Eviction Process: What to Do If You Receive an Eviction Notice

Follow these steps if you receive an eviction notice.

The eviction process is stressful. But losing your home isn’t inevitable. It’s possible to delay or prevent eviction. Help is available — you just have to know where to look. And you need to act fast.

What to do after receiving an eviction notice depends on your lease, your state and even your ZIP code. Knowing and defending your rights, working proactively with your landlord or property manager and accessing local, state and federal resources can keep you in your home.

What is an eviction?

“Eviction is a legal process that may be undertaken to remove a tenant from a rental property,” explains a definition on LegalDictionary.net. “The majority of evictions are the result of a tenant’s failure to pay rent, or the tenant’s frequent violation of the terms of the lease or rental agreement. Regardless of the purpose of the eviction, the landlord must follow a process specified by the law.”

Legal grounds for eviction

Landlords and property managers must follow particular steps and a certain order during the eviction process. They’re required to document every step so the eviction will hold up in a court of law.

Landlords must have a legal reason to evict a tenant. Legal grounds for eviction include:

  • Non-payment of rent
  • Incomplete rent payments
  • Criminal activity
  • Committing an act of domestic violence
  • Not abiding by community health and safety standards
  • Not vacating a property when the lease is up
  • Violating the term of the lease by subletting (or subleasing)
  • Housing an unauthorized tenant who doesn’t appear on the lease
  • Keeping an unauthorized pet not specified on the lease
  • Causing significant damage to the property

eviction notice

How long does the eviction process take?

The eviction process varies from state to state. Check the eviction process in your state.

The Eviction Lab provides an overview of eviction rates across the country. The site’s Eviction Tracking System also details the weekly eviction rates in 27 U.S. cities and five states and lists if a state eviction moratorium is in place.

How does the eviction process work?

The eviction process is specific to your state. But the key steps are similar across the country.

The eviction notice

The eviction process begins when a landlord or property manager gives the renter an eviction notice. This is often called a Pay or Quit notice or a Pay or Vacate notice. It serves as a formal, documented warning that a renter violated the lease.

Landlords may post this on the door of a unit. But they usually send it by certified mail so there’s a legal record of the sent and received dates.

This notice tells the renter what they need to do to comply with the lease and avoid eviction. It also lists the number of days permitted before the official eviction notice is filed. The time in between these steps is often just a few days, so it’s important to act immediately.

If you get one of these notices, don’t panic. If you take steps to resolve the issue, your landlord may not file the eviction.

Eviction filing

You must comply with the terms of the lease by the deadline specified in the Pay or Quit Notice. If you don’t, the landlord will file an eviction complaint form to begin the eviction case.

Once a court date is on the books, you’ll receive a summons to court. Both documents will come via delivery by local law enforcement.

Court hearing and judgment

A judge will review documentation in the eviction case. This can include the lease, the payment record and all relevant communication between you and the property owner or landlord.

After reviewing the facts, the judge will issue their ruling. If they find it in your favor, you’ll be allowed to stay in your home.

Even if you win your case, the court case remains part of the public records for up to seven years — just like an eviction. If your next landlord doesn’t read the details of the case, this can negatively influence your background check. That’s why it’s so important to stop the eviction process before it gets to this point, if possible.

If the judge sides with the landlord, you’ll be forced to leave your home. Depending on the rules in your state, unclaimed belongings will be removed through the court process, put in storage or set out on the curb.

Man upset holding an eviction notice.

What to do if you get an eviction notice

It’s normal to feel shocked or overwhelmed by an eviction notice. But since the time between an eviction notice and an eviction filing is short, it’s important to act quickly to stop the process early.

The effort is worth it. An eviction stays on your record for seven years and makes it difficult to rent an apartment in the future. Unpaid rent can damage your credit for years to come. And the stress of eviction has negative physical, mental and emotional effects on the entire household, especially children.

Review the steps below and reach out for help the moment you get an eviction notice or know you’ll be short on the rent. Every step takes time, so pursue multiple resources simultaneously. Don’t wait to hear back from someone before moving down the list.

1. Review your lease

If you’re served with an eviction notice for violating the terms of your lease, review your copy. Make sure any violations you’re accused of are actually listed in the lease.

Paperwork errors can happen. And vague or general language can lead to confusion. If you find an error or wording that’s open to interpretation, contact your landlord for clarification immediately. Document all correspondence.

2. Correct any lease violations

If you’re violating the terms of your lease, change your behavior right away. Unauthorized roommates and pets must find a new place to live immediately. Repair any property damage.

Document your compliance in writing. Supply photos and receipts for repairs. Communicate all positive changes to your property manager or landlord.

3. Make a payment plan

If you’re behind on the rent, create a payment plan and present it to your landlord. This document should tell them why you’re experiencing financial difficulties. It should also give a reasonable repayment schedule.

You can request to delay payments, make smaller payments or ask for rent forgiveness, depending on your financial situation. Stay realistic about what you can afford.

Property managers aren’t obligated to accept your plan. But many would rather have some income and a realistic plan for repayment instead of dealing with the eviction process.

Woman calculating numbers on her laptop.

4. Take advantage of temporary eviction moratoria

If you lost your job during the pandemic (or experienced a loss of income) fill out the CDC Declaration Form and provide a copy to your landlord immediately. The eviction moratorium suspends the eviction process during the COVID-19 public health crisis. This temporary stop to evictions for non-payment of rent extends to June 30, 2021.

This is not a rent forgiveness program. Your rent is still due. But it could buy you some very valuable time to access rent assistance programs and find employment.

Many states are also halting evictions during the pandemic. Regional Housing Legal Services displays temporary state eviction moratoria on an interactive map.

5. Access federal, state and local funding resources

Federal, state and local governments offer emergency rent assistance programs and other resources to help renters secure more affordable housing. You may qualify for more than one program, so reach out to as many as you can, as soon as you can.

The Apartment Guide Eviction Resource Guide lists federal eviction resources. It also helps renters search for service organizations and government programs in their home states. Charitable organizations also offer grants and emergency rent payment assistance.

HUD

The U.S. Department of Housing and Urban Development (HUD) provides affordable housing options across the country. Contact a Public Housing Agency (PHA) for rental advice at (800) 569-4287. Or search by state for an agency near you.

