Tag: Small

Your Guide to Small Business Lending Trends In 2022

It’s no secret the past two years have wrought havoc on the economy.  Workers were laid off in droves.  Small businesses suffered. Now, with things starting to get back on track, many displaced employees have found their own entrepreneurial spirit.  As a result, they are looking to start their own business. In fact, it’s being dubbed “The Great Resignation,” and it’s going to turn small business lending on its head. 

What’s Ahead for Business Lending

Many of these displaced employees are in the 30—45 age range. While some are looking for other employment, many are considering starting a business. Of course, this age range typically does not yet have a huge retirement plan, or a lot of savings at all for that matter. As a result, the demand for small business financing is going to increase greatly.  

Whether you are ready to start a business or already own one, there are some things you need to know about small business lending in the new year.

Interest Rates Are On the Rise

Everyone is saying it, and they’re right. Sadly, interest rates are rising. Thankfully, throughout the pandemic the Fed kept the rate low.  Obviously, it was an effort to counteract all the other crazy things happening in the economy. Now, it’s becoming obvious that a correction will be needed. 

It’s time to pay the piper, and the Fed is considering rate hikes as early as this year. What does that mean for small business lending?  If you need business funding, or think you may need it in the future, now’s the time to jump on a loan or a line of credit. 

Inflation is Coming Fast and Furious

Here is another reason to make sure you secure funding as soon as possible. Inflation is imminent. In fact, according to comments made to CNBC by Fed President James Bullard, it’s coming sooner than expected:

“… we were expecting a good year, a good reopening. But this is a bigger year than we w

ere expecting, more inflation than we were expecting.” 

It’s already started, and it always gets worse before it gets better. Make sure you have access to funds now, before it costs you more to get them.  Then, when you start to feel the squeeze of inflation, you have what you need. 

Regulations Aren’t Likely to Change Much

Even though small business funding options are increasing, it’s not likely the industry will see tighter regulations soon. Business owners will still have to find their own reliable and affordable funding. 

This is where the services of one of the business credit specialists at Credit Suite can be especially helpful. These specialists have their finger on the pulse of the small business lending industry. They can help borrowers make informed decisions based on that knowledge. 

The SBA Will Likely Play a Much Smaller Role

The Small Business Administration has had a tough couple of years as well. This is due mostly to the fiasco that ensued with the Paycheck Protection Program. A good idea that must be rushed is virtually guaranteed to have problems. The SBA was directly in the line of fire. 

They are working to rectify it, but their role in small business lending will likely be smaller in 2022 than it has been in the past. 

Online Lenders Aren’t Going Anywhere

Not only are online lenders sticking around, but they will continue to offer more options as their role in business lending continues to grow. 

The demand for business funding services that are less stringent when it comes to approval processes is stronger than ever.  There are plenty of alternative small business lenders standing ready to fill the gap. 

According to the 2019 Small Business Credit Survey 32% of small business applicants used online lenders, and that was before the pandemic. That number is very likely to grow in the coming year for a number of reasons. First, online lenders are typically more flexible. Also, they tend to offer a wider range of funding solutions, including:

Furthermore, they are usually faster and more efficient.  Not only do borrowers get faster approval, but they typically gain access to funds faster as well. Not to mention, you can apply for funding with just a few taps on a keyboard.  

It’s likely that this year and in the years to come, online lenders and other fintech companies will continue to provide lending solutions to small businesses. 

Online Lender Examples

There are a lot of well established online lenders out there, and new ones are popping up everyday. Be sure to vet each one carefully, and double check details before you apply, because they can change often. We have reviews on a number of them to help.

Here are a few you can start with: 

With all of these choices, we highly recommend that you check their websites directly for the most recent qualifying and term details, as these can change over time.

Credit Line Hybrid

If you need more of an alternative loan option rather than an alternative lender, a credit line hybrid may be a good option. This is a form of unsecured funding, and the Credit Suite Credit Line Hybrid has an even better interest rate than a secured loan. In fact, it can sometimes be as low as 0% for the first few months. 

It’s a credit card stacking program, and many of the cards report to business CRAs. That means, you can build business credit and access cash for your business with no personal guarantee. 

You do need a good credit score,  or a guarantor with good credit, to get an approval.  The minimum FICO is 680. There are no financials required, and you can often get up to $150,000. It is important to note also, some cards may report on your personal credit. 

Fundability, Including Business Credit, Will Be As Important as Ever

With increasing demand and competition for all types of business lending, building strong fundability will be increasingly important. Part of strong fundability is having a good business credit score. There are many ways to build your business credit score. 

You need help from someone with inside knowledge of the industry and relationships with the vendors and lenders that can help you build your business credit. This makes the whole process go faster and keeps frustration to a minimum. A free consultation with a Credit Suite Business Credit Specialist is a great place to start.

The post Your Guide to Small Business Lending Trends In 2022 appeared first on Credit Suite.

5 Ways Small Businesses Can Benefit from a 2021 Credit Review

What is a 2021 Credit Review and Why Should You Do One?

In a time when the economy is tumbling toward a recession, it’s important for small businesses to get their finances in order. Here are tips on how to do that by doing a 2021 credit review.

Also, we’ll show you how this can give your business an advantage over competitors who are not aware of what they’re missing out on. And why financial experts recommend this type of review. So look at the 5 ways a 2021 credit review can help your business. Get more information about what you need to do now so you don’t have any regrets later!

All year, we’ve been talking about building business credit. And we’ve talked about business credit reporting agencies and their reports. But do you know how to read your business credit reports? And do you know what to do with the information you might find?

The Benefits of Doing a 2021 Credit Review

Knowing what’s in your business credit reports can only help you. Learning what the CRAs are scoring you on will help focus your efforts. For example, if on-time payments matter to a CRA more than utilization percentage, then wouldn’t it be a good idea to concentrate on paying your credit bills on time? <Spoiler alert> they do.

Why it is Important for You to Know About Your Business Credit Scores

Business credit is an actual asset, and it is worth money! That means you can factor business credit into the cost of your business, should you ever decide to sell. Plus, what you do to build business credit will often help you build a clientele!

Better business credit scores will help you get business financing. They will help you get better financing, with lower interest rates and payback terms. For some entrepreneurs, better business credit scores are the difference between getting some financing….

Or none.

What Information Should be Included in Your Review

You want to be looking at your actual, full business credit reports, which are more than the scores. It’s time to look at the details. These should be reports from:

  • Dun & Bradstreet
  • Experian and
  • Equifax

About the Process

Get your D&B business credit report by signing into the D&B website. You want their CreditMonitor™ product, which shows the most scores. Get your Experian credit report by running a search for your business. You want their CreditScoreSM Report. To get your Equifax business credit report, you’ll need to contact them. Specify that you want a single Equifax business credit report.

How to Get Started with a 2021 Credit Review Now

If a highly detailed report isn’t in the budget right now, at least a shorter summary report will keep you informed. And it will get you in the habit of checking your credit reports. Today, we’ll look at high level information. This is what you absolutely need to know right now.

#5 Way a 2021 Credit Review Can Benefit Small Businesses: Get to Know Your Dun & Bradstreet Business Credit Report

It always makes sense to start with D&B. They are the biggest business CRA in the world, by far! You need a D-U-N-S number to start building business credit. If you don’t have a D-U-N-S number, you’ll need to get one; they’re free. This number gets your business into their system.

But your business will not get a PAYDEX score, unless there are at least 3 trade lines reporting, and a D-U-N-S number. Your business must have BOTH to get a D&B score or report.

D&B Data

D&B’s database contains hundreds of millions of companies around the world, both active and out of business. So D&B lists over a billion trade experiences. It works to improve its analyses to assure the greatest degree of accuracy possible. To ensure as accurate a report as possible, give D&B your company’s current financial statements.

Predictive Models and Scoring

D&B takes historical information to try to predict future outcomes. This is to identify the risks inherent in a future decision. They take objective and statistically derived data, rather than subjective and intuitive judgments. There are sample reports online available on the D&B website.

