Placing Your Money Where Your Small Business Mouth Is With Secured Lending Protected financing is almost take the chance of totally free financing and also a lot the chosen kind of finance for the banks or home mortgage business. For many personal people, the most significant car loan they will certainly obtain is their residence …
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Placing Your Money Where Your Small Business Mouth Is With Secured Lending
Placing Your Money Where Your Small Business Mouth Is With Secured Lending
Protected financing is almost take the chance of totally free financing and also a lot the chosen kind of finance for the banks or home mortgage business. For many personal people, the most significant car loan they will certainly obtain is their residence mortgage as well as for that protected borrowing they utilize their residence as security.
Security is specified as the possession or property that you promise to acquire debt, such as a little or individual service finance. Not just your residence, however your cars and truck, your service devices, a villa, a watercraft or various other building can be utilized as security when you require safe loaning.
The main benefit of these protected fundings, rather than unsafe car loans (additionally called very first cost fundings in the UK, or trademark lendings) are that the rates of interest for them are reduced.
For those that want beginning a local business, nonetheless, protected borrowing could be difficult or tough. A lot of local business individuals, particularly the expanding variety of netpreneurs and also business owners that are beginning a service out of their house, they just do not have the security to obtain that guaranteed borrowing cash.
Their residence might currently be mortgaged, they may be occupants or they might not have adequate equity in their houses. For these start-up service hopefuls protected providing hopes need to be changed by the fact of equity funding.
When we discuss equity funding, in contrast to guaranteed loaning from the typical banks, we’re speaking about cash that originates from the local business proprietors’ personal funds or from various other private or firm capitalists.
A firm that goes public and also obtains a mixture of cash via the sale of supply is getting equity funding. Investor or angel business are normal equity financers for tiny launch companies.
A business owner that moneys in her 401(k) to acquire a brand-new service computer system as well as printer, that invests his inheritance on making setting up components, that utilizes his financial savings to get small company tools, or offers his classic automobile collection to rent a store front area, are all utilizing equity funding to money their organisation.
Normally, regarding feasible, equity funding is the liked for a local business launch fund. It is much better to go this path than to start with safe borrowing alternatives that leave you in the red straight off.
The various other vital consider utilizing your very own cash to launch your very own firm is that anybody else or any kind of various other company taking into consideration buying you will certainly intend to see that you are greatly bought a functional in addition to psychological means. Absolutely nothing reveals this greater than wagering your very own life cost savings on your brand-new endeavor.
Also when you search for safe financing sources quickly after or further down the local business roadway any type of loan provider will certainly wish to see that someplace in between one 4th and also one fifty percent of the monetary launch for your firm originated from your very own funds.
That informs them not just that you are really dedicated yet that you believed this with as well as ready well beforehand. If you’re not going to think much of the danger, why, claim these investor, angel capitalists and also banks, should we?
The post Placing Your Money Where Your Small Business Mouth Is With Secured Lending appeared first on ROI Credit Builders.
Placing Your Money Where Your Small Business Mouth Is With Secured Lending
Placing Your Money Where Your Small Business Mouth Is With Secured Lending
Protected financing is almost take the chance of totally free financing and also a lot the chosen kind of finance for the banks or home mortgage business. For many personal people, the most significant car loan they will certainly obtain is their residence mortgage as well as for that protected borrowing they utilize their residence as security.
Security is specified as the possession or property that you promise to acquire debt, such as a little or individual service finance. Not just your residence, however your cars and truck, your service devices, a villa, a watercraft or various other building can be utilized as security when you require safe loaning.
The main benefit of these protected fundings, rather than unsafe car loans (additionally called very first cost fundings in the UK, or trademark lendings) are that the rates of interest for them are reduced.
For those that want beginning a local business, nonetheless, protected borrowing could be difficult or tough. A lot of local business individuals, particularly the expanding variety of netpreneurs and also business owners that are beginning a service out of their house, they just do not have the security to obtain that guaranteed borrowing cash.
Their residence might currently be mortgaged, they may be occupants or they might not have adequate equity in their houses. For these start-up service hopefuls protected providing hopes need to be changed by the fact of equity funding.
When we discuss equity funding, in contrast to guaranteed loaning from the typical banks, we’re speaking about cash that originates from the local business proprietors’ personal funds or from various other private or firm capitalists.
A firm that goes public and also obtains a mixture of cash via the sale of supply is getting equity funding. Investor or angel business are normal equity financers for tiny launch companies.
A business owner that moneys in her 401(k) to acquire a brand-new service computer system as well as printer, that invests his inheritance on making setting up components, that utilizes his financial savings to get small company tools, or offers his classic automobile collection to rent a store front area, are all utilizing equity funding to money their organisation.
Normally, regarding feasible, equity funding is the liked for a local business launch fund. It is much better to go this path than to start with safe borrowing alternatives that leave you in the red straight off.
The various other vital consider utilizing your very own cash to launch your very own firm is that anybody else or any kind of various other company taking into consideration buying you will certainly intend to see that you are greatly bought a functional in addition to psychological means. Absolutely nothing reveals this greater than wagering your very own life cost savings on your brand-new endeavor.
Also when you search for safe financing sources quickly after or further down the local business roadway any type of loan provider will certainly wish to see that someplace in between one 4th and also one fifty percent of the monetary launch for your firm originated from your very own funds.
That informs them not just that you are really dedicated yet that you believed this with as well as ready well beforehand. If you’re not going to think much of the danger, why, claim these investor, angel capitalists and also banks, should we?
