Day: December 22, 2019

Term Verses Whole Life– It Pays

Term Verses Whole Life– It Pays

You have actually made a sensible, accountable choice when you have actually determined to buy a life insurance policy plan.

Life insurance policy can be a costly acquisition, also; as a result of this, many individuals select not to spend for something they are not needed to acquire. Life insurance coverage is essential to both you as well as your recipient.

There are 2 standard type of life insurance policy– term life insurance policy and also entire life insurance policy. There are additionally various sort of term as well as entire life insurance policy plans, which indicates prospective insurance policy holders have a range of alternatives.

Take into consideration doing a little study on the various kinds of life insurance policy plans, and also acquire the one that ideal matches your demands, as well as the demands of your recipients.

Term life insurance policy plans:

– Are pure life insurance policy, implying they generally do not provide any kind of various other advantages besides survivor benefit.

– Offer life insurance policy defense for a defined quantity of time.

– Are normally cheaper than any kind of various other type of life insurance policy plan.

– Can be bought as degree term life insurance policy plans, which supply the very same survivor benefit the whole period of the plan, or lowering term life insurance policy plans, which use survivor benefit that lower every year over the period of the plan.

– May be bought as “return of costs” plans, which implies the insurance policy holder will certainly obtain all or a part of the costs paid throughout the plan.

Entire life insurance policy plans:

– Offer not just life insurance policy protection, yet offer a financial savings part.

– Offer life insurance policy security for the remainder of the insurance holder’s life.

– Are typically a lot more costly than term life insurance policy plans.

– Can be made use of as estate preparation devices.

– Can be bought as typical entire life insurance policy plans, global entire life insurance policy plans, or variable global entire life insurance policy plans, which offers the insurance policy holder a bigger variety of alternatives where to select.

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Fundability and How it Helps With Small Business Loan Risk Factors

Small business loan risk factors abound. But you can fix a lot of them with assuring fundability. The easiest way to do this is via building business credit. but first, let’s look at what a bank is going to want to know. they want to assess what sorts of small business loan risk factors you bring to the table.

Answer Lender Questions and Address Small Business Loan Risk Factors With Fundability

Fundability – or, not just the ability to become funded but how desirable a company is for funding – means different things to banks, venture capitalists, angel investors, and informal investors. That being said, they all agree on a few fundamental principles.

1. Do You Have Positive Cash Flow?

Lenders aren’t in the business of giving you gifts. Instead, they would like to see a profit on their investment. For that reason, if you are bleeding funds, they are not going to want to pay for a piece of what, to their minds, is an unsatisfactory financial commitment.

How do you turn it around? Do some economic triage. Perhaps your firm will not need to have an alternative site. Perhaps you don’t need to have a full-time assistant when part-time will do. Maybe you should be leaning harder on your customers with pending invoices. This is one of the biggest small business loan risk factors.

Start-ups will get a different question – see # 2.

2. Do You Have a Great Product or Service?

For startup companies, the concern is more like: do you have a fantastic product or service? A concept in itself is not going to be sufficient, so you also will want to have a comprehensive business system in place. Investors are going to want to see what you can do with your amazing idea, and how it can be successfully monetized. 

For a brand-new company this is the biggest of the small business loan risk factors. Otherwise, why bother making a company at all?

3. What Will You Use the Cash For?

If your reply is an unclear, “general fund”, investors are not going to be showing an interest. First of all, they want you to demonstrate you will be responsible with their money. In addition, they also want to know that your business is organized. You can be the most innovative and the very least business-oriented man or woman out there, so long as anyone in your organization is dealing with the financial heavy lifting. Somebody must make sure that the taxes are paid and the invoices go out to your clients.

Investors don’t actually want to see you using the funds for daily operations. If your business is functioning profitably (see # 1), then investors will expect that you can manage those expenses. Rather, they want to see if you are going to employ their funding for something new and different. In general, this implies you must be using their funds for improvement – a new piece of essential machinery; a new shop; a second facility; a new product line – these are just a few plans which would fit the bill for progress. 

See # 4 for the similar question for startups. This is another one of the bigger small business loan risk factors. Lenders want to know their money isn’t being thrown away. After all, they make a lot more money if you pay your loan off and pay interest. Getting their money back through collections is a lot less profitable for them.

4. How Much Funding Do You Need to Reach Positive Cash Flow?

For startups, a similar question is: just how much funding will you need to get to positive cash flow and profitability? In this case, your use for the money is still a distinct one – it’s to bring your new business to profitability.

