value; however, it is more flexible than whole life. This is because the premium due date can be altered (within certain guidelines). The policy holder may also be able to decide how much of his or her premium goes towards the policy’s cash value component, and how much goes towards the death benefit.
Universal life insurance plans that are offered by Liberty Mutual include the following:
Spirit Series Performance Universal Life – This plan provides permanent life insurance protection that builds cash value. Policy holders have the flexibility to adjust their level of coverage, as well as their premium payments, to meet their needs.
Spirit Series Universal Life – The Spirit Series Universal Life insurance policy provides an affordable form of permanent life insurance that is not necessarily designed for building long-term cash value. This plan does offer unique lapse protection features, as well as continuous life insurance protection through any circumstance if the insured meets certain requirements.
Other Products and Services Available
In addition to life insurance, Liberty Mutual also offers a broad range of other goods and services. These include the following:
Critical Illness insurance
Identity Theft insurance
Pet insurance
Tuition insurance
Small Business insurance
Home owner’s insurance
Apartment insurance
Condo insurance
Landlord insurance
Mobile Home insurance
Flood insurance
Umbrella insurance
Car insurance
Motorcycle insurance
Boat insurance
Watercraft insurance
Antique and Classic Car insurance
ATV and Off-Road Vehicle insurance
RV (Recreational Vehicle) insurance
Vehicle Insurance Plans
Rental insurance
Key Employee Insurance
The company also has a selection of retirement annuities. Because people are living longer today, one of the biggest concerns that retirees have is running out of money during retirement. An annuity can help to alleviate this issue, when the lifetime income option is chosen.
Through Liberty Mutual, there are single premium deferred annuities (SPDAs), and flexible payment deferred annuities (FPDAs). With a single premium deferred annuity, just one single lump sum payment is needed to attain a guaranteed stream of income in retirement. With a flexible payment deferred annuity, deposits may be made over time, prior to converting the annuity over into an income stream. The growth on the money that is inside of the account will grow tax deferred.
How to Get the Best Premium Quotes on Life Insurance Coverage from Liberty Mutual
If you are shopping around for the best premium rates on life insurance coverage from Liberty Mutual – or from any life insurance company – then it is recommended that you partner with an independent insurance agent. In doing so, you will be able to compare policies and premiums in an unbiased manner – and from there, you can determine which option will be best fit for you.
When you are ready to proceed, we can help. We are an independent insurance brokerage and we work with many of the top life insurance carriers in the industry today. We can assist you with getting all the key details that you need for making a well-informed buying decision. To get started, all you need to do is just simply fill out our quote form.
We understand that the acquisition of a life insurance plan can be somewhat overwhelming. There are many different parameters to think about, and you want to be sure that you are moving in the right direction. But this process can be made so much easier when you are working with an ally on your side who can walk you through it from start to finish. So, contact us today – we’re here to help.
Not even the smallest of small businesses can thrive without setting realistic financial goals. A set of financial goals is like a company’s road map, always providing a frame of reference for where the business is and appears to be going. It enables business owners to put each day’s actions into context and make decisions in accordance with a broad vision. If you have decided to start a small business, there is no better time than now to begin the financial goal setting process. Sadly, the apparent difficulty of small business accounting scares many entrepreneurs away from doing a real, thorough job of this.
Following are some practical steps that will demystify the process.
Allot Regular Time to Set & Adjust Your Goals
Despite the obvious importance of financial goal setting to small business success, it’s easy to neglect in favor of other, seemingly more “urgent” tasks. Getting a new product out the door, signing a big client or eliminating corporate waste can quickly take precedence over far-off financial goals. Therefore, it is critical that business owners allot specific, regular times to both set new financial goals and review progress on existing ones. Like any other business task, financial goal setting is unlikely to get done without a firm date for completion. Nor does this need to be an especially complicated system. Something as simple as agreeing to review company finances each Monday for two hours might be all your small business needs to get and stay on track.
Set S.M.A.R.T Goals
That said, it is not enough to merely spend regular time sitting around and theorizing about financial goals. To truly get the most out of the exercise, strive to set S.M.A.R.T goals instead. As Goal-Setting-Guide.com explains, S.M.A.R.T is an acronym for “specific, measurable, attainable, realistic, and timely.” Using this criteria, it soon becomes clear that vague goals like “making a lot of money” are totally insufficient. Same goes for far-off goals like “start taking out dividends by next summer.” These types of goals are unhelpful because they express what you hope will occur without specifying in any detail how it will happen.
A S.M.A.R.T goal, in practice, might be something like “double our sales by the start of the third quarter using weekly split-testing of ad copy and improvement of our follow-up sequence.”
