Lack of capital and cash flow remains a major concern for most small businesses. In fact, it ranked first on the list of top challenges faced by small business owners in Guidant Financial’s 2020 Small Business Trends survey. Many small business owners are turning to a business credit line to address their funding needs.
What is a line of credit?
A line of credit is a way for businesses and individuals to borrow the funds they need to make purchases and pay bills or other expenses, such as employee salaries. The line of credit on a business credit card can also be used as a cash advance.
All lines of credit have a limit set by the bank, credit union or other financial entity that provides them. The limit is flexible, and the bank may be willing to increase it, depending on factors like the financial health of your business and whether you make scheduled repayments on time.
A line of credit can be either secured – i.e., backed by collateral such as a building or home – or unsecured. With this type of financing, you only pay back what you borrow, plus interest on the credit you’ve used. This is the key difference between a credit line and a small business loan. [Read related article: Unsecured vs. Secured Business Loans]
What are the different types of lines of credit?
Lines of credit fall into the following four categories.
1. Business line of credit
You’re more likely to be granted a business line of credit if your organization has a positive payment and credit history and can demonstrate that it has the income to repay the money. This type of financing gives you access to funds for any business-related expenses.
Some lenders that extend lines of credit require a business asset, like an office building or piece of machinery, to serve as collateral for the line. Secured business lines of credit typically carry lower interest rates than unsecured lines.
2. Business credit card with a revolving line of credit
A business credit card may be the place to start if your business is new and can’t yet meet the requirements for a business line of credit from a bank.
In addition to allowing you to charge purchases up to a certain limit, a business credit card generally gives you the option of taking a cash advance. Some cards have lower cash advance limits than the regular credit line on the card, though.
3. Personal line of credit
This type of financing provides access to funds for personal use. Some people open a personal line of credit to have on hand for emergencies. Others do so for a specific purpose, like buying a home, paying for a wedding or financing a child’s education. A personal line of credit can be secured or unsecured.
4. Home equity line of credit (HELOC)
Homeowners who have amassed equity in their property may qualify for this type of financing.
Equity is the difference between the market value of the home and any liens or mortgages currently outstanding on it. For instance, if your home is worth $400,000 and your outstanding mortgage is $250,000, the equity in that home is $150,000.
Homeowners use HELOCs for various purposes, such as remodeling or renovating a home, financing a child’s college education, buying a car, or purchasing a second home or other real estate. Some people turn to a HELOC when they need to pay off credit card debt or other personal loans.
How does a revolving line of credit on a business credit card work?
A revolving line of credit on a business credit card “renews” continuously. As you pay down or pay off your outstanding balance, your credit line increases up to the limit set by the bank that issued it.
For example, say you open a business credit card account with a $25,000 line of revolving credit. Days later, you use it to buy $3,000 worth of supplies for your business, leaving $22,000 available. If you paid the bill in full the following month, your line of available business credit on the card would once again be $25,000. If you paid it in monthly increments, your available funds for purchases or cash advances would increase by that amount until they reach $25,000.
Your bank will charge interest on your unpaid balance. According to U.S. News, the average annual percentage rate (APR) on business credit cards ranges from 14.22% to 22.18%.
If you take out a cash advance, you’ll pay a higher APR plus a cash advance fee, which may be either a percentage of the funds advanced (usually 2% to 5%) or a flat fee (usually $10 to $15), whichever is more money.
What are the differences between a business credit card and a business line of credit?
A business credit card and a business line of credit may seem similar, but keep in mind these four differences between the two.
1. Funding limits
Available credit on a business credit card usually doesn’t exceed $50,000. With a business line of credit, that sum can be as high as $250,000.
2. Cost of cash advances
Card-issuing banks charge a fee and a higher interest rate for cash advances than what you pay when using the card for purchases. These higher rates and fees don’t come into play when you opt for a business line of credit.
3. Repayment flexibility
A business credit card offers a flexible repayment schedule, allowing you to choose how much of your balance you repay each month, while a business line of credit has a set end date and a fixed repayment schedule spanning six months to three years.
4. Trade-off between fees and rewards
Most banks have a business credit card rewards program. The trade-off is that most business credit cards have an annual fee, which covers the cost of the perks the bank offers in connection with the program.
By contrast, a business line of credit doesn’t come with rewards, but it also doesn’t carry annual fees.
When should you use a revolving line of credit on a business credit card?
Tapping into a line of credit on a business credit card is preferable to taking out a small business loan for paying ongoing expenses or making a purchase that will be paid off in just a few months, according to Michael Hammelburger, CEO of Expense Reduction Group.