The post Placing Your Money Where Your Small Business Mouth Is With Secured Lending appeared first on ROI Credit Builders.
How to Find Small Business Loans for Women
Female business owners can find small business loans for women to help fund their business. That’s not their only option though. The key, I think, lies with the terminology. The truth is, there are some funding options that are geared specifically toward women. However, they are few and far between, and they aren’t really loans. While some female geared organizations offer funding options for women only, they are typically in the form of grants.
During the COVID-19 situation, there are still loans out there which are specifically for women. But women entrepreneurs should also be looking into SBA Paycheck Protection Program funding.
Is There a Secret Sauce to Finding Small Business Loans for Women?
It isn’t a bad idea to pursue these options. Yet, that can’t be where it ends. Honestly, you cannot rely solely on specific small business loans for women. In fact, what you are really looking for are loans available to everyone that may work better for women than others. Regardless, you need to position your business to be fundable no matter the gender of the owner. If there is a secret sauce, fundability is it.
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Small Business Loans for Women: The Small Business Administration
When it comes to small business loans for women, the Small Business Administration is the cornerstone. Basically, since the loans are guaranteed by the government, they are easier for almost anyone to qualify for than regular traditional loans. Here’s a sample of the loan programs the SBA offers.
7(a) Loans
This is the Small Business Administration’s flagship 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.
504 Loans
These loans are also available up to $5 million and can buy machinery, facilities, or land. They are generally used for expansion. Similarly, private sector lenders or nonprofits process and disburse these funds. Furthermore, they work especially well for commercial real estate purchases.
Microloans
Microloans are available in amounts up to $50,000. They work for starting a business, purchasing equipment, buying inventory, or for working capital. For these, community based nonprofits handle funds as intermediaries.
SBA Express Loans
These loans max out at $350,000 and have a much faster turnaround. In fact, the SBA takes 36 hours or less to make a decision. Also, there is not as much application paperwork. As a result, they are a great option for working capital if you qualify.
Other SBA Resources for Women
Remember, take a minute to check out the other resources the SBA offers for female entrepreneurs. For example, the Office of Women’s Business Ownership. Their goal is to enable and empower business owners that are women via advocacy, outreach, and education as well as assistance.
Small Business Loans for Women: Private Lenders
Next, if the SBA doesn’t work out, or if you still need more funding, there are some private lenders for small business that tend to work well when it comes to loans for women in business.
Lending Club
LendingClub functions as a peer-to-peer lender. It 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 even hire new people.
Lendio
Lendio offers a loan-connection service that dramatically cuts the time it takes for small business owners to find the perfect loan. The key is, they do the legwork by vetting a network of competing small business lenders. With Lendio, funding is fast. It sometimes takes as little as 24 hours.
Blue Vine
BlueVine offers two options for small business financing. They include lines of credit and invoice factoring. Also, they offer the ability to talk with a financing advisor. Their application process takes place exclusively online. The minimum loan amount is $5,000 and the maximum is $100,000. To be eligible for financing from BlueVine, 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. In fact, their platform is vastly different. They are a kind of cross between crowdfunding and lending. Surprisingly, their loans have a 0% interest rate. That means, even though you have to pay it back, it is actually free money. In addition, there is no credit check. The only requirement is that you have to get at least 5 family members or friends to donate money for your business. Furthermore, you yourself have to give at least a $25 loan to another business on the platform.
Grameen
In contrast to most, Grameen actually does offer microloans specifically for women. The loan amounts range from $2,000 to $15,000. They also offer financial training and support.
As a bonus, they report payments to Equifax and Experian. Consequently, these loans help borrowers build credit.
Small Business Loans for Women: Other Resources that Can Help
It can be a good thing to work with these organizations when you are trying to find small business loans for women. Truly, each exists to support and aid women business owners in their small business endeavors. The tips, tricks, and support they offer can make all the difference in finding loans for women in business.
Association of Women’s Business Centers
The AWBC runs a network of business centers geared toward women. These centers work hard to help women succeed. They offer training, business development, financing, and mentoring opportunities.
National Association for Female Executives
Also known as NAFE, this organization does a lot as well. For example, they sponsor events, provide training, and extend other resources to help female business owners achieve success.
National Association of Women Business Owners
In the same way, the NAWBO works nationwide to offer training, events, and other resources to female owned businesses across the country.
SCORE
SCORE is the country’s largest network of expert business mentors that volunteer their time with more than 300 chapters and 10,000 volunteers. They connect female business owners with mentors. Alternatively, they can participate in a workshop to help them learn what they need to know to be successful.
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Small Business Loans for Women: A Better Option
The thing is, your gender should not define the funding you are eligible to get. While the nature of our society dictates this somewhat, there are things you can do to ensure your business if fundable despite your gender. Any business, woman owned or not, should be fundable to ensure the availability of funding whenever needed. So, while you are looking for small business loans for women, make sure your fundability is in order.
Start with the Foundation
Your business cannot be fundable if it is not set up properly. That includes the following.
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Don’t Use Personal Contact Information for Your Business
This includes a business phone number and fax number, business address, and email address. Not just any email address though. It needs to have the same URL as your website. More on that in a bit.
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Dump the SSN for an EIN
An EIN 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.
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Get Incorporated
Incorporating your business as an LLC, S-corp, or corporation is non-negotiable when it comes to building fundability for your business. .
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Open a Business Bank Account
Open a separate, dedicated business bank account.
