Tag: Options

Best Options for Salon Financing in A COVID-19 World

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

Best Salon Financing Options

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

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

Salon Financing: Credit Line Hybrid

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

Do You Qualify? 

It’s not as hard as you may think to qualify.  First, your personal credit score should be at least 685.  In addition, you can’t have any liens, judgments, bankruptcies or late payments.  Furthermore, in the past 6 months you should have less than 5 credit inquiries, and you should have less than a 45% balance on all business and personal credit cards.  

If that seems daunting, don’t worry.  If you do not meet all of the requirements, you can take on a credit partner that does.  Many business owners work with a friend or relative to fund their business.  If a relative or a friend meets all of these requirements, they can partner with you to allow you to tap into their credit to access funding. 

What are the Benefits? 

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

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

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

Funding Flexibility

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

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

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

Online Lenders

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

OnDeck 

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

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

Kabbage 

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

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

Credit Cards

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

Blue Business® Plus Credit Card from American Express

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

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

Capital One® Spark® Classic for Business

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

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

SBA Funding

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

7(a) Loans

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

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

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

504 Loans 

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

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

Another requirement is that you be in business for at least 2 years, or that management has equivalent experience if the business is a startup.

Microloans 

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

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

SBA Express Loans 

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

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

A Quick Note on Equipment Financing

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

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

Is Your Salon Fundable? 

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

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

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

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

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

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

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

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

Business Loans for Minority Women and Other Funding Options

As a minority woman in business, it is important to know what is available to you for business funding.  Do business loans for minority women even exist? The answer is, sort of. There are business loans for minority women, but not for them exclusively.  There are other funding options out there as well. Grants, crowdfunding, and even angel investors are all viable options.

Business Loans for Minority Women and So Much More

How do you find the best options for you?  How do you know if you need to be looking for grants or business loans for minority women? The truth is, you need to explore every option.  This is because, in reality, it is probably going to take a combination of funding options to fully fund your business. 

Business Loans for Minority Women: The Truth

The thing is, there aren’t a ton of loan programs only for minority women.  You are really looking for regular loans that work with the challenges faced by business owners that fit into both categories.  Once you understand that, your search will become much easier.

Business Loans for Minority Women: Traditional vs. Private

As a general rule, loans from traditional lenders are both the best and the hardest to get.  Their terms and rates are much better than those offered by private lenders. They also have more stringent eligibility requirements. They typically require higher credit scores, longer time in business, and more annual revenue.  

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

Private lenders, on the other hand, work a little differently.  They tend to have higher interest rates and less favorable terms. However, they have less strict requirements for approval.  They allow lower credit scores and less time in business, as a general rule. 

The Small Business Administration

So where do you go to find business loans for minority women?  Since traditional loans offer the best rates and terms, they are truly the place to start.  They are harder to get, but the Small Business Administration loan programs help make them easier.  They do not lend funds directly. Instead, they work with traditional lenders.   They back loans to make them easier for borrowers to qualify. You can find a list of SBA partner lenders using their lender match tool. 

7(a) Loans 

This is the Small Business Administration’s main loan program. It offers federally funded term loans up to $5 million. The funds can be used for expansion, purchasing equipment, working capital and more. These funds are distributed through traditional lenders. 

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

504 Loans 

These loans are also available up to $5 million and can buy machinery, facilities, or land. They are generally used for expansion.  Like 7 (a) loans, private sector lenders or nonprofits process and disburse these funds. They work well for commercial real estate purchases especially. 

Terms for 504 Loans range from 10 to 20 years.  Unfortunately, funding can take up 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. 

There is also a 2-years in business requirement.  For a startup, equivalent experience for management will meet this.

Microloans 

Microloans are available in amounts up to $50,000. They work for starting a business, purchasing equipment, buying inventory, or for working capital. Community based nonprofits handle SBA microloan programs as intermediaries. 

Interest rates on these loans are 7.75% to 8% above the lender’s cost to fund, and the terms go up to 6 years. Similar to other programs, they can take up to 90 days to fund. The minimum credit score is 640, and the collateral and down payment requirements vary by lender. 

SBA Express Loans 

These loans max out at $350,000.   They have a maximum interest rate of 11.50%. In addition, terms range from 5 to 25 years, and the SBA guarantee is less than it is with their other loan programs at 50%. To qualify, your credit score must be above 680.  Another requirement is that you must have a debt to service ratio of 1.1 or higher. If the loan is greater than $25,000, collateral may be necessary.  It depends on the lender. 

The turnaround for express loans is much faster.  The SBA takes up to 36 hours to give a decision. Also, there is not as much application paperwork.  As a result, express loans are a great option for working capital, among other things, if you qualify. 

Other SBA Resources

The SBA exists for all small company owners.  However, their Office of Women’s Business Ownership exists to help women local business owners specifically. This includes women minorities.  Their goal is to enable and empower business owners that are women via advocacy, outreach, and education as well as assistance.

Business Loans for Minority Women: Private Lenders

Other options for business loans for minority women include private lenders.  These loans, much like SBA loans, are not exclusively for minorities or women.  However, by nature they tend to work well with the unique challenges each group faces. 

Lending Club

LendingClub functions as a peer-to-peer lender that offers mostly fixed-term small business loans. Borrowers that get loans from LendingClub generally use loans funds to buy equipment, finance growth or expansion projects, consolidate other debt, or hire new employees.

The minimum loan amount at LendingClub is $5,000 and the maximum is $300,000.  You must have been in business for 12 months or more and have at least $50,000 in annual sales to qualify.  There can be no tax liens or bankruptcies, and you must have at least 20% ownership.  They will work with a credit score that is fair or higher.  A fair credit score ranges from 620 to 659. 

Lendio

Lendio offers a loan-connection service that dramatically cuts the time it takes for small business owners to find the perfect loan.  They do the legwork by vetting a network of competing small business lenders. Funding is fast, sometimes in as little as 24 hours.  

Potential borrowers submit one application and then see offers from lenders in the network.  The minimum loan amount is $500 while the maximum is $5,000,000.  The business must be U.S. or Canada based and must have a business bank account.  The minimum personal credit score for approval is 560.  

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Blue Vine Business Loans for Minority Women

BlueVine offers two options for small business financing.  They include lines of credit and invoice factoring.  They also offer the ability to talk with a financing advisor, and their application process takes place exclusively online.  Their minimum loan amount is $5,000 and their maximum is $100,000.  To be eligible you must be in business for at least 6 months, have revenue of $120,000 per year or more, and have a credit score of at least 600.  

Kiva

Kiva has a different lending model. They offer loans to businesses, but their platform is far different from that of traditional or even other non-traditional lenders.  It is a kind of  cross between crowdfunding and lending. They offer loans with a 0% interest rate, so even though you have to pay it back, it is actually free money. In addition, they do not run a credit check at all. The only requirement is that you have to get at least 5 family members or friends to donate money for your business, and you have to give at least a $25 loan to another business on the platform yourself. 

Grameen

Microloans are a great option when it comes to business loans for women with bad credit.  Grameen is one of the few lenders that offers microloans specifically for women.  The loan amounts range from $2,000 to $15,000, and they also offer financial training and support.  

As a bonus, they report payments to Equifax and Experian.  Consequently, these loans help borrowers build credit.

Other Resources for Women

Here are some other organizations that work to help women of all races.  

National Female’s Service Council

The NWBC is a federal advising council. It works as a resource of guidance to the government on women’s organization problems. The objective is to encourage campaigns, programs, and policies to sustain females from startup to growth.

