During the time you are paying your conventional mortgage, you are building equity with your home, lowering the amount of debt on it and increasing its value. The reverse mortgage is based on that value and that equity. There are some major differences between the traditional mortgage and the reverse mortgage. For traditional mortgages there are a few basic items that differ.

One, virtually anyone can apply for the home equity line of credit provided they have built actual value into their home.

Two, there are limits to how the money can be disbursed to you and what it can be used for.

Three, there are limitations to how much you can draw on the credit built into the home in the first place.

That is not to say there are not restrictions with the Reverse Mortgage Quote as well, because there are. You have to be at least 62 years old at the time you apply for this type of loan and there are other criteria that must be met as well.

The home must serve as your primary residence. In addition to who can apply and be approved for the reverse mortgage, there are restrictions for the loan originators that can issue one.

Because the reverse mortgage is one that is government insured, the applicant is required to speak to a government approved loan counselor before the application is completed. Reverse mortgages programe generally don’t reserve for taxes and insurance so you must pay your them yourself.

The biggest difference between the home equity line of credit and the reverse mortgage is that with a reverse mortgage you must make a monthly payment. You can have the money given to you as a lump sum, one-time payment, as monthly payments, as a line of credit or as any combination of these. The money can then be used for any purpose including paying off bills, medical care and therapy, vacations or ongoing living expenses. In fact, many people who have previously retired are turning to the reverse mortgage for their living expenses rather than having to face the prospect of looking for and returning to work. The huge benefit of the reverse mortgage is simple: you do not have to make a payment on this money unless you either move from your home, sell your home or die at which point your mortgage would have to be paid from the proceeds of the sale or by your estate.

Contact a broker or banker. There are lots of them on the internet. One of them, for example, is Currington Mortgage. They have the catch phase "Own Your Doorbell" Your broker will run your credit. Be prepared with at least one years W-2s and current pay-stubs with year to date( YTD) totals. If there has been any job movement or changes in the last two years you will need to go back that far. You should be able to answer any questions that come up about your credit. If there are slow payments on the report, explain why. Be honest. It works better in the long run.

It is always easy to remember the truth than keep track of a lie. And please know the broker or banker is on your side. They want you to refinance in owasso and get the loan. They do not get paid if you don’t. You will need to get an appraisal. That is an independent determination to set a value on the house. In most circumstance, the lender will loan you about eighty percent of the value of the house, called the loan to value (LTV). If everything checks out, you can have a new, lower rate within six weeks.

It will be longer if questions need to be answered . And then you will be in a lower interest rate loan, possibly with no mortgage insurance (from when you bought the house) and lower loan balance since you presumably have paid down on the principal, Your broker will help you each step of the way to refinance in owasso. The end result is a benefit you see with a better payment on your owasso mortgage.

Reverse mortgages continue their rise in popularity following the beginning of the retirement wave for the Baby Boomer generation, and the trend doesn’t seem to be slowing down. The attraction and demand for these loans are varied among each homeowner. Some homeowners wish to supplement their social security or pension payments with cash; others are using reverse mortgages to avoid potential foreclosure or liens on their property. This article will explore some additional benefits to help you decide if a reverse mortgage is right for you.

A reverse mortgage is a cash loan that is paid to you using the equity you’ve built up in your permanent residence. So instead of you making mortgage payments to the lender, the reverse mortgage lender will now make payments to you. The terms come in many varieties, and you will not be required to give up your home should you default during repayment.

Repayment of your loan will come when you’ve either a) moved out or sold your permanent residence, or b) you’ve passed on. If you sell your permanent residence (reverse mortgages require that you live in the home you’ll be taking the loan out on), the lenders principal balance plus interest will be taken out of the amount you sold the home for.

In the unfortunate and circumstantial second case in which you pass before beginning repayment on the loan, your heirs will be responsible for repayment. Although, as in the first case, your heirs can repay the loan by selling the home and deducting the balance plus interest owed at the time of closing. They can also simply refinance the loan, just like a traditional mortgage. However, it’s comforting to know that HUD defines this loan as non-recourse, meaning your heirs won’t be saddled with any additional debt beyond what the home can sell for.

