Get An Unsecured Business Loan With Bad Credit

I recently filmed a video on how to get unsecured business loans with bad credit, but I wanted to expand on it a little due to some good questions that came up.

Most of the time, people are referring to bad PERSONAL credit, not bad BUSINESS credit. So the answer is simple- If you have bad personal credit, all you need to do is build good corporate credit to get unsecured business loans. If you set up your corporate credit correctly, your personal credit should not be a a factor. Unsecured business loans would follow the same requirements as a construction loan. It would generally be handled as a bank line of credit and the current lending criteria for such a bank loan would be: over 12 business creditor accounts reporting favorably with a 6 month minimum payment history on those accounts. In addition, an 80 PayDex score, and two years in business from the date of incorporation.

But there is another, more creative solution to this problem. If the small business owner had build perfect business credit from the ground up, as I teach, than within 12 months they would have acquired several cash credit cards. What are cash credit cards? Visa, MasterCard, Discover, AMX. This is opposed to vender credit cards such as: Home Depot, Officemax, etc.

Do you see where I’m going with this? If you have an unsecured business credit card with a $50,000 credit limit, is not that basically a bank line of credit? Sure it is. And it is much easier to access than having to go the traditional route of getting a bank line of credit. So as a much quicker solution to the problem, one would get business credit cards without personal guarantees, which is exactly what I teach in my free 5 day eCourse for small business owners. If they follow my step by step plan of attack, they should have close to $100,000 in unsecured business credit lines.

As an added benefit, unlike personal credit, the more one uses their corporate credit, the better their business credit gets. You have probably heard that in order to have excellent personal credit, one should not use more that 30% of the available credit, right? Well with corporate credit, those rules don’t apply. The more you use, the better your score gets.

If you found this inside information helpful, I’ve put together more video tips as well as a Free 5 day email Course on how to do establish perfect business credit from the ground up.

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Key Distribution Issues in Emerging Markets

Fragmented markets – What is the balance between modern and traditional trade? Modern trade (e.g. Shoprite supermarkets) in most African countries, with the exception of South Africa and Kenya, is still in the very early stages of development. The contribution is in the low single digits. Reaching large numbers of traditional outlets (e.g. Mom & Pop, Dukas, Sooks) is a difficult and costly business.

Channel strategy – How do channels function and operate? Companies must map out a clear channel strategy and identify which channel the selected distributor will service. A poorly defined channel strategy can severely damage any distributor roll-out. One size does not fit all.

Outlet base – Are traditional and non-traditional channels well defined? In most emerging markets, determining the outlet base can be a challenging undertaking. Companies need to understand both the existing and potential outlet base. A well defined every dealer survey (EDS) is a key component of any successful distributor roll-out.

Territory – Is the territory well defined and does the distributor have the ability to service the territory? Companies must build distributor capability and schedule joined training sessions. Companies must also ensure they have detailed territory maps and a clear understanding of the outlet density.

Regional differences – What are the regional, urban and rural differences in distribution?

Product flow & reasons for purchase – How do products flow in the market? Often small groceries purchase product directly from the wholesale channel. In some cases they might purchase certain stock keeping units from modern trade (e.g. consumer goods Thailand). The wholesaler is often in close proximity to these outlets (2-5km radius). They provide a basket of goods, and in some cases credit, if they have a good relationship with the small grocery.

3rd Party Logistics -Where do the 3PLs operate in the country? 3PLs often cover the major roads well. However, in emerging markets they normally have a limited footprint in rural areas.

Selection criteria – What are the key components of a successful distribution partnership? Many distributors fail because critical components of the selection criteria are overlooked. The selection criteria will likely include important components such as capital, infrastructure, warehousing, transportation and required organizational structure.

Service – Assess the service and delivery for each channel and the service partners they work with. Review the key issues with service and delivery and map out the distribution models employed.

Customer service frequency – What is the frequency of product replenishment and reasons for the frequency?

Role definition – What are the company and the distributor are responsible for? It is important to review the organizational structure and how the company will support the distributor. Ensure that each profile (e.g. salesperson) has a clear understanding of his or her role.

