Hours before a midnight deadline, the Senate passed a short-term funding bill to keep the government running for 45 days. The bill will go to the president for his signature.
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Accounts receivable finance options can offer solutions to a number of business funding needs. They can help cover cash gaps or as working capital. In fact, they are a great way to get money for your business without worrying about credit score.
Many businesses find themselves cash strapped when their own customers are slow paying. Account receivable financing is a good solution. This is secured financing that uses your accounts receivable as security, or collateral.
Any business that carries receivables that turn over regularly can benefit. Old receivables aren’t worth as much. Think about it. If you have been waiting for payment for several months, you have a collection problem. Lenders aren’t as likely to lend against receivables that aren’t paid regularly.
Yet, if you regularly collect within 30 – 90 days, you only need cash to cover that gap. Accounts receivable financing from Credit Suite may be the perfect option.
Typically, monthly rates run between 1.25% and 5%. Loan amounts can go as high as $20,000,000. To qualify, you will not need financials or good credit.
You will need a time in business of at least 12 months. The lender will review existing receivables. Consequently, they will also consider the companies that your receivables are with. Hopefully, the companies who owe you have a good history of paying their debts. If so, your approval chances will increase substantially.
Lenders are not looking for good credit from your business. Instead, they need to see that those who owe you will pay. Of course, that is because they get their money when your customer pays the invoice. Accounts receivable finance options typically offer up to 80% of the total of receivables. When your customer pays, you get the balance, usually 20%, less a fee.
Borrowers can be approved with a personal credit score as low as 500. That’s even with recent derogatory items or major collections on the credit report.
You can get initial approval in 3 weeks or less. Once approval is financial, you may have funds in as little as 24 hours.
You can operate your business as if you get payment much sooner than your customers actually pay. Better yet, you can do so even while offering net terms to your clients. Of course, that helps you grow and run your business more successfully
Required documentations include:
Your business gets money without having to rack up expensive debts. Furthermore, the process is easy and fast. With more cash on hand, your business will pay its own bills faster. In turn, your business credit score may improve.
Both you and your customers benefit. You collect the majority amount of outstanding invoices. In addition, you can offer your clients far more favorable payment terms directly from your business. It’s a win for everyone!
There is a 4-step process that is easy to complete. First, fill out the form for a one on one consultation with a representative. Then, submit your application. After that, there will be a soft pull on your credit report. Then, there is an easy account receivables review for approval. You can prequalify in as little as 24 hours. What are you waiting for? Get yours free Business Finance Assessment today!
The post Accounts Receivable Finance: How Can A Business Use Accounts Receivable As A Funding Source appeared first on Credit Suite.
It’s about finding business credit—and funding for house flipping. Your business has stages, and they all correspond to types of financing and business credit. We’ll get to those later.
Do you double your revenue? Replace your equipment? Hire people, or more people? Retire and pass your house flipping business along to a family member or sell the company? Something else?
All these scenarios for house flippers will require funding! Even going concerns with stable, steady revenue can experience emergencies, or need to seize a business opportunity quickly and before they have the funds. All businesses can use business credit to achieve their aims – whatever they are. But instead of year by year, let’s go phase by phase since there is some overlap in time. So even if you’ve already been through some phases, checking out the earlier phases could help you see if you missed anything. And if you’re just starting out, checking out the later phases could show you how to start flipping houses with financing in the future so you can be ready.
We have liftoff! Setting up a business is a task with a lot of moving parts. It’s a lot more than just saying you’re in business. The way the business is set up can directly affect the ability of your house flipping business to succeed. This first phase covers your first six to twelve months of existence.
Fundability is a business’s ability to get funding. A lot of the power to get business money is in the hands of house flippers. A business starts with no credit profile. As a result, what’s on an application is all that’s reviewed for approvals. So your application must be very strong. Nearly half of all companies fail in their first 5 years, and about 2/3 in the first 10. As a result, new businesses don’t seem fundable to lenders. You can change that by building for fundability from the very start and get more funding for house flipping.
Check with your Secretary of State –a business name may have to be unique. Make sure your SOS has all the necessary, up to date, and correct information for your company. Make sure that you are in good standing with them and that your entity is active. You will have to file annual reports and pay an annual fee to stay active.
Keep the name of a high-risk or restricted industry out of your business name. Your flipping business can be Amy’s rather than Amy’s Fix and Flip. There is nothing underhanded about this; it is completely legitimate and honest.
A common reason for loan and credit card application denials is the lender can’t easily locate a business offline or online. So make it painfully easy for lenders and credit providers to find your flipping business. Make sure the business name is exactly the same on corporation papers, licenses, utility statements, and bank statements. Also make sure the business name and all other information is the same on every online listing you can find.
This must be a real brick and mortar building, a deliverable physical address. This can never be a UPS box or a PO Box. Some lenders will not approve and fund unless this criterion is met. A virtual address can also be a good idea if you need to hold a meeting or an interview, and it’s a lot more professional than doing this at your kitchen table. We like Regus, Davinci, and Alliance Virtual Offices. But keep in mind that we know of at least one credit issuer that will not accept virtual addresses.
Get a free EIN for your flipping business and choose your business entity at IRS.gov. Use your EIN to open a bank account and to build a business credit profile. To truly separate business credit from personal credit your business must be a separate legal entity, not a sole proprietor or partnership. Only incorporating creates a new and separate entity which by default will reduce your personal liability. Other entities (like partnerships) don’t. File this with the Secretary of State for your state. Make sure to set your entity up in the same state as your business address.
The IRS website is also where you choose NAICS codes, which are for the purpose of collecting, analyzing, and publishing statistical data on the US business economy. Per the NAICS, the 236118 code covers Residential Remodelers. This code also covers general contractors for home improvement.
The good news is, 236118 is not on the NAICS list of high risk and cash-intensive businesses. But that list is from 2014 and does not appear to have to been updated. It makes sense to err on the side of caution. Hence, to be on the safe side, it makes sense to keep the words like ‘flipping’ and ‘fix and flip’ out of the business name, as any industry with a low barrier to entry is bound to have higher risks than the norm.
Contact State, County, and City Government offices to see if there are any necessary licenses and permits to operate your flipping business. Licensing requirements differ depending on state, town, and industry. Always make sure you have the proper licensing for your corporation. Being fully licensed builds credibility in your house flipping business, and that can help you get more customers.
It’s quite easy and inexpensive to set up a virtual local phone number or a toll free 800 number. A cell or home phone number as your main business line could get you flagged as un-established – but VOIP is okay. If you don’t want customers calling you all day, do not use a personal cell phone as the business phone number.
It also helps with fundability to have a dedicated business phone number. Your number must have a listing with 411 for most credit issuers and lenders to approve you. Check for your record to see if you’re listed and your information is accurate. No record? Then use ListYourself.net to get a listing.
Lenders and credit providers will research your corporation on the internet. It is best if they learned everything directly from your corporate website. Not having a professional website can hurt your chances of getting corporate credit. Buy web hosting from a hosting company like GoDaddy or HostGator.
Your domain should be your business name, if possible. Add a company email address for your flipping business on the same domain as your website. This often comes with a website domain provider. This is not just professional; it also greatly helps your chances of getting approval from a credit provider. Do not use Yahoo, AOL, Gmail, Hotmail, or similar kinds of email.
You must have a bank account devoted strictly to your flipping business. The IRS does not want you commingling funds. Make accounting easier and reduce the risk of audit at tax time. Keep personal and business funds separate. Having a business-only bank account makes that easy.
Go to D&B’s website and look for your business. Can’t find it? Then get a free D-U-N-S number on the D&B site. A D-U-N-S number plus 3 payment experiences leads to a PAYDEX score. You need a D-U-N-S number to start building business credit. Once you are in D&B’s system, search Experian and Equifax’s sites for your business.
Get the most favorable funding by paying all bills on time. This way, you get:
For Experian, historical behavior (payment history) is 5-10% of the total score
Start with vendor accounts, a proven way to start building business credit. Vendor credit is generally not attached to a bank. So under federal law a Social Security number is not necessary. When not attached to a bank, there is no Social Security requirement for starter vendor credit. This is unlike bank loans and bank cards. You can legitimately leave the SSN field blank, to force them to pull your business credit under your EIN.