Other Tools to Consider

Along with those firms listed above, these agencies provide support to women owned businesses. 

The AWBC runs a network of business centers geared toward women.  These centers labor to help women succeed by offering training, business development, financing, and mentoring opportunities. 

This organization, also known as NAFE, sponsors events, provides training, and offers other resources to help female business owners achieve success.  

The NAWBO works across the country to offer training, events, and other resources to women owned businesses nationwide. 

With more than 300 chapters and 10,000 volunteers, this is the country’s largest network of expert business mentors that volunteer their time.  They match female business owners with mentors, or they can participate in a workshop to help them learn what they need to know to be successful. 

Don’t Forget to Look into Grants to Supplement Business Loans for Minority Women

Though highly competitive and rarely enough to fund a business on their own, grants are a great way to supplement other business funding.  Here are a few you can start with.

Amber Grant 

The Amber Grant awards $500 to $1,000 per month to a woman-owned business. One of the recipients also receives an additional $10,000 grant at the end of the year. Applicants only need to tell their story and turn it in with a $15 application fee.   

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#GIRLBOSS Foundation Grant 

Specifically for woman-owned businesses in fashion, music, and art, the #GIRLBOSS small business grant awards $15,000.  They also offer exposure via the Girlboss website and social media platforms. Judges rate those applying on creativity, business savvy, planning, innovation in the field, need, and where they plan to work. 

Cartier Women’s Initiative Award 

The Cartier Women’s Initiative Award is $100,000 for first place and $30,000 for second place.  They award the grant to 18 female business owners from around the world each year.  Women business owners who are just getting started may qualify.  Look over the complete application for more information.

Grants for Minorities

If you are looking into business loans for minority women, then you must be both a minority and a woman.  That being the case, you should check out these grants for minorities as well. 

First Nations Development Institute Grants

The mission of this group is to offer grants that help Alaska Natives, Native Hawaiians, and Native Americans.  They offer assistance in the application process in addition to funds.

National Black MBA Association Scale-Up Pitch Challenge

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

Non-Minority or Female Specific Options

There are grants options that can work well even though they are not exclusively for minorities, or women. Some examples include the following.

FedEx Small Business Grant

There are 10 grants the company awards each year.  They range from $15,000 to $50,000. If you’re a minority owned business with a cutting-edge product, this could be the grant for you.

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 grant funds. A 90 second video submission is optional.

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 

Business Loans for Minority Women and Other Helpful Resources

It’s important that you know about your options for business loans for minority women. However, you need to know what other resources are available as well.  There are plenty. Take a look around and see what you can dig up.

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Trainee Loan Payment Options

Pupil Loan Payment Options

Pupil Loan Payment Options
There are arrangements with the majority of kinds of trainee finances that permit you to delay repayments or change settlements to satisfy your requirements. Below, we will certainly review typical alternatives when it comes to paying down your trainee lendings.
Personal bankruptcy is not a choice for government pupil financings. You can use to transform the pay off terms of your pupil finances. If you’re missing out on settlements since they’re as well high, after that it will certainly finish up costing you much more anyhow, not to point out that you can spoil your credit history by missing out on settlements.
If you can satisfy the needs, after that it is feasible to obtain an exclusive pupil financing released. You need to think about various methods of paying off your pupil fundings if feasible.
This strategy enables you to begin out at reduced settlements that continuously raise over time. Settlements are figured normally as soon as every 2 years, so you have some time to prepare when the settlements boost.
The settlement is based additionally on the dimension of the funding. Several locate this a really reliable method to spending plan for trainee funding repayments.
In times of severe difficulty, you might certify to postpone your financing settlements. Numerous kinds of trainee fundings will certainly not have rate of interest building up throughout the deferment duration. Unlike deferment, forbearance alternatives do collect rate of interest throughout the duration that you are not making repayments.
If you are in some difficulty and also require to alter the terms or place off month-to-month repayments for a while, call the custodian of the car loan. Handle it well, as well as you can be on your method to paying off your trainee financings.

There are arrangements with the majority of kinds of pupil financings that permit you to postpone settlements or readjust repayments to fulfill your demands. The repayment is based likewise on the dimension of the financing. Several discover this an extremely reliable method to budget plan for trainee finance repayments.
In times of severe difficulty, you might certify to delay your car loan settlements. If you are in some problem and also require to transform the terms or place off month-to-month repayments for a while, call the custodian of the car loan.

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Small Business Start Up Loans and Other Funding Options

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

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

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

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Credit Line Hybrid

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

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

What are the Qualifications? 

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

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

What are the Benefits of a Credit Line Hybrid? 

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

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

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

Credit Cards

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

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

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

Crowdfunding

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

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

Angel Investors as an Alternative to Small Business Start Up Loans

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

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

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

SBA Options

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

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Small Business Startup Loans: 7(a) Loans 

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

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

504 Loans 

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

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

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

Microloans 

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

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

Private Lender Options for Small Business Start Up Loans

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

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

BlueVine 

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

Kiva 

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

Accion 

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

Fundability is Important for Small Business Start Up Loans

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

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

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

Separate Contact Information

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

EIN

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

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

Incorporate

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

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

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

Business Bank Account

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

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

Licenses

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

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

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

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

The post Small Business Start Up Loans and Other Funding Options appeared first on Credit Suite.

Small Business Funding: A Complete Guide to All Your Options

When it comes to small business funding, there are way more options than you probably imagine. While not every option is an option for everyone, there is usually some version of each that will work on some level. 

Your Definitive Guide to Small Business Funding Options

Most think of loans when they think of small business funding.  Term loans, lines-of-credit, invoice financing, and merchant cash advances all have their place.  The question is, do you use a traditional lender, look into SBA partners, or veer more toward private lenders?  

Also, loans are not the only players in the small business funding game.  Other, lesser known players include angel investors, crowdfunding, and grants.  You need to know about each one, and your options for each one, to make an informed decision. 

Small Business Funding: Types of Loans

There are a number of differ types of loans available.  In general, these types of financing can be found with both traditional and private lenders. Typically, if you go the traditional route, small community banks are more small business funding friendly than big banks. 

Traditional

These are the standard loans that disperse a set amount of funds, with the borrower repaying over a certain period of time.  The payment is the same each month, and they can be either secured or unsecured.  Unsecured small business loan options usually have higher interest rates. 

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

Line of Credit 

This is revolving debt similar to credit cards.  Borrowers are given a maximum limit of the amount of funds they can use, but only pay back the amount that they actually use.  For example, a borrower may have a $5,000 line of credit and use $2,000 to buy a new printer.  They will only pay back $2,000, until the time comes that they choose to use more. Lines of credit can also be secured or unsecured. 

Invoice Factoring

If you  have receivables, invoice factoring is an option.   The lender buys unpaid invoices from you at a premium, meaning you do not get full value.  However, you then have cash in hand for those open invoices.  The lender collects from the consumer directly at full value.  The older the invoice, the higher the premium.

Merchant Cash Advance

If you accept credit card payments, a merchant cash advance can help you out in a cash pinch.  It is basically just what is says.  It’s a cash advance on predicted credit card sales. They base the amount of the loan off of average daily credit card sales. Then, payment is taken from future credit card sales. This usually happens electronically. Most often, the process is automatic.  The benefits are that you get the funds fast, and there are usually more flexible options for repayment terms depending on your eligibility.

The Small Business Administrationbiz money Credit Suite

SBA loans are small-business loans guaranteed by the Small Business Administration.  Participating lenders, mostly banks, distribute the funds. They can guarantee up to 85% of loans of $150,000 or less, and loans that are more than $150,000 they will guarantee up to 75%. The maximum loan amount they offer is $5 million. 