D&B Reports

D&B offers database-generated reports. These help their clients decide if your business is a good credit risk. Companies use the reports to make informed business credit decisions and avoid bad debt. Several factors go into creating such a report.

In general when D&B does not have all the information that they need, they will show as much in their reports. But missing information does not necessarily mean your company is a poor credit risk. Instead, the risk is unknown.

Executive Summary

The report starts with basic company information, like:

  • Number of employees
  • Year your business was started
  • Net worth
  • Sales

D&B Rating

This rating helps companies check your business’s size and composite credit appraisal. Dun & Bradstreet bases this rating on data in your company’s interim or fiscal balance sheet plus an overall evaluation of your business’s creditworthiness. The scale runs 5A—HH. Rating Classifications show your company size based on worth or equity. D&B assigns such a rating only if your company has supplied a current financial statement.

The rating contains a Financial Strength Indicator. It is calculated using the Net Worth or Issued Capital of your company. Plus there’s a Composition Credit Appraisal. This number runs 1 through 4, and it shows D&B’s overall rating of your business’s creditworthiness.

The scores mean:

  • 1—High
  • 2—Good
  • 3—Fair
  • 4—Limited

A D&B rating might look like 3A4.

D&B PAYDEX

This part shows two gauges:  an up to 24 month PAYDEX, and an up to 3 month PAYDEX. As a result, you can see recent history and your company’s performance over time.

Both gauges have the same scores:

  • 1 means greater than 120 days slow (when it comes to your business paying bills)
  • 50 means 30 days slow
  • 80 means prompt payments
  • 100 means anticipates

100 is the best PAYDEX score you can get. The PAYDEX score is Dun & Bradstreet’s dollar-weighted numerical rating of how your company has paid the bills over the past year. It shows how well your company pays its bills.

Predictive Analytics

This next section shows the chance of business failure. It also shows how often your business is late in paying its financial obligations. These are comparative analyses: the Financial Stress Class, and the Credit Score Class.

Financial Stress Score

This section shows your Financial Stress Class, and a Financial Stress Score Percentile. The Financial Stress Class runs 1—5, with 5 being the worst score.

Financial Stress Score Percentile

It is a comparison of your business to other businesses. The percentile contains a Financial Stress National Percentile. The Financial Stress National Percentile shows the relative ranking of your company among all scorable companies in D&B’s file. It also contains a Financial Stress Score. The report shows the probability of failure with a particular score.

Financial Stress Score Percentile Comparison

So the idea behind the score is to predict the chances your business will fail over the next 12 months. The average probability of failure comes from businesses in D&B’s database. It is provided for comparative purposes. The Financial Stress Score offers a more precise measure of the level of risk than the Financial Stress Class and Percentile. It is meant for customers using a scorecard approach to determining overall business performance.

Credit Score Class

The Credit Score Class measures how often your company is delinquent in paying bills. Overall numbers run 1—5. 1 is businesses least likely to be late. More granular scores run 101—670. 670 is the highest risk.

Credit Limit Recommendation

It shows a spectrum of risk. Your risk category can be:

  • Low
  • Moderate or
  • High

D&B checks risk using their scoring methods. It is one factor used when creating recommended limits.

D&B Viability Rating

This section contains:

  • Viability Score— to show risk
  • Portfolio Comparison—also a demonstration of risk
  • Data Depth Indicator—descriptive vs. predictive
  • Company Profile—showing if financial data and other info was available

Credit Capacity Summary

This part repeats the D&B Rating above. It includes financial strength, the composite credit appraisal, and payment activity

Business History and Business Registration

This section contains information on ownership. It also shows where your corporation is filed (i.e. which state). This includes the type of corporation, and the incorporation date

Government Activity Summary and Operations Data

This section gives basic information on if your company works as a contractor for the government. It also shows the kind of industry your company is in. It shows what the facilities are like, including general data on its location.

Industry Data and Family Tree

The section shows your business’s SIC and NAICS codes. It also shows where your branches and subsidiaries are. This list is limited to the first 25 branches, subsidiaries, divisions, and affiliates, both domestic and international. D&B offers a Global Family Linkage Link to view the full listing.

Financial Statements

This section is devoted to financial statements D&B has on your business. It shows assets and liabilities, with specifics like equipment, and even common stock offerings.

Indicators and Full Filings

This part shows public records, like:

  • Judgments
  • Liens
  • Lawsuits
  • UCC filings

This part also breaks down where filings are venued, like the court or the county recorder of deeds office. It shows if judgments were satisfied (paid). It also shows which equipment is subject to UCC filings.

Commercial Credit Score

This part shows the Credit Score Class again. It also shows a comparison of the incidence of delinquent payments. It also includes key factors to help anyone reading the report interpret these findings. And it explains what the numbers mean.

Credit Score Percentile Norms Comparison

Here, your company is compared to others based on:

  • Region
  • Industry
  • Number of employees and
  • Time in business

Financial Stress Score and Financial Stress Percentile

This section shows a Financial Stress Class and a Financial Stress Score Percentile. The Financial Stress Class runs 1—5, with 5 being the worst score. he Financial Stress Score Norms calculate:

  • An average score and percentile for similar firms
  • The norms benchmark where your business stands

This is in relation to its closest business peers.

Financial Stress Score Percentile and Financial Stress Score Percentile Comparison

These two scores are a repeat of the Financial Stress Score section, above.

The average probability of failure is based on businesses in D&B’s database. t is provided for comparative purposes. The Financial Stress National Percentile shows the relative ranking of your company among all scorable companies in D&B’s file. And the Financial Stress Score offers a more precise measure of the level of risk than the Financial Stress Class and Percentile. It is meant for customers using a scorecard approach to determining overall business performance.

Advanced PAYDEX + CLR

This section repeats the 24 month and 3 month PAYDEX gauges. It also includes a repeat of the Credit Limit Recommendation. There is also a PAYDEX Yearly Trend. It shows the PAYDEX scores of your business compared to the Primary Industry from each of the last four quarters.

PAYDEX Yearly Trend

The PAYDEX Yearly Trend is a graph. It includes detailed payment history, with payment habits and a payment summary. It helps show if your business pays the bigger bills first or last.

Let’s look at an Experian business credit report.

#4 Way a 2021 Credit Review Can Benefit Small Businesses: Explore Your Experian Business Credit Report

Credit Review Credit SuiteExperian offers data and analytics to businesses to help them better gauge risk. They have a massive consumer and commercial database for checking risk. They have found that blended data and reports work a lot better for them. For troubled businesses, blended scores dropped an average of 30% over the four quarters leading up to a bad event. But the owner’s consumer scores showed no statistically significant decline during the same period. Their best known and most widely used score is Intelliscore Plus℠, a percentile score.

A Typical Experian Business Credit Advantage SM Report

Experian provides a sample report where you can get an idea of what to expect. The best, most accurate and up to date source for this information is the Experian website itself.

Business Background Information

The first part of a report contains:

  • Basic details like business name, address, and main phone number
  • Experian BIN (Experian’s BIN is like Dun & Bradstreet’s D-U-N-S number. It’s a unique identifier for each business in the database)
  • Annual sales
  • Business type (corporation, etc.)
  • Date Experian file established
  • Years in business
  • Total number of employees
  • Incorporation date and state

Experian Business Credit Score

Business Credit Scores run 1—100; higher scores mean lower risk. This score predicts the chance of serious credit delinquencies in the next 12 months. It uses tradeline and collections data, public filings as well as other variables to predict future risk.

Key Score Factors:

  • Number of commercial accts with terms other than Net 1—30 days
  • The number of commercial accounts that are not current
  • Number of commercial accounts with high utilization
  • Length of time on Experian’s file

Experian Financial Stability Risk Rating

Financial Stability Risk Ratings run 1—5; lower ratings mean lower risk. A rating of 1 means a 0.55% potential risk of severe financial distress in the next 12 months. Experian categorizes all businesses to fit within one of the five risk segments. This rating predicts the chance of payment default and/or bankruptcy in the next 12 months.

