Interest Rate Acronyms

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APR and APY – are they new texting acronyms? IDK, you say – or rather, you text? (For the benefit of the textually-challenged, IDK means “I don’t know.”) If you think they are texting acronyms, or just “DK” what they are, it’s time to learn.

APR and APY are financial acronyms, short for Annual Percentage Rate and Annual Percentage Yield, respectively. Both are interest rates, but they have a significant difference. APR does not address how interest is compounded – the default is the interest that you earn if you are depositing money, or pay if you are borrowing it – in one year. APY takes into account how often the interest is compounded.

If interest is compounded once per year, there is no difference between APR and APY – interest is added all at one time. However, let’s assume an interest rate is compounded monthly. In that case, the interest payment is divided up into twelve equal increments.

If you are earning interest on a deposit, that adds a sma…

How to Select the Best Business Bank – How to Choose the Bank Your Company Needs

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As a company owner, CFO or Controller, one of your most important tasks is to select the right business bank. It is easy to think that all banks are the same, but there are important differences in services, fees and culture. So it’s worth taking some of your valuable time to insure that the bank you select is the best fit for your business.

First, analyze the services you need from a bank. Here are some factors to consider:

Understanding Your Business Loan Options

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Lending institutions profit from helping businesses thrive. If you are concerned about your business simply surviving, or if there are indications of fundamental flaws in the business model, there may be too much risk for any outside investor to take on. Before you approach any financial institution for a business loan, there are several key documents you should develop and questions you should be prepared to answer. These must demonstrate who, what, when, where, how and why an institution would be making a sound investment by loaning money to your business. And, in the spectrum that ranges from failure to survival to a thriving business, you should develop these documents in such a way that the focus on thriving is front and center and well-articulated.

  • Who — Create executive profiles that provide detailed biographical information, education, past work history and major accomplishments for each key decision maker in your business. Because banks w…

Business Loans 101

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If you own a small business or intend to buy or start one, you will probably be borrowing money at some point — and possibly more than once. You may need money for startup costs, expansion, cash-flow management, disaster recovery, or any number of uses requiring operating funds and/or capital investment. Unless you have a money tree, trust fund or fairy Godmother, you may need a business loan to tide you over when cash is tight.

Typical types of small business loans include:

  • Standard Term Loans – A standard loan used for working capital. They may be secured (using company assets as collateral) or unsecured (based only on the credit rating of the business). Personal assets can be used as collateral for secured loans, but with obvious risk.
  • Startup/Acquisition Loans – Funds used to start up a business or acquire a business/franchise. To convince a lender, startup loans will often require a sound business pla…