Find Business Start Up Loans and Watch Your New Business Explode

You know when it’s nearing the 4th of July and you go shopping for fireworks?  As a kid, you look for the biggest one, assuming it will have the most impact.  You want it to not only look pretty, but also have a powerful boom.  Finding business startup loans can be similar to finding the perfect fireworks for your summer celebration. 

Business Startup Loans Could Be Just the Spark Your New Business Needs

How can you possibly compare business startup loans to fireworks?  It’s really easy when you consider the sheer number of options available when it comes to start up loans, just as there are an overwhelming number of options when you are choosing fireworks.

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

Traditional and SBA Loans 

biz startup loans Credit SuiteThese are like the sparklers of business startup loans.  They seem easy at first, but if you grab the wrong end, they are not fun at all!  Why are SBA loans lumped with traditional loans?  Basically, SBA loans are traditional loans with a government guarantee. Generally, applications are processed and funds are dispersed through traditional lenders. 

However, not everyone is eligible for a traditional loan.  For those that do not meet the requirements of traditional loans, SBA loans are a viable option.  However, the requirements and government red tape still trip a lot of borrowers up.  Here are the best SBA options for business startup loans. 

7(a) Loans

This loan program features federally funded term loans in amounts up to $5 million. In addition to functioning as business startup loans, these funds can be used to expand an existing business, purchase equipment, or to fund working capital, among other things. Banks, credit unions, and other specialized institutions partner with the SBA to process and disburse the cash.  

The minimum credit score to qualify is 680.  There is also a required down payment of at least 10% for the purchase of a business, commercial real estate, or equipment. The minimum time in business is 2 years, but for start ups, business experience equal to two years meets this requirement. 

504 Loans

These loans are also available up to $5 million. Terms range from 10 to 20 years, and funding can take from 30 to 90 days. They require a minimum credit score of 680, and collateral is the asset it is financing. There is also a down payment requirement of 10%, which can increase to 15% for a new business.  

Like 7(a) loans, there is a 2-years in business requirement, but for startups, if management has equivalent experience that fits the bill.

Online Lenders 

Online lenders are like the roman candles of business startup loans.  They carry more punch than sparklers, meaning they are easier to get your hands on than traditional or SBA loans.  However, if you mishandle them you can be in for a rude awakening.  Here are a couple to help you start your search. 

Upstart

Upstart is an online lender that uses a completely innovative platform for loans.  The company itself questions the ability of financial information and FICO on their own to truly determine the risk of lending to a specific borrower.  Instead, they use a combination of artificial intelligence (AI) and machine learning to gather alternative data.  They then use this data to help them make credit decisions.

This alternative data can include such things as mobile phone bills, rent, deposits, withdrawals, and even other information less directly tied to finances.  The software they use learns and improves on its own. You can use their online quote tool to play with different amounts and terms to see the various interest rate possibilities.  Typically, business loans are available ranging from $1,000 to $50,000.  Interest rates vary greatly, ranging from 7.5% to 35.99%.  Repayment terms can be either 3 -year or 5-year. 

OnDeck 

Obtaining financing from OnDeck is quick and easy. First, you apply online and receive your decision once application processing is complete. If you receive approval, 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 one year. 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. 

The Big Finish

Now, for that one diamond in the rough.  The one you spot across the tent that promises awe and wonder.  You aren’t sure if it will pay off because you’ve never actually seen one like it in action before.  You wait in anticipation to use it as the big finish at the end of the show and, this time, you are not disappointed.  That’s the credit line hybrid. 

Credit Line Hybrid: The Business Startup Loans Option You Didn’t Even Know Existed

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.  Imagine being able to get business funding without having to supply bank statements or credit stubs? Now, consider that you could get funding in a few days rather than weeks without supplying any collateral or documents? This is exactly what the credit line hybrid allows you to do. 

Basically, it allows you to fund your business without putting up collateral, and you only pay back what you use.  It’s like revolving credit, without the need for collateral, but with lower interest rates than most credit cards. 

Qualifications? 

It’s not as hard as you may think to qualify.   Of course, good personal credit is key, but your score doesn’t have to be as high as with traditional loans.   Your credit score should be at least 685.  Also, 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.  Lastly, 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.

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

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 partner with you to allow you to tap into their credit to access funding. 