Account development – How should account development be managed? This a critical component of any distributor operation. Not all accounts are equal. In most cases, companies need to prioritize and focus their attention on high value or strategic customers. Companies also need to determine how they will split the account development activities between the company and the distributor.

Value chain – Do we understand the value and margin of partner in the system?

Cost to serve – What is the true cost to serve? The true cost to serve is sometimes underestimated and companies must have a clear understanding of the cost to serve for both the distributor and the company. In many cases in emerging markets, financial cost centers provide limited data and financial modeling is essential to determine the true cost to serve. Many distributors fail because the remuneration is set too low and not adjusted for inflation on a periodic basis.

Low cost distribution – What local distribution solutions exist in the market that can be leveraged? Often small groceries are situated in congested areas, with narrow gravel roads where trucks can’t enter. In these markets you might find pushcarts, trolleys or motorbikes (e.g. Vietnam). Tapping into their distribution structure can lower cost and increase product availability. Some consumer goods companies have also successfully managed to organize these lower cost distribution models and make it work for their operations and product portfolio.

Warehouse -How will new systems impact on the existing warehouse? The warehouse function is sometimes overlooked when a company implements a new route-to-market system. Companies need to anticipate how the new system will impact on the warehouse function and what changes need to take place.

Stockholding – What is the required service frequency? Outlets in emerging markets often have limited cash flow and, in some cases, limited space to stock product. Review the required service frequency and the need for micro supply depots or wholesalers.

Key Performance Indicators – What are the key performance drivers? By focusing on the key performance drivers of your business, avoid overextending yourself. Sometimes less is more. Include key performance measurements in your business planning process and evaluate on a yearly basis whether you are using these measurements to track and improve your business. There is no point in tracking something just for the sake of tracking.

Processes- Are processes and systems well defined and standardized? Always aim to eliminate non-value adding activities where possible. Standard Operating Procedures (SOPs) simplify your business procedures and help to ensure the same quality in all operations.

Skills – What skills need to be recruited or developed? Emerging market operations often lack critical skills. It is dangerous to make assumptions about what people can and can not do. For any principal working with a distributor, conduct a skills gap analysis to determine the training recruitment needs.

Complexity – Can the distributor handle the level of complexity in the business? In many cases distributors that distribute all SKUs to all channels fail. Always aim to reduce the complexity in the business.

Collaboration – How will the distributor share information with the company? Too often critical information is only available at distributor level and not shared with the company. Also consider the role that can technology play in information sharing.

Appropriate technology – What technology is necessary? Evaluate mid tech solutions and identify the “appropriate technology” for your operation. Don’t overdo it.

Patience- How much time do you have? Ensure you have management buy-in. A Route-to-Market roll-out requires patience and a continuous improvement mindset. Small incremental changes can sometimes go a long way.

Legal issues – Are there are any legal issues with transporting your product category? It is also important to understand if there are any regional regulations impacting transportation and supply depots.

Culture – What are the culture issues? Take time to understand culture issues and don’t assume anything. Change your thinking when working in other markets.

Take note of the evolution – Are you taking the necessary steps to adapt to change? Too often supply chains in emerging markets evolve without any strategic plan. Modern trade and retailing are expanding and middle class consumers shopping patterns are changing. Consider how these changes in the market will affect your business.

Tielman Nieuwoudt has extensive supply chain and operational experience, covering more than twenty emerging market economies in Asia and Africa. He has managed end-to-end supply chains, from forecasting through order entry, control, inventory management, and Go-to-Market planning and implementation.

Tielman is a Certified Supply Chain Professional (CSCP APICS) and has a Bachelors degree in Marketing (SA) and a MBA in International Business from the University of Edinburgh in Scotland.

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Project Shakti – A Win Win Situation

“Our partnership with HUL offers the rural entrepreneur a profitable business model while operating i-Shakti kiosks. Also, low cost delivery and customized products will result in higher benefit through enhanced economic gains for the rural consumers.”