A business credit card also works well in the case of an emergency that you don’t have the cash reserves to cover. For example, if the vehicle you drive for business needs repairs after an accident but you can’t wait for the insurance payment to get the work done, a business credit card would be a convenient way to pay for that expense.
Hammelburger said a business credit card is not the right option for refinancing an existing debt, buying real estate or making any other type of large investment. A small business loan or business line of credit is a better bet here, primarily because it usually offers a larger sum of money than would be available on your business credit card.
Brian Cairns, founder of ProStrategix Consulting, agreed, adding that a business credit card should not be your first choice for funding your business because even the best credit cards have high interest rates. Occasionally plunking down such a card for a big-ticket item when finances are tight is OK, but only if you can pay off that item rapidly.
Hammelburger also advised against paying personal expenses with a business credit card. “If you do that, separating business expenses from personal ones at tax time is difficult, and I’ve seen it become a real nightmare. If you make a mistake, it could be a red flag for an audit.”
What other financing options exist for small businesses?
In addition to a business credit line or a business credit card with a revolving credit line, you may be considering a small business loan. Here are some of the ways a business credit card differs from a small business loan.
1. Application process
Qualifying for a business credit card is faster and easier than getting a small business loan. Loan applications are more involved, as banks want assurance that your business will be able to repay them. In general, they look for a good debt-to-income ratio (with minimal existing debt) and a track record of at least two years in business, among other qualifications.
2. Convenience and flexibility
Accessing funds from a small business loan often takes several weeks. You receive the lump sum upfront, whether or not you need the funds in their entirety, and pay interest on the full amount of the loan.
With a business credit card in hand, you can immediately charge purchases or access cash, and you only pay back what you’ve borrowed (with interest, if applicable).
3. Rewards and incentives
Depending on the issuing bank, you may receive a sign-up bonus or earn airline miles, shopping discounts, dining discounts, or other perks for using your business credit card. You may also earn cash back on purchases you make with the card. Business loans don’t come with these incentives.
4. Cost of borrowing money
The interest rates on business credit cards are usually much higher than the interest rates on small business loans or fixed lines of credit from a bank. These rates can increase over time, and interest adds up very quickly if you don’t pay your bill on time and in full each month. Also, inadvertently exceeding your credit limit or paying your bill late can incur fees and penalties that put a big financial strain on your business.
Business loans have lower interest rates, but again, you’re paying them for the full amount of the loan.
Original Source: business.com
Thousands of Broadway actors are expecting to lose health insurance amid the shutdown of theater.
Original Source: cnbc.com
The coal industry’s biggest cheerleader is about to be ousted from the White House and now leading infrastructure players are pledging to no longer provide infrastructure for coal fired power plants
The long term outlook for the coal market has been gloomy for some time, but in the past week the full scale of the existential threat facing the sector has been hammered home on multiple fronts.
President Trump famously failed to deliver on his promise to end the war on coal. He may have rolled back environmental regulations on the sector, but he could not negate the competitive pressures on the US coal industry from low cost renewables and gas. Coal company bankruptcies continued under the Trump administration and the US famously shuttered more coal power capacity under Trump’s first term than it did under Obama’s second term. But Trump did attempt to throw a lifeline to the embattled sector. President-elect Joe Biden has made no such promises and instead talks openly of multi-trillion dollar clean energy investment and a transition away from fossil fuels. The coal industry is arguably the biggest loser from Biden’s victory.
And Presidential disapproval is the least of the industry’s problems. The past week has seen a wave of coal divestment and withdrawal announcements from prominent infrastructure and investment firms, providing further evidence of the coal sector’s increasingly precarious position in the minds of investors and business leaders.
In the past few days engineering giants Siemens and Toshiba have pledged to stop building components for new coal-fired power plants, joining General Electric and Black & Veatch as companies that have recently confirmed they will end their investments in the coal sector. Meanwhile, South Korea’s largest conglomerate, Samsung Group, announced it would stop all types of funding for coal projects made by its insurance and investment businesses, delivering a further blow to the ailing sector.
As Toshiba president Nobuaki Kuramatani put it, players across the energy sector supply chain are gearing up for a major paradigm shift as demand for coal plummets, renewables capacity expands, and world leaders are increasingly united behind the need to tackle emissions. Recent net zero emission announcements from China, South Korea, and Japan in the past month, paired with Joe Biden’s pledge to return the US to the Paris Agreement, are all expected to usher in a wave of policies that should benefit green energy development and sideline carbon intensive projects – investors and manufacturers are taking note.
