Tag: Startup

6 Ways to Fund Your Startup When You Can’t Get a Government Business Loan

Those who died in military service did so for our freedom. Part of that freedom is the ability to open a business. In fact, you can even get a government business loan to do so. However, that option will not work for everyone. How can you fund a startup when you can’t get a government business loan?

Discover Other Ways to Fund a Business When a Government Business Loan Isn’t An Option

First, you may not qualify. They typically require good credit and some sort of collateral. Likewise, even if you do qualify, a government business loan may not be enough.  What are the other options?

1.The Credit Line Hybrid

The Credit Line Hybrid is a funding option that may offer an even better interest rate than a government business loan.  Yet, you get the money faster and easier also.  Furthermore, you don’t have to supply any bank statements or check stubs.  You can get funding in a few days rather than weeks, without supplying any collateral or documents.

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

How to Qualify for the Credit Line Hybrid

Your personal credit score should be at least 680.  In addition, you can’t have any liens, judgments, bankruptcies or late payments.  Furthermore, in the past 6 months, you should have less than 6 credit inquiries.  Also, you should have less than a 45% balance on all business and personal credit cards. You need to have at least two credit cards with limits of $2,000 or more and at least a year and a half of good payment history as well.

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

Learn business loan secrets and get money for your business.

How Much Funding Can You Get?

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

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

2. Retirement Account Financing

This Credit Suite program offers a flexible and powerful way for a startup to leverage assets that are in a 401(k) plan or IRA. It even has the blessing of the IRS. In fact, they  have their own name for it. It’s called a Rollover for Business Startups (ROBS).

How to Qualify for Retirement Account Financing?

No financials have to be submitted, and you do not need good credit. In fact, all the lender will ask for is a copy of your two most recent 401(k) statements.

If the plan has a value of more than $35,000,  you can get approval. This is true even if you have really bad personal credit. You can get however much of your 401(k) is “rollable.” Sometimes, you can secure a low-interest credit line or loan for 100% of your current 401(k) value.

The plan you use cannot be from a business where you currently work. It will have to be from previous employment. Also, you can’t still be contributing to it.

The cost is 5.25% (prime +2) and the term is 5 years. There is a $1,995 lender fee rolled in as well, which  includes 5 years of management and consulting.

3. Line of Credit

The difference between a traditional loan and a traditional business line of credit is that the line of credit is revolving credit rather than a term loan. Like a credit card, you only pay back what you use. Also, lines of credit typically have lower interest rates than business credit cards. The trade off is, there are no rewards like cash back or air miles.

Learn business loan secrets and get money for your business.

At Credit Suite, our funding partners offer an unsecured line of credit that has a minimum FICO score requirement  of 600.  You also must show business tax returns with net profits over $20,000 if you have been in business between 6 months and a year.  If you have been in business for over a year, you need to show $10,000 in monthly revenue. These requirements are much easier to meet than those typically set forth by lenders.

Terms are 6 to 18 months and interest rates range from 12% to 25%.  You can get up to $250,000.

4. Alternative Lenders

There are a number of non-bank lenders that will lend to startups. You do have to be careful, as there are a lot of predatory lenders out there. They also tend to have higher interest rates.  However, they aren’t all bad. Here are a few decent options for startup loans if a government business loan isn’t available.

BlueVine

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

Kiva

Kiva is different. First, the interest rate is 0%.  As a result, even though you have to pay it back, a loan from them is free money. There is no credit check at all. However, you have to get at least 5 family members or friends to donate to help fund your business as well. In addition, you have to pitch in a $25 loan to another business on the platform yourself.

Accion

Accion also may also be a good fit if a government business loan isn’t happening.  It’s a nonprofit that offers microloans. The minimum credit score is 575. You don’t have to already be in business, but if you are not, you must have less than $500 in past due debt. In addition, your business needs to be home or incubator based.

Remember, details such as interest rates and loan requirements can change, so be sure to check lenders directly for the most up to date information.

5.Crowdfunding

This option for startup funding is growing in popularity. With crowdfunding, you get a lot of smaller investments from a lot of people, or a crowd if you will. It is different from getting the bulk of your small business funding from one or two larger investors.

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

Learn business loan secrets and get money for your business.

6.Angel Investors

These are investors that are typically less formal than regular investors. An angel investor can be anyone. For example, it could be a family member or someone you met through networking.

The best way to find an angel investor is to ask people you know. Another option is an angel investors website or network. For example, Gust keeps a database of investors, companies, and programs.

Wait! Don’t Apply for Any Funding Before Your Read This

As you work on starting your business, you need to think about building business credit so that you can get the funding you need as your business grows. Unlike your personal credit score, you have to initially work to establish your business credit score.  The best way to do this is to work with a business credit expert from the beginning. The process is not hard, but if you don’t know what you are doing, it can be difficult to navigate. A business credit expert can help you start off on the right food, and guide you through the process in the right order.  This will save time and money, ensuring you build a strong business credit profile from the start. See for yourself with a free consultation.

The post 6 Ways to Fund Your Startup When You Can’t Get a Government Business Loan appeared first on Credit Suite.

Compound (YC S19) is hiring to help startup founders and employees

Article URL: https://jobs.lever.co/compound Comments URL: https://news.ycombinator.com/item?id=26974128 Points: 1 # Comments: 0

The post Compound (YC S19) is hiring to help startup founders and employees first appeared on Online Web Store Site.

The post Compound (YC S19) is hiring to help startup founders and employees appeared first on Buy It At A Bargain – Deals And Reviews.

How to Get Startup Funding

Building a business is thankless, difficult work. Sometimes, you just wish you had a little breathing room.

Usually, business owners have an idea of how they’d like to scale and grow their business. The only problem? Capital. There’s just not enough money to drive the growth they’d like to see.

It’s around this time that some businesses start to consider startup funding. Access to more capital means implementing better growth tools, expanding the team, and generally making the journey to profitability much smoother.

All of this sounds great, but it brings up important questions: How on earth are you supposed to get startup funding? What kind of funding should you consider? Does your business need startup funding?

