Month: May 2020

Small Business Start Up Loans and Other Funding Options

There are many options for funding a startup.  The most popular is small business start up loans.  However, not everyone can just go to the bank and get a loan.  Things like income and credit score get in the way. There are options if you find yourself in this situation.

Small Business Start Up Loans are Great, But Are There Other Options?

While business start up loans are the most popular option for funding a start up, sometimes you have to think outside of the box.  Sometimes you have to stack different types of funding to get what you need. Here are some funding options, some loans and some not, that you should consider outside of traditional loans.

Score the best business credit cards for your business, even when a recession looms.Check out our professional research.

Credit Line Hybrid

What if there were an option that allowed you to have an even better interest rate than a secured loan, and yet get the money faster and easier than any type of traditional funding.  Consider if you could get business funding without having to supply any bank statements or credit stubs? Just think, you could get funding in a few days rather than weeks without supplying any collateral or documents. That is exactly what the credit line hybrid lets you do. 

It is revolving, unsecured financing.  It allows you to fund your business without putting up collateral, and you only pay back what you use.  

What are the Qualifications? 

How hard is it to qualify?  Not as hard as you may think.  You do need good personal credit.  That is, your personal credit score should be at least 685.  In addition, you can’t have any liens, judgments, bankruptcies or late payments.  Furthermore, in the past 6 months, you should have less than 5 credit inquiries.  Also, you should have less than a 45% balance on all business and personal credit cards.  It’s also preferred that you have established business credit as well as personal credit.

If you do not meet all of the requirements, it’s okay. You can take on a credit partner that meets each of these requirements.  Many business owners work with a friend or relative to fund their business.  If a relative or a friend meets all of these requirements, they can pair with you to allow you to tap into their credit to access funding. 

What are the Benefits of a Credit Line Hybrid? 

This type of funding has many benefits.  First, it is unsecured.  That means you do not have to have any collateral.  Next, you do not have to provide any bank statements or financials.  

Not only that, but generally approval is up to 5x that of the highest credit limit on your personal credit report. Sometimes, you can get interest rates as low as 0% for the first few months, allowing you to put that savings back into your business. 

The process is pretty fast, especially with a qualified expert to walk you through it.  Another benefit is, with the approval for multiple credit cards, there is competition.  This makes it easier, and even likely if you handle the credit responsibly, that you can get interest rates lowered and limits raised every few months. 

Credit Cards

Credit cards get a bad rap.  Yet, if you know what you are doing, they can work well to help fund a start up in addition to small business startup loans. The draw is that these are accessible even with a credit score that isn’t great. However to be fair, the lower the credit score, the higher the interest rate. Also, there are limits on how low they will go with a credit score.

Typically, most business owners are eligible for a credit card of some sort. They do a credit check, but your credit doesn’t have to be as high as it would to gain approval for traditional small business start up loans. 

The downside of business credit cards is that they usually have a high interest rate. The upside is that many of them offer rewards in the form of cash or points that can be helpful.

Crowdfunding

This is an increasingly popular option for startup funding.  Here is how it works.  Crowdfunding is a type of investment option.  You get a lot of smaller investments from a lot of people.  Hence the term, crowdfunding.  This is different from getting the bulk of your small business funding from one or two larger investors. 

First, you have to figure out which crowdfunding platform is best for your situation. Kickstarter and Indiegogo are two of the most popular. Be sure to take note of the rules each platform has for when you gain access to funds.  They can vary greatly. 

Angel Investors as an Alternative to Small Business Start Up Loans

Investopedia defines angel investors as those who  “… invest in small startups or entrepreneurs. Often, angel investors are among an entrepreneur’s family and friends. The capital angel investors provide may be a one-time investment to help the business propel or an ongoing injection of money to support and carry the company through its difficult early stages.”

They are usually a lot less formal than regular investors. An angel investor can be anyone. Like, it could be your mom or someone you met through networking.  

The best way to find angel investors is to ask people you know. Also, you can try an angel investors website or network. For example, Gust keeps a database of investors, companies, and programs. Startups can even search for business plan competitions and other opportunities.

SBA Options

Small business start up loans are a specialty of The Small Business Administration.  These programs are designed for borrowers with lower credit scores than those required for traditional loans.

Score the best business credit cards for your business, even when a recession looms.Check out our professional research.

Small Business Startup Loans: 7(a) Loans 

This program offers federally funded term loans of up to $5 million. Funds can be used for expansion, purchasing equipment, and working capital in addition to startup. SBA partner lenders, usually banks,  process these loans and disburse the funds.  

