The protagonists of the Star Wars movie series, the Jedi Warriors describe a force which bounds all human beings. The Jedi warriors were the ones who owned the greater share of that force, than lesser mortals. The equity in the social structure shown in the fictional series is heavily loaded towards the Dark and Light Jedi masters. On the other hand, the 15^th century masterpiece by Sir Saint Thomas More converses about an egalitarian society, a perfect society where all mortals have equal share in the social and economic equity.

“They sold possessions and chattel, and parted those things to all men, as it was need to each.”-Utopia, 1516, Sir Thomas More

But the Star Wars series reflected the equity distribution which exists in our society. A complete era has been engaged in socialism bashing, claiming capitalism to be the ultimate panacea. Capitalism was meant to create “engines of growth”, which drove the rest of the lesser population. In economic circles, government intervention is preferred only to the level of clearing the hurdles. Everything works fine till; these engines of growth run on the track. But when they skittle, a return to government stimuli is inevitable.

“And then came the Stimulus Package“, 2009, US government released multi-billion dollar packages to the crying corporate men, who until now cried for more independence. $787 billion economic package which promises to uplift the economy, reduce job cuts, fast track recession to sidelines. This marked proved again, the failure of totalitarian distribution of equity. The very principles of capitalism require the inefficient to vanish. “One who falls behind, is left behind“, is the unsaid code of capitalism.

Equity shares in stock markets, mutual funds and other financial instruments are tumbling across all bourses, and coming down to more average levels. This means less money in corporate coffers, while Stimulus Package means more money in the hands of the common citizen. The fallout of the economic recession is more money in job incentive schemes, training programs, infrastructure development, and health sectors. Health sector which got preferential treatment in the past has received boosts. The stimulus package will also provide $4.7 billion to NTIA’s program for Broadband Technology, $2.5 billion to USDA’s program for Distance Learning, Telemedicine, and Broadband Program, $1.5 billion for HRSA for renovation & reconstruction of health centers (including funds for purchasing equipments). $1.1 billion for research for NIH,AHRQ, and HHS, $85 mils for tele-health and IT technologies, $500 mils to SSA, and $50 mils towards the administration for Veterans Benefits.

In the past too, economic stimulus packages by the government were the only solution suggested and implemented. Eminent economists like Paul Krugman predicted the anomalies in successive government spending which ultimately led to the current situation. But, it is startling and surprising to see the equity distribution in times of distress. This trend, whatever is its time limit, seems healthy and suggests towards a mixed model of checks and balances. But the real irony is that the masses are saving the corporate. We are supposed to be rescued by the Jedi, right? Any way it proves the Jedi were not that much of a hero after all.

Finance, business loans, credit cards and cash flow.

Running a business in today’s world of flux, constant change and instability can be a lot like watching a juggler spinning too many plates. He desperately tries to keep them all spinning but as soon as one starts to slow down and topple the rest follow like a stack of dominoes. If you have ever owned, own or plan to own a business you will understand (or should understand) the utmost necessity of having enough cash flow. In fact cash flow has often been referred to as the blood of a company. If it there isn’t any to flow or flows in the wrong direction it can stop a business in its tracks. Cash flow is so important companies will often commit themselves to what seem unfavorable terms in a loan just to make sure they are not cash strapped. This article will look into why cash flow is so important and what options a company has to keep it flowing when it has run of cash of its own.

Cash flow, why is it vital to my company, to any company?

Picture a ship, a large ship of the line of the early 1,800’s. A beautiful piece of sailing engineering. A powerful being with 600 people aboard and enough steel aboard to blow away the meanest frigate to kingdom come. Now picture it without a rudder. It is powerful, it is big, it might even be fast, but it can only go in a straight line or veer ever so slightly by the use of the sails. It has changed from being a useful tool to a big trunk floating in the ocean. Companies can be like that, they can be big they can be powerful but if they don’t have the cash flow to move quickly, adapt, invest in the right assets at the right time it is not worth much.

Of course cash is expensive and hard to come by. This might sound as a truism, which it may be. But there is no denying that having cash is expensive because you are not investing it. During the time you have your cash, you’re not making a profit or any interest on it. If the company has too much cash at hand it will stop being profitable, if it has too little it cannot operate effectively.

How to get cash when you’re cash strapped?