Eligibility for the reverse mortgage is flexible, but is based on some foundations. Lenders will require that you be at least 62 years old. Your income level is not important because the loan is being granted on the acquired equity in the home itself. You will remain as the owner of the loan and hold the title as such; therefore, it’s important to remember you will still be responsible for paying all of the bills, insurance, and costs associated with living in your home. Here are some other key points:

• Reverse mortgage loans should be closely considered as a financial transaction with long-term benefits and expenses. Each time you receive a payment, whether the terms are monthly installments or on a line of credit, the interest will be compounded on top of the principal during the life of the loan. Interest rates are sometimes fixed; sometimes they are variable and can move in directions that can work for or against your favor.

• Reverse mortgage loans are non-recourse, meaning the total amount you own at the end of the loan will not exceed the total sale value of the home at the time of repayment.

• In addition to age and interest rate, the amount of the loan you qualify for is determined based on how much your home is worth and how much you may still owe on the mortgage Consult a reverse mortgage professional or request a reverse mortgage quote for more details.

Once approved, the terms of the loan come in several flavors. You can choose to receive your loan payments in a single large payment at closing, on a monthly basis, in a line of credit that allows you to take payments anytime, or in any combination of these.

You should also be aware of the safety nets in place for you as a borrower. The loans are federally-insured by the United States Department of Housing and Urban Development (HUD) and can be originated and administered only by companies that are licensed by the state to do so. Further, the government requires you to speak with a HUD approved counselor before closing any reverse mortgage transaction. The reason is to insure that you have been given all of the appropriate and accurate information regarding the loan from someone other than the lender so that you may make educated and unbiased decisions.

Let’s look at some situations in which a senior may be considering a reverse mortgage. If any of the examples that follow this text apply to you, then you owe it to yourself to consult with a reverse mortgage specialist. You can request a free and confidential reverse mortgage quote right from our homepage at www.legacyreversemortgage.com that is tailored to your specific situation. Also be sure to take a minute to use our reverse mortgage calculator to estimate how much you can qualify for today, available at www.legacyreversemortgage.com/calculator.

• A senior is still paying a large mortgage payment on the home of their dreams. The fixed rate reverse mortgage pays off mortgage, freeing up all that monthly cash for the senior to stay in the home and significantly improve their standard of living.

• A senior couple owns a substantial and almost entire portion of the equity in their home after 28 years of mortgage payments, and with just a few more payments to go, this couple will own the home outright. After consulting with professionals and using the reverse mortgage calculator, the couple decided to take out the loan, pay off the home, and remodel the kitchen, bedrooms, and replace the roof with the cash.

• Social security benefits are only a few hundred dollars a month for one senior, and it’s just not enough to cover all the bills. This individual has been forced, on more than one occasion, to choose between buying medicine and food because the money just wasn’t there for both. He chooses a reverse mortgage to be able to comfortably enjoy his future years.

• Many years ago, a couple made the promise and commitment to fulfill their dream of traveling across the United States during retirement. To bring their dream to reality, a couple chooses a reverse mortgage to pay for a Winnebago, supplies, and begin planning for their trips and other hobbies.

With other chats on other sites, you have to divulge all of your contact information, including your name, address and phone number before you proceed. It doesn’t matter if you have a very general question or you aren’t even sure if you would qualify for a reverse mortgage in the first place, you are simply going to have to give this data before you can chat. And, once you are connected, you might find yourself in the middle of a sales pitch that can be fairly high pressure. If you are only starting the process, or simply looking for information, then this kind of tactic is the last thing that you really need.

Once those other sites have your email address and your home phone number, they can start to hound and harass you, reminding you virtually every day that you are the one that wanted information in the first place. They may call you daily or send several emails for their various products. And worse, they might sell your information to an outside, third party that will also call and hound you time after time after time.