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Licenses
Do the research you need to do to ensure you have all of the licenses necessary to legitimately run your business at the federal, state, and local levels.
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Website
Spend the time and money necessary to ensure your website is professionally designed and works well. Also, pay for hosting. Don’t use a free hosting service
Small Business Loans for Women: What Else Makes a Business Fundable?
The set up is not the end of the story however. It simply sets the business up to build fundability. After that is done, the actual building begins. Unfortunately, it may be more of a matter of damage control than building in the beginning, depending on history.
Business Credit Reports, Business Credit History, and Credit Score
These detail the credit history of your business. They are a tool to help lenders determine how credit worthy your business is.
The most common places for lenders to pull a business credit report from are Dun & Bradstreet, Experian, Equifax, and FICO SBSS. Since you have no way of knowing which one your lender will choose, you need to make sure all of these reports are up to date and accurate.
Lenders will be looking not only at your credit score, but your detailed credit history including:
- How many accounts are reporting payments?
- How long have you had each account?
- What type of accounts are they?
- How much credit are you using on each account versus how much is available?
- Are you making your payments on these accounts consistently on-time?
Other Business Data Agencies
There are other business data agencies that affect those reports indirectly. Two examples of this are LexisNexis and The Small Business Finance Exchange. They gather data from different sources, including public records. This means they could even have access to information relating to automobile accidents and liens.
Identification Numbers
Dun & Bradstreet is the largest and most commonly used business credit reporting agency. Every credit file in their database has a D-U-N-S number. To get a D-U-N-S number, you have to apply for one through the D&B website. You have to have this number to have a file with D&B, and you have to have a file with D&B to build business credit.
Business Information
This is a problem because of those fraud concerns lenders have. When business information doesn’t match up, it sets off alarms. Maybe your business licenses have your personal address but now you have a business address. You have to change it. Perhaps some of your credit accounts have a slightly different name or a different phone number listed than what is on your loan application. Do your insurances all have the same information?
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Financial Statements
Both your personal and business tax returns need to be in order. Not only that, but you need to be paying your taxes, both business and personal.
Bureaus
There are several other agencies that hold information related to your personal finances that you need to know about. For example, ChexSystems issues reports with information on bad checks. These reports can affect your bank score. If you have too many bad checks, you will not be able to open a bank account. That will seriously affect fundability.
Anything can come back to haunt you. Have you ever been convicted of a crime? Do you have a bankruptcy or short sell on your record? How about liens or UCC filings? All of this can and will affect the fundability of your business.
Personal Credit History
Your personal credit score from Experian, Equifax, and Transunion affect the fundability of your business. The number one way to get a strong personal credit score or improve a weak one is to make payments consistently on time.
The Application Process
Everything about this affects whether or not you can get funding for your business. Is your application complete and accurate? Are you applying for a loan product that fits your needs? Is the timing right? Did you find a good lender match?
There is More to Funding than Finding Small Business Loans for Women
There is certainly nothing wrong with female business owners seeking small business loans for women. They are a great first stop. In fact, now is a great time to borrow with the Fed cutting rates due to the coronavirus economic downturn. Still, no one should let their funding hinge on their gender. If you work to build fundability for your business, whether you can get funding for your business will never be a question again.
In fact, when you need funding and you have strong fundability, lenders will be competing to give you money. With a deep understanding of what makes your business fundable, you will find you can get more funds with lower interest rates. Gender has nothing to do with fundability, so don’t let it dictate the future of your business. Use gender specific financing to get started if you need to, but focus on total fundability to ensure ongoing business growth.
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Small Business Crowdfunding: Is it For You?
Small business crowdfunding is just one of many funding options. How do you know which one is best for you? Crowdfunding is an innovative way for a business to get funding. Honestly, it seems to be perfect. Except, it doesn’t work for everyone
Small Business Crowdfunding is Not for Everyone
The problem is, a huge number of crowdfunding campaigns are not successful. That doesn’t mean you won’t see success, but crowdfunding for startups really isn’t for everyone. It works much better for some types of businesses than others.
In addition, how you run your campaign makes a huge difference in your success. We have the secrets to both successful campaigns and which businesses do best with small business crowdfunding.
Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.
What is Small Business Crowdfunding
Crowdfunding sites let you get the word out about your business to thousands of micro investors at once. Anyone interested can invest as much or as little as they want.
They can pledge a wide range of amounts depending on the campaign and the platform in use. They may give anywhere from $50 to $500. Heck, pledges can even go as low as $5.
Most offer rewards to investors for their giving. Usually, this is the product the business will be selling. However, often different levels of giving result in different rewards. For example, a $5 gift may get you a thank you note, and a $100 gift will get you an early release of the product.
What Types of Businesses Do Best with Small Business Crowdfunding?
Any business can give crowdfunding a shot, and success is always possible. However, historically these types of businesses have done best.
New Local Services
This one was surprising to me personally, but it makes sense. If you want to open a local business, especially in an area where there is a direct need, it could do well with small business crowdfunding for startups. It may depend on your platform, more on that later. For now, Local Lift is designed specifically for local businesses to request funding, gauge interest, and even build a customer base before opening.
New High-Tech Gadgets
This doesn’t mean just a new take on what is already out there. Rather, this is something that is completely unique. That is what is going to get the most support. Also, it needs to have a working prototype and there needs to be research behind it.
Unique Inventions for the Home
This category gets a ton of support, especially for items that solve everyday problems. For example, the fly killing salt shotgun and the wet diaper sensor have done really well!