Consult Your Numbers
S.M.A.R.T goal setting demands that your actual numbers (rather than future, hoped-for “dream” scenarios) be used as the starting point. You must accept the current reality of your small business as portrayed by your cash flow, the income statement and balance sheet. If you are new to the business world (or have been neglecting company finances up until now), these documents may be unfamiliar. Nevertheless, they are critically important and foundational to small business goal setting. MoneyInstructor.com offers a sample income statement, while AccountingCoach.com provides a sample balance sheet.
Compare Yourself Financially to Competitors
While it may be impossible to know exactly how competitors are doing financially, it is generally common knowledge what the profit margins, labor and production costs in most businesses are. This, too, should be incorporated into the goal setting process. Do not look at your company as though it exists in a vacuum. It can be disheartening to learn that competitors are currently more profitable, but it is also an opportunity to reflect on why and how they got to that point – and how you can, too.
Create Action Plans
In accordance with the S.M.A.R.T goal philosophy, it is necessary to create specific, detailed action plans for how all goals will be reached. Once a goal has been set, move on immediately to delineating the necessary tasks. If new advertising copy needs to be written, make whomever is responsible aware of this and provide a deadline for completion. If customer support is a bottleneck, decide what needs to change, who will carry out the bulk of the work and when it needs to be done. Never be content to just set the goal. Always follow through.
Document Progress
Once the action plan is in place, document all progress made in implementing it. Task spreadsheets often work well in this regard. Simply create a shared spreadsheet in Google Docs or a similar service with the following headers:
Task
Date Posted
Responsibility
Date Due
Done?
Comments
Insist that anyone with a role to play in carrying out company financial plans use this spreadsheet to record what they are doing. This way, everyone can get a read on progress by looking in one set place.
Don’t Get Comfortable
Finally, there is much to be said for not growing complacent about financial goal setting. There is a tendency in new businesses to get comfortable with the status quo once a certain level of financial success has been achieved. Perhaps the company is turning a healthy profit, paying out handsome salaries to the owners and showing no signs of weakness. Be that as it may, no business owner can take up an attitude of complacency for long. The financial goals must always be on where the company currently is, where the owners want it to go, and what actions are needed to get there.
About the Author: Robert Steere is a staff writer at Business Owner’s Toolkit. Business Owner’s Toolkit provides information on small business accounting. They also provide useful tools for small business owners such as a sample balance sheet.
Do you have piles of papers lurking on your desk? Mountains of laundry looming beside your bed? Shelves double-stacked with knick-knacks? I have a bit of a clutter problem myself. The other day, I spent an hour looking for the vacuum cleaner, which eventually turned up buried under a pile of laundry almost as tall as I am.
All that clutter isn’t just annoying. It’s expensive. That’s right: Excess Stuff can keep costing you money even after it’s been bought and paid for.
How expensive is your Stuff? Professional organizer Jen Hunter of Find Your Floor in Boston says clutter can cost us real money in a lot of ways:
Buying replacement Stuff: Somewhere in your closet is that pair of running shoes you bought last year. Probably next to the ones you bought the spring before that. Clutter costs us dollars and time when we have to buy duplicates of stuff we know we own but just can’t find.
Damage to your Stuff: When you have more Stuff than space, storage can become a problem. Things can get stepped on, stored improperly and broken, water-damaged or just so buried they can’t be retrieved when needed.
Missing deadlines: When your Stuff is disorganized, you wind up paying hundreds of dollars a year in bank fees, late charges, library fines, overdue fees and tax penalties. Trust me on this one. I speak from years of painful experience.
Renting storage space: Almost 10% of U.S. families rent storage space for belongings that don’t fit in their homes. That’s a lot of dollars going to serve your Stuff instead of your life. Even those that don’t rent space may choose larger homes than they need so that they can store more Stuff.
Health costs: Out of control clutter can pose health risks from falling, and encourage the growth of allergens like dust and mold. Treatments for those can get expensive. Clutter can also affect your mental health. Writer Ariel Gore saw a therapist until she realized that what she really wanted was a clean home. So she hired a housekeeper for less than she paid the therapist and lived happily ever after.
To Hunter, the biggest cost is an intangible. “It’s the impediment that it presents to people’s lives,” she says.
Stacy J. Kaplan of Clutter Away in San Diego agrees. “You can’t function at your optimum level if you’re disorganized,” Kaplan says. “You wouldn’t run a business without a business plan. If you’re not organized your business will fail. A house is a small business in a way. It’s the operating structure behind what your family is doing.”
Clutter stops us from working as effectively as we otherwise might. At its most basic level, time spent looking for your car keys is time you’re not spending working, playing or relaxing.
It also costs us time because all that Stuff demands attention. While clutter might be a sign of neglect, it requires us to spend time working around it to accomplish basic household tasks like paying bills or preparing a meal. Those extra hours of housework are a drain on time and energy that could go into creative side projects, education or any number of other productive pursuits.
