We often find ourselves in a quagmire of financial crisis when we try to extend our credit for the next month just to find out that we are again facing the same problem and the over-extended credit just keeps adding up to present debts. In worse cases, people are known to declare bankruptcy to save them from impending doom.

Debt Reduction Solutions
In the case that you are unable to pay off your pending bills or find yourself trapped with increasing debts, there are some debt reduction solutions you can use in order to control your finances better.

It is important to look up the similarities and differences between the two debt reduction solutions in order to understand which of these solutions is better for you before making a choice.

1. Debt Consolidation
Debt consolidation programs are excellent alternatives to bankruptcy and offer consultation to manage and reduce debts. They also provide you with options to handle credit card debts.

a. Debt consolidation programs can plan your finances and give you a debt consolidation loan to pay off all your debts.

b. They offer specialized debts consolidation too in the case of credit card debt consolidation.

c. They have a very low interest rate and you are required to make only one monthly payment that is very small and is planned keeping in mind your financial situation.

d. You can use these programs with all kinds of debts – secured and unsecured.

2. Debt Settlement/Negotiation
This is different from debt consolidation. A debt settlement consultant will reach a settlement with your creditors to drastically lower your interest rates up to 50 percent of reduction is possible.

This system works because most creditors are reasonable and are interested in obtaining their money so they will be willing to reduce their rates as they know that they stand a better chance of getting their money in this fashion rather than from a person who declares himself bankrupt and can no longer pay the money.

a. You can choose the debts you wish to include in the debt settlement program.

b. There is no guarantee that all creditors will accept debt settlement though most will.

c. You will still be responsible for all secured debts incurred.

d. This system is most suited for people who are employed and working hard to clear their debts.

Credit Card Debts Solutions
Control the urge to flash that plastic. Each time you swipe your credit card; you are further pushing your credit limits and adding to expenditure. The start to saving can be done if you change your spending habits and reduce or eliminate the use of credit cards.

Credit card companies offer attractive benefits and schemes to lure the user into making a lot of non-essential spending as they stand to make a profit from pending balances. People end up ensnared in debt and then most of their money can just flow in the direction of clearance of credit card debts.

Lenders also tend to avoid lending any money to people with a bad credit card history or a high amount of balances. Bad credit is an extremely bad partner to have when you are in need of a loan for making a huge purchase such as a home or car.

It is possible that bad credit does not go against you in obtaining a mortgage or finance but the terms of finance may be very narrow and binding as in a higher rate of interest or a bigger down payment which basically adds up to yet more losses and possibly more debts.

Tips for credit card debt reduction:

1. The best way to cope with credit card debt is to stop the problem at its source that is to stop using the card. Cutting down on those expenses could help you save money which you can use to pay off your debt.

2. The minimum payment you need to make is just about equal to the sum required for the finance charges. For quick debt reduction, keep track of this and make a higher payment than the minimum payment. The more you pay the sooner the debts clear off.

3. Make sure that you use a zero percent interest credit card. That way you will not be paying interest and transfer all your existing credit card debts to that card too.

These are a few of the debt reduction solutions you can use to eliminate debt from your lives. The best thing of course, is not to incur debts at all but if that is inevitable it is equally important to take charge of your finances and keep your debts under control, in order to lead a stress free life

The owners of Twilight Bistro are hoping to expand, but they said the market for loans is still tight.

“They want as much assets as what it is worth,” Twilight Bistro owner Joe Anglin said. ”If I had that I’d just buy it.”

Anglin said part of the problem is, the business is not only small, but new.

“We’ve been here less than two years, and our track record does show a profit, but still with only two years and not a lot of assets, we expected to be told no,” Anglin said.

“The greater the risk, which often comes in smaller start up companies, the harder it is going to be to get those dollars,” Tricia Hollander with Hillyard Lyons said.

Still, Hollander said there are more dollars to be had, and credit is starting to ease up.

“We tend to see the pendulum swing,” Hollander said. ”I think maybe we’ve swung so far in one direction that at some point we’ll come back to the middle.”

She said new credit card rules that took effect Monday don’t apply to businesses, but that exemption could have an impact.

Some banks may try to make up lost revenue on the backs of businesses, and some businesses may put their credit on personal cards.