Renters who already receive assistance from HUD may qualify for lower rent through income recertification or hardship exemptions. A PHA representative can help you file the correct paperwork.

The NLIHC

The National Low Income Housing Coalition (or NLIHC) maintains a list of emergency rental relief programs by state. It also offers rental assistance.

The CFPB

The Consumer Financial Protection Bureau (CFPB) features comprehensive advice for renters facing eviction in eight different languages, including Spanish and Tagalog. It includes resources for active duty service members and a list of emergency rental assistance programs across the country.

211

Get help with housing expenses by calling 211 or searching 211.org. Renters can connect with local health and human service agencies, food and clothing banks, shelters and utility assistance programs.

talking to lawyer about eviction notice

6. Know your rights

If you receive an eviction notice, review your tenant’s rights. These vary by state, but there are commonalities. Your eviction is not valid if a landlord has discriminated against you, violated your rights, harassed you or provided a home that is not safe.

Property managers and landlords can’t discriminate against a renter because of race, religion, national origin, gender, age, sexual orientation or physical or mental disability. A landlord can’t evict you because of your marital status, whether or not you have children or the language you speak.

Landlords cannot harass you until you move out or cite personality conflicts as a reason for eviction. They can’t change the locks, throw you out without proper notice or prevent you from entering your home.

Housing law states that tenants have the right to live in clean homes that protect from the elements. They must have working heat, plumbing and electrical systems. Homes should meet all health and housing code standards and be safe and accessible for residents.

7. Contact a fair housing organization

If these rights are violated, call in the experts at your local fair housing agency. These organizations can also help renters facing eviction examine their options. Services and programs vary by state.

“Almost every state has a fair housing organization. And there’s a National Fair Housing Alliance that can help as well,” said Michelle Rydz, executive director of High Plains Fair Housing Center in Grand Forks, North Dakota. “We can help them fill out the paperwork and find money to pay for rent. And we have lawyers that work with us that can help clients when they have a court date.”

8. Get a lawyer

Finding a lawyer might sound like an unnecessary cost. But the eviction process moves quickly and the financial consequences of a judgment are dire. Seek council at the first sign of trouble.

“I think that tenants should seek the advice of counsel at the notice stage,” said Emily Benfer, law professor at Wake Forest School of Law and the chair of The American Bar Association’s COVID-19 Task Force Committee on Eviction.

Retaining an attorney can stop an eviction from becoming part of a renter’s permanent record. Attorneys also help more renters win their cases and stay in their homes.

“Nationwide, only 10 percent of tenants are able to secure representation in eviction cases, compared to 90 percent of landlords,” Benfer said, “Where tenants are not represented, the vast majority lose their case.”

A study conducted by The Kansas City Eviction Project found that 72 percent of tenants without legal representation had monetary damages and/or an eviction judgment entered against them. For renters with attorneys, the percentage fell to 56 percent. Benfer’s article cites a study that shows that 84 percent of New York City renters represented by an attorney remained in their homes.

Free and affordable legal resources

Paying for a lawyer is a major concern for people facing eviction. There are resources available for renters on a budget.

The American Bar Association’s FreeLegalHelp.Org connects low-income renters with federally funded legal aid services. It also includes pro bono attorneys who volunteer their services for free.

Search LawHelp.org for legal assistance and free legal aid programs by state and a list of legal resources. Or visit JustShelter.org to find resources listed by state. The site also links to several legal aid organizations across the country.

woman looking at tablet

How to get an apartment after an eviction

It isn’t easy to get an apartment after an eviction. But it can be done. Some basic tips can help you build up your credit and get back on your feet.

  • Rebuild your credit: Work with a credit counselor, consolidate your debt, reduce your expenses and pay all your bills on time.
  • Get a co-signer: Ask someone you trust with good credit to co-sign your lease to help lessen your landlord’s financial risk and share the financial burden.
  • Find a roommate: Move in with friends or family to minimize expenses, pay off debt and save money for a larger deposit
  • Demonstrate your credibility: Dress to impress and be polite. Tell landlords (ideally in writing) about your eviction and provide evidence that it won’t happen again.
  • Show financial responsibility: offer a larger deposit upfront to minimize the landlord’s financial risk. Produce paycheck stubs and reference letters from your employer and demonstrate how you’re rebuilding your credit.

Keep calm and take action

Eviction isn’t inevitable. By understanding the eviction process, acting quickly and using all your resources, you can hopefully delay or prevent eviction and stay in your home.

The information contained in this article is for educational purposes only and does not, and is not intended to, constitute legal or financial advice. Readers are encouraged to seek professional legal or financial advice as they may deem it necessary.

Source: rent.com

Working Capital Loans

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

According to PricewaterhouseCoopers, average revenues from 2018 to 2019 for businesses were up 10 percent, but many companies still struggled to convert those higher revenues to cash. When a business doesn’t have the cash flow to support daily or growth expenses for any reason, working capital loans might be an option. Find out more about working capital below to help you decide if this funding source is right for your company

What Is a Working Capital Loan?

Working capital loans are a type of funding that helps ensure businesses have the capital they need to continue operating during periods when it might be difficult to cover daily expenses while meeting new demands or growth. For example, if a business has tied up its cash flow in inventory for the holiday rush season, working capital funds can pay the bills—such as employee wages and rent—until holiday revenues are in.

It’s important to note that working capital isn’t meant to make investments or buy long-term assets such as equipment. If you need equipment, you may need to take out a secured loan for it. Working capital loans are meant to cover the standard operating expenses of the business such as regular debt payments, wages, rent and utilities.

Working capital loans help ensure businesses have the capital they need to continue operating during periods when it might be difficult to cover daily expenses while meeting new demands or growth.

Working Capital Financing Options

You can get working capital loans from a variety of sources. Some of the most common options are summarized below.

Short-Term Loan

What is it? You might be able to borrow money for a few months to help fund expenses until seasonal income comes in or a large invoice is paid.

Pros: It might be a good way to balance cash flow during seasonal upticks in expenses or downturns in income.

Cons: Because the terms of the loan are short, the lender may charge a relatively large fee to make money from the deal in lieu of interest paid out over a longer period of time.

