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Monday, October 27, 2014

The New Target: Auto Finance

By Nigel Aplin | Oct 27, 2014

After several years of being the focus of consumers over-extending themselves, the Canadian mortgage industry can rest a little easier as rating agencies and policy makers may now have a new target: auto finance. Both the Bank of Canada in its recent commentary and Moody’s Investor Services, in a report last week on Canadian banks, singled out auto loans as a possible area of vulnerability.

Auto loans at Canadian banks have been growing at an annual compound rate of 20% or more over the past seven years. Prior to 2007, auto leasing was a very popular vehicle acquisition option for consumers which offered low monthly payments but left auto makers with large inventories of used vehicles coming off leases which averaged between two and four years in duration. Pricing for leases increased significantly and many consumers began opting to purchase their vehicles and finance those purchases with loans which extended beyond the traditional car loan term lengths of three to five years. Auto finance loans which now extend over 72, 84, 96 or even 108 months offer consumers low monthly payments but create risk for lenders.

The Bank of Canada commented last week that “auto sales have reached record highs” as it suggested that the risks associated with household imbalances are edging higher. The Moody’s report looked at the potential exposure of banks which have loaded up their balance sheets with auto loans which have grown from $16.2 billion in 2007 to about $64 billion today. An economic shock like a sharp rise in the unemployment rate could trigger defaults on these loans and the risk to lenders comes from the rapid depreciation of new vehicles, particularly in the period shortly after purchase. Loan balances could exceed vehicle values during these periods and long amortizations of up to eight or nine years mean that loan balances are slow to reduce. Unlike real estate, the value of autos never increases over time.

Canadian consumers who can finance their car loans over long terms and enjoy relatively low monthly payments have also shown a preference for more expensive new vehicles and this only adds to the household imbalances to which the Bank of Canada refers. Canadian banks admit that auto finance is a rapid growth area for their balance sheets but they insist that they are maintaining prudent underwriting standards and that they stress test their portfolios regularly.

Wednesday, July 16, 2014

7 Ways to Prepare Today for the Next Recession

Is another recession imminent? Prepare your business today, so it will survive, and even thrive, should a recession hit.

July 07, 2014 The Great Recession seems like only yesterday. Yet it was five years ago that trillions of dollars of consumer wealth and millions of jobs were lost. Both sales and cash flow for small-business owners seemed to dry up overnight. It was the worst economic crash since the 1930s. Could it happen again?

The Bureau of Economic Analysis recently released its final estimate of GDP for the first quarter of 2014. It shows a decline of the U.S. economy at an annual rate of 2.9 percent. That’s down from the fourth quarter of 2013, when GDP grew at 2.6 percent. This makes the first quarter of 2014 the worst quarter since the first quarter of 2009 during the Great Recession.

While economists blame the results on the severe weather, could we be headed for another recession? By definition, a recession is two negative GDP growth quarters in a row, and historically, they have come at least once every decade.

Whether the next recession is around the corner or years away, we remember the damage the last one did. How can you prepare and protect your business should another recession hit?

1. Focus on profitability, not growth. Companies need to invest in order to grow their business, but they should only grow profitably. Sacrificing profitability for growth may get a company in trouble with large losses, especially if expected sales lag behind the forecast. Don’t let invested expenses get too far ahead of sales.

2. Stockpile cash. The single reason that all companies go out of business is because they run out of cash. A sign I always hang in my office as a reminder is “It’s Cash Flow, Stupid.” Forget about the sales line on the profit-and-loss statement and instead examine the cash flow statement. Do you have more or less cash at the end of the month? A simple check of your bank statement will give you the answer. Focus on getting paid from customers, extending payments to vendors, keeping stock levels low and inventory turns as high as possible.

3. Draw on the bank credit line. Banks want to give credit to companies that actually use it. Unless your business has six months' worth of cash in the bank, draw on that credit line. The cost of this insurance will be worth the low interest paid.

