Best Options for Salon Financing in A COVID-19 World

As many businesses are beginning to look at reopening, salon owners are facing a particularly unique predicament.  Merchant cash advances have long been a salon financing standard, but without credit card sales coming in and no guarantee of when they can open up, that funding source is no longer a viable option for many. 

Best Salon Financing Options

There are other options of course, but which ones work best for salon financing?  Is a term loan best?  Would credit cards work better?  How about a line of credit?  Of course, the answer depends on a number of factors. Take a look at these options, consider your own situation, and see which one will work best for you.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Salon Financing: Credit Line Hybrid

One unique option is the credit line hybrid. It is easier to get than a lot of salon financing options, and you can typically get more money than with other options. It’s basically revolving, unsecured financing.  It allows you to fund your business without putting up collateral, and you only pay back what you use.  

Do You Qualify? 

It’s not as hard as you may think to qualify.  First, 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, and you should have less than a 45% balance on all business and personal credit cards.  

If that seems daunting, don’t worry.  If you do not meet all of the requirements, you can take on a credit partner that does.  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 partner with you to allow you to tap into their credit to access funding. 

What are the Benefits? 

salon funding Credit SuiteThere are many benefits to using this for salon financing.  First, it is unsecured.  That means you don’t have to have any collateral to put up.  Next, the funding is “no-doc.”  That means you do not have to provide any bank statements or financials either.  

Better yet, typical approval is up to 5x that of the highest credit limit on the personal credit report. Often you can get interest rates as low as 0% for the first few months.  This allows you to put that savings back into your business. 

The process is pretty fast.  This is especially true if you have a qualified expert to walk you through it.  One other benefit is that the approval of multiple credit cards creates competition. This makes it easier, and even likely,, that you can get interest rates lowered and limits raised every few months. 

Funding Flexibility

In addition to these fabulous benefits, a credit line hybrid is an especially flexible form of funding.    Funds are available as needed and when needed for a variety of things, including but not limited to: 

  1. Paying off higher interest debt.  This could allow you to lower monthly payments and increase credit score. Imagine using a 0% interest credit line to pay off a number of high interest credit cards.  You could literally save yourself hundreds of dollars a month that can then be put back into your business. 
  2. Bridging a cash gap caused by slow collections or seasonal issues. You could never have to worry or stress about large invoices being paid slowly, or slow business in the off season, ever again.
  3. Covering bills during a global pandemic. COVID-19 turned the whole economy on its head.  No one knows if or when it will happen again.  Funds from a credit line hybrid can help you stay above water without waiting for or just hoping you can get government relief.
  4. Taking advantage of promotional pricing. Think about the next time your best seller goes on sale with the wholesale company, you can buy as much as you want at the promotional price because you have the funds.  
  5. Growing and expanding your business by adding equipment, adding on to your building, or even opening a new location. 
  6. Funding updates and repairs. Don’t let things slide any longer because you can’t pay for it.  Get the repairs you need, do the updates that need doing, and watch your business thrive. 
  7. Save it for a rainy day.  Leave it alone until you need it.  No one can see into the future.  It never hurts to have a safety net.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

Online Lenders

Online lenders tend to work well for salon financing.  Your credit score doesn’t have to be quite as high as it does with traditional banks, and the funds can be in your bank account much more quickly. There are tons out there, but some work better for salons than others.  Here are two examples that are generally favorable for salons. 

OnDeck 

Obtaining financing from OnDeck is fast and simple. First, apply online.  Then, receive your decision once application processing is complete. If approved, your loan funds will go directly to your bank account. The minimum loan amount is $5,000 and the maximum is $500,000.

Just like any other online lender, they do have certain requirements to qualify for a loan.  For example, a personal credit score of 600 or more.  Also, you must be in business for at least three years. Annual revenue must be at or exceed $100,000. In addition, there can be no bankruptcy on file in the past 2 years and no unresolved liens or judgements.

Kabbage 

Kabbage is a well known online lender offering a small business line of credit that can help businesses accomplish business goals. The minimum loan amount is $500 and the maximum is $250,000. They require you to be in business for at least one year.  Also, you must have $50,000 or more in annual revenue.  They will accept $4,200 or more in monthly revenue over the most recent three-month period to meet income requirement as well.

Kabbage is a go-to if you need cash quickly. Their non-traditional approach puts less weight on your credit score.  This means they may work well for borrowers that still have some work to do in that department.

Credit Cards

Just like online lenders, some credit cards work better for salons than others.  There are dozens out there.  It takes some research to determine which ones may work best for your salon financing needs.  Here are a couple that tend to work well to help get you started. 

Blue Business® Plus Credit Card from American Express

Check out the Blue Business® Plus Credit Card from American Express. It has no yearly fee and there is a 0% introductory APR for the initial twelve months. After that, the APR is a variable 14.74 to 20.74%.

Get double Membership Rewards® points on everyday business purchases.  These include office supplies or client dinners.  This applies to the first $50,000 spent annually. Get 1 point per dollar afterwards.  You’ll need great credit to qualify. 

Capital One® Spark® Classic for Business

Consider the Capital One® Spark® Classic for Business. It has no yearly fee, but there is also no introductory APR offer. The regular APR is a variable 24.49%. You can earn unlimited 1% cash back on every purchase for your company. There is no minimum redemption requirement either.

This card is within reach if you have fair credit, but beware of the APR. Still, if you can pay on schedule, and completely, then it’s a great deal.

