What Are Budgeting Loans and Budgeting Advances?

Although some are not aware of these two financial products, they are vital to individuals who have difficulties earning enough money to pay for their monthly expenses. Both of them are offered from the Social Fund and are designed for those who are already getting certain benefits. As a result, they are considerably more affordable than loans from banks, pawnbrokers or doorstep lenders.

This having been said, the fact that budgeting loans and budgeting advances are both designed for specific individuals prevents them from getting the exposure required to also make them popular amongst the individuals that would need them. Today, we’ll look at both budgeting loans as well as advances and establish who can access them and how much more affordable, they are when compared to those offered by banks.

Budgeting loans provide access to quick, short term cash.

What Are Budgeting Loans?

These loans are designed to help individuals who have low income pay for essential or emergency expenses such as:

  • Clothing or footwear;
  • Maternity or funeral costs;
  • Travelling costs;
  • Advance rent or removal expenses, when moving to a new home;
  • Furniture, household electronic equipment and basic home security systems;

Budgeting loans can also be used in order to pay for products and services that can help you find a new job or start work, such as equipment, clothes, and basic personal care products.

In order to apply for a budgeting loan, an individual must get pension credit, income support, income-based jobseeker’s allowance, or income-related employment and support allowance. Those interested must have been claiming any one of these benefits for a minimum of 26 weeks, consecutively or with a maximum break of 28 days.

The minimum amount that can be borrowed is £100 and the maximum:

  • For single individuals – £384;
  • For part of a couple – £464;
  • For those with children – £812;

You can apply for a budgeting loan through the GOV.UK website which also hosts the Form SF500 that you will have to fill out. Alternatively, it is possible to ask for guidance at a Jobcentre Plus.

Repaying a Budgeting Loan

The repayment procedure is fairly simple. These loans are interest-free, which means that you will only have to return the money that you’ve borrowed. In most cases, the term for the loan is two years and the repayments will be automatically deducted from the benefits that you are receiving. Keep in mind that if you stop getting the benefits, you will have to establish another way to repay the loan.

What are Budgeting Advances?

Budgeting advances are the equivalent of budgeting loans, however, they can only be accessed by individuals that are claiming universal credit. The conditions for getting a loan are:

  • Having received Universal Credit for at least 6 months, or making a case that you need the money in order to keep or find a job;
  • Earning under £2,600 as a single individual, or less than £3,600 as part of a couple, per month, for the past 6 months;
  • Not repaying another budgeting advance;

Repaying the advance starts with the next Universal Credit that you will receive and will be deducted on a monthly basis. The entire advance must be repaid in 12 months.

As with the budgeting loans, the minimum amount that can be borrowed is £100. The maximum amounts are identical to the ones from the loan. However, unlike the loans, a budgeting advance can only be claimed directly from a Jobcentre Plus.

Final Words

Both the Budgeting Loan, as well as the Budgeting Advance are designed for low-income individuals and families. As a result, their use is restricted to them. While the terms and conditions are drastically better than those offered by banks and private lenders, they do still need to be repaid and you should give applying for one a lot of thought before submitting your request.

Credit Cards

What Can You Do If Your Loan or Credit Card Application Is Refused?

Banks and various private lenders are not often clear when it comes to explaining why they refuse application loans. Unfortunately, this lack of transparency leaves many individuals in a limbo where, without knowing why they were turned down, they continue to submit applications to other lenders. This can actually lower one’s credit score due to the fact that each application and refusal is noted in one’s permanent financial records.

Now, in most cases, the bank that you’ve submitted your application to may give you at least basic information as to why you did not get the loan.For example, if the refusal is based on a credit reference file check, the lender will inform you of this and also tell you which credit reference agency they have used. While it may not seem like much, this will give you a lead that you can follow in order to find more information.

Note that you may ask the lender for further information, however, they are not obligated to give you any other clarifications. Instead, there are steps that you can make in order to discover what the issue is and to correct it.

Do Not Submit Any Other Applications

All the applications that you submit, regardless if they are approved or not, will still be marked on your permanent financial file. Each additional application that you make will further decrease your chances of getting a loan. If you believe that another lender may approve your request, wait 4-5 weeks before sending it. In other words, always space out your applications as much as possible.

How to Identify the Issue?

Once the lender tells you the name of the reference agency used, go online and check your credit reference file. All agencies are obligated to disclose this information once you make a request and the file will tell you everything that you need to know about what has reduced your credit rating.

Keep in mind that there are several credit reference agencies and each of them may have a different way of calculating your credit rating. Be sure to check the other ones in order to establish what is your exact chance of getting a loan.

What Options Do You Have at This Point?

Depending on what you applied for, there may be a few things that you can do in order to solve your initial problem.

