2007 September « Nevada State Corporate Network, Inc.

Why You Can’t Afford a Home

September 24, 2007 at 7:26 am | In Corporate Strategies | 3 Comments
Tags: Asset Protection, Business Credit, corporations, llc

Posted by Ian D. Tenen
Director of Corporate Credit
Business Credit Solutions, Inc.

Below you find an article recently published by Msn.com It discusses why it is now more difficult than ever for a “normal” to afford to buy a home. What this should mean to business owners that are incorporated is an opportunity. When an LLC or a Corporation has a strong business credit profile along with a well drafted business plan, opportunities that were not there before become ever-present.

Why You Can’t Afford a Home

While house prices were soaring, fueled by low interest rates and risky borrowing practices, wages barely kept pace with inflation.

By The Associated Press

An Associated Press analysis of new census data provides insight into the reasons for the slumping housing market: Since 1990, homeowners have faced a growing gap between their incomes and the price of their homes.
The widening gap in all but a handful of the nation’s 500 largest cities helped make the recent boom in housing prices unsustainable, according to analysts. The rising prices were fueled largely by low interest rates and risky borrowing, rather than increasing incomes.

“We had an artificial economy,” said Brad Geisen, founder of Foreclosure.com, a Web site that lists foreclosure properties. “There was all this wealth created in real estate, and it wasn’t really created.”
Nationally, the median household income grew by about 60% from 1990 to 2006, roughly matching inflation. At the same time, the median home value — the point at which half were more and half were less — more than doubled, to $185,200.

The gap between incomes and home values was even bigger in many cities.
For example, incomes in Miami roughly kept pace with inflation — meaning they were effectively stagnant — while the median home value quadrupled, to $315,900. In places such as Bend, Ore., and North Las Vegas, Nev., incomes about doubled, but home values increased fivefold.

Mark Zandi, chief economist at Moody’s Economy.com, likened the current housing market to the dot-com boom and bust a few years ago, when stock prices for many high tech companies soared — before some of them ever turned a profit — and then crashed.

“The parallels are quite similar,” Zandi said. The Census Bureau today released 2006 housing data for every state, county, metro area and city with a population of at least 65,000. Income data were released last month. Together, the figures provide a snapshot of the nation’s economy just as housing prices were peaking in many areas. Since then, housing prices have decreased in many markets, fueled by a crisis in the subprime loan market and dwindling credit even for some wealthier borrowers.

Continue reading Why You Can’t Afford a Home…

Business Plans

September 10, 2007 at 8:46 am | In Business Credit | Leave a Comment
Tags: corporate structuring, financial privacy, nevada corporations

Posted by Ian D. Tenen
Director of Corporate Credit
Business Credit Solutions, Inc.

Once you have gone through the steps of building the credit or your business the next step is to produce a business plan. A business plan is used by potential investors and lenders when they considering whether or not to lend or invest in one business or another. Below is an excerpt from an article published on the New York Federal Reserve website:

The Business Plan

The business plan should include the following sections:

Title page: List the name of the business, the owner(s), the address, and telephone and fax numbers.
Executive summary: Provide a brief summary of the plan and tell the reader how it is organized. The executive summary should be written last because it will draw on the other parts of the business plan. It tells who you are, the function of the company, and gives a summary of your purpose for borrowing.
Company description: Give an overview of the function and history of your company, its size, products or services, and markets.
Market analysis: Present your research and a discussion of the conditions and trends within the industry. Review the market for your product and the demand for it. Describe how many major competitors you have, how much of the market each of your competitors controls, and your strategy for gaining a share of the market or developing a new niche. You should be able to explain any barriers to entry into new markets you are considering and how you plan to overcome them.
Products and services: Explain your product or service and its function.
Operations: Explain how you make your product or provide your service. Specify how you get your product out the door to the customer. Where will you get your raw materials or inventory? If a manufacturing process is involved, describe it here, including the size of the factory, stages of production, and work flow. Or, if you have a retail business, give the location of your store. How was the site selected? Where will inventory be warehoused?
Marketing plan: Describe how you intend to sell your product or service and who will buy it. Also, discuss your distribution plans, advertising arrangements, and sales force.
Ownership: Indicate what type of legal entity your company is and its ownership structure: sole proprietorship, partnership, or corporation. If you have partners, who are they? How much of your company do they own? Describe how these individuals became principals and what you have agreed to give them in return for their investments.
Management and personnel: Review who is in charge, who works for you, and why you hired them. Describe how their experience will contribute to the success of your business. Include resumes of key people, including yourself.
Funds required and expected use: Summarize why you need a loan and how you will use the money. Ask for a specific amount. Include documentation on collateral, guarantor agreements, and signed contracts. Describe your repayment plan and present a contingency plan should your initial source of repayment fail.
Financial statements and projections: Include a personal financial statement, personal tax returns, and business financial statements—balance sheet, profit and loss statement, cash flow analysis for the last three to five years (if you have been in business that long), and projections for the expected performance of your business for the upcoming three-year period. In this section you will need to demonstrate your understanding of basic accounting and the financial concepts that are crucial to the success of your business. By using complete and correct financial statements, you will be able to communicate to a prospective lender how these concepts are successfully applied in your business. (An overview of the financial statements you need and how a prospective lender will analyze them appears in the next section of this booklet entitled “What the Lender Will Review.”)
Appendices/exhibits: This section should document any issues that can’t be addressed in the text. For example, distribution agreements, contracts for the purchase of your product, and your operating licenses would all be included as appendices.

Source: http://www.newyorkfed.org/education/addpub/credit.html

For more information call 1-866-854-5435 or visit our web site at… Business Credit Solutions, Inc.

Business Credit

September 7, 2007 at 9:14 am | In Business Credit | 1 Comment
Tags: corporate structuring, financial privacy, nevada corporations, Tags: Corporate Strategies

“What’s driving what’s happening in the mortgage market is the increase in delinquencies,” said Greg McBride, senior financial analyst with Bankrate.com in North Palm Beach, Fla. “These other products haven’t shown that surge, and they have protections in place.”

Credit card issuers, for example, can raise the rate on a customer’s card with little notice or shut off the line of credit at any point, he said.

“So if a card holder is showing signs of distress, the lender can scale him back from a $15,000 line of credit to $7,500 and limit its exposure,” McBride said. “It’s not like a mortgage, where the money is out there; it’s lent.”

Another reason the changes to consumer loans have been small so far is that markets related to consumer credit haven’t been as riled as those tied to mortgages, where growing defaults have prompted investors to shun mortgage-backed securities and have sent several dozen mortgage companies into bankruptcy.

Because credit cards have not seen substantial increases in delinquencies, “we haven’t seen deterioration in the performance in credit card asset-backed securities,” said Cynthia Ullrich, a senior director in Fitch Ratings asset-backed securities group.

Still, investors concerned about mortgage problems have demanded a slightly higher return on securities backed by credit card receivables in recent weeks to make up for a higher perceived risk, according to Wall Street analysts.

Those higher costs in the secondary market are being passed on to consumers, Chessen said, noting that financial institutions have the tools to raise rates for riskier customers while holding them down for those with better credit scores.

Arnold, of CardRatings.com, said one card issuer has held the rate on its cards at 10.99 percent for customers with the best credit ratings; but those with poorer ratings will be paying interest of 18.99 percent, up from 17.99 percent just a few weeks ago, he said.

“In terms of rates, the fallout from the subprime mortgage market has financial institutions practicing risk-based pricing,” he said.

Although JP Morgan Chase’s Dimon discussed the steps his bank is taking, other credit card issuers were loath to reveal their credit terms. Asked about current conditions, Bank of America Corp. in Charlotte, N.C., said it “maintained consistent underwriting standards” and evaluated each credit application on the individual’s merits.

USAA in San Antonio said it was monitoring the market “and will make changes if necessary,” and Discover Financial Services said delinquency rates remained at a record low so it hadn’t changed business practices.

Arnold recommends consumers protect themselves against unpleasant surprises such as higher rates and shrinking credit lines. Although many consumers don’t even glance at the small print in credit card offers and their monthly statements, he suggests a careful reading of everything a card issuer or lender sends.

URL:

http://www.msnbc.msn.com/id/20609360

For more information call 1-866-854-5435 or visit our web site at… Business Credit Solutions, Inc.