SBA Funding

We all know the emergency SBA funding in response to COVID-19 has been a debacle, but their regular loan programs are still available.  Some of them can work well for salon financing. 

7(a) Loans

This is the Small Business Administration’s most popular loan program. One reason is, it offers federally funded term loans up to $5 million. In addition, the funds can be used for expansion, purchasing equipment, working capital and more. Banks, credit unions, and other specialized institutions, in partnership with the SBA, process these loans and disburse the funds.

The minimum credit score to qualify is 680.  Also, there is a required down payment of at least 10% for the purchase of a business, commercial real estate, or equipment. Lastly, the minimum time in business is 2 years. In the case of startups, business experience equivalent to two years will do the trick.

Funds are available for a wide variety of projects, from working capital to refinancing debt.  You can even buy a new business or real estate.

504 Loans 

These loans are available up to $5 million and can buy machinery, facilities, or land. For the most part, they are for expansion. Private sector lenders or nonprofits process and disburse these loans. They especially work well for commercial real estate purchases.

Terms for 504 Loans range from 10 to 20 years.  Unfortunately, funding can take from 30 to 90 days. They require a minimum credit score of 680, and collateral is the asset the loan is financing. Furthermore, there is a down payment requirement of 10%, which can increase to 15% for a new business.

Another requirement is that you be in business for at least 2 years, or that management has 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. Unlike the others, financing comes directly from the Small Business Administration.

Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.

SBA Express Loans 

These loans max out at $350,000.  Moreover, they have a maximum interest rate of 11.50%. Terms range from 5 to 25 years.  In contrast to the others, the SBA guarantee is less, at 50%. To qualify, your credit score must be above 680.  Also, you must have a debt to service ratio of 1.1 or higher. If the loan is greater than $25,000, collateral may be necessary depending on the lender.

The turnaround for express loans is much faster.  In fact, SBA takes 36 hours or less to give a decision. Not only that, but the necessary paperwork for application is less also.  This makes express loans a great option for working capital, among other things, if you qualify.

A Quick Note on Equipment Financing

If you need to buy equipment for your salon, like chairs, tools, or sinks, any of these options will work.  However, it’s possible that specific equipment financing options may work even better.  These are small busienss loans in which the lender lends a portion of the quoted cost for the equipment you wish to purchase. 

Equipment loans are different because the asset you are purchasing is the security for the loan.  This makes equipment loans easier for those who do not have great credit or for borrowers that want to reduce their guarantee.

Is Your Salon Fundable? 

One of the best ways to ensure you can get salon financing when needed is to work on the fundability of your salon.  This includes a lot more than credit score.  It has to do with how your business is set up, how all of your personal and business records line up, and what information is available to lenders about your business from various sources.  It’s wise to do an analysis of fundability to ensure that your ducks are in a row.

In the meantime, it’s easy to make sure your business is set up to be fundable.  Consider the following: 

  • Do you have a separate business phone number and address?  This is necessary to fundability and business credit. 
  • Do you use an EIN to apply for business credit rather than your personal SSN?  You can get one for free at IRS.gov if you don’t already have one. 
  • Is your business incorporated?  It’s non-negotiable.  You must be incorporated to build fundability and business credit. 
  • Do you have a separate business bank account?  That’s necessary as well, for a number of reasons, including building fundability and business credit. 
  • Make sure you have all the licenses required to operate your business at all levels. 

Of course, this list is not exhaustive, but it is a great start and you can work on it now.  

Salon Financing is Out There, You Just Have to Know What You are Looking For

The truth is, these post COVID-19 times are hard for everyone, and salon financing may look different during hard economic times.   It is available, but you have to know which type of funding will work best for you.  Often a term loan isn’t an option, and even more often it isn’t the best option.  A credit line hybrid works well for almost anyone, and it comes with the bonus of potentially helping to build business credit. 

In the end, the answer depends on what you qualify for and what works best for your specific situation.  Research is key, and increasing your fundability always helps.

The post Best Options for Salon Financing in A COVID-19 World appeared first on Credit Suite.

The CARES Act and COVID-19: What You Need to Know NOW

There’s a lot going on right now. So let’s look at the CARES Act Fiscal Stimulus Plan. The details are still in flux. Some may change. This information is current as of right now.

Overview of the CARES Act

Here’s an Overview of CARES. CARES stands for Coronavirus Aid, Relief, and Economic Security Act.  This bill addresses economic impacts of, and otherwise responds to, the COVID-19 (coronavirus) outbreak. The bill authorizes emergency loans to distressed businesses, including air carriers and suspends certain aviation excise taxes. 

With respect to small businesses, the bill establishes, and provides funding for, forgivable bridge loans; and provides additional funding for grants and technical assistance.

More Details of the CARES Act

The bill also provides funding for $1,200 tax rebates to individuals, with additional $500 payments per qualifying child. The rebate begins phasing out when incomes exceed $75,000 (or $150,000 for joint filers). The bill establishes limits on requirements for employers to provide paid leave. 

With respect to taxes, the bill establishes special rules for certain tax-favored withdrawals from retirement plans; delays due dates for employer payroll taxes and estimated tax payments for corporations; and revises other provisions, including those related to losses, charitable deductions, and business interest. 

The bill also authorizes the Department of the Treasury to temporarily guarantee money-market funds. 

See: congress.gov/bill/116th-congress/senate-bill/3548.

Who Can Make CARES Act Loans? 

