Online Financial Tips

Archive for March, 2011

Medical Malpractice Insurance is intended to cover the MD/DO for claims arising from direct patient care. But there are other kinds of malpractice insurance that cover other things. As mentioned in prior blogs medical malpractice is the name we give to professional liability insurance or errors and omissions insurance for physicians. However, there are other medical professional liabilities that covers others besides the MD/DO for their direct patient care.

Entity Liability Insurance or Entity Malpractice Insurance is insurance that protects the entity from claims that it is pulled into, based on vicarious liability.

Entity Liability Insurance Example:

Dr D hires a doctor, Dr PT, to work with him in his office on a part time basis. Dr D has the part time physician provide his own insurance. Dr PT misdiagnosis cancer and a patient sues the doctor for the mistake. The patient names Dr PT and Dr D. Dr D is named although the patient never met Dr D. The patient sues since Dr D’s name is on the door of the practice and therefore Dr D is seen as responsible for DR PT’s actions.

Since this is not direct patient care, the business entity is the one being named in the lawsuit so this will trigger the entity liability coverage. If Dr D has set up his entity liability insurance coverage, which is usually included in the doctor’s medical malpractice insurance, he will be covered. This is assuming that Dr D purchased entity coverage from his insurer, and that he informed his insurer that he was adding Dr PT to his practice and has him covered.

Or the other alternative is Dr D could have purchased stand-alone entity coverage, which is necessary if his medical malpractice insurer would not offer the coverage.

Clinic Malpractice Insurance is another common form of medical insurance. This is for clinics and has many unique features. First, the entity can require MD’s have their own insurance and the clinic malpractice insurance will cover the entity. Also, the clinic policy will cover its PA’s and NP’s while they work for the clinic for no additional charge. In addition, the coverage will cover the employees and nurses of the clinic. Lastly, it will cover the medical director for non-direct patient care. Many MD’s are not aware that their insurance only covers direct patient care, and does not afford coverage for medical director activities.

Allied Professionals Medical Malpractice Insurance is another form of insurance. These typically cover the NP and PA’s. The coverage is almost identical to the medical malpractice for the MD/DO. It covers the allied for claims arising from direct patient care. It also can include entity coverage.

Medi Spa is a more recent area. Many of these ventures think that their general liability insurance affords them coverage for a malpractice claim. It most certainly does not provide coverage. Medi Spas need coverage similar to the clinic coverage. They need entity insurance coverage, allied coverage (if applicable), and medical director coverage. This industry is the least insured of all the medical providers.

This article discusses some trends in the commercial real estate lending process available to borrowers requiring smaller amounts of money.

There are both fixed and adjustable rate commercial real estate loans available. These loans can be obtained with up to 30 year terms for both owner occupied as well as investment properties. These types of loans are more flexible and somewhat similar to residential programs and offer various advantages to the smaller investor.

The focus for some lenders is toward loans of a million dollars and under, with a minimum loan size of one hundred thousand. Typically, there are two distinct programs available for small balance commercial loans. The first one is similar to a bank type loan which is for investors who can document income. If the borrower is able to provide the documentation needed the loan, terms will be competitive with a bank. The second type of loan for small balances is one in which the borrower doesn’t provide any documentation. In this case there is no real underwriting done on it. The rates prove to be a little higher in this case.

A 30 year term and amortization can sometimes be offered which allows the borrower to have the same interest rate for the life of the loan. Most banks will only offer a 5 year term. This allows the borrower to spread the payments out over 30 years at slightly higher interest rates than a bank but with lower monthly payments. Another nice thing about having a long term loan is that you don’t have to repeat the loan process every five years which can by trying for a lot of people.

Some of these more innovative lenders are able to bring the loan to closing within 45 days or less. That is a lot better than the traditional commercial loan which could take several months. The only reason that it takes up to 45 days is that a commercial appraisal can take anywhere from 2 to 4 weeks to complete.

Another benefit of this type of loan program is that it isn’t a short term loan with a balloon payment. This also means that there is no ongoing financial reporting. Once the loan is established and you make your payments, you stay on without having to produce certified financial statements every quarter to keep your creditor happy.

Most banks will require financial statements as part of the covenant to their loan. This is very costly and if the bank doesn’t like what they’re seeing in terms of the latest financial information, they can pull the loan or request that you pay up immediately.

One of the big risks of balloon payments is that at the end of 5 years a balloon would be due. If you’re in trouble with your credit, or the business isn’t doing as well as you’d hoped, it’s going to be challenging to produce the money or find someone else to refinance with. Getting into a long term program with a fixed rate can provide a lot of comfort for the borrower. They will know what their payments are going to be every month as far as they can see into the future.