The lowest credit score to qualify is 680.  There is also a down payment requirement of at least 10% for the purchase of a business, commercial real estate, or equipment. The minimum time in business is 2 years. For startups, business experience equivalent to two years will serve this purpose.  

504 Loans 

small biz start up loans Credit SuiteThese loans are also available up to $5 million.  Funds can be used to buy machinery, facilities, or land. Typically, these loans are used for expansion.  Like 7(a) loans, partner lenders process and disburse funds. These are especially great for real estate purchases.  

Terms for 504 Loans range from 10 to 20 years, and funding can take from 30 to 90 days. They also require a minimum credit score of 680.  The asset being financed is required for collateral. In addition, the down payment requirement of 10% remains, but can increase to 15% for a new business.  

Again, you must be in business at least 2 years, or management has to have equivalent experience if the business is a startup.  

Microloans 

Microloans are available in amounts up to $50,000. They work for starting a business purchasing equipment, buying inventory, or for working capital. Community based non-profits administer microloan programs as intermediaries, with financing coming directly from the Small Business Administration.  

The minimum credit score is 640, and the collateral and down payment requirements vary by lender. 

Private Lender Options for Small Business Start Up Loans

If your personal credit score isn’t the best, consider looking at private lender options.   

These are alternative lenders that have less strict eligibility requirements.  They do have higher interest rates and less favorable terms than traditional loans however, so choose wisely. 

BlueVine 

BlueVine requires that you be in business for at least 6 months.  If you have at least $120,000 in annual revenue, you may qualify for a loan from them.  The minimum credit score for a line of credit from BlueVine is 600. Furthermore, if you want invoice factoring, you can get approval with a score as low as 530, 3 months in business, and $10,000 in monthly revenue.

Kiva 

Kiva is different. How different?  They are actually very different.  For example, the interest rate is 0%.  That means, even though you have to pay it back, a loan from them is free money. They don’t check your credit at all. However, you have to get at least 5 family members or friends to throw some money in to help fund your business. In addition, you have to pitch in a $25 loan to another business on the platform.

Accion 

Accion may be a good fit for small business start up loans also. It’s a nonprofit that offers microloans.  Installment loans are available to both startups and already existing businesses through Accion. The minimum credit score is 575. You don’t have to already be in business, but if you are not, you must have less than $500 in past due debt. In addition, your business needs to be home or incubator based.

Fundability is Important for Small Business Start Up Loans

Fundability, in the simplest terms, is the ability of your business to get funding. When lenders consider funding your business, does it appear to them to be a good idea to make the loan?  What do they look at to make that determination? 

You see why it makes a difference.  Lenders have to perceive lending to your business as profitable.  But what makes a business fundable? How do you become fundable?

First, you have to have a fundable foundation.  That includes the following. 

Separate Contact Information

The first step in setting up a fundable foundation is to ensure your business has its own phone number, fax number, and address.   That doesn’t necessarily mean you have to get a separate phone line, or even a separate location.  There are ways around that.  

EIN

The next thing you need to do is get an EIN for your business.  This is an identifying number for your business that works in a way similar to how your SSN works for you personally.  You can get one for free from the IRS.

Score the best business credit cards for your business, even when a recession looms.Check out our professional research.

Incorporate

Incorporating your business as an LLC, S-corp, or corporation is necessary to fundability.  It offers liability protection and helps separate your business from you as the owner, among other things.  

Which option you choose does not matter as much for fundability as it does for your budget and needs for liability protection.  The best thing to do is talk to your attorney or a tax professional.  Also important to note is that, when you incorporate, you become a new entity. You’ll also lose any positive payment history you may have already accumulated, and your time in business will start over. 

This means it is vital to incorporate as soon as possible.  It’s important for fundability and building business credit, but time in business makes a difference for those things as well.  The longer you have been in business the more fundable you appear to be.  That starts on the date of incorporation, regardless of when your business actually opened.

Business Bank Account

You have to open a separate, dedicated business bank account.  First, it will help you keep track of business finances.  It will also help you keep them separate from personal finances for tax purposes. 

Furthermore, it is much easier to show you meet the minimum income a lender requires for small business start up loans if you have everything in a separate business account.  

Licenses

For a business to be legitimate it has to have all of the necessary licenses it needs to run.  If it doesn’t, red flags are going to fly up all over the place.  Do the research you need to do to ensure you have all of the licenses necessary to legitimately run your business.  

There is much more to fundability than these foundational factors, but none of it matters if you don’t have the foundation in place.  Taking care of that piece at startup is the way to go.