Since they have a government guarantee, financial institutions are able to offer these loans at lower interest rates. 

How Do You Qualify SBA Loans? 

To be eligible for SBA Government Loans, you must meet certain qualifications. These include:

  • Your business must be for profit.
  • Your business must be inside the US.
  • Business owners must invest equity.
  • You must have exhausted all other financing options.
  • Your business must qualify as a small business.
  • Your business must be in an eligible industry.

What About Repaying SBA Loans? 

One perk of SBA government loans is that you can take longer to pay them back than you would otherwise. According to the SBA, the terms depend on how you intend to use the funds. 

For example, working capital loans, or funds you intend to use for daily operation, have a repayment terms of seven years. However, funds for new equipment purchase have a term of 10 years. Real estate loan terms extend even longer to 25 years. Of course, the longer the term the lower the interest.  As a result, regular payments are lower. 

How Do SBA Loans Work?  

With little exception, the SBA does not actually provide the funds for the loans they guarantee. The lenders that partner with them provide the funds, but the agency guarantees a portion. Currently, they will guarantee up to $3.75 million. 

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

What does that mean? It means that lenders are able to offer better interest rates and terms than they would otherwise be able too. This is because there is a reduced risk with the SBA guarantee. If the borrower defaults on the loan, the Small Business Administration will pay out their guarantee amount. 

Find out more about the SBA and the programs they offer here. 

Small business Funding: Private Lenders

Private lenders are also known as alternative lenders.  Generally, they can be a little more relaxed with requirements.  The drawback is that they also tend to have higher interest rates and less favorable terms. 

They usually have options for all types of financings at varying rates.  There are a ton out there, but here are a few to get you started if you need to go this route for small business funding. 

Upstart

Upstart is a fairly new online lender that is using cutting edge technology.  They question whether financial information and FICO alone can really determine the risk associated with a specific borrower.  Instead, they are using a combination of machine learning and AI to gather alternative data.  They then use this data to make credit decisions.

Alternative data includes such things as phone bills, rent, deposits, withdrawals, and even other information less directly tied to finances.  Software from the company learns and improves based on this data. 

They offer various types of financing products to fit a broad range of needs. From credit card refinancing to student loans, and pretty much anything in-between, there is something for everyone.  Debt consolidation and personal loans are included. Business loans are also an option.

You can get a quote on a loan to start or expand a business.  Get a quote online in minutes.  Learn more in this comprehensive review. 

StreetShares

StreetShares started as a service to veterans.  Now, they offer term loans, lines of credit, and contract financing. They also offer small business loan investment options. The maximum loan amount is $250,000.  Pre-Approval only takes a few minutes. They use a soft pull on your credit so it doesn’t affect your score. 

To be eligible, you must be in business for at least 12 months with annual revenue of $25,000. Exceptions are possible also.  Loans to companies in business for at least 6 months that have higher earnings can get approval on a case by case basis. The borrower’s credit score must be at least 620. For more on StreetShares, see our in-depth review.

Kabbage

Kabbage is a well know online lender. They offer a small business line of credit that can help businesses accomplish business goals quickly. The minimum loan amount is $500 and the maximum is $250,000. They require you to be in business for at least one year and have $50,000 or more in annual revenue, or $4,200 or more per month in the previous 3 month period. 

They are great if you need cash quickly. Also, their non-traditional approach puts less weight on your credit score, so they may work better for some borrowers than other lenders.

Fundation

Fundation provides both term business loans online and lines of credit. It is most known for its working capital funding options. These are funds meant to help cover the day-to-day costs of running a business rather than larger projects. Typically, these funds come in the form of a line-of-credit.

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

Their minimum loan amount is $20,000 while the maximum loan amount they offer is $500,000. They require you to be in business for at least 12 months and have annual revenue of at least $100,000. To be eligible, your personal credit score must be no less than 600. Additionally, you must have at least 3 full time employees.  That number can include yourself.  Business owners cannot live or operate their business in North Dakota, South Dakota, or Nevada. 

SmartBiz

If you want the convenience of online lending but need to look toward products offered by the SBA, then SmartBiz is for you. 

With the help of the Small Business Administration, SmartBiz offers loans that are government backed. While SBA loans typically take a lot of time and paperwork, SmartBiz found a way to streamline the process.  It makes getting loans through the Small Business Administration easier than ever. The minimum loan amount is $30,000 and the maximum is $5,000,000.  

As stated, SBA loans are government-backed business term loans for business owners who’ve had difficulty qualifying for other types of financing.  As a result, the requirements are a little stricter. Your credit score has to be 650, and you have to be in business for 2 years or more. In addition, annual revenue has to be $50,000 at least, and there can be no outstanding liens, bankruptcies, or foreclosures in the past 3 years. 

Small Business Funding: Investors

Of course, the standard investor option is always available. However, often the better option for small business funding is to find an angel investor. 

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

Most often, they are in it for a one-time contribution.  Typically, they do not lend to the same person twice. That is even if that person pays them as agreed.

They like to spread their risk over a lot of people and businesses to make sure they get a good return on their investment.  They are also usually a lot more informal than most types of funding. An angel investor can be anyone, from your mom to someone you met through networking.  

How to Find Angel Investors

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

Small business Funding: Crowdfunding

Crowdfunding is an increasingly popular option for small business funding.  Many business owners find this is their best option for independence. With crowdfunding, they can start a new business without taking on debt or taking out equity.  This is rare startups. However, a little planning and creative marketing can go a long way. 

What is Crowdfunding?

Crowdfunding is a type of investment option really.  The thing is, you get a lot of smaller investments from a lot of people, a crowd if you will.  This is in contrast to getting the bulk of your small business funding from one or two larger investors. The problem is, not everyone with a campaign on a crowdfunding site is successful.   In fact, it is kind of rare to get your business fully funded through crowdfunding.

How to Use Crowdfunding to Fund Your Small Business

You’ll have to figure out which crowdfunding platform is best to use for your business. Kickstarter and Indiegogo are two of the most popular. 

Trying to get investors will take time. You’ll need the perfect pitch to get investors interested.  It helps to learn more about crowdfunding and how to get started. 

Small Business Funding: Grants

Another option for funding your small business is grants.  They are sometimes overlooked because they tend to be highly competitive.  Also, many business owners do not know what’s out there. Take some time to look around and see what’s available.  

Many grants are available that are specific to minorities, females, or veterans. There are some grants opportunities that are open to everyone however.  One example is the FedEx grant. The FedEx grant is open to any business that has been in operation for at least 6 months and has 99 employees or less. They award eight $7,500 grants, one $15,000 grant, and one $25,000 grant to winners each year. LendingTree is another example.  It offers a grant annually of $50,000. 

Small Business Funding: The Big Picture

The truth is, there are a lot of options out there that can be used instead of, or in addition to, loans.  Don’t forget too, you can always use some version of self-funding. Savings and retirement accounts are sometimes the best options.  This is especially true of retirement accounts that offer lending options. Sure, you have to pay the funds back, but you are paying yourself back.  

In the end, you’ll have to figure out which option or combination of options will work best for you and your business. This should get you started. 

The post Small Business Funding: A Complete Guide to All Your Options appeared first on Credit Suite.

Loans, Grants, and Other Funding, Oh My! Women Owned Business Grants and Other Funding Options for Women Business Owners

There are a ton of options available to women for business funding.  Some are female specific, like women owned business grants. Others are not regulated to women specifically, though they may work better for women than some other options.  The key is to quilt together the options that work best for you and your needs. 

