The Rich Blog

Factoring is a great way to maintain a positive cash flow when building your business. Accounts receivables financing also known as invoice factoring is the practice of selling your invoices at a discount to a factoring company. It is a quick way for small business to raise working capital when needed. The factoring company buys your accounts and advance you up to 90% of the face value of your invoices. They then collect payment from your customers and return the remaining 10% minus there fee after the customer pays in full.

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Written by Guest Author: J. Scott

It seems like getting out of debt is a hot topic for 2010. News sites seem to be highlighting folks that have worked hard to become debt free. I have had many emails from people asking me the best way to eliminate their debts and how to stay debt free, but there is no simple answer. Becoming debt free is a process and requires much self control and knowledge. The best way to achieve these goals is to educate yourself about the subject and practice what you have learned. Starting an emergency fund and using the debt snowball method to pay off your debts are great places to start your journey. I will give a short description of both below.

1) Emergency fund: We all fall into bad times where we have problems paying our bills, this maybe the reason you are in debt in the first place. With an emergency fund you will be able to still pay your bills on time, when you do fall into these slumps. The goal is to save up at least 3 months of living expenses, but 6 months is highly recommended. Simply add up all your expenses like rent, food, phone, entertainment and what ever else you spend money on now and multiply your total by 3. Save up that much for when hard times hit and you will be able to maintain the same lifestyle until you get back on your feet.

2) Debt snowball method: If you have multiple outstanding debts you want to pay off, this is one of the best methods out there. You basically list your debts in order of highest interest first. You start paying the minimum on all your debts except the first one on the list. Put all the cash you have saved from paying the minimum and any extra you can come up with each month towards to first bill on the list. After this bill is paid, put all the money you were paying on the first bill towards the next debt on your list and continue the process until you have finished paying off all your debts. The debt snowball method is designed to keep you motivated to pay off your bills and motivation is the key to managing personal finances.

Learn as much as you can about these and you will be well on your way to financial freedom.

Running a business can be very expensive. You need to purchase supplies, pay rent, bills etc.. If you don’t have enough capital, your business can go under very quickly. For this reason, most businesses rely on loans to get started and to keep going.

Bad Credit? No Problem! Peer-to-peer lending provides an alternative solution for small business loans for those having trouble getting access to money through bank and other financial institutions.

Prosper.com is the largest person-to-person lending marketplace in the US, allowing borrowers to post information about themselves and their business ideas, and allowing lenders to bid on loans.  Since its launch in February 2006, over 1 million people have joined the community and $200 million in loans have been facilitated.

Prosper.com is an auction-based platform like eBay, where borrowers set the maximum rate they’re willing to pay, and investors bid at or below the rate set by the borrower. The website allows everyone to create a personal profile, including photos and a personal statement. Listings can be viewed by everyone who accesses the website. Using the online loan calculator, potential borrowers can see what their payments will be like.

When placing the ad, borrowers allow Prosper.com to pull their credit reports. Based on credit worthiness a potential borrower is assigned a grade. If a potential lender is interested in loaning money to this person, lenders place a bid to lend all or a portion of the money requested, and the interest rate they want in return for their money. Once enough bids have been entered to fully fund the loan, all of the interest rates and amounts are consolidated into one loan paid to the borrower. All loan interest rates are fixed and structured for 3 years and payments are automatically withdrawn from the borrower’s bank account.

Prosper.com gives those in need of a second chance they may not otherwise receive while giving anyone with a few bucks to lend the opportunity to help a total stranger.

Here are some tips to get your loan funded:

-         Be honest in your listing and when responding to lender questions.

-         Write a very well organized personal statement, especially if you have a low credit grade.

-         Be responsive to the questions about your listing.

-         To verify that you are the legitimate owner, Prosper.com makes small transactions to your bank account that you need to confirm (like PayPal). Once your listing has reached 5% funding, complete this process as quickly as possible.

-         Prosper enables groups within the marketplace. You do not need to join a group to borrow or lend on Prosper.com, however groups are good at helping borrowers with their listings and finding lender support.