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Salon Equipment Financing for 2020

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Finding the best equipment financing option for your salon, spa, or barber shop can be a chore. So, we’ve put together a guide to make the process a little easier. Once you figure out how to pay for the tools you need, opening a salon becomes a much more attainable (and more enjoyable) goal. 

Salon Equipment Financing for 2020

Buying the right equipment to run a successful salon or spa isn’t cheap. Because of the expense, you may worry that qualifying for a large business loan will be difficult. Yet often, the very salon equipment you need may serve as collateral for your loan. As a result, finding affordable financing could be easier than you think. 

5 Options for Salon Equipment Financing

Whether you need hair dryers, pedicure spas, or the perfect salon furniture, the right equipment loan can help. Compare the following business financing and leasing options to see if one might be a good fit for your salon. 

BlueVine

BlueVine was founded in 2013. The lender offers several business funding options, including term loans which might be a good choice for equipment financing. 

Rates: Starting at 4.8%

Requirements: 

  • 600 minimum FICO Score
  • 6 months or more in business
  • At least $10,000 in monthly revenue

Loan Amounts: Up to $250,000

Repayment Terms: 6 – 12 months

Pros:

  • You may qualify even with fair personal credit (but not at the lowest rates)
  • Fast funding in as little as a few hours after approval
  • Prequalify with a soft credit inquiry that won’t hurt your credit score

Cons: 

  • Loans aren’t available for start ups
  • Low maximum loan amount compared with other funding options
  • Repayment terms are short with weekly payments automatically deducted from your business bank account

SBA Loan by SmartBiz

Small Business Administration loans — specifically SBA 7(a) and 504 loans — represent one of the most affordable ways for businesses to finance equipment. Yet qualifying for an SBA loan can be a time-consuming and challenging process. SmartBiz offers a faster online application process that could potentially help your company secure an SBA loan and get funded in less than a month. 

Rates: 6.25% – 8.50%

Requirements: 

Loan Amounts: $30,000 to $5 million

Repayment Terms: 10 – 25 years

Pros: 

  • Competitive interest rates 
  • Lengthy repayment term options
  • High loan amounts available
  • Shorter application and funding period compared with traditional SBA loans

Cons: 

  • Personal guarantee required from owners
  • Demanding qualification requirements
  • The funding speed on SBA loans can be slower than many other financing options

TimePayment

TimePayment is an equipment leasing company that has been in business for over 30 years. 

Cost: .0219-.0626 factor rate (based on your credit and the length of lease) 

Requirements: 

Lease Amounts: $500 to $100,000

Lease Terms: 12 – 60 months 

Pros: 

  • Transactions of $10,000 or less may be approved in seconds
  • Fixed, monthly payments
  • Potentially qualify with bad credit (though your cost will likely be higher)

Cons: 

  • Can be expensive compared with other borrowing options
  • Security deposit may be required

Kapitus

Founded in 2006, Kapitus offers several business financing options, including equipment financing. You can borrow between $10,000 to $500,000 for your business, if you qualify. 

Rates: 7.00% – 30%

Requirements: 

  • 600 minimum FICO Score (675 for loans of $150,000 and up)
  • 2 years or more in business (for loans over $150,000)
  • No bankruptcy filings for at least three years

Loan Amounts: $10,000 to $5,000,000

Repayment Terms: 2 – 7 years

Pros:

  • You may qualify with a fair credit score (but expect a higher rate)
  • Start ups may qualify with a FICO Score of 600 or higher (up to $45,000 in funding)
  • Little to no downpayment required

Cons: 

  • You might be asked to make weekly or bi-weekly payments 
  • Lender charges an origination fee between 3.5% to 5%

LendSpark

LendSpark is a licensed direct lender that specializes in alternative business financing, including equipment loans. Funding for small to midsize businesses is available to companies located in all 50 states. 

Rates: 5% – 35% APR

Requirements: 

  • At least 2 years in business
  • Personal and business credit considered (minimum credit score not disclosed)

Loan Amounts: Up to $2 million

Repayment Terms: 3 months – 5 years

Pros: 

  • Fast loan approval, potentially the same business day
  • Equipment loan and lease options available

Cons: 

  • Funding may be slow compared with other lenders
  • Doesn’t disclose minimum credit or revenue requirements online

How to Qualify for Salon Equipment Financing

Each lender sets its own qualification criteria when it comes to salon equipment financing or any other type of business funding. Yet all lenders are concerned with two very important details — risk and profit. 