New Tools for Cooking at Home
Think things that will let you do something at home that you normally can’t, like carbonate your own soda, or something that lets your cook things faster, or easier. Items that serve multiple purposes are another option. Maybe an easy way to make sushi at home? New kitchen tools for the home are often a big hit.
Small Business Crowdfunding Platforms
Suppose you have one of these highly successful ideas, or even if you do not and you want to give small business crowdfunding a shot anyway, you need to find the right platform. Now more than ever, with the economic downturn due to coronavirus, you have to choose your platform carefully. Here are a few to start with.
Kickckstarter
With over 14 million backers, Kickstarter is one of the largest crowdfunding platforms in the world. They boast over 130,000 funded projects. These include products and services related to:
- Publishing
- The arts and film
- Comics and illustration
- Design and tech
Kickstarter requires you to have a prototype. In addition, projects cannot be for charity. However, nonprofits can use Kickstarter. Also, you are not allowed to offer equity in a company as a perk.
Other banned projects and perks include anything to do with:
- Contests and raffles
- Cures and medicines
- Credit services
- Live animals
- Alcohol
- Weapons
Creators collect a 5% fee on all funds. They also use a payment processor, Stripe, that applies payment processing fees (roughly 3-5%). Unsuccessful campaigns do not pay a fee. There are also fees of 3% + $0.20 per pledge. Pledges under $10 have to pay a discounted micro pledge fee of 5% + $0.05 per pledge.
Indiegogo
Indiegogo has over 9 million investors. They do not allow campaign goals below $500. Also, they charge 5% platform fees and 3% + 30¢ third-party credit card fees. Note that fees are deducted from the amount raised, not the goal. As a result, if you raise more than your goal, you will pay more in fees. They do not accept PayPal.
Indiegogo is noteworthy because they offer flexible financing in addition to fixed financing options. So, if you do not make your goal and you chose flexible funding, you can at least hold onto what you collected. This is the opposite of how crowdfunding normally works.
RocketHub
RocketHub is better suited for those who need venture capital. They give you an ELEQUITY Funding Room. There, you can pitch your idea and see if it stimulates any interest from donors.
This platform is specifically for business owners working on projects related to:
- Art
- Business
- Science
- Social
If you achieve your fundraising goal, you will pay a fee of 4%. In addition, you’ll pay a 4% credit card handling fee. But if you do not reach your goal, then that fee jumps up to 8% plus the credit card handling fee. That means RocketHub is best for companies that are more confident they will make their goals.
Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.
CircleUp
CircleUp aims to help up and coming brands and companies raise capital for growth projects. However, companies must apply and show revenue of at least $1 million to get a listing on the site. That said, the platform will sometimes make exceptions.
CircleUp can be good for those who already have a somewhat established business. That includes business owners who want both funding and guidance in order to take their businesses to the next level.
If your business gets approval for listing on CircleUp, the fee percentage comes from the total amount you raise.
GoGetFunding
GoGetFunding has been around since 2011. They let fundraisers keep the money they raise, regardless of whether they meet their target. If your business idea is unproven and you are unsure of whether you can meet your funding needs with a crowdfunding for business campaign, flexible funding can be a great option.
They charge a 6.9% fee. This is pretty high, but it includes both the platform fee and the payment processing fee. Therefore, it is actually more cost-effective than many other crowdfunding for business options.
Crowdfunder
With Crowdfunder, investors purchase equity in promising companies. They consider campaigns to be deals, and its donors are investors. Basic listings are $449/month. Self-start listings are $499/month. Self-start plus is $999/month. In their community, there are over 15,000 investors and 200,000 startups.
Fundable
This is a crowdfunding for business platform that allows companies to raise funds from investors, customers, and friends. They have over $80 million in funding commitments.
Fundable does allow equity campaigns. Also, they charge $179 per month to raise funds. Fees on rewards are: 3.5% + 30¢ per transaction. They do not charge success fees.
Fundly
Fundly allows for crowdfunding for creative ventures. If your business has a creative lean, this might work for you.
There is no minimum amount to fundraise or to keep money you raise. You can usually withdraw payments within 24 – 48 hours of the donation. In addition, they offer automatic transfers. It is free to create and share an online fundraising campaign.
Yet, Fundly will deduct a 4.9% fee from each donation you get. A credit card processing fee of 3% is also taken out from each donation. Also, there are nonspecific automatic discounts for larger campaigns.
Keys to a Successful Small Business Crowdfunding Campaign
There is no such thing as guaranteed success. These steps can help make sure you give yourself the best chance possible when it comes to crowdfunding for business.
Do the Research
You have to know your market and what demand looks like. The only way to find that out is to research. Figure out how much money you actually need before you set your goal. Lots of business owners have started crowdfunding campaigns only to find the demand isn’t there or their goal fell short of the actual need.
Create a Prototype
Trulty, you have to have a sample to show investors. It’s important. People are generally more likely to let go of money if they can see something tangible. This is so vital that Kickstarter actually mandates that you to have a prototype to show potential investors
Consider Your Platform
Once you know who your target audience is, you can determine if you would be best served by Kickstarter, Indiegogo, or another successful platform that is not as well known. If your audience doesn’t use the platform you are on, it won’t matter how great your idea or product is. They’ll never see it.
Give Awesome Incentives
This is huge. Don’t make promises you can’t keep, and don’t give away the company. Still, if someone one is going to help you get started, they deserve something amazing. Offer more than a thank you note. Be bold with what you offer as a reward for their support, without harming your success.
