Mark Carolin

Posts Tagged ‘Bad Debt’

So, if you’ve decided to make that all-important jump from cubicle jockey to business owner, you might be wondering what comes next? After all, there seems to be no end to the amount of setup that needs to take place. You’ll need to first identify a problem, and be sure that there is a market around it. Once you’ve done that, you then need to make sure that it is a buying market.

Then you need to develop a solution. Then a marketing plan has to come next, so that you have a clear picture of how you will reach your customers and prospects. Finally, you’ll need a business plan. Once you’ve got all this together, you’re ready to go right? Not so fast! You’ll still to funding for equipment, and as your company grows, employees, office space, phones, etc. One option of course is to pay for this all out of your own pocket, with your last paycheck and vacation pay. However, a better option is an unsecured business loan.

You might think that loans in general would be something to stay away from, what with high interest rates, inflexible repayment plans and so forth. And for a personal loan, you’d be correct as this is an example of “bad” debt, that is debt that doesn’t help you put money in your pocket. An unsecured business loan on the other hand, is “good” debt. Why? For the simple reason that, when used with restraint, it can allow you to get the equipment, people and office space you need so that as your business grows, you are able to easily grow with it. The last thing you want is not enough space, or cash to get the employees, software or other things that you will need.

With that said, there are several other advantages to getting an unsecured business loan. To whit: as a small business owner, provided you have a good business plan, obtaining funds for what you need will be easier. Just be sure that you have the purpose for the funds clearly defined in your mind and on paper.

Another benefit that you will have is the fact that, unlike other types of loans, an unsecured business loan is just that: unsecured. This means that you don’t have to put anything up as collateral in order to obtain it. Naturally, you want to have a plan in place to repay it quickly, but you don’t have to borrow by putting your house on the line either. One more benefit of an unsecured business loan is the fact that you won’t have to enter into any “shares for cash” deal, thereby you can fully own your company, not sell off pieces of it to get the cash you need.

Finally, of course, having an unsecured business loan means that you are a recognized business and because of that you can get breaks on taxes that employees do not get. For on thing, interest on the loan can be used as a tax deduction, meaning that you will save money.

A prepaid credit card and a bad debt card are the options open to you if you have an adverse credit record and need a credit or debit card. There are many reasons for you needing a credit card, and even those with a very poor credit record eventually find that not having a card can very inconvenient.

Let’s take some examples a where bad debt card or prepaid credit cards would be better than no card at all:

1. Hotel bookings.

Most people book their hotels in advance – in fact if you don’t you are highly unlikely to get a room! When you book online you obviously have to secure the booking using a credit card. If you book by telephone, you will be asked for your card number. So if you have had your cards cancelled, and no regular card provider will give you one because of your past record, then what do you do? No more hotels for the rest of your life? You are better off with a bad debt card or a prepaid credit card than no card at all!

2. Vacation Bookings

The same applies here, and there is not really any need for me to go further than that. You know how it works: you make the booking and then give your card number. No card, no booking. The days are long gone when you book and then pay cash when you arrive.

3. Any Online Purchase

Any online purchase must be made using a credit or debit card. If you don’t have card you can’t buy anything online. Nothing at all!

4. Autotellers

There will come a time, not too far into the future, when banks will not handle cash except from registered retailers, and even that will die out. Cash for the few items that you need it for will be dispensed by autotellers and practically everything else will be paid using a card of one type or another. Even bars are converting to cards: hand it over when you order your drink, and then every other drink goes onto your tab assigned to that card.

Basically, what I am saying here is that you will find life sheer hell without a credit or debit card, and if your credit is shot, as it is for many people, and as it was for me for a long time, you will find ‘normal’ life very difficult. You will need a card for most purchases, online or not, and unless you have good credit you will need either a prepaid credit card or a bad debt card. Without one of these you will be screwed when it comes to purchasing anything you cannot buy in your local store – that includes hotels, flights, vacations, restaurant bookings, online purchases – in fact anything online that costs money – and even getting cash from your bank.

So why are there both bad debt cards and prepaid credit cards? Why not just one or the other? The reason is that some people cannot take a second chance, and when issued a bad debt credit card without a credit check being carried out, they still screw up on the repayments.

These cards don’t offer you a large amount of credit initially, sometimes only $500 or