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Debt reduction strategy is important for your business to thrive

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Author: Ravi Philemon

Debt reduction strategy is important for all business-owners if they want their business to not only survive, but thrive and grow.

By: Hitesh Khan/

One of the key elements in starting or growing a business is developing a comprehensive financing, as well as debt reduction strategy. A long-term plan can help reinforce short-term spending discipline and reduce the likelihood your business will burn through capital too quickly.

Creating a capitalisation strategy requires an understanding of the business activities your company plans to finance, estimates of how much these activities will cost, and knowledge of appropriate sources of financing.

Running the Numbers

Once you understand the business activities you need to finance, you can develop an annual budget and estimate your capital requirements for at least the next two years. Many experts recommend planning for worst-case, realistic, and best-case scenarios. This approach may decrease your likelihood of underestimating your capital requirements, which could cause you to run out of money or pass up potential opportunities.

You may want to consult outside sources (such as your accountant) to ensure your budget is as reliable as possible. A professional association that represents your industry may have information about standard costs, margins, and financial ratios.

Urgent loans can help you overcome short term hurdles

Sources of Capital

After researching your capital needs, you’re ready to consider potential sources of funding. The table below explains sources that entrepreneurs frequently use and the characteristics associated with each.

Source Advantages Disadvantages
Company profits Allows owner maximum control of business. Not feasible for start-up or early-stage company. May be inadequate to finance significant long-term expansion.
Business owner’s personal resources Owner maintains control. May require business owner to increase personal debt or jeopardize long-term goals such as a secure retirement.
Family and friends May provide flexible terms. May lack business expertise or be inadequate for long-term needs. Could potentially risk jeopardizing relationships.
Loan from bank or commercial finance company Frequent source of short-term financing. Loan officers may have broad business experience and provide assistance with financial issues. May be reluctant to provide long-term loan or to finance a start-up company. Requires collateral to secure loan agreement.
“Angel” investor who finances small businesses Typically a former entrepreneur or executive, investor may possess considerable management expertise. May provide access to business associates and other investors. May desire active, involvement in the business, resulting in less control for the entrepreneur.
Venture capitalist Does not require additional debt, providing the business owner with financial flexibility. Often necessitates a higher rate of return than lenders because there is no requirement to make current payments.

Special Considerations for Start-Ups

If you are estimating capital needs for a start-up business, plan on maintaining sufficient funding to cover anticipated expenses for at least six months. Most start-up businesses are not profitable and typically operate six months or longer before generating capital internally.

Also, the type of business you manage will influence your capital requirements. For example, a retail business requires inventory that must be financed before taking delivery. Many service businesses typically wait between 30 and 90 days before receiving payment from customers, which may require an infusion of capital to pay interim expenses.

The following tips are useful for your debt reduction strategy:

CREATE A BUDGET AND STICK WITH IT
Your budget should include all of your current expenses. Download a Personal Budget Planner Opens a New Window. for more information on creating a budget.

Payday loans may be quick fixes for pressing needs but has high interest rates

DON’T BORROW ADDITIONAL MONEY TO PAY OFF DEBTS OR BILLS, UNLESS ABSOLUTELY NECESSARY
‘Just don’t do it’, may be too drastic a move. There are times when you need to approach the various sources for borrowing money, including licensed money lenders, to keep your business afloat.

debt reduction strategy

Image credit: Alan Cleaver l Flickr

CUTTING EXPENSES IS A DEBT REDUCTION STRATEGY

Get this number by analyzing your budget and determining where reductions can be made (e.g., eating out, buying snacks and lunch at work, going to the movies, etc.). Once you have determined how much you plan to cut, use this “found” money to pay down the balances on your debts.

OPTIMISING YOUR MONTHLY PAYMENT CAN BE ANOTHER DEBT REDUCTION STATEGY
Pay the maximum amount towards your highest interest rate debts. Pay the minimum amount on all other debts.

ASK FOR REDUCED INTEREST RATES
Some creditors, especially banks, will reduce your interest rates if you just call and ask. If you receive offers from other lending agencies with lower interest, use those offers as leverage when you are re-negotiating your rates with your current creditors.

