THINGS TO KNOW BEFORE ENTERING THE HOUSING MARKET
At YNCU, we know entering the housing market is a daunting task. School does not prepare you for the financial risk you take when purchasing a home for the first time. We want to share with you some tips to help you enter the housing market, responsibly.
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From a lemonade stand on the corner to a brokerage house in the downtown core, every business needs capital to get started and to continue operating. Described below are the four basic types of financing you should be aware of.
Venture capital (Equity or Shareholders' Loans)
Equity is money paid in exchange for partial ownership of the company. There is no obligation to repay Equity-the investor has bought a share in the profits. A shareholder loan is money loaned to the business by a shareholder. Both equity and shareholder loans create leverage which is the ability of the business to attract other loans and investmentsAt YNCU, we believe that your business is our business, and we'd like to help you succeed however we can.
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Capital asset financing (Term Loans)
Term loans are used to purchase fixed assets required by the company, such as office equipment, vehicles, etc. A percentage of the value of the assets purchased then acts as security against the loan until it is repaid.
Operating Loans
Operating loans are used to cover wages, rentals, inventory costs and other expenses in advance of collecting revenues to pay them. The lender will use a percentage of your accounts receivable as security against an operating loan. Operating loans are essentially a series of pre-approved, monthly 'term loans' that save you from having to constantly negotiate new loan terms.
Bridge Capital Financing
Bridge capital financing is a form of loan intended to 'bridge the gap' between the due date of a payable and the date a specific receivable is anticipated. The receivable itself is the security for the loan. Bridge financing is typically reserved for low-risk situations.
Lenders invest in a business based on, among other factors, your financing plan. If you were to use a term loan to cover wages or inventory costs, you would violate the integrity of your plan. Investors would lose confidence in you, making it difficult to get further financial support. Even worse, your business may fail.
At YNCU, we believe that your business is our business, and we'd like to help you succeed however we can.
Why not stretch your business’ potential?
Your Business Visa should work as hard as you do.
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Your Neighbourhood Credit Union (YNCU) is a licensed credit union operating in, and under the laws of, the province of Ontario. Eligible deposits in registered accounts have unlimited coverage through the Financial Services Regulatory Authority (FSRA). Eligible deposits (not in registered accounts) are insured up to $250,000 through the Financial Services Regulatory Authority (FSRA) .