~ Mr. Nachiket More

Executive Director, Wholesale Banking Group
ICICI

“There’s incredible potential in rural markets. That’s where the growth will come from.”
~ Sharat Dhall, Hindustan Lever’s director of new ventures and marketing services

Sankaramma, the leader of the local Kanaka Durga self-help Group (SHG) belongs to K. Thimmapuram village’s Muddaner Mandal in the Kadapa district of Andhra Pradesh. The village has 350 households with a total population of 1200. Sankaramma’s 5 hectares of agricultural land was not sufficient for six member family due to severe drought in the region. She started a business in April 2003 with the Hindustan Unilever Ltd. By 2005, she had a regular monthly turnover of Rs.10,000 per month. Initially she sold door to door, but thereafter the customers started visiting her home for products. She sees Project Shakti as a mean for the bright futures of her children. Project Shakti also enabled her to provide mid-day meals at the primary school in her village. Today, Sankaramma has become a key development figure in her village.

Usha Sarvatai, a mother of 2, traveled 32 km everyday to work. Her husband’s income was not sufficient for the two children and their old parents. But the long distance and the odd timings of the job forced Usha to quit the job. Then she got a call from the Government dept. to attend a meeting, convened by Project Shakti. Usha became a Shakti Amma and started a new venture. In a short span the good relationships she developed with the villagers helped her do good business. She says, “I am happy fulfilling my family’s requirements and people give me a lot of respect today.” And she is now very eager to grow her business in the years to come.

The list does not end here. Hindustan Lever Ltd., a subsidiary of Unilever is counting on thousands of women like Sankaramma and Usha Sarvatai to sell its products to the rural consumers it couldn’t reach before. By 2005, around 13,000 poor women were selling the company’s products in 50,000 villages in India’s 12 states and contributed for 15% of the company’s rural sales in those states . The women typically earned between $16 and $22 per month , often doubling their household income which was used to educate their children. Overall, around 30% of Hindustan Lever’s revenue came from the rural markets in India

Started in the late 2000, Project Shakti had enabled Hindustan Lever to access 80,000 of India’s 638,000 villages . Hindustan Lever’s director of new ventures proudly expressed, “At the end of the day, we’re in business. But if by doing business we can do something positive, it’s a great win-win model.” Hindustan Lever was not the only company recognizing the vast marketing potential in rural India. With the saturation of urban market, the companies started reengineering their businesses and products to target rural consumers who are poor but are rich in aspirations fueled by the media and other forces.

Unilever in India: Business and Growth

Unilever was the world’s largest Fast Moving Consumer Goods (FMCG) company with a worldwide revenue of $55 billion in 2005 . It’s Indian subsidiary, the Hindustan Unilever Limited (HUL) was the country’s largest FMCG company with combined volumes of about 4 million tonnes and revenues near about $2.43 billion . HUL’s major brands included Lifebuoy, Lux, Surf Excel, Rin, Wheel, Fair & Lovely, Pond’s, Sunsilk, Clinic, Pepsodent, Close-up, Lakme, Brooke Bond, Kissan, Knorr-Annapurna, Kwality Wall’s etc. These were manufactured over 40 factories across the country .

In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspati Manufacturing Company . Thereafter the Lever Brothers India Limited and United Traders Limited were established in 1933 and 1935 respectively. In November 1956, these three companies merged and form HUL. Unilever’s share in HUL was 51.55% in 2005 and the remaining of the shareholding was distributed among about 380,000 individual shareholders and financial institutions. A foray of acquisitions followed thereafter . In 1984, the Brooke Bond joined the Unilever fold. Lipton was acquired in 1972 and Ponds in 1986 . HUL was following a growth strategy of diversification always in line with Indian opinions and aspirations.

The economic and political development in the 1990s had marked an inflexion in HUL’s and the Group’s growth curve. Economic liberalization permitted the company to explore every single product and opportunity segment, without any constraints on production capacity. On the other hand, deregulation allowed alliances, mergers and acquisitions. In 1993, HUL merged with the Tata Oil Mills Company (TOMCO) 1993 . In 1995, HUL formed a 50:50 joint venture with another Tata company, Lakme Limited .