There are even loan programs available that will allow the investor to borrow up to 97% of the property value. There are some restrictions though. The property needs to be owner occupied. For example, the business owner will be leasing the property. It makes more financial sense for them to own it and have the tax advantages that go along with that.

The business owner can come up with as little as 3% down to buy the property. This is amazing as most banks max out at an 80% loan to value on property. This requires most borrowers to plunk down at least 20% in a typical lending situation.

The focus in some loan programs is on the strength of the personal borrower. This way, it’s not just what the business is earning or the cash flow that is being generated by the property. The borrowers own investments, income, liquidity, and other factors are used to determine if they can support the debt for their investment.

Looking for some positive news on commercial mortgage lending and commercial real estate investing? Generally speaking there is scant little to be found, but one particular sector of the industry is thriving and represents a tremendous opportunity for real estate investors and developers; government buildings. For good or for ill government is growing and growing fast.

The current administration in Washington appears particularly amenable to the expansion of government. The economic downturn that has devastated private business has proven to be a boon for the public sector. Over the next decade government agencies such-as The Social Security Administration, The Department of Homeland Security, and The Department Immigration and Naturalization will all be expanding rapidly and with that expansion will come an incredible need for office space and administrative facilities. The Justice Department is in dire need of up-to-date, modern court houses and The US Postal Service has made a multi-billion dollar commitment to new, high-tech retail postal outlets as-well-as brand new regional distribution facilities. There is a boom going on in real estate, it’s the government facilities boom and it represents some excellent opportunities for savvy investors.

In the past it was common for a government agency to own the building it worked in, but today the trend is for the actual building to be owned by an investor or developer and merely leased to the agency. The government has realized that real estate ownership is not necessarily consistent with its core mission and that they would rather have free cash flow instead of dormant equity. New buildings are being built to suit a particular government agency and then triple net leased (NNN) to that agency. In addition, the government is monetizing existing equity by executing “sale and lease back” transactions whereby they sell buildings they currently own, grab the cash, and simply lease the building back from the new owner.

Developers that used to build hotels and shopping centers are now bidding on the construction of court houses, government office buildings and post office warehouses. Investors who’ve recently been burned in privately owned commercial real estate are now lining up for the dependable income that comes from owning real estate that is used by the government.

There are two huge advantages to investing in government real estate.

First, the US Government has never missed a rent payment and has never reneged on a lease. Uncle Sam still enjoys the highest possible credit rating; they have taxing power, and if that fails they have printing presses. If you are landlord to the Government you will get paid.

The second (extremely important) factor that makes this real estate niche more attractive than almost all others right now is the simple fact that financing is readily available.

You can’t get a loan to build a strip mall, an apartment building a motel or an industrial park today. America does not need or want any more commercial real estate inventory on the market right now; about 10% of what we already have is just sitting vacant. Capital is extremely tight and lending standards are extremely restrictive…unless you are buying, refinancing or building for the government.

Property owners, commercial real estate investors and developers with projects and buildings NNN leased to the Federal Government or a Federal Government Agency are not suffering the effects of the current credit crisis that the rest of the industry is struggling with. Funds are immediately available and not hard to qualify for if your tenant is Uncle Sam.

A unique and specialized lending platform called credit tenant lease (CTL) financing makes getting a loan against a government building relatively simple. Unlike traditional commercial mortgage lending, CTL financing is underwritten based on the strength of the tenant and the structure of the lease rather than the creditworthiness of the borrower and the appraised value of the real property. With CTL lending, if the tenant is strong and the lease is tight, you can get a loan.

CTL loans are long term, non-recourse, fixed rate commercial mortgage loans that hold the lease and the income it produces as the primary collateral against the loan. Because of the straight forward nature of CTL lending, loan amounts are generally much higher than normal, bank or Wall Street loans. Many CTL lenders will lend up to 100% of the value of the building (100% LTV) or 100% of the cost of construction (100% LTC). The only restriction is that the rent collected must (slightly more than) cover the mortgage payment. Debt-service-coverage ratios (DSCR) are a very low 1.01-1.05.

Interest rates for CTL loans are based on corresponding government bond rates with a small premium applied. Deals are funded by issuing private placement mortgage backed bonds and selling them to fixed income investors. CTL loans can be written and closed in 45-60 days from start to finish; much faster than conventional commercial real estate financing that can take 90-200 days to complete.

In addition to the Feds, State, County and City Governments may also qualify if they have maintained a good credit rating with Standard & Poor’s and Moody’s.