I’m going to demystify the topic of startup funding and help you understand your options when it comes to raising money for your business.

How Do I Get Startup Funding for My Business?

Right off the bat, we need to establish a few ground rules.

It’s important that you understand what “raising money” actually does to your business. You’re essentially doing one of two things.

When it comes to startup funding, you’re either trading money for equity or trading it for debt.

When the average business owner pictures startup funding, they’re usually thinking about equity. To put it simply, equity is when you trade a percentage of your business in exchange for capital.

That equity is based on the perceived value of your company, which means it’s vital that you have some established value before you walk into an investor meeting. Ideas are great, but trust me when I say that these venture capitalists and angel investors have heard it all before. You’re going to need solid numbers and data if you want a chance at their money.

Of course, if you don’t have the data to secure startup funding from an investor, you could always rely on debt.

I’m just going to come out and say it: Going into debt as a startup is almost always the wrong approach. Whether it’s bank loans or credit cards, those terrible interest rates will eat your business alive. As “Shark Tank” investor Mark Cuban himself says,

If you’re starting a business and you take out a loan, you’re a moron. There are so many uncertainties involved with starting a business yet the one certainty that you’ll have to have is paying back your loan.

All of this is vital to understand because it highlights the reality of startup funding. What you’re really doing is giving pieces of your business away in exchange for some cash. Think of it like you’re borrowing from your future self.

I bring this up because I’ve seen plenty of startups ask if they can raise money. Do you know what I don’t see? Startups asking if they even need to raise money.

Don’t get me wrong, if your startup ends up being as big as Facebook or Slack, you can probably afford to trade some equity to increase cash. But trading away pieces of your profits just to keep your business afloat won’t be the right path for everyone.

Before you continue down this path, you and your team need to sit down and establish your needs, as well as the potential risks and rewards associated with each form of startup funding.

Remember, every single startup is going to have different needs, different risk tolerances, and different definitions of success. Consider each of these startup funding options carefully and make informed decisions for your business. Your future self will thank you.

How Much Startup Funding Do I Need?

Before you start asking for investor money, it’s essential that you establish your startup costs and how much you’ll need to continue building your business.

Assuming your business already exists, you should have a clear idea of your current expenses. As your startup continues to grow, it’s vital that you consider how much money your expansion is going to cost.

How much will you need for your new offices? How many employees will you be hiring, and what will their salaries be? What’s your projected ad spend? These are just some of the questions that you’ll need to have answers before you receive a dime from investors.

If you’re struggling, the SBA has a great startup costs calculator you can use to simplify this process.

When we think of startup funding, we tend to think of massive sums of money with startups raising millions of dollars. A study by Babson College found that the average business was able to start up with just $15,000 of funding.

When it comes to startup funding, it’s not about raising as much money as humanly possible. The goal is to raise the money you need without giving away too much of your startup in the process. Here are some options to do that, starting with the most common when we think of “startup funding.”

Check Out Startup Series Funding

The concept of Series funding can get rather complex, so for now, we’re going to address the basics.

This type of funding is typically thought of in terms of rounds. Series A round, Series B round, and so on.

But before any of that, there are a few other rounds that take place. Startups don’t usually just go straight into Series A, although it is possible.

First, there’s the pre-seed funding. This is friends, family, and other people in your support network. Seed stage funding is next, and this is typically where equity funding official starts. Venture capitalists and angel investors are usually found here, and these rounds will raise anywhere from $10,000 to $2 million.

Next, we have Series A funding. As the potential for greater funding increases, so does the level of scrutiny your business gets put under. Monetization is key here. These rounds typically run from $2 million to $15 million.

The rounds can continue from here, with each letter representing both an expectation of growth, as well as a potential increase in access to capital for your business.

Find Investors for Your Startup

Let’s assume that you didn’t make it to “Shark Tank.” How are you supposed to find investors?

There are typically five ways to find investors. The first, which I’ve already covered, is friends and family.

From there, you can look at loans and grants, but those aren’t realistic for every business. The more common option explored by startups is private investors. If you’re looking for angel investors, the Angel Capital Association is worth checking out.

While angel investors are typically individuals with a high net worth looking to invest, venture capitalists are using investor money to fund your business. It seems like a slight difference, but the approach to funding is actually very different.

Angel investors are interested in working with you to maximize the potential of the business. Venture capitalists are usually looking to fund a business that’s already well-established. Choosing the right investor can and will have a massive impact on the future development of your business.

Bootstrap Your Own Startup

Funding your startup through personal savings is far from glamorous, but it’s still your smartest move.

Why? The less of your company you have to give away, the better. But there’s something else at work when you’re bootstrapping your startup.

You’re creating tangible data that’s going to make raising money significantly easier.

Think about it. Most startups walk into investor meetings with a poorly designed MVP, a flimsy proof of concept, and a massive ask. More importantly, none of them address the elephant in the room.

Investors don’t care about good ideas. Investors want something tangible. They’re not looking to gamble away their money. They want the best possible chance of maximizing their returns.

Now, imagine you walk in with a fully formed business. Suddenly, the conversations are different. You don’t have an underwhelming MVP, you have a product that converts.

You don’t have a weak proof of concept, you’ve already established real product/market fit. As far as funding goes, you’re able to bring more to the table because your business is already off the ground.

When you bootstrap successfully, you’re able to present a much more compelling investment opportunity, while putting yourself in a strong negotiating position. This means better deals for you and peace of mind for investors, who know that your business is likely to be a winner.

Take the time to bootstrap your business, for as long as you can. It might not be as exciting as getting millions of dollars, but a bootstrapped business is 100% yours, and that’s pretty exciting to me.

Look for Business Startup Loans

While I don’t think that business startup loans are the right option for most founders, there is a right way to handle them.

Let’s start with what you need to know. A startup loan can be as low as $500 or as high as $750,000. The higher your loan, the more heavily your business plan will be scrutinized.

As a bare minimum, you should expect to explain both how and when you plan to make money. From there, you’ll likely be asked to explain why you’re better than your competition, how much potential your market has, etc. With some lenders, you’ll be required to present collateral, in the event that you can no longer pay back the loan.