Merchant Cash Advance

What is it? A cash advance offered by the bank or agency that handles your payment processes. For example, businesses that accept money through PayPal may be eligible for a Payment Working Capital loan.

Pros: These loans are typically easy to get if you have a solid history processing payments through that bank or agency. That’s because the loan isn’t based on your personal credit or the credit of your business. It’s typically based on how much average revenue you process through that payment method.

Cons: Typically, merchant cash advances are paid back as a percentage of your sales over time. That lowers your cash flow for the immediate future and can make it more difficult to budget for business expenses if you overcommit on the loan.

Bank Line of Credit

What is it? A revolving line of credit that you can draw from and pay back and then draw from again—similar to a credit card.

Pros: A line of credit is flexible and ongoing, which means it’s there when you need it, but you don’t have to draw on it if you don’t need to. It can also be a good way to balance cash flow if your revenue tends to fluctuate.

Cons: You may need decent personal or business credit to get approved for a line of credit. It can also be tempting to rely too heavily on it, temporarily masking serious financial problems until they might be too late to resolve.

SBA Loan

What is it? You can get certain types of loans through programs approved by the Small Business Administration. Some of these loans can be used for working capital.

Pros: While the terms and rates associated with SBA loans vary, they may be more favorable than those of traditional loans.

Cons: SBA loans can be easier to qualify for from a credit perspective, but they do have specific requirements, such as documentation. You may also be limited on what you can use the funds for.

Trade Credit

What is it? Trade credit occurs when you purchase goods on an account and pay for them later. Typically, if you pay within the agreed-upon period, you don’t pay interest on this debt.

Pros: Trade credit is low-cost and is generally a common business practice, which means it might be available to you from various vendors.

Cons: This isn’t a form of credit you can use to cover expenses other than goods purchased, but that might free up some cash for other uses.

Who Offers Working Capital Loans?

Working capital loans are offered by a variety of organizations. Banks, credit card companies and payment networks might all offer working capital loans. Some organizations specialize in this type of lending and work with businesses that can demonstrate a strong historic revenue to provide working capital loans or lines of credit.

Working Capital Loan Interest Rates and Fees

As with any type of lending, working capital loans do cost your business in the form of interest rates and fees. With a few exceptions, such as certain trade credit arrangements, working capital comes with varied rates and costs. If the lender makes money via interest, your own credit or the creditworthiness of the business may be used to determine how much interest is charged.

Some working capital loans don’t include interest. The lender instead charges a flat fee that is incorporated into the total amount paid back during the loan process.

Is a Working Capital Loan Right for Your Business?

As with any form of debt, working capital loans have benefits and disadvantages. Understanding the common pros and cons can help you determine whether working capital loans are a good decision for your business.

Benefits

Working capital can provide the cash influx you need at just the right time. It’s a financial tool for helping businesses cover costs during various seasons or scale up for growth. If you’re careful about how you use the credit associated with working capital loans, they may not be as expensive as some other forms of financing.

Drawbacks

Working capital loans come with some of the same drawbacks of any debt, including interest or other costs. But a bigger potential disadvantage is the temptation to lean heavily on working capital even when you know that your business is in trouble financially. Working capital is meant to be a temporary bridge, not a crutch your business can lean on permanently.

Pros and cons of working capital loans

Other Options for Increasing Your Work Capital

Working capital is a measurement of how well a company can use its current assets to pay its current liabilities. It’s an important statistic for you to be aware of as a business owner, because it indicates how financially healthy your company is. If you need to improve your working capital but don’t want to receive financing from a third party, consider these other ways to increase your working capital:

  • Cutting business expenses, including unnecessary travel or acquisitions.
  • Increasing income by hosting a sale or increasing prices if the market will support it.
  • Collecting past-due invoices.
  • Selling valuable business assets that may not be required at this time.

As you weigh your different options for working capital financing, don’t forget to stay on top of your business credit score and your personal credit score, too. To learn more about the latter, check out Lexington Law’s guide to credit.


Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

The Best Places to Live in Georgia in 2021

Georgia, also known as the Peach State, features everything from fun city amenities like a thriving nightlife and the latest art openings to outdoor opportunities right in your suburban backyard.

It’s no surprise that Georgia has plenty of options for great places to live.

Atlanta’s growing economy with Coca-Cola, Home Depot and Delta Air Lines at the helm entice any visitor to move to the city. Farther south in Macon and Savannah, you can enjoy a growing music scene and fresh seafood, respectively, too.

Georgia provides a full spectrum of experiences for those visiting and considering moving here. Seriously, there are more than 100, just in Atlanta.

To help your search for your next home, here are the best places to live in Georgia, arranged in alphabetical order:

Alpharetta, Georgia.

  • Population: 67,213
  • Median household income: $113,802
  • Average commute time: 29 minutes
  • Walk score: 30
  • Studio average rent: N/A
  • One-bedroom average rent: $1,635
  • Two-bedroom average rent: $2,052

The Atlanta suburb of Alpharetta continues to make the best places to live lists, thanks to its vibrant culinary spots, shopping districts like Avalon, thriving tech and manufacturing industries and of course, education.

The city offers easy access to the airport, only 35 miles south via GA-400. You can head on your way to your next business trip or vacation in no time.

If you’re looking for the outdoors, you’re also less than 45 minutes from the North Georgia Mountains and cabin towns like Blue Ridge and Ellijay.

Downtown Alpharetta offers a walkable experience with boutiques, breweries and fine dining establishments lining the streets. Every weekend, the city comes down to stock up on local offerings at the Alpharetta Farmer’s Market.

With a one-bedroom average rent of under $1,700, you can find an affordable place with good schools nearby in Alpharetta.

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Athens, Georgia.

  • Population: 126,913
  • Median household income: $38,311
  • Average commute time: 19.4 minutes
  • Walk score: 35
  • Studio average rent: $712
  • One-bedroom average rent: $739
  • Two-bedroom average rent: $1,259

Sure, when you hear Athens, you think of the University of Georgia and the accompanying football tailgating. However, the city has more to offer than college fun.

While Athens is a small city, it does come with a great perk — affordability. You can rent a one-bedroom for $739 a month on average.

You also have access to arts and entertainment, thanks to Athens’ thriving music scene. Check out your favorite entertainer at the Georgia Theatre or discover a new one at the intimate 40 Watt Club.

