Advantages and Disadvantages of Bank Loans

Bank loans are made to help us in times of financial struggle, they are available in many different places within each country so no one has to miss out. There are a range of locations as seen here for this particular loan https://www.towerloan.com/branch-locations/illinois-locations/ which can aid people in a variety of different life events such as weddings, funerals, house moves or home improvements for a few examples. It aids us to get through by allowing us to borrow enough money to settle our problems. In business, bank loans are available to be used in purchasing equipment, inventory and to obtain the funds and operation capital of our business expansions. Also, bank loans are regarded as reliable and honored methods to finance our business, either big or small. However, it can’t be gained that easily. Bank loans can be available only if we can guarantee the bank with finance firms with a long track record and substantial collateral. Aside from that, some banks are strict when it comes to their bank loan offers.

Given that, as citizens and probably business owners, weighing the advantages and disadvantages of having bank loans must be well-thought of. In this way, regrets can be avoided in the end, and more success can be met. Below are only some of the top advantages and disadvantages of bank loans in our life both as citizens and business owners. So, let’s start!

Advantages of Bank Loans

More Control in the Business

The first advantage of bank loans is that it can give us more control in the business. With bank loans, we can borrow an amount that we can use to improve our business, as well as its capability to provide more services or products to the valued customers. Now, as we already borrowed an amount from a bank, we can control the operation of our business, its plan, and its goals in the future. As we hold the money for these things to happen, we can properly dwell with our business and ensure that it’ll reach success.

Moreover, unlike equity finance, banks do not take business ownership positions. Bank personnel also aren’t allowed to be involved in the business operation, whatever it takes. Thus, the control of the business is still left to us as the owners.

It is only temporary

Next, if we borrowed an amount from a bank through a loan and we finished paying it on time and contract, it’ll literally come to an end. So, bank accounts are temporarily depending on the amount we borrowed, as well as the agreed amount of dividend payments in a certain period. Once we have finished paying our loan, we’ll no longer be obliged to be involved with the bank lenders and the bank itself. With this, we can enjoy running our business more while we earn.

Tax-Deductible Interest

Lastly, bank loans have tax-deductible interests. Additionally, this is best with fixed-rate loans wherein interest rates are not changing during the loan course. With that, loan service payments will remain the same throughout the loan’s entire effectiveness. Also, with these, it can be easier for us to plan and budget our monthly loan payments. With the additional help from a spreadsheet for computing our future payments in the business, our business life can be managed easily and effectively.

Enough with the advantages, let us now proceed to the disadvantages of bank loans.

Disadvantages of Bank Loans

Tough to Qualify

The top and greatest disadvantage that we can possibly encounter with bank loans are that it is tough to qualify. Here, it will be hard for us and our business unless there is a valuable collateral or a substantial track record such as real estate. This is because banks are being careful when it comes to their clients. They see to it that the clients have the capability to pay loans and to ensure that there will be no losses or defaults. Moreover, business borrowers will be required to provide personal guarantees wherein assets are seized when failure or being unable to pay the loans came to happen.

High-Interest Rates

When it comes to businesses, there can be an increase in terms of the interest rates as well as insufficient bank funding. Often, businesses face this kind of concern, and it isn’t wise to just grab it. High-interest rates in bank loans will never be helpful to fund our business. Instead, it will only make it more difficult for us when paying the loan. So, we better be wise when choosing the bank offering bank loans with interest rates.

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Signs We’re On Our Way to Becoming Millionaires

Millionaire! Yes, it is a big, mouth-watering word. Who doesn’t want to become one! None, I guessed it right. I have met many people in this world – businessmen, businesswomen, music artists, and athletes – and none of them says no to cash, not even the clergy. That is because money seems to be everything in the world we live in: factual! Now that all of us want to become millionaires, what signs should we watch out for? Of course, not all of us can be millionaires; it is simply not possible. For those of us who are “called and chosen” (join me in being a Christian here) to be millionaires, here are the signs that we are on the right track to making this big dream come true.

 

We Have a Sixth Sense: the Power of Saving

All of us know that we cannot become millionaires without the power of saving; I mean saving money. Dreaming to become one without saving to achieve the goal is akin to chasing a mirage. It doesn’t matter the amount of income we get, whether it is mega or meager, saving a part of it is essential to building a bankroll, which will eventually see us become millionaires. Knowing how much we should save from our income to get to the mark we want is vital here, and it may just be a matter of countdown before we acquire thatĀ  huge status. Setting a monthly budget is an excellent way to go about this. From the budget, you can be able to know our recurrent expenditures and see how much we are left with that should go into our savings kitty.

 

We Always Aim Higher

Allow me to call this shooting for the moon. That means we will land among the stars even if we missed the target. To put it simply, if we are aiming to save $100 a month, then we should aim $150, for instance, so that even if we don’t achieve that, we will still land on the minimum mark. Aiming higher motivates us to get down to work.

 

We Start Investing While We Are Still Young

Life is short, and we can’t just afford to wait. ForgetĀ  about wanting to start a business at 30; the earlier we start interacting with the business world, the better. If we are diving into investments in our teens, then that is a sign that we are destined to become millionaires. We should not wait until we have started raising families. Remember, a family comes with greater responsibilities, and we may be ”pushed” to start investing instead of being ”pulled”. The former simply means that our financial problems are the driving factor. In such circumstances, we are likely to spend everything we earn, and this is a very bad sign.

 

We Thrive Even in Difficult Circumstances

It doesn’t matter what we are going through, we always see opportunities to make money. During the Covid- 19 pandemic, for instance, there are people who made fortunes out of this situation. I call them Covid millionaires. Guys in my hometown were making masks like nobody’s business, and they were really making a kill out of it. Yes, I mean the ability to see a business opportunity where there seems to be none.

 

We Are Always Creative and Innovative

Are we able to come up with something new that people will like? What about improving on what already exists with an aim of diverting the attention of customers to our business? That is what creativity and innovation mean. If we have these abilities, then nothing should really stand in our way of becoming millionaires.

 

We Know the Difference Between Essentials and Non-essentials

This is where many people make mistakes. Must I eat chicken every other day in my home? Must I drive a car at this point in time? Knowing what is essential and what is not is something that those of us who are destined to become millionaires will want to consider. With a clear plan of where we are heading to in our mind, we should be able to tell the things we need now and those that can wait. Call this delaying gratifications.

 

We’re Risk Takers

We can’t become millionaires if we are not ready to take risks, in terms of investment. In fact, the ability to take risks could be the main difference between a successful entrepreneur and an average business-minded person, who lives from hand to mouth.

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