Lenders with delegated authority from SBA. This lets lenders determine eligibility and creditworthiness. They can do so without going through SBA channels.

How Will Banks Evaluate Borrower Eligibility for CARES Act Funding? 

The lender must consider if the borrower was in operation on February 15, 2020; and had employees for whom the borrower paid salaries and payroll taxes OR paid independent contractors, as reported on a Form 1099-MISC. The application period is February 15, 2020 to June 30, 2020.

Business Size Requirements

So any small business, non-profit, veterans’ organization, sole proprietorship or independent contractor, eligible self-employed individuals, or tribal small business concern is eligible for a loan if they employ no more than the greater of 500 employees; or if applicable, the SBA size standard for employees in the industry where the borrower operates (NAICS code). 

Employees include anyone employed on full-time, part-time or other basis. For businesses with more than 1 physical location (like food services), the 500 employees can be measured per physical location.

Maximum Loan Amounts Under the Paycheck Protection Program of the CARES Act

The maximum loan amount under the Paycheck Protection Program is the lesser of 2.5 times the average total monthly payments by applicant for payroll costs incurred during one year before the date of the making of the loan. And add in outstanding amounts of any Emergency Injury Disaster Loan (EIDL) gotten on or after January 31, 2020 to be refinanced under this loan. Or $10,000,000. There are special rules for seasonal employers and businesses not in existence from 2/15/2019 to 6/30/2019.

Payroll Costs

Payroll costs include the sum of payments of any compensation for employees for salary, wage, commission, or similar compensation. They also include payment of cash tip or equivalent, and payment for vacation, parental, family, medical or sick leave. And they include allowance for dismissal or separation, and payment for the provision of group health care benefits, including insurance premiums. Plus they include payment of any retirement benefits, or payment of state or local tax assessed on the compensation of employees. 

The sum of such payments cannot be more than $100,000 in 1 year, as prorated for February 15, 2020 to June 30, 2020.

Payroll costs do not include compensation of an individual employee’s in excess of an annual salary of $100,000 prorated from February 15, 2020 to June 30, 2020. And they do not include taxes imposed or withheld under FICA (Social Security and Medicare), Railroad Retirement Act, and IRC Chapter 24 (income tax at source). 

Also, they don’t include any compensation of an employee whose principal place of residence is outside the US; and qualified sick leave or family leave wages where a credit is allowed under the Families First Coronavirus Response Act.

CARES Act Credit Suite

Want to review your options with one of our consultants? Give us a call at 877-600-2487.

What Can CARES Act Loans Be Used For?

Loans can be used for payroll costs and costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums. They can also be used for employee salaries, commission, or similar compensations. 

You can use a loan for payments of interest on any mortgage obligation (excludes prepayment) or rent (including rent under a lease agreement). And you can use it on utilities and interest on any other debt obligation that was incurred before the period.

Good Faith Certification Requirements

So here are the Good Faith Certification Requirements. 

An eligible recipient applying for a covered loan must make a good faith certification that: the uncertainty of current economic conditions makes necessary the loan request to support ongoing operations. They acknowledge that funds will be used to retain workers and maintain payroll or make mortgage payments, lease payments, and utility payments

And they certify that the eligible recipient does not have an application pending for a loan under this subsection for the same purpose and duplicative of amounts applied for or received under a covered loan.

 Plus they certify that, from February 15, 2020 to December 31, 2020, the eligible recipient has not received duplicate amounts for the same purpose received under a covered loan.

Requirements and Fees

So here are the details on requirements and fees. 

The SBA has no recourse against any individual shareholder, member, or partner of an eligible recipient of a covered loan for nonpayment of any covered loan unless it is used for a purpose not authorized. 

From February 15, 2020 to June 30, 2020, no personal guarantee is required for the covered loan. And no collateral is required for the cover loan. Also, from February 15, 2020 to June 30, 2020, the SBA will not collect a fee.

Deferral of Payment

So here are the Deferral of Payment details. 

From February 15, 2020 to June 30, 2020, there is complete payment deferment relief for impacted borrowers with a loan with terms of 6 months to 1 year. This includes payment of principal, interest, and fees. An impacted borrower is one in operation on February 15, 2020 with an application for covered loan that is approved or pending after the enactment date.

What is Covered for the Sum Paid for 8 Weeks from Loan Origination Date

So here is what is covered for the sum paid for eight weeks from the loan origination date. 

Coverage includes payroll costs, and any payment of interest on any covered obligation. It also includes any indebtedness or debt instrument incurred in the ordinary course of business as a mortgage on real or personal property incurred before 2/15/2020. 

And it includes any payment of rent made under a leasing agreement in force before 2/15/2020. Plus it includes any utility payment for electricity, gas, water, transportation, phone or internet access where service began before 2/15/2020.

CARES Act Credit Suite

Want to review your options with one of our consultants? Give us a call at 877-600-2487.

Documents a Borrower Must Provide

So here are the documents a borrower must provide. Provide verification of the number of full time equivalent employees on payroll and pay rates including payroll tax filings reported to the IRS and state income, payroll, and unemployment insurance filings. 

Add cancelled checks, payment receipts, transcripts of accounts, and any other documents verifying payments on covered mortgages, leases, and utility payments.

 And add certification from an authorized representative of the eligible recipient that the documentation presented is true and correct. Plus a certification that the amount for which forgiveness is requested was used to retain employees, make interest payments on a covered mortgage or rent obligation, or to make covered utility payments. Provide any other documentation the SBA determines is necessary. No eligible recipient shall receive forgiveness without submitting the documentation required.