4. Challenge all business assumptions. Always ask if the business can be done another way. Cockroaches thrive during bad times because they know how to adapt or die. How can the company increase its gross margin? How can it sell to clients at a lower cost? What parts of the business always make a profit, and how can you leverage it? Which are the really profitable customers?

5. Ask customers to substitute your products for higher priced ones. Is your product now the cheap alternative? In a recession, price can trump all. But why wait until then? Find out from customers if your products can replace something similar that they’re paying a lot more for—often it can.

6. Cut costs now even if revenue hasn’t gone down. No owner has ever regretted cutting costs too soon. When deciding which costs to cut, use the “cringe factor.” Ask yourself which checks make you cringe when you write them at the end of the month. Cringing means that you are not getting value out of these expenses and need to either cut them or find another vendor that offers those services.

7. Remember resiliency. Economic cycles come and go. You have been here before and survived. Cheer the good times with parties, awards and trophies. Mourn the bad times for 24 hours, but then let it go. If you place value on action, you’ll have more chances at success.

It's not a matter of if a recession will hit, it's more of a question of when. Get your business ready today, and you can sleep better knowing you are prepared.

Read the Article

Friday, June 27, 2014

Steps to correct errors on you credit bureau

1. Support your case:
Gather receipts, statements and other documents related to your credit account. You may need these to prove your claim.

2. Contact the credit reporting agencies:
Use their form for correcting errors and updating information. Do this for both Equifax Canada and TansUnion Canada.
Before the agencies can make any changes, they first need to check your claim with the creditor that reported teh information.
If the creditor agrees there is an error, the agencies will update your credit report. However, if the lender confirms the information is correct, the agencies will not make any changes.

3. Contact the creditor:
You may be able to speed up the process by contacting the lender yourself about the error. Ask the lender to verify its file and provide the credit reporting agencies with update information.

4. Escalate your case:
Not satisfied with the results of the investigation? Ask to speak with someone at a higher level at the credit reporting agency or the creditor. If the creditor is a federally regulated financial institution, and it will not correct the error, as for information on its compliant-handling process.

5. Add a consumer statement:
If you are still not satisfied, ask the credit reporting agencies to add a consumer statement. This lets you provide details about an item o your report, using up to 100 words and it's free of charge.
Lenders and others who look at your credit report may consider your consumer statement when they make their decisions.

Don't have the time or energy to deal with it, call us, we'd be happy to help 1-888-693-1439

Building, Improving and Securing Credit through safe, secure and affordable solutions

Monday, June 16, 2014

How to Correct Errors and Check for Fraud

Check your credit report at least once a year for errors and signs of identity theft. Think of it as an annual checkup for your financial health!

You have the right to dispute an information on your credit report that you believe is wrong. You can ask the credit reporting agencies to correct errors. it's FREE

Watch out for:
mistakes in your personal information, such as wrong mailing addresses or incorrect date of birth.

errors in credit card and loan accounts, such as a payment you made on time that is shown late.

negative information about your accounts that is still listed after the maximum number of years it is allowed to stay on your report.

Why do errors matter?
They may give lenders the wrong impression. You could be turned down for an application or receive a lower credit score than you should have. Even errors that seem minor, such as a misspelled name or a wrong address, could cause problems when you apply for credit.

What cannot be changed?
You cannot change factual, accurate information related to a credit account. For example, if you missed payments on a loan or a credit card, paying the debt in full or closing the account will not remove the negative history. Negative information will only be removed after a certain amount of time.

Watch out for "credit repair" companies that claim they can eliminate negative information, for a fee, before the date it would normally be removed from your credit report. This is not possible.

Call us today for a FREE credit report consultation at 1-888-693-1439

Building, Improving and Securing Credit through safe, secure and affordable solutions

Friday, June 13, 2014


The actual formulas used to calculate credit scores are the property of private companies and are not available to the public. This means it is not possible to know exactly how many points your score will go up or down based on the actions you take.