Lenders are more likely to approve your application if they’re comfortable with the risk of doing business with you. Less risk means you’re more likely to pay a loan back as promised. Less risk generally equals more profit for the lender. 

To assess your risk, a lender may consider the following factors when you apply for financing. 

If you want to improve your equipment loan approval odds, these tips may help. 

  • Have an active business entity filing with your secretary of state. 
  • Make sure you have all necessary business licenses for your industry. 
  • All owners should be prepared to provide personal guarantees. 
  • Aim for a minimum personal credit score of 600 or higher. 
  • Your personal credit reports should be free of bankruptcies (in the last seven years). 
  • You and your business should have no outstanding tax liens. 

Can You Qualify for Salon Equipment Financing with Bad Credit?

Bad credit can be an obstacle when you apply for financing — equipment loans or otherwise. With equipment loans, however, you have a factor that works in your favor. The equipment you want to purchase can serve as collateral for the loan, which helps reduce the lender’s risk. Lower risk for the lender can make it easier to qualify for this type of financing. 

If you do qualify to finance salon equipment with bad credit, count on there being a trade off. The interest rates on bad credit loans are generally much higher compared with the rates you can secure with good credit. You may also face higher fees and shorter repayment terms.   

Here are some lenders that might consider approving your funding application if you have credit challenges. 

You might even find salon equipment financing with no credit check required at all. If you do, proceed with caution. No-credit-check financing can be expensive, often to the extreme. 

How Many Years Can You Finance Salon Equipment? 

The length of your repayment terms can vary widely for salon equipment. Depending on the lender, you may find equipment financing options that need to be repaid in a few months. Other loans may stretch out as long as decades. 

Repayment terms are based on a number of factors. First, a lender will assess your risk by examining your credit profile, time in business, annual revenue, current debts, and more. The amount you want to borrow also plays a role. Finally, the lender’s own risk tolerance comes into play — placing a cap on the maximum time (months or years) it’s willing to stretch out repayment. 

Should You Buy or Lease Salon Equipment? 

When you want to finance the purchase of equipment for beauty salons and spas, you have two primary options — buy or lease. Either option may help you stock your location with the tools it needs. But it’s wise to compare the pros and cons of renting versus buying salon equipment before you start filling out financing applications. 

Pros of Buying Salon Equipment

  • The equipment itself may serve as collateral, and you may not need to pledge additional assets to secure funding. 
  • Your loan may help you build better business credit (if the account reports to a commercial credit bureau and you always pay on time or early). 
  • You may be able to take advantage of special equipment owner tax benefits, like the Section 179 deduction. 

Cons of Buying Salon Equipment

  • You may need upfront funds (aka a downpayment) to qualify for some types of equipment financing. 
  • With low credit scores, you could have trouble finding affordable financing. 
  • If the equipment becomes outdated sooner than anticipated, you might have trouble upgrading due to your remaining loan balance. 

Pros of Renting Salon Equipment

  • If your equipment breaks, your lease may cover maintenance and repair costs. 
  • Your monthly payment may be lower when you lease salon equipment compared with taking out a loan to purchase it outright. 
  • You may be able to take advantage of Section 179 tax deductions, even if you’re only leasing salon equipment. 

Cons of Renting Salon Equipment

  • Someone else owns your equipment. 
  • You can’t take depreciation deductions on your taxes when you rent salon equipment.
  • An equipment lease may come with prepayment penalties. 

*Note: For all tax-related matters you should talk to a tax professional for advice about your specific situation. 

Alternative Financing Options for Salon Equipment

Has your business been denied for traditional bank loans? Do you believe you’re unlikely to qualify for equipment financing based on strict lender requirements? There are other types of financing you can consider. 

Business Line of Credit

A business line of credit can provide your company with a flexible way to borrow over and over again. Similar to a business credit card, a line of credit lets you access funds up to a preset credit limit. As you pay back the money you borrow (or a portion of those funds), you can then reuse the credit line up to its limit. 