We can become prisoners of our Stuff. J.D. has written a lot here about how Stuff ties up our money. We can inadvertently tie up a lot of our earnings in rarely used sports equipment, video games, and other pricey toys. Selling that unused Stuff frees up not only your cash but your energy. When there’s too much Stuff around you, you’re like a plant in a too-small pot. It’s hard to grow or thrive when hemmed in by clutter.
Of course, the answer isn’t to move to a bigger place. There are families who live happily in 100-square-foot apartments. They just have less Stuff than we do.
The solution is to put your space on a diet. Some basic steps to get started:
Consider adopting The Compact, an agreement to buy nothing new for one year. This should cut the flow of Stuff coming in down to a trickle.
To deal with the Stuff you have, go through one small area at a time. Don’t try to do the whole house at once. Choose a room, a closet, a desk, or even just a kitchen drawer.
A good rule of thumb: Get rid of anything you don’t use or love.
A habit of clutter can be hard to give up. If you’re used to having a lot of Stuff around you, a pared-down space can feel too spare and empty. Before you rush to fill that void, try sitting with it for awhile and really setting an intention for you want to replace your clutter with. It might be original art, new bookcases, workshop space or just more breathing room.
Whatever you choose to do with your space, you can use the same techniques you used to clear it to keep it clean. Don’t keep Stuff you don’t use or need. Don’t buy Stuff you don’t want or need. Spend a little time each day keeping your space organized.
Here are the top three clutter-busting tips from GRS Twitter followers:
“Throw clutter in bags, put them in the attic. As you need something, take it from the bag. After 6mo, donate bags.” — @jacobmlee
“For clutter: I’m using @gretchenrubin‘s rules: Make your bed and the 1-min rule: if you can do it in 1 min, do it now!” — @jc_losangeles
“My fave declutter advice: Spend 15 Mins a day!” — @BudgetsAreSexy
I know we just talked about Stuff last week, but how do you combat clutter? What tips and tricks can you share with readers?
Over the past couple of years I’ve looked at, and reviewed, quite a few online brokers. There are a lot of pretty good ones out there, but even among all the good ones I’ve reviewed, TD Ameritrade stands out from the pack. They’ve been honored by multiple financial publications like Smart Money, Kiplinger and Barron’s for their great web and mobile tools, usability, commitment to customer education and just being a great place for investors of all types – especially long term investors.
Today I thought I’d do a TD Ameritrade review, exploring their history, the industry awards they’ve received, as well as looking at the important stuff like fees, tools and mobile trading options. So let’s get started.
TD Ameritrade Background
TD Ameritrade has been around for quite a while, tracing it’s roots back to a company launched in the 1960s called Rahel, Knack and Co. From Wikipedia:
The company started as an investment banking business named Rahel, Knack and Co. in the 1960s in Omaha, Nebraska. It was purchased in 1975 by J. Joseph Ricketts, Robert Perelman, and David G. Kellogg, renamed First Omaha Securities, and became one of the first firms to offer negotiated commissions.
Ricketts acquired the company completely from the other two founders in 1981. The company became AmeriTrade Clearing in 1983. In March 1997, Ameritrade became a publicly held company. In 2005 Ameritrade acquired TD Waterhouse and was renamed TD Ameritrade.
Today TD Ameritrade has over 6 million U.S. customers, and more if you include international customers. As of 2008 they were 746th-largest US firm.
TD Ameritrade is member of SIPC, which means your investments are protected by SIPC insurance up to $500,000 and $100,000 of it can be in cash. This means that you are protected against the company going into insolvency. You are not protected against market losses.
Awards
TD Ameritrade has received a lot of praise as one of the top online brokers in the industry. Among the awards they’ve received in the past couple of years:
Kiplinger named them #1 Best online broker for 2011 and called them “a great value proposition for long-term investors“.
Barron’s ranked TD Ameritrade #1 Best site for novices in their 2012 annual review of online stock and option brokers.
Barron’s ranked TD Ameritrade #2 Best site for long term investing in their 2012 annual review of online stock and option brokers.
Barron’s ranked TD Ameritrade #3 Best site for options traders in their 2012 annual review of online stock and option brokers.
Smart Money recognized them as the #1 discount brokerage firm, tied with one other company in SmartMoney’s 2011 review of online brokers
Stockbrokers.com ranked TD Ameritrade #1 overall broker in their 2012 broker review.
As you can see the last couple of years TD Ameritrade has consistently been rated as one of the top platforms for investing, especially for long term investors like I am.
TD Ameritrade Fees, Commissions And Minimums
When you’re opening an online brokerage account one of the first things you should probably look at is what your fees, commissions and minimums on your account will be. With TD Ameritrade you’ll get no account minimums, no maintenance fees and really no other unexpected fees.