This rating uses tradeline and collections info, public filings, and other variables to predict future risk. Key Rating Factors:

  • Number of active commercial accounts
  • Risk associated with the business type
  • Risk associated with the company’s industry sector
  • Employee size of business

Credit Summary

This section contains several counts of various data points. For the most part, details are available further in the report. The info contains:

  • Current Days Beyond Terms (DBT)
  • Predicted DBT for a particular date
  • Average industry DBT
  • Payment Trend Indicator (stable, or not)

This sector also contains:

  • Number of payment tradelines
  • Number of lender consortium experiences
  • The number of business inquiries
  • Number of UCC Filings, bankruptcies, and liens

The last part of this section shows:

  • Number of judgments filed
  • Number of accounts in collections
  • Company background (includes founding date, where headquarters are, and what your business does)

Payment Trend Summary

This section shows your company versus your industry on:

  • Monthly payment trends
  • Quarterly payment trends

These are the percentages of on-time payments by month and quarter.

Trade Payment Information

This next part shows details on payment experiences (financial trades). There is also data on:

  • Lender consortium experiences (financial exchange trades)
  • Tradeline experiences (continuous trades)
  • Aged trades and payment trend detail

There is also a link to send any missing payment experiences.

Inquiries, Collection Filings, and Collections Summary

The Inquiries part has the industry making the inquiry and a total made during a given month. The Collection Filings sector has the date, name of the agency, and status (open or closed). If a collection is closed, the Collection Filing sector also has the closing date. The Collections Summary shows: status, number of collections, dollar amount in dispute, and amount collected (even if $0).

Commercial Banking, Insurance, Leasing

For leasing, this section shows:

  • Leasing institution name and address
  • Product type and lease start date and term
  • Original and remaining balances
  • The scheduled amount due
  • The number of payments per year
  • And the number of payments which are current, late, or overdue

Judgement Filings

This sector shows:

  • Date and plaintiff
  • Filing location
  • Legal type and action
  • Document number
  • Liability amount

It also includes cases where your company in the report is the plaintiff or the defendant.

Tax Lien Filings

This part has:

  • Date and owner
  • Filing location
  • Legal type and action
  • Document number
  • Liability amount and description

UCC Filings

This section has:

  • Date and filing number
  • Jurisdiction
  • Secured party
  • Activity (filed, or not)
UCC Filings Summary

This part shows:

  • Filing period
  • Number of cautionary filings
  • Total filed, released, or continued
  • Amended/Assigned

Cautionary UCC Filings include one or more of the following collateral:

  • Accounts
  • Accounts receivable
  • Contracts
  • Hereafter acquired property
  • Leases
  • Notes receivable, or
  • Proceeds

But the Experian Business Credit Advantage SM Report does not have Intelliscore Plus℠. And it does not have the Experian Finance Stability Risk Score.

Experian’s Intelliscore Plus℠

It is a highly predictive score. This score provides detailed and accurate data on your business’s risk. It blends commercial data and consumer data on you, the business owner or guarantor. Reports include trades, legal filings, and more. Business credit scores run 0—100; 0 represents a high risk.

This score shows the percentage of businesses scoring higher or lower than yours. Many large financial institutions use it. So do over half of the top 25 P&C insurers and most major telecommunications and utility firms. Industry leaders in transportation, manufacturing, and technology also use Intelliscore Plus as their main risk indicating model. It has more than 800 aggregates or factors affecting business credit scores. Experian checks the scores of the millions of businesses in their database.

The Experian Financial Stability Risk Score (FSR)

FSR predicts the potential of your business going bankrupt or defaulting on obligations. The score finds highest risk businesses by using payment and public records which include:

  • Severely delinquent payments of 61+ and 91+ days
  • High utilization of credit lines
  • Tax liens
  • Judgments
  • Collection accounts
  • Industry risk
  • Short time in business, etc.

FSR shows a 1—100 percentile score, plus a 1—5 risk class. The risk class puts businesses into risk categories. The highest risk is in the lowest 10% of accounts. A score of 66—100 and a risk class of 1 means a low risk of default or bankruptcy. But a score of 1—3 and a risk class of 5 means your business has a high risk of default or bankruptcy.

Time to look at Equifax.

#3 Way a 2021 Credit Review Can Benefit Small Businesses: Understand Your Equifax Business Credit Report Better than You Ever Have

You can get a sample Equifax business credit report online. The company gets its data through a data sharing agreement with the Small Business Exchange. And it uses Net 30 type industry trade credit info.

Equifax Business Credit Reports

Equifax will combine financial data with industry trade credit data and add in:

  • Utility and telephone data
  • Public record information (bankruptcies, judgments, and tax liens)

Company Identifying Information

The first section shows identifying info, like business name, and address and telephone number. This section will also include your Equifax ID. An Equifax ID is how Equifax can tell your business from similarly-named businesses.

Credit Risk Score

This score runs 101—992. Higher numbers are better. This section also shows key factors. These are positives and negatives about your business. Such as the age of your oldest account, if you have any charge-offs, and the size of your business.

Credit Utilization

This pie chart shows which percent of your available credit line you are using. It also has labels to show how much each percentage is. It is only for your financial accounts.

Payment Index

This score runs 0—100. Higher numbers are better. It also shows Industry Median.

  • 90+ means paid as agreed
  • 1—19 means 120 or more days overdue

Days Beyond Terms

This is a line graph of the average days beyond terms by date reported. It is for nonfinancial accounts only. Plus it shows any recent trends. So if you’ve improved your payment habits, it shows up here.

Business Failure Score/Inquiries

The score runs 1000—1880. It shows key factors like recent balances. The section on inquiries shows the date, and if it was an inquiry on a financial or nonfinancial account.

Bureau Messages

This part seems to be a free form field. Its purpose is to add notes to your profile. These can be notes on the number of your locations, or any business aliases.

Bureau Summary Data

This section shows:

  • The number of financial and nonfinancial accounts
  • Date the credit became active
  • Number of charge offs and total dollars past due
  • Most severe status in 24 months
  • Single highest credit extended
  • Total current card exposure
  • Median balance and average open balance

It also shows Recent Activity, which includes:

  • The number of accounts delinquent
  • New accounts opened
  • Inquiries and
  • Accounts updated

Public Records

This section has:

Type Status:

  • Bankruptcy
  • Judgments, whether satisfied or not
  • Liens filed and opened, or released
  • Number, dollar, and most recent date filed

If there are none reported, then the date field will show that.

Additional Information

The final section appears to contain miscellaneous information, like:

  • Alternate Company Names and DBAs
  • Owners and Guarantor Names (name, type, date reported)
  • Business and Guarantor Comments (seems to be another freeform field) and
  • Report Details (the date of the report)

#2 Way a 2021 Credit Review Can Benefit Small Businesses: You Can do a 2021 Credit Review on Your Own

Checking your business credit reports in depth is the way to go to do your own credit review. But how do you know if there’s an issue you need to address? The answer is business credit monitoring. Each of the business CRAs has their own plan(s).

D&B Business Credit Monitoring

Pricing is current to September of 2021.

Use D&B Credit Monitor to check your report. It costs $39/month. View recent scores and ratings and benchmark your business versus your industry. It also alerts you to special events like suits, liens, and judgments. It includes dark web monitoring. This means it scans the dark web to help protect your business from possible fraud.

Experian Business Credit Monitoring

Prices are current as of September 2021.

  • Business Credit Advantage: $189/year, monitor business credit for 1 year, alerts of changes
  • Business Credit Score Pro: $1995/year with trade details or $1495/year in summary form only, get access to several business credit reports
  • Profile Plus: $49.95 for a single report
  • Credit Score Report: $39.95 credit summary report with score

Experian Subscription Plans: The Business Credit Advantage Subscription Plan

This is just one report including nearly everything Experian offers. This includes:

  • Business Credit Score (Intelliscore)
  • Financial Stability Risk Rating
  • Collections and trade payment details

Experian Subscription Plans: The Business Credit Score Pro Subscription Plan

Get 30 reports per month. This plan does not include:

  • Alert Emails & Monitoring
  • Dispute Resolution Status Alerts
  • 3 Month Score Trend
  • Unlimited Access to Your Report
  • Business Identity Monitoring

Experian Subscription Plans: The Business Credit Score Pro Subscription Plan (Enhanced Version)

Experian also offers an enhanced version of this plan. Get more info, including:

  • Trade payment detail
  • UCC detail
  • Inquiry detail

Currently costs $1,495 per year.