“Clearly, there will be a paradigm shift in the energy sector globally,” Kuramatani observed as he announced the company’s new direction. “As a result, we have decided to stop receiving orders for coal-fired thermal power plants that emit large amounts of carbon dioxide.”
Toshiba said on Wednesday that it will instead accelerate its pivots towards cleaner, renewable energy and focus on a new goal of halving greenhouse gas emissions related to its business by 2030. Kuramatani said the firm expected business opportunities to emerge as countries worked to meet decarbonisation commitments under the Paris Agreement and as such the company would be targeting a three-fold increase in its renewable business over the next 10 years.
The Japanese firm’s announcement came just one day after turbine manufacturer Siemens Energy announced it would similarly stop taking new business from coal-fired power plants.
Chief executive Christian Bruch said new investments in coal were at odds with the company’s commitment to sustainability. “Sustainability is at the core of our actions,” he said. Both Siemens and Toshiba have said they will respect existing contracts, however, and the German firm said that existing technology partnerships would be also be “addressed” in light of its withdrawal from coal.
However, again there is a sense of a company recognising where market forces are heading. Siemens’ gas and renewables focused operations look to offer far better long term opportunities than a sector that multiple governments want to phase out.
And yet another blow to the ailing coal sector was delivered this week, as South Korean conglomerate Samsung Group pledged to stop all investment in coal projects through its insurance arms, Samsung Life and Samsung Fire & Marine, and its asset management business.
The move comes after the company was criticised by investors and green groups following research that suggested the companies, the largest property and life insurers in South Korea, had provided $14bn for coal projects in the last decade.
The insurance firms have not directly financed coal projects since June 2018, but this week’s announcement will mean they no longer underwrite insurance policies for such projects or invest in corporate bonds backed by coal projects, Samsung Group said.
In addition, Samsung Securities and Samsung Asset Management, the conglomerate’s brokerage and fund management businesses, also committed to drafting investment guidelines that would mandate a ban on fresh investments in coal mining and coal power plants.
Samsung Group’s withdrawal from coal is expected to have a ripple affect across other companies and financial groups in South Korea, which currently derives just five per cent of its electricity from renewable sources, according to the IEA.
Meanwhile, a smattering of financial updates from the US further planted another nail in the coffin of the coal sector, with the world’s largest private sector coal miner Peabody revealing it was teetering on the verge of bankruptcy after its coal sales volumes plummeted by 23 per cent, and energy company American Electric Power Co announing plans to ditch 1.6GW of coal capacity in Texas by 2028 in a bid to meet federal regulations.
The Covid-19 crisis has undoubtedly played a major role in highlighting and accelerating the coal sector’s decline, as plumetting energy demand during the pandemic saw cheaper forms of power such as wind and solar shouldering the lion’s share of electricity demand in regions with high clean energy capacity. This week’s developments provide yet further evidence that investing and partnering with the coal sector is not only reputationally risky due to its devastating impact on the environment and climate, but an enterprise that can undermine companies’ potential for long term growth and financial security.
Original Source: businessgreen.com
The week’s winners, losers and newsmakers.
Original Source: adage.com
Need a little Aloha in your life? I feel you! Hawaii is one of my favorite go-to’s for more reasons that I can count and as soon as we can be travelling again, I’ll be booking a flight.
This ultimate Hawaiian packing list will make sure you leave nothing behind – as well as help you find where to pick up the things you don’t have.
In the mean time we can dream of planing our trip to Hawaii to swim in gin clear water and picture-perfect beaches relaxing just to think about, let alone stroll along or jump into. But I’m also in love with the culture – the Hawaiian people take great pride in their state and are the embodiment of what true hospitality should look and function like.
So whether you’re craving luaus or waterfalls, shopping in Waikiki, heading out to the Big Island or visiting the best beaches on Oahu, this packing list for Hawaii will prep you for your much needed vacation!
*Note, this post contains affiliate links to products and places I like and think you might like too.
Pick a flower for your hair!
1. Light, comfortable clothing
You don’t need your entire closet for an adventure in Hawaii. Let’s face it: you’ll be spending most of your time in the water or on the beach, so think resort wear. Pack a couple of nice dresses for dinner, but for the most part, you’ll be wearing tops, shorts, skirts, and swimsuits.
My personal easy-to-pack beachy look is 3/4 leggings/pants and a breezy top (that hides a multitude of sins!) with a sunhat that I can easily fold into my luggage. Pro tip: if your sunhat doesn’t fold up, pack it in your suitcase first and fill it with clothes taking care to retain its shape.