5. How Much Revenue Yearly Can Your Business Generate After Three Years?

This question is the same whether you are presently in business or you are aiming to get a startup business funded. This will separate the lifestyle businesses (designed to make their owners glad but not develop into bigger players) from the scalable businesses. A lifestyle business normally won’t get this sort of funding. Instead, it will be funded by virtue of secured debt or bootstrapping or secured debt.

A scalable business can still be modest and not expect explosive growth, but still be fundable. Your new widget warehouse might begin small. Investors would expect it to have more moderate funding needs.

6. What Number of Your Existing Clients, Channels, and Partners Will Support Your New Business Growth and Volume?

Introducing new markets (or going for new customers or trying to market new products) will be viewed as riskier, unless you have an established history of financial success via pioneering. See # 7 for the semi-comparable question for startup ventures.

7. How Do You Know That Anybody Will Buy Your Product or Service?

If you do not know your market, then you will not know how to target to those customers. If your clients are middle-aged women, they will most likely respond to different techniques than if your customers are teen boys. Merely making a product and flinging it out to the ether, praying someone will buy it, is not going to sit well with investors. Instead, they want you to have scouted out your prospective clientele prior to you coming knocking and asking for funding.

The rest of the questions are only for startups.

8. How Much Funding Can You Get From Friends and Family to Launch Your Business?

Oftentimes these are your most important investors, or they might be your only investors. Treat them well.

9. How Much Funding Can You Personally Add?

Investors would like to know this amount because it indicates a commitment to the startup. If you want to keep your life savings, you’ll be a lot more careful with funds than if you’re just playing around with other people’s money.

10. Who Comprises Your Team?

Your team does not have to be employees of your business. It can also be consultants and mentors. Contact your school. There might be an educator interested in your new business, even if you never took a class with that person. Not a college alum? Try your nearby community college just the same. A professor might even want to use your company experience and story in a lecture.

Small Business Loan Risk Factors Credit Suite

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

But How Do You Best Address These Small Business Loan Risk Factors? Build Business Credit!

Small business credit is credit in a business’s name. It doesn’t connect to an entrepreneur’s consumer credit, not even if the owner is a sole proprietor and the only employee of the business. 

Because of this, a business owner’s business and personal credit scores can be very different.

Consumer credit scores depend upon payments but also other elements like credit usage percentages. 

But for small business credit, the scores truly only hinge on whether a business pays its debts promptly.

Biz Loan Risks Credit SuiteThe Process

Building company credit is a process. It does not occur automatically. A company has to proactively work to develop small business credit. 

Having said that, it can be done readily and quickly, and it is much quicker than building personal credit scores. 

Vendors are a big component of this process.

Doing the steps out of order leads to repetitive denials. Nobody can start at the top with small business credit. For instance, you can’t start with retail or cash credit from your bank. If you do, you’ll get a denial 100% of the time.

Company Fundability

A business needs to be fundable to credit issuers and vendors. This is the best way to address any small business loan risk factors.

Hence, a business needs a professional-looking website and e-mail address. And it needs to have site hosting bought from a vendor like GoDaddy. 

Additionally, company telephone and fax numbers need to have a listing on 411. You can do that here: http://www.listyourself.net.  

In addition, the business phone number should be toll-free (800 exchange or similar).

A business also needs a bank account dedicated solely to it, and it has to have all of the licenses essential for running. 

Licenses and Reducing Small Business Loan Risk Factors

These licenses all must be in the perfect, accurate name of the company. And they need to have the same small business address and phone numbers. 

So note, that this means not just state licenses, but possibly also city licenses.

Small Business Loan Risk Factors Credit Suite

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Working with the Internal Revenue Service

Visit the IRS web site and get an EIN for the business. They’re totally free. Choose a business entity like corporation, LLC, etc. 

A company can start off as a sole proprietor. But they more than likely want to change to a variety of corporation or an LLC. 

This is to decrease risk. And it will make best use of tax benefits.

A business entity matters when it pertains to taxes and liability in case of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and taxes. Nobody else is responsible.

Incorporating is a great way to address small business loan risk factors.

Kicking Off the Business Credit Reporting Process

Begin at the D&B website and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a business into their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s sites for the business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process. 

In this manner, Experian and Equifax have something to report on.