Top Options for Female Business Owners, Including Women Owned Business Grants

You can look around for women owned business grants and other funding options specific to women.  They do exist, but there are not that many of them. The best bet is to combine those that you can find along with options that work well for women in business, though not specifically designed for women exclusively. 

 

Demolish your funding problems with 27 killer ways to get cash for your business. 

Business Loans for Women

Hands down, business loans are the most easily accessible and sure-fire option for funding a business.  This is true whether you are a woman, a minority, a veteran, have a disability, or even if you do not fit into any of these categories.  It may be hard to believe, because loans cost money, right? Free money is better, and if those options are out there, they have to be better, right?  

While these free money opportunities are great, they are few and far between.  Not only that, but they are typically highly competitive. Definitely pursue them, but realistically you need to understand that loans are pretty necessary when it comes to running a business.  Especially in the early phases. In general, the best place to start for virtually all small business owners, whether a female or not, is The Small Business Administration. 

Small Business Loans from The Small Business Administration

While many start out looking for women owned business grants, you can just know that you will probably need loans at some point as well.  Though not specifically for women alone, the SBA offers government backed loan programs.  Many of these are perfect for women business owners, even though they are not for women exclusively.

7(a) Loans

This program offers federally funded term loans up to $5 million. The funds can be used for expansion, purchasing equipment, working capital and more. Banks, credit unions, and other specialized institutions in partnership with the SBA process these loans and disburse the funds. 

To qualify, a business owner has to have a credit score of at least 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. If a business is a startup, business experience equal to two years is enough. 

This is by far the most popular of the SBA loan programs.  Funds are available for a broad range of projects, from working capital to refinancing debt, and even buying a new business or real estate. 

504 Loans 

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

Terms for 504 loans range from 10 to 20 years.  Funding can take from 30 to 90 days. The minimum credit score requirement is 680, and collateral is the asset being financed. There is also a down payment requirement of 10%.  However, this can increase to 15% for a new business. 

Furthermore, there is a requirement that you be in business for at least 2 years, or that management has equivalent experience if the business is a startup. 

Microloans 

Microloans are available in amounts up to $50,000. They work for starting a business, purchasing equipment, buying inventory, or for working capital. Community based nonprofits handle microloan programs as intermediaries.  Unlike other SBA programs, financing comes directly from the Small Business Administration. 

Interest rates on these loans are 7.75% to 8% above the lender’s cost to fund, and the terms go up to 6 years. They can take up to 90 days to fund. There is a 640 minimum credit score requirement.  However, the collateral and down payment requirements vary by lender. 

 Demolish your funding problems with 27 killer ways to get cash for your business. 

SBA Express loans 

Express loans top out at $350,000 and have a maximum interest rate of 11.50%. Terms range from 5 to 25 years, and the SBA guarantee is less than with their other loan programs at 50%. To qualify, your credit score must be above 680.  In addition, you must have a debt to service ratio of 1.1 or higher. If the loan is greater than $25,000, collateral may be necessary depending on the lender. 

The turnaround for express loans is faster, too.  The SBA takes up to 36 hours to give a decision. Necessary paperwork for application is also less, making express loans a great option for working capital, among other things, if you qualify. 

SBA CAPLine 

There are 4 distinct CAPLine programs that differ mostly in the expenses they can fund. Each of them carries a maximum amount of $5 million and an interest rate that ranges from 7% to 10%. Funding can take 45 to 90 days. 

The four different programs are: 

  • Seasonal CAPLines -Financing for businesses preparing for a seasonal increase in sales.
  • Contract CAPLines -Financing for businesses that need funding to fill a contract.
  • Builder’s CAPLines -Financing for businesses taking on a real estate or construction project.
  • Working capital CAPLines -Financing for businesses that are struggling with a short-term slump in sales.

You must have a credit score of 680 or above to qualify for these. There is no minimum time in business requirement unless you are getting a seasonal CAPline. That one carries a one year in business requirement. 

SBA Community Advantage Loans 

This pilot program is set to expire or extend in 2020. It’s meant to promote economic growth in underserved areas and markets.  Lenders can be less strict when it comes to poor credit or low revenue if the business has the potential to stimulate the economy or create jobs in underserved areas. 

Loan amounts range from $50,000 to $250,000 with a maximum interest rate of 11%.  Terms range up to 25 years.

CrowdFunding

If you want to reduce the amount of loans you need to start and run your business, crowdfunding is a viable option.  Crowdfunding gives today’s business owners a new way to build a successful business. Don’t be fooled. Not everyone with a campaign on a crowdfunding site is successful.  Funding a business with crowdfunding doesn’t happen overnight. In fact, it often doesn’t happen at all. To succeed at crowdfunding, you have to research what works, what doesn’t, and then cross your fingers because truthfully it may work, and it may not.

Find which crowdfunding platform is best to use for your business. Kickstarter and Indiegogo are two of the most popular crowdfunding platforms to use. Some work better for specific types of businesses than others.  Also, some may have higher success rates for women than others. Do your research.

Women Owned Business Grants

All grant programs are highly competitive.  However, they are still worth the effort to apply.  There really isn’t anything to lose except time.  It’s free money. Women owned business grants are rarely enough to fully fund a business, but they can supplement other funding types. Here are some examples of women owned business grants. 

SBA Women’s Business Centers

In addition to helping with loans, the SBA Women’s Business Centers also help women entrepreneurs get access to other types of funding. Some lend money or award grants directly, while others help connect women entrepreneurs with financial institutions.  Take a look at their website to find out more on how to apply for women owned business grants through this network.

Eileen Fisher Women Owned Business Grants

The clothing brand Eileen Fisher hands out $100,000 per year to 10 women-owned businesses. To qualify, a woman must have at least 51% ownership, and the business must be in operation for at least three years. Also, it must bring in less than $1 million per year in revenue and have a focus on environmental or social change.  

Amber Grant 

The Amber Grant awards $500 to $1,000 per month to a woman-owned business. One of the recipients also receives an additional $10,000 grant at the end of the year. Applicants only need to tell their story and turn it in with a $15 application fee.   

#GIRLBOSS Foundation Grant 

Specifically for woman-owned businesses in fashion, music, and art, the #GIRLBOSS small business grant awards $15,000.  They also offer exposure via the Girlboss website and social media platforms. Judges rate those applying on creativity, business savvy, planning, innovation in the field, need, and where they plan to work. 

Demolish your funding problems with 27 killer ways to get cash for your business. 

Cartier Women’s Initiative Award 

The Cartier Women’s Initiative Award is $100,000 for first place and $30,000 for second place.  They award the grant to 18 female business owners from around the world each year.  Women business owners who are just getting started may qualify.  Look over the complete application for more information.

All of the finalists get to attend the INSEAD Social Entrepreneurship 6-Day Executive Program (ISEP). They will also have the opportunity to participate in workshops on entrepreneurship and business coaching seminars, as well as be exposed to networking opportunities.  

Other Funding Options Beyond Women Owned Business GrantsFemale Owner Biz Grants Credit Suite

While programs like those that provide women owned business grants and those offered by The Small Business Administration often work to meet the special challenges women business owners face, sometimes it just isn’t enough.  If your credit score does not allow you to qualify for SBA loans, there are other  options available as well. They tend to work well, though not specifically designed for women. 

Lending Club

LendingClub functions as a peer-to-peer lender that offers mostly fixed-term small business loans. Borrowers that get loans from LendingClub generally use loan funds to buy equipment, finance growth or expansion projects, consolidate other debt, or hire new employees.