SET GOALS AND PRIORITIES
Determine what’s important. When you prepare to buy something ask yourself if this purchase is in line with the priorities you have set, and will it help you reach your goal or delay it.

DEBT REDUCTION STRATEGY WOULD REQUIRE YOU TO CRUNCH THE NUMBERS
Calculators are very useful tools to help you determine the amounts you should be paying towards each of your debts and calculates the money you will save by paying your debts in the recommended order.

An effective debt reduction strategy would require you to be diligent and disciplined until all your excessive debts are pad off.

How to Secure Personal Loans Quickly

If you have limited capital and are searching for personal loans to expand your business, the loan consultants at iCompareLoan can set you up on a path that can get you a it in a quick and seamless manner. Our loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs. Find out money saving tips here.

Our Affordability Tools help you make better property buying decisions. iCompareLoan Calculators help you ascertain the fair value of a property and find properties below market value in Singapore.

If you are looking for a new home loan or to refinance, our Mortgage brokers can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us for your business expansion needs.

Contact us for advice on a new home loan.

Contact us for home loan or refinancing advice.

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Morgan Stanley: Push to electric vans and trucks will be led by Amazon and other ‘megafleets’

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Morgan Stanley: Push to electric vans and trucks will be led by Amazon and other ‘megafleets’


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Amazon is one of many technology and logistics companies with a “megafleet” of vehicles and Morgan Stanley thinks the e-commerce giant’s goal of carbon neutrality will take “EVs to the next level.”

UBS downgrades Charles Schwab to sell, says buybacks can’t cushion blow from rising costs

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UBS downgrades Charles Schwab to sell, says buybacks can’t cushion blow from rising costs


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UBS lowered its rating of Charles Schwab stock to sell from neutral on Wednesday, saying the financial services company is facing barriers to growth and revenue
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Property cooling measures review needed, Redas urges Government

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Author: Ravi Philemon

Property cooling measures review is needed urged the Real Estate Developers’ Association of Singapore (Redas yesterday (Feb 19). It warned that the higher stamp duties on developers could lead to “a repeat of the 2017-2018 ‘land grab’ situation in four to five years’ time”.

Redas president Chia Ngiang Hong who urged the property cooling measures review at the group’s Spring Festival lunch, pointing out that Additional Buyer’s Stamp Duty (ABSD) for land stands at a total of 30 per cent and limits the timeframe for all residential sites, regardless of size, to be sold out within five years.

The need for developers to sell their units within five years to avoid hefty ABSD rates has also pushed “all developers to exhaust their inventory at around the same time”, he said. Adding, this could partly account for the land price escalation in 2017 and 2018 because “everyone basically ran out of inventory at the same time.”

Property cooling measures review is needed as the hefty ABSD rates developers would have to pay if they failed to sell their units within five years, may have pushed “all developers to exhaust their inventory at around the same time”, he said.

This policy meant that “everyone basically ran out of inventory at the same time”, partly accounting for land price escalation in 2017 and 2018, he added.

Private home buyers are exercising greater caution in their purchase decisions

In urging the property cooling measures review, Mr Chia said the Government should allow “room for the private sector to respond to market conditions.”

He added that that the Government should have “open communication and constructive and meaningful feedback” with stakeholders to allow for a more robust policy-making process.

Mr Chia said that it may be timely to review and tweak other existing policies and measures to help Singaporeans, particularly first-time buyers, by re-evaluating the loan-to-value limit for their first property purchase. And that “the Government can also make it easier for HDB upgraders to own private homes by reviewing the timing of upfront payment of ABSD so as to ease their cash flow planning.”

property cooling measures reviewReferring to Redas chief’s call for property cooling measures review, Finance Minister Heng Swee Keat who was chief guest at the group’s lunch, said the developers’ association should accept bitter medicine to make it strong again.

“You were officially founded in 1959, so that makes you part of the Merdeka Generation. Prime Minister Lee Hsien Loong has characterised the Generation as one that “faced the problems resolutely, worked with the Government, and when necessary, accepted the bitter medicine that made us strong again”. I think this applies to the real estate sector.