Repayment of these loans can range anywhere from one to five years. You can expect to pay between 8% and 17%, even if your credit is solid. It’s worth mentioning that while you’re repaying this loan, it will be significantly harder for your business to secure another type of funding. After all, investors don’t want to be involved with a business that’s still paying their way out of debt.

Really, there’s only one reason you’d ever take out a startup loan. In a perfect world, you’re doing this because your business is already successful, you don’t want to give up equity, and you have a clear repayment plan that doesn’t create an excessive burden on your business.

Get Startup Funding From Family and Friends

This one is a bit tricky. On the surface, it sounds fantastic. It has the perks of a startup loan, without any of the drawbacks. Your friends and family can offer you capital for a low, or sometimes nonexistent interest rate. They’re also significantly more flexible when it comes to equity distribution, so what’s the problem?

Well, it’s family. Your support network might be rooting for you, but taking their money means they’re suddenly involved in the process. Suddenly, your decisions aren’t your own. Even when you own the majority of the company, family members might have their own ideas about how things should be done.

While there are plenty of entrepreneurs that raise money from friends and family, it’s a delicate decision to make. There are plenty of personal relationships that never recover after going into business together.

Still, it’s definitely an option to consider. Your wealthy aunt may not invite you to Thanksgiving this year if you lost all her money, but at least she won’t kick you out of your house.

Listen, if you have a rich uncle that was going to spend $25,000 on an addition to his house this year anyway, go ahead and see if he’s open to funding your business. Just understand that you’re not just dealing with your uncle anymore. You’re dealing with his money, too.

Raise Startup Money Through Crowdfunding

The average startup tends to ignore the possibility of crowdfunding for a few reasons.

Over the years, crowdfunding has developed a reputation as something of an incomplete funding strategy based more on wishful thinking than sound business sense.

Horror stories of products like the OUYA still haunt startup teams who are considering raising capital this way.

startup funding ouya

The second and more common reason is that they simply don’t know how to get started. It feels a bit more like putting on a performance than it does a round of investing.

The reality is that getting started is actually pretty straightforward. Start with a financial goal in mind. A common concept implemented within crowdfunding platforms is the concept of a stretch goal. The more money you raise, the more you’re able to deliver at launch.

Of course, you aren’t just getting money for free. Your new army of investors expects something valuable in exchange for their money. But with a bit of creativity and a strong understanding of what you can afford to offer financially, you should be able to make this work.

Once you have your goal and stretch goals established, start to build out the marketing materials. Make a video on who you are, and why they should invest in your business.

Crowdfunding is a highly competitive space, so don’t expect this to be easy. But if you’re willing to work for it, crowdfunding might just be the right approach for your business.

Apply for Small Business Grants

For whatever reason, small business grants aren’t looked into by most startup founders I talk to. I just figured they’d never heard of the concept, but now I’m starting to think it’s because they don’t think they’d qualify.

For example, the U.S. government is offering low-interest loans and even grants to small business leaders. Economically, the government supporting entrepreneurs makes financial sense. After all, competing internationally is much easier when your economy is boosted by five or six massively successful companies.

What does that mean for you? If you’re building a new tech or science business, you actually have a strong chance of securing some of that free government money. Plus, you typically qualify for state and federal grants.  

Conclusion

Money being tight as an entrepreneur is nothing new. It’s natural to consider the option of startup funding. What’s important for you to keep in mind is that finding the right funding can make or break your business.

Take the time to consider your options carefully. If you can afford to bootstrap, do it for as long as you can. No matter what, protect yourself and your business so that it can develop properly over time.

Which kind of funding seems most interesting to you? Let me know in the comments below!

The post How to Get Startup Funding appeared first on Neil Patel.

How to Fund a Startup Business No Matter What

What do you need to know about how to fund a startup business? First, there is more than one way to do it!  It’s true. Regardless of what is happening around you, in most cases you can fund a startup business in some way.  It may very well take longer depending on your exact situation, but it is almost always possible. 

You Can Fund a Startup Business No Matter What is Going On

Fund a Startup Biz Credit SuiteThe thing is, virtually everyone assumes if they cannot get a business loan, they can’t fund a startup business.  That really isn’t true. There are all kinds of options for funding. Loans are only one of them. Furthermore, there are probably many more types of loans than you think. We put together a list of some of the most common, and less common, ways to fund a startup business in any situation. 

Fund a Startup Business: Traditional Loans

These are the loans that you go to the bank to get.  With a traditional loan, you are almost always going to have to give a personal guarantee.  This means they will check your personal credit.  If it’s not great, you are probably out of luck. That is where a lot of people stop, thinking they have hit a brick wall.

There are ways over that wall however.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Fund a Startup Business: SBA Loans

SBA loans are traditional bank loans.  However, they have a guarantee from the federal government. The Small Business Administration 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 be a little less strict on personal credit score requirements. 

The trade-off is that the application progress is lengthy. There is a ton of paperwork connected with SBA loans. 

Fund a Startup Business: Private Loans

Private business loans come from companies other than banks.  These companies are sometimes called alternative lenders.  Many have popped up in the past decade as entrepreneurship has become more common.  The need for a financing option from somewhere other than traditional banks has spurred this growth. 

There are a few benefits to using private business loans over traditional loans.  The first is that they often have more flexible credit score minimums.  They still rely on your personal credit. Yet, they will often accept a score much lower than what traditional lenders require. Another benefit is that they will sometimes report to the business credit reporting agencies.  That helps build or improve business credit. 

The tradeoff is that private business loans typically have higher interest rates and less favorable terms.  Still, the ability to get funding and the potential increase in business credit score can make it well worth the cost. 

Examples of Private Lenders

The thing about private lenders is, you almost always have a time in business requirement. However, it can be as low as one year, even 6 months in some cases.  

BlueVine

The minimum loan amount available from BlueVine is $5,000 and the maximum is $100,000. Annual revenue must be $120,000 or more and the borrower must be in business for at least 6 months. Personal credit score has to be at least 600. It is also important to know that BlueVine does not offer a line of credit in all states. 