Check out four of our favorite starter vendors for the house flipping industry:
They report to D&B. They work with more than 1,300 suppliers. Grainger sells electrical products, fleet maintenance, HVACR, hardware, janitorial, power tools, pumps, and more. If a business doesn’t have an established credit, they will require additional documents. like accounts payable, income statement, balance sheets, etc. There is no minimum order amount necessary to report but Grainger does prefer for a business to have at least a $50 payment history. Apply online or over the phone. Terms: Net 30.
To qualify, you need:
Marathon Petroleum Company provides transportation fuels, asphalt, and specialty products throughout the United States. Their product line supports commercial, industrial, and retail operations. Marathon is under the Wex umbrella. This card reports to Dun & Bradstreet and Experian. Before applying for multiple accounts with WEX Fleet cards, make sure to have enough time in between applying so they don’t red-flag your account for fraud.
To qualify, you need:
Must also have a good Experian business credit score. Your SSN is necessary for informational purposes. If concerned they will pull your personal credit talk to their credit department before applying. You can provide a $500 deposit instead of using a personal guarantee if you’ve been in business less than a year. Apply online or over the phone. Also, their terms are Net 15.
Uline is a distributor of shipping, industrial, and packing materials, and industrial and janitorial products. 99.5% of Uline’s orders ship the same day, with no backorders. This card reports to: D&B and Experian.
To qualify, you need the following:
Uline prefers that a business has a good credit profile with D&B, but this is not necessary. Your application may get approval for net 30 at the time of order. But upon final review, their credit department may change to a few prepaid orders before granting a net 30. Apply by creating an account first, then place an order and select Net 30 terms. Their credit department will then review the account. Also, their terms are Net 30.
Home Depot Pro is a single-source supplier for facilities maintenance supplies, including everything from cleaning and janitorial supplies and PPE to plumbing parts and lighting products. If in business for less than 1 year, they require at least 2 prepaid orders using their credit cards over the course of 90 days. Must be an active web customer for 90 days to apply for Net 30. No minimum order necessary.
They will not accept virtual addresses. You should be in business at least 1 year to qualify. Reports to Experian. Also, their terms are Net 30.
To qualify, you need the following:
Every step and every credit provider is designed to help your house flipping business. It’s meant to help you qualify for business credit cards that you will actually use. As you continue building, your time in business will help. But to get started, you may need to give a PG. That’s okay; that’s a part of the strategy.
According to Investopedia, a personal guarantee is:
“an individual’s legal promise to repay credit issued to a business for which they serve as an executive or partner. Providing a personal guarantee means that if the business becomes unable to repay the debt, the individual assumes personal responsibility for the balance. Personal guarantees provide an extra level of protection to credit issuers who want to make sure they will be repaid.”
When you provide a PG, you are adding your Social Security number to the application. You should expect a hard inquiry. You’re also adding the details of your personal income to the application.
If you already have good personal credit, then you’re all set. But if not, you can work with a credit partner or guarantor. And never stop working to improve your personal credit, no matter what shape it’s in.
A credit line hybrid is a form of unsecured funding. Our credit line hybrid has an even better interest rate than a secured loan. Get some of the highest loan amounts and credit lines for businesses. Get 0% business credit cards with stated income. These report to business CRAs so you can build business credit at the same time. This will get you access to even more cash with no PG. You need a FICO credit score of at least 680 or a guarantor with good credit to get an approval. No financials necessary.
This is not a loan, and you will not have to pay an early withdrawal fee or a tax penalty. You put the money back by contributing, just like with any 401(k) program so you won’t lose your retirement funds. The IRS calls this a Rollover for Business Startups (ROBS), which is a separate entity with its own set of requirements. The plan, through its company stock investments, rather than the individual owns the trade or business.
This financing isn’t a loan against, your 401(k), so there’s no interest to pay and does not use the 401(k) or stocks as collateral. Instead, this is simply a movement or change of custodian. our 401(k) must have more than $35,000 in it and cannot be from a business where you are currently employed. You can get 401(k) financing even with severely challenged personal credit.
Some lenders will make loans using securities as collateral. Securities-based lending provides ready access to capital. The only restrictions to this kind of lending are other securities-based transactions, like buying shares or repaying a margin loan. You continue to earn interest on stocks pledged as collateral. But you will have challenged personal credit.
Your fix and flip business and its potential are assets. Talk to people you know about angel investing. Angels buy a smallish stake in your company. They usually don’t expect as big a return as venture capitalists do. VCs might also buy a stake, but they generally just want paradigm-changing businesses. Most house flipping companies won’t fill the bill unless your take on the industry is utterly unique. Another way to sell a part of your equity is to take on another founder or partner.
Crowdfunding success has no guarantees. Crowdfunding platforms like Kickstarter will take a percentage of any money you raise. But it can still be a way to get a cash infusion without having to give up equity. If you’re particularly good online and have a compelling service and story, then you’re more likely to succeed than most people. And it can be a way to start flipping houses with no money.
Grants can come from the government or private businesses. Expect a lot of competition, difficult entry requirements, and not a lot of money. But it’s another way to get some cash without having to sell a chunk of your flipping business. You may find there are few grants for the flipping industry, but you may be able to score grants based on the kind of entrepreneur you are, e. g. female, disabled, LGBTQ+, etc. Also check under terms like gentrification and rehabilitation.
Right now, you have minimal Growth Monthly Revenue (GMR). This is a fast paced growth house flipping business plan, throw it against the wall and take what you can get right now. Look at some short sighted daily and weekly goals for quick cash and growth. During this phase, your focus is on the bare essentials to create a viable business. Your goal is to build your consistent revenue to $10,000 per month and continue to work to improve your personal credit.
In Phase 2, start developing marketing Now you’re at an aggressive sales pace adding nurture and longer sales cycles. Use medium term monthly growth planning (campaign to campaign). It’s time for software implementation and system development. You’re building the blocks of how your flipping business is going to be, now and in the future. This phase should run somewhere between the first six to 24 months from launch.
Your credit options will increase once you get to Phase 2, including:
As you continue to build exceptional business credit and pay your bills on time, credit providers trust you even more. You can get higher limits and better terms. And you can start to get business credit cards with no PG.
With no PG financing, you can get higher limits and better terms. Continue building exceptional business credit and pay your bills on time. In general, the following will reduce the need to provide a PG for this type of house flipping financing:
Much like with any other kind of business borrowing, the more assurances you can give the lender, the better.
There are many vendors who do not report to the business credit reporting agencies unless you default. But they’re still a good idea, because credit can help you beyond business credit building. Not having to put up 100% of the costs of equipment or a building or anything else can help with budgeting. Credit can sometimes be the only way to take advantage of a limited time opportunity if you don’t have the money right now. And if your business credit cards offer rewards, cash back, or points, then using them is to your advantage.
Vehicle financing is a great way to get a pickup truck or other business vehicle without having to wait until you can just pay cash and drive it off the lot. Note: it may be necessary for business owners to personally guarantee vehicle loans. If you are a co-borrower, the loan will most likely report to your personal credit report. Some loans have a prepayment penalty and charge you for paying ahead. It is a good idea to have a loan proposal. A loan proposal should detail your flipping business, loan needs, and financial statements. Here are a couple of vehicle financing choices from us.
Ford offers several commercial vehicle financing options. These include loans, lines, and leases to actual business entities. This is not for sole proprietorships. Get a loan or a lease.
Ford may ask for a PG if you don’t get approval on the merit of your application. Apply at the dealership. Ford will report to D&B, Experian, and Equifax.
To qualify, you need:
Ally provides personal financing. But they will also report to business credit bureaus. If your flipping business qualifies for financing without the owner’s guarantee, you can get financing in the business name only. Ally will report to D&B, Experian, and Equifax.
To qualify, you need:
If you provide a PG, Ally will not report to the personal credit bureaus unless the account defaults.
Get a lease or a loan. To qualify, you need most of the same things as you need for an Ally Commercial Line of Credit, except for a bank reference and fleet financing references. There is no minimum time in business requirement. Apply in person only, dealer will advise if you’ll get approval or if a PG is necessary.
With at least 3 Tier 1 vendors reporting, Tier 2 starts to open up. Here are five of our favorite Tier 2 vendors to help you with your house flipping business:
Quill sells office supplies, cleaning supplies, handheld computers, and more. If not given a Net 30 they will ask for prepaid orders of $100. Normally any prepaid order will not report but you need them to get a Net 30 account. Net 30 accounts require a $50 purchase to report. Sometimes an order is shipped, and the customer thinks they have approval, but this may not be the case.
New businesses or businesses with no credit history with D&B may need to prepay purchases for 3 consecutive months until Net 30 approval. It can take Quill’s credit department approximately 3 hours to process an application. Reports to D&B. Also, their terms are Net 30. Apply over the phone.