Legacy Reverse Mortgage does not require any personal information to access and use the chat feature. You simply log on during the open times and ask your question. If the question cannot be answered by the operator, you might be directed to others who can better assist you, but it is still your choice whether you give personal information or not. It is not a requirement.

Reading articles and other Reverse Morgtage calculator works for some people, but there are often things that might seem confusing and will need to be clarified. Often, that is better done by talking to someone directly so that you can ask the questions that might not be specifically covered in a general article or in an application packet. Sometimes all you need is the answer to a question about how to fill out your forms so that you are doing them correctly and other times there are other questions that you need to have answered. Chat can be the simplest way to get the information that you need before you start the process because if you are simply not qualified for a reverse mortgage, then it is a waste of time to start the paperwork process. If you are qualified but not sure that it is right for you, then chat can help you make the decision whether to proceed or not.

graduating from IIM-Ahmedabad. After a stint of Business Planning for Modi Telstra (later

acquired by Airtel) he headed roaming operations for Airtel's Kolkata circle.

Mr. Raman started his Six Sigma journey in GE Capital International Services in 2002. Since then he has been in the Six Sigma / Process Excellence field. He spent three & half years in WNS Global Services in various lead roles.

In his last role he headed the Business Process Excellence and Transformation function for one of its four verticals. Mr. Raman Heads the Information Technology & Business Process Excellence team at Motilal Oswal Financial Services Ltd, A leading financial services company.

Mr. Raman is from IIT – Kharagpur and IIM - Bangalore

1. You have been one of those highly respected lot of students who have done both IIT and IIM. How does it feel?

It feels great. In fact it used to feel much greater around the time of passing out. God has been

good to me that I was blessed with parents who encouraged and supported me in all decisions I

took regarding these two great institutes of learning. I took one major decision each to get into

IIT-Kharagpur and IIM – Ahmedabad.  I think as we grow I feel sense of responsibility towards society in general and nation in particular to contribute and enable people to become better and wiser. I tend to focus on these responsibilities while making money for myself and enable organizations improve profits.

2. In which way IIT and IIM has changed you?

A lot! Both institutes made me face the real world. In school it was a different environment and I was on top of the world but after entering these institutes I met with the real world and transformation of boy into man happened, I would say. I studied in Hindi medium till class so it was an additional challenge for me. Having said above, I feel incomplete as I grow and interact with more people – I guess that is the truth. These institutes made me focus on my strengths and forced me to work on my weaknesses. One more aspect of self realization happened in both institutes and that is improved self-confidence. Humans come to study and I was also one more

of them … no special shape, size etc. was required to get in there. Specifically, while IIT helped

me shape my overall personality and make me some great friends, IIM helped me sustain

pressure and improved my endurance, especially first year and more specifically the first term

where the pressure of academics was so huge that any minute wasted seemed like a big crime.

In those days I felt it was unnecessary pressure but I did not realize that institute prepared

students sustain pressure in corporate world.

3. To what extent the institutes play a role in your career growth?

A great deal. They are definitely great stamps on your resume. One can focus on performing well

at work after having these certificates instead of getting more certificates during job to enhance

one’s resume. Though academically they may not have directly helped me through subject matter

expertise but overall development does helps in corporate world. I still remember how MOC at

IIM-A has helped me all through. Another important aspect is networking with some great people

there. Our batch mates are all over the place at various senior positions in different industries and

geographies. Though need has not arisen so far but I am confident if there will be need these

friends will be there to help me.

4. What’s your advice to the students who are preparing for IITs and IIMs?

Just chill and focus on building core strengths and conceptual understanding. Mugging never

helps you get through these entrance formats. Do not be under pressure just do your best by

focusing on right studies and leave the rest to almighty. Getting a good coach (coach who

focuses on above said aspects) is critical. In the hindsight I feel a coach would have helped me

further … I did not have one. Even if you do not get through … it is not end of the world.