Experian Reports: The Profile Plus Report

Get everything in the Business Credit Score Pro Subscription Plan. Plus (optional with the more expensive report):

  • Trade Payment Detail
  • Inquiry Detail
  • UCC Detail
  • Corporate Financial Information

Experian Reports: The Credit Score Report

Get everything in the Business Credit Score Pro Subscription Plan, but no optional sections. This one is like a one-time version of the Business Credit Score Pro Subscription Plan. You can use it to decide if you want to subscribe to the more expensive plan.

Equifax Business Credit Monitoring

These prices are current to September 2021. These reports include credit summary, and payment trends and public records. So the idea is to help you identify potential risk of late payments and business failure. Order a single Business Credit Report for $99.95. Or order a Business Credit Report multipack (5 for the price of 4) for $399.95.

Tips for Maintaining Good Credit after Your 2021 Credit Review

Pay your bills on time! It’s the most effective and fastest way to raise and maintain good business credit scores. You should also dispute any material inaccuracies in your reports. Inaccuracies are material (important) if they’re dragging down your scores.

Disputing Issues with Your Reports

The business CRAs will not change your scores without proof. They are starting to accept more online disputes. Include proofs of payment with it. These are documents like receipts and cancelled checks. Be specific about the concerns with your report.

#1 Way a 2021 Credit Review Can Benefit Small Businesses: Monitor Business Credit at D&B, Experian, and Equifax for Less

But all these reports are expensive! You could spend HUNDREDS of dollars trying to keep up with reports from all three of the big business CRAs. But… Did YOU know you can get business credit monitoring for all 3 big business CRAs in one place—for less? Credit Suite offers monitoring through its Business Finance Suite (through Nav). See what credit issuers and lenders see. So you can improve your scores and get the business credit and funding you need.

Your 2021 Credit Review: Takeaways

So there are many reasons to review your business credit reports and understand them.

Business CRAs D&B, Experian, and Equifax all provide reports on businesses like yours. They tend to tap similar info and draw somewhat similar conclusions. Paying on time will help your scores more than anything else. And monitoring your reports will help you find errors fast, before they can do a lot of damage. Monitor with Credit Suite for a lot less than if you monitored your reports and scores at each business CRA.

What’s YOUR business’s biggest benefit from doing a 2021 credit review?

The post 5 Ways Small Businesses Can Benefit from a 2021 Credit Review appeared first on Credit Suite.

When Large Loans for Business Are Right for Small Business Owners

Will Large Loans for Business Work for Your Business?

For business owners looking to scale, the old adage often rings true: “It takes money to make money.” You need funding to hire team members, manufacture products, buy equipment and cover marketing or administrative costs. All that adds up fast, leaving business owners on the hunt for financing. But when it comes to determining the size and kind of loan that is right for your business, you need to weigh long-term impact with short-term rewards. You need to determine if large loans for business will work for you.

Large loans for business loans tend to be $500,000 or more.  They may be a good option for entrepreneurs who need revenue but want to maintain ownership of their small business.

According to Matt Schulz, chief credit analyst at LendingTree, “Finding investors or partners can work, too. However, those partnerships can come with a lot of baggage.” He adds, “For those who are interested in maintaining control over their business, a business loan might be preferable to adding more cooks in the kitchen.”

Here’s when to consider a large business loan for your small business and what you need to know before taking out the loan.

Consider taking out large loans for business when…

You need to buy new equipment

Whether you’re upgrading existing equipment or buying new tools, using large business loans to fund the initial purchase can be a good option, if you know the risks.

“It’s important to understand that large business loans often require collateral,” Schulz explains. “If you’re using the loan to buy new equipment, the equipment may be the collateral for that loan.”

That means you may have to surrender your new tools if you can’t pay the bills. But using equipment as the collateral tends to be less risky than offering other parts of the business (or even personal assets) instead.

It’s time to move into a bigger space

Owning your own office has its advantages, including potential tax breaks and the ability to customize the space. But it can also come with a hefty price tag. Especially if you want to own a storefront in a popular retail space with a lot of foot traffic.

Enter commercial real estate loans. On average, this financing option covers 60% to 90% of the property’s value, up to $1 million. Since you’ll own the property, your equity will build over time. Plus you’ll have the benefit of an asset that is likely to grow in value. Like a loan for equipment, a commercial real estate loan is secured by the actual property. This means you may lose the real estate if you fall behind on your payments. But you can always consider renting the space if your own business doesn’t take off like you planned.

You want to buy an existing business

If you’re looking to buy a competitor or buy into a franchise, large loans for business can provide the capital you need to make the purchase. When it comes to how much you can qualify for, , you’ll need to provide the lender with a business valuation. Typically, the stronger the valuation, the more funding you’ll receive.

Use the loan for items secured by collateral, like office space or equipment, or for intellectual property. But a loan not secured by collateral will be harder to qualify for and have more restrictions. You may also have to lean more on your personal credit score and business cash flow to prove to the lender that you can pay them back.

Three key points to remember when you take out large loans for business

  1. Large business loans are harder to secure

Per a recent survey, business applications were up 69% in April 2021 compared to the previous year. But those new businesses will have to temper their lending expectations. Large loans for business are often reserved for businesses in operation for at least three years. Strong cash flow, profit and loss statements and credit history also play an important part in getting these loans. .

“If you’re just getting your business off the ground,” Schulz explains, “a personal loan or a small business credit card is a better choice. They may not be as sizable as your typical large business loans, but they’re available to companies that are just getting started.”

As large business loans are harder to qualify for than some other funding options, it may take more time and effort to get them.

“Larger banks may be more willing to give larger loan amounts than smaller banks,” Schulz says. “As with any loan or any type of financial transaction, shopping around is really important. That first offer that you’re given may not be the best one you can get, so take your time.”

  1. Many large loans for business require collateral

As mentioned above, large business loans are risky for lenders. To reduce that risk, lenders tend to require collateral.

You can offer equipment, invoices, office buildings and even personal assets as collateral. Lenders can legally seize these items if you fail to make timely payments. It’s particularly risky to offer personal assets like your house as collateral. Because if the business struggles, you could lose both the business and your home at once.

So while they’re difficult to find, not all loans will require collateral.

“You can find large business loans without collateral,” Schulz says, “but the loans might be smaller and the interest rates possibly higher.”

  1. Large business loans come with large risk

The higher the business loan, the higher the risk that comes with it. Paying back $2,000, even if it requires help from personal assets, might not break you financially. But trying to come up with $450,000 could.

Business owners should consider this with care, , especially in tumultuous economic times like what we’ve experienced in the last year following the coronavirus pandemic.

“In any economy, it is risky to take on debt,” says Shulz. “In a volatile, wildly unpredictable economy like ours today, it can be even more challenging.

“The best advice is some of the oldest: Know thyself. If you are comfortable with the risk that comes with taking on a large business loan and think that it could be an important tool to help take your business to the next level, go for it. Just be sure to shop around and know the details of the loan before you sign on the dotted line.”

Ana Gotter is a business and financial writer with years of experience creating content on topics including personal loans, financial planning, business management, and business finances.

The post When Large Loans for Business Are Right for Small Business Owners appeared first on Credit Suite.

When Large Loans for Business Are Right for Small Business Owners

Will Large Loans for Business Work for Your Business?

For business owners looking to scale, the old adage often rings true: “It takes money to make money.” You need funding to hire team members, manufacture products, buy equipment and cover marketing or administrative costs. All that adds up fast, leaving business owners on the hunt for financing. But when it comes to determining the size and kind of loan that is right for your business, you need to weigh long-term impact with short-term rewards. You need to determine if large loans for business will work for you.