One benefit LendingClub offers with their small business loans that many others do not is access to a client advisor. This is someone to help you figure out how to best use your business loan funds, as well as how to budget loan payments.

The minimum loan amount at LendingClub is $5,000 and the maximum is $300,000.  There is a minimum time in business requirement of 12 months to qualify.  In addition, you must have at least $50,000 in annual sales.  There can be no tax liens or bankruptcies, and you must have at least 20% ownership.  They will work with a credit score that is fair or higher.  A fair credit score ranges from 620 to 659. 

Lendio

Lendio offers a loan-connection service that dramatically cuts the time it takes for small business owners to find the perfect loan.  They do the legwork by vetting a network of competing small business lenders. Funding is fast, sometimes in as little as 24 hours.  

Potential borrowers submit one application and then see offers from lenders in the network.  The minimum loan amount is $500 while the maximum is $5,000,000.  The business must be U.S. or Canada based and must have a business bank account.  There is a minimum personal credit score requirement of 560.  

Blue Vine

BlueVine offers two options for small business financing.  They include lines of credit and invoice factoring.  They also offer the ability to talk with a financial advisor. Their application process takes place exclusively online.  The minimum loan amount is $5,000 and their maximum is $100,000.  Furthermore, to be eligible you must be in business for at least 6 months, have revenue of $120,000 per year or more, and have a credit score of at least 600.  

Kiva

Kiva has a unique lending model. They offer loans to businesses, but their platform is far different from that of traditional or even other non-traditional lenders.  It is sort of a cross between crowdfunding and lending.  They offer loans with a 0% interest rate.  That means, even though you have to pay it back, it is actually free money. In addition, they do not run a credit check. The only requirement is that you have to get at least 5 family members or friends to donate money for your business.  Also, you have to give at least a $25 loan to another business on the platform yourself. 

Grameen

Grameen is one of the few lenders that offers microloans specifically for women.  The loan amounts range from $2,000 to $15,000, and they also offer financial training and support.   

As a bonus, they report payments to Equifax and Experian.  The result is, these loans help borrowers build credit. 

Choose Your Funding Options Wisely for Women Owned Business Grants and More

For many, business funding will be similar to a quilt.  Just as a quilt weaves various colors and types of fabric into a beautify, functional work of art, so can business funding work.  There are various types available, and if you combine the ones that work best for you, they can work together to ensure your business not only stays running, but also growing and thriving. This includes women owned business grants. 

The post Loans, Grants, and Other Funding, Oh My! Women Owned Business Grants and Other Funding Options for Women Business Owners appeared first on Credit Suite.

Government Grants for Women and Other Funding Options for Women Owned Businesses

It’s no secret that female business owners face unique challenges when it comes to finding funding for their businesses.  There are a lot of options available, but it seems that whenever a woman seeks funding advice, they get a generic answer. Usually it is something related to government grants for women.  However, specific government grants for women are not as common as many think.  

There Are a Number Funding Options Available for Women Owned Businesses, Including Government Grants for Women

Still, there are plenty of options.  Some are designed specifically for women business owners, but most are not.  From private grants to government loans, women business owners can fund their businesses and be successful if they know where to start. 

Government Grants for Women and From Other Sources

All grant programs are highly competitive.  Even the few government grants for women. Despite this, they are definitely worth the effort to apply, as there really isn’t a lot to lose except time.  It’s free money that can supplement other funding types. Some examples include: 

SBA Women’s Business Centers

In addition to helping with loans, the SBA Women’s Business Centers also help women entrepreneurs get access to other types of funding. Some lend money or award grants directly, while others help connect women entrepreneurs with financial institutions.  The grants that are awarded through some of these centers could be considered government grants for women, since the SBA is a government entity.

Eileen Fisher Women-Owned Business Grant

The clothing brand Eileen Fisher hands out $100,000 per year to 10 women-owned businesses. To qualify, a woman must have at least 51% ownership, and the business must be in operation for at least three years. Also, it must bring in less than $1 million per year in revenue and have a focus on environmental or social change.  This is a private sector grant.

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

Amber Grant 

The Amber Grant awards $500 to $1,000 per month to a woman-owned business. One of the recipients also receives an additional $10,000 grant at the end of the year. Applicants only need to tell their story and turn it in with a $15 application fee.  This one is another private sector grant. 

#GIRLBOSS Foundation Grant 

Specifically for woman-owned businesses in fashion, music, and art, the #GIRLBOSS small business grant awards $15,000.  They also offer exposure via the Girlboss website and social media platforms. Judges rate those applying on creativity, business savvy, planning, innovation in the field, need, and where they plan to work.  Like the last two, this is private grant. 

Cartier Women’s Initiative Award 

The Cartier Women’s Initiative Award is $100,000 for first place and $30,000 for second place.  They award the grant to 18 female business owners from around the world each year.  Women business owners who are just getting started may qualify.  Go here for the complete application information for this small business grant.

All of the finalists get to attend the INSEAD Social Entrepreneurship 6-Day Executive Program (ISEP). They will also have the opportunity to participate in workshops on entrepreneurship, business coaching seminars, and be exposed to networking opportunities.  This is also a private grant. 

The Small Business Administrationgovernment grants for women Credit Suite

The SBA offers government backed loan programs, a number of which are perfect for women business owners, though not designed exclusively for women.

7(a) Loans

This program offers federally funded term loans up to $5 million. The funds can be used for expansion, purchasing equipment, working capital and more. Banks, credit unions, and other specialized institutions in partnership with the SBA process these loans and disburse the funds. 

To qualify a business owner has to have a credit score of at least 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. If a business is a startup, business experience equal to two years is enough. 

This is by far the most popular of the SBA loan programs.  Funds are available for a broad range of projects, from working capital to refinancing debt, and even buying a new business or real estate. 

504 Loans 

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

Terms for 504 loans range from 10 to 20 years.  Funding can take from 30 to 90 days. The minimum credit score requirement is 680, and collateral is the asset being financed. There is also a down payment requirement of 10%.  However, this can increase to 15% for a new business. 

Furthermore, there is a requirement that you be in business for at least 2 years, or that management has equivalent experience if the business is a startup. 

Microloans 

Microloans are available in amounts up to $50,000. They work for starting a business, purchasing equipment, buying inventory, or for working capital. Community based nonprofits handle microloan programs as intermediaries.  Unlike other SBA programs, financing coming directly from the Small Business Administration. 

Interest rates on these loans are 7.75% to 8% above the lender’s cost to fund, and the terms go up to 6 years. They can take up to 90 days to fund. There is a 640 minimum credit score requirement.  However, the collateral and down payment requirements vary by lender. 

SBA Disaster Loans 

Disaster loans are available in amounts up to $2 million.  They are actually processed directly through the SBA. They are available to small-business owners that have been affected by natural disasters.  Terms go up to 30 years, and the maximum interest rate is 4%. 

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

The minimum credit score for disaster loans is 660. Collateral is necessary if the loan goes over a certain amount, usually $25,000, if it is available or when it becomes available. For a military economic injury disaster that amount is $50,000. A down payment is not necessary either way.

SBA Express loans 

Express loans top out at $350,000 and have a maximum interest rate of 11.50%. Terms range from 5 to 25 years, and the SBA guarantee is less than with their other loan programs at 50%. To qualify, your credit score must be above 680.  In addition, you must have a debt to service ratio of 1.1 or higher. If the loan is greater than $25,000, collateral may be necessary depending on the lender. 

The turnaround for express loans is much faster.  The SBA takes up to 36 hours to give a decision. Necessary paperwork for application is also less, making express loans a great option for working capital, among other things, if you qualify. 