5. Some students have to make a choice between IIMs and MBA overseas. What’s your

advice to such students

IIMs. Action is here. The academics wise IIMs would be closer to Indian market and now there

are people who are migrating to India so why think of going overseas. However, in the event that

you choose to then make sure you go to one of the IVY leagues even if they cost you a bomb.

6. Other than academics, what else did you learn from IIT and IIM?

I think byproducts I learnt other than academics have been much more useful. I learnt a lot …

overall personality development, making friends, politics and how to deal with that; how to be self

and still deal with the world. Above all I guess self belief and self-confidence.

7. Which institute influenced you more IIT or IIM?

Difficult to differentiate between the two. Both influenced me in different way. While IIT shaped

me as a person, IIM helped me get into a good career. If I am forced to choose one out the two, I

will choose IIT.

8. Your advice to parents of aspiring IIT and IIM students:

Do not put undue pressure on your wards. Just give them all that they need to prepare to enter

into these institutes and leave the rest to them. Another thing: do not be over or under confident

about your ward … both are bad for your mental health and your kid’s chances of getting into

them. Parents must understand the real potential of their kid instead of just expecting him/her to

get into these institutes because your neighbor’s son/daughter has gone there … it puts extra

pressure on the ward. Try to focus on giving right and good values to the kids instead of getting

into a rat race. I think my parents could be the one who can advice parents better :-)

9. What’s your advice to students who can’t or didn’t make it to IIT or IIM?

As I have said above. IIT or IIM is not the end of the world … they are one of many routes to

become a good human being and be successful in life. If you do not get through, sulk for few

days only (because if you do not that would mean you did not try seriously ;-)) and then get on to

alternate journey to be a great human being etc. It is important to realize what is your goal and

accept that IIT and IIM can be one of many ways to get there.

But it makes an interesting reading to understand the dynamics of the real estate market in Pakistan. One can safely assume that it is an underdeveloped market. As compared to developed economies of the world where the real estate is mostly financed through mortgage, it is a completely neglected sector in Pakistan. The presence of mortgage financing in the property sector is only a recent phenomenon and can be qualified as negligible. Even the present mortgage financing is volatile with floating interest rate, which means that the lender is unsure of the real terms and conditions of the loan and the banks are at liberty to change the terms and conditions in case of adverse interest rates subsequently. It is interesting to note that mortgage financing is more than 50 % of GDP in most developed countries whereas this ratio is less than 2% in Pakistan.

Another worrying factor of the real estate market of Pakistan is the poor land record maintenance. It is still manual and efforts to computerize it have failed in the past. Bribery is the order of the day in land record and Patwari is still the king who may temper with the record according to his sweet will and vested interests. There is also a risk of fraudulent transactions due to non-transparent land record.

Recently following a worldwide boom in international real estate business, property market in Pakistan also witnessed a sharp growth. One of the factors may also be the recent decline in interest rates. It is a standard principle of economics that in a falling interest rates regime, people tend to invest in real estate, thinking it to be safe and secure from inflation.

Another stigma on the property sector of Pakistan is the speculation mafia. With the drop of interest rates, people were uncertain about their investments in banks and withdrew to invest in the property market, which offered attractive returns overnight, thanks to speculation mafia. Many housing societies were formed to defraud people. Files were in circulation everywhere without any physical existence of the plots and houses on ground and many opportunists and speculators benefited from this panorama. And ultimately common man was the looser, who was left with the file without anything concrete as the housing societies suddenly started to disappear. One can easily remember the example of Bankers City Housing Society.

But at the end of the day, common man in Pakistan is dreaming for a small house of his own, which seems a distant dream. One way to overcome the shortage of houses in Pakistan may be the introduction of multistory buildings to avoid the heavy urban land cost.  This will naturally lower the prices of houses and may bring these in the reach of a common citizen.

Government may devise a policy to encourage the participation of the private sector in the property market. But the discouragement of speculators is very essential. Moreover the Government needs to help the poorest segment of society through its sate owned organization called House Building Finance Corporation. Government may also identify the sate owned land in the urban areas and give it to the private sector on soft lease terms for building houses for the poorest segment of society. This will lower the high property prices in Pakistan and will help in maturing the property& real estate market on stable footing.