CARES Act Loan Forgiveness Details

So here are the loan forgiveness details. The lender will decide on the application no later than 60 days from receiving the application. Any amount which would be includible in gross income of the eligible recipient by reason of forgiveness is excluded from gross income.

Reduction of Loan Forgiveness

There can be a reduction of loan forgiveness. A reduction can happen if there is a reduction in full time equivalent employees. So this is when comparing to the average number of FTEs per month employed by the recipient from February 15, 2019 to June 30, 2019 or January 1, 2020 to February 29, 2020. 

Reductions also happen for over 25% in certain reductions in total salary or wages of any employees. These are employees who in 2019 did not receive a wage or salary at an annualized rate more than $100,000. There are special rules for tipped workers and rehires during a certain time period. 

Economic Injury Disaster Loans: Which Kinds of Businesses are Eligible under the CARES Act?

SBA’s Economic Injury Disaster Loans (or working capital loans) are available to small businesses; small agricultural cooperatives; small aquaculture businesses and most private non-profit organizations.

Available businesses include businesses directly affected by the disaster. And they include businesses that offer services directly related to the businesses in the declaration. They also include other businesses indirectly related to the industry that are likely to be harmed by losses in their community.

Criteria for Loan Approval 

So here are the criteria for loan approval. Applicants must have a credit history acceptable to SBA. The SBA must determine that the applicant business can repay the SBA loan. And an applicant business must be physically located in a declared county. And it must be suffering working capital losses due to the declared disaster. So this cannot be due to a downturn in the economy or other reasons.

Amounts You Can Borrow 

So check out how much you can borrow. Eligible entities may qualify for loans up to $2 million. The interest rates for this disaster are 3.75% for small businesses and 2.75% for nonprofit organizations. So terms go up to 30 years. Eligibility is based on business size, type of business and its financial resources. 

The SBA defines what a small business is, at sba.gov/document/support–table-size-standards.

How Can a Business Use the Loan Funds? 

A business can pay fixed debts, payroll, accounts payable, and other bills that could have been paid had the disaster not occurred. But there is no intent for the loans to replace lost sales or profits or for expansion.

CARES Act Credit Suite

Want to review your options with one of our consultants? Give us a call at 877-600-2487.

Collateral Requirements

So check out the Collateral requirements. Economic Injury Disaster Loans over $25,000 will need collateral. SBA takes real estate (commercial and residential) as collateral when available. The SBA will not decline a loan for lack of collateral. But they require borrowers to pledge what is available.

Ineligible Entities Under the CARES Act 

These are the ineligible entities under the act. 

Agricultural Enterprises: if the primary activity of the business (including affiliates) is as defined in Section 18(b)(1) of the Small Business Act. Also ineligible are religious and charitable organizations. Plus gambling concerns if they derive more than one-third of their annual gross revenue from legal gambling activities. And casinos and racetracks, because these are businesses whose sole purpose for being is gambling. Plus real estate developers mainly subdividing real property into lots and developing it for resale on their own account.

SBA Economic Injury Disaster Loan Funds

So here are the details on the SBA’s Economic Injury Disaster Loan (EIDLs) Funds. Funds come straight from the United States Treasury. Applicants do not go through a bank to apply. They apply directly to the SBA’s Disaster Assistance Program. So you can visit disasterloan.sba.gov/ela

There is no cost to apply. And there is no obligation to take the loan if offered. The maximum unsecured loan amount is $25,000. Applicants can have an existing SBA Disaster Loan and still qualify for an EIDL for this disaster. But you cannot consolidate the loans.

You can apply online. Applicants may apply online using the Electronic Loan Application (ELA). Visit disasterloan.sba.gov/ela. you can download paper loan applications at sba.gov/disaster

Mail completed applications to: 

US Small Business Administration
Processing and Disbursement Center
14925 Kingsport Road
Fort Worth, TX 76155

Get Disaster Loan Information and Application Forms

To get disaster loan information and application forms, call the SBA’s Customer Service Center at 800-659-2955 (800-877-8339 TTY). Or email disastercustomerservice@sba.gov

Get assistance from SBA partners. So you can get free help with reconstructing financial records, preparing financial statements, and submitting the loan application as follows. Small Business Development Centers (SBDCs); SCORE; and Women’s Business Centers (WBC). For the nearest office: visit sba.gov/local-assistance

Takeaways

Keep in mind, the CARES Act is still a bit in flux. But the details are probably not going to change much. The gist of it is to help small businesses during 2020. Most of the deadlines are in June, so apply NOW. Contact us today to learn more about the CARES Act and COVID-19: what you need to know.

The post The CARES Act and COVID-19: What You Need to Know NOW appeared first on Credit Suite.

How to Adapt Your Marketing During the Coronavirus (COVID-19)

It’s been roughly a month now since the Coronavirus started to flip our lives upside down.

From having to practice social distancing and getting used to life without the outdoors to continually washing our hands and wearing masks and seeing loved ones and friends getting sick, the Coronavirus is something none of us expected.

Even our businesses are suffering. Just look at the Coronavirus marketing stats I shared a few weeks ago. The results are devastating.

It’s why I decided to change Ubersuggest and make it more free to help small businesses out.

Since then a lot has changed and there are new opportunities that have come around when it comes to your online business and marketing activities.

Opportunity #1: Help others selflessly

My ad agency has thousands of clients around the world. We lost a ton, but we still have enough to see trends in what’s happening.