The economic downturn and corresponding credit crunch has devastated commercial and residential real estate alike. There is no doubt that it’s tough out there, and recovery is going to take time. But opportunity can usually be found in the midst of crisis. One of the opportunities for real estate professionals is clearly to be found in government real estate. The unprecedented growth in the sector means demand will be there. The availability of financing through CTL means that the capital to fuel that growth will be there as well.

It is imperative to business owners to have awareness on credit card processing. This is due to the fact that they make profit or they get sales from offering card payment on their businesses online. If an online business owner lacks knowledge on this certain area, then here are some fundamentals on card processing for businesses.

What gives online businesses the opportunity to increase sales is by accepting “plastic” payments as one of their payment methods. Here is an overview of how the transaction is processed:

1.) If a customer wants to complete an order or a transaction, they would have to fill-out a secure form on your site.
2.) The card information is submitted through a gateway, then it is verified and the payment gets authorized.
3.) Then the money is transmitted by the card processing bank to your merchant account.

Online business owners typically want to avail a discount credit card processing for their business, but they have to keep in mind that they should also avail the one that would give them the best quality so as to avoid any errors on online transactions. If customers experience errors or repetitive errors when making transactions on an online shop, they would get annoyed and eventually be discouraged in buying the item or availing the service and the business would lose a sale or a deal, so online business owners should realize that availing a cheap processing service may also cost them by losing a customer/s. Nevertheless, this does not mean that those who offer great discount credit card processing also offer poor service.

Online business owners should not be misled by those card processing providers that offer discount credit card processing because they usually have hidden fees that only show once a merchant signs a contract.

Searching for discount credit card processing may take some time and effort. An online business owner should carefully look for the companies that has special offers like discounts on getting a membership or a one-time markdown for the first month of availing the service. Once you have found the right processing service provider, then your business is ready to operate. Make sure that customers will see a big signage on your website that you accept payments through credit cards so that they will be encouraged to buy from you.

The ever progressing technology that revolves around the internet has created a new way to deal with money. Many businesses revolve around online shopping and electronic commerce. E-commerce has revolutionized the global market by connecting the world through the internet. It is becoming easier and easier to make international transactions, thus expanding the scope of any online shopping/e-commerce business. Also another benefit to starting a business over the internet is the decrease in cost for work environment, since most people who own a business on the internet run it from their own home.

Many people today, whether consumer or vendor, have opened a merchant’s account that allows them to make transfers from their bank account in order to make payments or receive them. The ease and availability of online banking has made all types of transactions extremely convenient and easy. When you open a bank account you can keep track of all the places where you accessed your on line savings account to make a payment, you can keep track of the current balance, make changes to your account, etc. Performing all these actions electronically is rapidly becoming the norm when dealing with money. You can also access your on line savings account to check the annual percentage rate of interest that you will be earning, or you can also access your checking account to make sure all of your bills have been sent.

The internet is the biggest and fastest growing market, with billions of potential customers, and online banking has helped accelerate that process immensely. When customers have easy access to money online it facilitates the shopping process, and makes it far more profitable. I predict that in the future the number of stores and malls is going decrease sharply in the upcoming years, because online shopping and e-commerce has been becoming the number one choice for most small businesses and vendors.

If you are eligible to apply for a business credit card and need to reduce your gas expenses, here’s the deal. To help you with cut-back on your gas expenses, we reviewed some of what we think are the most rewarding business gas credit cards out there. Before applying for a gas credit card, the introductory rate, APR, Annual Fees, Cash rebates, and reward programs are some features that should be compared.

Discover Business Card

Designed for corporate enterprises, the Discover Business card is also a plus point for running home businesses. The Cards’ reward program awards a 2% rebate for purchases on gas and 5% for office supplies. Discover’s ecommerce site offers 5 to 20% discounts on purchases from Cardholders. Balance transfers and purchases incur 3.9% and 0% intro APR during the first 6 months and 12 months respectively. Afterward, a fixed 13.99% APR is applicable. Cash rewards and points accumulated never expire. Free employee cards are also available with customizable spending limits for each individual card. This allows an administrator keep accumulating rebates even as employees make expenses. The Card attracts no annual fee.

Blue Cash for Business Credit Card

Blue Cash for Business awards up to 5% cash rebate for purchases on gas and other eligible items. The intro period offered on the card lasts 6 months during which 0% interest is charged. Afterward, other card transactions are charged an APR that could come low as 2.99%. A side benefit is the employee cards that earn cash rebates on purchases. Cardholders aren’t charge annual fees.