There are various types of life insurance, but the basics of each stay the same. Each one involves paying premiums to the insurance company, which in the event of death pays an amount to the person and/or people named in your policy,  the beneficiaries. Your beneficiaries receive this money income tax free.

The value of a life insurance policy should be the amount of funds that your heirs would need upon your death. This value will be different for everyone based on their goals. For some, they might want to be able to pay their mortgage, pay student loans for children or meet the needs of their spouse for a lifetime. A baseline multiplier that is often used to calculate life insurance value is ten to fifteen times your annual income.

The two main categories of life insurance are term life insurance and permanent life. Term life insurance is for a particular period of time, usually 5, 10, 15, 20 or sometimes 30 years where the premium is usually set for the duration of the term. Often term life insurance is purchased by people who are young and in good health because it is inexpensive and can be a good value. Yet, while term life insurance has lower premiums than permanent life insurance, it builds no cash value and is only paid if the insured dies.

So, if the insured lives through the entire term of their insurance, the coverage disappears and there are no benefits. Additionally, if a term life insurance policy expires on a person at an older age, perhaps in their 60s, it can result in what is called “exploding” term life insurance because the insured can't afford to renew term. Unless the coverage can be rolled over into permanent life insurance, it expires.

Permanent life insurance, on the other hand, is intended to last for the entire life of the insured, rather than a particular time period.  Additionally, it develops equity by earning interest, often similar to a long-term bond, which has cash value. This money, which is growing in your policy, can be accessed while you are still living as a beneficial piece of a balanced portfolio. While there are many varieties of permanent life insurance, the two main types are whole life insurance and universal life insurance.

The cost of life insurance premiums depends on a number of factors. Underwriters analyze factors such as age, health and history of you and your parents’ medical histories. They even analyze habits such as the use of tobacco and look at avocation such as whether you an avid drag racer, scuba diver or skydiver. Underwriters review these factors and often request your past medical records and that you to undergo a medical exam.  

Most people understand the importance of life insurance but the factors that affect the policy rate are often unknown and misunderstood. Insurance policies come in different sizes and designs. There are different rate classes for different policies. What rate class you fit in to depends on personal factors of your life. When calculating your rate, a life insurance company considers policy type and personal factors like age, weight, job, and sometimes hobbies if those constitute a possible risk.

These factors are categorized based on various risks associated with you. If you are in a low risk category including your good health, your life insurance premiums will be lower than someone in a higher risk category. When trying to figure out what factors may affect your policy, consider what might make you a riskier client for the insurance company to insure. Some factors for your life insurance rate are things that are out of your control but a few factors are in your hands.

The type of policy and how much life insurance is enough for you are major factors in the cost of your policy and are decisions you have to make yourself. You can take counsel and advice from friends, family, and professionals but in the end the choice is yours. Tobacco use is another factor that you can control. Policies for non-smokers will always cost less than those for smokers. Type, frequency, and last use of tobacco will impact your premium. Even the use of nicotine patches or gum can influence your policy. Most life insurance companies mandate that you be completely tobacco- and nicotine-free for two years or more before you can be accepted as a non-tobacco user.  Some companies distinguish between cigarette smoking (higher cost) and other tobacco use such as pipes, cigars and chewing tobacco.

Job type and hobbies are other factors that you can control. Jobs that involve risky procedures, or those in unsafe environments will put you in a higher risk category than a someone in a safer profession. The risk level of your hobbies are also a factor. High risk hobbies, like sky diving, auto racing, or scuba diving can make your policy cost sky rocket.

Other factors that play a huge role in your policy are age and health history. These factors are, of course, out of your control. But there are steps you can take to beat “father time” and your family’s hereditary history. If you purchase life insurance when you are a young adult, you will pay lower rates than if you purchase a policy later in life.