The State Botanical Garden of Georgia and Sandy Creek Park offer opportunities to enjoy the mild Georgia weather and nature. End your weekend with a pint from local brewery Creature Comforts — yes, the one you saw in Thor’s hand during the last “Avengers” movie.

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Atlanta, GA.

  • Population: 506,811
  • Median household income: $59,948
  • Average commute time: 27.2 minutes
  • Walk score: 55
  • Studio average rent: $1,605
  • One-bedroom average rent: $1,655
  • Two-bedroom average rent: $2,140

From Fortune 500 companies to good music and food, Atlanta has plenty to offer as one of the best cities to live in Georgia. With more than half a million residents, the city has a diverse community that provides everything from an indie clothing store to large coffee chains.

Atlanta’s 45 neighborhoods all have their unique personality. You can find a luxury condo in Midtown or a charming craftsman home in Grant Park — just minutes from each other. Depending on the neighborhood, your walk score may improve, but you’ll have access to city parks and local dining options that range from Mexican to Italian and Ethiopian.

With those city amenities come high rent prices — you can find a studio on average for $1,605 a month. Keep in mind that easy access to MARTA rail and the bus line can help you skip long commutes at the end of the day.

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Augusta, Georgia.

  • Population: 197,888
  • Median household income: $42,592
  • Average commute time: 21.1 minutes
  • Walk score: 33
  • Studio average rent: $1,000
  • One-bedroom average rent: $1,013
  • Two-bedroom average rent: $1,153

While many know Augusta for the annual Masters golf tournament, its residents enjoy a rich history, a charming downtown and a growing economy year-round. The walk along the Savannah River in downtown Augusta indeed shows the beauty of the city.

The Gertrude Herbert Institute of Art and the Augusta Museum of History give you a glimpse of this Southern city’s history. The Summerville neighborhood has some of the most beautiful historic homes, preserved thanks to a local ordinance, with large columns and manicured lawns.

On the weekends, you can explore Broad Street and its small boutiques and restaurants on foot. During the warm months, the Augusta Market brings local artisans to the Savannah River’s River Walk park.

From tapas to nightlife, you can find it all here.

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Columbus, Georgia.

  • Population: 195,769
  • Median household income: $46,408
  • Average commute time: 20.6 minutes
  • Walk score: 35
  • Studio average rent: $553
  • One-bedroom average rent: $833
  • Two-bedroom average rent: $983

For those looking into affordable living, Columbus tops our list of best places to live in Georgia. You can get a two-bedroom apartment in the city for under $1,000 per month on average.

Only 90 minutes from Atlanta, Columbus is an outdoor lover’s paradise with the Chattahoochee River flowing nearby. The river provides incredible opportunities to whitewater one of the country’s longest courses and even zipline across it.

Elsewhere in the city, you can find a farmers market, artists market and free concert series set up in the downtown area.

The Springer Opera House features some of the best talents throughout annual performances and leads one of the most prominent theatre programs in the Southeast.

The city is also home to Fort Benning and the National Infantry Museum, the only one of its kind in the U.S.

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Decatur, Georgia.

Photo source: Agnes Scott College
  • Population: 25,696
  • Median household income: $106,088
  • Average commute time: 27.3 minutes
  • Walk score: 39
  • Studio average rent: $1,323
  • One-bedroom average rent: $1,403
  • Two-bedroom average rent: $1,587

The city of Decatur is only about five square miles, but it packs a lot of goodness. With three MARTA rail stations and a robust bike lane program, you can easily navigate the city without a car.

Agnes Scott College, an acclaimed women-only liberal arts college, provides interesting arts programming for residents to enjoy.

Only a few miles from downtown Atlanta and high-quality schools, Decatur’s housing is highly sought out. You can find a two-bedroom on average for $1,587 per month.

However, you’ll have access to some of the best restaurants in Georgia, like Kimball House, Leon’s Full Service and Brush Izakaya, along with regular community events in the square.

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Macon, Georgia.

  • Population: 153,159
  • Median household income: $41,334
  • Average commute time: 21.3 minutes
  • Walk score: 35
  • Studio average rent: $610
  • One-bedroom average rent: $1,050
  • Two-bedroom average rent: $1,172

Right at the heart of the Peach State and only two hours from Atlanta, Macon is a hub of job opportunities, higher education options like Mercer University and, of course, entertainment on the weekends.

Warner Robins, 20 miles away, offers job opportunities at the Robins Air Force Base as one of the state’s largest employers. Plus, your average commute time hovers around 20 minutes.

Downtown Macon features new, cool boutiques as well as iconic places that have regulars. Listen to the latest tunes at Fresh Produce Records and then hop to the Tubman Museum, an essential visit.

To learn more about Macon’s music history, The Little Richard House and Otis Redding Museum are both must-see stops for music lovers.

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Marietta, Georgia.

  • Population: 60,867
  • Median household income: $57,452
  • Average commute time: 28.5 minutes
  • Walk score: 31
  • Studio average rent: $1,018
  • One-bedroom average rent: $1,162
  • Two-bedroom average rent: $1,426

One of Cobb County’s gems, Marietta, offers good schools, a tight-knit community and rich history. Marietta City Schools hosts a diverse student body with high rankings in the state.

Near Marietta Square, a hub for most community events, you can find the Marietta Museum of History in a preserved 1845 warehouse building. There are a few other historical sites within the city center like the William Root House Museum & Garden and Kennesaw Mountain.

Not too far, at Truist Park, you can cheer on the Atlanta Braves and enjoy a meal at The Battery.

While Atlanta’s infamous traffic can keep you on I-75 for longer than you want, the average person commutes nearly 30 minutes to work.

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Sandy Springs, Georgia.

  • Population: 109,452
  • Median household income: $78,613
  • Average commute time: 26.1 minutes
  • Walk score: 44
  • Studio average rent: N/A
  • One-bedroom average rent: $1,630
  • Two-bedroom average rent: $2,007

Sandy Springs’ proximity to downtown Atlanta, Buckhead’s business district and the outdoors makes it one of the best places to live in Georgia. You’ll also have to the public transportation via the MARTA rail to avoid the 26-minute average commute.

