Quality of Loan Portfolio

A high quality loan portfolio means that the bank?s loan loss experience is at or above levels set by regulatory agencies. One can infer that the bank therefore takes fewer risks. Bankers are not supposed to be entrepreneurial or take risk. A banker has never been rewarded for taking risk! The banking system rewards those who can decline any borrowing request outside of the underwriting parameters. Loan portfolio quality that?s high = low loan accessibility to business owners. It stands to reason that banks are not risk takers based upon the low returns they are willing to accept.
Banks with four star excellence ratings seek out commercial customers who are stable and have limited need to borrow. The other 72% of business customers are left outside the circle of these banks. Where do these businesses turn to Cash Flow the Working Capital needs of their business? Where do they go to fund opportunities for growth and development of new market niches? More often than not they turn to the widely accepted world of non-traditional funding sources - preferred SBA lending companies for real estate and fixed asset needs, leasing companies for equipment needs, and Factoring companies for Working Capital needs. These non-traditional funding sources evaluate opportunities to participate by lending funds to small & medium sized businesses. Non-traditional lenders rates on borrowed funds may be higher than traditional bank rates, but their mission is to employ funds to obtain a return, not to let cash sit idle on the sideline in order to obtain a four star excellence rating. Their pricing reflects the perceived risk. And, they are not restricted by regulatory bureaucracy or fear of losing their four star rating as banks are.
In this ever changing world, business owners are advised to explore opportunities outside of the traditional financing channels. Before a need arises a business should be familiar with alternative funding sources. And perhaps, when your bank informs you that they continue to achieve a four-star excellence rating?it would be wise to investigate your options pertaining to Working Capital and Cash Flow solutions

Working capital and cash flow: Capital Safety Level, Quality of Loan Portofolio

Recently, my newspaper reported that a local bank ?...earned a four star excellence rating for the sixty-fourth consecutive quarter.? That?s sixteen years of four star excellence! The article went on to say that the ?rating is based on a complex formula that includes ?capital safety levels, quality of loan portfolio, and the ability to meet obligations?? The press release was designed to showcase the value of this bank and demonstrate its prominent position in the economy.
As a former banker with over seventeen years of commercial experience, I chuckle at this information being tossed around by the bank and its regulatory agencies for self promotion and marketing purposes. I suppose that if you are a blue-hair whose purpose is to find somewhere other than under the mattress to keep your retirement funds, this article was good news. But what does it mean to the business owner or entrepreneur looking for a Funding partner to participate in an opportunity to grow, increase jobs and profit? In a nutshell this type of information should be a wake up call to find another bank-here?s why.
Let?s explore the underlying meaning to business customers behind a portion of this ?complex formula.

Secured loans are a popular way of raising funds for homeowners

Secured loans are a popular way of raising funds for homeowners, and there's no denying that taking one out can be a great way of organizing your finances. Debt consolidation, financing home improvements, even paying for a new car - secured loans can be used for all of this. However, as with any financial agreement, it's only sensible to take your time when deciding whether to proceed. After all, with a secured loan, you could be betting your home on a successful outcome. So what things do you need to consider before finalizing your application?Firstly, as just alluded to, it's an inescapable fact that taking out a loan that's secured on your home could potentially put your home at risk. Should you fall behind on your repayments, the lender can apply to seize your property, evict you from it, and then sell it at less than market value to clear the debt. Scary, huh?This is, of course, a fairly rare outcome, and most lenders are happy to work with you if you do get into trouble, using repossession as a last resort, but you should consider this carefully before taking out a loan, especially if you'll be converting existing unsecured debt into secured though debt consolidation.The second problem with secured loans is that they tend to be for fairly high amounts, and repaid over a fairly long term. This means that the amount of interest you'll pay over the entire term may be substantially higher than you might think. Even with a low APR, secured loans aren't necessarily a cheap option.Thirdly, if you use a secured loan to wipe out some existing unsecured debt, you may get the illusion that your debt levels have lessened. There's then always the temptation to use your credit cards etcetera to build up fresh debts, so you now have secured AND unsecured debt hanging over your head, and you'll be in a worse position than ever before.A fourth problem with a secured loan is that you'll by its very nature be removing equity from your home. In other words, the value of your home and the amount of debt secured on it will be much closer. Considering that today's property prices are at record highs, and that many experts are predicting a fall in the near future, you could then be left in the unenviable situation of owing more than your home is worth - that is, you could fall into negative equity.The fifth problem we'll cover is also related to the removal of equity from your home. Should you in the future wish to take advantage of a refinancing offer to reduce your mortgage costs, it helps to have as much equity available as possible in order to secure the best deal. A secured loan now could harm your remortgage prospects in the future.So has all this put you off the idea of getting a secured loan? It shouldn't do, as you may still benefit greatly from the financial restructuring one will allow you to do. However, it's a big decision, and this is why you need to be aware of the possible problems first, so that your decision can be as informed as possible