Unlike age, there’s no real way to take the upper hand when it comes to your family’s health history. Just be sure to divulge all known health information. If you don’t and it is discovered that you withheld information, your policy can be deemed null and void. To get a complete understanding of what factors will affect your policy, contact an insurance expert like those at LifeInsure.com.

What are title loans?

Title loans are loans for borrowers who provide their car title as collateral for their loan. In this type of loan, the lender doesn't check the credit score of the borrower. The only consideration for the loan is the value and condition of the vehicle. This is the reason that these loans have higher interest rates than other loans. They are generally on a short-term basis and are on higher interest rates.

Easy Process

The amount of the loan is determined by the collateral value of the asset. The lenders offer up to 50% of the collaterals resale value. The interest rates vary depending on the state where the lender is located. The payment plans vary by loan program, but the most common one is where the borrower pays off the interest due at each due date. The outstanding amount has to be paid in full at the end of the term of the loan. If the borrower is unable to pay the outstanding amount, they can roll the balance by getting a new title loan.

Is it a good idea?

Title loans are secured loans where it takes a few minutes to fill the application for a loan. The amount is set based on the current market value of the vehicle. It is one of the quickest and easiest ways to get cash in an emergency situation.

Another reason to consider title loans as your best loan option is that it doesn't restrict what your money is to be spent on. It is generally used to spend on emergencies or to pay debts or outstanding bills. The best part of this loan is that you still keep the car while paying off the loan. So, it doesn’t put the burden of having to find other transportation in the mean time. The borrower is advised to consult a lawyer so as to fully understand the conditions for repaying the loan.

Be sure about the terms and conditions before you sign the loan papers. Proper research in this area is necessary to reduce chances of getting involved with a lender offering unfair terms and conditions. Make sure you understand the process and enjoy the benefits of secured loans in your time of need.

If you make use of rollover 401k you must keep in mind that you will be expected to pay a penalty on the interest. This amount will also be included in your taxable income when you pay your taxes the following year. This amount can be quite significant so it is very important that anyone who is contemplating on cashing in on their retirement account takes note of the penalties to be faced. But if you are on the verge of bankruptcy and need to save your home, you must cash in your retirement account rather than have your credit ruined. A bankruptcy or foreclosure will stay on your record for many years to come unless you employ the services of a credit repair service to eliminate them. A credit rewind can be useful to those who have bad credit as a result of foreclosure or bankruptcy.

When you rollover 401k, you can move your old 401k account to the new one you have with your new employer. Or you can choose to move it to an IRA. Whatever you decide, just make sure that you move your account from your earlier employer so as to eliminate the fees that he may charge you for maintaining your account. Don’t ever cash the fund unless you are on the verge of bankruptcy as it will attract heavy penalties. Retirement plans are after all meant to be withdrawn only after you retire.

The options available when you rollover 401k include rollover to a new 401k account, a traditional IRA or a Roth IRA. Each of these has their own pros and cons so you need to choose the one that matches your requirements as per your situation.  If you do it the right way, your rollover 401k can assist you in retaining a healthy situation in your personal finances.

You may rollover 401k to IRA as it gives you a lot more choices in investing. This gives you more control on how your retirement fund is invested; you can choose the investment instrument as per your requirements while you have very limited choices if you decide to leave your 401k account as it is. Now more and more employers no longer provide an employer match to your contribution which was the main reason for opening a 401K account in the first place. But whatever you do, make sure you do not cash your 401k account unless absolutely necessary like when you are on the verge of bankruptcy.

When you start making your health insurance back up plan there are a few things you have to do in order to make sure you pick the right plan as a backup. The reason why you want to have a backup health insurance plan is because you never know when something bad will happen to you or your family and you want to be prepared. The first thing you should do is to begin to ask around what your close friends and family have for their insurance plans. Although plans are different for everyone it may help you get an idea of what type of plan would be the right fit for your family.

