Word: loaning
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What happened? Declining global interest rates left investors searching for anything that would pay higher yields. Eager to oblige, Wall Street investment bankers devised ever cleverer ways to package ever riskier loans into high-yield securities. And mortgage lenders came up with ever more creative loan terms to attract customers. This lured "unsophisticated borrowers who had difficulty fully understanding how these products would affect them when interest rates rose and housing prices edged off," says Eugene Ludwig, a former top banking regulator who now runs Promontory Financial Group...
...questions. You're assuming the risk, so you have every right to know just how the money will be put to use. If you're funding a new business, ask if there are other lenders, how much of the cost the borrowers are kicking in and if your loan can be secured with equipment or real estate. If the loan is personal, it would be worth knowing that the money will pay for a nursing home as opposed to, say, gambling debts...
Document the loan. This is critical. Put the agreement in writing. A business loan should include a formal business plan. Draw up a promissory note and a repayment schedule with penalties. This is when firms like Circle Lending can help. It charges from $200 for a personal loan to $800 for a mortgage, plus a monthly fee of $19. But you get bulletproof documentation for legal and tax purposes and billing and collection services too. It will also restructure the loan if necessary. Such flexibility is hard to find at a bank "and really keeps a loan on track," says...
...Ndavi, whose capitalization today is nearly $1 million, offers loan values at a level beyond typical microcredit operations, which are sometimes criticized as the purview of First World do-gooders helping Third World women market tribal shawls. The handful of institutions like it are the first real banking system most rural Mexicans have ever known. In developed countries there are usually fewer than 2,000 people per bank branch. In Oaxaca the number is 38,000, according to AMUCSS. Mexico's big banks have failed to help. The few large banks that make up Mexico's financial oligopoly have...
...great variety of fruits and vegetables, and Whole Foods has said it wants to increase its percentage of local produce. (Of the roughly $1 billion in produce the company sold last year, 16.4% came from local sources, up from 14.9% in 2005.) Last year Mackey announced a $10 million loan program for local farmers...