When I saw businesses starting to lose a lot of money, I decided to give more of Ubersuggest’s premium features for free. That means it would take me much longer to break even, but that isn’t something I am worried about right now.

Take look at the image below… you’ll see something interesting.

The chart breaks down how many free-trial signups Ubersuggest has received throughout the past month.

Keep in mind, new customers means free trials… a large portion of free-trial users doesn’t convert into paying customers but still, the more trials you get in theory, the more paid customers you will eventually get.

As you can see, the chart is declining. That’s because I opened up more of Ubersuggest’s paid features and made them free.

What’s interesting is you (and other community members) helped support me.

The moment I blogged about more features being opened up for
free, many of you decided to purchase a paid subscription.

I received dozens of emails from the marketing community thanking me and letting me know that they appreciate everything that I was doing AND they purchased a paid plan to help me out.

Now granted, in general signups are down, but that’s what happens when you decide to give away more for free. I didn’t do it because I am trying to leverage Coronavirus or look good, instead, I am just trying to help people out just like I’ve been lucky enough to have had people help me out during my times of need.

But here is what’s interesting… my traffic started to go up
on Ubersuggest the moment I
told everyone that I am giving more away for free.

I’m not the only one who experienced this.

Eric Siu decided to give away a course that teaches people how to start a marketing agency for free (he normally charges $1,497) and a bit more than 250 people have taken Eric up on his offer.

This has led Eric to gain more social media fans and it’s
given him an opportunity to do a webinar about his product/services to a new
audience of 50,000 people.

Similar to me, Eric wasn’t trying to do this to gain
anything, he is just trying to help people out.

I also know someone in the health space who did something similar and one person in the employment space.

They all saw the indirect benefits of helping people out.

In all cases that I have seen, the result is more traffic.

With your website and business, consider what you can give away for free. Anything you can do to help people out is appreciated, especially during this difficult time. You’ll also find that it will drive you more visitors, which is a nice indirect benefit.

Opportunity #2: Paid ads are really, really cheap

The latest trend we are seeing is that paid ads are becoming cheaper.

It makes sense because the way these big ad networks make money is through an auction system. They need small businesses to drive up the cost per click (CPC) for ads so that way the big, billion-dollar corporations have to spend more money on ads.

If you don’t have as many small businesses advertising (like we are experiencing now) there isn’t as much competition for the inventory, so the cost per click decrease.

But the virus has been causing us to spend more time online, so much so that companies like Netflix have had to reduce their streaming quality to help.

In other words, traffic on the web is up and there are fewer advertisers. This means ads are cheaper.

Now we are also seeing conversions rates dropping in certain
industries, but nowhere near at the same rate as the CPCs.

When we average things out per industry and globally, we are seeing paid ads producing a much higher ROI than before the Coronavirus hit. Just look at the chart below.

Our clients, in general, have seen their ROI go from 31% to 53%. That’s a 71% increase in ROI.

If you haven’t tried paid ads yet, you should consider it. If you do, consider ramping up as there is more excess inventory than there has been in years.

Opportunity #3: Conversions are down, but there’s a
solution

For many industries, conversion rates are down. Here’s a
quick snapshot of what it looked like right after the first big week in the
United States.

Since then, things have changed. For some industries, it has gotten better, but for others like travel, it’s still terrible and will be for a while. Delta Airlines is currently burning $60 million a day.

But we found a solution that has boosted conversion rates by 12% on average.

If you are a store selling something online, consider offering payment plans through services like Affirm.

Payment plans reduce the financial burden your customers
will face in the short run.

And you don’t have to be an e-commerce company to leverage payment plans. If you are selling consulting services, you can accept money over a period of a year.

If you are selling ebooks or digital courses, you can also
have a monthly installment plan.

When I sold digital products on NeilPatel.com, I found that roughly 19% of people opted in for my payment plan.

It’s an easy way to boost your conversion rates, especially in a time where many people are looking to reduce their cash spend in the short term.

Opportunity #4: Offer educational based training

If you are looking for a good opportunity, consider selling
your audience educational based courses.

With unemployment
numbers reaching all-time highs
, more people than ever are looking for new
opportunities.

Many of these opportunities are in fields like high-tech
that not everyone has experience in.

And, of course, going back to school can be expensive and is time-consuming. Plus, let’s face it… you can probably learn more applicable knowledge on YouTube than sitting in a college class for 4 years (at least for most professions).

So, where do people go to learn? Any online education
website offering very specific, niche advice and courses.

Whether that is Udemy or you are selling your own courses, people are looking for help.

If you don’t know how to sell online courses in mass quantity, follow this. I break it down step by step and even give you the templates you need to be successful. It’s the same ones I used to reach over $381,722 a month in sales.

Opportunity #5: Geography diversification

COVID-19 is a global issue. But it is affecting some
countries worse than others.

For example, South Korea has had better luck controlling the spread of the virus compared to many other countries.

And countries like the United States and Italy have exploded
in daily cases.

With over 84,000 new cases a day and growing quickly, the spread of the virus or the slowdown of the virus can affect your traffic drastically.

For that reason, you should consider diversifying the
regions you get your traffic from.

Through international SEO, you can quickly gain more traffic and be less reliant on one country’s economy.

For example, here is my traffic swing for my SEO traffic in
the United States over the last few months.

The US traffic is slowly starting to climb back. It’s still not back to where it was during my all-time highs, but it’s not as low as when the Coronavirus first hit the United States.

