- 1 What happens if I make a late payment on my WebBank/Fingerhut Credit Account?
- 2 10 Questions to Ask Before Applying for a Bank Loan
- 3 Payment on account: what it is, how to calculate your tax bill, deadline to pay and how to reduce it
- 4 wiseGEEK: What Happens if I Miss a Credit Card Payment?
What happens if I make a late payment on my WebBank/Fingerhut Credit Account?
If you do not make your payment by the due date, you will incur a late fee. If you pay late on a regular basis or if your payment is more than 60 to 90 days late, your late payment may be reported to the major credit bureaus as negative information. That will drag down your credit score.
Late fees may be compounded by higher interest, returned check fees, and other fees. Be sure to make all your payments on time to avoid these fees.
All information presented on this website is subject to change. We do our best to maintain it accurate and up to date. However, we recommend all our visitors to read the credit cards′ terms and conditions on the application page before submitting the application form. Note that this website may be compensated if visitors choose to utilize the links on this website.
10 Questions to Ask Before Applying for a Bank Loan
Most small-business owners need a bank loan at one time or another, and applying for one involves much more than filling out paperwork and saying a prayer. Among other things, you need to consider the state of your personal and business finances, how you're going to repay the loan, and how much money you actually need.
Here are some of the key questions you should ask before starting an application:
Is it likely I will qualify for the loan?
You're only going to hurt your credit if you apply for a loan you won't get. "Just like if you get declined for a personal credit card, it makes it more difficult to borrow in the future," says David Gass, a business consultant and coach in Meridian, Idaho. "If you get turned down, it looks to the next bank like you're a bad risk." He suggests asking lending institutions about their specific requirements before applying. Many will let you know the minimum credit score they require, the cash flow you need to show, and other qualifying factors.
How much do I really need?
Before you approach the bank, make sure you have a good handle on how much cash you actually need. The best way to determine this is to create a monthly cash-flow projection. Does your customer pay you in 60 days, but you have to pay your vendors in 15 days? If so, you might need extra money to tide you over. "It will reflect poorly on you if you come in to the bank asking for $50,000, then they ask you to create a cash-flow projection and you find out that you actually need $100,000," says Adam Hoeksema, co-founder of Muncie, Ind.-based ProjectionHub, a Web app to help entrepreneurs make financial projections. "You should know how much you need and how you will use the funds before approaching the bank."
How much can I borrow based on the asset I'm using for collateral?
Business owners often think if they purchase a piece of equipment for $100,000, they should be able to borrow $100,000 by pledging the equipment as collateral. But banks usually don't agree, Hoeksema says. "Banks will value your asset below what you think the value should be, and then they will only lend up to a certain percentage of the value of the asset." For example, banks might lend up to 70 percent of the value of a new piece of equipment, and maybe only 60 percent for a used piece of equipment.
Do I have adequate cash flow to repay the loan?
Your banker will probably ask you to provide financial projections for the business. Make sure to include your debt repayment plan in those projections. Bankers are going to be looking for businesses that have some wiggle room, and you may need to show available cash flow that is three times greater than your debt payment requirements, Hoeksema says. "They don't want to see if you lose one customer, you won't be able to make your loan payment this month. If your projections show that you have very little room for error, you are likely to scare them away."
Will the money help my business grow?
If you're borrowing $10,000 for payroll or other routine operating expenses, you're not generating more revenue from the loan and could find yourself in the same spot three to six months from now. Instead, you should put borrowed dollars into the parts of the business that will generate more revenue over time and help reduce future borrowing needs, Gass says. "If I take that dollar and leverage it, put it into sales and marketing and drive more revenues -- $1 driving $5 -- then it's worth it. It's all about growing the business."
How good is my business credit score?
Most people know their personal credit score, but very few know their business score, says Rohit Arora, CEO and co-founder of Biz2credit, a New York-based company that arranges loans for small businesses. As with personal credit, you can find your business credit score through Experian, Transunion or Equifax. If the score isn't as high as you think it should be, it might be because there are outstanding liens against your business. Also, check to make sure your vendors are reporting your payments. You can try to boost your score by reducing the balance on your business credit cards or requesting a credit-line increase to lower the percentage of your available credit in use. "The lender is going to check your business, and your score is the final arbiter of whether you get the loan or not," Arora says. "Even if you have stellar personal credit and good assets, if a lot of business contacts are saying you're paying them late, that's going to scare off lenders."