To qualify, you need:
United is the largest equipment rental company in the world. Reports to Equifax. Apply online or at a local store. Also, their terms are Net 30 or Net 45.
No minimum time in business is necessary. No minimum purchase to report. Need an established business credit history (good Equifax business credit score) to have the option to apply without a PG. If Equifax business score is low, a PG is necessary.
To qualify, you need:
Home Depot offers a wide range of home improvement products. They offer both a pay in full and a revolving option. Reports to D&B, Experian, and Equifax. Apply online or at the store. Terms: Commercial Account (Pay In Full Terms) -Net 30 or Net 60; Commercial Revolving Charge Account -Revolving.
To qualify for either option, you need:
For pay in full terms, you also need:
For revolving terms, you also need:
Offers a wide selection of products—from consumer goods to industrial and construction equipment—to do-it-yourselfers, contractors, and professional shops. Reports to D&B and Experian. Apply online or at a branch. Also, their terms are Net 30.
To qualify, you need:
You can get nearly anything at Amazon—including materials to stage finished homes for sale. Reports to D&B and Equifax. Apply online. Also, their terms are Net 55.
No minimum time in business if strong business credit history. You should have at least 2 years in business. Amazon will pull business credit reports to make sure there is some established business credit history. Must have a good PAYDEX score of 80 or higher and a good Equifax business credit score. If a company has been in business for more than 2 years but does not have an established business credit history, a PG is recommended but not necessary. It may increase the likelihood of approval and is recommended if you have a young or small business, and not enough business credit history.
To qualify, you need:
Managing small business finances can be overwhelming. There are several tools that can help streamline the process. Options like Brex, Divvy, Expensify, Lola, and more are growing in popularity. Which one is right for your fix and flip business?
Brex and Divvy are business money management systems that integrate with your accounting software. You can track expenses and, depending on the level of service you choose, can also help with paying bills and controlling spending. Also, Brex has a partnership with the FDIC and your funds are secure.
Virtually everyone that opens a Brex cash account gets a corporate card. Brex reports any payments to Dun & Bradstreet. Divvy reports to the Small Business Finance Exchange, which in turn provides data to all SBFE partners, including business credit bureaus.
In Phase 2, your funding options also multiply, to add:
MCAs technically aren’t fix and flip loans; it’s a cash advance based on the credit card sales of a business. A small business can apply for an MCA, and have an advance deposited into its account quickly. So you can offer Net 30 terms but not have to wait a month to get paid. With an MCA you get funding based strictly on cash flow as verifiable per business bank statements. A lender mainly just wants to see consistent deposits.
You can technically qualify with only one year in business, but the annual revenue requirement is high enough that phase 2 may make more sense. You can raise capital from investors who get a percentage of the enterprise’s ongoing gross revenues in exchange for money invested until a predetermined amount is paid. Often this predetermined amount is between 3 – 5 times the original amount invested. Monthly payments will fluctuate with revenue highs and lows and will continue until you’ve paid back the loan to flip a house in full.
Fundbox will connect directly to your online accounting software when deciding whether to fund your flipping business. They will auto debit your weekly payment from your bank account. But Fundbox does not report to the business credit reporting agencies.
You need to have:
Use a loan or lease to purchase or borrow hard assets for your flipping business. Physical assets can include items such as a pickup truck or a laptop. Pay predictable amounts every month. You can build business credit on a program like this.
Or lease equipment, rather than buy it outright. You will often put down less money than you would if you were buying the equipment. You may be able to negotiate flexible terms with an equipment lease, and it’s easy to upgrade equipment after your lease ends. This is helpful if your equipment is something like a computer which quickly becomes obsolete.
If you already own your equipment free and clear you can use that as collateral for financing. Sell equipment to a lender for cash. Then lease it back from them. You can unlock Section 179 tax savings, and depreciate your entire equipment purchase in the first year. You’ll need at least one larger piece of higher value equipment to qualify. A pickup truck should do nicely.
If you have open invoices and are extending credit to customers in some form, then you can get paid faster with factoring. Usually this involves invoices with net terms, like net 30, 60, or 90. To be paid faster, you turn those invoices over to a factoring company. They immediately give you an agreed upon percentage of the total of the invoices, like 80%. When your customer pays, the factoring company keeps their fee, and they send you the rest. But keep in mind – factoring only works if your customers pay.
Strong business credit (10 to 12 Accounts). Good personal credit will always help. Build consistent revenue to $10,000 or more a month. Always develop business connections in your community and with potential lenders.
Successful growth…it’s working! It’s time to start optimizing systems and operations. So, you’ll be undergoing massive team and infrastructure development, and long term growth and planning for semi-annual to annual focus lifetime customer value. You’ll need to make some high level strategic hires (Managers, VP’s, Essential C levels). This phase will happen at about 24 months or more from launch.
Your Phase 3 credit options put your Phase 1 and Phase 2 options on steroids, with:
Phase 3 opens your funding options up to:
Alternative lending can mean online lending. For certain industries, online lending is one of the only ways to get money. Before you dip into your savings, investigate house flipping business lending. Because lenders that specialize in the fix and flip industry lending are out there.
More time in business will make SBA loans a real possibility for your flipping business. It’ll be easier to get an SBA loan in Phase 3 versus earlier. This is because you can more readily show your fix and flip business is established and making money. Demonstrated profitability and responsible credit and bank account management will improve your chances of getting an approval for an SBA loan. SBA loans have great terms. There’s a reason why you should be striving to be eligible for one.
Banks are often the first place we think of when we think of financing. But big banks only sign off on about 25% of the small business loan applications that come their way. Term loans often have lower interest rates than many other funding options. Also, they also tend to be for higher loan amounts. But you will most likely have to undergo a personal credit check and/or provide collateral.
In Phase 3, your mission is to take your flipping business to the next financial level, so your goals are:
Buy everything from office supplies to power tools. Vendors will check whether your business information is uniform everywhere. They will also check if your flipping business is properly and thoroughly licensed (if necessary). Also, terms can be revolving. You will need at least 6 (more is always better) accounts reporting to the business CRAs.
Here are two Tier 3 vendors we love:
You will generally need some time in business before you can get approval.
Buy tools and hardware, home goods, and more. Reports to D&B and Equifax. Apply online or at the store. Also, their terms are revolving.
You must have trade accounts reporting to all 3 major business credit bureaus for at least 3 years. Must have a good Experian business score and a good PAYDEX score of 80 or higher. Also, you must have a good Equifax business credit score. If any above criteria is not met, a PG may be necessary. Providing a guarantee may increase the likelihood of approval and is recommended if you have a young or small business.
To qualify, you need:
Kleer Card helps with expense tracking, controls and issuing of credit cards all on one platform. Get accounting solutions for your flipping business. No PG necessary. Reports to D&B, Experian, and Equifax. Apply online or over the phone. Also, their terms are Net 7.
To qualify, you need:
To get to Tier 4 means you have at least 9 accounts reporting. Terms can be revolving. To ensure that your vendor’s report your payments, make a purchase of $50 or more. Also, there may be a minimal time in business requirement.
Here are 3 Tier 4 vendors we love:
Sam’s Club offers office supplies, business furniture, janitorial/cleaning supplies, paper products, computers, and more. Reports to D&B, Experian, and Equifax. Apply at the store. Also, terms are revolving.
To get approval without a PG, it helps to have $5 million in annual sales or revenues and/or at least 2 years in business, and/or more than 10 employees. A PG is necessary if your company is a sole proprietorship or partnership. Cash advance available with business credit card approval, amount of cash advance depends upon approval amount.
To qualify, you need:
The Sutherland Lumber Company specializes in complete building packages, including storage sheds, garages, post frame buildings and pole barns, and entire houses. You have the option to apply with business liability only, Sutherlands will advise if you get approval, or a PG is necessary. Also, if you don’t get approval based on business credit history, a PG is necessary. Reports to D&B. Apply online or at the store. Also, their terms are revolving.
To qualify, you need:
Menards offers a complete selection of name brand merchandise, tools, materials and supplies for all home improvement needs. Their Commercial Credit card has no annual fee and its own line of credit. You will need strong business credit history with good PAYDEX score of 80 or higher and a good Experian business credit score. You must have at least 3 years in business. If your business is a nonprofit corporation, corporation or LLC, a PG is necessary if the business is less than 3 years old. Reports to D&B and Experian. Apply online or at the store. Also, their terms are Net 30 or Net 50.