I also love a wrap/pashmina or poncho. They’re great to wear on the plane and easy to throw on of an evening.
I’m pretty ruthless when it comes to taking shoes on vacation and Hawaii is even easier. Take no more than three pairs of shoes. I usually only take two pairs on a beach vacation. Truly, you won’t need more than that! I take a pair of sandals/flip flops for the beach and mine are so cute I can also wear them to the mall. And a pair of shoes to wear to dinner. Done. Unless you plan on outdoor activities like a hike, then pack hiking boots.
A light rain jacket is always a good idea. Hawaii is tropical, so rain is fairly common.
Download my free packing checklist here >
2. Waterproof phone case
If you’re like me, most of your Hawaii memories will be photos on your phone. A waterproof phone case is a must, especially if you want to capture those epic shots while kayaking, paddle boarding or jet skiing. Add a flotation strap to your case, just in case your phone ends up in the water. This prevents it from sinking and makes it easier to grab.
3. Daytime essentials
No one goes to Hawaii to sit indoors! Whether you stay in the water, on the golf course, or do extreme adventures, you’ll need the following outdoor gear:
UV-protective sunglassesReef-safe sunscreenLip balm (with SPF)BackpackWater bottleSmall umbrellaBug spraySun hat
4. Mesh water shoes
If you know you’re going to be spending a lot of time in the water, I highly recommend mesh water shoes. These shoes are made for getting wet. They offer more grip than sandals and are more breathable than sneakers.
I have a pair of Omega shoes and they are quick drying and look good to wearing on land and sea. You can read my review of them here.
5. Dry bag
If you’re planning on any water sports, a dry bag can protect your belongings from waves or accidental drops in the water as well as being super handy for a day at the beach as a general hold all for all the essentials above.
6. Sand-resistant beach towel
The magic is real, there really are sand-resistant beach towels. The fibers are woven in a way that doesn’t trap sand. Just shake it out and fold it up. PS these make great gift ideas too!
7. Underwater camera
If you have some extra money to put toward your trip, I highly recommend an underwater camera. Hawaii is just as beautiful below the water as it is above, and the entire island chain is brimming with unique sea life. Best of all, you don’t have to dive deep to get great shots.
8. Rash shirt
Long-sleeve rash guards can be lifesavers under the brutal Hawaii sun, especially for the kids, and even in the winter. These are ideal for anyone with fair skin and it reduces your chance of sunburn and doesn’t require you to lather up with sunscreen every 30 minutes. Wear it as a swimsuit top or over your swimsuit.
9. Clutch/Wrist wallet
If you’re like me and spend most of your day outside, the last thing you want to do is carry a heavy purse or bag on your sun kissed shoulders. Bring a wristlet or clutch purse to give your shoulders a break.
Waikiki is all sun, sand and sea!
10. Beach bag
Stash your book, suntan lotion, sunglasses, towel, water bottle, snacks and any other little necessities into a stylish beach bag. It makes time at the pool or beach a breeze.
11. Packing Cubes
Packing cubes have been game changers for my travels around the world. They’ve not only freed up space in my suitcase, but also make me more mindful (or should I say picky?) about what I pack. I assign a cube to each “category” of items (e.g. one for daytime clothes, one for bathroom stuff, etc.). If it doesn’t fit in the cube, it doesn’t go. It also keeps my suitcase super organized. When I need something, I just grab that cube and crack it open. Easy peasy.
12. Empty Space
This one is so easy to overlook, but leave room in your suitcase! Hawaii is a bevy of souvenirs, and I’m not talking about your typical little trinkets and magnets. Not to mention the fabulous Ala Moana shopping centre which is worth a visit (or two). You will thank yourself for leaving enough to bring home a few “show and tells”.
Other Essentials
There are some things you’ll need to put on your Hawaii packing list that are so obvious you might forget them. Consider this your Public Service Announcement to include basic yet super important things in your suitcase:
Toiletries, such as shampoo, conditioner, lotion, hand sanitizer, toothpaste, toothbrush, makeup, and soap. Travel documents, including travel insurance papers (if applicable), passport, ID, emergency contact information, itineraries, flight information, and hotel booking confirmation.Electronics chargers for cell phones, tablets, laptops, and other devices. Emergency cash.Prescription medications, as well as over-the-counter medications for allergies, motion sickness, or headaches.Something to read while you relax and unwind
I hope this packing list for Hawaii is helpful. What have I missed?
Download my free packing checklist!
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Original Source: bloggeratlarge.com