GIVE YOURSELF CREDIT!

Transcription

1 Growing Dollars and $ense Workshops GIVE YOURSELF CREDIT! Presented by The Coalition for Debtor Education This program is made possible by a grant from the FINRA Investor Education Foundation through Smart investing@your library, a partnership with the American Library Association.

2 agenda Your personal credit report Business credit card Bank loan

3 Your personal credit Check reports online Report errors Check FICO score Pay down outstanding balances Negotiate credit limit and interest rate

4 Three Major Credit Bureaus

5 Order one FREE report form each credit bureau each year Review for errors Check for Identity Theft Correct errors in writing Report stolen cards to credit bureaus asap annualcreditreport.com 0r To stop receiving rpre-screened offers: OPTOUT TIP: Order a free report from one company every 4 months

6 Managing debt and improving your credit Negotiate a lower rate for your personal cards Pay off highest interest rate card first Don t use costly extra services: Identity protection Job loss protection

7 Maintain you good credit Pay on time Pay off balances monthly Or at least pay more than the minimum Don t use more than 1/3 of your available credit

8 Bottom line Improve your personal credit report before you negotiate for a business card As the owner, you are personally responsible for business credit card debts

9 Business Credit Card Rate tied to your personal credit report Can help you track expenses Some cards offer employee fraud protection Help build business credit May qualify for rewards and discounts

10 Business Credit Card Use separate cards for personal and business expenses

11 Business Credit Card You are personally responsible for debts Interest rate can change - retroactively Payment due dates can change - monthly! NO cap on late fees or over-the-limit fees Rates and fees tied to your personal credit history Owner must personally guarantee card; missed payment or default shows on owner s personal credit report

12 If you accept credit cards You cannot require phone # and address You cannot impose a minimum charge or charge an extra fee for using a card You must be sure customer information is secure You must truncate card # - only show last 4 digits

13 Credit Reports of Job Applicants Fair Credit Reporting Act (FCRA) Must obtain an applicant s or employee's written consent to order their credit report Must provide report and notify applicant that he/she may challenge decision if not approved on basis of credit report

14 Business Loans Government Banks

15 Business loans Loans and Grants Search Tool

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17 Bank Loans SBA Loans SBA participates in a number of loan programs designed for business owners who may have trouble qualifying for a traditional bank loan. Visit a local bank or lending institution that participates in SBA programs.

18 SBA Guaranteed Loans The process starts with your local lender, working within SBA guidelines. See SBA application checklist on your handout

19 Preparing your Loan Application

20 Common Loan Features Term: Long or Short Interest rates vary depending on the term, type, size, risk of the loan. Repayment may be a lump sum or on a monthly or quarterly schedule. Payments may be delayed until the funds help your business generate cash flow. The loan may be committed May require that you maintain compensating balance levels in a deposit account.

21 What a Lender looks for: 5 C s Capacity Capital Collateral Conditions Character

22 Also Personal Financial Statement Balance sheet P&L statement Cash flow statement

23 Common Loan Restrictions Maintenance of accurate records and financial statements Limits on total debt Restrictions on dividends or other payments to owners and/or investors Restrictions on additional capital expenditures Restrictions on sale of fixed assets Performance standards on financial ratios Current tax and insurance payments

24 Business Line of Credit Helps manage seasonal cash flow Prepare for long-term success by purchasing short-term assets, such as inventory

25 Next steps The Credit Process: A Guide For Small Business Owners tml Small Business Adminitration Contact your own bank or one of the organizations listed in the Resources Guide