That makes financial institutions nervous.

“That becomes a little bit of a muddy issue when businesses take on personal liability, so that is a concern,” Hollander said.

As for Twilight, they said their best bet for a loan right now is the small business administration.

They said the wait could be a little longer, but they believe it will work out in the end.

Hollander said some small businesses are avoiding expansion right now anyway because they are focused on getting their financial house in order.

If you are a small business owner, will this loosen up my lender purse strings and allow some money to trickle down from the big cats on Wall Street and into your pockets?

Yes, it is a good start, but hold your contagion because it is not as wildly exciting as you might think. In fact, some have openly criticized the new bill. This is a continuing article (20 in all) on the subject: Help. Is anyone out there loaning to small businesses anymore?

Let us first begin by looking at a program that is already in existence and is being sold on the secondary market. There is a loan program out there and SBA lenders are actually making loans currently: the Community Express Loan Program. This gives unsecured small business loans between $5,000 and $50,000 with very little paperwork, answers typically in two days, interest rates presently at 7.75%, funding and two weeks, and monies wired directly to your business account.

There are still lenders participating in this program, although Congress has failed to make the program permanent and still has a 10% cap on the number of loans. Enter the Obama stimulus bill. Let us look how it affects this program and small business lending as a whole.

Some undiscerning headlines claim $3 billion in the stimulus bill is being pumped into the secondary market and viola, the banks will be making more loans. Not so fast. As this article explains, that money is being pumped into an elite SBA program that will not affect the average small business owner.

Before I give a clear answer, let’s define what we’re talking about. Most of us have heard about SBA loans. With the exception of disaster loans and the Microloan Program (for underserved communities), the Federal government through the U.S. Small Business Administration (SBA) does not actually loan the money.

Instead, it licenses private lenders, like the community bank on your block, to make loans and if there is a default, Federal government guarantees come to the rescue and reimburse for a certain percentage.

So, if you got a $100,000 loan (in this economy? OK, hypothetically) that has a 75% guarantee and there is a default, after going through certain steps, the lender could receive reimbursement for up to $75,000.

And remember there are literally thousands of lenders out there that do SBA loans for the simple reason they feel warm and fuzzy with the guarantee.

Forty-nine Monmouth and Ocean county businesses received SBA-backed loans worth $18.1 million during the last three months of the year, up from 35 businesses that received $16.7 million the same quarter the previous year, the SBA reported.

“We do see trends that indicate the worst is behind us, and we’re hopeful this trend we’re establishing continues on,” said James A. Kocsi, director of the SBA’s New Jersey district.

Small-business lending plummeted the past two years as banks, stung by bad loans, tightened their standards. It made it tougher for small businesses to buy equipment, pay workers and fuel the economy.

To jump start lending, the federal government as part of the economic recovery act provided $730 million to the SBA at least partly to eliminate and reduce fees and guarantee up to 90 percent of a loan. (The SBA previously guaranteed 75 percent to 85 percent of a loan.)

The incentives will remain until the end of February. But Congress may extend them through the end of the year.

Small-business owners say the credit market remains tight. Seaside Materials Inc., a Long Branch company that sells masonry building supplies, recently was forced to search for another lender after its long-time bank called in its line of credit, said Anthony Damiano, the company’s chief executive officer.

The company saw sales fall 60 percent during the recession. And even though it cut expenses just as rapidly and never defaulted on a loan, it couldn’t convince other banks to work with it, Damiano said.

The company, however, caught a break when Basking Ridge-based Affinity Federal Credit Union agreed to lend it about $580,000 — most of which will be guaranteed by the SBA.

“I found (Affinity) to be very communicable, especially in these times, because a lot of banks aren’t doing anything right now in terms of looking out for small businesses,” Damiano said.

TD Bank remained the biggest SBA lender, both at the Shore and in New Jersey. But three other banks that aren’t household names — BNB Bank, Indus American Bank and Innovative Bank — were among the biggest SBA lenders in New Jersey.

Kevin McCloskey, vice president of lending at Affinity, said the credit union became an SBA-approved lender just last year, hoping the banking industry’s credit crunch would allow it to make more business loans — and add customers.

All but one of its new customers “are being asked to leave the bank they’re at now,” McCloskey said.

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