To qualify, you need:
Consistent growth is key. You’re aiming for long term consistent and stable growth and moving toward market domination (Competitor Buyouts and Acquisitions). Product development and expansion becomes critical for longevity. Now it’s time for the big hire. You’re going to fill out C Level, Directors, and middle management. Yes, your flipping business can become this big! This phase will happen at around four to five years from launch.
By Phase 4, the sky is pretty much the limit! You should be able to get:
And you should be able to leverage reports for specific vendors. This also includes asking for a credit line.
In addition to everything we’ve already talked about, your house flipping business can potentially take full advantage of private equity and/or investors. You might even sell shares in your corporation or go public!
Now you’re playing the long game. Your mission is to look to the future and help your flipping business for decades to come. Therefore, you need to balance your costs vs your cash flow vs your business’s profit. And you need to leverage funding for expansions and buyouts. Also, you should be maximizing leverage of cash flow with vendors and business credit.
By this time, your business should be very well established. At this phase, you want to cash in on all the work you have invested. This is where the funding and credit has the long game return. A Business Credit Portfolio is transferable and increases the value of your fix and flip business.
Your proven track record with merchant cash advances or revenue lending pays off big time, since it can keep business cash flow moving through the ups and downs. Having a proven track record with the SBA, and a profitable banking relationship, will improve the value of your flipping business as well. People want to buy something they can lend against if they need to.
Selling can mean you’re retiring, or maybe you’re exchanging one form of entrepreneurship for another and want to change industries yet remain an entrepreneur. In Phase 5, you can:
In essence, you should be prepared to sign for your own buyout. A profitable, seasoned flipping business can be an exceptionally valuable legacy.
Your financing and credit options will change, from your startup to your exit. It may be tricky to navigate the nuances. Let us work with you–we’ve got the design!
The post 5 Year Business Credit & Funding for House Flipping Guide appeared first on Credit Suite.
It makes sense that, if you do not separate your business credit from your personal credit, you could run into issues. Most get that if they fund their business with their personal credit, their personal finances could suffer. But, did you know that even if you have separated everything beautifully, the reverse can still be true? Here are 3 ways personal financing can affect your ability to get funding for your business.
Some business funding options consider your personal credit score no matter what. For example, all traditional loans, SBA loans, and even the Credit Line Hybrid focus on personal credit score. Generally, they want to see a personal score above 650, though there are exceptions. The issue goes beyond this however.
The number one factor that affects personal credit is paying on time. However, some other factors that can affect your personal credit score include:
This last point is important. It includes everything from credit card debt to personal financing for auto loans and mortgages. If you max out your limits on everything without paying it down significantly, your personal credit score will be negatively impacted. All of this means, you could be making all payments on time and still run into issues.
It’s true. Some business credit reporting agencies take your personal credit into account. They use your personal credit in the calculation of the business credit score they release to lenders. This means if your personal credit score is bad, your business credit score could suffer.
Experian is different from the other two main business credit reporting agencies in one very important way. Of course, business credit is credit in a business’s name. It depends on how well a company can pay its bills. Yet, Experian uses both consumer and business credit information to gauge risk. They find a blended score is more accurate and predictive.
This score is becoming increasingly common and it’s a lot trickier. FICO SBSS stands for FICO Liquid Credit Small Business Scoring Service. Unlike your personal FICO, the SBSS reports on a scale of 0 to 300. The higher the score the better, and most lenders demand a score of at least 160.
The scoring model for this score is not the same as other business credit scoring models. It uses your business and personal credit scores, but it does so much differently than Experian.
The formula for calculations is proprietary and well-guarded by FICO. They do not make the information public. Unlike the other business credit reporting agencies, you cannot request a copy of your report or see your score. Here’s why. Surprisingly, this score can actually vary from lender to lender. That’s right, two different lenders can get two different scores for your business from FICO SBSS at the same time.
Here’s how that works. Lenders can ask for certain factors in the score to carry more weight than others. Your score can vary depending on how a lender weighs each factor. One lender may put more weight on your personal credit score or your business credit. Meanwhile, another may choose to weigh annual revenue as more important than payment history. It is their choice.
FICO searches business credit information from business credit agencies. This includes D&B, Experian, and Equifax. They use this information in the calculation of your score. So, your score with these bureaus affects your FICO SBSS.
The only way to ensure that your personal credit doesn’t impact your business credit in a negative way is to keep your personal credit in good order. This is because you really can never know which factors the lender is going to weigh more or less for that matter.
Because some types of funding require a strong personal credit score, you may need to use a guarantor to get access. This includes some funding types that can help you build business credit, like the Credit Suite Credit Line Hybrid.
A credit line hybrid is a form of unsecured funding. Our credit line hybrid even works for startups, and you can get a better interest rate than a secured loan. It reports to business CRAs, but you need a FICO score of at least 680 to qualify.
However, if your personal FICO isn’t that great, you can use a guarantor with good credit to get approval. It’s no-doc financing, meaning you do not have to turn in any financial documents. Using a guarantor could be worth it if you need funding quickly.
Business lending, at its core, is affected by the Fundability of your business. There are 4 core factors that affect business Fundability, and each of these factors is made up of a number of principles. Personal financial statements and other data bureaus are included in these factors.
Some lenders will ask for personal financial information no matter what. Others may only look at them if the business is not considered creditworthy on its own. When it comes to personal financial statements, lenders are usually looking primarily at tax returns. It’s best to have a tax professional prepare them. Other information lenders may ask for include check stubs and bank statements, among other things.
There are other agencies that hold information related to your personal finances as well. ChexSystems is one example. They track bad check activity, and their report makes a difference when it comes to your bank score. If you have too many bad checks, you will not be able to open a business bank account. That, in turn, will cause serious fundability issues.
LexisNexis and the Small Business Finance Exchange also fall into this “other bureaus” category. They can have all sorts of information on you, like:
While these bureaus do not directly generate credit reports, they do share information with certain credit agencies. They then use this information for their reporting.
This means personal finance information they hold can affect the fundability of your business, and thus your business lending options.
Whether it’s credit card debt, a mortgage, or just how you handle your personal bank account, your personal finance management can affect your ability to fund your business.
You cannot change that entirely. Still, you can limit the extent to which this is true. Separating your business from yourself and building a strong business credit score is the best way. Lenders will be able to depend less on the personal financing aspects of your creditworthiness, and focus more on the fundability of the business itself.
The post 3 Surprising Ways Personal Financing Affects Business Funding appeared first on Credit Suite.
funding for law firms
When you consider hanging your shingle and starting your own law practice, you have to think about a lot of things. One thing you may think about is funding. Every business needs funding. There is no business in the world that can run without money.
So, how do you get the business funding you need when you need it? You may think a legal practice would have no problem getting funding. However, even a law firm has to be fundable, particularly because rainmaking can take time — and it isn’t always dependable. Strong fundability is necessary for any business to get financing.
There is an added benefit for legal practices when it comes to fundability. Fundability aligns rather closely to all of the little things a firm does to attract, impress, and retain clients.
When you are just starting out with your own practice, clients may be few and far between. Not only that, but the cases you get are not likely to be huge. You need a way to make payroll and pay other bills and obligations until cash flow catches up. This is where fundability comes into play.
Fundability is any business’s current ability to get financing. Now, don’t make the mistake of thinking that you’ll be able to get the funding just because of the type of business you own. It may help. Still, before lenders approve funding for law firms, they want to make sure the business is fundable.
Regardless of the type of business, there are 5 core principles of fundability that it must have. Each core principle is affected by a number of factors. Sadly, many business owners never realize that those factors can affect their ability to get business funding.
The fundable foundation starts where every foundation starts, at the beginning. Likewise, it has everything to do with how you set your business up.
A business needs its own phone number and address. A business phone number should not be your own, even if you are a sole practitioner. You can use a separate line or VoIP and have it forwarded to your personal phone. Just do not list your personal phone number as your business number.
As for an address, it has to be a physical address where you can receive mail. A P.O. Box or UPS Box will not work. Of course a virtual office is an option. However, realize that some lenders will not accept a virtual office address.
Your law firm needs an EIN as well. Lenders want to see your business is legitimate and credible. If you apply for business funding and do not have an EIN, it looks unprofessional. Likely, this is even more true for an attorney. The number is free and easy to get on the IRS website. An EIN has the added bonus of keeping your personal Social Security number private.