Stock Trades
TD Ameritrade has $9.99 stock trades, which are definitely are in line with industry average. For what you’re getting with them for tools and research it is definitely a decent price.
Options Trades
For option trades, they also charge $9.99 per trade, plus 75 cents per contract.
Fees And Minimums For An Account
TD Ameritrade doesn’t have account maintenance fees, monthly minimums, inactivity fees. Broker assisted stock trades are $49.99. To see a full schedule of their fees, head on over to their site.
There is also no minimum account funding level to open a cash account and a $2,000 minimum to open an options or margin account.
TD Ameritrade Tools
TD Ameritrade has some great tools you can access via their platform. For example, the Trade Architect tool-set includes things like custom charts, probability and earnings analysis, stocks watch lists, integrated community to give you help and more.
TD Ameritrade’s Thinkorswim Trading Platform has also been voted the number one trading platform by Barron’s. So you know their trading tools are top notch. Their award winning mobile trading apps are available for Blackberry, iPhone, Ipad, Android, or Windows phone. Trading on the go should never be a problem.
TD also has a ton of research available if you want to investigate stocks before you buy. They offer investing and trading reports from Jaywalk Consensus, Research Team, Market Edge, S&P Columns, and S&P Research. Premium reports are also available for an additional charge if you want to get even more in depth. For the average person, however, they have a ton of knowledge available at their fingertips.
TD Ameritrade Account Types
TD Ameritrade has a ton of investment account options for individuals, families and more. If you want to open a retirement or investing account, they’ve probably got you covered:
Standard Accounts: Individual, Joint Tenants, Tenant in Common, Community Property, Tenants by the Entireties, Guardianship or Conservatorship.
Retirement Accounts: Traditional and Roth IRAs, Rollover IRA, SEP IRA, SIMPLE IRA
Education Savings Accounts: 529, Coverdell ESA, UGMA/UTMA.
Specialty Investing Accounts: Trust, Limited Partnership, Partnership, Investment Club, LLC, Sole Proprietorship, Corporate, Non-Incorporated Organization, Pension or Profit Plan for Small Business.
Open Your Own TD Ameritrade Account Today
Conclusion
When considering an online discount brokerage TD Ameritrade is definitely one of the most awarded and most recommended options out there. They’ve got low fees, reasonable commissions and their online trading tools and research are second to none. Their Ipad app is also one of the best available.
Add to that the fact that they’ve been awarded extensively in the last year, with at least 4 publications giving them a #1 rating as best online brokerage or best for long term investors, and you’ve got one of my top brokerage options to consider. Definitely put them on your short list.
Have you used TD Ameritrade? What has your experience been like? Are you happy with them? Tell us your thoughts in the comments.
Open An Account With TD Ameritrade Or Get Details. Click Here.
This is fantastic guest post by Omie Ismall who shares his experience as successful entrepreneur. Looking to create your own start-up company from scratch? If so, read this and take notes.
Some years ago, I sat down with one of my Board members to discuss my next year’s compensation. He said something that still sticks with me to this day,
“You know, your salary doesn’t matter because you’ll never build real wealth from it”
I dismissed the thought. After all, I had built a six-figure portfolio by the time I was thirty and carried no debt. My wife and I had lived cheaply since college and had saved 25% of our dual incomes. But my advisor, who was worth tens of millions of dollars, knew firsthand that the truly rich almost all do it via equity not salary.
Sure, anyone that makes a reasonable salary can build up a million-dollar portfolio by simply living below their means and investing the excess cash. That’s much of what we preach at LiveCheap. It takes a long time with great expense control, but it is the safest way to becoming relatively well-off at minimal risk.
But the amount of wealth that can be built up with an equity position can make your best efforts saving salary look like a pittance. It’s not the only way, as I wrote in 5 Ways to Get Rich in Less Than 15 Years, but for those that want to build something and make a fortune, small companies can be a goldmine.
Average Entrepreneur
I’m not talking about the Bill Gates’ or the Michael Dell’s of the world. That’s not your average entrepreneur. Most small company business owners make their money by dramatically increasing their net worth on the path from $1 million in revenues to $10 million.
At $1 million, the company is nearly worthless but at $10 million it could be worth $20 million or more. In fact, once the $10 million mark is crossed, a whole host of potential buyers are quite eager to write you a big check. If you can spend 10 years of your life and grow a company past that mark, you will be wealthier than almost anyone of reasonable income. Sound easy? It’s not.
It took me 18 months to hit the $1MM mark from the day of our first sale, but it took nearly 5 more years to get beyond $5MM. And by most business standards, especially when you are creating an industry, that’s fast.
The small company is a massive wealth builder for a couple key reasons. Running a successful small company forces you to live below your means. Your net worth includes a concentrated position in something that you cannot access: private company stock.