You can use business lines of credit for a variety of purposes. Whether your business needs to buy equipment or access extra cash for overhead costs, a line of credit might be helpful. Generally, you will need good credit scores to qualify for this type of financing. 

Merchant Cash Advance

A merchant cash advance allows businesses to secure funding based on future credit card sales. If you qualify, the MCA provider will generally take an agreed-upon percentage of your credit card sales every day until you repay your full advance. 

Funding is typically fast with MCAs and the application process can be less involved than you face with traditional loans. MCA providers are often willing to work with business owners who have low credit scores as well.

You can use a MCA to pay for hair salon equipment purchases. But, if you do, you should expect the cost of this short-term financing to be expensive. The APR on a merchant cash advance could climb as high as 200% or more.  

Short-term financing options such as cash flow loans and invoice financing feature similar pros and cons for small business owners. 

Business Credit Cards

You probably don’t think of pulling out a business credit card to pay for equipment financing. And, in many cases, using a credit card to finance your company’s large equipment purchases isn’t wise. (Interest rates on credit cards tend to be much higher than loans, after all.) Yet there are some exceptions. 

You might consider using a business credit card to pay for large purchases, like equipment, in the following situations. 

  • You only need short-term financing because you’re confident you can repay the money you borrow quickly. 
  • You want to take advantage of a low-interest introductory offer from a credit card provider, and you have a plan to pay off the balance before the low rate expires. 
  • You’ll have the funds to pay for your equipment purchase by the statement due date, and you want to earn extra rewards with your credit card. 

Nav’s Final Word: Salon Equipment Financing

The right equipment financing and leasing options can help you grow your business. But it takes some research to find the best deal available for your salon or spa. 

Like any small business owner, you’re probably excited to prepare your location and open the doors to new customers. But don’t be tempted to rush the financing process. Taking the time to compare offers and rates can save you a ton of money in the long run. 

Also, don’t underestimate the importance of establishing good business credit. Even if you can’t qualify for the best deal today based on your credit rating, you can work hard to change your situation for the future. Once you improve your credit, you might even be able to refinance your current loan with a better option. 

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Bad Credit

Loans for Bad Credit: Alternatives to High-Interest Loans

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In the face of unexpected events, most Americans don’t have enough cash to cover their needs. Statistics estimate that more than half of all Americans have less than $1,000 in a savings account.

It’s challenging to get through everyday life without expecting anything to go wrong. Any emergency — be it a car accident, a hospital visit, or even a broken refrigerator — will put Americans in trouble.

To add insult to injury, poor credit can make an emergency even more challenging. That’s where installment loans come in.

For consumers that have a bad credit score (below 630), installment loans can be the best option to get quick money. Installment loan funds are distributed all at once. Afterward, the repayment of the installment loan follows either a fixed monthly payment.

Online installment loans are ideal for emergencies as access to fast cash. Here’s everything you need to know before taking out an installment loan.

Online Installment Loan Basics

Installment loans are actually a broad category that includes many different kinds of loans, such as mortgage loans, car loans, and other personal loans. They tend to be long-term loans that require credit checks.

Payday loans are another type of installment loan. However, its structure is different. They must be repaid over a shorter period, have higher interest rates, but require no credit checks.

Installment Loans

As stated above:

  • Installment loans deliver quick cash in one lump sum

  • Installment loans require a credit check

  • Installment loans describe many different loan types

Furthermore, installment loan terms depend on the type of loan and can range from 3 years for car loans to 30 years for mortgage loans. In contrast, a personal installment loan lasts for approximately 12 months.

To get approval for any of the above loans, the individual will be subject to a credit check (more to know on that here: https://www.wisegeek.com/what-is-a-credit-check.htm ) and a fairly long application process.

Installment loans offer an APR of 36% or below, and user payments can be made online, over the phone, or by check.

Another advantage of installment loans is that they help borrowers improve their credit rating — as long as they pay on-time. It provides immediate access to cash, while at the same time, it’s a means to an end toward recovering a bad credit score.