Large loans for business loans tend to be $500,000 or more.  They may be a good option for entrepreneurs who need revenue but want to maintain ownership of their small business.

According to Matt Schulz, chief credit analyst at LendingTree, “Finding investors or partners can work, too. However, those partnerships can come with a lot of baggage.” He adds, “For those who are interested in maintaining control over their business, a business loan might be preferable to adding more cooks in the kitchen.”

Here’s when to consider a large business loan for your small business and what you need to know before taking out the loan.

Consider taking out large loans for business when…

You need to buy new equipment

Whether you’re upgrading existing equipment or buying new tools, using large business loans to fund the initial purchase can be a good option, if you know the risks.

“It’s important to understand that large business loans often require collateral,” Schulz explains. “If you’re using the loan to buy new equipment, the equipment may be the collateral for that loan.”

That means you may have to surrender your new tools if you can’t pay the bills. But using equipment as the collateral tends to be less risky than offering other parts of the business (or even personal assets) instead.

It’s time to move into a bigger space

Owning your own office has its advantages, including potential tax breaks and the ability to customize the space. But it can also come with a hefty price tag. Especially if you want to own a storefront in a popular retail space with a lot of foot traffic.

Enter commercial real estate loans. On average, this financing option covers 60% to 90% of the property’s value, up to $1 million. Since you’ll own the property, your equity will build over time. Plus you’ll have the benefit of an asset that is likely to grow in value. Like a loan for equipment, a commercial real estate loan is secured by the actual property. This means you may lose the real estate if you fall behind on your payments. But you can always consider renting the space if your own business doesn’t take off like you planned.

You want to buy an existing business

If you’re looking to buy a competitor or buy into a franchise, large loans for business can provide the capital you need to make the purchase. When it comes to how much you can qualify for, , you’ll need to provide the lender with a business valuation. Typically, the stronger the valuation, the more funding you’ll receive.

Use the loan for items secured by collateral, like office space or equipment, or for intellectual property. But a loan not secured by collateral will be harder to qualify for and have more restrictions. You may also have to lean more on your personal credit score and business cash flow to prove to the lender that you can pay them back.

Three key points to remember when you take out large loans for business

  1. Large business loans are harder to secure

Per a recent survey, business applications were up 69% in April 2021 compared to the previous year. But those new businesses will have to temper their lending expectations. Large loans for business are often reserved for businesses in operation for at least three years. Strong cash flow, profit and loss statements and credit history also play an important part in getting these loans. .

“If you’re just getting your business off the ground,” Schulz explains, “a personal loan or a small business credit card is a better choice. They may not be as sizable as your typical large business loans, but they’re available to companies that are just getting started.”

As large business loans are harder to qualify for than some other funding options, it may take more time and effort to get them.

“Larger banks may be more willing to give larger loan amounts than smaller banks,” Schulz says. “As with any loan or any type of financial transaction, shopping around is really important. That first offer that you’re given may not be the best one you can get, so take your time.”

  1. Many large loans for business require collateral

As mentioned above, large business loans are risky for lenders. To reduce that risk, lenders tend to require collateral.

You can offer equipment, invoices, office buildings and even personal assets as collateral. Lenders can legally seize these items if you fail to make timely payments. It’s particularly risky to offer personal assets like your house as collateral. Because if the business struggles, you could lose both the business and your home at once.

So while they’re difficult to find, not all loans will require collateral.

“You can find large business loans without collateral,” Schulz says, “but the loans might be smaller and the interest rates possibly higher.”

  1. Large business loans come with large risk

The higher the business loan, the higher the risk that comes with it. Paying back $2,000, even if it requires help from personal assets, might not break you financially. But trying to come up with $450,000 could.

Business owners should consider this with care, , especially in tumultuous economic times like what we’ve experienced in the last year following the coronavirus pandemic.

“In any economy, it is risky to take on debt,” says Shulz. “In a volatile, wildly unpredictable economy like ours today, it can be even more challenging.

“The best advice is some of the oldest: Know thyself. If you are comfortable with the risk that comes with taking on a large business loan and think that it could be an important tool to help take your business to the next level, go for it. Just be sure to shop around and know the details of the loan before you sign on the dotted line.”

Ana Gotter is a business and financial writer with years of experience creating content on topics including personal loans, financial planning, business management, and business finances.

The post When Large Loans for Business Are Right for Small Business Owners appeared first on Credit Suite.

The post When Large Loans for Business Are Right for Small Business Owners appeared first on Buy It At A Bargain – Deals And Reviews.

How to Make Small Business Saturday an Unqualified Success for Your Business

Small Business Saturday Can Be One Key to Business Success

We talk about business funding and fundability, and business credit building a lot. But they’re not just as a means to an end. We also see all three of these areas as pathways to business success. One strong pathway is higher sales. That’s where Small Business Saturday comes in.

What is Small Business Saturday?

American Express created Small Business Saturday (SBS) in 2010. It takes place right after Black Friday, the day after Thanksgiving. Black Friday is the day major retailers get ‘in the black’ when it comes to their budgets. It is also the unofficial kickoff to holiday shopping.

But Small Business Saturday is meant to be part of the ‘Shop Small’ movement. The intention is to convince consumers to do more of their holiday and other shopping at small businesses. Organizations across the country sign up to serve as Neighborhood Champions. These supporters bring their community together with events and activities on SBS and throughout the year.

Let’s look at some resources to help your business do Small Business Saturday right.

Amex Small Business Saturday Resources for Small Businesses

Amex offers customizable posters and other tools for businesses in the following industries:

  • Beauty
  • Retail
  • Dining

Plus they offer resources for businesses 100% online or catering to B2B.

There’s an Amex ‘general’ toolkit as well. It includes three printable images. There are three social media posts for Facebook, Twitter, and the like. And there’s one larger good quality poster.

Getting Ready

In 2020, Big Commerce made several predictions on how SBS would go that year. With the Delta variant surging, the 2021 holiday shopping season is looking a lot like 2020. Hence the predictions may still be valid.

SBS Prediction #1: More Online Traffic

Even without stay at home orders, consumers may voluntarily want to stay inside more. This can be out of an abundance of caution or concern for the health of loved ones. And what do they do when they’re stuck indoors? A lot of them go shopping online.

SBS Solution #1: Attract That Increased Online Traffic

Baby boomers and Gen X, in particular, love online sales. In 2020, Facebook Business found that 80% planned to Christmas shop online at least to some extent. Adobe predicted that search engines like Google would drive 46.5% of 2020’s online shopping revenue. And Adobe also said social media would drive awareness but not sales.

This means you want to amp up your holiday SEO. Invest in seasonal content. Perform keyword research on holiday phrases. And create landing pages for any holiday and seasonal offers.

SBS Prediction #2: More Sales

Last year, stimulus checks drove at least some spending. But consumers may still be keen to pamper themselves, even if they don’t have an extra few thousand or so to spend. And even if extra unemployment payments have stopped.

SBS Solution #2: Attract Those Dollars and Sales

Creating landing pages is one great way to bring customers in. You can create a landing page focusing on just, say, your newest product line. Give every bit of information you think customers would want to know. Like prices, colors, shipping costs, size choices, and more.

Use high resolution photography showing off your wares to their best advantage. Even purely service businesses can photograph their location or staff.

Customers with long lists will love what is essentially one-stop shopping. And of course you want it to be easy to add an item to their carts, and check out. Also, make it easy for customers to get in touch if they have questions.

You can also reposition your products and services around the holidays. Or create bundles of related products at various price points. Like adding grooming products to an attractive basket or tin and calling it a spa sampler. Or bundling products and services like a coupon for a percentage off a haircut with one for a free manicure and one for a free bottle of nail polish or a high-end hairbrush and calling it a day of beauty.

SBS Prediction #3: New Customers

In 2020, the supply chain was disrupted. Again, 2021 is looking a lot like 2021. As a result, consumers are checking online more than ever. They may also be more amenable to accepting second choices. Or they may be open to trying something new.

Consumers may also want to support businesses which support their values. For example, these can be Black-owned businesses, or women-owned businesses. Per Facebook Business, nearly two-thirds of consumers surveyed were open to new products during the holidays.