Of course, attorneys know the importance of incorporating for liability purposes. But, incorporating your business is an important step in separating a business from the owner personally which also increases fundability. The state you are in will determine which type of corporation is allowable for legal practices. In California, for example, if you opt to become a professional corporation, liability protection will not cover acts related to professional malpractice. You could instead form a California Legal Liability Partnership (LLP) and you would not be vicariously liable for the malpractice of other members.
Other states, like Massachusetts, will allow a firm to become a professional legal liability corporation (PLLC). In the Bay State, a PLLC won’t protect you from vicarious liability for the malpractice of other members of the PLLC. And in Delaware, the term is LLC (they don’t use the term PLLC) although you can also create a Professional Corporation in Delaware. Both arrangements provide some protection. It will pay to compare the two types closing before deciding between them.
In general, creating a PLLC or LLC means the members must all be licensed to practice within the state of incorporation. Hence, unlike with other types of business incorporating, you wouldn’t be able to choose to incorporate in Delaware or Wyoming — unless of course your firm is in the applicable state and all of the members are admitted to practice there. Incorporation also must be done as soon as possible. A lot of lenders look for a minimum time in business, and generally they consider the start of business to be the incorporation date.
You have to open a separate, dedicated business bank account. There are a number of reasons for this. When it comes to fundability, the key is that there are several types of funding you cannot get without one. Many lenders and credit cards want to see a business account with a minimum average balance.
Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.
If you do not have the necessary licenses to run your business, red flags are going to fly up all over the place. Lenders do not lend to borrowers that they feel are not doing what they should. In a legal LLC or PLLC, the members will all need to be admitted to practice in the applicable state.
Firms practicing in federally regulated fields (such as securities), will likely need federal licensure.
These days, you do not exist without a website. However, having a poorly put together website can be even worse. It’s the first impression you make on many, including lenders.
Spend the time and money necessary to have a website that is professionally designed and works well. Pay for hosting rather than usings a free hosting service. Also, make sure it has the same URL as your website. Don’t use a free service such as Yahoo or Gmail. In particular, free services may not have the kind of security you would need to maintain client confidentiality, anyway.
Another plus to having a professional website and email address(es) is they are an opportunity to establish a trusting relationship with your clientele.
A business credit report is a tool to help lenders determine how creditworthy a business is, even law firms. There are a few different sources, but the main ones are Dun & Bradstreet, Experian, Equifax, and FICO SBSS. Since you have no way of knowing which one your lender will choose, you need to make sure all of these reports are up to date and accurate.
In addition to the business credit reporting agencies that directly calculate and issue credit reports, there are other business data agencies that affect those reports indirectly. LexisNexis and The Small Business Finance Exchange are two examples of this.
These two agencies gather data from a variety of sources, including public records. They even have access to information relating to automobile accidents and liens. While you may not be able to access or change the data these agencies have on your business, you can ensure that any new information they receive is positive. Enough positive information can help counteract any negative information from the past.
In addition to the EIN, there are identifying numbers that go along with your business credit reports. The Experian BIN is simply assigned by Experian. But you do have to apply for a D-U-N-S number from Dun & Bradstreet.
Dun & Bradstreet is the largest and most commonly used business credit reporting agency. Every credit file in their database has a D-U-N-S number. Apply for one through the D&B website. It’s free.
Your business credit history is what makes up your business credit score, which is a huge factor in the fundability of your business.
Your credit history consists of:
The more accounts you have reporting on-time payments, the stronger your credit score will be.
Business information needs to be consistent. Something as small as using an ampersand in your business name on one document and the word “and” on another can cause an application for funding to be denied.
A large number of loan applications are turned down each year due to fraud concerns simply because things do not match up. Maybe your business licenses have your personal address, but now you have a business address. Do some of your credit accounts have a slightly different name or a different phone number listed than what is on your loan application?
Inconsistency causes warning bells for lenders, and you may never know what the problem was.
Credit Line Hybrid Financing: Get up to $150,000 in financing so your business can thrive.
Your personal credit score from Experian, Equifax, and Transunion all make a difference. You have to have your personal credit in order because it will definitely affect the fundability of your business.
Some business credit reporting agencies use your personal score in your business score calculation. Of course, lenders may pull your personal score as well, regardless of what your business credit score looks like.
Both your personal and business tax returns need to be in order, and you need to be paying them. Tax returns aren’t the end of the story however.
It is best to have an accounting professional prepare regular financial statements for your business. Having an accountant’s name on financial statements lends credence to the legitimacy of your business.
Personal Financials
Often tax returns for the previous three years will suffice. Again, it is best to have a professional prepare them. Other information lenders may ask for include check stubs and bank statements, among other things.
There are several other agencies that hold information related to your personal finances that you need to know about. Everyone knows about FICO. Your personal FICO score needs to be as strong as possible. It really can affect business fundability and almost all traditional lenders will look at personal credit in addition to business credit.
ChexSystems is also in the mix. They track bad check activity, which makes a difference when it comes to your bank score. If you have too many bad checks, you will not be able to open a bank account. That will cause serious fundability issues.
Everything is fair game. Do you have a bankruptcy or short sale on your record? What about liens or UCC filings? Yes, even these personal things can affect the fundability of your business.
First, consider the timing of the application. Is your firm currently fundable? Next, ensure that your business name, business address, and ownership status are all verifiable. Lenders will check into it. Lastly, make sure you choose the right lending product for your business and your needs. Do you need a traditional loan or a line of credit? Would a working capital loan or expansion loan work best? Choosing the right product to apply for is important.
Everyone knows the easiest way to put together a puzzle is to start with the edges and corners. These are the easiest pieces to find because of their straight edges. Once in place, there is a framework within which to fit all the other pieces.
The fundable foundation is like a puzzle framework. Even with a law firm, it’s easier to start building your fundability from the beginning, especially since many of the steps you need to take are what clients are looking for in a firm anyway. Similarly, the foundational pieces are easiest to find. As a result, filling in the details of all the other principles goes much more smoothly. Yet, many business owners do not even realize these pieces are part of the fundability puzzle at all.
Funding for law firms is out there. Making sure your firm is fundable assures you the best possible chance of getting the funding you need to grow and thrive.
The post How Fundability® Affects Funding for Law Firms appeared first on Credit Suite.
Millions of people work a side hustle these days. There are tons of options. Companies like Uber, Lyft, DoorDash, Instacart and more have blown the market wide open and helped create a gig economy of temp workers. However, many still choose to work on their own to make money on the side.
People choose to make money on the side in all kinds of ways. Some examples include:
The thing is, running a hustle on the side isn’t free. Even though often the overhead is relatively low, there are going to be costs. Selling online requires fees. Shipping costs are an issue if you sell a physical product. Even services oriented hustles like cleaning will require supplies.
There are a number of options when it comes to funding for this type of work.
Check out how our reliable process will help your business get the best business credit cards.
In the beginning, bootstrapping is the obvious choice. Basically, this is when you do it yourself. By definition, a side hustle is something you do in addition to your regular job. So, it can make sense to invest an initial amount to get started from funds already available to you. Then, continue to use most of your proceeds to purchase more of what you need for the hustle. Hopefully, eventually you break even and then produce a profit.
If you want to expand with newer or better equipment, say a new embroidery machine, baking molds, or a new vinyl cutting machine, consider asking friends and family. They can make great birthday or holiday gifts. You could also ask them to borrow the money, or even sell them equity so they become angel investors if it grows into more than just something you do on the side.
If you have good personal credit, you may be able to find good terms on a credit card to fund what you need short-term. Still, financing a business with personal credit means using a high percentage of your credit limits. This is called high credit utilization, and it can lower your personal credit scores.
If you decide your hustle is strong enough to take on a life of its own, consider setting it up as a separate business. Even if you keep your day job, doing this opens up many more funding opportunities.
Once you see your side hustle taking off, go ahead and name it. Your state may require for every business name to be unique, so check with the Secretary of State’s office. Get a business phone number and list it in the 411 directory. Then, get an EIN using the business name, phone number, and a physical business address where you can receive mail. You can do this for free at IRS.gov. Note: Do not use a P.O. Box or an UPS box as your business address. You can use a virtual address, but some lenders will not accept those.
You also need a separate, dedicated business bank account. Even if you aren’t bringing in a lot yet, this is still a good idea. You will need to report the income to the IRS, and this will help you keep track. Beyond that, if you want to apply for vendor accounts and other forms of business credit, this is often a requirement.