A new or budding company needs cash. How a company acquires it will determine how profitable it will be. There are various ways in which to must capital which we have and will continue to analyze in this website. A great solution for small companies with quick turn over of capital like small building companies, service industry and the likes, are credit cards. Although credit cards can be the quickest way to bankruptcy when used badly they can provide instant cash at low to zero rates of interest. In fact if you faithfully repay your “credit card loans” before the end of the month you can get money for nothing, not a bad deal.

The current housing crisis has been blamed mostly on decrease in home equity and its consequences. The fall in home prices are equally responsible for the difficult times being faced by the homeowners, renters, lenders, investors and local government. The unexpected fall in home prices have left many home owners with little or no home equity.

The end of September 2008 home price index had fallen more than thirty percent from its high point observed in 2006. This indicates a decrease of more than hundred thousand dollars from original home values. Thousands of homeowners are finding themselves at the brink of foreclosures and many of them have had to deal with cancellations of their home equity credit lines. New buyers are encountering problems in securing loans based on home equity. Home equity which was once upon a time the most trusted and bankable collateral against which securing loans was comparatively easier has fallen underwater.

The only silver lining among all this chaos is the decrease in amount of property tax that has to be paid. Automatic reassessments are underway but quicker realization is possible on appeal. The reassessment values and savings would largely depend on previous assessment of the property. Thus this might not help the new buyers since there might not be a big difference for them. The homeowners who would benefit the maximum are the ones who bought the house in 2005 and 2006. These people can expect substantial decrease in their tax amount. This reduction in taxes would lay heavily on local governments since they are the ones who bear this. Most of the agencies have resorted to lay offs, salary cuts, service cuts etc to tide over the lack of funds due to the economic crisis. The budget shortfalls would be increased due to cuts in property taxes.

The rental market is also benefiting since the low home prices are keeping home owners from selling their homes. People are waiting for a recovery of the home prices and while waiting are choosing to opt for a rental income. Suddenly there is an increase in competition in this field and the already existing rental property owners are feeling it. This has led to decrease in rent for these properties since availability is fast exceeding demand.

Smaller communities are still intact and renters who are well established continue to report steady demand form qualified renters. This trend is being maintained due to factors like uncertain jobs, housing market in shambles and a very stringent lending environment. People, who had plans of buying a home previously, now are preferring to wait until the housing market recovers and in the mean time are content to be renters.

The decrease in home values has affected the society and the common man to a very large extent and the impact is more than that of decreased home equity and their values. The people who would be directly affected by this lowering of prices include local governments, investors, renters, home owners, property owners and borrowers. Recovery of the housing market is eagerly awaited to bring about a change in this situation.

The golden mean of business loans, how to find it? Equity finance, venture capital, business loans, small business loans and the list just goes on and on. How to choose the right option for your business. How to find the most efficient route for your business. How we measure the success of a finance option will depend on our personal requirements, expectations and goals. However there are ways to evaluate the desirability and quality of a finance option. This article will deal with the characteristics of the main finance options and how they could affect your business.

The Greeks, or rather the Greeks that accepted the teaching of Aristotle, believed that there is always a golden mean to everything. Nature had a golden mean where relationships between species and cosmos were in harmony. Music has a golden mean. The human body was in their view built around a golden mean that related the length of the arm with the size of the head and the height of a man. Modern science has disclosed interesting mathematical relationships in science and the harmony and order of creation do point to a sort of golden mean that holds everything in balance. Even physicists today look for harmony and beauty in the models they design to see the mark of truth in their theories.

Can we apply that idea to business finance, is there a way of finding the right option for us and our business. Well as lofty and dramatic as our illustration is, it is true that we need not leave our choice of finance to chance. There are guidelines and facts that can guide our decision. We will analyze three of the main options business owners have to choose from mentioning their respective strengths and weaknesses.

Equity finance. Equity finance is a great finance option for small to medium companies that are starting or have little experience. Equity finance investors or Business Angels as they are often called provide capital within the thousands to low hundreds of thousands. They also offer their time and expertise for your business on a day to day basis.

Venture capitalists. Venture capitalist investors are willing to invest larger amounts of capital than equity finance but tend to invest in more established companies that have more experience and expertise in their field. Venture capitalists leave the day to day running of the business to the managing board giving more freedom of action to you.

Business loans. The variety of business loans is large and would be difficult to simplify in a short paragraph. However business loans tend to be for smaller amounts than equity finance and venture capitalists. They are also often easier to get approved despite poor credit. However the interest rates are often higher. On the flip side no control is passed on the bank or lending company.