Since you are always exposed to downside risk, you tend to be very hesitant about spending money, as you may need to invest capital into the company at any time. Also, being successful at a small business usually means watching expenses carefully, something that usually is done in one’s personal life too.
When you finally sell, it is treated as a long term capital gain subject to a maximum 15% federal capital gains tax. If it were income, it would be taxed at more than twice the rate. So when the day comes to sell, most entrepreneurs are able to undergo a radical change in lifestyle, although many stay true to their frugal ways.
This varies dramatically from doctors or lawyers who tend to scale their expenses as their incomes grow and don’t fall victim to the common traits of the wealthy. An entrepreneur that has never pulled down more than a $150,000 salary may suddenly have a check for $10 million dollars.
So what’s the catch?
Well, few people want to work hard enough to make it happen. You make less than you would at a regular job and work far more hours, anywhere from 60 to 100 a week, for many years. The stress is enormous and you find out very quickly how hard it is to consistently meet payroll. You’ll expose your family to downside risk that you never had being a regular employee and you’ll put off the things that your family wants to do for years all in the name of the business.
Unlike a regular job, you just can’t hop to a new gig every few years: your employees depend on you and you’re tied to the business. There are dozens more drawbacks but for me they were all overshadowed, not by the ability to build wealth, but rather the ability to build something of lasting value. And that’s probably the reason why most entrepreneurs don’t want to sell their business even when they have multiples of what they need to retire. They love it and become inseparable from it.
Interested in building real wealth?
The following list is a quick gut check for being an entrepreneur and learning how to make a million:
Are you willing to put your family at financial risk in order to grow a company?
Are you willing to put in the late nights and weekends to make it happen?
Do you have core skills that will let you become a great business owner?
Do you know an industry well enough to run with an opportunity?
Do you have a passion for something? – just wanting to make money usually isn’t enough
Do you have enough capital to start the business or make an acquisition?
Will your spouse or significant other support you in your endeavor?
The last point is vitally important. Entrepreneurs often have no idea how much they put their wives (or husbands) through. If you answered yes to these questions, then start heading down the path of entrepreneurship. In 10 to 15 years, you may have more than enough money to retire, even if you don’t want to.
Omie Ismail is the CEO of Live Smart Media Inc. the holding company for LiveCheap.com. Omie is a successful information and software CEO for the past decade having taken eCivis Inc. from concept to become the leading grants management company for governments nationwide. He has a passion for helping people live the good life cheaply and for growing businesses from the ground up. Omie currently splits his time between his family, LiveCheap, and his next venture.
When you look at Peerform reviews you first need to understand the difference between conventional loans and peer to peer loans. While traditional loans come from a bank and can take months to get done, P2P loans are done through a platform that connects investors and borrowers.
Peer-to-Peer lending sites are rapidly becoming preferred destinations for both borrowers and investors. Peerform is a newer member of the P2P Market and it provides opportunities for both borrowers and investors to get better rates than what they can get from banks or other traditional loan and investment sources.
About Peerform
Peerform was founded in 2010 by Wall Street executives with backgrounds in finance and technology. They started the platform because they realized that traditional lenders like banks seemed unwilling to provide loans for individual and small business owners.
The solution was to create a peer-to-peer lending platform that would bring both borrowers and loan investors together. This would also give investors an opportunity to earn much higher interest rates on their investments than what they could get through traditional bank investments like savings accounts, money market accounts, and certificates of deposit.
The platform is able to offer lower rates to borrowers, and higher rates to investors, because it lacks the physical infrastructure and employment base that banks have. The reduction in operating costs from running a technology driven online lending platform could be passed on both borrowers and investors.
Peerform is headquartered in New York City and has been featured in major media outlets, such as Time and The Street. Peerform is currently eligible to make loans to residents in the 36 following states: Alaska, Alabama, Arkansas, Arizona, California, Delaware, Florida, Georgia, Hawaii, Illinois, Kentucky, Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, Nebraska, New Hampshire, New Jersey, New Mexico, Nevada, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Vermont, Washington, and Wisconsin.
Loans made on Peerform are underwritten by Cross River Bank, a federally insured New Jersey chartered bank and FDIC member.
Borrowing Through Peerform
The Peerform borrowing process is quick and simple, and you can use the loan proceeds for just about any purpose, including for business related needs.
Here are the highlights of the Peerform lending process:
Loan purpose. Peerform makes personal loans that can be used for a wide variety of purposes, including debt consolidation, credit card refinancing, home improvement, major purchases, car financing, business purposes, medical expenses, moving and relocation, wedding expenses, vacation, home buying, or other needs.
They also have a category referred to as a “green loan”. That’s where you take a personal loan and use it to purchase alternative energy equipment for your home. This typically can be something like solar panels for heat and hot water, or even the generation of electricity.
