Home Based Travel Agent - October 2008 - (Page 12)

Lifeline Financing Your Business in Tough Times Helpful hints to guide your business through a challenging economy unscathed Just 18 months ago, home equity lines of credit were a solid source of business expansion financing or emergency cash flow for small businesses. Rates were advantageous, and such bank loans— using a home as collateral—were relatively simple to secure. Today, that option has vanished for many home-based agencies. Why the drought? Chalk it up to a sagging housing market. If your home’s market value was $200,000 in 2005, and your mortgage was $130,000, a bank might have eagerly approved a $50,000 line of credit. But now, that same home might only be worth $120,000, far less than the mortgage amount. Presto, the equity is gone. Lenders are increasingly pulling the plug on existing home equity lines of credit, even when payments are made on time. As a result, many small businesses are turning to SCORE (www.score.org), the non-profit Service Corps of Retired Executives, for advice. In 2007, more than 10,500 SCORE volunteer business counselors in 389 chapters expended 1.1 million hours counseling small-business owners online, in one-on-one meetings and in workshops—and all for free. Amid a challenging economy, “SCORE has 12 YOUR FOR THE AGENT provided 15 percent more services to entrepreneurs and small-business owners so far this year over this past year, and financing is one of the key questions we get,” says Michael L. Keaton, SCORE’s director of communications. In 2006, SCORE also experienced a 5 percent increase in requests for assistance vs. 2005. What are the options financial experts say you might consider for business financing or to generate cash flow? Opinions vary widely as to fiscal appropriateness, but here is a sampling to consider. I Angel Investors: If you’re just starting out, consider so-called “angel investors,” people willing to venture where banks won’t. They typically invest $1 million or less, often for up to five years or more. Venture capitalists tend to want bigger investments. Talk to SCORE about how to find angel investors. I Friends and Relatives: Why pay high interest rates? Ask your friends and family if they’d like a good deal. Offer them a fair interest rate, less than what you’d pay for interest on a bank loan, but better than they can get elsewhere. Put down the terms in a simple, one-page document that states what the interest rate will be and when you’ll repay. I Prosper.com: This online site (www. prosper.com) matches up small businesses with individuals willing to loan money. You register, take a credit check and are assigned a credit risk—A through F. Even those at the lower end of the scale may, at times, get financing depending on what interest rate they’re willing to pay and whether they have friends or relatives willing to go online and help fund the request in small increments. You request a loan amount, select the interest rate you’re willing to pay and put up a listing. If enough people agree to fund your request, you’ll receive paperwork and the funds, and pay Prosper.com one monthly payment.They disburse the funds to investors. If your listing isn’t fully funded at the end date, the listing expires. Prosper.com collects a one-time 1 to 3 percent fee on funded loans from borrowers. I Commercial and SBA Loans: Businesses seeking $100,000 or less can often find unsecured loans based on their personal credit history. New companies, though, might find this choice a tough go, given a lack of operating history. You might need to put up personal assets as collateral.While not lending money directly to businesses, the Small Business Administration (www. Continued on page 14 Home-BasedTravelAgent O CTOBE R 2008 ILLUSTRATION BY SCOTTMAXWELL/FOTOLIA.COM http://www.Prosper.com http://www.prosper.com http://www.prosper.com http://www.Prosper.com http://www.Prosper.com http://www.score.org http://www.sba.gov

Table of Contents Feed for the Digital Edition of Home Based Travel Agent - October 2008

Home Based Travel Agent - October 2008 Contents Editor’s Note Publisher’s Note Your Lifeline Agent Profile New Technology Industry News Hot Deals Charging Fees Cover Story: Divers’ Destinations For the Traveler - Cruise - Groups For the Agent - Cruise - Groups Top Hotels in Italy For the Traveler - Destinations - China For the Agent - Destinations - China For the Traveler - Destinations - Caribbean For the Agent - Destinations - Caribbean For the Traveler - Destinations -Las Vegas For the Agent - Destinations - Las Vegas Home-Based Agent Expo New Products

Home Based Travel Agent - October 2008

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