The company had also made a string of mergers, acquisitions and alliances in the Foods and Beverages sector. Some of these were the acquisition of Kothari General Foods (1992), Kissan (1993), Dollops Icecream business from Cadbury India (1993), Modern Foods (2002), Cooked Shrimp and Pasteurised Crabmeat business of the Amalgam Group of Companies (2003) .

With 12.2% of the world population residing in the villages of India, the country’s rural FMCG market had a huge potential . The Indian FMCG sector was the fourth largest sector in the economy with a market size of $13.1 billion . The sector was expected to grow by over 60% by 2010. In 2005-2006 the urban India accounted for 66% of total FMCG consumption, with rural India accounting for the remaining 34% . However, rural India accounted for more than 40% consumption in major FMCG categories such as personal care, fabric care, and hot beverages . The Bid FMCG companies such as HLL, Nirma and ITC joined the foray to tap the huge potential.
In the 1990s, a local Indian firm, Nirma Ltd. started providing detergents to the rural poor at the lowest cost. The company had created a business system with a new product formulation, low-cost manufacturing, wide distribution channel, special packaging and value pricing. After a decade, Nirma became one of the largest branded detergent makers with a 38% market share and 121% return on its capital employed .

In 2002, ITC set up a network of internet-based kiosks, e-choupals, to help the farmers in their procurement process. The initiative began with the soya growers in Madhya Pradesh and then expanded to cotton, tobacco, shrimp etc. Starting with six e-choupals in June 2000, ITC’s Internet-based, rural initiative had linked 6,000 Indian villages with around 1,200 e-choupals by 2002. The setting up of each e-choupal entails an investment of Rs 1-3 lakh .The objectives behind e-choupals was to allow single place procurement and purchase point, allowing farmers to sell their products directly to ITC on the basis of updated current prices prevailing in the market. This eliminated middlemen and thus helped ITC to cut its costs.

In 2007, around 34% of the FMCG products sales came from rural areas . The number of households that used FMCG products in rural India had grown from 13.6 crore in 2004 to 14.3 crore in 2007 . This growth was achieved on an average 1.8% year-on-year growth in the number of households, which use at least one FMCG product. However, the growth in penetration level for the entire FMCG products was not same. According to one study by a market research firm IMRB, the monthly consumption of detergents and toilet soaps remained largely stagnant with a 92% penetration, but that of liquid shampoos grew from 68% in 2004 to 83% in 2007 . These figures revealed a shift towards higher-value products among the rural market, from toothpowder to toothpaste or from unbranded to branded products. According to the senior project director of IMRB International, Manoj K Menon, “One of the most significant changes, includes growing preference towards branded products. For example, in the food and beverages segment, penetration of branded atta has gone up year-on-year by 8 per cent and branded salt by 3 per cent. The penetration of unbranded atta has decreased by 1 per cent and salt by 3 per cent.”

The HLL Marketing Effort: Transition to Rural Market

HUL’s competitive advantage generated from three sources. First it’s strong well established brands, second, its local manufacturing capacity and supply chain and third its vast sales and distribution system. It was soon felt that HUL’s sales and distribution system which had protected it from competitors would be soon replicated by its rivals and to maintain its edge, the company had to increase its reach beyond the urban markets. So far the operations of HUL included more than 2,000 suppliers and associates. The distribution network, consisted of 4,000 stockists, covering 6.3 million retail outlets reaching the entire urban population, and about 250 million rural consumers .

Typically, the goods produced in each of the HUL’s 40 factories were sent to a depot with the help of a carrying and forwarding agent (CFA). The company had its depot in every state of the country. The CFA was a third party and got servicing fee for stock and delivery of the products. In each town, there was a redistribution stockist (RS) who took the goods from the CFA and sell them to retail outlets. By the late 1990s, the HUL management realized certain problems with the existing sales model. First, the model was not viable for small towns with small population and small business. HUL found it expensive to appoint one stockist exclusively for each town. Secondly, the retail revolution in the country changes the pattern the customers shop. Large retail self service shops were established. In the response of these problems, HUL redesigned its sales and distribution channel and the new system was known as ‘diamond model’ in the company. At the top end of the diamond, there were the self service retail stores which constituted 10% of the total FMCG market. The middle, fatter part of the diamond represented the profit-center based sales team. In the bottom of the pyramid was the rural marketing and distribution which accounted for 20% of the business .