Set a Goal
Setting goals you can reach is necessary to success. Make certain you look at the numbers in relation to actual facts before you set a fundraising goal. Be certain you have production facilities on the line that can meet the timeline goals. Do not randomly set goals with no clue what it will take to reach them.
Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.
It’s All in the Marketing
You can’t just willy nilly throw a campaign together. If you create a video, it needs to be professionally edited. Any social media should be specifically targeted toward your audience. If they are a cheesy, audience, then that is how your social media and videos need to be. A more sophisticated audience will need a different feel.
Whether Small Business Crowdfunding Works for You or Not, You Need Strong Fundability
What is fundability? It’s the ability of your business to get funding. What affects the fundability of your business? How do you make your business fundable? Those are short questions with very long answers. Here’s a brief rundown.
How Do You Make Your Business Fundable?
Your business will never build fundability if you do not set it up to do so. These means:
- Having a separate phone number, address, and email address for your business. Don’t use your own.
- Incorporating as an S-corp, LLC, or corporation.
- Opening a separate, dedicated business bank account.
- Have all the licenses necessary to operate.
- Getting an EIN from the IRS.
- Getting a D-U-N-S number from Dun & Bradstreet.
- Having a professional, user friendly business website.
That’s just the setup however. This doesn’t cause your business to be fundable, it just gets it ready. If everything else is stellar and your business isn’t set up this way, it will not be fundable.
What Affects the Fundability of Your Business?
This list is much more complicated. All of these things fit together like the pieces of a very strange puzzle. Some of it has to do with the past, some the future, and some deal with what is happening right now. For example, some things related to you personally, such as liens, traffic tickets, and person credit can actually affect the fundability of your business.
That said, if you flood the agencies that report this information with enough positive information, the older information will not matter as much. At the same time, you have to work to actively build business credit, which is a whole other animal. It affects fundability in a huge way, but contrary to personal credit, it doesn’t build on its own.
Is Small Business Crowdfunding for You?
It might be. If you fit into one of those categories known to be the most successful, give it a shot. Even if you don’t, there’s nothing that says you can’t try. Either way, be sure to follow our tips for a successful campaign, and work on fundability at the same time. In the future, you will most definitely need it.
The post Small Business Crowdfunding: Is it For You? appeared first on Credit Suite.
How to Get a Small Business Loan
If you are wondering how to get a small business loan, you may be thinking in terms of credit score. Of course, both your personal and business credit score make a huge difference in approval chances. That isn’t all there is to it however. Here is everything you need to know about how to get a small business loan.
How to Get a Small Business Loans: What You May Not Know
Did you know that how your business is set up, how you present your business to the lender, and even which type of lender and loan you are applying for can all affect your approval chances? These are the things no one really tells you. They do matter however, and lenders definitely take these things seriously.
How to Get a Small Business Loan: Fundable Foundation
First, it is almost guaranteed you are going to have to have a personal guarantee for a business loan. There are exceptions to this, but in general you can expect that your personal credit will come into play. However, this doesn’t mean that bad personal credit will keep you from funding your business. The first key to how to get a small business loan is to work on overall fundability. If your business as a whole is fundable, your personal credit will not have as much of an impact. The first step in that process, is to set up your business properly.
Find out why so many companies use our proven methods to get business loans.
How to Set Up Your Business to be Fundable
Here is what you need to do to set up your business to be as fundable as possible. The goal is to ensure your business is separated from yourself as the owner for credit purposes. This step is also important to solidifying your business as one that is legitimate and viable in the eyes of lenders.
Separate Contact Information
You can get a business phone number and fax number pretty easily that will work over the internet instead of phone lines. In addition, the phone number will forward to any phone you want it to so you can simply use your personal cell phone or landline. No need for a new phone! Whenever someone calls your business number it will ring straight to you.
Faxes can be sent to an online fax service, if anyone ever happens to actually fax you. This part may seem outdated, but it does help your business appear legitimate to lenders.
You can use a virtual office for a business address. What is that? It’s not what you may think. A virtual office is a business that offers a physical address for a fee, and sometimes they even offer mail service and live receptionist services. In addition, there are some that offer meeting spaces for those times you may need to meet a client or customer in person.
Get an 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. Some business owners used their SSN for their business. This is what a lot of sole proprietorships and partnerships do. However, it really doesn’t look professional to lenders, and it can cause your personal and business credit to get all mixed up. When you are looking to increase fundability, you need to apply for and use an EIN. You can get one for free from the IRS.
You Have to Incorporate
Incorporating your business as an LLC, S-corp, or corporation is vital to fundability. It lends to the appearance that your business is legitimate. It also offers some protection from liability.
When you incorporate, you become a new entity. You basically have to start over. You’ll also lose any positive payment history you may have accumulated as well.
This is why you have to incorporate as soon as possible. Not only is it necessary for fundability and for building business credit, but so is time in business. The longer you have been in business the more fundable you appear to be. Time in business starts on the date of incorporation, regardless of when you actually began doing business.
Separate, Dedicated Business Bank Account
You have to open a separate, dedicated business bank account. There are a few reasons for this. The main one for this purpose is, it further separates your business from you as the owner.
Get All Necessary 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 on all levels.
Professional Business Website
Spend the time and money necessary to ensure your website is professionally designed and works well. Don’t use a free hosting service, and make sure your business has a dedicated business email address. Furthermore, it needs to have the same URL as your website. Don’t use a free service such as Yahoo or Gmail.