SBS Solution #3: Welcome Those New Customers With Open Arms

Got a new customer’s email address? Then why not send them a coupon for a certain percentage off their next purchase? And consider a single question upon checkout. Here’s one: Where did you learn about us?

But Small Business Saturday also comes with some challenges.

SBS Challenge #1: Consumer Awareness

We tend to see a lot more ads for Black Friday, or Cyber Monday, than for SBS. Will your customers forget the date?

Address SBS Challenge #1: Spread the Word

Add website banners, even months in advance. Ask your local Neighborhood Champions for support and ideas. Set up ad retargeting on social media. Consider a delivery strategy of buy online, pick up in store, to get customers in the door.

SBS Challenge #2: Customer Reluctance

How do you convince customers to shop from you and not bigger stores? How do you stand out from the competition? Smaller businesses tend to not have a lot of wiggle room to slash prices. So how do you get customers to choose you?

Address SBS Challenge #2: Personalize!

Small Business Saturday Credit SuiteYou have what the big players don’t. You can personalize, even online purchases! Stand out by treating customers like the individuals they are.

Try hosting online events, or add a personalized note to a delivery. or put customer service front and center. And consider working with other small businesses in the area. Your discounted pedicure could work perfectly with a coupon from a nearby shoe store.

Small Business Saturday: Takeaways

So, SBS is a creative way to bring in customers and help kick off the holiday season. You can make yours more successful with some digital sprucing up, and smart product and service repositioning. Partnering with another local business is another winning strategy.

The post How to Make Small Business Saturday an Unqualified Success for Your Business appeared first on Credit Suite.

Get the Best VA Small Business Loan for Your Business

Yes, You Can Get VA Small Business Loan—Here’s How

Veteran-owned businesses tend to be small, and of course they require working capital. But where can veterans get a VA small business loan?

Programs for Veterans to Get a VA Small Business Loan and More

Veterans can get a VA business loan through entities like:

  • The US government (SBA)
  • Private websites
  • Online lenders

Plus, there are programs not specifically for small business loans for veterans which they may qualify for as well.

Get a VA Small Business Loan via an SBA Veterans Advantage Guaranteed Loan

The SBA provides fee relief on small-dollar loans. This helps to reduce barriers for veteran-owned small business, so they can access capital and create jobs. The SBA uses a credit scoring model to help reduce underwriting costs and processing time for a VA SBA loan.

For loans of $150,000 or less, the upfront guaranty fee is zero. The upfront guaranty fee is also zero for SBA Express Loans. For loans not through SBA Express, the upfront guaranty fee for loans to veteran-owned small businesses for $150,001—$500,000 (inclusive) is 50% less than the upfront guaranty fee for non-veteran owned small businesses. For loans for over 12 months, the fee is 1.5% of the guaranteed part. And for loans for 12 months or less, the fee is 0.125% of the guaranteed part.

Details

For loans of $500,001—$5,000,000 (inclusive), upfront guaranty fees for 7(a) loans made to veteran-owned small businesses depend on the loan amount and the loan’s. For loans with a term of over 12 months, guaranty fees are:

  • Loans of $500,001—$700,000: 3% of the guaranteed part
  • Loans of $700,001—$5,000,000: 3.5% of the guaranteed part up to $1 M
  • Plus 3.75% of the guaranteed part over $1,000,000

For loans for 12 months or less, the guaranty fee is 0.25% of the guaranteed part.

Qualifying for SBA Veterans Advantage

A small business must be at least 51% owned and controlled by a person(s) in these groups:

  • Honorably discharged veterans
  • Active Duty Military service members eligible for the military’s Transition Assistance Program (TAP)
  • Active Reservists and/or active National Guard Members; or
  • Current spouse of any veteran, Active Duty service member, Reservist, National Guard member, or the widowed spouse of a service member who died while in service or due to a service-connected disability

FYI, if you’re looking for a Patriot Express loan, the SBA doesn’t offer those anymore.

Get a VA Small Business Loan from the Military Reservist Economic Injury Disaster Loan Program (MREIDL)

The Office of Veterans Business Development (OVBD) administers this program. Eligible small businesses can get loans up to $2 million. Pay a fixed 4% interest rate with a maximum repayment term of 30 years. The purpose of these loans is to cover operating costs a business cannot meet due to the loss of an essential employee called to active duty in the Reserves or National Guard. It comes directly from government benefits.

Or get a VA Small Business Loan from the Service-Disabled Veteran-Owned Small Business Concern Program

Government financing can also come in the form of preferences for contracting work. The federal government’s goal is to award at least 3% of all federal contracting dollars to service-disabled veteran-owned small businesses each year. To qualify, businesses must be at least 51% owned and controlled by one or more service-disabled veterans. And one or more service-disabled veterans must manage day-to-day operations and make long-term decisions. Eligible veterans must have a service-connected disability. These are some of the best business loans for disabled veterans.

SBA Microloans Can Be a Good Alternative to a VA Small Business Loan (If You Do Not Need Too Much)

Available to both veterans and non-veterans, the SBA provides microloans to small businesses that cannot typically qualify for other lending options. SBA microloans currently go up to $50,000.

Microloans often have higher interest rates of 8%—13%. Often, a microloan requires collateral and heavy paperwork, including a business plan, various tax returns and financial projections for the business. Average SBA microloan size is about $13,000.

Supplement a VA Small Business Loan with a Grant from The StreetShares Foundation

This is a 501(c)(3) nonprofit organization. Its programs provide access to capital opportunities, educational content, mentors, coaching, and networking events. Its programs serve military community entrepreneurs nationwide. Their VA small business grant program, the Veteran Small Business Award, provides financial support to help veterans start or grow small businesses.

The StreetShares Veteran Small Business Award

Apply via video pitch. Tell the Foundation about the business and its social impact on the military community. Convey, in the written application or video pitch, your strategy for resilience in response to rapid market change prompted by the pandemic crisis.

They also evaluate your nonprofit or business entity on its positive social, community, educational, military-transition, veterans’ employment, health & wellness, or veterans’ mental health/spiritual impact, on the American military and veteran community. This is in addition to or in conjunction with business or nonprofit functions. Awards run $4,000—$15,000.

The StreetShares Foundation Military Entrepreneur Challenge

Qualified applicants submit their pitch on video. 8—15 finalists are chosen, then voted on, at the Foundation website. Awards are as follows:

  • $15,000 for first place
  • $4,000 for second place
  • $2,500 for third place

Qualifying for The StreetShares Foundation Military Entrepreneur Challenge

Applicant must be a veteran, reserve or transitioning active duty member of the US Armed Forces. Or they can be a spouse of a military member or the child or immediately family member of a Military Member who died on active duty. Applicants must own at least 51% of the business entity described in the application. Grant funding is for veterans and military spouses who are low-income or otherwise lack financial means and have a goal to start or grow an early-stage business or nonprofit.

So FYI, the USAA small business loan program with Street Shares has ended.

Get Work Vessels for Vets and Use a VA Small Business Loan for Other Expenses

This charity offers grants to veteran-owned small businesses. Their purpose is to help returning vets transition from military service to the civilian workforce. The program provides new or used equipment (adapted to accommodate injuries if needed) to returning veterans  starting a non-farming business. So this equipment has been everything from laptop computers to commercial fishing boats.

More Programs

They also have a program for vets starting farms or ranches, and a program for nonprofits serving veterans. Still, they give preference to post-9/11 returning combat veterans. To qualify, you must provide a business plan.

Average vessel value runs about $5,000—$6,000. But the charity defines ‘vessel’ as anything a vet would need to do business, like tools or farm fencing.  Charity Navigator gives them a failing score, but that may be more due to a lack of information versus anything nefarious.

Hivers and Strivers

Hivers and Strivers is an Angel Investment Group. They focus on early-stage investments to support start-up companies founded and run by graduates of US Military Academies. Also, they typically invest $250,000—$1 M in a single funding round and provide active involvement.