On the flip side, our traffic in Brazil has been going through the roof.

We haven’t changed our strategy, it’s not algorithm related… we haven’t produced more content than usual… we’ve just seen an increase.

We are also starting to see a nice increase in India.

By translating your content for other regions and leveraging international SEO, you can quickly grow your traffic.

Sure, it may take 6 months to a year to start seeing results in the United States, but that isn’t the case with regions like Brazil where there isn’t as much competition.

If you want to achieve similar results to me, follow my global SEO strategy.
It works well… just look at the images above.

Conclusion

Sadly, the next few months are going to get worse. The daily
count of new Coronavirus victims is growing.

From a personal standpoint, all you can do is stay indoors and practice social distancing.

But from a marketing, business, and career perspective, you can make a change.

You should have more time now (sadly), so use it to your
advantage. Put in the effort so you can grow, that way you’ll come out of the
Coronavirus stronger.

So which one of the above opportunities are you going to implement first?

The post How to Adapt Your Marketing During the Coronavirus (COVID-19) appeared first on Neil Patel.

Recession Supply Chain Management in the Era of COVID-19

Conditions are changing on the fly. It’s hard to find certain products on the shelves. COVID-19 (the novel coronavirus) has utterly disrupted the supply chain. This is so even if you never received products or raw materials from Asia. And with the economy slipping, a recession seems a certainty. You need recession supply chain management.

Suddenly, You Need to Concern Yourself with Recession Supply Chain Management

Our world of business has changed. Right now, business owners are more concerned than ever before. Many are uncertain of what to do. It’s a time to be wondering about how to get the capital you need to grow, and whether it’s possible to survive and thrive. But you can!

Everything is Moving FAST These Days

Conditions are changing on the fly. Several states have already closed restaurants and bars and other nonessential businesses. Others are limiting gatherings, if they can get people to listen and do as requested. Still others have lockdowns in place. Stores are having trouble keeping stock on the shelves. Customers and prospects are getting jittery.  But you can still build business credit. In fact, you should.

Supply chains are breaking down. If you get goods from China, they you’re already feeling the pinch. This includes if you only get one raw material from China. It can be harder to get basic supplies. Unfortunately, hoarding is a very real problem right now. But did you know that starter vendor business credit can save you?

Building Recession Supply Chain Management Right into Business Credit Building

Here’s how business credit is built. Having an EIN doesn’t mean you have established credit. If you go to a bank to try and get credit using your EIN with no credit established, you’ll ALWAYS get denied, guaranteed! That is unless you have good personal credit and use it for approval while supplying your personal guarantee. It doesn’t have to be that way. Now is the perfect time to get rolling with business credit. Take advantage of changed circumstances and strike while the iron is HOT.

Let’s look at building business credit the right way. You cannot start with high limits. First you must build starter trade lines that report (vendor credit). Then you’ll have an established credit profile. Then you’ll get a business credit score. With an established business credit profile and score you can start getting high credit limits. Acting now can only help you later.

Recession Supply Chain Management with Starter Vendor Credit

What is starter vendor credit? These trade lines are creditors who will give you initial credit when you have none now. These are often vendors who can give you basic business supplies such as shipping boxes, Outdoor work wear, Ink and toner, Office Furniture, and yes, paper goods! They often offer terms such as Net 30, instead of revolving. However, there are some revolving accounts which are still considered to be starter vendors.

Details

Here are the typical details on vendor credit accounts. So, 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, such as within 30 days on a Net 30 account, or 60 days for a Net 60 accounts. Unlike with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used. 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. Once that’s done, you can then use the credit, pay back what you used, and the account goes on report to Dun & Bradstreet, Experian, or Equifax.

Once on report, then you have trade lines, and an established credit profile and score. With your newly established business credit profile and score, you can then get approval for more credit under your EIN. For vendor credit, you can leave your SSN off of the application. Then the credit issuer then pulls your EIN credit, sees a solid profile and score, and can then approve you for more credit. No matter what the economy is doing, this is very doable.

Not Using Your Social Security Number

Let’s look at what it means when you’re not using your Social Security Number. You can’t leave your SSN off bank loan applications or many other credit applications, if that credit is ultimately issued by a bank. This is because federal law requires a Social Security number on the application. It’s to prevent fraud. But for starter vendors, so long as it’s not through a bank, you can leave your SSN off the application. Just leave that field blank. Don’t fill in any other number, because if you do so, you’ve just broken two federal laws.

Recession Supply Chain Management Credit Suite

Learn more here and consult with us about getting started toward growing small business credit in a recession.

Starter Vendor Credit Benefits and How They Can Help You with Recession Supply Chain Management

Check out these starter vendor credit benefits. Vendor Credit is an important step in building business credit. Vendor Credit is easier to get than store or fleet credit. It can lead to more credit. Establishing credit will lead to lenders approving you. This process is proven to work! As we pause and regroup, it’s the perfect opportunity to build starter vendor credit.

Consider the process of building business credit. You will need to have credit to get more credit. Getting initial credit is the hardest part. Many trade vendors who issue credit don’t report it to the business reporting agencies – as in over 90%! So, you must find sources which actually report.

Vendor Credit to the Rescue for Better Recession Supply Chain Management 

Here are three Companies which provide vendor credit and report to the business credit reporting agencies: Uline, Quill, and Grainger Industrial Supply. 

And they can ALL help you get basic supplies, no matter how well your current supplier is stocked.