How to Get a Small Business Loan: Business Plan
The next step in how to get a small business loan is the business plan. You have to sell your business to lenders as one that will be a good investment. Honestly, it’s best to hire professional writers and researchers to help you put this together, but if you cannot, there are plenty of free resources online that can help. This includes templates. Generally, a well put together business plan should include the following.
- An Executive Summary
- Description
- Strategies
- Market Analysis
- Analysis of audience
- Competitive Analysis
- Plan for Design and Development
- Plan for Operation and Management
- Financials
- Financial Information
Find out why so many companies use our proven methods to get business loans.
How to Get a Small Business Loan: Research Lenders
The next step in how to get a small business loan is to choose the right type of lender for your needs. This will take research. There are generally three types of lenders. There are traditional lenders, SBA lenders, and private lenders.
Traditional Lenders
These are your standard financial institutions. They include large banks, smaller community banks, and credit unions.
SBA Lenders
For the most part, these are traditional lenders and sometimes non profits that lend funds with a federal guarantee through the Small Business Administration.
Private Lenders
These are lenders other than traditional banks and credit unions that offer terms loans. Usually they operate online. Occasionally they will have a brick and mortar location as well. The difference between these and traditional lenders is that the loans have looser approval requirements and a much faster application process. Most often you can simply apply online, get approval in as little as 24 hours, and the funds are in your account within 24 to 48 hours after approval. They are an option if your personal credit is okay and you need funding fast.
Many of these have popped up in the past decade as more and more people are branching out to start their own business. The need for a financing option from something other than traditional banks has encouraged this growth.
There are some benefits to using private business loans over traditional loans. The first is that they often have more flexible credit score minimums. Even though they still rely on your personal credit, they will often accept a score much lower than what traditional lenders require. Another benefit is that they will often report to the business credit reporting agencies, which helps build or improve business credit.
The tradeoff is that private business loans often have higher interest rates and less favorable terms. In the end though, the ability to get funding and the potential increase in business credit score can make it well worth it.
Find out why so many companies use our proven methods to get business loans.
How to Get a Small Business Loan: Research Types of Loans
Not only can you choose your lender type, but you can also choose your loan type. This is the next part of the process in how to get a small business loan. Choosing the right type of loan both for what you need, and for what you qualify to get, can make all the difference.
Traditional Term Loans
These are the loans that you go to the bank to get. As a business, your business credit score can help you get some types of funding even if your personal score isn’t awesome. That isn’t necessarily the case with this type of funding however.
With a traditional lender term loan, you are almost always going to have to give a personal guarantee. This means they will check your personal credit. If your personal credit score isn’t in order, you will likely not get approval.
What kind of personal credit score do you need to have in order to qualify for a traditional term loan? If you have at least a 750 you are in pretty good shape. Sometimes you can get approval with a score of 700+, but the terms will not be as favorable.
If you have really great business credit, your lender might be more inclined to be a little more flexible. However, your personal credit score will still weigh heavily on the terms and interest rate.
Of all of the different loan types, this is the hardest to get. It is usually worth the trouble though if possible, because these generally have the best rates and terms.
SBA Loans
These are traditional bank loans, but they have a guarantee from the federal government. The Small Business Administration, or SBA, works with lenders to offer small businesses funding solutions that they may not be able to get based on their own credit history. Because of the government guarantee, lenders are able to relax a little on the personal credit score requirements.
In fact, it is possible to get an SBA microloan with a personal credit score between 620 and 640. These are very small loans, up to $50,000. They may require personal collateral as well.
The trade-off with SBA loans is that the application progress is lengthy. There is a ton of red tape connected with these types of loans.
Business Line of Credit
This is basically the traditional lender’s version of a business credit card. It’s revolving credit, meaning you only pay back what you use, just like a credit card. However, rates are typically much better than a credit card. The application and approval process is more similar to that of a traditional term loan.
If you need revolving credit and can qualify for a term loan, this is the best of the available business funding types for you. It is great for bridging cash gaps and covering short term expenses without the high credit card interest rates.
There are no cash back rewards or loyalty points, though. This makes some business owners prefer business credit cards in some cases, despite higher interest rates.
Invoice Factoring
If you are an established business with accounts receivable, invoice factoring is one of the available business funding types that you have access to. This is where the lender buys your outstanding invoices at a premium, and then collects the full amount themselves. You get cash right away, without waiting for your customers to pay the invoices.
Invoice factoring is a good option if you need cash fast, or you do not qualify for other funding types. The interest rate varies based on the age of the receivables.
How to Get a Small Business Loan: Put It All Together
There is a lot to do when it comes to how to get a small business loan. The thing to remember is, while it all has to be done, it doesn’t all have to be done independently. You can work on setting up your business while simultaneously researching loans and writing your business plan.
If you are just getting started, you may not be able to complete the setup process until you get a loan. That’s okay. Do what you can when you can, and keep the big picture in mind. If you do these things and make your payments consistently on-time, you will find it easier and easier to get funding for your business.
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All Aboard the Train to Small Business Loans for Minority Women
Are you a minority female looking for small business loans? Then hop aboard the small business loans for minority women express. Each stop along the route has something to offer. Pull into the station, stay awhile, and learn about what each option has to offer.