The Chattahoochee River National Recreation Area and 16 city parks offer plenty of opportunities to get outside, explore new trails and even go on a kayak or two. You can also find Vickery Creek Falls nearby in Roswell.

For those into nightlife, you can check out Battle & Brew as well as plays at the City Springs Theatre Company and Act 3 Productions.

You can find a one-bedroom in the area for $1,630 a month on average.

If you’re looking for close proximity to the action while keeping a little quiet at home, this is the place for you.

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Savannah, Georgia.

  • Population: 144,464
  • Median household income: $43,307
  • Average commute time: 20.5 minutes
  • Walk score: 46
  • Studio average rent: $1,244
  • One-bedroom average rent: $1,197
  • Two-bedroom average rent: $1,346

Home to River Street and the Savannah College of Art and Design, Savannah’s Spanish moss-lined streets take you back to the past. The city’s downtown grid street system makes it incredibly walkable and easily enjoyable.

Despite all of the ghost stories and dark past, the city has plenty to offer delicious dining options, museums and outdoor opportunities. You can both enjoy fresh oysters on River Street next to the water and not too far, walk around the area that inspired the “Midnight in the Garden of Good and Evil” book.

The Port of Savannah played an essential role in local cotton and tobacco industries following its opening in 1744. These days, the port is a historic landmark and one of the fastest-growing ports in the country.

If you want a hop and a skip from Tybee Island, you can find a two-bedroom apartment for $1,346 a month on average.

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Find your own best place to live in Georgia

Georgia’s four seasons, affordability and growing economy have attracted people from all over. It’s no surprise that the Peach State has several great cities to pick from.

Whether you’re looking to relocate with your job or just looking for a new city to love, Georgia’s Southern charm and delicious food will reel you in.

Rent prices are based on a rolling weighted average from Apartment Guide and Rent.com’s multifamily rental property inventory of one-bedroom apartments in March 2021. Our team uses a weighted average formula that more accurately represents price availability for each individual unit type and reduces the influence of seasonality on rent prices in specific markets.
Other demographic data comes from the U.S. Census Bureau.
The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.

Source: rent.com

GAP To Move Card Issuers From Synchrony To Barclays ($1 Billion)

WSJ is reporting that GAP will change credit card issuers for it’s private label and co-branded credit cards for brands such as Athleta, Banana Republic and Old Navy. The existing issuer is Synchrony and the new card issuer will be Barclays. Synchrony has previously held this relationship for approximately 22 years.

The changeover is expected to happen sometime around April 2022 when the existing contract ends and Synchrony is expected to earn $1 billion from the sale. As part of the sale Barclays has purchased the backbook meaning that existing cardholders will be brought over to Barclays in the sale.

Unfortunately it’s probably bad news for all of the spending offers we regularly see on these cards, as previously 80% of the card programs cost was incurred by GAP.

Hat tip to reader John L

Source: doctorofcredit.com

The Best Parks and Green Spaces in Philadelphia

From the moment William Penn, founder of the Colony of Pennsylvania, set aside Philadelphia’s Five Great Public Squares as part of his “Greene Countrie Towne” city plan, Philadelphia has been recognized for its amazing public green spaces and parks, large and small, urban and woodsy. Nearly every neighborhood contains an inviting, safe, inspiring public space. But what are some of the best?

Fairmount Park

Fairmount Park PhiladelphiaFairmount Park Philadelphia
Fairmount Park

Every discussion of Philadelphia parks must start with Fairmount Park, the largest space within the world’s largest urban park system.

Stretching from the Strawberry Mansion to the Spring Garden neighborhoods, the East Park half of Fairmount Park lies on the Schuylkill River’s east bank. This side features scenic running and biking trails that wind past historic sites such as The Philadelphia Museum of Art and Boathouse Row, with its famous light display, large plateaus near Brewerytown, which include the Sedgley Woods Disc Golf Course and Strawberry Green Driving Range and the vast Fairmount Park Athletic Field, where you can hop into a pickup hoops game or join an organized sports league. For a quieter outing, the recently renovated East Park Reservoir is one of the best bird-watching enclaves in the city.

Across the river, though still in Fairmount Park, the West Park runs from the Wynnefield neighborhood down to Mantua. Here you can take the kids to the first-in-the-nation Philadelphia Zoo, the Please Touch Museum or the John B. Kelly Pool right next door.

For a more adult excursion, take in a concert and an amazing view at the Mann Center for the Performing Arts or fling a Frisbee at the Edgely Ultimate Fields. In the winter, Philadelphians of all ages take to Belmont Plateau for the city’s best sledding hills.

Wooded parks

Wissahickon Valley ParkWissahickon Valley Park
Wissahickon Valley Park

For everything Fairmount Park has to offer, other city parks boast their own perks. The expansive Wissahickon Valley Park extends from Chestnut Hill through East Falls in North Philly. There you’ll find people on mountain bikes and on foot traveling the winding gravel paths of forested Forbidden Drive, youngsters learning while having fun at the Wissahickon Environmental Center Tree House and anglers casting into the trout-stocked Wissahickon Creek.

Running from Bustleton to the Delaware River in Northeast Philly’s Holmesburg section, Pennypack Park is a 1,300-acre wooded creekside hiking and biking oasis that provides nature programs at Pennypack Environmental Center, a full working farmstead with cattle, sheep, pigs and chickens at Friends of Fox Chase Farm, and King’s Highway Bridge, the oldest in-use stone bridge in America.

In extreme South Philly, you’ll find Franklin Delano Roosevelt Park, adjacent to the professional sports complex, which contains a full 18-hole golf course, a nationally-celebrated skateboard park and the Meadow Lake Gazebo, long a popular spot for wedding photos.

The John Heinz National Wildlife Refuge at Tinicum, a little farther south in Eastwick next to the Philadelphia International Airport, is a top hiking, canoeing and fishing spot within a stunning environmentally-protected tidal marsh.

Urban parks

Spruce Street Harbor ParkSpruce Street Harbor Park
Spruce Street Harbor Park
Photo courtesy of Anastasia Navickas

If you prefer parks that feel part of the city rather than those that feel like you left the city, Philadelphia won’t disappoint.