Vendor Credit Tier

First you ought to build trade lines that report. This is also called the vendor credit tier. Then you’ll have an established credit profile, and you’ll get a business credit score. 

And with an established business credit profile and score you can begin to get credit in the retail and cash credit tiers.

These kinds of accounts have the tendency to be for the things bought all the time, like marketing materials, shipping boxes, outdoor workwear, ink and toner, and office furniture.

But to start with, what is trade credit? These trade lines are credit issuers who give you starter credit when you have none now. Terms are commonly Net 30, rather than revolving. 

Therefore, if you get approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, like within 30 days on a Net 30 account.

Details

Net 30 accounts have to be paid in full within 30 days. 60 accounts need to be paid completely within 60 days. Compared to with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you made use of. 

To start your business credit profile the right way, you need to get approval for vendor accounts that report to the business credit reporting agencies. When that’s done, you can then make use of the credit. 

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may have to apply more than one time to these vendors. So, this is to validate you are responsible and pay punctually. Here are some stellar choices from us: https://www.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/ 

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move onto the retail credit tier. These are companies which include Office Depot and Staples. 

Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use the small business’s EIN on these credit applications.

One example is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a D-U-N-S and a PAYDEX score of 78 or higher.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move onto the fleet credit tier. These are businesses such as BP and Conoco. Use this credit to buy fuel, and to repair, and take care of vehicles. Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the business’s EIN.

One such example is Shell. They report to D&B and Business Experian. They need to see a PAYDEX Score of 78 or higher and a 411 company telephone listing. 

Shell might claim they want a certain amount of time in business or revenue. But if you already have adequate vendor accounts, that won’t be necessary. And you can still get approval.

Small Business Loan Risk Factors Credit Suite

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Cash Credit Tier

Have you been sensibly managing the credit you’ve up to this point? Then move onto the cash credit tier. These are service providers like Visa and MasterCard. Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One such example is the Fuelman MasterCard. They report to D&B and Equifax Business. They want to see a PAYDEX Score of 78 or higher. And they also want you to have 10 trade lines reporting on your D&B report. 

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

Also, they want you to have an established business.

These are commonly MasterCard credit cards. If you have 14 trade accounts reporting, then these are attainable.

Monitor Your Business Credit and Directly Address Small Business Loan Risk Factors

Know what is happening with your credit. Make certain it is being reported and address any mistakes as soon as possible. Get in the practice of checking credit reports and digging into the particulars, and not just the scores.

We can help you monitor business credit at Experian and D&B for only $24/month. See: www.creditsuite.com/monitoring. 

At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business. That will cost about $19.99.

Update Your Information to Address Small Business Loan Risk Factors

Update the details if there are inaccuracies or the details is incomplete.

Fix Your Business Credit to Reduce Your Small Business Loan Risk Factors

So, what’s all this monitoring for? It’s to contest any inaccuracies in your records. Mistakes in your credit report(s) can be fixed. But the CRAs often want you to dispute in a particular way.

Disputes and How They Help Reduce Small Business Loan Risk Factors

Disputing credit report inaccuracies typically means you send a paper letter with copies of any proof of payment with it. These are documents like receipts and cancelled checks. Never mail the originals. Always mail copies and retain the original copies.

Fixing credit report inaccuracies also means you specifically spell out any charges you dispute. Make your dispute letter as understandable as possible. Be specific about the issues with your report. Use certified mail to have proof that you sent in your dispute.

Taking the initiative and handling any errors as fast as possible will also help address any small business loan risk factors.

A Word about Building Business Credit and Small Business Loan Risk Factors

Always use credit sensibly! Don’t borrow beyond what you can pay back. Track balances and deadlines for payments. Paying off promptly and completely does more to boost business credit scores than just about anything else. And beyond that, responsible account management will counter any small business loan risk factors.

Establishing company credit pays. Great business credit scores help a small business get loans. Your loan provider knows the business can pay its debts. They know the business is for real. 

The company’s EIN links to high scores and lending institutions won’t feel the need to call for a personal guarantee.

Addressing Small Business Loan Risk Factors: Takeaways

Business credit is an asset which can help your business in years to come. Learn more here and get started toward establishing company credit.

The post Fundability and How it Helps With Small Business Loan Risk Factors appeared first on Credit Suite.

Is Your Business Fundable: An Analysis of Fundability

Many of us analyze ourselves mercilessly in the mirror.  We pick apart every flaw and consider how we might change or improve each one. While that may or may not be a positive activity, in the same way, you can improve the success of your business by reflecting on what is working and what is not. An analysis of fundability is one way to do this.