Small Business Loans for Minority Women Come in All Shapes and Sizes, Find the One that Will Work Best for You
Once inside the station, you may find that small business loans for minority women aren’t what you expect. In addition, you will find there are grants and other resources available to help female minority business owners. There are many other options for funding as well, including loans that are available to everyone. The only way to determine which option or combination of options will work best for you is to learn all you can about each one.
Find out why so many companies use our proven methods to get business loans.
First Stop: The Small Business Administration
The first stop on the small business loans for minority women express is the Small Business Administration. SBA loans are guaranteed by the government and issued by participating lenders, mostly banks. 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.
Due to the government guarantee, banks are able to offer these loans at lower interest rates and with less strict eligibility requirements. Since many minorities face challenges getting funding due to lower credit scores and net worth, these loans tend to work for them. This is despite the fact that they are open to everyone and not specifically small business loans for minority women. Here’s a sample of what they offer.
7(a) Loans
This is the Small Business Administration’s cornerstone 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 they use the asset being financed as collateral. There is also a down payment requirement of 10%. This can increase to 15% for a new business.
In addition, there is 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. 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.
Find out why so many companies use our proven methods to get business loans.
Other SBA Resources
While you are at this stop on the route, take a minute to check out the other resources the SBA offers. They exist for all small business owners. However, their Office of Women’s Business Ownership exists to help female local business owners specifically. This includes females that are considered minorities. Their goal is to enable and empower business owners that are women via advocacy, outreach, and education as well as assistance.
Second Stop: Private Lenders
The next stop when looking for small business loans for minority women is the private lending station. Loans from private lenders, much like SBA loans, are not exclusively for minorities or women. However, They do 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.
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 financing advisor. Their application process takes place exclusively online. The minimum loan amount is $5,000 and the 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 yourself have to give at least a $25 loan to another business on the platform.
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.
Bonus Stop: The Grant Spur
Though highly competitive and rarely enough to fund a business on their own, grants are a great way to supplement other business funding. It can be wise to keep your eyes open for loan opportunities even while seeking small business loans for minority women. 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.
#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.
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 association says its purpose is to help newer businesses that have an African founder that maintains equal ownership.
There are also grant 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.
Find out why so many companies use our proven methods to get business loans.
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 used 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.
Don’t Stop There: Other Resources for Women
Here are some other organizations that work to help women of all races. The support they offer can help you land small business loans for minority women, or any loan for that matter, and run your business well.
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 Station Resources
Along with those resources listed above, explore these firms that also 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.
You Are the Conductor: Take Your Business to the Next Level
In the end, the key to getting small business loans for minority women is to take the controls and go full steam ahead. You conduct your ride on the rails of business ownership. You can start by opening the doors to all the funding options that could be available to you. To do this, you have to build fundability. When your business is fundable, you have access to funding from virtually every source possible.
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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 Administration
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.
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How Fundability and Minority Small Business Grants Can Build Off Each Other
First, to be clear, minority small business grants, and any grants for that matter, are totally free money that you do not have to pay back. As such, those awarding grants typically do not consider your ability to repay a grant in the selection process. That doesn’t mean that fundability doesn’t matter though. It does. … Continue reading How Fundability and Minority Small Business Grants Can Build Off Each Other
How Fundability and Minority Small Business Grants Can Build Off Each Other
First, to be clear, minority small business grants, and any grants for that matter, are totally free money that you do not have to pay back. As such, those awarding grants typically do not consider your ability to repay a grant in the selection process. That doesn’t mean that fundability doesn’t matter though. It does.
Your Level of Fundability Can Affect Your Ability to Win Grants, and Winning Minority Small Business Grants Can Help You Build Fundability
How does this work? How does the fundability of your business affect your ability to get grants, and how can getting small business grants help you build fundability? Think about it. Of course, the main thing that grantors are looking for is a business that can be successful. That means having a winning business idea. That being the case, applicants focus on that piece. They present a fabulous pitch and a winning business plan, then they execute a flawless presentation and hope those that make the decisions love it.
Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.
However, if the competition is a close one, and there are any red flags out there on any applicant, it could mean the difference between winning, and not. Winning is important, because grants can be a great option for supplementing your funding.
The Bare Minimum: Do I Need Fundability to Get Minority Small Business Grants?
Most likely, those offering grants are not going to check credit. They probably do not even really care about your personal financials. Those pieces of fundability are not likely to come into play. You can find out more about those and the other parts of the fundability puzzle here.
However, the foundation of fundability needs to be in place. This is what can make a difference when it comes to winning minority small business grants. What is a foundation of fundability and why does it matter? It matters because it is what sets your business apart as legitimate. These are the things that separate your business from yourself, and it shows that you have all of your proverbial ducks in a row. It may never come into play, but if it does, you want to be ready. What are the building blocks of the foundation of fundability?
Contact Information
The first step in setting up a foundation of fundability is to ensure your business has its own phone number, fax number, and address. Now don’t panic. That doesn’t mean you have to get a separate phone line, or even a separate location. You can still run your business from your home or on your computer if that is what you are doing. You do not even have to have a fax machine.
In fact, you can get a business phone number and fax number pretty easily that will work over the internet instead of phone lines. In addition, the phone number will forward to any phone you want it too so you can simply use your personal cell phone or landline if you want. Whenever someone calls your business number it will ring straight to you.
Faxes can be sent to an online fax service, if anyone ever happens to actually fax you. This part may seem outdated, but it does help your business appear legitimate to lenders.