Are my personal finances in order?
Bankers may want to look at your "global financial statement," including personal information like outstanding student loans, personal credit card debt and mortgage payments. Until your business reaches a substantial size ($5 million to $10 million in annual revenue or more), the bank is going to rely heavily on your personal financial statement and personal credit score to determine the creditworthiness of your business. "If you have a $200,000 mortgage on a house worth $250,000, and you have $200,000 in student loans, the bank may not see you as a good candidate for a loan," Hoeksema says. "If you have a lot of personal debt and very little collateral that you can provide to the bank, you may need to find a strong co-signer."
Do I have all the documentation I need to apply for the loan?
Arora says some studies have shown that as many as four in five loans never close -- "not because the business didn't qualify, but because of the paper chase." When applying for a business loan, you will need a lot of documentation. For example if you're seeking a Small Business Administration loan, Arora recommends you provide the last three years of business and personal tax returns, personal financial statements and financial projections for the next 12 to 24 months. "If you go to the [lender] and are not fully prepared, not only does it make you look unprofessional, but by the time you get the documentation in place, it might be outdated," he says.
Does the loan have a prepayment penalty?
When you take out a loan, find out if you're free to pay it off early without any penalty. Some states allow lenders to charge prepayment penalties, in which case you should try to negotiate a compromise. For example, you could agree to a penalty only if you pay off the loan in a relatively short period of time, say, within six months from the time of the loan. "Prepayment is especially valuable if you believe your business may grow soon, and you may need a larger line of credit," says Jeanne Brutman, a New York-based financial planner for small-business owners. "By having good excess cash and a paid-off or [paid-down] line of credit, it shows the lender you are responsible with debt and can handle an increase in your total credit."
If I die, how will the loan be repaid?
It's something most people don't like to think about, but in the event of your death, an unpaid business loan can affect your family. "Most people think, if I die, the bank is out of luck, but that's not true," Brutman says. If you leave a large life insurance policy, for example, the bank may come after that. Find out what a lender's policy is in the event of your death to best determine how to protect your family. "Most business owners understand that if they're collateralizing their house and the business fails, they could lose their house," Brutman says. "But they may not understand that if they die, it doesn't cancel out their debts." It may be best to put your assets in your spouse's name, if the spouse doesn't have an ownership stake in the business. Brutman also recommends personal property and casualty insurance coverage, which in the event of your death, takes business debt into consideration.
Payment on account: what it is, how to calculate your tax bill, deadline to pay and how to reduce it
Updated on 31 July 2017
Today is the deadline for self-employed workers to pay the second half of their self-assessment tax bills. Here's how to calculate your payment on account and what to do if you can’t afford to pay.
‘Payments on account’ are advance payments towards your self-assessment tax bill.
You will have to make two payments on account each year.
Each payment is half your previous year’s tax bill and payments are due by midnight on 31 January and 31 July.
The 31 January payment will have settled your previous year’s tax bill (2016/17) and you’ll need to have made an advance payment for the current financial year (2017/18) that gets offset against your tax return the following January.
The 31 July 3017 payment is the other half of the current amount owed, as the taxman expects you will earn a similar amount this year as you did last year.
If your earnings have remained broadly the same year on year, then this means you’ll have settled your 2017/18 tax bill by the end of July 2017.
So, by 31 January 2018, the only self-assessment tax you’ll need to pay is another payment on account.
Normally this isn’t a problem, as you’re only ever expected to make a half-payment. However, if this is your first year filing a return then you could have to pay your year’s tax plus 50%. And that can really catch people out.
Of course, if you’ve carefully saved your taxes as you’ve earned, then there’s no problem. But not everyone is quite that sensible.
Okay, say you owe £5,000 on earnings between 6th April 2016 and 5th April 2017.