Hivers and Strivers involvement includes serving as board members and advisors and providing counsel and offering expertise. Venture Capital for Veterans will soon take over funding. Because they are affiliated with Hivers and Strivers.

Veteran Ventures Capital

This is an investment group. Any veteran-owned businesses can apply for funding. They also offer a full range of consulting services to ensure business success. As a Service-Disabled Veteran Owned Small Business, they also have ties to government contracting to aid veteran entrepreneurs in expanding their opportunities to work with federal agencies.

Through their government solutions branch, they offer help with budgeting and professional staffing, along with product procurement, and getting government contracts.

Veterans Business Fund

VBF is a not-for profit organization, established to aid veterans by providing supplemental capital required to satisfy the equity requirements for a small business loan. The VBF provides capital in the form of a non-interest bearing loan with very favorable repayment terms. Currently, the VBF is not taking applications, while they go through a fundraising round.

More Funding Choices

So there’s more out there than veteran business loans and grants. Veterans and non-veterans alike may qualify for:

  • Merchant cash advances (if their business has incoming revenues)
  • Crowdfunding is an option for all, but conventional businesses tend to not do so well
  • Veteran and non-veteran business owners can also sell equity in their business to angel investors for funding

Yet more options include collateral-based funding, business credit, and our credit line hybrid. Our credit line hybrid is a form of unsecured funding—good for both veterans and non-veterans. Get business funding without having to supply bank statements or credit stubs.

Getting a VA Small Business Loan: Takeaways

VA loans and other financing are out there. And you can get grants or even venture capital investment in your business. There are also nonprofits which give money to veteran-owned businesses. But never forget about the SBA and their programs, and programs not specific to veterans, like our credit line hybrid.

The post Get the Best VA Small Business Loan for Your Business appeared first on Credit Suite.

How Do Government Contracts for Small Business Work?

Get Government Contracts for Small Business

Are you looking for government contracts for small business? The federal government can be a terrific place to get clients. But there are many details to learn! The Small Business Administration has got you covered.

Government Contracting

The government is a huge consumer of goods and services. So any US business should be trying to get a supply contract with them. Unlike other customers, the government will be a consumer for as long as the United States exists. The SBA Contracting Guide helps small businesses navigate the details.

SBA Contracting Guide

The SBA has a role in government contracting. They work with federal agencies and offer what are essentially SBA contracting assistance programs. The idea is to award 23% of prime government contract dollars to eligible small businesses. It also offers counseling and help to small business contractors.

Government contracts are a tremendous financial opportunity for small businesses. Per the SBA Contracting Guide, the US government buys all types of products and services. And the law requires it to consider buying from small businesses.

The government wants to buy from small businesses for several reasons, including:

  • They want to ensure that large businesses don’t muscle out small businesses
  • To gain access to the new ideas that small businesses provide
  • To support small businesses as engines of economic development and job creation
  • And to offer opportunities to disadvantaged socio-economic groups

How Do Government Contracts Work?

  • Requesting proposals, evaluating bids, and awarding contracts should be on a level playing field
  • The government should consider a bid from any qualified business
  • With set-aside and sole-source contracts, federal agencies must publicly list their contract opportunities
  • Some of these contracts are set aside only for small businesses

At times, set-aside contracts might make up certain types of tasks on larger contracts. In others, entire contracts may be reserved for small businesses. When a contract is set aside for one specific small business,  it’s called a sole-source contract.

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

Does Your Business Have What it Takes to Get Government Contracts for Small Business?

Start with market research. To bid on and win government contracts, you must sell products or services the government buys. And you must do so at a competitive price. Check to see if there’s a market for your product or service. The SBA can help you to determine how big the market is, and find potential buyers.

The Federal Procurement Data System

Move onto the Federal Procurement Data System. This system is the repository of all federal contracting data for contracts over $25,000. With this system, you can see which agencies have contracts and with whom. Find out what agencies buy, and learn which contractors have contracts.

USSpending.gov

Take a look at USASpending.gov. USASpending.gov tracks government spending through the contracts it awards. This searchable database contains information for each federal contract. Use this information to help identify government purchasing trends.

Agency Recurring Procurement Forecasts

Federal agency procurement forecasts can be very helpful. Each government agency releases a procurement forecast. It includes contracting opportunities for small businesses. Review Agency Recurring Procurement Forecasts. Find out if there are agencies that are buying what you sell.

Procurement forecasts can get granular. You can look up procurement for (for example) the Department of Veterans Affairs. And then break it down by location. And then see budgeted amounts for everything from asbestos abatement to buying stretchers.

What Makes a Successful Contractor?

The government prefers to work with established, reliable businesses. This means it’s likely that startups need not apply. Do you have a track record of delivering quality goods and services on time and within budget? Is your reputation within your industry strong?

Downsides of Trying to Get Government Contracts for Small Business

It take a long time to win your first government contract. And it can also take a significant amount of money. Some businesses spend between $80,000 and $130,000 to earn their first contract! Also, it could take up to two years to start making a return on your investment. So you must have enough cash flow to sustain your business. Government Contracts for Small Business Credit Suite

Keep a diverse list of private-sector clients. This can help offset any potential initial losses. Being e-commerce savvy is also very important in government contracting. For example, to work with the Department of Defense, you must be able to invoice and receive payments electronically.

The SBA Offers Counseling to Small Businesses

One form of this help comes from a government contracts website called Procurement Center Representatives. Procurement Center Representatives (PCRs) help small businesses win federal contracts. PCRs view many federal acquisition and procurement strategies before they’re announced. This way, they can influence opportunities that should be set aside for small businesses. PCRs also conduct market research and help small businesses with payment issues. They also provide counseling on the contracting process.

Subcontracting Program Assistance (SPA)

The SPA can help you with subcontracting questions after the awarding of a contract. SPA can help you with tools to match prime contractors and subcontractors. And it can help small businesses market their services to prime contractors. You will have to reach them by email.

SBA Learning Center

You can also check out the SBA Learning Center. The SBA offers free online courses. These are to help small businesses understand government contracting. These are in the form of video classes.

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

Procurement Technical Assistance Centers (PTACs)

Or work with Procurement Technical Assistance Centers. PTACs help small businesses interested in government contracting. PTACs can help you determine if your business is ready for government contracting. They can help you register in the proper databases. And they can help you to find and bid on contracts.

SCORE

Another option is working with SCORE. SCORE is a nonprofit association. It has thousands of volunteer business counselors around the country. These counselors educate small business owners. SCORE provides free in-person and online counseling. They also provide educational workshops.

Small Business Development Centers

Or try the SBA’s Small Business Development Centers. Small Business Development Centers (SBDCs) offer free, one-on-one counseling and low-cost training services. Business owners can go to SBDCs for help with procurement and contracting. SBDCs will also help with market research. And they will provide 8(a) program support for minority-owned businesses

SBA Small Business Offices

Or you can turn to the SBA’s small business offices. Many federal agencies have an Office of Small and Disadvantaged Business Utilization (OSDBU). Or they may have an Office of Small Business Programs (OSBP). These offices work to identify opportunities to contract with small businesses.

OSDBUs and OSBPs

An OSDBU promotes using certain kinds of small businesses. These include disadvantaged, 8(a), women-owned, veteran-owned, service-disabled veteran-owned, and HUBZone small businesses. This is within the US Department of Commerce’s (DOC) acquisition process.

OSBPs advocate to include small businesses in the cleared industrial base. They do so through education and collaboration. They also maximize opportunity for small businesses in DCSA acquisitions. DCSA stands for Defense Counterintelligence and Security Agency.

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

Basic Requirements for Getting Government Contracts for Small Business

Before a business can engage in federal contracting, they must meet certain basic minimum requirements. Your business must have a D-U-N-S number. It also needs an NAICS code.

You must also meet size standards. Most manufacturing companies must have 500 employees or fewer. Most non-manufacturing businesses with average annual receipts under $7.5 million will qualify. You’ll need to register with SAM (the System for Award Management). SAM is a database that government agencies search to find contractors. And you must maintain compliance. The federal government’s purchasing process comes under the Federal Acquisition Regulation.

