BANKING & FINANCIAL SUPPORT

One of the important aspects of having a business is the financials of the business. One of the financial aspects is banking. Banking is extremely important for any business as it provides a safe loaning option should you wish to expand or develop your business.

It is also a safe and easy way to keep track of all the money that the business needs and provides a method of receiving payments from customers as well such as eftpos payments. Having good relations with your bank can be very beneficial to your business as this enables you to apply for more loans to further the growth of your business.

Different banks will give you different offers. For instance ANZ is better than the ASB, in that ASB charges fees on every transaction, while ANZ is offers free transactions.
Selecting the right accounts to use is important for making sure that you make the most of the services and benefits that a bank has to offer.  Generally, a credit card is a better option than an Eftpos card, because you do not need to deposit money on a credit card. Also, with a credit card, you normally have 10,000 to 20,000 credit limit for businesses.

Applying for Financial Support
If you want financial support from banks or potential investors, you need to prepare an account book, and a complete track record of the workshop performance to date. The potential investors want to run a financial checking of your workshop.
They want to know if you have the ability to return the support and with interest.
If a workshop provide proof of profit for each year and each month, it is easier to receive approval for financial support.

What you must know:

• The amount you want to borrow
• The period or payment term
• The interest and finance rate

If you can get financial support you are better off extending the payment term, so you have sufficient time to pay the debt, whilst having the ability to pay off the loan earlier. If you cannot pay the debt on time, then you should at least pay the interest on time, otherwise the result will be a bad record on your credit history.

The finance rate is usually around 6% to 29.5% per year, and the finance company acquires the money from the market at around 10% interest, they will charge you 15% to 20% in finance rate per annum. For example, if you borrow $20,000 over a period of two years at an interest rate of 19.5%. The finance company will receive the interest fee by monthly debit and it is divided in to 24 instalments. For the first month, you will pay $833.33, with an interest fee of $325 dollars.  In the second month the payment will be $833.33, with an interest fee of $311.45. As you can see, as time progresses, while the instalments remain the same, the interest fee is reducing every month.

When seeking financial support it is vital to be aware of all the fine print as the interest sometimes increases more and more with time and businesses can collapse by the overload of interest. Also, bare in mind that when you borrow the money the finance company is very friendly, however when you cannot pay the debt and interest, they will become very impatient and at times rude, and so it pays to keep on top of your bills.

(Source: www.elca.ch.com)