OnDeck

With OnDeck, applying for financing is quick and easy. Apply online, and you will receive your decision once application processing is complete. Loan funds will go directly to your bank account. The minimum loan amount is $5,000 and the maximum is $500,000.

There is a personal credit score requirement of 600 or more.  Also, you must be in business for at least one year. There is an annual revenue requirement of at least $100,000 as well. In addition, there can be no bankruptcy on file in the past 2 years and no unresolved liens or judgements. 

Fund a Startup Business: Crowdfunding

Crowdfunding sites allow you to pitch your business to thousands of micro investors. Anyone who wants a piece of the action can buy in. 

Investors pledge amounts ranging from as low as $5 to as high as they want. They may give $5, $80, $150, or even over $500. As a general rule, they can give as much or as little as they want.

Though not always necessary, most business owners offer rewards for investment. Typically, this comes in the form of the product the business will be selling. Different levels of giving result in different rewards. For example, a $50 gift may get you product A, while a $100 gift will get you an upgraded version of product A.

The two most common crowdfunding platforms are Indiegogo and Kickstarter. 

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Fund a Startup Business: Angel Investors

These investors are usually only in for a one-time deal. Many choose to spread their risk out over many people and many businesses to be certain they get a safe return on their investment.

Angels tend to be a lot more informal than most types of funding. They can be people you know. Or they can be people you connect with through networking or other means. 

Angels are not covered by the Securities Exchange Commission’s (SEC) standards for accredited investors. But a lot of them are accredited investors anyway. 

To become an accredited investor, an person has to have a minimal net worth of $1 million, and an annual income of $200,000.

There are a number of angels who aren’t millionaires. They could be friends or colleagues with home equity, or local professionals who are looking to invest. 

How Do You Find Angel Investors?

The best way to find these kinds of investors is to ask. You can also try an angel investors website or network. Try Gust, which used to be called Angel Soft. They keep a database of investors, companies, and programs. Startups can also search for business plan competitions and more.

Another option is to look at the biggest angel investor groups. Be aware, however, that these meetings are really only going to happen if you can get an introduction. 

According to Entrepreneur, in order from smallest to largest the top 10 Angel Investor groups are:

  1. New York Angels Inc.
  2. Alliance of Angels (Seattle)
  3. Pasadena Angels
  4. Hyde Park Angel Network (Chicago)
  5. Band of Angels (Menlo Park, CA)
  6. North Coast Angel Fund (Cleveland)
  7. Golden Seeds LLC (NYC)
  8. Investors’ Circle (San Francisco)
  9. Tech Coast Angels (Los Angeles) and
  10. Ohio Tech Angel Funds (Columbus, OH)

Focus and requirements may vary from group to group.  For example, some concentrate on local startups only. Do your research so you don’t waste yours and the angels’ time if it isn’t a good fit.

Fund a Startup Business While Keeping Your Day Job

Here’s an option that most don’t want to hear, but it is totally legitimate and sometimes, it’s just the best way.  If you do not have access to a ton of funds to launch a huge new business right away, consider keeping your day job and start your business small, as a side hustle. 

Not every business can start this way, but a lot can.  For example, a bakery or a cleaning business can easily start this way.  If you set up from the beginning to be fundable and build business credit, you can go even further.  More on that later. 

Fund a Startup Business: The Retirement Years

This is similar to keeping your day job in that you start small.  If you have retirement savings you could use that as loan security, or take a loan directly from retirement if your plan allows for that.  You can build your business slowly, a little at the time. While you’re doing so, you can work to build business credit and overall fundability 

Whatever You Do, Build Fundability from the Beginning

So, how do you do that?  How do you build fundability and business credit? The first thing you do is set up your business to be fundable.  When you do this, you will also be setting it up to be a separate entity from you as the owner, which is the first step in building separate business credit.  How do you build a fundable foundation? You need the following.

Contact Information Separate from the Owner

The first step in setting up a foundation of fundability is to ensure your business has its own phone number, fax number, and address.   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 want.  You don’t even have to have a fax machine.  

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.  

Incorporate

You have to incorporate as an LLC, S-corp, or corporation. It gives credit to your business as one that is legitimate, and it separates your business from you as the owner.

Which option you choose does not matter as much for fundability as it does for your specific budget and liability protection need.  The best thing to do is discuss it with your attorney or a tax professional.  You are going to lose the time in business that you have.  When you incorporate, you become a new entity. Basically, you have to start over. You’ll also lose any positive payment history you may have.

This is why you have to incorporate as soon as possible.  Not only is it vital to fundability and for building business credit, but time in business is also important.  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. 

Separate Business Bank Account

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

In addition, you cannot get a merchant account without a business account at a bank. That means, you cannot take credit card payments.  Studies show consumers tend to spend more when they can pay by credit card.

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 at the federal, state, and local levels. 

Website

These days, you do not exist if you do not have a website.  However, a poorly put together website can be even worse.  It’s the first impression you make on most, and if it appears to be unprofessional it will not bode well for you with lenders or customers. 

Fund a Startup: Build Business Credit 

Okay so, you need to know how to fund a startup, not how to set it up, right?  Here’s the thing. Once you have your business set up like this, you can start building business credit so that you have more options for funding your business.  

The main key to this is to use starter vendors that will issue net terms on your invoices and report those payments to the business credit reporting agencies.  Even if you are keeping your day job or starting small during retirement, you can use these vendors for the things you need in the everyday course of business. 

Things like office supplies, packaging, and even cleaning supplies can be purchased from such vendors on account using your business information.  As you get enough of these accounts reporting, you can apply for store credit, then fleet credit, and eventually, regular business credit cards that are not limited to specific types of purchases or specific stores.  Then, your business credit should be strong enough that you can qualify for a loan and launch your business on a bigger scale.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Fund a Startup Business: There are More Ways than One

The truth is, there is more than one way to fund a startup business.  Depending on your specific situation, you will have to decide which option or combination of options will work best for you and your business.

The post How to Fund a Startup Business No Matter What appeared first on Credit Suite.

Grants for Small Business Startup: Will It Be Enough?