Loan amounts. Peerform will make loans that range in size $1,000 and $25,000.
Loan terms. All loans made through Peerform are for a term of 36 months. All loans are also fixed rate, installment loans that will be fully paid off at the end of the term. Peerform does not offer any other loan terms at this time.
Minimum borrower qualifications. In order to qualify for a loan with Peerform, you must have:
A minimum credit score of 600
No delinquencies, bankruptcies, tax liens, judgments, or non-medical related collections in the past 12 months
A minimum of one revolving account ever opened
A maximum debt-to-income ratio (DTI) of not more than 40% (not including mortgage debt)
A minimum of one open bank account
Although you don’t need to be employed, you do need to have an income which can be documented and verified. Also in regard to income, if you’re married, your spouse’s income cannot be used to qualify for the loan. Peerform provides personal loans, so you cannot include a cosigner for qualification purposes, nor make joint applications.
The loan application process. Peerform’s loan application uses a five step process:
Registration – This is an online registration that you can complete within a few minutes
Personal loan selection – After completing the online registration, the platform will review your information, and offer loan terms or alternatives.
Personal loan listing – After you have selected the loan terms that you want, your loan request is listed on the platform so that it can be evaluated by potential investors.
Verification – You will be asked to submit documentation that supports the information that you supplied in your registration form, or that will be needed to verify your identity.
The loan registration process will ask you to provide basic information, such as the loan amount you are requesting, the purpose of the loan, your credit score range, your full name, address, phone number, date of birth, email address, and annual salary and wages. You will then be asked to create a password.
Once you complete the registration form, you will be informed immediately if you qualify for a loan, and what the rate for that loan will be. Again, all loans are for a term of 36 months.
If you accept the offer, your loan request will be placed on the platform for investors to review and consider if they want to invest in it. You will also be taken through a step-by-step process to complete your application. Making application does not have any impact on your credit score.
Identity verification will involve you uploading copies of one of the following: your drivers license, military ID with photo, passport with photo, or US federal or state government ID. You will also be asked to verify your income. This will include two recent pay stubs, but they may also request recent tax returns and/or a copy of your bank statements.
Loan funding. In a best case scenario, your loan funds will be available shortly after the loan is put on the personal loan listing platform. However, all listed loans can remain on the platform for up to two weeks, which is known as the two-week listing period. You can track investor interest in your loan during the process.
But it is possible that your loan will not be fully funded within the two-week listing period. If it isn’t, you can either accept a lower loan amount (up to the amount funded), or you may need to reapply.
Interest rates and fees. Just like Lending club loans, interest rates with Peerfrom range between 7.12% APR and 29.99% APR. Rates are based on your Peerform Grade, and broken down into four alphabetic groups, each with its own rate range:
AAA, AA+, AA, A+ and A: 7.12% APR to 13.94% APR (credit score range: 700+)
BBB, BB+, BB, B+ and B: 14.86% APR to 19.44% APR (credit score range: 680 – 699)
CCC, CC+, CC, C+ and C: 20.87% APR to 26.92% APR (credit score range: 600 – 679)
DDD and DD+: 28.33% APR and 29..99% APR (credit score range: not indicated)
There are no application fees. There are however origination fees, typically 5.00% of the loan amount on all loans grades, except Peerform Grade loans AAA (1.00%), AA+ (2.00%) and AA (3.00%). The origination fee is deducted from your loan proceeds. For example, if your loan is $10,000, and the origination fee is 5.00%, you will receive net loan proceeds $9,500. The origination fee is payable only if the loan is issued.
The preferred loan repayment method by Peerform is by direct debits from your bank account. But you do have an option to pay by paper check. If you do, there is a $15 check processing fee for each check.
Late payments are assessed a fee of 5% of the monthly payment, subject to a $15 minimum per occurrence. There is also an unsuccessful payment fee in the event that your payment is refused. That fee is $15 per unsuccessful attempt, or a lesser amount as determined by state law.
There are no prepayment penalties in the event that you want to make a partial or full early payment on your loan.
Loan payments. You can repay your loan either by automatic draft from your bank account, or by mailing in monthly checks. However, Peerform does charge a fee of $15 per payment if you pay by check. There is no charge if you pay by automatic bank draft.
Site security. Peerform follows bank level security protocols, which includes encrypting and storing sensitive data in dedicated 24 hour maintain servers, which are protected with firewalls and housed in a secure facility. Servers are equipped with Secure Socket Layer (SSL) certificate technology to ensure encryption.
You also don’t need to concern yourself with the fact that investors will have access to your personal information. They will get only the information needed for investment purposes, but will not have access to any information that personally identifies you. In that way, you can apply for a loan anonymously, and not concern yourself that the information is available to someone who is either unintended or inconvenient, and certainly not for general public consumption.