Also, if you want to be able to take credit card payments, you will need a merchant account. You cannot get a merchant account, without a business bank account.
These are just the first steps in setting up a side hustle to be eligible for business funding.
Check out how our reliable process will help your business get the best business credit cards.
As you do this, don’t neglect the details. Small inconsistencies can cause big problems. For example, if you use an ampersand in your business name when you get your EIN, be sure to use the ampersand and not the word “and” when you open your business bank account.
This type of seemingly small detail can cause big problems when you apply for business funding later on.
Taking these simple steps in the beginning will ensure you are ready to roll when the time comes to expand and grow your hustle. It takes funding to do that, and these steps will help you qualify for funding in the name of the business.
One of the easiest ways to start is to apply for business vendor credit. But first, use the business information you set up to apply for a D-U-N-S number from Dun & Bradstreet. You can apply and get one for free on their website.
Then, you can apply for credit from vendors in the name of your business. This will allow you to buy items needed to fill orders before you get paid. Items like jewelry-making supplies or tools and materials for handyman work can be bought ahead of time using vendor credit. You won’t have to wait to take orders. It can also make it possible to pay for advertising materials, like ad designs and banners, or even print ads.
You can’t just start applying for business accounts with any vendor you want right away and expect approval, however. If there are vendors that offer personal accounts and sell what you need, that is fine. However, it’s wise to work with some vendors that will extend net accounts in your business’s name, and report them to the business credit reporting agencies like Dun & Bradstreet, Experian, or Equifax.
Then you build business credit for your hustle. Business credit opens up many more funding opportunities for the future.
There are a few vendors that will do this even if your business credit score isn’t great, or is currently non-existent. They use other factors to determine creditworthiness. This includes whether your business is set up the way described above, as well as time in business, and more.
These are not revolving accounts. Rather, they are net accounts, meaning you will have to pay off the total balance at the end of the net term period. However, this can be a way to get the materials you need to run your business before your customer pays you. You can expand and grow your side hustle without depleting cash reserves, or even if you have no cash reserves.
The fun part about doing it this way, instead of just funding your business with your personal credit, is that you can build on those initial vendor credit accounts and eventually have even stronger business credit. All you need is 3 to 5 initial accounts reporting to be able to apply for more advanced accounts.
Check out how our reliable process will help your business get the best business credit cards.
After you are bringing in money regularly, and your income is somewhat predictable, you may also be able to finance your new business with purchase order financing or a merchant cash advance.
For both of these kinds of financing, you get slightly less than the full value of any outstanding invoices, but you get it a lot faster!
If you have a business account with PayPal or Square, you may qualify for a loan from them that does not take credit score into account.
Another great option when it comes to funding a side hustle as it grows is the Credit Line Hybrid.
A credit line hybrid is a form of unsecured funding. Our credit line hybrid has an even better interest rate than a secured loan. You can get 0% business credit cards with stated income, and many of these report to business CRAs. That means you can build business credit at the same time. You get access to even more cash, and with no personal guarantee. You need a good credit score or a guarantor with good credit to get an approval. In this case, that is a FICO score of at least 680. There are no financials required.
Your side hustle can be as large or as small as you want to make it. You can keep your day job, or you can grow it into a full time gig and be your own boss. Regardless, you’ll need funding to make it happen.
The post How to Get Business Funding for Your Side Hustle and Make More Money! appeared first on Credit Suite.
Millions of people work a side hustle these days. There are tons of options. Companies like Uber, Lyft, DoorDash, Instacart and more have blown the market wide open and helped create a gig economy of temp workers. However, many still choose to work on their own to make money on the side.
People choose to make money on the side in all kinds of ways. Some examples include:
The thing is, running a hustle on the side isn’t free. Even though often the overhead is relatively low, there are going to be costs. Selling online requires fees. Shipping costs are an issue if you sell a physical product. Even services oriented hustles like cleaning will require supplies.
There are a number of options when it comes to funding for this type of work.
Check out how our reliable process will help your business get the best business credit cards.
In the beginning, bootstrapping is the obvious choice. Basically, this is when you do it yourself. By definition, a side hustle is something you do in addition to your regular job. So, it can make sense to invest an initial amount to get started from funds already available to you. Then, continue to use most of your proceeds to purchase more of what you need for the hustle. Hopefully, eventually you break even and then produce a profit.
If you want to expand with newer or better equipment, say a new embroidery machine, baking molds, or a new vinyl cutting machine, consider asking friends and family. They can make great birthday or holiday gifts. You could also ask them to borrow the money, or even sell them equity so they become angel investors if it grows into more than just something you do on the side.
If you have good personal credit, you may be able to find good terms on a credit card to fund what you need short-term. Still, financing a business with personal credit means using a high percentage of your credit limits. This is called high credit utilization, and it can lower your personal credit scores.
If you decide your hustle is strong enough to take on a life of its own, consider setting it up as a separate business. Even if you keep your day job, doing this opens up many more funding opportunities.
Once you see your side hustle taking off, go ahead and name it. Your state may require for every business name to be unique, so check with the Secretary of State’s office. Get a business phone number and list it in the 411 directory. Then, get an EIN using the business name, phone number, and a physical business address where you can receive mail. You can do this for free at IRS.gov. Note: Do not use a P.O. Box or an UPS box as your business address. You can use a virtual address, but some lenders will not accept those.
You also need a separate, dedicated business bank account. Even if you aren’t bringing in a lot yet, this is still a good idea. You will need to report the income to the IRS, and this will help you keep track. Beyond that, if you want to apply for vendor accounts and other forms of business credit, this is often a requirement.
Also, if you want to be able to take credit card payments, you will need a merchant account. You cannot get a merchant account, without a business bank account.
These are just the first steps in setting up a side hustle to be eligible for business funding.
Check out how our reliable process will help your business get the best business credit cards.
As you do this, don’t neglect the details. Small inconsistencies can cause big problems. For example, if you use an ampersand in your business name when you get your EIN, be sure to use the ampersand and not the word “and” when you open your business bank account.
This type of seemingly small detail can cause big problems when you apply for business funding later on.
Taking these simple steps in the beginning will ensure you are ready to roll when the time comes to expand and grow your hustle. It takes funding to do that, and these steps will help you qualify for funding in the name of the business.
One of the easiest ways to start is to apply for business vendor credit. But first, use the business information you set up to apply for a D-U-N-S number from Dun & Bradstreet. You can apply and get one for free on their website.
Then, you can apply for credit from vendors in the name of your business. This will allow you to buy items needed to fill orders before you get paid. Items like jewelry-making supplies or tools and materials for handyman work can be bought ahead of time using vendor credit. You won’t have to wait to take orders. It can also make it possible to pay for advertising materials, like ad designs and banners, or even print ads.
You can’t just start applying for business accounts with any vendor you want right away and expect approval, however. If there are vendors that offer personal accounts and sell what you need, that is fine. However, it’s wise to work with some vendors that will extend net accounts in your business’s name, and report them to the business credit reporting agencies like Dun & Bradstreet, Experian, or Equifax.
Then you build business credit for your hustle. Business credit opens up many more funding opportunities for the future.
There are a few vendors that will do this even if your business credit score isn’t great, or is currently non-existent. They use other factors to determine creditworthiness. This includes whether your business is set up the way described above, as well as time in business, and more.
These are not revolving accounts. Rather, they are net accounts, meaning you will have to pay off the total balance at the end of the net term period. However, this can be a way to get the materials you need to run your business before your customer pays you. You can expand and grow your side hustle without depleting cash reserves, or even if you have no cash reserves.
The fun part about doing it this way, instead of just funding your business with your personal credit, is that you can build on those initial vendor credit accounts and eventually have even stronger business credit. All you need is 3 to 5 initial accounts reporting to be able to apply for more advanced accounts.
Check out how our reliable process will help your business get the best business credit cards.
After you are bringing in money regularly, and your income is somewhat predictable, you may also be able to finance your new business with purchase order financing or a merchant cash advance.
For both of these kinds of financing, you get slightly less than the full value of any outstanding invoices, but you get it a lot faster!
If you have a business account with PayPal or Square, you may qualify for a loan from them that does not take credit score into account.
Another great option when it comes to funding a side hustle as it grows is the Credit Line Hybrid.
A credit line hybrid is a form of unsecured funding. Our credit line hybrid has an even better interest rate than a secured loan. You can get 0% business credit cards with stated income, and many of these report to business CRAs. That means you can build business credit at the same time. You get access to even more cash, and with no personal guarantee. You need a good credit score or a guarantor with good credit to get an approval. In this case, that is a FICO score of at least 680. There are no financials required.