Uline

We talk about Uline a lot, and it’s for very good reasons. They sell shipping, packing and industrial supplies. They report to Dun & Bradstreet and Experian. You must have a D-U-N-S number and an EIN before starting with them. You need for an order to be $50.00 or more before they’ll report it. Your first few orders might need to be pre-paid to initially so your company can get approval for Net 30 terms.

To qualify, you need an entity in good standing with Secretary of State, your EIN number with the IRS, your business address (matching everywhere), a D-U-N-S number, your business license (if applicable), and a business bank account. Your application may get approval for net 30 at time of order. Upon final review, their Credit Department may change to a few prepaid orders, before granting Net 30.

How Can Uline Help You with Recession Supply Chain Management?

Here’s how Uline can help. Among many other things, they sell toilet paper and paper towels. You can get retail bags. New Hampshire, for example, is going to single-use to slow transmission of COVID-19. Other states may follow suit. But you may have to wait a few weeks to get your delivery. This is not usual for them, it’s just the current circumstances. Deliveries should speed up in the future. Note: due to high demand, you can only order nitrile gloves if you already have ordered them from Uline before. You can visit them at: uline.com.

Recession Supply Chain Management Credit Suite

Learn more here and consult with us about getting started toward growing small business credit in a recession.

Quill

Let’s look at Quill. They sell handheld computers, shipping supplies, cleaning supplies, and more. They report to Dun & Bradstreet. If you are not given a Net 30, they will ask you to do prepaid orders of $100.00. Normally any prepaid order won’t report. So you need for them to have given you a Net 30 account. Net 30 accounts require a $50.00 purchase to report.

To qualify, you need an entity in good standing with Secretary of State, your EIN number with the IRS, your business address (matching everywhere), a D-U-N-S number, your business license (if applicable), and a business bank account. A new business or businesses with no credit history may need to prepay until Net 30 approval.

How Can Quill Help You with Recession Supply Chain Management?

Here’s how Quill can help. Among many other things, they sell hand sanitizer, paper towels, and toilet paper. Due to high demand, delivery may be slower than usual. Currently, their $45 minimum for free shipping has been waived. Right now, everything they sell is shipping for free. You can visit them at: quill.com.

Grainger Industrial Supply

Check out Grainger Industrial Supply. They sell hardware, power tools, electrical supplies, pumps and more. And they also do fleet maintenance. They report to D&B. Orders must be $50.00 or more to go on report. Terms are Net 30.

To qualify, you need an entity in good standing with Secretary of State, your EIN number with the IRS, your business address (matching everywhere), a D-U-N-S number, your business license (if applicable), and a business bank account. They may ask for additional documents for approval. If a business doesn’t have an established credit, they will require additional documents like accounts payable, income statement, balance sheets, etc.

How Can Grainger Industrial Supply Help You with Recession Supply Chain Management?

Here’s how Grainger can help. Grainger remains committed to staying open. They’re currently sold out of hand sanitizer, and a lot of their face masks are sold out, but they do have toilet paper, Lysol, and rubbing alcohol. Some delivery estimates are faster than others. You can visit them at: grainger.com.

Recession Supply Chain Management: The Upshot

Times are changing rapidly. But one constant in life is business credit building. Starter vendors can supply a lot of what you need right now. So consider changing your supply chain and build business credit while weathering the current storm. Get paper goods, cleaning supplies, and so much more. Our Business Finance Suite has even more starter vendors. We’re all in this together.

Recession Supply Chain Management Credit Suite

Learn more here and consult with us about getting started toward growing small business credit in a recession.

The post Recession Supply Chain Management in the Era of COVID-19 appeared first on Credit Suite.

What The Coronavirus (COVID-19) Means For Marketers

By now you have heard about the Coronavirus.

The sad reality is that it is spreading quickly and will continue to spread for a while.

Did you know that we are getting roughly 13,000 new cases a day and it’s growing fast?

No one really knows how many people will be infected (or will pass away sadly), but it has caused the global stock markets to crash, which means as a business (or even a marketer), you will be affected.

And because my ad agency works with hundreds of companies in all the major sectors and we have 7 offices around the world, we are already starting to see how it is impacting marketing (I’ll share the data below).

So what does this mean for you?

Well, before I go into that, let me be clear on what marketers should NOT do.

Don’t exploit the situation

The first thing we are seeing is people trying to exploit fear.

What I mean by this is supplies are running low around the world. From masks and toilet paper to hand sanitizer and other basic necessities… I am seeing marketers buying them and then reselling them on eBay or running ads and selling them for 10-50x the price.

This isn’t entrepreneurship and this isn’t marketing. I highly recommend that you avoid exploiting the Coronavirus situation to make a quick buck.

Not only is it wrong but it is also very short-sighted. Sure you may be able to make a quick buck, but it won’t last… you are better off spending your time on anything that is long term.

So now that we got that out of the way, what does the Coronavirus mean for marketers?

Businesses are going to struggle for a while

Even if the virus slows down fast as the numbers have dropped in China, businesses are going to struggle for well over a year because they will have to make up for their losses.

For example, in China the virus caused retail sales to drop by 20.5% and the unemployment rate jumped to 6.2 in February.

When companies like Apple shut down their stores to help reduce the spread, it means less income and less profit. Sure they are able to pay their employees during their temporary shutdown, but not all companies have their bank balance and most won’t be able to do the same.

Just look at the travel industry. The virus is expected to lose them 820 billion dollars. Virgin Atlantic just asked their staff to take an 8-week unpaid leave.