However, the main factors that are used to calculate your score include:

Payment history
Use of available credit
Length of inquiries
types of credit

Let's discuss PAYMENT HISTORY:

This is the most important factor for your credit score. It shows:
*When you paid your bills
*Late or missed payments
*Debts you did not pay that were written off or sent to a collection agency
*Whether you have declared bankruptcy

Your score will be damaged if you:
*Make late payments - the longer it takes you to make your payment, the worse the impact on your credit report and score will likely be.
Have accounts that are sent to a collection agency
Declare Bankruptcy
Withhold payment due to a dispute and the lender reports your payments as late.

With Certain financial products, any payment you make on time will not be counted and will NOT improve your credit score. However, if you miss payment and your account is sent to a collection agency, this CAN be included and will damage your credit score. These products include:

Chequing and saving accounts
Prepaid cards

Telecommunications accounts, such as mobile phone and internet, are exceptions. Payment you make on time as well as late payments MAY be considered for your credit score.

If you have any questions feel free to PM me or just post your question below.

Tomorrows topic - Use of available credit

Building, Improving and Securing Credit through safe, secure and affordable solutions

Wednesday, May 14, 2014

How Do Factoring Companies Price Their Agreements?
There is a broad range in the factoring industry when it comes to pricing. The pricing set in the
factoring contract, known widely as the MPSA (Master Purchase and Sale Agreement), is dependent on a few aspects of the small business they are factoring.

Here is a general list of considerations the factor bases their pricing decision on:
Size of the company looking to factor.
Industry the company is in
Financial strength of the company
Special considerations
Purpose and use of funds 

Everyday I will right a short description of each consideration.

Size of the company looking to factor. 
This is perhaps the biggest influence on pricing from the factor’s perspective. Simply put, the smaller the factoring line (amount the company is looking to borrow), the higher the cost of factoring. Why? Factors need to see a worthwhile return on investment. Both the small business owner and the factor need to take on business that is profitable and worth the risk.
We recently spoke with a small business owner with nominal sales history that received their first purchase order for $20,000. The fee to cover the cost of this purchase order was $2,000 which is 10%. Looking at it from an outside perspective, you may think that is expensive. Let’s take a closer look. In this case, the cost of goods was $20,000 and the sale price (wholesale) was $28,000 or a 40% margin. The $8,000 profit would be reduced by $2,000 to cover the cost of financing. The companies first major sale would reduce their profit by $2,000, but it would give them the ability to fill the order and make the sale. Ideally, this will turn in to future business and larger orders. This concept and way of thinking was covered in my previous blog on opportunity cost.
As sales increase, the fee for financing will decrease. You have to take what you can get in the beginning until your business is on solid ground and the risk to lending to your business has subsided.

If your business could benefit from some additional capital to take advantage of sales opportunities, we would like to speak with you. Please contact us to discuss your needs 1-888-693-1439.

Tuesday, April 15, 2014

7 Small Business Loan Myths ... Busted

Getting a small business loan can be complicated, but don't believe everything you hear about the process. Here are seven small business loan myths you should think twice about:

Myth No. 1: Getting a small business loan is the hardest thing you'll ever have to do.

While obtaining a loan for your small business is no easy feat, it doesn't have to be an insurmountable trial. Small business lending experts agree that you can best avoid such trouble by preparing for the challenges that applying for a small business loan may present. While there are challenges, a lot of the frustration around obtaining small business financing can be eased by doing your due diligence.  Be prepared and have all your documents ready to present to lenders.

Myth No. 2: You have to have perfect credit to get a small business loan.

Good news for those who think that bad personal credit means never owning or expanding a business. While low credit scores might have been a non-starter in years past, today's lending environment is actually more open to subpar credit ratings than ever before. While traditional banks may be restrictive when it comes to obtaining credit, there are alternative options.

Alternative lenders tend to base lending decisions on the financial realities of a business rather than the financial history of business owners. Specifically alternative lenders take a close look at business performance, industry type, time in business and cash flow before handing out a loan.

Myth No. 3: The best way to obtain a loan for my business is through a bank.

Think your bank is the best (or only) place to apply for a loan? Think again. Traditional lending institutions have been a mainstay of small business funding for many decades, and still are, in some industries. But they are not the only places (or necessarily the best places) to turn to for a loan.