Credit Line Hybrid Benefits

There are many benefits to using a credit line hybrid.  For example, it is unsecured, meaning you do not have to have any collateral to put up.  Also, the funding is “no-doc.”  This means you don’t have to provide any bank statements or financials.  

Going further, typical approval is up to 5x that of the highest credit limit on the personal credit report. Sometimes you can even 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.  One other benefit is this.  With the approval for multiple credit cards, competition is created.  This makes it likely, if you handle the credit responsibly, that you can get interest rates lowered and limits raised every few months. 

The Right Platform

Of course, location and platform are key elements to any good fireworks show.  You want to have a great, safe place to shoot from.  Beyond that, you want to make sure there is nothing to obstruct vision.  Fundability is the platform from which you shoot off your business startup loans for all to see the beautiful results. 

What’s fundability?  It’s the ability of your business to get funding.  It embraces a number of far reaching factors, but it all starts with the foundation. 

The foundation of fundability is in how your business is set up.  It has to be recognizable to lenders as a fundable entity separate from you, the owner.  How do you make that happen?  Well, like any foundation, it is best to start at the beginning.  If you start with a fundable foundation from the inception of the business, everything will run more smoothly.  However, if your business is already up and running, then you may not have that option.  That’s okay, it’s never too late to start, but start now.  The longer you wait the harder it will be. 

Contact Information

The first step in setting up a foundation of fundability is to ensure your business has its own phone number, fax number, and address.   What may be surprising is, that doesn’t mean you have to get a separate phone line, or even a separate location.  You can still run your business from your home or on your computer.  You don’t even have to have a fax machine.  

In fact, you can get a business phone number and fax number pretty easily that will work over the internet instead of phone lines.  In addition, the phone number will forward to any phone you want it too so you can simply use your personal cell phone or landline if you want.  Whenever someone calls your business number it will ring straight to you. 

Faxes can be sent to an online fax service, if anyone ever happens to actually fax you.  It may seem outdated, but it does help your business appear legitimate to lenders. 

You can use a virtual office for a business address. How do you get a virtual office?  What is that?  It’s not what you may think.  This is a business that offers a physical address for a fee, and sometimes they even offer mail service and live receptionist services.  In addition, there are some that offer meeting spaces for those times you may need to meet a client or customer in person. 

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.

Incorporate

Incorporating your business as an LLC, S-corp, or corporation is necessary to fundability.  Lenders are more likely to believe you are a legitimate business if your business is incorporated. Incorporation also offers some protection from liability. 

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.  When you incorporate, you become a new entity.  That means you start over with credit history and time in business.

This is why you have to incorporate as soon as possible.  In itself it is necessary for fundability, but time in business affects fundability also.  The longer you have been in business the more fundable you appear to be.  That starts on the date of incorporation, regardless of when you actually began doing business. 

Business Bank Account

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

There’s more to it however.  There are several types of funding you cannot get without a business bank account, and some lenders and credit cards want to see a business account  with a minimum average balance.  In addition, you cannot get a merchant account without a business account at a bank. Without that, you can’t take credit card payments.  Studies show consumers tend to spend more when they can use a credit card.

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

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 to ensure you have all of the licenses necessary to legitimately run your business at the federal, state, and local levels. 

Make Your Business the Brightest

Let’s be real.  There’s a lot more at stake when you are choosing business startup loans than when you are choosing fireworks.  In the end however, the goal is the same.  You want the one that gives you the most bang for your buck.

The post Find Business Start Up Loans and Watch Your New Business Explode appeared first on Credit Suite.

Minority Business Loans and Grants: Their Powers Combined Can Help Your Business Explode

Like peanut butter and jelly, minority business loans and grants make for a powerful combination.  On their own, each can be a phenomenon, but put them together, and you have a match made in small business funding heaven.

Use Minority Business Loans and Grants Together for a Powerful Combination

Minority loans and grants can be great tools when paired with other funding sources. But how do you get them? How do you use them together?  Which ones are best for you? We know how to find the answers to all of these questions and more. 

Find out why so many companies use our proven methods to get business loans

Minority Business Loans and Grants: Start with The Small Business Administration

It’s impossible to talk about business loans and not mention the SBA.  While they do not lend funds directly, they do handle the administration of many  loan programs that help all small businesses get the funds they need through partner lenders.   Many of their programs, though not specifically for minorities, work fabulously for minority business owners. 