  • Repaying Outstanding Debts – If you need the loan in order to repay other debts or to pay your bills, you may want to consider using the services of a free debt adviser. They are able to look at your credit rating and offer other options that you may not have considered;
  • Funding a Large Purchase – If you needed the money for a large purchase and have estimated that you would be able to afford the repayments, you may want to consider lenders other than banks. There are many online lenders that offer similar services to those of banks. However, only do so after you’ve taken a look at your credit report;

Final Words

Having your credit or loan request refused by the lender is never a pleasant experience. However, there are always steps that you can take in order to resolve the issue. Request to see your credit report, check all available credit registers in order to determine your current credit rating, avoid sending any more applications and work towards building up your credit score. While it may take some time, this is the most reliable way to ensure that your future applications will not be rejected.

Business Loans

What Are the Main Ways to Finance a Business?

Financing a business is never an easy process, however, it is far from impossible. In reality, finding the money needed for your company is more a matter of knowing where to look and how to plan the future of your business, rather than knowing the right people and having a perfect credit rating. When it comes to small companies and start-ups, establishing what is the right financing model for your needs is essential.

There are many situations in which entrepreneurs accepted financing from wrong sources and ended up being locked into disadvantageous terms and conditions. In more serious cases, it is perfectly possible to lose part of your company if you are not careful when choosing an appropriate financing source.

3 Types of Financing That You Can Access

It is important to keep in mind that there are 3 very different financing models that you can choose from when it comes to accessing financial resources for your company. These are:

  • Off-Balance Sheet Financing;
  • Debt Financing;
  • Equity Financing;

Each of these has different advantages and disadvantages that you have to take into consideration and review thoroughly. Let’s take a closer look at each of them:

Understanding Off-Balance Sheet Financing

Unlike the other types of financing above, Off-Balance Sheet Financing is not an actual loan. Instead, it offers entrepreneurs a way to take large purchases off a company’s financial records. The main utility of this method is that it helps business owners make their company seem less debt-ridden, increasing its appeal in front of potential investors.

While this practice is considered to be in a legal grey area due to the fact that it can unrealistically bolster a company’s image, it is a service offered by most accounting companies and using it does not break any laws.

What Are the Pros?

  • It is a great way to hide large purchases from potential investors;
  • It can, in some cases, decrease the visibility of a company’s debt;

What Are the Cons?

  • It is more a damage control method, rather than a financing source;

Understanding Debt Financing

Although the name of this form of financing makes it seem overly complicated, it is actually extremely easy to understand. Debt financing is a financing category that includes automobile loans and mortgages. It essentially describes loans obtained from banks or private lenders. As a side note, loans received from investors also fall under this category.

The process of accessing debt financing is quite simple. You, as the owner of your company, can go to the bank, fill out an application form and wait for it to be processed by the lender. If the company is still in its starting year, the bank will check your personal credit score, instead of that of the business. Once your application is approved, the bank will establish the terms and conditions of the loan, including the interest rate and the term.

What Are the Pros?

  • The lender does not gain control over how you run your company;
  • The interest that you have to pay is tax-deductible;
  • Having to return the money through monthly repayments makes it easy to manage the company’s income and expenses;

What Are the Cons?

  • The monthly repayments can easily eat into the profit of small companies;

Understanding Equity Financing

This is the type of financing that most will be used to when it comes to the business world. With equity financing, the money comes entirely from investors. However, these financial entities are divided into two categories: Venture Capitalists and Angel Investors.

The former is often a large firm, rather than an individual and offers considerable amounts of money (starting at £2,500,000). As for the latter, angel investors tend to be wealthy individuals who are looking to invest in products offered by other companies rather than start a business of their own. These investors usually want clear and simple terms and move faster than venture capitalists.

What Are the Pros?

  • You do not have to return the money;
  • Equity financing is a way to access large amounts of money;

What Are the Cons?

  • Equity financing implies giving up ownership over portions of the company in exchange for the funds;
  • The investors will have a say in the direction that your company moves in and must be consulted in all matters;

Final Words

Ideally, you should try to find informal sources of financing, such as family or friends. However, if this is not an option or if you need a larger amount of money, then either of the three methods presented above will be useful. Regardless of what type of financing you choose, keep in mind that each of them comes at a price. Some will cost you control over the company, while others will take away some of your profits.

Quick Loans

Quick Loans – Why They Are Popular and How to Make the Most of Them?

2020 will be remembered as the year when the world was hit by a Pandemic. Pretty much all economies are in a recession, many people lost their jobs, wages were cut, all that while living expenses skyrocketed.

Even if you are one of the lucky ones to have a job through this turmoil, it is no easy task to get by from one to another paycheck.

That is why many people have turned toward quick loans as a solution to support their personal or business needs. Quick loans are also known as short term loans, payday loans, cash loans, and so on. But it is not just the current situation that drives people toward quick loans. There are several other factors as well. Factors such as:

Immediate Access to Cash

From the moment you submit your application to the moment your loan is approved, it can be a matter of only minutes, not hours or days as it is with standard banks. As far as the deposit goes, that largely depends on your bank and how fast they can process the transactions. Sometimes that can be within the first hour after your application has been approved, other times it can take a bit longer.