SBA CAPLine 

There are 4 distinct CAPLine programs that differ mostly in the expenses they can fund. Each of them carries a maximum amount of $5 million and an interest rate that ranges from 7% to 10%. Funding can take 45 to 90 days. 

The four different programs are: 

  • Seasonal CAPLines -Financing for businesses preparing for a seasonal increase in sales.
  • Contract CAPLines -Financing for businesses that need funding to fill a contract.
  • Builder’s CAPLines -Financing for businesses taking on a real estate or construction project.
  • Working capital CAPLines -Financing for businesses that are struggling with a short-term slump in sales.

You must have a credit score of 680 or above to qualify for these. There is no minimum time in business requirement unless you are getting a seasonal CAPline. That one carries a one year in business requirement. 

SBA Community Advantage Loans 

This is a pilot program set to expire or extend in 2020. Its purpose is to promote economic growth in underserved areas and markets. Decision makers can be less stringent when it comes to poor credit or low revenue if the business has the potential to stimulate the economy or create jobs in underserved areas. 

Loan amounts range from $50,000 to $250,000 with a maximum interest rate of 11%, while terms range up to 25 years.

Other Loan Options for Women Business Owners

While programs like those that provide government grants for women and those offered by The Small Business Administration often work to meet the unique challenges faced by women business owners, sometimes it just isn’t enough.  If your credit score does not allow you to qualify for SBA loans, these options are available as well. They tend to work well, though not specifically designed for women. 

Lending Club

LendingClub functions as a peer-to-peer lender that offers mostly fixed-term small business loans. Borrowers that get loans from LendingClub generally use loans funds to buy equipment, finance growth or expansion projects, consolidate other debt, or hire new employees.

One benefit LendingClub offers with their small business loans that many others do not is access to a client advisor. This is someone to help you figure out how to best use your business loan funds, as well as how to budget loan payments.

The minimum loan amount at LendingClub is $5,000 and the maximum is $300,000.  There is a minimum time in business requirement of 12 months to qualify.  In addition, you must have at least $50,000 in annual sales.  There can be no tax liens or bankruptcies, and you must have at least 20% ownership. They will work with a credit score that is fair or higher.  A fair credit score ranges from 620 to 659. 

Lendio

Lendio offers a loan-connection service that dramatically cuts the time it takes for small business owners to find the perfect loan.  They do the legwork by vetting a network of competing small business lenders. Funding is fast, sometimes in as little as 24 hours.  

Potential borrowers submit one application and then see offers from lenders in the network.  The minimum loan amount is $500 while the maximum is $5,000,000.  The business must be U.S. or Canada based and must have a business bank account.  There is a minimum personal credit score requirement of 560.  

Blue Vine

BlueVine offers two options for small business financing.  They include lines of credit and invoice factoring.  They also offer the ability to talk with a financial advisor. Their application process takes place exclusively online.  The minimum loan amount is $5,000 and their maximum is $100,000.  Furthermore, to be eligible you must be in business for at least 6 months, have revenue of $120,000 per year or more, and have a credit score of at least 600.  

Kiva

Kiva has a unique lending model. They offer loans to businesses, but their platform is far different from than that of traditional or even other non-traditional lenders.  It is sort of a cross between crowdfunding and lending.  They offer loans with a 0% interest rate. That means, even though you have to pay it back, it is actually free money. In addition, they do not run a credit check at all. The only requirement is that you have to get at least 5 family members or friends to donate money for your business.  Also, you have to give at least a $25 loan to another business on the platform yourself. 

Grameen

Microloans are a great option when it comes to business loans for women with bad credit.  Grameen is one of the few lenders that offers microloans specifically for women.  The loan amounts range from $2,000 to $15,000, and they also offer financial training and support.  

As a bonus, they report payments to Equifax and Experian.  Consequently, these loans help borrowers build credit. 

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

Government Grants for Women Do Exist, but So Much More Is Available

It is possible to find government grants for women.  They do exist. However, they are not the only option female entrepreneurs have.  Since they are rarely enough to fully fund a business, it is good to know what else is out there. 

When looking for government grants for women, start with the SBA Women’s Business Centers.   They are going to be your best bet for information of this type. Don’t limit yourself, however.  Try the other grant options mentioned above, and look around for others. New ones pop up every day. Know though, that complete funding will almost always require a loan or investor of some type, so keep that in mind as well. 

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5 Small Business Loan Options (Some of Which You’ve Probably Never Heard of) 

What Small Business Loan Options are Out There and Which Ones Are Best for You

Funding a small business is no easy task.  There are an overwhelming number of funding options.  From small business loans to crowdfunding, and a seemingly infinite number of possibilities in between, it can be hard to choose.  For most, it will take some combination of these to get the job done.  It can help to know your small business loan options.  There may be more than you think.

Small Business Loan Options: Lenders

The first decision to make is what type of lender to use. A lot of business owners think that it’s a bank or bust.  There are a few different types of lenders to consider when looking at your small business loan options however.

Learn business loan secrets with our free, sure-fire guide.

Big Banks

These are those nation-wide institutions like J.P. Morgan Chase and Wells Fargo.  As a general rule, they are not a friend to small business.  There is nothing specific that they hold against smaller businesses.  It is simply that these businesses do not generally meet their lending requirements.  It’s all numbers.  If you don’t have the numbers, you don’t get the funding.

small business loan options Credit Suite2

Community Banks

Community banks are the smaller, local financial institutions.  They are the “hometown” banks, if you will.  These guys are friendlier toward small businesses.  They are able to look a little deeper and see a tad bit more than the numbers. Their small business loan options may have slightly less strict eligibility requirements.  However, it is still a numbers game.  Whatever those numbers are, whether credit score, annual income, years in business, or some combination, you will have to have them to be eligible.

Credit Union

Credit unions come in large and small sizes as well.  The main thing to remember is that you must be a member to get a loan from a credit union.  They do usually offer more favorable interest rates however. If you are a member of one, be sure not to count them out when shopping around for loans.

Alternative Lenders

Alternative lenders generally function online, though some do have brick and mortar locations.  Their main draw is that they offer small business loan options to those that may not qualify with traditional lenders.  Their credit score requirements are lower.  They may or may not require a certain amount of time in business or minimum revenue amounts.  The main drawback is that their small business loan options typically have higher interest rates.

Small Business Loan Options: Types of Loans

In addition to the types of lenders, there are various types of loans including:

●        Traditional

These are the standard loans that disperse a set amount of funds, with the borrower repaying over a certain period of time.  The payment is the same each month, and they can be either secured or unsecured.  Unsecured small business loan options usually have higher interest rates.

●        Line of Credit

This is revolving debt similar to credit cards.  Borrowers are given a maximum limit of the amount of funds they can use, but only pay back the amount that they actually use.  For example, a borrower may have a $5,000 line of credit and use $2,000 to buy a new printer.  They will only pay back $2,000, until the time comes that they choose to use more. Lines of credit can also be secured or unsecured.

●        Invoice Factoring

Factoring invoices is an option if you have receivables.   The lender basically buys unpaid invoices from you at a premium, meaning you do not get full value.  You then have immediate cash however, for those open invoices.  The lender collects from the consumer directly at full value.  The older the invoice, the higher the premium. This is due to the fact that the likelihood of collecting on the invoice goes down the older the invoice gets.

Learn business loan secrets with our free, sure-fire guide.