You need to have made that payment by the end of January 2017. But you also need to pay an extra £2,500 at the same time, and then again by 31 July.
Then, when you file your return for the following financial year, you’ll already have paid £5,000 towards it.
If you’re bill for the 2017/18 tax year is less than £5,000 you’ll be given a rebate but if it’s more you will need to make a balancing payment on 31 January 2019 and your payment on account will increase.
Assuming nothing has changed, you’ll simply pay £2,500 every January and July, which should feel much more manageable.
For many people, this is entirely necessary. You don’t want to be saving for last year’s tax bill out of this year’s earnings.
After all, that would trap you in a cycle of tax, where you’d be constantly working to pay off the previous year’s tax bill. You’d never be able to stop working, unless you saved double the tax in your final year.
However, some cynics suggest that it’s also to give the government a bit of a financial boost in the middle of the year.
You have to make a payment on account if your tax during the previous financial year was more than £1,000.
However, that’s not the case if more than 80% of that year’s tax was taken off at source, for example, through PAYE.
If your earnings for the current tax year are likely to be less than the previous year, don’t panic, it’s easy to let the tax man know.
There’s a fairly simple form to fill out, letting you state that your business profits are down, or that there’s another reason you owe a reduced amount.
You can fill out this form online by logging into the self-assessment website, selecting ‘customer services’, clicking on the ‘Request Us’ option and selecting ‘Reduce your payments on account’.
There are penalties for both filing your self-assessment return late and for late payment of any tax due.
The tax man will charge you £100 for filing a late return, then another penalty at three months, six months and 12 months. If you delay by that long, you could have to pay more than £1,600.
So, even if you can’t pay the outstanding amount, you need to file your return.
If you don’t pay the money you owe by the deadlines, the taxman can charge interest. After 30 days HMRC will apply interest at 2.75% on the outstanding amount. The taxman may also charge a penalty or surcharge.
What do you do if you’ve completely messed up? If you failed to save enough and simply cannot pay?
It’s probably very tempting to just ignore the whole problem, but you can’t afford to.
You need to get in touch with HMRC as soon as possible if you can’t pay, as you may be able to avoid any penalties and even spread your repayments over a period of time. But you need to talk to someone to arrange that; ignore the problem and it will get bigger and bigger.
Of course, if you have a reasonable excuse, like you’ve suffered a life-threatening illness or a bereavement, the tax man can be lenient.
Make sure you let the tax office know as soon as possible, by filling out the reasonable excuse claim form.
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wiseGEEK: What Happens if I Miss a Credit Card Payment?
If you miss a credit card payment, you will likely receive a notice from your credit card company that your account is delinquent. You should immediately make the payment and contact the company to tell them that the payment has been made. Technically, a credit card company can report a missed credit card payment to the credit bureaus immediately, but most will not report it until the account is 30 days late or more.
It is important to at least make the minimum credit card payment on time, but mistakes are bound to happen. If you realize that you have missed a payment, call the company and find out the exact amount of the payment that is now due. It may have increased due to late fees or additional interest. In addition, it is best to explain why the payment was missed; if it was the first time and it was a legitimate mistake, the company may be willing to remove any late fees and not put a notice on your credit report. If you frequently miss your scheduled credit card payment due dates, the company is not going to be as likely to want to work with you.
You should make the payment immediately; it may be done over the phone or you might want to mail in the payment. If you mail the payment, be sure to tell the credit card company that is what you are doing. Usually a credit card payment will need to be more than 30 days late before it is reported to the credit bureaus. A 30-day late payment is less damaging than a 60-day late payment, which itself is less damaging than a 90-day late payment. All of these will have a negative impact on your credit score, though.
Once a credit card payment is more than 90 days late, it will typically be sent to a collection agency. The bill collecting company will then begin sending notices and likely making phone calls to try to get you to pay. If you legitimately cannot pay, you will need to tell this to the collection agency as well as the credit card companies. Some credit card companies will settle with you, but this can be a fairly lengthy legal process. Credit card companies do have the right to sue you for unpaid balances, however, so keep that in mind before charging something you cannot pay for.