Investing Through Peerform
If Peerform is a great place to get a loan, it’s also a rich source of investment opportunities.
Here is how investing through Peerform works:
Investor qualifications. In order to invest on Peerform, you must be an accredited investor. That’s an investor who is either high income or high net worth, or both, and who is generally recognized as a sophisticated investor who understands risk, knows how to invest into it, and is prepared to lose all of his or her investment (the temperament factor).
According to the US Securities and Exchange Commission, an accredited investor is defined as anyone who…
earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
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Investments offered. Peerform offers two types of investment products, whole loans and fractional loans. Whole loans are just what the name implies – you’re buying an entire loan. These investments are typically offered to institutions. Fractional loans are portions of loans, that are offered to individual investors.
These are not unlike investments on other P2P sites in which you can either invest in an entire loan, or in small pieces of many loans, commonly called notes.
All loans available for investment on Peerform are subject to analysis by the Peerform Loan Analyzer. The tool uses a highly advanced and dynamic algorithm for pricing loans. It uses empirical methods rather than filters (which are used on most P2P platforms) in order to better calculate consumer credit risk.
Custom portfolio. The portfolio enables you to diversify by customizing your investments to meet your needs. You can set investment goals, and the customization tool will outline how to invest your capital in order to reach your investment goals in the most concise way.
Fraud protection. Loan fraud is not uncommon and increases loan defaults, so Peerform takes extra steps to weed it out. In addition to requiring documentation to verify the borrower’s identity and income on the loan registration form, Peerform also uses both proprietary methods and commercially available licensed technologies and solutions to both detect and prevent fraud.
This includes third-party services such as Lexis Nexis for user identification, TransUnion for credit checks, and OFAC compliance.
Peerform also verifies that there is a variation of no more than 10% in the income stated by the borrower on the registration form, and that which is proven by the income documentation. If needed, IRS Form 4506T will be completed and sent to the IRS to verify the borrower’s income tax records. A small debit is taken from the borrower’s bank accounts, and verified by the borrower to make sure that the bank account is valid. The borrower’s phone number and email IP location are also verified.
Investment returns. Peerform offers rates of between 6.44% and 28.33% (net of origination fees). This rate range refers to returns before deducting for loan defaults, so your actual returns will be something less. .
Summary
Peerform is one of a growing number of P2P lending sites that also offers investment opportunities. The platform is using cutting edge technology to set the most accurate loan rates, which will also reduce the number of defaults that lowers the investment return on so many P2P lending sites.
Until a few years ago, small businesses were limited to obtaining business loans from banks and other traditional sources. But in the last few years, another source has opened up, and that’s peer-to-peer (P2P) business loans.
These are loans tailored specifically for small businesses, and they provide greater credit options than what small business owners can find at banks.
P2P Lenders Have Become Important Sources of Business Loans
It’s fortunate for small businesses that P2P platforms that make business loans are coming into the market. Banks – the most traditional source of loans of all types – are not particularly interested or generous when it comes to making loans for business purposes.
If you are a business owner and have attempted to get business financing, you’re likely well acquainted with the difficulties of the process.
This is especially true in the small business space. Banks make loans to businesses, but those are primarily well-established businesses. More typically, they represent medium- to large businesses.
Banks see these as lower risk lending niches since companies have strong track records, as well as large revenue streams and asset bases to secure the loans. That kind of stability is usually not as obvious with small businesses, and banks make getting a loan particularly difficult.
Complicating the process is that banks often don’t make business loans for less than $100,000. They usually see smaller loans as not worth their time and effort, based on the profitability of the loan. That means that if a small business only needs $50,000, they may not even be able to find a bank willing to talk to them.
But P2P lending is opening up for small businesses. Here are five of the most prominent P2P lenders in the sector:
Lending Club
You always have the ability to use personal loans for business purposes with Lending Club, but Lending Club has been gradually segmenting its loan types, which includes dedicated business loans and business lines of credit.
The personal loans are still available, which will enable you to get an unsecured loan for up to $40,000 to use for your business. But the business loan programs will enable you to borrow much larger amounts.
In fact, you can borrow an amount of up to $300,000. Business loans are installment loans with terms that run from one to five years They are fixed rate, with fixed monthly payments, and will be paid in full at the end of the term.
Business credit lines, on the other hand, are revolving credit arrangements, that function like credit cards or home equity lines of credit.
Lending Club does not require business plans or projections, nor do they generally ask for appraisals or title insurance. No collateral is required for loans for less than $100,000, and when collateral is required for higher amounts, it’s usually a general lien on the business and personal guarantees from the owners of the business. What’s more, loan proceeds can be used nearly any purpose.
In order to qualify for a Lending Club business loan or business line of credit, you must be in business for at least 24 months and have at least $75,000 in annual sales.