Almost three-fourth of the total 1.2 billion Indian population resided in the rural areas and majority of them had a very low per capita income (around 44% of that of urban India) . Urban market had reached the saturation point, thus changing focus on rural India. In comparison to just 5,161 towns in India there are 6,38,365 villages in India [Exhibit I]. Moreover, more than 70% of India’s population lived in villages and made a big market for the FMCG industry because of increasing disposal incomes and awareness level.

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Buying A POS System – It’s All In The Details

There are several components to a full POS system. These include software, hardware, technical support and hardware support. Here are points to consider when choosing a POS system:

o Investigate the software company to make sure it will continue to support and develop the software you choose.

o Hardware can include the computer, monitor and POS peripherals such as the cash drawer, customer display, receipt printer and scanner. Research the hardware warranty on all POS hardware and peripherals. These warranties can vary dramatically. Compare length of warranty, response time, on-site vs. depot repairs and which components are covered.

o When comparing different POS software you will find that the system requirements vary from one solution to the next. It is essential to make sure you purchase hardware with the appropriate system requirements. In addition, make sure you are purchasing the appropriate number of software lice nses for your new system if more than one employee will be using it.

o Make sure to ask about training and hardware support contracts. While these can typically cost more, they will ensure worry-free store operations.

o Finally, training and installation are sometimes included in the proposal. Check to make sure you understand exactly how much training is included and research how much training is required to become self-sufficient. Be clear about who will install the software.

IDENTIFY RECURRING COSTS

When reviewing proposals, make sure you understand the up-front costs as well as any recurring costs that may be required. Are there monthly service fees? Are there annual membership dues? How much will technical support cost to answer questions about the software? What warranty is offered on the hardware and the POS peripherals (cash drawer, receipt printer, scanner, customer display)? Are you required to purchase a service contract? How will you take advantage of updates or upgrades to the software? When researching these costs make sure you understand the terms, response time, and whether there are additional charges for each workstation.

CREDIT CARD PROCESSING

Do you already have a credit card payment processor? Make sure the new POS system can accommodate your payment processor. Some POS software companies require using their payment processor.

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Myth Vs Fact Helping Homeowners – Another Perspective

The looming mortgage crisis has affected almost everyone in all facets of life. When the homes stop selling the builders stop building, the carpenters stop nailing, the painters stop painting, paint stores stop selling and Home Depot stock hits record lows. Vertical damage is universal in almost all aspects of retail, services and durable goods. Let’s face it; America is a nation that is fueled by land development and salesmanship. Unfortunately, ingenuity, invention and production have taken a back seat to Americans selling products owned or built by other countries. For Goodness sake, GM is second in sales to Toyota now, who’d a thunk it?

The reason for this article is not to bemoan today’s economic footprint but to help people understand the most common myths that you hear about the housing and mortgage debacle. What you hear from our completely un-biased and non-partisan media auspiciously omits some of the important facts that might help the average American better understand exactly what we are up against.

Living in Atlanta, right around the corner from CNN, I have originated my fair share of mortgages for reporters and correspondents, who will remain nameless. I can honestly attest that news reporters, anchors and correspondents have the exact same blank stare and vacant head nod as John Q. Public does when loan officers dive into the details. However, now that we have a mortgage crisis they have mysteriously morphed into expert authors as they recite Democratic talking points. If questioned, most reporters that write columns about the mortgage industry have no clue as to the real life ramifications of the political solutions they publicize and promote.

As evidence I have taken excerpts from an article by Andrew Jakabovics named “Myth vs. Fact: Helping Homeowners” and corrected some of the Democratic talking points he has recited. Mr. Jakabovics writes for americanprogress.org, an organization that resembles the aforementioned non-partisan press. My initial intention was to post this article as a rebuttal to his article on his company’s website. However, after taking a glance at the website it would appear that any article that fails to blame President Bush for personally orchestrating the entire debacle will fall on deaf ears.