How to Analyze the Fundability of Your Business and Make Positive Changes

Take a step back and look at your business in terms of fundability.  Does your business appear fundable to lenders? What does that even mean?  It means your business appears to lenders to be one that they can lend to with little risk.  Risk of what? The risk of you not paying back your debt. They don’t make money if you don’t pay, and they are definitely in it for the money.

How do you make sure that’s the case for you?  You need to analyze the fundability of your business.  There are hundreds of factors that can affect fundability.  The fact that they all interconnect and affect each other further complicates things.  As with all things, the best place to start is at the beginning, the foundation, if you will. 

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit. 

The Foundation of Fundability

The first thing you need to look at during this analysis is how your business is set up.  It makes a difference. In fact, it makes a big difference. 

Dedicated Contact Information 

For example, you cannot share a phone number and address with your business.  A business has to have a dedicated business phone number and address. 

This can happen in a couple of ways. First, you can get a separate phone line and have a separate business location.  This is pretty standard. However, it can cause issues if you run your business online out of your home. 

In this case, you can get a virtual office address and a VoIP (Voice over Internet Protocol) business phone number.  Basically, it allows you to speak on the phone via the internet instead of phone lines. A virtual address service will often offer other services as well, such as live receptionists.  VoIP phone numbers can typically be forwarded to any number you want, meaning you do not have to get a dedicated line to have a dedicated number. 

Why does your business contact information need to be separate from your own?  There are a number of reasons, but for fundability there are two. First, it makes your business seem more professional.  In a lender’s eyes, this lends itself to appearing more fundable.  

Next, it creates the separation needed between business and owner to ensure the business can build credit separate from the owner’s personal credit. While this isn’t the only step necessary for separation, it is a necessary step. 

EIN

Another thing to look at in your analysis of fundability is whether your business has an EIN.  A lot of business owners, especially those running their business as a sole proprietorship, tend to use their social security number on business documents.  However, an EIN is a much better option. 

This not only further separates the business from the owner, but appears more professional, and therefore fundable, to lenders as well.  In addition, it helps ensure that business credit accounts stay off your personal credit report.  

You can get an EIN for free from the IRS.  The process is fast and easy. 

Incorporation

As mentioned before, many small businesses run as a sole proprietorship because it is easiest and cheapest.  However, when this comes up in your fundability analysis, you are going to need to change it. Incorporation is a vital part of fundability.  

There are several reasons for this.  Again, incorporating creates the separation from owner necessary for building business credit and appearing fundable to lenders.  However, it also helps protect your personal assets should the business struggle. 

What does not matter, is which option for incorporation you choose.  Whether you incorporate as an LLC, an S-corp, or a corporation does not make a difference when it comes to creating separation and fundability.  

Each option comes at a different cost and with varying levels of liability protection.  Choose which one is best for you based on your budget and the level of liability protection you need.  Usually, it is best to talk to an attorney or tax professional, when making this determination. 

Note that it is abundantly better to incorporate from the first day of operations.  This is because, whenever you do incorporate, you lose time in business and payment history from when you were in operation as a sole proprietorship or a partnership.  This means the longer you wait, the more backtracking you will have to do. Not incorporated yet? Now is definitely the time. 

Separate Business Bank Account 

The next step in your analysis of fundability is to take stock of your business bank account.  Is it the same as your personal account? That won’t work. You need a separate, dedicated business bank account.  

For one thing, this again creates the separation necessary to build business credit, which is a huge piece of being fundable.  However, there are also a few different types of financing that are only available if you have a business bank account. 

For example, you cannot get a merchant cash advance without a business bank account, and you cannot get a merchant account to accept credit card payments.  Studies show that customers spend more when they can pay with a credit card. Also, several business credit cards want to see a business bank account. These are both in addition to lenders that may want to see a business bank account with a minimum average balance before approving a loan.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit. 

Analysis of Fundability: Consistent and Professional Public Presence

This part of fundability can get pretty complicated because it has so many interconnecting pieces.  The consistency part can be especially daunting because it goes all the way back to the start of your business.  If it has been in operation for a while, you can see how that could be an issue.

The thing is, most business financing applications are denied due to fraud concerns.  This can be an issue for you if you have different information across various records.  All names, contact information, etc. needs to be consistent when it comes to public records, accounts, websites, social media, licenses, and anything else you can think of. 