Do you know how to find grants for small business startup? There are a number of grant programs out there for those wanting to start a business.  Even those already operating but still in the startup phase can benefit.  However, grants for small business startup are highly competitive.  Funds are often limited. It’s rare to get enough from a grant to fund an entire startup without needing other options.

There are Grants for Small Business Startup, But You Need More

What are options other than grants that offer free money?  I mean, that’s the best thing about a grant.  You do not have to pay the money back.  Also, bad credit doesn’t matter when it comes to grants. There are not a lot of other options that great.  However, there are a few.  

Why Use Grants for Small Business Startup

The truth is, grants for small business startup are rarely enough.  You are going to need more funding.  That said, you definitely should apply for any grants you might qualify to get.  Just be careful.  Be sure you meet the eligibility requirements before you begin the application process. 

The process of applying for grants can be tedious and lengthy.  That isn’t always the case, of course, but you don’t want to spend a lot of time on something you have no chance of getting.  By being intentional and finding the opportunities you can actually take advantage of, you increase your chances of approval and decrease your chances of wasting time. 

Any amount you receive, even if it is a few hundred dollars, can help reduce the amount of debt you have to take on.  Also, winning a grant can help your business look more viable to lenders. 

So, which grants do you qualify for? It depends.  Many grants are designed specifically for a certain type of business or business owner.  Some are not.  Here are a few possibilities to help get you started, along with some resources to do your own research.

grants for small business startup Credit Suite

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

Grants for Small Business Startup: Available for All

There are grants options that can work well for anyone.

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.  They can be utilized for marketing, advertising, expansion, and even to hire employees. These grants are open to everyone.  However, you do have to be an NASE member to apply.  Membership fees vary based on the membership level chosen. 

USDA Value Added Producer Grant

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

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

Grants for Small Business Startup: Minority Business Owners

Here are some minority grant options to consider.  There are certainly others out there.  However, they are not always well advertised.  This means you need to be sure to do your own research. 

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.

Not only that, but there are a wide range of opportunities from the First Nations Development Institute.  New ones initiate as old ones retire. There is a mailing list you can join to receive information about new opportunities as they become available.

National Black MBA Association Scale-Up Pitch Challenge

Also known as NBMBAA, the Scale-Up Pitch Challenge 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.

Grants for Women Business Owners

For female business owners, there are several grant opportunities.  These are just a few. 

Eileen Fisher Women Owned Business Grants

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

Amber Grant 

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

#GIRLBOSS Foundation Grant 

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

grants for small business startup Credit Suite

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

Cartier Women’s Initiative Award 

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

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

Grants for Small Business Startup: Other Grant Resources

Of course, new grant opportunities open all the time.  During the COVID-19 pandemic, many local agencies have stepped up to help small businesses, including offering grant opportunities.  Sometimes, more funding becomes available allowing for new grants to open.  Here are some resources to help you find more grants for small business startup.  

Other Debt Free Options

Of course, debt free is best, so you are probably wondering if there are other options, besides grants for small business startup, that will help you fund your business debt-free.  Yes, there are. However, much like grants, they are a long shot and do not always fund your business completely. 

The two main options you have are crowdfunding for startups and angel investors.  Crowdfunding basically involves convincing several micro-investors to fund your business a few dollars at the time.  If you have a successful crowdfunding campaign it can be very effective.  Also, it’s not as easy as it sounds.  

Angel investors are not a new idea.  If you can find one, you are golden.  These are just one or two, or a small group, of investors that invest large sums.  They usually do so in return for equity in your business, meaning they want some of the future profits.  That means it’s not totally free money, but it is money for your business that you can get without being tied down by debt. Anyone can be an angel investor, even your mom!

An Awesome Non-Grant Option

Now, the truth is, it is virtually impossible to start a business debt-free.  Financing in some form is almost always necessary.  What you need is the most effective and flexible option for financing with the lowest interest rates.  

If you have top notch personal credit, that is probably going to be a traditional business loan.  However, many capable business owners do not have the personal credit score necessary.  Not only that, but you don’t want your personal credit to bear the brunt of your business debt.  You need business credit as well. There is a debt option that you can access with a lower personal credit score than what is required by traditional lenders.  Furthermore, it will help you build business credit at the same time. 

Credit Line Hybrid

A credit line hybrid is essentially an unsecured line of credit.  It allows you to fund your business without putting up collateral, and you only pay back what you use.  The funds can be used for many things, including startup costs. 

 It’s super easy to qualify.  You need a personal credit score of at least 680, which is lower than what is required by many banks. Additionally, you can’t have any liens, judgments, bankruptcies or late payments.  Also, in the past 6 months you should have less than 4 credit inquiries.  You should have less than a 45% balance on all business and personal credit cards as well.  It’s also preferred that you have established business credit in addition to personal credit.

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

Benefits to Using a Credit Line Hybrid with Grants for Small Business Startup

There are many benefits to using a credit line hybrid.  First, it is unsecured, meaning you do not have to have any collateral to put up.  Next, this is no-doc funding.  That means you do not have to provide any bank statements or financials.  

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

With the approval for multiple credit cards, competition is created.  This makes it easier to get interest rates lowered and limits raised every few months. The process is generally quick, especially with a qualified expert to walk you through it. Also, you can build fast business credit because some of the accounts involved report to the business credit reporting agencies. 

SBA Loans

While federal grant money is preferred, other types of federal funding are available. This is another option for startup funding when grants for small business startup are not enough.  The Small Business Administration offers federally guaranteed loan programs that can help fund a business at any stage.  The applications are processed and funds disbursed through traditional lenders.  However, the requirements are easier for many businesses to meet.  This is because of the government guarantee that they have.  

You can find a lender that offers SBA loan programs using the lender match tool. Here are just a few of the programs they offer.  Which one may be right for your business will depend on a number of variables. 

7(a) Loans

The minimum credit score to qualify for this one is 680, just like the credit line hybrid.  There is a down payment requirement of at least 10% if you are using the funds for the purchase of a business, commercial real estate, or equipment. The minimum time in business is 2 years, but if you are a startup, business experience equivalent to two years will fill the requirement.