Your side hustle can be as large or as small as you want to make it. You can keep your day job, or you can grow it into a full time gig and be your own boss. Regardless, you’ll need funding to make it happen.
The post How to Get Business Funding for Your Side Hustle and Make More Money! appeared first on Credit Suite.
The post How to Get Business Funding for Your Side Hustle and Make More Money! appeared first on Buy It At A Bargain – Deals And Reviews.
Organization Credit Cards: A Valuable Source Of Funding
One of the secrets to service success exists in enough resources: you require it to obtain with the ever-changing times of your little service. A current study revealed that 90% of tiny service proprietors make use of a company credit score card.
Accessibility to Funding
When beginning a brand-new organization, locating resources of financing can be an obstacle. A company charge card permits you very easy accessibility to a credit line. The credit line for service bank card is normally greater than individual cards.
Lots of service debt cards, consisting of the Platinum Business Credit Card from American Express and also the Chase Platinum Visa ® Business Card, supply 0% APR initial prices. This can aid start your organization.
Capital Solutions
Offering first financing, an organization credit rating card enables you to prolong money circulation. As you obtain cash money from customers as well as clients, you can pay off the credit score card equilibrium
With a company debt card, unlike a company one, you are directly accountable for paying off the financial debt. By establishing as well as tracking acquisitions up a repayment routine, you can prevent running right into debt card financial debt.
Bonus Bonuses
Service credit scores cards provide tiny firms a riches of advantages. As your company expands, you can include staff member cards.
An organization charge card will certainly aid you track expenditures. Annual as well as regular monthly declarations demonstrate how much you have actually invested, as well as some will certainly also classify products. This allows you to swiftly examine exactly how funds are being made use of.
Numerous organization bank card supply benefits programs. You might wish to get 5% money back on acquisitions, or gather factors that can be retrieved for traveling rewards and also various other incentives.
As you think about which charge card will certainly function best for you, check out your service and also its requirements. If you take a trip often, a benefits program with airline company miles is excellent. And also if you merely desire a lot more money accessible, seek a cash money back program.
Whatever you are looking for, opportunities are you will certainly be able to locate it in an organization credit report card. Sight your company debt card as one of the economic devices for your service.
One of the tricks to company success exists in enough funding: you require it to obtain via the ever-changing times of your little organization. A current study revealed that 90% of tiny company proprietors utilize a company credit scores card. The debt limitation for company credit rating cards is generally greater than individual cards.
Numerous organization debt cards, consisting of the Platinum Business Credit Card from American Express as well as the Chase Platinum Visa ® Business Card, provide 0% APR initial prices. Sight your company credit history card as one of the economic devices for your service.
The post Service Credit Cards: A Valuable Source Of Funding appeared first on Get Funding For Your Business And Ventures.
The post Service Credit Cards: A Valuable Source Of Funding appeared first on Buy It At A Bargain – Deals And Reviews.
For going concerns with some time in business, cash flow financing can be a good way to fund expansion, growth, or everyday needs. But what IS cash flow financing? And where do you get it?
Fundability is the ability of a business to get funding. It covers all the points a lender or credit provider will check when trying to figure out if you’ll pay back a loan or credit extended to you. These include details you may not have thought about or might think aren’t so important. But they are!
When you think like a lender, you come to understand that all they want is to be sure that you’ll pay them back. Lenders look at one of three things for loan approval: cash flow, collateral, and/or credit. The more of these “Cs” you have, the more funding options are available. Let’s look at how cash flow financing can help your business.
Cash flow financing is a loan made to a company is backed by a company’s expected cash flows. A company’s cash flow is the amount of cash that flows in and out of a business. This is within a specific period. Cash flow financing or a cash flow loan uses generated cash flow as the way to pay back the loan. It’s one of the smarter financing activities you can do if you’ve got a going concern with predictable income.
Much of the time, you must have a few years in business. You may need a certain minimum credit score. You must prove historical cash flow, and present your accounts receivables and accounts payables, so the lender can determine how much to loan to your business.
You can use outstanding account receivables as your collateral for business financing. Receivables should be with the government or another business. If you also have purchase orders, you can get financing to have those filled. You won’t need to use your cash flow to do so. Get an accounts receivable credit line with rates of less than 1% with no consumer credit requirement.
Use your outstanding account receivables for financing. Get as much as 90% of receivables advanced ongoing or more, in less than 24 hours. The rest of the accounts receivable are released once the invoice is paid in full. Factor rates as low as 1.33%.
Terms are for Credit Suite account receivable financing. The only collateral necessary is your account receivables. Loan amounts run from $10,000 to $10 million. Up to 95% of receivables can be advanced within a week. Rates start at prime rate 2%. You must have a FICO score of 500 or better.
Receivables must come from another business or government agency, not an individual. Business must be open for at least one year to qualify. Medical receivables must have $1 million in annual sales or more. For the deal submission, you must provide the application, a breakdown of existing receivables, and a sample invoice.
Purchase order financing is advanced to a business with a large purchase order or contract, but the business is unable to fulfill it. A lender then loans the funds necessary to complete the order and charges a percentage for the service. Then the company can fulfill its order or contract.
The difference between purchase order and accounts receivable financing is purchase order financing involves a company lending you money to fulfill purchase orders. But accounts receivable financing involves a company buying your outstanding invoices. Still, they are both, at bottom, based on cash flow.
Terms are for Credit Suite purchase order financing. For approval, lenders will often review your outstanding purchase orders that need filling. They want to be sure the purchase orders are valid, and the suppliers you are dealing with are credible.
If so, then you can get approval, regardless of personal credit history. Rates tend to range from to 4%. In some instances, you can get 95% of your purchase order financed.
Demolish your funding problems with 27 killer ways to get cash for your business.
This is a way to raise capital from investors who get a percentage of the enterprise’s ongoing gross revenues, in exchange for money invested. In a revenue-based financing investment, investors get a regular share of business income until a predetermined amount is paid. Often, this predetermined amount is a multiple of the principal investment. It is often between 3 to 5 times the original amount invested.
Since repayment of the loan is comes from revenues, the time it takes to repay the loan will fluctuate. The faster revenue grows, the quicker you’ll repay the loan, and vice versa. The percentage of monthly revenues committed to repayment can be as high as 10%. Monthly payments will fluctuate with revenue highs and lows and will continue until you’ve paid back the loan in full.
All terms are for the Credit Suite business revenue lending program. Necessary collateral is consistent revenue verifiable through bank statements. Loan amounts run from $5,000 to $500,000. Terms are for 3 to 36 months. Pay a factor rate of 1.10 to 1.45%. Credit you must have a 500 credit score or higher, with no recent bankruptcies.
Business must earn annual revenue of $120,000 or more per year. You must be in business for a year or more. The business must do over 5 small transactions each month. Financial services industries are prohibited, damaged credit is acceptable. Or business must bring in at least $15,000 monthly revenue with 6 months’ time in business. To get this deal, you must provide the application and 6 months of business bank statements.
Get a line of credit from Fundbox. Fundbox just wants to know about your cash flow when deciding whether to fund your business. Fundbox will connect straight to your online accounting software. That’s all you need to do. You can get a revolving line of credit for up to $100,000. Fundbox will auto debit your weekly payment from your bank account. You don’t need to show a particular personal credit score. And you don’t need to show a certain time in business.
Pay in equal installments over the course of a 12 or 24 week plan. Available credit replenishes as you pay. There are no penalty to repay early. Your business must be American. You must have a 600 or better personal FICO score, and $100,000 or more in annual revenue. Also, you must have a business checking account. Ideally you must have 6 months in business or more.
Demolish your funding problems with 27 killer ways to get cash for your business.
You can get a loan from PayPal. But you must already have a PayPal business account. There is no personal guarantee. Loan amounts and eligibility depend on your sales via PayPal. So applying won’t result in a credit check.
The maximum loan amount depends on your PayPal account history. To be eligible, you must have a PayPal Premier or Business account for 90 days or more. Also, you must process at least $20,000 in annual PayPal sales if you have a Premier account, or at least $15,000 in annual PayPal sales if you have a Business PayPal account. Pay off any existing PayPal Working Capital loan.
Since automatic repayments get deducted as a percentage of each PayPal sale, the amount you repay each day changes with your sales volume. The more you sell, the more repayment progress you’ll make that day. On days without sales, you’ll make no payments, but you must repay something at least every 90 days.