Atop the Circa Centre South Garage in University City is Cira Green, a new rooftop greenspace boasting seasonal coffee carts, summer movies and some of the best views of downtown.

Named by Jetsetter Magazine as one of the “World’s Best Urban Beaches,” Spruce Street Harbor Park at Penn’s Landing is an eclectic recreational sanctuary along the Delaware River with seasonal food and beer trucks, a riverside boardwalk and a cluster of more than 50 cozy hammocks, which hang under spectacular LED lights strung amongst the trees.

From biking to basketball to bird-watching, Philadelphia’s city parks and green spaces offer unlimited means of escape from the bustle of urban life.

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Gift Aid vs Self Help Aid For College

College tuition can be costly whether you are seeking an undergraduate and graduate degree, attending an out-of-state public university, or taking classes at a private university.

If you do not have adequate savings to pay for classes, room and board, food, travel and other necessities, then you may be considering how to pay for college.

The costs of attending college continue to rise each year for both public and private colleges and universities. The average tuition and fees at a public in-state college was $9,687 and at or private schools it $35,087 for the 2020-21 school year. Obtaining financial aid is one way students can afford to attend college.

One common type of financial aid is called gift aid and typically comes in the form of federal and state grants and a wide range of scholarships that are given by private donors, foundations, non-profit organizations and even the universities themselves.

These grants and scholarships do not have to be paid back, which is helpful for students who are on a tight budget or are considering obtaining a graduate degree.

Another type of aid is called self help aid and usually comes in a form of work study programs and student loans. Some work study programs are sponsored by the federal government and they provide part-time jobs for students who need help paying their tuition. These jobs can be either on the campus of the college or university or off campus nearby.

Self help aid also includes federal student loans which have to be paid back after a student graduates.

There are advantages and disadvantages of both gift aid and self help aid. Undergraduate and graduate students may only qualify for one type of aid, depending on their financial circumstances, where they are obtaining their college degree or other factors.

What Are The Pros and Cons of Gift Aid?

Grants and scholarships are considered gift aid. One common form of grants are called Pell grants. These are grants provided by the federal government and Pell grants are given to undergraduate students who have demonstrated financial need.

The maximum federal Pell grant award is $6,345 for the 2020–21 award year (July 1, 2020, to June 30, 2021), but amounts can change annually.

The main drawback of gift aid is that you may not know what amount you will receive and you may need to supplement paying for college by seeking more scholarships and grants or getting a part-time job.

Federal work study programs are available for both undergraduate and graduate students to help them pay for tuition and other educational costs. The program’s jobs are related to the student’s course of study and also include community service work.

Both full-time or part-time students may qualify for part-time employment while they are enrolled at their university or college and it is available to undergraduate and graduate and professional students who demonstrate financial aid.

The work study programs are operated by a college and university financial aid office and you will receive at least the federal minimum wage. These jobs are available both on-campus and off-campus which can be beneficial for students who do not have other means of transportation.

Students who work off campus typically work for a nonprofit organization or a public agency and the goal of the job is geared to be in the public interest. The number of jobs is limited, so students should apply early to ensure that they have a position for the following academic year.

Federal and Private Student Loans

Another type of self-help aid are federal and private student loans. Federal student loans are based upon the financial need of a student and their family. They are either subsidized or unsubsidized direct loans and may offer lower interest rates than private loans. One drawback is that the federal government will limit how much money you can borrow.

Undergraduate students may qualify for subsidized loans that are given based on their financial need. One benefit is that the federal government will pay the interest on these loans while you are attending school or at least taking classes half-time, during your grace period or when you have deferred the loan.

Both undergraduate and graduate students may qualify for unsubsidized loans and they are not based on financial need. These loans accrue interest while students are taking classes, during the loan’s grace period, or when you have deferred the loan.

Private student loans can be used to help make up the gap in what is needed to pay the remainder of tuition or living expenses. While both federal and private student loans may help students pay for their tuition; they must be repaid once a student graduates.

If you do not complete your course study and do not receive a degree, the student loans still have to be repaid.

Federal student loans have protections that private student loans do not offer. Students who have received federal student loans can seek several options after graduation to repay their loans including income-driven repayment programs.

Federal student loans also offer borrowers’ the ability to put loans in forbearance or deferment, allowing them to temporarily pause payments in certain situations.

Some borrowers will choose to refinance their federal student loans into new private student loans. But this option means that you lose the protection of the federal repayment plans. Private student loans have both fixed and variable interest rates.

Fixed interest rates are beneficial for people who want to know the exact amount of their loans each month helping them to budget more easily. The interest rate on variable student loans are sometimes lower than fixed rates but that means your payment amounts can fluctuate from month to month.

Shopping around can help you find the best private student loan that fits your financial needs and the amount that you can repay each month.

Qualifying For Gift Aid or Self Help Aid?

Qualifying for either gift aid or self help aid might depend on your financial circumstances. Students may want to apply early for grants, scholarships, work-study programs and student loans.

completing a FAFSA®, or Free Application for Federal Student Aid. This application must be completed every year.

Some states and colleges may have their own FAFSA deadlines , so double check to avoid missing any. Missing a deadline can mean forgoing some financial aid.

While some gift aid such as scholarships are given to students based on merit, grades or other accomplishments, grants, work study programs and student loans are typically based on your financial needs and the cost of tuition at your university.

Some universities use data from the FAFSA to determine gift aid like scholarships too. Students can also apply for scholarships and grants that aren’t associated with the FAFSA®.

Private Student Loans with SoFi

In some cases gift aid and federal aid aren’t enough to help students pay for their tuition. In that case, some students may consider private student loans.

SoFi offers private student loans with no late fees or origination fees with flexible repayment options. There are also interest rate discounts for eligible SoFi members.

Interested applicants can find out what rate and terms they could pre-qualify for in just a few minutes. Learn more.



SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SOPS20061

Source: sofi.com

Do I Qualify for the National Mortgage Settlement?

Last updated on February 10th, 2012

In case you haven’t heard by now, the so-called “National Mortgage Settlement” was finalized today.

It’s the largest multi-state settlement since the Tobacco Settlement back in 1998, related to robosigning allegations that took place over the past several years.

Essentially, some of the nation’s largest loan servicers routinely signed off on foreclosure documents without doing their due diligence, and/or without the presence of a notary.

