Small business loans
As far as small business men are concerned they require long term as well as short term investments in order to meet their varying business needs. These needs will also be of long term and short term duration. As far as the short term business needs are concerned, the requirement may be lower in financial terms however the time to meet the need will be very little. To meet such short term business requirements investments in savings bank accounts or short term deposits can be effectively utilized by the small business men. These investments will provide a moderate interest also to the depositor. Depending on the diversified financial needs of the business carried on, tailor-made schemes of deposits which will be based on a combination of liquidity and return aspects of investment can be adopted by each businessman.
The savings bank accounts which provide higher rate of interest are more useful to the businessmen comparing to term deposits as the former is having high liquidity and can be utilized for emergency requirements of the business. At the same time such accounts will earn more or less same interest earned by the term deposits.
Account facilities, Rate of interest, etc
In UK, the Premier Direct Current Account provided by Alliance & Leicester Financial Services is one among the banking concerns which provide ample facilities and high interest rates on balances up to 2,500 for savings bank customers. If you are a Premier Direct Current Account customer of the bank then you can always be able to view, download and print all transactions through Internet Banking. The information about charges applied to the account, and interest added during the month can be checked by the customers. Each and every month the customer will be receiving an email reminding him to visit the transaction page. Cash can be taken using Visa debit card at any UK cash machine from such accounts. The minimum balance requirement is 500 per month. From the machine withdrawals can be made upto 250 per day.
HSBC UK provides 4.30% interest on their Cash Mini ISA and 4.65% for on line saver account. HSBC Premium Saver yields an interest rate of 3.69% per annum. They are also having choices like regular saver, flexible saver, etc.
Online banking with ING Direct also will save money when the customer sets up a bank account with them. Everyone gets the same high rate of interest on their savings account regardless of how much money they save. Banking online is easy and customer can easily start saving money with an ING Direct bank account, high interest savings account
In Australia, Easy Street Online Savings Account provides comparatively higher rate of interest, i.e., 5.95% interest per annum, calculated daily and compounded monthly. The account offers all other modern facilities.
Running the account successfully
There are basically four things which are to be kept in mind while running the savings bank accounts. These are the following:
1. Never allow cheque bounces in your account, which will not only impose bank charges to diminish the balance in the account, but will create a negative rating particularly when you are looking for some personal loans based on your bank operations.
2. Keep the account balances always above the minimum level of balance as stipulated by the bank, this will save you from bank charges on non-maintenance of minimum balance and your account will be rated in the elite or premium class of customers by the bank.
3. Do not issue non-dated cheques and minimize issue of post-dated cheques. Some times you may be required to issue cheques as security to some loan taken. Never issue a cheque without putting the date on the instrument; otherwise you may not be able to know when the cheque would be presented by the party for collection. In case of post-dated cheques you should always have a record of the dates of presentation. These precautions will help you prevent unexpected debits in the account.
4. Do not close your fixed deposit account on emergencies. Once you close the account, it may not be easier to invest the same within the near future. Instead you can avail a loan against FD which may be upto 90% of the deposit. The interest rate will be slightly higher than the interest rate of the deposit, may be one percent extra. However this will not be more than the interest earned on deposit as the loan amount is lower than the deposit amount. With the loan amount you can meet the emergency for the time being, and afterwards you can start repayment of the loan as and when you get money and once the loan is repaid in full, your FD lien is released and your deposit will continue as a full-fledged deposit.
Meeting requirements without withdrawal
This is a technique practised by most businessmen. Suppose you are in receipt of the telephone bill amounting to $50 with the last date for payment without fine falls 20 days later from the date of receipt of the bill. A normal person, to be on the safer side, may prefer to issue a cheque for the bill amount at the earliest so as to avoid the situation in which he may forget the due date of the bill and the consequent penalty or disconnection of the facility may take place. On the contrary, the businessman will postpone the payment near to the due date so that his funds will yield the interest till that date and makes the payment on or just before the due date. It may also possible that he would be getting some receipts in cash in between so that he would be able to pay-off the bill without withdrawing money from his savings bank account. Another positive approach towards investing in small savings account is deposit all income first and then provide for the expenses. If you have got $100 with you and you have to meet liabilities amounting to $60, normally you would be depositing in your account $40 and keeping the rest with you for meeting the liabilities. Here also the experienced business man will deposit $100 in his bank account and then prepare for withdrawals towards the liabilities, which he may try to minimize or postpone. He will also get the benefit of higher volume of banking transactions as far as his savings account is concerned.
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