●        Merchant Cash Advance

If you accept credit card payments, a merchant cash advance can help you out in a cash pinch.  It is basically just what is says.  It’s a cash advance on predicted credit card sales.  They base the amount of the loan off of average daily credit card sales, and then take payment from future credit card sales. This usually happens electronically. Most often, the process is automatic.  The draw is that you get the funds fast, and there are usually more flexible options for repayment terms depending on your eligibility.

Small Business Loan Options: The Small Business Administration

No discussion of small business loan options would be complete without mentioning the SBA.  While they do not lend funds themselves, they do administer a number of loan programs that help small businesses get the funds they need through partner lenders.

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.  These include 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 and can buy machinery, facilities, or land. Typically, they are used for expansion.  They work especially well for commercial real estate purchases.

Microloans

These are $50,000 or less. They are good for starting a business, purchasing equipment, buying inventory, or general working capital.

SBA disaster loans

This is a program available to businesses that have fallen victim to natural disasters.  These loans are different because, unlike the others, the SBA actually processes them directly rather than using partner lenders.

SBA Express Loans

The turnaround for express loans is much faster, with the SBA taking up to 36 hours to give a decision. There is less paper work as well, making express loans a great option if you qualify.

SBA CAPLines

There are 4 different CAPLine programs.  They differ mostly in how the funds can be used. The maximum on each is $5 million.  It can take 45 to 90 days for the funding on CAPLines to come through.

Learn business loan secrets with our free, sure-fire guide.

SBA Community Advantage Loans

This is a pilot program.  It will either expire, or the SBA will extend it in 2020. 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 these.  Get more details on the SBA, these loan programs, and additional resources offered by the Small Business Administration here.

5 Specific Small Business Loan Options

Now, you are probably here because you need to know specifically where to go to get a small business loan.  As you have seen, the possibilities are endless.  However, here are some of our favorite online lenders for those that may be having trouble qualifying for loans.

Upstart

Upstart is a fairly new online lender that is using cutting edge technology.  They question whether financial information and FICO alone can really determine the risk associated with a specific borrower.  Instead, they are using a combination of artificial intelligence and machine learning to gather alternative data.  They then use this data in the credit decision making process.

Alternative data includes such things as mobile phone bills, rent, deposits, withdrawals, and even other information less directly tied to finances.  Software from the company uses this data, then learns and improves on its own.

They offer various types of financing products to fit a broad range of needs. From credit card refinancing to student loans, and pretty much anything in-between, there is something for everyone.  Debt consolidation and personal loans are included, in addition to business loans.

You can get a quote on a loan to start or expand a business.  Quotes are available online in a matter of minutes.  Learn more in this comprehensive review.

StreetShares

StreetShares started as a service to veterans.  Now, they offer term loans, lines of credit, and contract financing. They also offer small business loan investment options. The maximum loan amount is $250,000.  Pre-Approval only takes a few minutes. They use a soft pull on your credit so it doesn’t affect your score.

To be eligible, you must be in business for at least 12 months with annual revenue of $25,000. Exceptions are possible, with loans to companies in business for at least 6 months with higher earnings happening on a case by case basis. The borrower’s credit score must be at least 620. For more on StreetShares, see our in-depth review.

Kabbage

Kabbage is a well know online lender. They offer a small business line of credit that can help businesses accomplish business goals quickly. The minimum loan amount is $500 and the maximum is $250,000. They require you to be in business for at least one year and have $50,000 or more in annual revenue, or $4,200 or more per month in the previous 3 month period.

They are great if you need cash quickly. Also, their non-traditional approach puts less weight on your credit score, so they may work better for some borrowers than other lenders.

Fundation

Fundation provides both term business loans online and lines of credit. It is most known for its working capital funding options. These are funds meant to help cover the day-to-day costs of running a business rather than larger projects. Typically, these funds come in the form of a line-of-credit.

Their minimum loan amount is $20,000 while the maximum loan amount they offer is $500,000. They require you to be in business for at least 12 months and have annual revenue of at least $100,000. To be eligible, your personal credit score must be no less than 600. Additionally, you must have at least 3 full time employees.  That number can include yourself.  Business owners cannot live or operate their business in North Dakota, South Dakota, or Nevada.

SmartBiz

If you want the convenience of online lending but need to look toward products offered by the SBA, then SmartBiz is for you.

With the help of the Small Business Administration, SmartBiz offers loans that are government backed. While SBA loans typically take a lot of time and paperwork, SmartBiz found a way to speed things up.  This makes getting loans through the Small Business Administration easier than ever. The minimum loan amount is $30,000 and the maximum is $5,000,000.

As stated, SBA loans are government-backed business term loans for business owners who’ve had difficulty qualifying for other types of financing.  As such, the requirements are a little stricter. Your credit score has to be 650, and you have to be in business for 2 years or more. In addition, annual revenue has to be $50,000 at least, and there can be no outstanding liens, bankruptcies, or foreclosures in the past 3 years.

Knowing Your Small Business Loan Options Can Help You Make the Best Decisions

Of course, a lot of the choosing will be done for you based on your qualifications.  Your credit score, length of time in business, and annual revenue will make a difference.  Still, knowing where to start based on what you have to work with is a huge first step.

If you are eligible for a loan with a traditional lender, you may find the lowest interest rates there.  They tend to have the most favorable terms and rates.  Their online counterparts typically have higher interest rates, but the loans are easier to qualify for.

However, if you are struggling with credit or just starting out, one of these 5 options for alternative lenders could be great.  In addition, there is the option of traditional loans with the SBA programs, if you fall somewhere in between.  Whatever you do, don’t jump in without doing your research.

Shop around with a variety of lenders to compare what they offer, what their requirements are, and figure out which lenders and loans will work best for your specific business. A little time spent on the front end doing this can save you a lot of time and money after the fact.

 

 

 

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Enjoy the Independence You Fought For: 5 Options for Veterans Business Loans

Find Veterans Business Loans to Run a Business and Be Your Own Boss

Our founding fathers adopted the Declaration of Independence on July 4, 1776. Since then, thousands of men and women have fought to maintain that independence for our country.  Now home, those that fought should enjoy some of that independence.  One of the best ways to do that is to be your own boss.  Run your own business.  Veterans business loans can help you do just that.

Where are these veterans business loans? How do you find them? When you do, how do you get them? You’re in luck! That is just what we are going to tell you.  Some of the following are specifically veterans business loans. Others are loans for anyone, but they tend to work especially well for veterans.

Best Veterans Business Loans

These are our top picks for veterans business loans.

1.      Military Reservist Economic Injury Disaster Loan Program (MREIDL)

If someone necessary to the business is called into active duty, this is the first place to go for veterans business loans.  The Military Reservist Economic Injury Disaster Loan Program (MREIDL) offers loans up to $2 million to qualifying businesses. Funds are meant to help cover operating costs that can’t be met due to the loss of a necessary worker called to active duty in the Reserves or National Guard.

2.      Boots to Business and Boots to Business|Reboot

Boots to Business is the 2-step entrepreneurial program offered by the Small Business Administration on military installations around the world.  It functions as a training track of the Department of Defense (DOD) Transition Assistance Program (TAP).  This is a great resource for tracking down and qualifying for veterans business loans.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

3.      Veteran Women Igniting the Spirit of Entrepreneurship (V-WISE)

The Veterans Women Igniting the Spirit of Entrepreneurship (V-WISE) is an SBA funded program. It is offered by the Institute for Veterans and Military Families which includes online training.  There is also a conference that utilizes the spirit of female veterans and female military spouses. In addition, mentoring is available.