Small Business Start Up Loans Are Just One Way to Fund a Startup

There are many ways to fund a startup.  Small business start up loans are just one of them.  The truth is, most businesses have to access more than one option to make things work.  If you can start debt free with angel investors or crowdfunding, do that. If not, these other options are just what you need to get up and running.

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Standard Industry Classification Codes in a Recession – Which Get You Denied?

Standard Industry Classification Codes in a Recession – Which Will Get a Business Funding Denial?

Do you know which Standard Industry Classification codes in a recession will get you denied?

A Standard Industry Classification – SIC Code – may or may not be vital for SBA Paycheck Protection Program funding. Yet it is certainly important when it comes to other types of funding.

But before we go any further, just what is a Standard Industry Classification code, anyway?

Standard Industry Classification Codes in a Recession: SIC Codes

The SIC Code (Standard Industrial Classification) is a part of a business classification system.

A Standard Industry Classification code, or SIC is a four digit numerical code which is assigned by the U.S. government to businesses, to make it easier to identify the primary activity of the business. It is an indicator of the kind of business a company is in.

The Securities and Exchange Commission developed this system. For example, if your company makes tires and/or inner tubes, then your SIC code would be 3011. The numbers are somewhat intelligent. There are ranges of industry groups which correspond to the first of the four digits Such as manufacturing corresponds to four-digit SIC codes which start with either a 2 or a 3.

Details

The combination of the first and second digits then defines the major industry group. In our example, 30 will designate ‘Rubber and Miscellaneous Plastic Products’.

The SIC code’s digits are grouped to identify the industry and industry group. The first two digits in the SIC code identify the major industry group. And the third digit identifies the industry group. Finally, the fourth digit identifies the industry.

In fact, the Internal Revenue Service will use the SIC code that you select. This is in order to determine if your business tax returns are comparable to the other businesses in your industry. Hence, if your tax deductions do not reasonably resemble the other businesses in your industry, your business could be audited.

Furthermore, some companies may be labeled high-risk when they do not select the right SIC codes to classify their company. However, if you understand how the business classification system works, then you can choose the correct code on your first try.

Standard Industry Classification Codes in a Recession Credit Suite

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Standard Industry Classification Codes in a Recession: NAICS Codes

The North American Industry Classification System (NAICS) is another business classification code.

This code classifies business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. economy. NAICS industry codes define establishments based on the activities in which they are primarily engaged.

The NAICS puts out its own list of high-risk and high-cash industries. Higher risk industries on the list include casinos, pawn shops, and liquor stores, but also automotive dealers and restaurants.

OSHA requires injury and illness reports from certain high-risk industries.

Restricted industries (automatic decline) include:

  • Ammunition or Weapons Manufacturing; wholesale and retail.
  • Bail Bonds
  • Check Cashing Agencies
  • Energy, oil trading, or petroleum extraction or production
  • Finance: (Federal Reserve Banks, foreign banks, banks, bank holding companies,
    loan brokers, commodity brokers, security brokers, mortgage brokers, mortgage bankers, mortgage companies, bail bond companies, or mutual fund managers).
  • Gaming or Gambling Activities
  • Loans for the speculative purchases of securities or goods.
  • Pawn shops
  • Political campaigns, candidates, or committees
  • Public administration (e.g., city, county, state, and federal governmental agencies).
  • X-rated products or entertainment

High-Risk Industries (subject to stricter underwriting guidelines):

  • Agriculture or forest products
  • Auto, recreational vehicle or boat sales.
  • Courier services
  • Computer and software related services.
  • Dry cleaners
  • Entertainment (adult entertainment is to be considered restricted).
  • General contractors
  • Gasoline stations or convenience stores (also known as c-stores)
  • Healthcare; specifically nursing homes, assisted living facilities, and continuing care retirement centers.
  • Special trade contractors
  • Hotels or motels
  • Jewelry, precious stones and metals; wholesale and retail.
  • Limousine services
  • Long distance or “over-the-road” trucking.
  • Mobile or manufactured home sales.
  • Phone sales and direct selling establishments
  • Real estate agents/brokers
  • Real estate developers or land sub-dividers
  • Restaurants or drinking establishments.
  • Software or programming companies
  • Taxi cabs (including the purchase of cab medallions) .
  • Travel agencies

Standard Industry Classification Codes in a Recession: Which Code is in Use?

They both are. However, the SIC code system is phasing out and NAICS will replace it. But for the moment, assume they are both in play, as the transition has not yet finished. These coding systems are similar but not identical.

Lenders, banks, insurance companies and business CRAs use both business classification systems. So this is to determine if your business is in a high-risk industry classification. Hence you could get a denial for a loan or a business credit card based on your business classification. Some SIC codes can trigger automatic turn-downs, higher premiums, and reducing credit limits for your business.