How well individuals can do often depends on the terms of the installment loan that they receive. Keep reading to get more advice on how to choose an installment loan that is right for you.

Choosing an Online Lender

Like any other loan, picking a lender requires a fair amount of research and work. It’s not going to be a simple task, and there are several factors that individuals need to look out for when picking the right loans.

Below are the most important features that individuals need to keep in mind when choosing an online installment loan.

Compare Rates

All the different installment loan options out there are going to offer different percentage rates. These range from 6% to 36%, and you should sift through all possible options to get the most favorable rates.

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Ideally, individuals should opt for the lowest rates to ensure that the monthly payments are as low as possible.

Online lenders can offer potential borrowers their interest rates ahead of time. This usually requires a soft credit check, which does not impact a borrower’s credit score.

However, applicants need to be careful, as different vendors have different requirements. Understanding these requirements will help avoid any mishaps.

Understand All Fees

Every vendor has different fees, these fees might have different names like an “organization fee” or a “service fee,” but they generally range from 1% to 6%.

In contrast, other vendors might charge a prepayment fee for early repayment. Under no circumstances should a borrower agree to a loan deal before the lender discloses all fees.

It’s up to the individual to be as vigilant as possible because certain vendors will keep some fees to themselves, and may not disclose them until the last minute.

To avoid any excess costs in the future, make sure to go over the contract in its entirety.

Choosing Manageable Terms

Installment loans offer a lot of advantages for needy consumers:

But, one thing to remember is this: the longer the loan term, the higher the interest individuals will pay. Taking longer terms might give borrowers more time to pay, but it also means that borrowers will have to pay more interest.

In contrast, shorter terms are harder to manage, but it means paying a lower interest rate. When choosing the right installment loan, individuals should calculate the monthly payment based on the term length.

Many online vendors offer software that automatically calculates the amount. Everyone should employ a strategy to assess different term lengths to see what monthly payments are the most manageable.

Vendor Perks

Not all vendors are the same, and it’s already established that they offer different rates for different prices. However, while already offering different rates, vendors also offer different perks — specific features tailored to the individual.

If the individual is consolidating debt, certain lenders will send loan money to creditors on behalf of the loanee. Other vendors offer the ability to change due dates or provide hardship plans if the borrower encounters any financial difficulties.

It’s crucial to consider all these factors before taking out an installment loan. It’s best to have everything working to your advantage with an already poor credit history before taking out an installment loan.

Our Top Picks for Online Installment Loans

There are hundreds of online installment loan options out there, and looking through all of them can be a hassle. Furthermore, those new to the industry won’t be able to identify scams or loans meant to exploit.

Upgrade

Upgrade is one of the best installment loan vendors for those with a bad credit score. They accept a minimum score of 600 and will provide potential applicants with an offer in minutes. Their APR rates range from 7.99-35.97% depending on the amount, duration, and purpose of the loan. Users can easily apply for loans and get ideas on rates using the company’s website.

Simple Fast Loans

Simple Fast Loans is also among the best installment loan vendors for individuals that have a bad credit score. They offer loans ranging from $200-$3,000. These loans have terms up to 5 years.There’s no prepayment penalty, and applicants will also get next day funding. To get an idea of the rates, users can easily apply using their website.

LendingPoint

For users that have a credit score below 600, a great option to choose is LendingPoint. They accept a minimum credit score of 585 and offer loans for $2,000-$25,000. The APR rates for these loans are on the higher side ranging from 9.99-35.99%. Money becomes available to the applicant the next day, and there’s no prepayment penalty on the loan.

Avant

Another installment loan vendor for users that don’t have a good credit score is Avant. They require a minimum credit score of 580 and offer loans for $2,000-$35,000. The APR rate is between 9.95-35.99%, and they offer the ability to change payment dates. However, applicants will have to pay a loan origination fee, and there’s no option to include a co-signer on the loan.

Online Financing Options to Avoid

Online installment loans are a great option for individuals with bad credit scores, and, if used correctly, are a way to improve credit scores.

However, the same can’t be said for all online financing options, and certain ones are important to avoid.

Payday Loans

Payday loans function similarly to installment loans. In addition, they have recently been rebranded as short-term installment loans.

