5 Advantages of a Credit Insurance Policy

While running a business, you are likely to meet customers who are quite poor in clearing debts. Some will even disappear while owing you large amounts of money. When you are faced with such customers, credit insurance companies come to your rescue. A good example of a credit insurance company is Niche Trade Credite. Just like in any other insurance policies, credit insurance has its advantages which really help you as the business person to overcome the challenge of bad debts. The companies help you in getting back to your financial position before the bad debts were noticed. By insuring your credits with a good company like Niche Trade Credite, you are certain of getting the best insurance cover on your bad debts. Credit insurance companies make sure that you increase your sales and hence your business grows. A company like NicheTC gives you the best solutions when dealing with errant customers. It is therefore necessary that you acquit yourself with the advantages of taking a credit insurance cover.

Niche Trade Credite

Below are some of the advantages:

Increased borrowing

Most credit insurance companies make sure that you have access to working capital which is cost effective. This helps your business to grow and also to avoid major cash flow disruptions. Credit insurance companies have a goal of maximizing the availability of your working capital. This is usually from the receivables that you have pledged to your lender.

Peace of mind

Once you insure your credit losses, you are certain that there will not be any bad debts being written off. This way you relax and run your business while you are at peace. This way, you smoothly run your business.

Loss protection

Credit insurance companies protect you from catastrophic losses. It is good to note that one of the most risk prone assets is the receivables. Credit insurance companies provide a safe net when they protect you from bad debts losses. The fact that a credit insurance company reinstates you to your initial position creates a kind of protection from huge and unexpected debt losses.

Lowering of bad debts reserves

Credit insurance helps you to manage write offs with a much greater certainty. This happens when you reduce the bad reserve, then you can take up excess of the bad debts reserves into your own income. This hence improves your earnings, financial ratios and shareholder equity. It is good that you note that your bad debts are not tax deductible.

Better risk management

Credit insurance companies ensure that you have the skill of better risk management. You can issue credit while you know it is a risk you are undertaking. This can only happen with the mentality of credit insurance company’s intervention in case of bad debts loss. This enables you deal with any risk that involves bad debts losses.

On top of these advantages, some credit insurance companies will make a point of paying the indemnity and also take part in the cost incurred when attempting to claim your receivables.

Advantages of Using Hard Money Lenders

An investor wishing to beat a strict deadline on a deal is better off using hard money lenders instead of the conventional lenders. Of course just like in the bank situation, hard money loans have a process that must be followed. The major advantage over other traditional lending methods,however, is that they have fewer qualifications, take a shorter time to process and loan amounts are negotiable.

Unlike the bank situations where a strong collateral as well as credit score determine whether a client obtains lending or not, hard money lenders only need to ascertain that an individual has sufficient collateral and the project for which the money is meant to fund is viable. After that, an investor can get money within a week or less.

An individual who has had a recent foreclosure may not avail proof of loan repayment to a conventional lender. The same is different for a hard money lender. Even with a very poor credit score, a hard money lender is able to extend credit to a client so long as there is surety of repayments. This basically means that one’s credit rating does not affect the amount of borrowing a hard money lender can offer.

Most times, people ask about those who really need hard money loans. Well, they are best for real estate investors and house flippers. Here are occasions when to apply for this type of lending:

  1. When there is a deal that may be time barred if one wastes a week or two.
  2. When an individual needs a large amount of money that conventional lenders are not ready to offer.
  3. When one has a poor credit rating but still needs to make investments.
  4. When a borrower has defaulted on a previous loan with other lenders and is still in need of lending to strike a deal.

Although the interest rates charged on hard money loans is higher than that of the banks, there are various advantages a borrower enjoys when using this type of credit. These are:

  1. Simple processing of application and quick approval. Hard money lenders know how time is crucial for applicants and rush to meet those deadlines.
  2. Little scrutiny of an applicant’s financial situation. Unlike in the banking situation where a client’s tax returns, income and credit score get a thorough scrutiny, hard money lenders rarely do this.
  3. Borrowers are not humiliated because as long as there is collateral, funding is availed.
  4. Most banks and other financial institutions prefer to extend loans only to people who are officially employed and have a steady monthly income. This is different with hard money lenders as they avail loans to all cadres of professionals.
  5. Huge amounts of loans are granted based on property value.

As it is, hard money lenders can use residential and commercial property as security. However, they often shy on the use of owner occupied buildings as these have lots of thresholds attached to them as the law requires. Commercial property that can act as collateral includes office buildings, shopping centers, hotels and land meant for development activities.