Which choice is right for you? The answer lies in your personal needs, ambitions and business plan. Think hard of what you really need and how you are planning to achieve it. This way you may find your personal finance golden mean.

Understanding the fundamentals of the equity market is very essential to grasp the entire mechanism and ensure higher returns on the investments. A lot of twists and turns can occur when the company stocks are not understood in the professional manner. The share holder equity basically means the total amount which is paid for the respective shares.

Thus, here is a brief description of the market instruments of the equity market. Some of these are as follows. To start with, the dividend basically suggests the respective portions in the profits of the company. The dividends are also placed on the basis of shares and these are paid on the basis of per quarter, half year and even per year. This is also on the basis of the corporate. There is a fixed rate on which the dividends need to be paid. The share dividends which are preferred are paid before than the common share dividends.

The total amount of the respective earnings and then when it is divided by the share outstanding is called as the earning per share. A certain amount of the dividend has to be paid per dividend; it is also decided on the basis of the corporate decisions. The amount of the profit is also retained for the future operation and expansion.

The voting shares are also regarding to the voting right given to the share holder on the basis of the issues of the company. It also means the attendance of the annual meetings and also has the jurisdiction to the Board of Director elections. At the same time, there are the nonvoting shares which donot give the privilege to the share holders to participate in the voting issues of company.

Then comes the concept of the growth of the shares. The amount of purchase and the sale of the shares determine the value of the respective shares. Capital appreciation is the goal. This is gained by the increase in the prices. Thus, the priority objective is the capital growth in the equity market.

There are several risks to the common shares. There are several systemic and unsystemic risks. At the same time, there are conditions which take create poor liquidity. This actually makes the lowering of the market. The basis of the capital gains is on the appreciation. The losses will also impart write offs against the respective gains. The dividends which are paid to the respective investors are then taxed on the gross basis which is often accompanied by the tax dividend credit.

But, at the same time, there are some concepts which needs to the implemented in this case. For example, one needs to understand that the economy is weaker at present. But at the same time, the recession might be combated with the decisive investments. But then the equity market is meant only for those who are not looking for very high end results and investments. Moreover, the equity market is the best for those who are searching for receiving stable and steady income.

Business loans or overdrafts, how to finance your company.

Financing a company in today’s unstable economy is no easy task. How you get about it will depend on various factors. What short term, mid term and long term goals you have. How much cash you need to finance your company and what stage of development your company is.

For instance to start a company can be the hardest stage to find financing. You have no business record, no sales, no assets to use as collateral. This makes it hard to find investors, banks and other finance companies that will risk giving you a loan. Because situations change and context is very important when deciding which finance option to choose, you need to analyze your personal circumstances before deciding on which finance option is best for your company.

Business loans.

Business loans are loans provided by a bank or some other finance company to your business. The precise conditions depend on the contract, but generally the business acts as a virtual person that takes on the loan. This has various advantages. If your company does not work, the debts your company takes on will not necessarily pass on to you.

Business loans provide a lump sum that can be used as you see fit. It also provides a safety net for last minute expenses or investments. This allows your company to be more flexible and adapt to change faster and more efficiently. However business loans require time and documentation to be approved. If your company has not past history and no assets to provide as collateral you might have to begin with a personal loan and then take a larger business loan when your company is solvent. Business loans are also expensive. You will need to pay setting up fees, interest rates, setting up fees and probably penalty fees if you wish to pay your loan early.

Business overdrafts.

Business overdrafts are an agreement between your business and a bank. The bank agrees to provide you with cash on demand up to a certain amount. You only pay interest on the amount you borrow, not on your overdraft maximum. You can generally pay back as much or as little as you want / can. Overdraft facilities are organized for a set period of time at which the full overdraft should be paid. Overdraft services can be renewed for a renewal fee. The advantage of overdrafts over loans is that you only pay interest on what you need, on what you actually borrow through the overdraft. Interest is charged daily so you have more control on your finance costs.

So which option is best for you? It will depend on the needs, context, situation of your business, plus your personality. If you are planning to to make one large payment or investment a loan might be better. You will probably be able to arrange cheaper interest rates. However if you are not sure of the amount of cash you will need, but want to be able to have cash when and where needed, business overdrafts might be the best choice for you.