For business owners looking to borrow a relatively small sum (between $5,000 and $250,000), getting a bank loan is likely to be more trouble than it's worth.   Bank loans may still be a great option for business owners who need to borrow a significant chunk of cash, over a long period, and still get a low interest rate. But make sure you fall under their categories before applying through a bank.

Getting a loan through an alternative lending source is usually much quicker than obtaining a bank loan. With a simple application, some bank statements, photo ID and proof of ownership, business owners can have cash in hand in as little as seven days. 

Myth No. 4: The worst way to obtain a loan for my business is through a bank.

Wednesday, February 12, 2014

9 Fast Fixes for Your Credit Scores

So you’ve had a few problems getting  the bills paid lately, and you’re wondering what you can do to repair the damage to your credit.

You’ve got plenty of company. Millions of people in Canada have credit blemishes severe enough (and BEACON credit scores under 620) to make obtaining loans and credit cards with reasonable terms difficult.

Or maybe your credit is OK, but you’d like to make it better. After all, the better your credit, the less you pay in interest.

To improve your credit scores, it’s important to know where you stand now. You can get free credit reports once a year, but you typically have to pay to see your BEACON scores.

If your scores are above 760, you’re probably already getting the best rates. If they’re anywhere below that mark, though, they could stand some improvement.

We’d be happy to assess your credit bureau at “NO COST TO YOU” and help you get on the road to
financial recovery.

Here are nine simple steps you can take to a speedy credit recovery.

1. Get a credit card if you don’t have one
Don’t fall for the myth that you have to carry a balance to have good scores. You don’t, and you shouldn’t. But having and using a credit card or two can really build your scores.

If you can’t qualify for a regular credit card, consider a secured credit card, where the issuing bank

2. Add an installment loan to the mix

You’ll get the fastest improvement in your scores if you show you’re responsible with both major kinds of credit: revolving (credit cards) and installment (personal loans, auto and student loans).

If you don’t already have an installment loan on your credit reports, consider adding a small personal loan that you can pay back over time. This is were our Crediplan program can help you build credit and save money at the same time.

3. Pay down your credit cards

Paying off your installment loans can help your scores but typically not as dramatically as paying down — or paying off — revolving accounts such as credit cards.

Lenders like to see a big gap between the amount of credit you’re using and your available credit limits. Keep your balances between 30%-80% utilization,  the lower the Utilization the higher your credit score.

4. Use your cards lightly
Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. What’s typically reported to the credit bureaus, and thus calculated into your scores, are the balances reported on your last statements.

If you regularly use more than half your limit on a card, consider making a payment before the statement closing date to reduce the balance that’s reported to the bureaus. Just be sure to make a second payment between the closing date and the due date, so you don’t get reported as late.

5. Check your limits
Your scores might be artificially depressed if your lender is showing a lower limit than you actually have. Most credit card issuers will quickly update this information if you ask.

6. Dust off an old card
The older your credit history, the better. But if you stop using your oldest cards, the issuers may decide to close the accounts or stop updating them to the credit bureaus. The accounts may still appear, but they won’t be given as much weight in the credit-scoring formula as your active accounts.

7. Get some goodwill
If you’ve been a good customer, a lender might agree to simply erase that one late payment from your credit history. You usually have to make the request in writing, and your chances for a “goodwill adjustment” improve the better your record with the company (and the better your credit in general). But it can’t hurt to ask.

A longer-term solution for more-troubled accounts is to ask that they be “re-aged.” If the account is still open, the lender might erase previous delinquencies if you make a series of 12 or so on-time payments.

8. Dispute old negatives
Say that fight with your phone company over an unfair bill a few years ago resulted in a collections account. You can continue protesting that the charge was unjust, or you can try disputing the account with the credit bureaus as “not mine.” The older and smaller a collection account, the more likely the collection agency won’t bother to verify it when the credit bureau investigates your dispute.

9. Blitz significant errors
Your credit scores are calculated based on the information in your credit reports, so certain errors there can really cost you. But not everything that’s reported in your files matters to your scores.

