Unless we work in the world of finance most of us happily
Posted in General on 21. Oct, 2010
Unless we work in the world of finance, most of us, happily, won’t give much thought to VAT. Producing enough books to have national distribution would cost between £40,000 and £50,000, so Victoria has taken on an agent to help look for a publisher.. But the enthusiasm from booksellers means she is setting her sights higher. Her original plan was to publish the book herself, funding the cost with a business loan. For day-to-day expenses, Victoria uses her business credit card; she also has a business overdraft facility with NatWest.Victoria has produced a larger version of the book, and had positive feedback from booksellers, including WH Smith.
That, and setting up the business, cost around £6,000, which she funded from savings. Not finding a pony story for her daughter, she decided to write her own.After a two-year search for an illustrator, Victoria, 31, published a limited edition A5 version. The adage “borrow only what you can afford to repay” applies whether it is a business or a personal loan.Case studyThe idea for Sugerlite Publishing came to Victoria Beesley, four years ago. “Businesses do need to guard against simply building up their debt without having a regular repayment plan,” warns Mike Rogers at Barclays. This can be offset against the business’s profits.Just because borrowing is easy does not mean it is the right strategy. As additional borrowing is held separately, it is relatively easy to work out the interest bill.
Virgin One, Royal Bank of Scotland and First Active offer “chequebook” mortgages, where homeowners can borrow more (up to an agreed limit) without having to tell the bank why; other flexible loans, such as Open Plan from Woolwich, have similar facilities.Interest rates range from 4.9 per cent at Woolwich to 5.2 per cent at Virgin One. Extending the mortgage, or remortgaging to a larger loan, might not add much to monthly payments because of recent falls in interest rates.A flexible mortgage is worth considering. “But if you cannot, there is a danger that the debt will spiral.”The cheapest long-term way to borrow is often a mortgage. “By all means use a credit card if you are confident that you can pay it off at the end of the interest-free period,” says Tony Byrne. Credit cards can also provide useful short-term cash flow, but it is important not to use them as a crutch for an under-funded business. Deals change quickly, but Egg currently has one of the best, with zero per cent interest for the first six months on both balance transfers and new spending.At the end of the introductory period, interest rates rise sharply, so you either have to pay off the debt or be prepared to switch to another card. “A business customer might make an impulse purchase on the personal front and then not be able to pay a key supplier,” he warns.For those who can keep their money on a tight rein, a personal credit card can be a very cheap way to borrow.