You must also own at least 20% of the business and have at least fair or better personal credit. This generally requires a credit score of at least 660, with no recent bankruptcies or tax liens.
APR runs between 6.95% and 35.89%, and there is an origination fee equal to between 0.99% and 6.99%. But there are no application fees and no prepayment penalty.
Funding Circle
Where Lending Club and other P2P lenders offer business loans as part of their loan mix, Funding Circle is expressly set up to provide business loans specifically.
Funding Circle provides business loans for a minimum of $25,000 up to a maximum of $500,000. Like Lending Club, business loan terms can range from one year to five years, and you can use the proceeds to just about any purpose – refinancing existing debt, hiring more employees, buying inventory or equipment, or moving or expanding your business operation.
In order to qualify for a business loan with Funding Circle, you must have a minimum credit score 640, and not have any bankruptcies or judgments within the past seven years, nor any outstanding tax liens or unsatisfied judgments.
You must be in business for 24 months and showing a profit in at least one of the last two years. You must also have a minimum annual revenue of $150,000 in each of the two most recent calendar years.
Business loans will not require any specific physical collateral, but you will have to execute a Form UCC-1 filing as well as provide personal guarantees by each owner of the business.
Interest rates can run between 5.49% and 27.79%, and there is an origination fee that ranges between 1.49% and 4.99% of the loan amount.
Learn More About Funding Circle
Prosper
Unlike Lending Club and Funding Circle, Prosper doesn’t have a dedicated business loan program available. However, you can take an unsecured personal loan of between $2,000 and $35,000 and use it for business purposes.
In order to qualify for a loan with Prosper, you must have a minimum credit score of 640 with Experian (that’s the credit bureau that they base your credit score on). You will need to furnish a copy of your recent income tax return if you are self-employed.
Interest rates run between 5.99%, to a maximum of 35.97%. Prosper also charges an origination fee equal to between 1% and 5% of your loan. There is no application fee and no prepayment penalty.
Upstart
Like Prosper, Upstart doesn’t have a specific loan program for business loans but does allow you to take a personal loan which can be used for just about any business need that you have.
Upstart is a little bit different from other P2P lenders in that they look beyond traditional credit criteria, but they also consider your education. This includes your major, your grade point average, and even the college or university you attended. They consider that certain major fields of study have advantages over others, and it figures into the underwriting mix.
You can borrow from a minimum of $3,000 to a maximum of $35,000. They have two loan terms, 36 months and 60 months. Though they are not specifically business loans, they have a major advantage in that they require no collateral for the loan.
As a self-employed person, you will need to provide the most recent year’s income tax return, as well as copies of current year invoices for your business. They will also likely require a copy of your college transcript if you graduated within four years of applying for a loan. You must have a minimum credit score 640, and not have any bankruptcies or other negative public records on your credit report.
Interest rates run between 4.66% and 29.99% for a 36-month loan, and between 6.00% and 27.32% for a 60-month loan. It’s likely that they also charge an origination fee since that is the practice with P2P lenders, but it is not disclosed on their website. Assume that will be in line with other P2P lenders origination fees.
PeerForm
PeerForm follows the same path as Prosper and Upstart in that they don’t have a specific business loan program, but they do have personal loans that you can use for just about any business purpose you choose.
Loan amounts range between $1,000, and $25,000, and all are for a term of 36 months. These are installment loans that come with fixed rates and fixed monthly payments and will be paid in full at the end of the loan term.
Interest rates range from 7.12%, up to 29.99%. There are no application fees and no prepayment penalties. However, PeerForm does have an origination fee between 1.00% and 5.00% of the loan.
In order to qualify for a PeerForm loan, you must have a minimum credit score 600, which is lower than any other P2P lender on this list. However, your credit report must also reveal no delinquencies, bankruptcies, tax liens, judgments, or non-medical related collections within the past 12 months.
You can have a maximum debt-to-income ratio of 40%, but this does not include mortgage debt on your personal residence. Your credit report must also show a minimum of one revolving account, you must also have at least one open bank account in order to qualify for a loan.
The P2P Business Loan Advantage
That’s five major P2P lending platforms that have business loans available in one form or another. If you are in need of a smaller loan amount – less than $35,000 – and you are looking for a simple unsecured loan that you can use for business purposes, then Prosper, Upstart and PeerForm should be able to provide you what you’re looking for.
But if you need a larger amount, like several hundred thousand dollars, and your business is a little bit better established as far as the length of time in business and cash flow, then you will want to go with either Lending Club or with Funding Circle.
Whatever you choose, the upshot is that you are no longer limited to getting business loans strictly from banks. You can now take advantage of P2P platforms, and likely have a greater chance of getting the financing you need for your small business.
And you likely have every reason to believe that you will also get your loan a lot faster and with fewer questions and less documentation.