Here’s the stuff that’s usually worth the effort of correcting with the bureaus:

  • Late payments, charge-offs, collections or other negative items that aren’t yours.
  • Credit limits reported as lower than they actually are.
  • Accounts listed as “settled,” “paid derogatory,” “paid charge-off” or anything other than “current” or “paid as agreed” if you paid on time and in full.
  • Accounts that are still listed as unpaid that were included in a bankruptcy.
  • Negative items older than seven years that should have automatically fallen off your reports.
Get your “FREE” Credit Score Analysis today, call us TODAY 1-888-693-1439 and let’s get you back on the road to financial recovery.

Tuesday, February 4, 2014

How To Profit From Networking

How To Profit From Networking

Sales are frequently developed through the relationships we have created with other people. Networking functions provide the opportunity to expand our contact list,particularly when we create and nurture quality relationships. It is not enough to visit a networking group, talk to dozens of people and gather as many business cards possible. However, every networking function has tremendous potential for new business leads. Here are five strategies to make networking profitable:
1. Choose the right networking group or event. The best results come from attending the appropriate networking events for your particular industry. This should include trade shows, conferences, and associations dedicated to your type of business. For example, if your target market is a Fortune 500 company, it does not make sense to join a group whose primary membership consists of individual business owners. You can also participate in groups where your potential clients meet. A friend of mine helps people
negotiate leases with their landlords. He joined the local franchise association because most franchisors lease their properties.

2. Focus on quality contacts versus quantity. Most people have experienced the person who, while talking to you, keeps his eyes roving around the room, seeking his next victim. This individual is more interested in passing out and collecting business cards than establishing a relationship. My approach is to make between two and five new contacts at each networking meeting I attend. Focus on the quality of the connection and people will become much more trusting of you.
3. Make a positive first impression. You have EXACTLY one opportunity to make a great first impression. Factors that influence this initial impact are your handshake, facial expressions, eye contact, interest in the other person and your overall attentiveness. Develop a great handshake, approach people with a natural, genuine smile and make good eye contact. Notice the color of the other person's eyes as you introduce yourself. Listen carefully to their name. If you don't hear them or understand exactly what they say, ask them to repeat it. Many people do not speak clearly or loudly enough and others are very nervous at networking events. Make a powerful impression by asking them what they do before talking about yourself or your business. As I've always stated, "Seek first to understand and then to be understood." Comment on their

business, ask them to elaborate, or have them explain something in more detail. As they continue, make sure you listen intently to what they tell you. Once you have demonstrated interest in someone else, they will - in most cases - become more interested in you. When that occurs, follow the step outline in the next point.
4. Be able to clearly state what you do. Develop a ten second introduction as well as a thirty second presentation. The introduction explains what you do and for whom. For example; "I work with boutique retailers to help them increase their sales and profits."
This introduction should encourage the other person to ask for more information. When they do, you recite your thirty second presentation. "Bob Smith of High Profile Clothing wanted a program that would help his sales managers increase their sales. After
working with them for six months we achieved a 21.5 percent increase in sales. Plus, sales of their premium line of ties have doubled in this time frame." As you can see, this gives an example of your work and the typical results you have help your clients
achieve. Each of these introductions needs to be well-rehearsed so you can recite them at any time and under any circumstance. You must be genuine, authentic, and as I recently heard a speaker say, "bone-dry honest."
5. Follow up after the event. In my experience, most people drop the ball here. Yet the follow-up is the most important aspect of networking. There are two specific strategies to follow:

First, immediately after the event - typically the next day - you should send a handwritten card to the people you met. Mention something from your conversation and express your interest to keep in contact. Always include a business card in your correspondence.
Next, within two weeks, contact that person and arrange to meet for coffee or lunch.  This will give you the opportunity to learn more about their business, the challenges they face, and how you could potentially help them. This is NOT a sales call - it is a relationship building meeting.

Networking does product results. The more people know about you and your business, and the more they trust you, the greater the likelihood they will either work with you or refer someone else to you.