“From time to time, there have been bitter medicine, but we face the problem resolutely because we work together and we can really continue the progress. I would fully endorse Mr Chia Ngiang Hong’s statement: let’s strengthen the partnership between the Government and our business leaders and our workers.”

Mr Heng said REDAS has played a very important role in Singapore’s nation building journey.

“In fact, many of you here are responsible for making Singapore what it is today – all the nice buildings that we have today. Urban development would not have been possible without the support, capital, and expertise of private developers and companies. For example, many of our private housing, office towers, hotels, and retail developments are built by the private sector. Indeed, the shape of Singapore is really shaped by all of you.”

Foreign investor demand intact for residential properties despite property curbs

Mr Heng asked those that urged for property cooling measures review to think long term.

“All of you are very familiar about how property values are calculated. In fact, property, like all other long term capital assets, is essentially a discounted cashflow from a future stream of earnings over the lifetime of the capital. Whether it is a machine in a factory or real estate, it is the same principle of our capital raising model of discounted future cashflow. We have not been able to prevent economic cycles in the world. But I hope that we can do our best to prevent economic crises.”

Mr Heng pointed out that it was especially critical for the property sector to think long term as they position themselves for longer term developments.

“Even as we go through the economic cycles, it is very helpful for us to keep our view on the long term and how we project ourselves, how do we position ourselves for this longer term developments. There will be various key changes. These changes will go even deeper and faster. So what it means is that we will have to run a little faster.”

How to Secure a Home Loan Quickly

With the private residential property market settling, are you planning to buy a new private home but are ensure of funds availability for purchase? Don’t worry because iCompareLoan mortgage broker can set you up on a path that can get you a home loan in a quick and seamless manner. We are the experts who do the work for you for free, while you lean back, rest and rely on our professionalism at absolutely no cost to you.

Our brokers have close links with the best lenders in town and can help you compare Singapore home loans and settle for a package that best suits your home purchase needs. Find out money saving tips here.

Whether you are looking for a new home loan or to refinance, the Mortgage broker can help you get everything right from calculating mortgage repayment, comparing interest rates all through to securing the best home loans in Singapore. And the good thing is that all our services are free of charge. So it’s all worth it to secure a loan through us.

For advice on a new home loan.

You may also contact us for advice on mortgage refinancing.

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DBS housing loan business hit by property cooling measures

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Author: Ravi Philemon

DBS housing loan business took a hit following the introduction of new property cooing measures in July last year. The bank reported that mortgage growth came in shy of $2 billion for 2018. In November 2018, the bank said it expects new mortgage bookings to end at $2.5 billion for the year. This figure presented then was $1.5 billion less than the bank’s projection in the beginning of last year.

DBS housing loan business

DBS ATM branch – Holland Village

DBS housing loan business is now expected to hit about $1.5 billion to S$2 billion in 2019.

DBS chief executive officer Piyush Gupta acknowledged the impact of the cooling measures introduced last year on DBS housing loan business in 2018.

Mr Gupta said: “Mortgage business continues to be slow. Actually, our mortgage growth last year didn’t even come in at S$2 billion.” “Bookings have been particularly slow. Overall, our new bookings are coming in at least 30 to 40 per cent lower than they were before the cooling measures,” he added.

Mr Gupta noted that there will be about 65 new projects in Singapore this year and estimated a mortgage growth of $1.5 billion to $2 billion for the bank in 2019.

Despite the DBS housing loan business decline, the bank’s share of Singapore housing loans remains at 31 per cent.

Except for the decline in its housing loan business, DBS Group achieved another record performance in 2018 as net profit rose 28% to $5.63 billion. The bank said that business momentum was maintained over the course of the year despite heightened economic uncertainty and financial market volatility in the second half.

Total income for DBS increased 11% to $13.2 billion from loan and fee income growth as well as a higher net interest margin, which were partially offset by weaker Treasury Markets income.