It will provide more than $25 billion in assistance to homeowners, participating states and the federal government.

For the record, all 50 states participated except for lonely old Oklahoma.

The offending parties in the National Mortgage Settlement include:

– Ally/GMAC
– Bank of America
– Citi
– JPMorgan Chase
– Wells Fargo

These are the nation’s five largest mortgage loan servicers.

Benefits will be provided to both borrowers whose loans are owned by the settling banks as well as to borrowers whose loans they service.

In other words, your mortgage may have been originated by another company and sold to one of these companies to be serviced. So be sure to check your loan documents if you think you may be eligible.

Where the Settlement Money Will Go

The bulk of the money, at least $10 billion, will go toward principal balance reductions. In other words, those who hold underwater mortgages will see their balances drop to get them above water.

But the assistance will only be directed toward those who are either delinquent or at imminent risk of default as of the date of the settlement.

The principal reduction will likely be facilitated via a loan modification, so borrowers will ideally end up with a smaller loan balance and a lower mortgage rate, which will certainly make mortgage payments much more affordable.

State attorneys general believe principal reductions will prove beneficial, and as a result, will be employed by other mortgage lenders not involved in the settlement.

Another $7 billion or more will be used for short sales and transitional services, forbearance of principal for unemployed borrowers, anti-blight programs, and benefits for service members forced to sell their homes at a loss as a result of a “Permanent Change in Station” order.

Loan servicers will also have at least another $3 billion at their fingertips to provide refinancing to borrowers who are current, but underwater on their mortgages.

These homeowners will be able to take advantage of the record low mortgage rates that were previously out of reach due to loan-to-value ratio restraints.

Additionally, $1.5 billion will be distributed to roughly 750,000 borrowers who have already lost their homes to foreclosure.

The states involved will also receive immediate payments of roughly $3.5 billion to help fund consumer protection and state foreclosure protection programs.

How and When Can You Get Help?

If you think you qualify for assistance, you can contact the offending mortgage servicer directly, although they should be contacting you…

For borrowers who lost their homes between January 1, 2008 and December 31, 2011, a claim form should be sent to you for one of those shiny checks.

You can also contact your individual Attorney General’s office to check eligibility, or to provide a current address assuming you moved and/or have been foreclosed on.

Unfortunately, relief won’t be immediate under the settlement. Over the next 30-60 days, settlement negotiators will be selecting an administrator to oversee the program.

And over the next six to nine months, this administrator will work with attorneys general and loan servicers to identify relief recipients.

It is expected to take three years to execute the entire settlement, so patience is a virtue here.

Who is Left Out of the National Mortgage Settlement?

Borrowers with Fannie Mae and Freddie Mac owned mortgages. And those with FHA loans.

This is more than half of the homeowners with mortgages in the United States.

So quite a few borrowers are missing out. But they can still get assistance via HARP 2.0, even if they are severely underwater. Or via the Broad Based Refinancing Plan currently in the works.

Additionally, those that have positive home equity likely won’t see any relief from this settlement.

Essentially, those that paid down their mortgages, or came up with a reasonable down payment, won’t qualify for assistance under this settlement.

While it seems like they’re losing out, they aren’t. This settlement is about shoddy foreclosure practices, so those that weren’t affected obviously wouldn’t receive any benefit.

However, they may receive the indirect benefit of a healthier housing market and higher home prices if the settlement works as it should.

It’s worth noting that the banks involved are still accountable for claims that may arise out of any other wrongdoings committed during the lead up to the mortgage crisis.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

4 Ways to Keep Your Taxes Down If You Are Self-Employed

Self-employment has its perks, but being your own boss can lead to headaches come tax season. In addition to the income tax, you’ll need to pay self-employment taxes that support the Social Security and Medicare programs.

But there are ways to reduce the amount you owe.

At the start of the new year, you may receive a 1099-NEC tax form or 1099-K tax form. You also may have received other income in the form of cash or checks for work performed in the previous year from being self-employed.

One of the best ways to lower your taxes paid on self-employed income is to increase your business expenses. As a self-employed taxpayer, you can write off expenses and take certain deductions against that income to help reduce your tax liability.

However, it is very important to hold on to all receipts for any business expenses related to purchases or professional services received and to keep accurate, up-to-date records of your business’s activity.  

Here are four easy ways to keep your taxes down if you are self-employed.

1. Driving expenses

If your self-employed income is from operating a ride-hailing or delivery business through platforms such as Uber or Lyft, you will be able to take a vehicle expense deduction. This allows you to recover some costs associated with wear and tear on your vehicle to operate your business.

Be sure to keep track of your business miles, personal miles and commuting miles as you will need to provide this information to take the deduction.

2. Home office expenses

Home office expenses is another deduction that you can take advantage of if you utilize part of your home as your office space to conduct business. A home office deduction can be calculated using the simplified deduction method, which is a prescribed rate of $5 per square foot of your home that is used for business up to 300 square feet.

Or you can use the actual expense deduction method, which allows you to write off a percentage of expenses related to rent, utilities, mortgage interest, property taxes and repairs and maintenance.

Other common deductible expenses related to your home office include website services, computer software, merchant fees, electronics and other supplies needed to run your business. 

You also can deduct communication expenses, such as a portion of your internet and cellphone bill, as long as those costs are directly related to your business. For example, if 20% of your time on the phone is spent on business, you could deduct 20% of your phone bill.

3. Depreciation deductions

If you purchase equipment, such as a laptop or a leaf blower for your business, you can categorize it as an asset and take a depreciation deduction — which allows you to spread the expense over the useful life of your asset.

For example, let’s say you purchased a new ergonomic office chair at the beginning of the year for $400. You will be able to classify this as an asset and take a $57.14 depreciation expense deduction each year over a useful life of seven years, which is standard for office furniture.

You can also take a Section 179 election to fully expense and deduct the asset in the current year — instead of depreciating it — to further reduce your tax liability. This is an annual income tax deduction taken by filling Form 4562 with your tax return.

4. S Corp election

Another way to keep your taxes down is by changing your business structure into an S Corp election with the IRS. You can make the S Corp election for your corporation or limited liability company.