Federal Acquisition Regulations

Note: Federal Acquisition Regulations allow for some deviance from the norm. Regulations covering government contracting programs for small businesses are in 13 CFR 125. This rule defines when a business can say one or more service-disabled veterans own it. It also includes the government definition of subcontracting.

How to Win Contracts

You want to find contracts – use databases like the Dynamic Small Business Search. And you must market to the government. Some great places to find out what agencies or prime contractors need are:

  • Federal Procurement Data System
  • Office of Small and Disadvantaged Business Utilization (OSDBU) (specific to some agencies)
  • Office of Small Business Programs (OSBP) (specific to some agencies)

You also want to address any objections that may arise. A federal contracting officer may reject a business due to questions about ability to fulfill the contract. Then the SBA offers the small business a chance to apply for a Certificate of Competency. Here, you can prove your business is up to the challenge. But note: a COC is only good for one contract. So you may need to reapply in the future if you bid for another government contract in the future.

Types of Contracts

The government limits competition for certain contracts to small businesses. Those contracts are called small business set-asides. Set-asides can be competitive or sole-source. These can be some of the easiest government contracts to win.

Competitive Set-Asides

If 2+ small businesses could do the work or provide the products, the government sets aside the contract just for small businesses. Much of the time, this is automatic for government contracts under $150,000. Also, some set-asides are open only to small businesses in SBA contracting assistance programs.

Sole-Source Set-Asides

The government issues some contracts without a competitive bidding process. This often happens when only one business can fulfill the requirements of a contract. For consideration, register your business with the System for Award Management. And take part in any contracting program you may qualify for. Such as 8(a) Business Development or Women-Owned Small Business.

Government Contracts for Small Business: Takeaways

The US government is a huge consumer of goods and services. They are a client likely to be able to pay your business on time, and unlikely to go out of business in your lifetime. The SBA gives extensive guidance for getting government contracts for small business. Also, check if you or your business qualify for special programs to help you win government contracts.

The post How Do Government Contracts for Small Business Work? appeared first on Credit Suite.

11 Tax Write Offs for Small Business That May Surprise You

You have to pay your taxes. Not only is it illegal not to, but paying your personal and business taxes is a major factor in fundability. If you apply for business funding and a lender sees you have not been paying your taxes, it will likely result in denial. After all, if you can’t pay your taxes, how can they believe you will repay them?  That said, there is no reason to pay more than necessary. There are several tax write offs for small business that can help. Many of them may surprise you. 

Tax Write Offs for Small Business Can Save You Money

In truth, a tax professional is the best way to make sure you take advantage of all of the tax write-offs available. There are more than most realize. Below is a list of tax deductions for small business that can help.  Remember, this is not a complete list, and not every business will be eligible for every deduction. Always work with a tax professional to ensure your business taxes and personal taxes are filed properly. 

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

11 Tax Write Offs for Small Business

Check out this list of tax write offs for small business, and ask your tax professional if any of them are an option for you.

#1: Simplified Home Office Deduction

When it comes to business tax write offs, this one is pretty popular. Most everyone knows there is a way to deduct home office expenses on your taxes. If you work from your home, you can deduct the portion of that home that you use specifically for business purposes. However, you must have a dedicated office space that you only use for work.  Then, you have to determine the percentage of home expenses that are associated with the business. 

For example, if your home office space is ¼ of the total square footage of your home, you can deduct ¼ of the utilities, etc. as a business expense. As you can imagine, this calculation can get complicated and tedious quickly.  As a result, a lot of home business owners do not take this deduction. They do not feel they can properly keep up with it.  Some do not feel the deduction is worth the time it would take to keep up with all that is necessary for the calculation.

What you may not know is that there is a simplified calculation for this deduction. The simplified option is a quick and easy way to determine your home office deduction.  You just multiply the total square footage of the space you dedicate to work only by $5.  Remember, the maximum amount you can claim using this method is $1,500 

#2: Qualified Business Income Deduction (QBI)

If you own a sole proprietorship, partnership, or an S corporation, you may be eligible for a qualified business income deduction. If so, you could deduct up to 20% of your qualified business income from your tax return. 

That means if you have qualified business income of $100,000, you can deduct $20,000 and only pay taxes on $80,000. 

#3: Bonus Depreciation

Depreciation tax write offs for small business are nothing new.  Business assets like equipment are depreciated on the books over time at a set rate. That means you do not count the full cost of the item in the first year it is purchased. However, under bonus depreciation, you can deduct more than standard depreciation in the first year. 

Before 2017 the bonus depreciation amount was 50% of the cost. Then, you would depreciate the remaining 50% of the cost over the life of the asset. However, the new law says that for anything purchased between September 27,  2017 and January 1,  2023, you can deduct 100% of the cost in the first year the item is put into service. 

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

You don’t have to, but it could be advantageous to do so. Your tax professional can help you make that decision.

What types of items qualify for bonus depreciation?  Tangible assets with a useful life of 20-years or less as dictated by the IRS. 

Some items that fall into this category include: 

  • Machinery
  • Equipment
  • Computers
  • Appliances
  • And furniture

#4: Business Related Legal and Professional Fees

If you use an attorney or an accountant for business services, their fees are deductible. Did you have an accountant prepare your taxes? That’s deductible. Using an attorney to help draft employment contracts or a writer to write a business plan? That is all deductible.

#5: Dues and Memberships

Fees paid to professional organizations for membership are deductible.So, a pediatrician could deduct any fees paid for membership to the American Academy of Pediatrics, or an architect could join the American Design Drafting Association (ADDA).  If the business pays the fees, it is tax deductible on that business’s tax return. 

#6: Interest on a Business Loan

Did you know you can deduct the interest you pay on a business loan? If you meet a few qualifications that is. 

Qualifications include: 

  • Funds come from an actual lender, not family or friends
  • You are liable for the debt, legally
  • Both you and the lender intend for the debt to be repaid

It’s also important to note that you have to actually spend the loan funds. You can’t just put them in an account and make payments. That’s considered an investment by the IRS, and therefore does not qualify as one of the tax write offs for small business. 

#7: Bank Charges

Pay attention to your bank and credit card statements. All those little charges and fees are tax deductible. It may not seem like much, but they can add up. Especially when you consider all of the charges this can ecompass. 

Costs such as: 

  • Cash deposit fees
  • Merchant service fees
  • Late fees
  • Online banking fees
  • And even credit card convenience fees

These all count, so keep up with them.

#8: Continuing Education Expenses

As a business owner, you can pay for continuing education for your employee and yourself, and it could be tax deductible.  The IRS says if the cost is related to training that maintains or improves skills required for the job, it is  deductible. The deduction includes a number of education related expenses. 

For example: 

  • Course fees and tuition
  • Books
  • Supplies
  • Lab fees
  • And other similar items

#9: Business Animals

Animals that are used in the course of business are tax deductible. That means both the cost of the animal itself and the care and feeding of it. Of course, you can’t just buy a dog or cat and call it a business animal. However, if you have a dog and you use it as a guard dog in your business, some of those expenses could be tax deductible. 

One fun example is a junkyard owner who bought cats to help with rats. The IRS ruled it was a legitimate business expense and therefore, deductible. 

If you are an animal breeder,  you can also deduct costs related to animals for breeding. 

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

#10: Website and Other Internet Related Expenses

The costs associated with maintaining a website can be tax deductible.  This may include hosting fees, design costs, and a number of other related expenses.

#11: Magazine Subscriptions

You can deduct the costs of some subscriptions, including those for professional journals, trade publications, and even technical journals. It’s important to note that you cannot deduct the cost of magazines for a waiting room. 

Don’t Do It On Your Own

Want to know the number one sure fire way to pay more than you need to in business taxes?  Try to do them yourself. Don’t do that. Hire a professional. After all, the fees are tax deductible. Then, you can know you are getting all the tax deductions for small business you are eligible for. Don’t let not paying taxes negatively affect business fundability. Want to know more about fundability and what may be affecting yours? Try a free consultation with one of our business credit specialists now. 

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