Lending to Businesses

If a bank is lending to someone for personal use, the loan is just another expense for the borrower to take from their monthly income. It doesn't enhance their ability to make repayments and if anything, it reduces their ability to repay because presumably, their funds were already committed elsewhere.
But, if you lend money to someone who already has an established business and they intend to use the funds to further invest in that business, then one could argue, that they are increasing their ability to repay their loan and therefore increasing their covenant strength.
On the other hand some people say that by lending someone money for home improvements, it increases the value of the underlying asset but they forget that in a repossession scenario, you'd be looking at forced sale recovery value anyway as you don't know in what condition the property will be left. In my mind, it is better to increase the value of the covenant (i.e. the borrower) because there is less chance you'll end up in a fire sale. Furthermore, if the investment in the business does yield results, then the borrower will be able to draw more money out of the business and so the home improvements may be done anyway.
Finally, the last thing to bear in mind is that someone who relies on their business to generate themselves a living will fight their hardest to keep it afloat because the last thing they want is to lose their source of income and may well be a more responsible and commercially aware person.
In conclusion, it makes more sense to lend to people that will invest in a business than to lend to people that intend to spend the money on themselves. They are likely to be far more responsible borrowers.
Roma Finance is an independent residential and commercial finance broker with over 10 years experience, based in Manchester.
We specialise in many types of property and asset finance including Bridging Loans, Commercial Mortgages, Secured Loans (second charges), Invoice Discounting, Development Finance, Stock and Plant & Machinery Finance.
What makes Roma Finance unique is that we actually underwrite loans for other lenders. We have very strong lender relationships, we know the key decision makers and their appetite for deals, we understand their funding process, we get deals completed quickly and most importantly, we can give clear and honest feedback to our clients.

Promoting Your Business Yourself Or by Using a Marketing Firm

Marketing a business is something you have to do in order to compete in the business world these days. It doesn't matter how big your business is, you will need to market yourself and your business in some way. Talking about your business and attending business networking events will help you to get your name out there. A well promoted website will also benefit you but there comes a time and place where you will need to do that little bit more and either employ your own marketing people or hire a marketing agency.

A marketing agency will assess how your business works, the employees perception of the business and the businesses strengths and weaknesses. The marketing agency will then use this information combined with the goals you want to achieve to work out which marketing techniques would be best applied to your business. For a fledgling business, promotion and the creation of brand awareness maybe key but an already established medium sized business with a client base, a different approach might be needed. A marketing firm may recommend market research and direct selling in order to find out what the clients want and deliver it to them. This is the strength of good marketing companies and this is the reason you can use them for a range of services.

There are a range of various marketing skills that can be utilised by a business. Many of them can be simple to use and do yourself by utilising social networking and book marking websites but this sort of marketing is great as it is easy to do and allows you to communicate with your customer base for little or no expense. However to make a real impact you need to look at a combination of online and offline marketing methods exploiting any medium you can to your advantage.

How To Avoid a Recession

Policies to avoid a Recession
1. Cutting Interest Rates. Recently, the Fed cut interest rates by 0.75% a big stimulus for consumer spending. Amongst other things, lower interest rates reduce mortgage interest payments, giving consumers more disposable income.

2. Freeze on Subprime Mortgage Rates. There is a 5 year scheme to freeze subprime rates, preventing house repossession.

3. Tax Cuts. Cutting taxes increases consumer disposable income. But, will people spend if they are nervous about the future?

4. Increase in Government Spending. Higher government spending is another way to stimulate the economy. The US has not announced much in this area. They are hampered by budget deficit and preference for tax cuts.

5. Devaluation. The devaluation of the dollar is not particularly a policy, it is something that is just happening. However, the weaker dollar is boosting the US export sector and could help avoid recession.

House prices keep falling

HOUSE prices on average fell again in the final three months of 2008, a third straight quarterly decline, new data shows.
Despite cheaper mortgages and greater incentives for first home buyers, prices of established homes on average fell 3.3 per cent in 2008.
The Australian Bureau of Statistics house price index released today shows average house prices in Australia's capital cities fell by a further 0.8 per cent in the December quarter. Economists had expected a 1.0 per cent decline.
The worst hit cities during the quarter were Melbourne (down 1.7 per cent), Brisbane (down 1.2 per cent) and Perth (down 0.9 per cent.)
Over the year, Perth prices fell 6.7 per cent, while Sydney and Canberra prices were both off 4.1 per cent.
The Reserve Bank of Australia (RBA) is widely expected to cut its cash rate again by at least 75 basis points when its board meets for the first time this year tomorrow.
The central bank slashed the rate by 300 basis points between September and December last year in attempts to stave off a recession.
The Federal Government also doubled the first home owners grant to $14,000 for the purchase of existing houses as part of last year's $10.4 billion economic stimulus package, and to $21,000 for newly built homes.

'Recession not inevitable', says Turnbull

RECESSION is not inevitable despite the Federal Budget heading for deficit, Opposition Leader Malcolm Turnbull said today.His comments came after Prime Minister Kevin Rudd and Treasurer Wayne Swan earlier admitted the Budget would go into deficit, collapsing by $115 billion amid a growing global recession.
"I wouldn't say it (recession) is inevitable at all," Mr Turnbull said.
He called on the Government to make each part of its reaction to collapsing financial markets "effective" before repeating earlier criticism about the stimulus package delivered late last year.
Mr Turnbull also upped his direct attack on Mr Rudd, labelling him a "born-again socialist" who did not understand the financial crash.
"Over the holidays a lot of people read fiction," the Liberal leader said.
"It sounds like Mr Rudd spent his holidays writing fiction," Mr Turnbull said, referring to a lengthy essay written by the Prime Minister.
In the essay, Mr Rudd promises greater Government intervention and regulation in the market.
"His remarks about regulation are truly bizarre. From what I've read of his essay it sounds like a feat of imagination," Mr Turnbull said.
"There should always be more good regulation and less bad regulation.
"The critical thing is getting regulation right."
Mr Turnbull reiterated a long list of Coalition plans to attack the economy including wide-ranging tax cuts.

The economy: How bad is it?

The National Bureau of Economic Research said Monday that the United States has been in a recession since December 2007, making official what most Americans have already believed about the state of the economy.

The NBER is a private group of leading economists charged with dating the start and end of economic downturns. It typically takes 6 to 18 months after the beginning of a recession to declare its start. The NBER similarly does not declare an end to the recession until long after the "expansion" has begun.

The current recession will likely prove to be one of the longest downturns since the Great Depression of the 1930s. The past two recessions (1990-1991 and 2001) lasted eight months each, and only two of the 10 previous post-Depression downturns lasted as long as a full year, according to the NBER.