Once you have an idea of what your friends and family use for a plan then you can start looking into these companies. You may be able to use the plan you currently have right now as a bookmark for what type of plan you may want to have in the future. If you are covered by an individual plan right now you are going to want to look at individual health insurance plans, if you are covered by a group health insurance plan or a family plan you may want to look into a plan like that. No matter what type of plan you have coverage with right now you will be able to find a plan that is similar to it, if not better, as a backup health insurance plan. One company that has been getting national recognition for their great health insurance plans is Humana Insurance.

With Humana Insurance there are options for the plans that have always been around which are considered to be more conventional plans, but there are also new plans that you may be able to customize yourself to fit your needs. Many of these plans may not be available through other health insurance providers, which is one reason why Humana Insurance has found itself as one of the front-runners for health insurance.

Let us first tackle grants. Grants are essentially what some people call "free money." It is called this in the sense that you do not have to pay back the company or the government agency that awarded you the grant when you succeed with your venture. Of course, since a grant does not require repayment, they are also one of the toughest funding choices to get. You will need to come up with a unique business idea that nobody else has or you will need to come up with a product that shows a lot of promise and that will revolutionize one aspect of the commercial industry before you can even think of coming up with your grant proposal.

The next funding option on the list is a loan. You can get a loan from your local bank with the help of the federal government for your small business if you can come up with a convincing proposal as well for your business. This is not as difficult to get as the grants that the government and some private companies give out but you will still need to prove that you are highly capable of running your business as well as making it succeed. These loans need to be repaid but with the government backing you up, you don't need to come up with guarantees and collateral to secure such a loan.

Your third option for funds for your small business is venture capitalism. This kind of funding usually involves a private company that sees some promise in your idea, and with such potential that they see, they will want to have some part in your future success. Venture capitalists often provide the funds you need for such a small business idea, and somewhat like grants, they do not expect you to pay back what they spent on your startup. What they expect from you however is the success of your venture and for them to earn from what you make by having them own part of your business or having them own stocks of your business.

All of these funding options, grants, loans and venture capitalists, are not really that easy to get a hold of but you do stand a chance of getting your business off the ground with any one of these. All you need to do next is to put together a convincing and impressive grant proposal or business plan and present it to these possible avenues for funds to finally get that small business of your up and running.

What are they actually offering you?

You need to consider what specific services the factoring company can provide and be sure that they are appropriate for your needs. It sounds obvious, but you need to ask, especially with regards to funding flexibility. For example, the factoring facility may have limits on the amount of finance available other than the 80% prepayment facility.

Ask them about:

Recourse Period; the factor will not approve invoices over (normally) 90 days old.

Funding Limits: the factor will have a limit of how much it is prepared to advance against each customer.

Concentration limit; This is set as a percentage of the whole ledger (normally around 25%) and means that the factor may restrict any customer balances that exceed 25% of the total ledger.

It may be that certain factors will run the account strictly to the rules and may restrict the facility funding unnecessarily.

Factoring charges

Charges quoted for factoring can vary widely and can be dressed up in various ways to look more attractive. There are two main charges for a factoring facility. The service fee which is charged as a percentage of the invoice value (normally 0.5% to 3%) and the discount charge, which is an interest charge over bank base rate – charged in much the same way as interest on an overdraft. Additional charges may apply to exceptional items or additional work, but some factors charge them as a matter of course. Also remember that as your sales grow your charges will grow. You should be in constant negotiation with your factoring company to reduce their percentage factoring fee or better still ask for a fixed fee! A reputable factoring company may not always be the cheapest, but should offer the best value for money and be open to ongoing reviews and discussions about charges.

Reputation

Your factoring company will be contacting your clients and chasing for payment. It is therefore essential that you have confidence in the company as a whole and in the individuals who will be dealing with your customers. Find out more about the factoring company you are proposing to use. Are they backed by major organisations such as banks or well-known brands? Do they have large numbers of existing clients? Are they members of industry associations? Everyone says they provide a good service but you need to dig a bit deeper than surface testimonials. You could request to speak to existing clients or they may be able to provide you with independent feedback confirming what their clients think of the service.