The loans are usually under $1,000 and are due on the next payday. With payday loans, an individual will have to either submit a post-dated check or provide access to the bank account.

It might sound relatively okay, but the issue with payday loans is that it’s nearly impossible to pay them back. Lenders will let individuals roll over the loans with more interest to pay the next day. Interest rates are typically 400% APR on these loans, and individuals get caught in the payday loan debt cycle.

No Credit Check Loans

These loans might seem like a good idea for those with bad credit scores, but they’re essentially just a debt cycle. The combination of high-interest rates, short terms, and lump sum repayment means that borrowers are stuck in a cycle of ever-increasing debt. It’s best to find loans that offer some sort of credit check and security to get the best terms.

Upfront fees

While certain loans might require a small percentage to process the application, some can be a complete red flag. There are plenty of up-front loan scams, and there are several signs that borrowers need to address. If a vendor asks for money upfront, then there’s a good chance it’s a scam.

Additionally, these issues tend to arise the most with vendors that don’t offer credit checks. Lastly, do enough research to recognize an offer that seems too good to be true.

Conclusion

Keeping all these things in mind, online installment loans are the best option for borrowers with a bad credit score. They are a useful resource and, if managed correctly, are a path to recovering a good credit score.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes



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Build Mastercard Credit Card Review

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When you have bad credit, it can be extremely hard to build it back up. To rebuild your credit, you need to open a new credit account, pay your bills on-time and keep it in good standing. But when your credit is bad, there are very few companies that are willing to approve you for a new credit card account. However, the Build Mastercard is specifically designed for people with bad credit. Let’s take a look at this card and see how it works.

How the Build Mastercard Works

This card is designed for people who have had serious credit problems, and it charges setup and maintenance fees to offset that risk. It is marketed as an affordable alternative to payday loans for customers who are trying to establish, strengthen or rebuild their credit history. It promises customers clear upfront pricing, no hidden fees, and tools that help them use and build credit wisely.

To open a new account, you will have to pay a one-time account setup fee of $53 and a membership fee of $72 annually. These set-up and maintenance fees will be charged to your account before you begin using your card, and will reduce the amount of credit that will be initially available. For example, if you receive a $500 line of credit, then your initial available credit will be $375, which is $500 minus the $72 membership fee and the $53 account setup fee.

Top Features:

Reports to major credit bureaus; initial credit limit of $400; fast application process with results in seconds

The late payment and returned payment fees are each $35, but thankfully, there are no over-the-limit fees or foreign transaction fees imposed on charges processed outside of the United States.

Another important aspect of the Build Mastercard is that it has no grace period. With most credit cards, you can avoid interest charges by paying your monthly statement balance in full. The period between the statement closing date and the payment due date is known as the card’s grace period. Since the Build Mastercard has no grace period, it will begin charging interest on purchases and cash advances on the date of the transaction. The standard interest rate for purchases and cash advances is 29.9% APR, which is a variable interest rate that can rise or fall with the Prime Rate.

As a Mastercard, this card is accepted worldwide at millions of merchants in nearly every country. Mastercard also offers a Zero Liability Protection policy. This means that even though the Fair Credit Billing Act allows card issuers to hold customers liable for a maximum of $50 in the event of fraud, you’ll never be responsible for any amount in the event of an unauthorized transaction. To utilize this policy, just take reasonable care to protect your card from loss or theft and promptly report any loss, theft or unauthorized charges to your card issuer.

Build Mastercard Advantages

This card is designed for applicants with bad credit. If you’ve had credit problems, then you will be far more likely to be approved for this card than you would for a card that wasn’t meant for those with bad credit. Unlike secured cards, the Build Mastercard doesn’t require that you pay a deposit and it will start off most accounts with a $500 line of credit (which will be reduced to $375 until you’ve paid the $72 membership fee and the $53 account setup fee).

The Build Mastercard is also a full fledged credit card, which will make it easier to rent a car or check into a hotel room. In contrast, those who have debit or prepaid cards can have difficulties when traveling and may have to submit a cash deposit to rent a car or check into a hotel.