504 Loans

Funds from 504 loans can buy machinery, facilities, or land. Generally, these are used for expansion.  They work especially well for commercial real estate purchases.

They require a minimum credit score of 680 as well, and they are collateralized by the asset being financed.  There is also a down payment requirement of 10%, which can increase to 15% for a new business.

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

grants for small business startup Credit Suite

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

Microloans

These loans work well for starting a business, purchasing equipment, buying inventory, or for working capital. Community based non-profits administer microloan programs as intermediaries, with financing coming directly from the Small Business Administration.

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

The thing to remember about all loans and lenders, including those related to the Small Business Administration, is that details such as interest rates, terms, and eligibility requirements can change frequently.  Be sure to check with individual lenders for the more up-to-date information.

Grants for Small Business Startup: Are They Worth the Time and Energy?

If you find one for which you meet all the eligibility requirements, yes, absolutely it is worth it.  Any amount you get that reduces the amount of debt you need to fund your business is worth it.  That said, remember it is unlikely you will get out of having to use financing at all. So, be sure to find the type of financing that will work best for you.  The credit line hybrid will work for almost anyone, and has many benefits, including helping to build business credit!

The post Grants for Small Business Startup: Will It Be Enough? appeared first on Credit Suite.

Micro Startup Acquisition: The Definitive Guide to Buying and Selling Small Startups

The problem with selling your startup is the long exit time. Sometimes it can take as long as seven years before you can sell your business and hop on the next idea.

And the investors? They feel the same way.

Who wants to wait almost a decade to buy a startup when the face of tech is evolving at such a rapid pace? Plus, the price tag on those more established businesses often run into the billions.

That’s an expensive mistake if you make the wrong investment.

The solution? Micro startup acquisitions.

From Facebook to Microsoft, there is a massive trend to seek out tiny teams of five or less, buy them, and use the technology and talent to gain a competitive edge.

In this guide, we’ll discuss the benefits of buying and selling a micro startup, the trends changing M&R strategy, and the top tools you can use to sell (or buy) your startup.

But before we dive into that, we need to look into what micro startup acquisitions are and why you need to sit up and take notice.

Micro Startup Acquisitions: What Are They, and Why Should I Care?

Micro startup acquisitions are a move away from buying businesses with established products or even proven revenue streams.

Instead, larger tech companies like Twitter and Pinterest are making investments in small startups. These businesses usually consist of 2 to 3 people, and companies are taking bets on their products that aren’t even fully realized yet.

Why?

Companies are becoming more proactive and want to acquire complementary products earlier on in their road maps as a way to outwit the competition and obtain the best talent in the industry.

What does this mean for startups?

Your exit strategy timeline is A LOT shorter. Gone are the days of waiting 5, 7, or 10 years to sell, making it more affordable than ever to bootstrap your startup.

Hike Labs was founded in 2014, and by 2015, Pinterest had swooped in and acquired the San Francisco-based mobile publishing startup.

Micro Startup Acquisition Trends

Over the last couple of years, there have been clear trends in why big companies are choosing to invest in these small teams and use them as part of their growth strategy.

More deals are about gaining access to new capabilities or markets. While it’s a trend across sectors, it’s picking up steam in tech where companies are looking to deliver more complete solutions to consumers.

These acquisitions, which focus more on scope than scale, accounted for 90% of tech deals in 2019, which is a 40% increase from 2015. It’s a clear indicator that businesses want to expand their offerings and capabilities.

It’s Harder to Build the Right Product from Scratch

No one wants to be late to market.

Yes, the tech giants could develop the software these micro startups are making, but by the time it’s ready for market, a competitor might have rolled a similar product out and taken all the glory.

Or you could make the mistake of investing too much in the wrong idea, and there goes money, time, and resources down the toilet. It’s usually much cheaper to acquire a startup that has done the legwork than get an idea internally developed.

By acquiring micro startups, companies can mitigate both risks and reap the rewards.

For example, HR and finance SaaS vendor Workday bought Scout RFP (a San Francisco startup with a team of 8) for $540 million.

The startup built a cloud-based office procurement system that helps customers streamline supplier management. The acquisition is a step in the right direction for Workday to compete as a holistic enterprise resource planning solution.

The Micro Startup Talent Hunger Games

It’s no secret that attracting top tier talent can take your business to the next level.

These micro startup acquisitions aren’t only about products. Sometimes it’s the talent that attracts the bigger guys. Micro teams can amplify a company’s productivity while getting rid of the learning curve which comes with new hires.

The innovation and ability to push a startup idea into production mean the team has skills and knowledge that is invaluable to an established company.

For example, when Instagram bought Luma (its first acquisition), the tiny three-person team was part of the deal. The Luma team’s knowledge in video stabilization technology was critical in launching Instagram’s complementary app, Hyperlapse.

The Attractive Price Point of Micro Startups

A massive advantage of purchasing micro startups is the price.

It’s way cheaper to go small than fund a big, established company with hundreds of employees.

And the risk of it going under? A much softer blow.

If the investment goes the same way as Jay-Z’s Tidal music streaming app, it’s a much smaller amount to write off. Plus, you get to keep the team.

For example:

Microsoft spent $200 million to acquire Accompli and only $100 million for Sunrise. When you compare that to the $7.5 billion they spent on the acquisition of Github, or their purchase of Skype for $8.5 billion, that’s quite a bargain.

The same goes for Google acquiring Android for a measly $50 million in 2005 with key employees joining the company. As of 2020, the net worth of Android is estimated to be over $2.5 billion.

The Race for Artificial Intelligence With Micro Startups

Another major trend in micro startup acquisitions is artificial intelligence. Companies in almost every sector are looking to take advantage of machine learning and integrate it into their products.

When you combine this with the shortage of AI talent, there is a race to scoop up startups and their teams who are in the early stages of funding and research.

In 2019, Facebook quickly snapped up a visual search startup called GrokStyle, who developed an app that can automatically detect decor and home furniture from a photo. When asked about the acquisition, Facebook responded in a statement that “their team and technology will contribute to our AI capabilities”.