4. The National Center for Veterans Institute for Procurement

The National Center for Veterans Institute for Procurement extends the entrepreneurship training offered in TAP to veterans of all ages in their communities.

4.      SBA Veterans Advantage

SBA Veterans Advantage guarantees loans approved to businesses operated by veterans or military spouses.

5.      Other SBA Options

In addition to those already mentioned, the Small Business Administration offers many sources of guidance and funding for veteran owned small businesses.

●       Veterans Business Outreach Center (VBOC)

The Veterans Business Outreach Center (VBOC) furnishes entrepreneurial development solutions including business training, guidance, and mentoring for qualified veterans operating or considering launching a small business.

●       SBA Express

The SBA Express program is a fantastic loan program for veterans. You can get approval for a loan for up to $350,000. Get rates of 4.5-6.5%. Lines of credit are available for 7 years. You will not need to offer any collateral for up to $25,000, and turnaround time is 36 hours.

●       Leveraging Information and Networks to Access Capital (LINC)

The Leveraging Information and Networks to Access Capital (LINC), an online matchmaking service, connects business owners to nonprofit lenders. These lenders supply free financial advice and specialize in microlending and smaller loans. This is the SBA Community Advantage program, and you can learn more about it here:  https://www.sba.gov/sites/default/files/files/CA-Participant-Guide-4-December-28-2015.pdf

●       7(a) Loan for Working Capital

You need 3 years’ worth of business tax returns, credit that’s not too bad, and collateral for 50% to 70% of what you need to borrow to qualify for this loan.

●       SBA 504 Loan Program

This program offers business real estate financing.

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In addition, the SBA Office of Veterans Business Development offers a broad range of programs and services to sustain and encourage future and existing veteran business owners and military spouses.

Alternative Lenders Are an Option

Finally, if you still need more funding, or if none of the above options will work for you, try alternative lenders. Business owners with decent personal credit and income tax returns for 2 years that show a profit can usually get approval. You could have rates of 7% or lower. Lenders will want to see some kind of profit on your tax returns.

No Matter What, Build Business Credit

Regardless of whether you qualify for a traditional loan, veterans business loans, or alternative lending options, you need to be building business credit. It is the best thing for your business.

Small business credit is in the business name. It doesn’t lead back to the business owner’s personal credit.  In fact, a business owner’s business and consumer credit scores can be very different.  For this reason and many more, business credit is vital to the life of a business.

Why Build Business Credit?

Because company credit is separate from personal credit, it helps to safeguard a business owner’s personal assets. They can survive even if there is a problem with the business.

Personal credit scores are dependent on payment history.  Not only that, but other factors like credit utilization percentages matter as well. Due to business purchases being much higher than personal expenses by nature, and personal limits much lower than business card limits, you can max out limits quickly using personal cards for business transactions.  That skyrockets your credit utilization percentage.  For that reason, your personal score can suffer if you use personal cards for business even if you make your payments on time.

How to Establish and Build Business Credit

Growing small business credit is a process, and it does not occur automatically. A corporation has to actively work to establish corporate credit. It is not hard, however, as long as you follow and trust the process.

Due to the fact that the process builds on itself, performing the steps out of order will lead to repetitive rejections. Nobody can start at the top with business credit. For example, you can’t start by applying for store or cash credit from your bank. If you do, you’ll face rejection 100% of the time.

Make your Business Appear Fundable

First of all, you must make your business appear to be a fundable entity that is separate from yourself.  Here’s how:

  • Your business needs a professional-looking website and email address. The website should have the same URL as the business email, and the email should not be from a free service.  Yahoo and Gmail are not acceptable business email platforms.
  • In addition, company telephone and fax numbers ought to have a listing on 411.com. They both need to be from a toll-free exchange and not your personal numbers.
  • You need a separate business bank account. Run all business transactions through it. Not only will it help separate your business from yourself, but it will make your life a lot easier

come tax time.

Speaking of Taxes and the IRS

Visit the IRS website and get an EIN for the business. It will be free. You also will need to formally incorporate.  That means choosing to become a corporation, s-corporation, or LLC.  In addition to separating your business from yourself, you will gain some protection for your personal assets. The level of protection will vary, as will the cost, based on the option you choose.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Dun & Bradstreet

Dun & Bradstreet is the most commonly used business credit reporting agency.  Head to their website and obtain a totally free DUNS number. A DUNS number is how D&B gets a small business into their system to generate a PAYDEX score. If there is no DUNS number, then there is no PAYDEX score.

Apply for Accounts in the Vendor Credit Tier

The vendor credit tier is composed of vendors that will offer net invoice terms.  They do not require a credit check, and they report payments to the business credit reporting agencies.  You can buy things from them that you use every day, like shipping boxes, outdoor workwear, ink and toner, and office furniture.

Net accounts need to be paid in full based on their terms, usually 30,60, or 90 days. This is in contrast to revolving accounts, where you can make payments.  If you pay your net accounts on time with vendors that report, your business credit profile will be opened.

It is important to remember that not every vendor does this.  Certain vendors known as “starter vendors” make up the vendor credit tier and can help you build business credit. These are merchants that will grant an approval with very little effort. You also need them to be reporting to one or more of the big three credit reporting agencies (CRAs): Dun & Bradstreet, Equifax, or Experian.

Moving On: The Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the credit reporting agencies, then move onto the retail credit tier. These are businesses such as, Office Depot and Staples, offer credit for their stores only.  They will have more of the things you need to run a business.

Use your SSN and date of birth for identification purposes only and not for guaranteeing the credit.

Just Keep Climbing: Fleet Credit Tier

After another 8 to 10 accounts are reporting, it is time to move to the fleet credit tier. These are service providers such as BP and Conoco. Use this credit to purchase gasoline and maintain vehicles. Again, use your SSN and date of birth for identification purposes only and not for guaranteeing the credit.

Top of the Mountain: Cash Credit Tier

If you are responsible for managing your credit up to this point, you can move on to the cash credit tier. These are businesses like Visa and MasterCard. Remember, your SSN and birthdate should not be used to verify credit, though they may be required for identity verification.

Stay on Top of Your Business Credit

Furthermore, after you have business credit, you need to stay on top of it.  Make sure it is being reported and take care of any errors as soon as possible. Get in the practice of checking credit reports and digging into the specifics, not just the scores.  Update the relevant information if there are errors, or if the details are incomplete.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you with each of them directly. See: https://www.creditsuite.com/business-credit-monitoring.

Repair Work

Errors in credit reports can be corrected, but the credit agencies normally have a set way they want you to do it.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Disputing credit report mistakes usually means you mail a paper letter with copies of any proof of payment with it. These are documents like receipts and cancelled checks. Never send the originals.  Send copies instead.

Fixing credit report inaccuracies also means you precisely detail any charges you challenge. Do so in writing and make your letter is as clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you sent in your dispute.

Another benefit of credit monitoring is that you will know how many accounts are reporting from each credit tier.  Therefore, you will know when to move on to the next tier.

Always use credit carefully.  Do not borrow more than what you can pay. Keep track of balances and deadlines for repayments. Paying on time will do more to increase business credit scores than just about anything else.

A Final Word on Veterans Business Loans

There are Veterans business loans out there.  In addition, there are other fantastic loan options that can work well for veterans, despite not being specifically designed for them. This funding can help you gain independence in your work life by giving you the funding you need to start and run your own business.

Above all however, you need to build credit for your business.  This is simply one more step toward running your own business and gaining your independence.  We appreciate that you fought hard for our country, and now we want to fight hard for you.  We can help you through the business credit building process.  Visit www.CreditSuite.com to find out more.

 

 

 

 

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