7(a) Loans 

This is the Small Business Administration’s most known program.  It provides federally funded term loans up to $5 million. The funds can be used for a number of purposes,  including 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. 

504 Loans 

504 loans are also available up to $5 million.  They can be used to buy machinery, facilities, or land. Typically, business owners use them to fund expansion.  They work especially well for commercial real estate purchases. 

Microloans 

Microloans are loans for $50,000 or less. They work well for starting a business, purchasing equipment, buying inventory, or general working capital. 

SBA Express Loans 

These are fast turnaround loans, with the SBA taking 36 hours or less to give a decision. There is less paper work as well, which is part of what makes express loans great if you qualify. 

SBA Community Advantage Loans minority business loans and grants Credit Suite

This is a pilot program running through 2020.  It also has the potential for extension. Its purpose is to promote economic growth in underserved areas and markets. Decision makers look past such things as poor credit or low revenue if the business has the potential to create jobs or promote economic growth in underserved areas. 

These are some of their most popular programs. The Small Business Administration does so much more for small businesses in addition to this.  Get more details on the SBA, these loan programs, and additional resources offered by the Small Business Administration here.    

Minority Business Loans and Grants: Private Lenders

Though not specific to minorities, some private lenders offer products that work well when paired with grants to help a business grow and expand.  Here are just a few examples. 

BlueVine

BlueVine has several financing options.  For example, they offer term loans, invoice financing, equipment financing, lines of credit, and merchant cash advances.  As a requirement, you have to be in business for at least 6 months. If you need a term loan or a line of credit, then they require a minimum annual revenue of $100,000.  For invoice factoring, the minimum credit score is just 530! If you want a line of credit or term loan, you will need a minimum credit score of 600. They have an A+ rating with the BBB.  Find out more about BlueVine in this review

OnDeck

OnDeck has lines of credit and term loans with fixed interest rates.  You can get up to $500,000 with a term loan. They also have an A rating with the Better Business Bureau.  The minimum FICO they require is 600. In addition, you must have $100,000 minimum annual revenue and be in business for at least one year.  Find out more about OnDeck in our review

SmartBiz

SBA loans typically take a lot of time and paperwork. Still, SmartBiz found a way to speed things up.  They make it easier than ever. Unfortunately, they do have stricter requirements. For example, your credit score has to be at least 650.  Also, you have to be in business for 2 years or more. Further, annual revenue has to be $50,000 at least. There can be no outstanding liens, bankruptcies, or foreclosures in the past 3 years either. 

Funding Circle

If you’re looking for a low APR, then Funding Circle is your go-to.  They have fixed rate term loans and require a credit score of 620 or above.  Unlike BlueVine, there is no minimum revenue requirement. However, they do require you to be in business for at least 2 years.  They have an A+ BBB rating. Find out more in our Funding Circle review

StreetShares

This company offers invoice financing, term loans, and lines of credit.  Similar to others, there is a minimum number of years in business requirement.  However, the minimum annual revenue requirement is less than others, at only $25,000.  Additionally, the minimum credit score is 600. They also have an A+ rating with the Better Business Bureau.  Find out more about StreetShares in our review, here

Minority Business Loans and Grants: Improve Your Chances of Loan Approval

Just being a minority business owner does not guarantee approval regardless of the lender or loan program. There are some things a lender is looking for regardless.  Though some lenders are a little more relaxed than others, at their core, they are all looking for the same general things on some level. 

Fundability

A business that appears fundable to a lender is complete, organized, and either has solid revenue or a solid startup plan. Find out more about fundability, what it is, and what affects it here. 

To appear fundable, a business needs: 

  • To be formally incorporated as an S-corp, LLC, or a corporation.
  • An EIN from the IRS.  This is an identifying number for your business that functions similar to the way your SSN does for you personally.  
  • A dedicated business bank account.
  • Contact information that is different from the owner’s.  A separate telephone number on a toll-free exchange and a dedicated physical address are vital.. 
  • A professional website and an email address that has the same URL.  Free web hosting and email services won’t do the job in this case.  

Find out why so many companies use our proven methods to get business loans

A Business Plan is Necessary for Minority Business Loans and Grants

Lenders want to see a professional business plan.  Even if you are not a startup a plan is necessary. Startups need a plan so that lenders can see they know what they are doing.  Established businesses need to show how they plan to use the funds. Lenders want to see that applicants have research to support the plan as well.  Find out more about business plans here

Forms and Documentation

It is pretty much not possible to over prepare when applying for a loan.  Because of this, you should try to think ahead to what information lenders may want to see. Pull together forms and documentation they may ask for.  Items such as past tax returns, financials, and licenses are common. The more prepared you are from the beginning, the smoother the process will flow. 