Tools for Acquiring or Selling Micro Startups and Other Businesses

Want to cash in on the micro acquisition boom? Whether you’re looking to sell or invest in a small business, there are various tools to help you swipe right and find your perfect match.

Micro Acquire

micro acquire

Micro Acquire is a marketplace that connects startups to buyers. The platform is free, private, and has no middlemen.

When you sign up, you’ll get instant access to over 10,000 trusted buyers with total anonymity.

The marketplace is designed to cut down on the time you need to sell your business and find startups to invest in. Once you’ve found a buyer or a seller, you’ll get a letter of intent (LOI) in 30 days or less.

Who Is It For?

Micro Aquire is for startups with an annual recurring revenue (ARR) of less than $500,000. It’s one of the best platforms for serial entrepreneurs to invest in small companies and grow them into booming successes.

Key Features

  • 30-day closing period.
  • Filter the listings to find a startup that ticks all your boxes.
  • Sell your startup by following a quick and simple selling process.
  • Each seller provides key metrics to give buyers an accurate idea about the sustainability of their business.
  • No middlemen. The sale is direct between the seller and buyer.

What Does It Cost?

  • Free: Micro Aquire is free for sellers and buyers with basic features.
  • Premium: For $290 per year, you’ll get the newest listings sent straight to your inbox before the other buyers on the free version. It gives you the chance to review, negotiate, and snap up a deal before anyone else. Plus, Micro Acquire won’t charge any commission from the sale.

Flippa

flippa

Flippa is a marketplace for buying and selling websites, apps, domains, and online businesses.

While it helps to streamline the negotiation and transaction process, it does have a history of scam listings.

If you decide to buy on Flippa, do your due diligence and put the listings under a microscope to make sure it’s legit to find those diamonds in the rough.

Who Is It For?

Flippa is an ideal marketplace for small to medium-sized businesses. You can find a range of sellers at any price.

You can buy or sell online businesses and products like:

  • Blogs
  • E-commerce stores
  • Affiliate sites
  • SaaS businesses
  • Apps
  • Shopify stores
  • Amazon FBA stores
  • Domains

Key Features

  • The easy-to-use site navigation makes it simple to list your business in under 10 minutes.
  • There are tons of filtering options to help you find a business that meets your needs and budget.
  • Choose the “Auction” feature to sell your business within 30 days or set it at a fixed price. Fixed price listings usually take 3-5 months to sell.
  • The “Broker-Matching Service” connects you to a personal broker who will manage the entire sales process from marketing to closing the deal on your behalf. You will need a net annual profit of at least $100,000 to qualify.
  • The “Self Service” feature gets you a Flippa account manager to help you with the sales process.
  • Use Flippa’s free Online Valuation Tool to get a sense of how much your business is worth.

What Does It Cost?

Flippa’s listing fees depend on what you’re selling:

  • Starter/template websites: $15
  • Domains: $10
  • iOS and Android Apps: $15
  • Established websites: $49

There is also a 10% success fee on each sale, and you can upgrade your listing with various packages starting at $295.

Tiny Capital

tiny capital

Tiny Capital is a different breed in the micro acquisition space. Unlike some of the other tools mentioned above, it’s a traditional venture capital firm, with a twist.

Instead of buying companies and becoming a micromanaging nightmare, Tiny has a hands-off approach.

Besides the required monthly and quarterly reports, founders rarely have contact with the firm, with some businesses only speaking to Tiny Capital founder, Andrew Wilkinson, once every six months.

Who Is It For?

Tiny Capital seeks to invest in profitable internet businesses within the information technology sectors.

Think your business would be a good fit?

You need to meet the following requirements:

  • 3-5 years in business.
  • A minimum of $500k per year in annual profit.
  • A high-quality team.
  • You have a simple online business with high margins that doesn’t require complex technology or large teams
  • Your business has a competitive advantage.

It’s the perfect micro acquisition option for founders who want a quick sales turn around (most deals are complete within 30 days) and an investor who is going to be seen and not heard.

Key Features

  • There is a simple selling structure where you can get a full or partial cash payment upfront.
  • Tiny Capital has a simple 30-day sales cycle that includes a 15-day due diligence process.
  • Founders can stay or go.
  • No culture change required.
  • No in-person meetings before or after the sale.

What Does It Cost?

There are no upfront costs with Tiny. All you need to do is contact the team, and you’ll get a response within 48 hours. If Tiny likes your business, you’ll get an offer within 7 days.

FE International

fe international

FE International is an acquisition advisory team for businesses earning five figures or more. With a 94.1% sales success rate, it’s one of the top tools for micro startup acquisitions.

As a full-service M&A (mergers and acquisitions service), the platform has integrated solutions for all the major elements of a successful acquisition. From valuation to exit planning to post-sale considerations, it’s all handled under one roof.

Who Is It For?

FE International specializes in selling websites in the SaaS, content, and e-commerce industries. It’s an excellent choice for startups within the 5 to 8 figure range who want top-tier support throughout the sales process.

Key Features

  • FE has a high sales success rate compared to its competitors.
  • It has a vetted investor network of 50,000 people, ensuring only qualified, seasoned professionals view information about your business.
  • Several brokers are always available to minimize disruptions in the sales process.
  • To help you get the best possible deal, FE International creates a thorough sales plan and marketing materials to attract qualified buyers.
  • FE brokers will approach several pre-screened and vetted investors and negotiate the best deal on your behalf.

What Does It Cost?

There are no listing fees for sellers or joining fees for investors. Brokers are paid a 15% commission fee on all sales, and there is a buyer transaction fee of 2.5% with a maximum threshold of $1,000.

Empire Flippers

empire flippers

Since opening its doors in 2013, Empire Flippers has sold over $93,000,000 worth of websites and online businesses with an impressive 88% selling success rate.

Who Is It For?

Empire Flippers is interested in websites within the following categories:

There is an intensive seller vetting process to ensure only quality listings make it onto the marketplace, and there is a dedicated team for each step of the process.