Depending on the loan terms you choose, you must pay at least 5% or 10% of your total loan amount (loan + the fixed fee) every 90 days. The 5% minimum applies to loans estimated to take 12 months or more for repayment. This has a basis in your business’ past PayPal sales and other factors. The 10% option applies to loans estimated to be repaid within 12 months.
You can get loans through Square. Applying will not affect your personal credit score. Loan eligibility comes from several factors related to your business, including its payment processing volume, account history, and payment frequency.
You can get $300 to $250,000. Borrowers get a customized offer with a basis in their card sales through Square. Then they choose their loan size. You will pay no interest, just an ongoing flat fee
There are no ongoing interest charges. Instead, you will pay one fixed loan fee to borrow the loan. The fixed fee is the difference between the total owed amount and the initial loan amount. The fixed fee will never change, regardless of how fast or slow the loan is repaid. It is automatically deducted until you pay back your loan in full. If sales are up one day, you pay more; if you have a slow day, you pay less. At least 1/18 of the initial balance must be repaid every 60 days.
They don’t want collateral for business loans of $75,000 or less. For loans amounts over $75,000, they take a security interest in your business assets. Then they will file a UCC statement with the Secretary of State where your business is organized. There is no personal guarantee.
Demolish your funding problems with 27 killer ways to get cash for your business.
There are several options for business funding that depend on your cash flow. Some are available through Credit Suite. There are also online options, such as through PayPal and Square. Contact us today for help with your options.
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Does business funding with no personal guarantee credit exist? The simple answer is yes. How do you get it, and do you even need it? Those are harder questions to answer.
To some, it may seem like a mythical idea, a unicorn if you will. Even if you have strong business credit, many lenders will ask for a personal guarantee on a business loan. So, what are companies talking about when they say you can fund a business with no personal guarantee credit? Let’s find out.
Before we can talk about no personal guarantee credit for business funding,we need to define a few terms.
First, we’ll define business credit. Business credit is credit, like a credit card or other type of credit account, in the name of your business rather than in your name personally. When you apply, you use your business name, your business contact information, and your EIN instead of your social security number.
What frustrates you the most about funding your business? Check out how our free guide can help.
Then, the business is responsible for repayment. Sometimes, the account does not report to your personal credit report. Meaning, your personal credit scores will not be affected by your business credit accounts.
Now, let’s talk about your business credit report. This is a report, like your personal credit report. Lenders use it to evaluate the creditworthiness of the business. It consists of the credit history of the business, the business credit score, and other data. The business credit score is made up of the payment history of those business credit accounts that actually report to the business credit reporting agencies.
Not all business accounts will do that. But those that do, are the ones that make up the score on the business credit report.
To understand what no personal guarantee credit is, you have to know what a personal guarantee is. If you get a credit account with a personal guarantee, you are responsible for repayment. By definition, all personal credit accounts have a personal guarantee.
This could mean a hard pull on your personal credit, which can lower your personal credit score. However, in theory, if your business has an account in its own name and it is set up to be a separate entity from you, the owner, it is responsible for its own debt.
Still, many companies require a personal guarantee from the business owner before extending business credit, especially small businesses. This is due to many factors, including data from the Bureau of Labor statistics that states 20% of new businesses fail within the first year, 45% within the first 5 years, and 65% in the first 10 years. In fact, only 25% of new businesses make it 15 years or more.
It’s easy to see why lenders and credit card companies would ask for a personal guarantee from business owners when it comes to business credit.
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The short answer to this is yes, but it is not that simple. First, most business accounts that do not require a personal guarantee are designed for larger businesses or older businesses.
There is very little out there when it comes to no personal guarantee credit for small, newer businesses. There are some vendors that will extend net terms without a personal guarantee if your business meets certain requirements.
Requirements may include a certain minimum time in business, a minimum average balance in a business bank account, specific annual revenue, and more. Other than that, there are a couple of business charge cards you can get without a personal guarantee. For example, Brex and Divvy both offer this type of product.
The catch is, these are charge cards, not credit cards. So you have to pay the balance off each month. Basically, it’s like a card that you can use anywhere and you have net 3o terms on the balance. It’s similar to a vendor account, but more flexible.
There are also business credit cards available without a personal guarantee, but only if your business credit is strong enough. In general, your business needs to be earning millions in annual revenue to qualify for these cards.
Why try to avoid a personal guarantee? No one likes risk. That’s why businesses require a personal guarantee and why business owners don’t love to give one. However, if you have true business credit that requires a personal guarantee, the business will have to pay first. You will be personally liable for anything that the business cannot cover. Still, you will not be first in line for all of it.
A better option is to realize that if your business is small and young, you are likely going to need a personal guarantee for much of the funding. Yet, you can work to reduce your liability in a number of ways. The first way to do that is to incorporate your business as a corporation, S-corp, or LLC. Your business attorney or accounting professional can help you with that.
Next, you can look at funding options that do not require credit at all. Does this debt-free funding even exist? Sure it does.
Grants, Crowdfunding, Angel Investors, ROBS, and more can be used to get as much funding as possible without any repayment.
Then, you can work on building a strong business credit profile for your business, including a strong business credit score. This will help you be able to get funding for your business without as much reliance on a personal guarantee. Basically, the stronger the business credit, the less the lender feels the need to rely on the owner’s creditworthiness.
The key to this is to look for creditors who will report positive payment history to your business credit profile. Even some lenders that require a personal guarantee may report payments to your business credit report and not your personal credit report.
Stop worrying about the personal guarantee and worry more about building business credit so you can reduce the amount of personal guarantee required to get the funding you need.
If you cannot get all of the funding you need for your business with non-debt options, and your business is young and small, you may very well have to use a personal guarantee to get the funding you need in the beginning. That is okay.
What frustrates you the most about funding your business? Check out how our free guide can help.
The key is to know exactly what you are getting. Definitely make sure you apply with your business name, EIN, and contact information. Then find out what credit agencies they report to. If they report to the business credit agencies like Dun & Bradstreet, Experian Business, or Equifax (Business), that is a good thing. It will help you reach your goal of building business credit faster.
If they report to personal credit, so be it. Just keep working through the process of building your business credit profile as quickly as possible. Then, you can tip the scales away from your personal liability as much and as quickly as possible.
If you really want to stay away from a personal guarantee, you can try one of these debt-free funding options. Just remember, debt-free doesn’t mean cost-free. There are always some costs associated with funding.
This is a 401(k) Rollover for Working Capital program. It’s also known as a Rollover for Business Startups (ROBS). Per the IRS, a ROBS qualified plan is a separate entity with its own set of requirements. The plan owns the business through its company stock investments, rather than the individual.
This type of financing isn’t a loan against your 401(k), so there’s no interest to pay. It does not use the 401(k) or stocks as collateral. Instead, this is simply a movement or change of custodian. The plan has to be a plan from an employer you no longer work for, and you can no longer be contributing.
Crowdfunding is a way of getting multiple smaller donations from a lot of individuals. Hence the term “crowd” in crowdfunding. There are many options for crowdfunding platforms, but be sure you know what you are getting into. Many crowdfunding platforms make you give all of the funding back if you do not make your goal by the end of the campaign.
They will take a percentage of the donations. That’s how they make their money. In addition, they may push to have you deliver on your promises. Crowdfunding tends to work best when donors can personally connect with a product or service . Straightforward businesses may not do so well.
The kinds of businesses which do the best often associate with products not quite on the shelves yet or artistic endeavors.
While there are “professional” angel investors out there, an angel investor can be pretty much anyone. It could be a friend or family member sitting on home equity, or local professionals who are looking to invest. Consider people you know well and people you may not know so well.
What frustrates you the most about funding your business? Check out how our free guide can help.
There are some grant options available, and of course those do not have to be repaid. However, they are highly competitive, and it is unlikely it will be enough to fully fund your business. Also, grants will require time on your part to prepare all necessary paperwork. Some even require an application fee.
No personal guarantee credit for business funding is great to have. Still, chances are you are going to need a personal guarantee to get funding at some point. There are a lot of good options out there. In fact, SBA loans are a great option. You can also look into alternative lenders like Fundbox and OnDeck or Accion.
Using a personal guarantee to get the ball rolling while you work on building your business credit profile is a valid option. It is what most business owners have to do. But, you need to build a strong business credit score so lenders can start to rely more on the credit worthiness of your business than you personally. Credit Suite has a whole program designed to help do just that. Find out more about the Business Credit Builder now.
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