Your Personal Credit Has to Be Strong

A solid personal credit score is important to getting the best small business loans.  You can’t escape it. As you can see above, a score of 600 or higher is necessary almost across the board with the exception of some invoice factoring and non-traditional options. 

Remember, it isn’t impossible to improve your personal credit score.  The first step is to get a copy of your credit report. You can get a free copy each year. Scan it for what may be causing a negative impact.  If there are mistakes, contact the credit agency in writing to have them removed. If late payments are the issue, start paying on time. You cannot fix a problem until you know what the problem is. 

Business Credit Counts Also

When it comes to business loans, you cannot ignore business credit either.  While it usually isn’t listed as a primary requirement, for most lenders having a strong business credit score can only help you.

If a lender sees a personal score that isn’t exactly what they need, they may consider business credit when making their decision.  In addition, if you qualify for the loan and have good business credit, you may be able to get a lower interest rate. 

Find out why so many companies use our proven methods to get business loans

Minority Business Loans and Grants: Find Your Loan a Grant Sidekick or Two

No super hero due is complete without a sidekick.  If Robin was the jam to Batman’s peanut butter, then maybe one of these grants, or one not listed, can help round out your business funding as well. 

The nice thing about grants is, they do not have to be repaid.  It’s free money. The drawbacks are that they are highly competitive, and they usually are not enough to fund a business alone.  They work well, but they are not superhero material, typically. Once a sidekick, always a sidekick. 

Some grants are minority specific, and some are not.  They vary in application process and eligibility requirements.  Here are some examples of each to add to your minority business loans and grants repertoire. 

First Nations Development Institute Grants

The mission of this group is to offer grants that help Alaska Natives, Native Hawaiians, and Native Americans. Not only that, but there are a wide range of opportunities from the First Nations Development Institute.  There is a mailing list you can join to receive information about new opportunities as they become available.

National Black MBA Association Scale-Up Pitch Challenge

Also known as NBMBAA, the Scale-Up Pitch Challenge offers cash prizes ranging from $1,000 to $50,000.  The association says its purpose is to help newer businesses that have an African founder that maintains equal ownership.  

A business must be a member of the NBMBAA to compete.  There is a $10 monthly membership fee. After that, there is an online application.   If chosen, you must submit a pitch that lasts three minutes. Then, finalists go on to compete at the NBMBAA annual conference.

Other Grant Options: Non-Minority Specific 

There are grant options that can work well even though they are not exclusively for minorities. They are available to everyone, including minorities.  Some examples include the following.

FedEx Small Business Grant

This grant is how FedEx is working to strengthen small business innovation.  There are 10 grants the company awards each year. They range from $15,000 to $50,000, and if you’re a business with a cutting-edge product, this could be a great opportunity.

A business must use the FedEx website to submit entries. There are a few questions to answer about your business.  In addition, there is a requirement for an elevator pitch about what makes your business special.  Also, you have to explain how you would use the funds. A 90 second video submission is an option as well.

NASE Growth Grants

The National Association for the Self-Employed (NASE) has small business Growth Grants of up to $4,000. They are for micro-businesses, and proceeds can be used for a number of things.  They can be utilized for marketing, advertising, expansion, and even to hire employees. These grants are open to everyone. However, you do have to be an NASE member to apply. Membership fees vary based on the membership level chosen. 

USDA Value Added Producer Grant

The USDA’s Value-Added Producer Grant (VAPG) program offers grants for small businesses.  It includes minority owned business. Grants range up to $250,000. They are specifically to help agricultural producers with activities that add value to their products. As a result, grants are open to those in rural areas.  They must be operating as one of the following: 

  • Cooperative
  • Farmer
  • Rancher
  • an independent agricultural producer
  • or an agricultural producer group 

Minority Business Loans and Grants: A Dynamic Duo for Your Business

You do not have to have one to have the other.  However, if you pair them, you get twice the power.  Another great thing about grants is, you aren’t limited in how many you can win.  Apply for all that you qualify for and see what happens. Minority business loans and grants combined could be just the boost your business needs to soar to new heights.

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