You can use a virtual office for a business address. How do you get a virtual office? What is that? It’s not what you may think. This is a business that offers a physical address for a fee, and sometimes they even offer mail service and life receptionist services. In addition, there are some that offer meeting spaces for those times you may need to meet a client or customer in person.
EIN
The next thing you need to do is get an EIN for your business. This is an identifying number for your business that works in a way similar to how your SSN works for you personally. Some business owners use their SSN for their business. This is what a lot of sole proprietorships and partnerships do. However, it really doesn’t look professional to lenders, and it can cause your personal and business credit to get all mixed up. When you are looking to increase fundability, you need to apply for and use an EIN. You can get one for free from the IRS.
Incorporate
This is the most important step in fundability thus far. Incorporating your business as an LLC, S-corp, or corporation is necessary to fundability. It lends credence to your business as one that is legitimate. It also offers some protection from liability.
Which option you choose does not matter as much for fundability as it does for you budget and needs for liability protection. The best thing to do is talk to your attorney or a tax professional. What is going to happen is that you are going to lose the time in business that you have. When you incorporate, you become a new entity. You basically have to start over. You’ll also lose any positive payment history you may have accumulated.
This is why you have to incorporate as soon as possible. Not only is it necessary for fundability and for building business credit, but so is time in business. The longer you have been in business the more fundable you appear to be. That starts on the date of incorporation, regardless of when you actually started doing business.
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Business Bank Account
You have to open a separate, dedicated business bank account. There are a few reasons for this. First, it will help you keep track of business finances. It will also help when it comes time to do taxes by keeping your personal finances separate from your business finances..
There’s more to it however. There are several types of funding that are not available without a business bank account. Many lenders and credit cards want to see a business account with a minimum average balance. In addition, you a merchant account is not an option without a business account at a bank. That means, you cannot take credit cards payments. Studies show that consumers usually spend more when credit card payment is available.
Licenses
For a business to be legitimate, it has to have all of the necessary licenses it needs to run. If it doesn’t, warning lights are going to flash all over the place. Research what you need to do to ensure you have all of the licenses necessary to legitimately run your business at the federal, state, and local levels.
Website
In these times, you do not exist if you do not have a website. Having a poorly put together website can be even worse though. It is the first impression you make on most. As a result, if it appears to be unprofessional, your business will look bad before the customer even gives it a chance.
Spend the time and money necessary to ensure your website is professionally designed and works well. Pay for hosting too. Don’t use a free hosting service. Along these same lines, your business needs a dedicated business email address. Make sure it has the same URL as your Website. Don’t use a free service such as Yahoo or Gmail.
If you are a new business applying for minority small business grants to help get you off of you feet, you may not be ready for all of this yet. Much of it can be does at square one however, and it is infinitely easier to do so. For example, just go ahead and get a business number and address and use it on your grant applications. Get a professional website, or at least a prototype, up and running so you have something to show. It could make all the difference.
How Can Minority Small Business Grants Help Build Fundability?
It’s pretty easy to see how fundability can affect your ability to get minority small business grants. How is the reverse true though? How can minority small business grants help you build fundability, especially when you don’t have to pay them back so there are no payments to report to business credit.
Here’s how. When you get minority small business grants, you have free money to grow and expand your business. This can help you be more profitable without the debt typically associated with growth. This, in turn, makes it easier to pay back any debt you do have to get in the process of starting and running a business, which will help to build fundability.
The only question now is, where do you get minority small business grants? Many private and government agencies offer them, including some corporations. Some are offered annually, while others are available for one time only. It would be impossible to list all available grants, but here are a few to start with. Remember to do your research, as all of them have different eligibility requirements and application processes.
Options for Minority Small Business Grants
If you qualify, there are many grant options available. There are not as many specifically for minorities, but there are some. Here is just a sample of what is out there.
First Nations Development Institute Grants
With a mission to offer grants that help Alaska Natives, Native Hawaiians, and Native Americans, this group is at the top of the list. They also offer assistance in the application process.
Not only that, but there are a wide range of other opportunities from the First Nations Development Institute. Get on the mailing list to receive information about new opportunities as they become available.
National Black MBA Association Scale-Up Pitch Challenge
Also known as NBMBAA, the Scale-Up Pitch Challenge 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.
A business must be a member of the NBMBAA to compete. There is a $10 monthly membership fee. After that, there is an online application. If chosen, you must submit a three-minute pitch. Then, finalists go on to compete at the NBMBAA annual conference.
Non-Minority Specific Options
There are grants options that can work well even though they are not exclusively for minorities. Some examples include the following.
FedEx Small Business Grant
This grant is the company’s way of working to strengthen small business innovation. There are 10 grants the company awards each year. They range from $15,000 to $50,000, and if you’re a 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 including marketing, advertising, expansion, and even to hire employees. Anyone can apply, but you do have to be an NASE member. Membership fees vary based on the level of membership you choose.
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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. These grants are designed specifically to help agricultural producers with activities that add value to their products. As a result, grants are open to those in rural areas. They must be operating as one of the following:
- Cooperative
- Farmer
- Rancher
- an independent agricultural producer
- or an agricultural producer group
Minority Small Business Loans and Fundability: It Goes Both Ways
While neither directly affects the other, the two do affect each other indirectly. Having a strong, fundable foundation can help the pendulum swing your way when it comes time to make a grant decision. By the same token, if you win a grant, the funds could help you build strong fundability if used properly. The two together make a winning team for your business.
The post How Fundability and Minority Small Business Grants Can Build Off Each Other appeared first on Credit Suite.