In addition, you need to pay careful attention to your online reputation.  If you have poor reviews or a ton of complaints, you could run into fundability problems.  This includes both online review sites and the Better Business Bureau. 

Another important piece here is your company website.  First, you have to have one. However, it can’t just be something you throw together.  It needs to be professionally designed, and you need to pay for hosting. Your business email address needs to have the same URL as your website also.  You shouldn’t use a free email service such as Yahoo or Gmail. 

Analysis of Fundability: Business Credit

The next thing you have to consider when you do an analysis of fundability for your business is your business credit score.  First, do you even have one? If your business isn’t set up to be fundable as discussed above, probably not. That’s your first step. Once that is done, you have to get accounts reporting to the business credit reporting agencies to start building your credit score.  

Get a D-U-N-S Number

Dun & Bradstreet is the largest and most commonly used business credit reporting agency.  Each business in their database has a D-U-N-S number. If you do not have one, they will not recognize you and any accounts reporting will be discarded.  You must have this number. You can get one for free on their website here. 

Experian has a similar number known as the BIN.  Find out more about that here. 

Other Agencies

Other agencies can affect your fundability as well.  For example, there are two other main business credit reporting agencies.  They are Experian and Equifax. Your record with these and other agencies can affect your ability to get funding.  

Other credit agencies do exist and some lenders do use them.  CreditSafe and FICO SBSS are just a couple of examples. In addition, your file with LexisNexis and The Small Business Finance Exchange can  affect your business credit score, and thus your fundability. 

Work with Starter Vendors in the Vendor Credit Tier

The vendor credit tier is the best place to get started when it comes to building business credit.  Many of the vendors in this tier will extend net terms and report payments, without doing a credit check.  Instead, they will rely on length of time in business and income to determine eligibility. 

Monitor Your Business Credit

The last step in building business credit for fundability is to monitor your business credit.  This should be an ongoing step in your analysis of fundability as well. You need to stay on top of which accounts are being reported for one thing.  This is how you will know you can move on to the next tier. Even after this though, you need to know where things stand.  

If you find mistakes, you can contact the reporting agency in writing and have them corrected.  Be sure to send copies of backup documentation, not originals.  

We can help you monitor your business credit for a fraction of what it will cost with the CRAs. 

Analysis of Fundability: Your Financials Matter, Both Business and Personal

If you are a very small business, you may not give much thought to your financial statements.  When you are doing an analysis of fundability, you have to however. You need to know how to read them, and how to understand what they are telling you.  

Details such as whether you are turning a profit and what assets you have available for collateral will make a difference to lenders when they are making fundability decisions. They will need to see that your business is able to pay back the funds they lend.  

In truth, any reports on your personal finances can make a difference as well.  For example, if you are flagged in the ChexSystems system for bad checks, that could come back to haunt you.

Pay Your Bills, Both Business and Personal 

This is the single most important thing when it comes to an analysis of fundability.  Are you paying your bills consistently and on-time? If so, can you continue to do so into the future?  If not, what’s the problem? What changes can you make to ensure that you get back on track with making payments? 

It all boils down to making good decisions.  This is especially true when building business credit by working through the credit tiers.  During that process, you are adding a lot of new accounts in an effort to move on to the next tier.  Be sure to keep tabs on what you can pay, and do not over do it. Also, only buy thing you can actually use for your business.  There is no need to buy things you do not need to build credit.  

Analysis of Fundability: The Application Process

This is where all the pieces come together.  The lender will look at your foundation closely.  Your business name, address, and ownership information has to be verifiable.  You also have to make sure the timing is right for borrowing, and that you have selected a lending product that is a good fit for your business. 

This is where issues with consistency will come to light.  Any red flags due to identity can cause problems. This is also where any liens or judgements can begin to hinder your chances. 

If you make sure your have a foundation for fundability, work on making sure you have strong business credit, and keep your finances in order, the application process should be pretty smooth.

analysis of fundability Credit Suite

Mirror Mirror On the Wall, How To Become the Most Fundable Business of All

You need to know if your business is fundable.  If it isn’t, you need to fix it. The only way to find out is to do an analysis of fundability.  Take stock. What do your foundation, business credit, and financial situation look like? Figure out what you are doing well and what you need to work on to ensure your business can get the funding it needs to grow and thrive long into the future. 

 

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