Top Features:

Reports to major credit bureaus; initial credit limit of $400; fast application process with results in seconds

And although this card has numerous fees to open an account, it has no foreign transaction fees. Most credit cards, and even some premium reward cards, still charge a 3% foreign transaction fee on all charges processed outside of the United States. So whether you are making a quick trip across the border, or taking a vacation overseas, you can use this card anywhere without being assessed an additional fee for each transaction.

Finally, the Zero Liability policy is one of the best protections offered by a credit card. This allows you to use your card with the confidence that you won’t have to pay any of the cost of fraudulent transactions.

Build Mastercard Disadvantages

The $72 membership fee and the $53 account setup fee are expensive, and some applicants may want to consider a secured card instead. There are plenty of good secured cards listed here. While you may have to pay an even higher deposit to open a secured card account, that money is refundable when you close your account in good standing. The 29.9% APR interest rate is high, but not out of line for a card marketed to those with bad credit. Finally, the lack of a grace period means you will always have to pay some interest on your charges, even when you pay your statement balance in full.

Bottom Line

The Build Mastercard is specially designed for people with bad credit, and it has its own distinct advantages and drawbacks. By carefully understanding how this card works, you can decide if it is right for your needs.

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Are There Mileage Limits on Rent to Own Cars?

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Rent to own cars, also called lease to own vehicles, don’t come with mileage restrictions. They can be a good option for bad credit borrowers who need a car fast. We cover how these agreements work, and how they’re different from other vehicle buying options.

Rent to Own Cars and Mileage Limits

Are There Mileage Limits on Rent to Own Cars?Traditional leased cars come with mileage limits, but rent to own vehicles don’t come with this restriction. Traditional leasing companies place mileage limits on their cars to preserve their value, typically so that they can be sold at a later date as pre-owned vehicles.

Many people think that leasing and rent to own cars are similar, but the truth is that they’re very different. Leasing involves making payments on a vehicle for around two to three years, and then returning it at the end of the lease. With rent to own cars, the main goal once you make all the payments is ownership.

Another large difference between leasing and rent to own vehicles is that leased cars are almost always brand-new vehicles. Rent to own cars are always used.

How Rent to Own Vehicles Work

To get into a rent to own vehicle, you need to find a dealership that offers in-house financing, also called buy here pay here (BHPH) used car lots. These dealers are also lenders, so they don’t rely on third-party lenders for financing. This also means that you usually get to skip the credit check.

Since there typically isn’t a credit pull, borrowers with poor credit may have a better chance of qualifying for a rent to own vehicle than a traditional auto loan or lease. The biggest factor that determines your eligibility for these agreements is your income. Some rent to own cars don’t require a down payment, but the payments are likely to be higher than an auto loan in the long run.

You also don’t have to worry about interest charges because rent to own agreements aren’t loans. You’re not borrowing an amount from a lender to pay for a vehicle – you’re making payments on the car to the dealership until you’ve paid what you owe.

Bad Credit Auto Loans vs. Rent to Own Cars

A big downside to rent to own vehicles is that there sometimes isn’t a chance for credit repair. If the dealer didn’t check your credit reports to determine your eligibility for the car, then they may not report your on-time payments. Anything that isn’t reported on your credit reports doesn’t impact your credit score, so it doesn’t help improve it.

Bad credit auto loans from subprime lenders, however, are always reported. These lenders do check your credit reports, but they consider more than that. Sometimes, credit reports can’t tell the whole story, so subprime lenders use other facets of your situation to determine your ability to repay a car loan. They examine your income and residence history, require a down payment, ask for personal references, and more.

Subprime auto loans are crafted for bad credit borrowers who want to get on the road to credit repair. While rent to own vehicles are a good short-term solution, it doesn’t usually solve the bigger issue: bad credit.

Repair the Root of the Problem With a Car Loan

When you’re struggling with poor credit, it’s tempting to go for a quick solution like a rent to own car. But if you want to repair your bad credit, consider subprime financing. These lenders are signed up with special finance dealerships, and we can help you find one in your local area.

Here at Auto Credit Express, we have a network of special finance dealers all over the country. Get matched to one near you by filling out our auto loan request form. There’s never an obligation, and we’ll get right to work!

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