For example, when operating your business as an S Corp, if your business income is $100,000 per year and you pay yourself a reasonable salary of $60,000, all income that exceeds your salary — $40,000 in this case — is not subject to self-employment taxes. Only the salary of $60,000 is subject to self-employment taxes. However, if operating your business as a sole proprietor, self-employment tax is due on the entire amount of $100,000 business income.

Financial Reviewer, RetireGuide.com

Ebony J. Howard is a certified public accountant and financial reviewer for RetireGuide.com. Her background is in accounting, personal finance and income tax planning and preparation. Ebony holds a dual degree bachelor’s and master’s in accounting from Clark Atlanta University. She is passionate about making an impact in the community, sharing her knowledge in financial literacy and empowering people to achieve greater financial freedom.

Source: kiplinger.com

Working Capital Loans – Lexington Law

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

According to PricewaterhouseCoopers, average revenues from 2018 to 2019 for businesses were up 10 percent, but many companies still struggled to convert those higher revenues to cash. When a business doesn’t have the cash flow to support daily or growth expenses for any reason, working capital loans might be an option. Find out more about working capital below to help you decide if this funding source is right for your company

What Is a Working Capital Loan?

Working capital loans are a type of funding that helps ensure businesses have the capital they need to continue operating during periods when it might be difficult to cover daily expenses while meeting new demands or growth. For example, if a business has tied up its cash flow in inventory for the holiday rush season, working capital funds can pay the bills—such as employee wages and rent—until holiday revenues are in.

It’s important to note that working capital isn’t meant to make investments or buy long-term assets such as equipment. If you need equipment, you may need to take out a secured loan for it. Working capital loans are meant to cover the standard operating expenses of the business such as regular debt payments, wages, rent and utilities.

Working capital loans help ensure businesses have the capital they need to continue operating during periods when it might be difficult to cover daily expenses while meeting new demands or growth.

Working Capital Financing Options

You can get working capital loans from a variety of sources. Some of the most common options are summarized below.

Short-Term Loan

What is it? You might be able to borrow money for a few months to help fund expenses until seasonal income comes in or a large invoice is paid.

Pros: It might be a good way to balance cash flow during seasonal upticks in expenses or downturns in income.

Cons: Because the terms of the loan are short, the lender may charge a relatively large fee to make money from the deal in lieu of interest paid out over a longer period of time.

Merchant Cash Advance

What is it? A cash advance offered by the bank or agency that handles your payment processes. For example, businesses that accept money through PayPal may be eligible for a Payment Working Capital loan.

Pros: These loans are typically easy to get if you have a solid history processing payments through that bank or agency. That’s because the loan isn’t based on your personal credit or the credit of your business. It’s typically based on how much average revenue you process through that payment method.

Cons: Typically, merchant cash advances are paid back as a percentage of your sales over time. That lowers your cash flow for the immediate future and can make it more difficult to budget for business expenses if you overcommit on the loan.

Bank Line of Credit

What is it? A revolving line of credit that you can draw from and pay back and then draw from again—similar to a credit card.

Pros: A line of credit is flexible and ongoing, which means it’s there when you need it, but you don’t have to draw on it if you don’t need to. It can also be a good way to balance cash flow if your revenue tends to fluctuate.

Cons: You may need decent personal or business credit to get approved for a line of credit. It can also be tempting to rely too heavily on it, temporarily masking serious financial problems until they might be too late to resolve.

SBA Loan

What is it? You can get certain types of loans through programs approved by the Small Business Administration. Some of these loans can be used for working capital.

Pros: While the terms and rates associated with SBA loans vary, they may be more favorable than those of traditional loans.

Cons: SBA loans can be easier to qualify for from a credit perspective, but they do have specific requirements, such as documentation. You may also be limited on what you can use the funds for.

Trade Credit

What is it? Trade credit occurs when you purchase goods on an account and pay for them later. Typically, if you pay within the agreed-upon period, you don’t pay interest on this debt.

Pros: Trade credit is low-cost and is generally a common business practice, which means it might be available to you from various vendors.

Cons: This isn’t a form of credit you can use to cover expenses other than goods purchased, but that might free up some cash for other uses.

Who Offers Working Capital Loans?

Working capital loans are offered by a variety of organizations. Banks, credit card companies and payment networks might all offer working capital loans. Some organizations specialize in this type of lending and work with businesses that can demonstrate a strong historic revenue to provide working capital loans or lines of credit.

Working Capital Loan Interest Rates and Fees

As with any type of lending, working capital loans do cost your business in the form of interest rates and fees. With a few exceptions, such as certain trade credit arrangements, working capital comes with varied rates and costs. If the lender makes money via interest, your own credit or the creditworthiness of the business may be used to determine how much interest is charged.

Some working capital loans don’t include interest. The lender instead charges a flat fee that is incorporated into the total amount paid back during the loan process.

Is a Working Capital Loan Right for Your Business?

As with any form of debt, working capital loans have benefits and disadvantages. Understanding the common pros and cons can help you determine whether working capital loans are a good decision for your business.

Benefits

Working capital can provide the cash influx you need at just the right time. It’s a financial tool for helping businesses cover costs during various seasons or scale up for growth. If you’re careful about how you use the credit associated with working capital loans, they may not be as expensive as some other forms of financing.

Drawbacks

Working capital loans come with some of the same drawbacks of any debt, including interest or other costs. But a bigger potential disadvantage is the temptation to lean heavily on working capital even when you know that your business is in trouble financially. Working capital is meant to be a temporary bridge, not a crutch your business can lean on permanently.

Pros and cons of working capital loans

Other Options for Increasing Your Work Capital

Working capital is a measurement of how well a company can use its current assets to pay its current liabilities. It’s an important statistic for you to be aware of as a business owner, because it indicates how financially healthy your company is. If you need to improve your working capital but don’t want to receive financing from a third party, consider these other ways to increase your working capital:

  • Cutting business expenses, including unnecessary travel or acquisitions.
  • Increasing income by hosting a sale or increasing prices if the market will support it.
  • Collecting past-due invoices.
  • Selling valuable business assets that may not be required at this time.

As you weigh your different options for working capital financing, don’t forget to stay on top of your business credit score and your personal credit score, too. To learn more about the latter, check out Lexington Law’s guide to credit.


Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com