Standard Industry Classification Codes in a Recession Credit Suite

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Standard Industry Classification Codes in a Recession: Risks

When considering any aspects of a business, risk has to be a major factor. There are inherent issues in every single industry. Crops fail, or lease terms go up too high so a company has to move. Or tariffs or even a war make importing less reliable.

But some businesses are considered to be risky by their very nature. And this is the case even if everything else goes off like a hitch and the business is prospering. Risk is inherent within these business types. Therefore, even if your business doesn’t feel risky, it just might be anyway.

Why Risk Matters

The biggest reason why risk matters has to do with funding. There are several industries where lending institutions are hesitant to do business. In those particular cases, there are stricter underwriting guidelines. But at least a company can get funding.

Not so with other industries. In some industries, no funding is available at all. As a result, those businesses will need to find other solutions for financing. These solutions can include, potentially, crowdfunding, angel investors, venture capital, business credit building and more.

Still, a lot of businesses would rather work with lenders. But where are lenders’ ideas of the magnitude of risk coming from?

Standard Industry Classification Codes in a Recession: Real Injury Risks According to the CDC

In 1999, the Centers for Disease Control published an article on risks in small businesses. This article contains information on SIC codes. And it gives information on injuries associated with the codes. While this is not the true means by which lending institutions decide on risk, it is still of interest. And it can demonstrate what may be behind some of the reasoning.

Part of the calculation of risk comes from occupational injuries.  These are such as those noted in the CDC report. But the other side of the risk coin is occupations which are high in cash transactions. After all, a pawn shop might not have much of a specific risk of injury at all. But the large amounts of cash normally associated with one mean that it can be a tempting target for thieves.

Standard Industry Classification Codes in a Recession: Choosing Better SIC Codes

The choice of SIC code is yours. For automotive sales, for example, you would normally select 5511, ‘Motor Vehicle Dealers (New and Used)’. But most lenders will automatically turn your business down because of the high-risk factor within the business classification name. Of course you want to be honest with your SIC coding classification. But if more than one SIC code could apply, try this. There is nothing wrong with choosing the SIC code which will not get you denied by lenders.

Ideas

Therefore, if you want to have your automobile sales company, do this. You need a business code with auto and home supply stores, motor vehicle parts and accessories, or car washes written in the actual business code. That way, you can still operate your real business of “automotive sales” without actually being considered a risk factor.

There is nothing deceptive or dishonest about doing this.

Check the SIC code database for more information on these codes.

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Standard Industry Classification Codes in a Recession: Choosing Lower-Risk Business Names

It goes beyond coming up with the perfect memorable name which is easy to spell and say. Even beyond evoking your company’s mission statement, there’s more. There’s also the matter of risk. Adding a risky business type into your business name will trigger financing denials.

For example, bail bonds are a restricted industry. So are many types of financing business types, and check cashing agencies. Hence naming your venture Chico’s Bail Bonds is a recipe for a delay if not an outright denial.

But it is the same as with choosing a lower-risk SIC code when two apply. There is nothing deceptive, illegal, or unethical in naming your company Chico’s.

Will this more generalized name guarantee funding for your business venture? Of course it won’t. But at least your business will not be automatically turned down before you can make your case for funding.

Standard Industry Classification Codes in a Recession: Takeaways

Choosing the incorrect Standard Industry Classification codes in a recession could end up costing your business. And it could get you labeled as high-risk. And this could directly impact your insurance premiums, your financing ability, and even your credit limit recommendations.

This small error of choosing the wrong SIC codes could cost your business in the future. Therefore, be sure to do your research before you select any SIC codes for your business. Because you might just end up choosing which SIC codes get you denied. And it does not have to be that way.

 

 

 

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CareRev (YC S16) Is Hiring a Sales Director

Article URL: https://grnh.se/cf98c1063us

Comments URL: https://news.ycombinator.com/item?id=23244518

Points: 1

# Comments: 0

Lazy Lantern (YC S19) Is Hiring a Staff Back-End Engineer in Paris

Article URL: http://angel.co/l/2sAcvx

Comments URL: https://news.ycombinator.com/item?id=23273336

Points: 1

# Comments: 0

New comment by sidraval in "Ask HN: Who is hiring? (May 2020)"

TrialScope | Remote (ET) or Jersey City, NJ | Full Time | Backend & web frontend

TrialScope is hiring a mid-level (or higher) developer familiar with TypeScript/React and one of: Ruby/Rails or C#/.NET. The role is fully remote, working roughly eastern time, with the option of working from our Jersey City, NJ headquarters.