F.H.A. and V.A. Loans

If you find it difficult to qualify for a conventional loan, U.S. government loan programs from the Federal Housing Authority (F.H.A.) or the Department of Veterans Affairs (V.A.) may be helpful. Designed to promote home ownership by offering lower qualifying ratios and reduced down payments, F.H.A. and V.A. loans are not issued by the government, but instead are made by private lenders who are protected by government insurance in case the borrower defaults. Unlike conventional loans, both F.H.A. and V.A. loans have maximum allowable amounts and may require additional paperwork and inspections before the loan can be approved.

Using Time Wisely

The length of time you plan to live in a house should be an important factor in your choice of financing. If you plan to stay for 10 years or longer, a traditional fixed-rate mortgage may be your best bet. But if you plan on owning a home for less than 5 years, then the low introductory rate of an adjustable-rate mortgage or hybrid loan might make the most financial sense. In general, ARMs have the lowest introductory interest rates, followed by hybrid loans, and then traditional fixed-rate mortgages

Fixed-rate Mortgages

Fixed-rate mortgages carry the same interest rate for the life of the loan. These types of loans have traditionally been the most popular choice for homeowners because their steady payments are easy to budget for, and can help protect against inflation. Fixed-rate mortgages are most common in 30-year and 15-year terms, but may also be available for 20-year and 40-year mortgages.

Payday Loan

Payday loans go by several names including cash advance, check loan, or post-dated loan. These are all the same type of short-term loan for amounts between $100 and $1000 depending on your financial situation.
Payday loans are for small financial emergencies. You can save money on late charges or bounced checks by securing a cash advance against your next payday. You usually have thirty days to pay back the loan, although with additional fees you can take longer to pay back the loan. To apply for a loan you must have a job and a bank account with a check book. A poor credit rating or debt history is initially not a problem

Business Loans and Business Finance UK

Business loans help you put your ideas into actions. Whether you want to diversify into other business segments or want to acquire other companies, business loans are there to meet your needs. We understand that your time is precious, that's why our experts have condensed the entire information pertaining to business loans and have presented before you in the form of articles. These articles are knowledge treasures which will help you get business loans whenever you need them.

Loan Asset Reallocation

Loan reallocation, sometimes referred to as an asset swap, is the process of selling all or part of one internal investor's portion of a loan to another internal investor to achieve performance results. While the concept of reallocation is simple, the mechanics of such transactions are rather complex.
The process begins with the determination of the sale price. You can sell the assets at market value or at book value, in which case you would not recognize any gain or loss. You should have the flexibility to determine whether any deferred revenue should be taken in as income or recognized as part of any gain or loss on the sale.
The reallocation process must then "rollback" all transactions processed on the loan to the effective date of the reallocation. Deferred revenue, affecting the seller's book value, must be recognized as income to the effective date. Accrued interest should be calculated and credited to the seller and is due from the buyer. Fees paid to a servicer need to be apportioned based on the loan amount sold and prorated based on the payment cycle.
Without affecting the loan balance due from the borrower, both investors' balances need to be adjusted to reflect the new loan allocation. Depending on your policy, you may also need to transfer cash between bank accounts to reflect the sale and to adjust the escrow accounts held on behalf of the borrower. Historical information reflecting both the original and new ownership structures need to be retained as it may impact your regulatory reporting.
If you sold the asset with a premium or discount, a new deferred revenue recognition stream needs to be established for the buy side of the transaction, which impacts only this investor's book value. Once the new ownership structure is put into effect, the reallocation process must then reprocess any transaction that was reversed during the rollback process.
SS&C's loan management system can lead you through the entire reallocation process with just a few simple steps as shown in the screens below.

Business Loan

A business loan is designed for a wide range of small, medium and startup business needs including the purchase, refinance, expansion of a business, development loans or any type of commercial investment. Business loans are generally available at highly competitive interest rates from leading commercial loan lenders. A business loan can be secured by all types of collateral, varying from business properties to personal belongings.

Home Equity Loan

A loan based on the difference between the present value of your home and its original price, less any unpaid balance on your mortgage. If your home is worth more now than it was when you bought it, that extra equity is considered to be collateral for this loan. You can receive the entire principal as a lump sum or opt for a home equity line of credit that allows you to pay only interest on money you've actually spent.
Look for a no-fee home equity loan at a competitive rate of interest that allows you the option of just paying interest each month and does not require any repayment of the principal for 10 or more years.
Although home equity loans are attrace because the interest you pay is tax-deductible, keep in mind that the lender can sell your home if you fail to repay the loan. If possible, try to repay a home equity loan in two to three years.