The bill referred to in Mr. Jakabovics’s article is the Federal Housing Finance Regulatory Reform Act of 2008; a bill that will raise taxes on mortgages to the tune of $500 million per year. The bill is a part of a larger piece of legislation that will eventually transfer $300 billion dollars of “at risk” mortgages that have been hand-picked from our nation’s lenders portfolios. These loans will carry a higher default rate that will cost the Federal Housing Administration dearly that will be made up by additional funding from Uncle Sam. Guess where Uncle Sam gets his money

Mr. Jakabovics Wrote:

1. Myth: “The bill offers a bailout to speculators.”

o Mr. Jakabovics: “All legislation under consideration requires owners to live in the homes they want refinanced.”

o Correct Answer: Agreed, however I do not know how much of a “myth” this is. Let’s move on.

2. Myth: “The bill offers a bailout to lenders.”

o Mr. Jakabovics: “To take advantage of an FHA loan guarantee, lenders and investors must take a “haircut” and pay closing costs plus an insurance premium up front.”

o Correct Answer: The bill is linked to legislation that takes the worst loans from our nation’s lenders portfolios and transfers them to the Federal Housing Administration which is Government funded. Am I missing something here?

Furthermore, “an insurance premium” PMI, MIP has always been on loans over 80% loan to value on ALL agency loans funded by Fannie Mae, Freddie Mac and FHA. The insurance premium will not represent a change from the norm as the writer infers. I assume that the “haircut” refers to the fact that all loans will be trimmed to the actual appraised value. This will still present FHA with an an “at risk” loan at 100% LTV.

3. Myth: “The bill offers a bailout to homeowners. ”

o Mr. Jakabovics:” Under the House’s Home ownership Retention Mortgage program and the Senate’s Hope for Homeowners program, each part of the legislation now before Congress, individual homeowners would have to pay an ongoing insurance premium to cover the costs of the FHA credit enhancement.”

o Correct Answer: Ditto from above.

4. Myth: “There is no need for Congress to act; the private sector’s Hope Now Alliance has been very successful in making necessary workouts.”

o Mr. Jakabovics: “Few borrowers have been offered substantive, long-term modifications to their loans. Moreover, a loan-by-loan approach to the housing crisis simply can’t address the scale of the need.”

o Correct Answer: I agree that Hope Now Alliance is inept. However it is the best response the Executive branch could muster with the Legislative branch bickering and fighting about which side of the aisle can claim credit for “solving” the mortgage crisis.

A loan by loan solution is exactly what is needed; sweeping legislation that over regulates the banking industry will stifle the flow of money. History has proven time and time again the when congress tell the banks who and how to loan their money they simply stop loaning it.

The truth is, both sides deserve the blame here. In an election year neither Republicans nor Democrats are going offer much in the way of concessions that until after the election. The only difference is that the Democrats have ABC, CBS, NBC and every production being produced from Hollywood cheer-leading their point of view. Admittedly, the Republicans have Fox and Talk radio, until the Dem’s pass the “Fairness Doctrine.”

5. Myth: “The housing crisis only affects irresponsible borrowers, so taxpayers who struggle to meet their obligations shouldn’t pay for their mistakes.”

o Mr. Jakabovics: “The housing crisis affects all homeowners and even renters.”

o Correct Answer: Agreed, blaming homeowners for getting caught up in the mortgage fiasco is analogous to blaming kids in the 60′s for smoking pot. By in large most people caught up in that atmosphere have learned from the experience and moved on.

In closing, none of the answers you have read here can be considered a “fact”. The only fact is that we are in a serious financial crisis that is extremely fluid. What America needs is our top financial minds, which will exclude the majority of politicians, putting their heads together to come up with a non-partisan answer. The answer isn’t letting the market “correct itself” nor is it boot strapping federal agencies and private banks with a mandate that bails out everyone in a bad mortgage.

The answer is in between those two extremes. The problem is that Democrats and Republicans are dragging their feet even more than usual because we are in an election year. Neither side is willing to give up ground with an election looming for fear that it may possibly give the other side bragging rights in November, ironically while their constituents suffer.

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