The ports are also empty and the first rounds of layoffs have already started.

It’s estimated that in total COVID-19 will cost the global economy $2.7 trillion.

And not only are people losing money but they are losing traffic and conversions.

Organic traffic is down in most industries

As I mentioned above, we work with hundreds of clients in different industries through my agency. On top of that, we also have tons of data because of Ubersuggest.

Before I dive into the data, note that we didn’t focus on any one single country, we decide to look at the traffic stats from a global perspective. We also didn’t include data from sites with less than 5000 visitors a month as they tend to have drastic swings from a percentage perspective even when there are no global issues or algorithm updates.

We also don’t have data on every single industry, for example, we don’t really work with many restaurants nor do we purchase data for that category as local restaurants usually don’t have the biggest marketing budgets. We have data on most of the major ones, but again not all.

Now, from an SEO standpoint, last week we saw huge drops in organic traffic for most industries we are tracking. Just look at the chart below (compares last week to the previous week).

If you are in the news industry or financial space, your traffic skyrocketed. 

And if you are in the travel industry, you saw massive drops in traffic.

You can’t tell by the chart, but e-commerce was a mixed bag, depending on what sites sold, traffic was either up or down. For example, if you were selling baby products like diapers or wipes then you saw a nice bump in traffic.

But if you were selling luxury goods like big-screen televisions you saw a drop in traffic.

Conversions were also down for most industries

From a conversion rate standpoint, we saw drops in most industries as well. Even the financial sector, which had big traffic booms in traffic, dropped in conversions.

Just look at the chart below (comparing last week to the previous week):

As for news (media) sites, they had a big conversion lift as many of them charge for people to read their updated information.

For example, you can only read a certain amount of content from the Washington Post for free until you see a message that looks like this:

People didn’t want to miss out on Coronavirus, political and financial information with the turmoil, hence news sites saw a nice lift.

And with some sectors like travel, they are currently offering massive discounts, which is helping counteract some of their traffic declines. Overall, they are still seeing a massive revenue hit.

Pay-per-click data

We don’t have as much pay-per-click data as we do for SEO as Ubersuggest is mainly used for SEO purposes, but we haven’t seen big shifts in cost per click… even for things like the travel industry.

We don’t have a big enough sample size, but as I mentioned, costs haven’t come down much.

For example, even though we saw big dips in the number of people searching for things like flights or hotels, we didn’t see a drastic drop in CPC but we did see a big increase in cost per acquisition.

In other words, you can still roughly pay the same amount per click, but the cost per conversion has been going up for most industries… unless you are selling necessities like toilet paper.

So what does this mean for marketers?

Be fearful when others are greedy, and greedy when others are fearful

I didn’t come up with that saying, it’s actually a line from Warren Buffett.

You will see people cutting back because the economy is predicted to get hit by 2.7 trillion dollars and experts are saying that we are going to go into a recession.

You even have billionaire investors like Carl Ichan saying that the market has more room to go down and we should expect the sell-off has longer to go.

But what I’ve learned from going through two crashes (the dotcom crash in 2000 and the real estate crash in 2008) is that the best time to double down is when others are not.

During an economic downturn, you’ll find that you will have less competition, which means it is easier and faster to get results, and in some cases, you’ll be able to get deals, such as a potential reduction in pay-per-click advertising.

Just think of it this way: out of all the publicly traded companies in the United States, if the market keeps going down, many of them will struggle to pay off their debt, which has exploded to $75 trillion.

This means some companies will either go bankrupt, get bought out, or get bailed out by the government. Some may be able to cut costs enough to pay their bills, but for most, it will be too late.

Again, this just means less competition for you.

If you are lucky enough to be sitting on some cash during the recession this is the best time to buy out other companies. The ideal ones to buy are media companies.

The more eyeballs you control, the more power you will hold in the future. Plus, by controlling eyeballs, it gives you the ability to sell anything you want in the future.

It’s the reason I bought the KISSmetrics website for $500,000 a couple years ago. During their peak, they had 1,260,681 million unique visitors a month.

That’s a lot of traffic.

When I bought the site out, I was out a good amount of money for me, but the moment I merged it into the NeilPatel.com site, I increased my lead count by 19% and recuperated my investment in less than a year.

In other words, this is your opportunity to strike and gain market share.

So when you see your competitors closing down or slowing down on their marketing, the goal is to double down. You may not see the biggest return right away, but in the long term, you will.

Every time the market goes down by 20% or more it roughly takes 536 days to recover.

As we recover, you’ll see your revenue climb and the ROI from your marketing spend go through the roof.

Conclusion

Hopefully, the Coronavirus passes soon and it has minimal impact on lives. For the time being, try not to socialize with others too much or go into crowded places.

You should read this article by the Washington Post as it breaks down great simulations of how the Coronavirus will spread and what we can do to reduce the impact on the world.

And as for your marketing, this is the time for you to double down. Don’t be fearful when others are also afraid. Do what Warren Buffett does… be greedy when other people are fearful.

In other words, double down. 

How have you seen the Coronavirus affect your traffic?

PS: Please be safe and, if possible, stay indoors.

PPS: To help out a bit, I’ve opened up the keyword ideas report on Ubersuggest as well as historical keyword data. I know many of you may be facing financial difficulty, so hopefully having the data helps you save a bit of money on marketing.

The post What The Coronavirus (COVID-19) Means For Marketers appeared first on Neil Patel.