Apply from Anywhere and Any Device (Laptop, PC, Smartphone)

It doesn’t matter where you are, who you are with, or what you are doing, as long as you have a few minutes to spare and access to the internet. Grab to whatever device you got available (PC, laptop, or smartphone) and you can submit your application instantly.

Get a Quick Loan Even With a Bad Credit Rating

Having a bad credit rating is not always our fault, but we need to live with it nonetheless. Most quick cash loan lenders will borrow your money even if your credit rating has been leveled to the ground. At the same time, they need to see signs that you are being financially responsible and that you pay off your old debts promptly and on time. Furthermore, they need to see a pattern in which your old debts are not accumulating, but are decreasing.

Quick cash loans can be extremely useful.

Quick Cash Loans

Not everyone needs to know when you are temporarily in a challenging financial situation. Quick cash loans present a discrete financial solution that can help you deal with your immediate financial needs without anyone knowing about it.

How to Make the Most of a Quick Cash Loan?

Getting a loan is the same as buying anything else. In this particular case that’s money. The first and most important thing is to use the services of a licensed lender. To that end, always make sure that you use the services of a company that has been regulated and authorized by the Financial Conduct Authority (FCA).

The second thing is to make sure that you get a quick cash loan with the lowest possible rate and the best terms of use. Nowadays, there are plenty of licensed lenders, and each of them has their terms and rates.

Borrow as much as you need, not as much as you can. The thing is that quick loans tend to have high-interest rates. The logic here is simple, the more money you borrow, the higher the interest rate you need to pay back. So, just grab exactly how much you need, and don’t be tempted by your limit that might be higher than what you need.

Final Words

Last but not least, borrow knowing you can make your payment on time per your quick loan agreement. Any postponements and restructuring of your original agreement can only lead to increasing your debt and with that the amount of money you need to return to your lender.

Short Term Loans

How to Get a Short Term Loan Approved?

Getting a short term loan may be not as demanding as getting a standard bank loan, but it doesn’t mean that everyone can get it or you just need to ask for it. Some people think exactly that, and when their short term loan application is denied they wonder how that’s even possible.

Well, it is possible to get rejected for a short term loan in the UK despite what most people think about that.

What follows is a set of recommendations that can help your short term loan application get approved in the shortest possible period.

Before we start

There are two basic criteria that you need to fulfill to be even considered for a short term loan. First of all, you need to be an adult UK citizen. Furthermore, you need to have a bank account.

If you meet those basic criteria keep on reading. Otherwise, there isn’t any point in going forward.

The Significance of Your Short Term Loan Application

Most online applications are similar and rarely when some landers ask for something different than what’s common with their competitors. Regardless of how the application looks, of the things they will ask you, or of the papers they will ask you for, what matters for you is to be truthful in your answers. Plus, submit all the necessary documents that they might ask for.

If the application is complete and with truthful data then it is very likely that it will be processed fast and you can have your loan on your bank account in the shortest possible period.

This is important because your data will be checked by one of their human operators. If they find some discrepancy between what you claim in your application and your bank and other records, they might simply reject it based on that.

Then there is the thing with your submitted documents. If you just made quick snaps with your camera, they might look blurry. Ideally, it is best to send scanned documents in pdf format. But if you don’t have a scanner at hand, make sure you take high-resolution photos so that their operators can easily go through them.

Basic Criteria to Have Your Short Term Loan Approved

The following criteria are pretty much universal with most short term money lenders. However, “most” doesn’t mean all of them. So keep that in mind because there are still some that might ask for something else before approving your short term loan application.

Employment or Steady Monthly Income

The first thing that every lender will do is check and assess your persona situation and how big of a risk of non-payment you are. Sometimes, even if you are not employed, yet you have some other source of income, they feel free to approve you a short term loan. But most times, being employed is the most important criteria

Your Personal Debt is NOT Out of Control

If you have a debt that is just growing from month to month and is taking a massive part of your income, you might not get approved. On the other hand, if you keep your personal debt “at bay”, it is not growing month by month, that sends positive signals to the lender.

You Pay Your Existing Loans

Your credit history might be as poor as it gets, but if your recent record shows signs of improvement on your side, lenders will see and acknowledge that as a positive sign. By serving your old debts promptly you send the message that you’ve changed and that you are more responsible with your finances.

Final Words

Getting a short term loan is no rocket science, as it shouldn’t be. Fill your application promptly, submit all the documents they ask for, and borrow as much as you need at the given moment. That’s there all that is too it. The rest is out of your hands and depends on the lender. But if you meet the basic criteria, the ones we’ve mentioned above, then the likelihood of your short term loan being approved is very high.