Reporting on its 4th Quarter earnings, the bank said that return on equity rose more than two percentage points to 12.1%, the highest in more than a decade, attesting to the improved structural profitability of the DBS franchise as interest rates and allowances reached more normalised levels.

Fourth-quarter earnings increased 8% to $1.32 billion. Total income grew 6% to $3.25 billion as sustained loan growth and net interest margin progression over the quarter were moderated by a decline in Treasury Markets income.

Commenting on his bank’s report, Mr Gupta said: “We achieved financial results befitting our fiftieth anniversary, a year when we were also recognised as the world’s best bank and best digital bank. Return on equity of 12.1% was near the historical high of 2007, when interest rates were twice the levels today and capital requirements less stringent.

“The structural improvements we have made to the profitability of our franchise – a shift towards higher-returns businesses, deeper customer relationships and more nimble execution – put us in good stead to navigate the challenges of the coming year.”

Foreign investor demand intact for residential properties despite property curbs

Mr Paul Ho, chief mortgage consultant at iCompareLoan said that DBS housing loan business over the next few quarters is likely to be muted, and that most of the housing loans would be the drawdown of loans already approved before the introduction of the cooling measures.

He added: “Such weaknesses in the bank loan growth is expected to be corrected by the long-term effects of demand-and-supply.

Despite the new property cooling measures and weaknesses in bank loan growth, the Singapore real estate market still looks positive for property investors. The fact is, the overall interest rate environment in Singapore is still considered low on a global scale. This is one major reason why Singapore’s property market will remain buoyant.”

HSBC and UOB joins DBS and BOC to offer 3 Years Fixed Rate Mortgage Packages

Mr Ho also pointed out that any US interest rate hike is bad news for borrowers in Singapore. This is because the US Fed rate hike has an impact on credit cards, mortgages, vehicle loans and bank savings accounts here, as Singapore interest rates are closely correlated with those in the US.

Since the beginning of this year, banks have raised interest rates for both fixed and floating home loan packages by 10 – 30 basis points (bps). Some banks have already upped their mortgage rate to 2.05 per cent, to keep pace with the increasing interest rates. DBS is now charging 1.95 percent a year for each of the three years for its 3-year fixed rate package.

How to Secure the Best Home Loans Quickly

iCompareLoan is the best infomercial loans portal for home-seekers, buyers, investors and real estate agents alike in Singapore. On iCompareLoan, you will be able to find all the latest news and views, informational guides, bank lending rates and property buying trends, and research data and analysis.

Whether you are looking to buy, sell or refinance apartments, condominiums, executive condos, HDB flats, landed houses or commercial properties, we bring you Singapore’s most comprehensive and up-to-date property news and best home loans trends to facilitate your property buying decisions.

Our Affordability Tools help you make better property buying decisions. iCompareLoan Calculators help you ascertain the fair value of a property and find properties below market value in Singapore.

Our trademarked Home Loan Report is Singapore’s first one-of-a-kind analysis platform that provides latest updates of detailed loan packages and helps property agents, financial advisors and mortgage brokers analyse best home loan packages for their clients, so that they may give unbiased home loan/commercial loan analysis for their property buyers and home owners. Our distinguished Panel of Property Agents who are users of our Home Loan report can give the best all-rounded advise to real estate seekers.

All the services of our mortgage consultants are ABSOLUTELY FREE, which means it’s all worth it to secure a loan through us.

Whether it is best home loans, best commercial loans or refinancing of existing loans or SME loans, CONTACT US TODAY!

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Podcast Ep#22: En Bloc? It’s All Over Now

Click on Podcast Ep#22: En Bloc? It’s All Over Now
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https://i1.wp.com/www.propertysoul.com/wp-content/uploads/2016/12/cropped-heading.jpg?fit=32%2C32&ssl=1 Author: Property Soul

In this podcast, we will talk about this round of en bloc wave for residential projects, which is fast approaching the end of it. We will look at some facts and data of the en bloc market. When trying to explore the mindsets of en bloc buyers and sellers, I am using the analogy of… [read more]

The post Podcast Ep#22: En Bloc? It’s All Over Now appeared first on Property Soul.