The role is for a team whose software aids clinical trial recruitment, allowing trial sponsors to recruit quickly. Our hope is that this will allow pharmaceutical companies to bring high quality drugs to market faster than they can currently.

We’re a small team (4 full-time across product/eng) inside of a larger, established company. We would love to hire someone who is interested in contributing to the product & culture, as well as the engineering efforts. The interviewing process is practical, with no algorithms, trivia, or whiteboards involved.

Must be a US Citizen or Green Card holder. Contact me at the address in profile.

New comment by bananaoomarang in "Ask HN: Who is hiring? (May 2020)"

Scite | Senior Full-Stack Developer | Remote/NYC | https://scite.ai/jobs

scite is a startup based in Brooklyn, working to help tackle the reproducibility problem in science by mining and analyzing existing literature. For more info on us see https://scite.ai.

We are looking for a senior full-stack developer interested in making a positive impact on a large societal problem. Our team is nearly fully remote so we are looking for individuals that are self-motivated and eager to take on a leading role at a growing startup. Specifically, we are seeking people with experience in any/all of the following:

– JavaScript (ES6)

– React/Redux

– Python

– Postgres

– Elasticsearch

– Docker/Docker Swarm

– Mongo

– Keras/TensorFlow

If you’re interested in applying, please email a short note explaining your interest and background as well as your resume to jobs@scite.ai

Contrasting The Two Types Of Investments

Contrasting The Two Types Of Investments There are 2 significant sorts of financial investments carried out in the stock-trading sector nowadays– long-lasting financial investments and also temporary financial investments. If you discover on your own bewildered as well as puzzled in picking which kind would certainly be best, merely remember of the distinctions in between … Continue reading Contrasting The Two Types Of Investments

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Contrasting The Two Types Of Investments

Contrasting The Two Types Of Investments

There are 2 significant sorts of financial investments carried out in the stock-trading sector nowadays– long-lasting financial investments and also temporary financial investments. If you discover on your own bewildered as well as puzzled in picking which kind would certainly be best, merely remember of the distinctions in between these 2 ranges as well as think about the benefits and also downsides of each to be directed in making the right choices.

Essentially, the significant distinction in between both financial investments is the reality that temporary strategies are really created to reveal a considerable return quickly duration. While lasting financial investments, on the various other hand, are developed to last for several years as well as provide a sluggish yet dynamic boost in its return.

When it comes to the negative aspects and also benefits of each kind of financial investment, allow us uncover much more regarding the distinctions.

Short-Term Investments

The significant benefits of spending for a temporary strategy are the possibilities for development at a really rapid time period, varying from a couple of weeks to a couple of months. There might be varying fads that can impact the market, temporary financings can still enable you much more control over your cash as well as you it is extra most likely that you can maintain a much more careful eye on your financial investment.

This kind of financial investment might be a little bit riskier due to the variations existing in such an unpredictable supply market, as stated over. As contrasted to its lasting equivalent, this sort of financial investment might a lot conveniently be influenced by unforeseeable scenarios since it remains in a much shorter amount of time. Therefore, also if there is a really massive possibility that you can make a great deal of cash in this sort of financial investment, there are additionally excellent opportunities that you can shed a great deal.

Long-Term Investments

For long-lasting financial investment intend on the various other hand, there is a higher capability for this kind of financial investment to get tiny and also dispersed revenues over a longer timespan. As well as due to the fact that it has a slow-but-steady rate, it ends up being a lot more secure and also includes less threats.

Of training course, a negative aspect for the slow-moving development of your financial investments might show that you can not anticipate to gain earnings right away specifically when you are severely in demand of cash. On top of that, you might likewise have much less control over your cash since your financial investment would certainly not develop right now.

Take note that since financial investments might need a great deal of costs to be paid as it proceeds and also due to taking place variations in the market, a lot of long-lasting financial investments might experience down time prior to they can really climb up as well as end up being efficient.

In picking in between these 2 significant kinds of financial investments, one of the most crucial point you need to think about in order to assess which strategy would certainly end up being a lot more useful to you is to consider on your factors for spending.

After that undoubtedly a temporary strategy would certainly fit you, if you spent in supplies with the best objective to make cash rapid. On the various other hand, if you desire to spend for future and also insurance coverage functions like in situations in which you desire to have cash when you expand old, after that a long-lasting strategy for investing is best.

Whatever your choice might be, constantly bear in mind that there are benefits as well as downside in all type of financial investments. And also eventually, to end up being effective in your undertaking, you need to want to tackle marginal dangers as well as make clever choices in order to handle your professions.

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