To qualify for a listing on Empire Flippers, you must meet the following requirements:

  • Your business or website must have a 6-month solid track record of at least $1000 profit per month.
  • You must be using Google Analytics for the past 6 months.

Key Features

  • Empire Flippers has a dedicated migrations team to take care of transferring your new business to you.
  • Get an estimate on how much your business is worth on Empire Flippers before you start the vetting process.
  • New listings are sent out via email to a list of over 45,000 people.
  • If you list with Empire Flippers, you will need to agree to not list your business anywhere else for 2 months. Sellers also need to sign a 3-year non-compete agreement.

What Does It Cost?

Empire Flippers has a $297 listing fee for first-time sellers. But if your listing is declined, it is 100% refundable.

If you’re a repeat seller, you’ll only pay $97 to list your site.

Potential buyers must pay a refundable 5% deposit fee to gain access to a listings URL, P&L, and Google Analytics.

There are commission fees ranging from 8% to 15% depending on the final sale price.

Conclusion

The race is on for micro startup acquisitions.

Companies who understand the benefits of expanding their scope by adding complementary products and talent to their portfolio will reap the rewards.

Companies who forgo adding micro acquisitions as part of their mergers and acquisitions strategy are going to get left in the dust by competitors and struggle to find top-tier talent.

In short, there is no better time to be a desirable tiny startup.

Have you ever sold or acquired a micro startup? What has been your experience?

The post Micro Startup Acquisition: The Definitive Guide to Buying and Selling Small Startups appeared first on Neil Patel.

Compound (YC S19) is hiring to build financial products for startup employees

Article URL: https://withcompound.com/career/swe-fullstack

Comments URL: https://news.ycombinator.com/item?id=24993013

Points: 1

# Comments: 0

Meet Founders and Hear Pitches at YC's Work at a Startup Expo on Dec 3rd

Article URL: https://www.workatastartup.com/events/startup-career-expo-s20

Comments URL: https://news.ycombinator.com/item?id=24793880

Points: 1

# Comments: 0

On the Hunt: Finding Elusive Recession Startup Business Loans

COVID-19 threw our country into a recession that no one really saw coming.  The drastic turn in the economy was jarring to say the least.  Starting a business now can be scary.  Here’s what you need to know about recession startup business loans and other funding options. 

How to Find Other Funding Options Besides Recession Startup Loans

Small businesses continue to report problems finding credit. About 45% do not apply, most likely due to the fact that they do not need to. Another 20% don’t apply because they are discouraged from doing so. They either feel they will not qualify or they believe the process is too hard, and therefore not worth the time.

Small business owners report that competition among banks for their business came to a head from 2001 to 2006, and that this competition has declined from 2006 to the present.

But Wait, There’s More to Recession Startup Business Loans and the Economy
recession startup business loans credit suite

Even more concerning, according to one report, the number of American banks and thrifts has been decreasing slowly for 25 years. This is coming from consolidation in the marketplace in addition to deregulation in the 1990s, reducing barriers to interstate banking.  What does that mean in layman’s terms?  In short, recession is coming. Will you be able to find funding? 

Assets focused in ever‐larger financial institutions is a problem for small business owners. Big banks are a lot less likely to make small loans. Economic declines usually mean financial institutions will become more mindful with financing. 

The good thing for small businesses is, business credit does not rely on traditional financial institutions. What about recession startup business loans? How do you find them? Does such a thing even exist?

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

In the strictest sense, yes.  I mean, startup business loans do not just disappear during a recession.  They are just harder to get.  Startups are a big risk, and few lenders are willing to take such risks, especially during a recession.

That doesn’t mean you should lose all hope however. There are options that can make it easier for you to qualify, and if you are still not able to get startup business loans, other types of funding do exist.  

The Credit Game? 

Lenders check credit to help determine whether or not a borrower is likely to repay the loan. It is an effort to reduce risk. If you have great personal credit, you are home free. No need to hunt, the loans will come to you whether there is a recession or not.

While credit is a good indicator of likelihood to repay, it is far from perfect. The problem is, for business loans, most owners have to rely exclusively on their personal credit.  This is because, as a startup, they likely do not have any business credit yet.  It is possible to have not so great personal credit and still be able to meet business obligations.

What Else Can Lenders Use besides Credit to Approve Recession Startup Business Loans?

There are a ton of potential borrowers out there that could be great for lenders. Unfortunately, they will never get a second look because of a poor personal credit score or non-existent business credit score. 

Some lenders are willing to take other factors into consideration when they determine whether to approve business loans. They may look at credit, but they look at income, current debt, and length of time in business as well. 

Often a business can get approval based on length of time in business and annual revenue. It is important to remember that startups can be as young as a couple of years. It does not have to be a brand-new business to qualify as a startup.

Most loans that do not require a great credit score do require at least 6 months in business. Some will go with 3 months. Few and far between are the loans that do not have a minimum time in business requirement. 

Some lenders will get as personal as to ask why your personal credit score is low. If there is a personal situation that caused a decline in credit, telling them about it may help. In addition, if your score is low but has increased significantly, you should bring that to their attention as well.

For example, if you can show them that your score went low as a result of a health problem, but has increased 100 points since that problem was resolved, it can only help. 

What Exactly Are You Hunting For?

Loans are hard to come by in a recession, period.  Recession startup business loans may be some of the hardest to find.  The key is to remember you are hunting more for the right lender, rather than the right loans. Not only that, but you may be better off looking for another type of funding all together.  Here are some surprising alternatives to traditional lenders and loans.

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

Alternative Lenders

Alternative lenders are likely the best option when it comes to business loans in a recession.  They are alternatives to the standard banks and credit unions. Many operate solely online. They often process applications in just a few days, and borrowers receive funds quickly. 

The main difference in alternative and traditional lenders is that there are many occasions where they may not even do a credit check. Often, if you can show that you are generating sufficient revenue to repay the loan and interest, you are golden.

You do have to do your research still.  Do not assume every loan an alternative lender offers is what you are looking for. 

The interest rates with alternative lenders are generally higher, and the repayment terms are less liberal. They may also require a personal guarantee or collateral of some sort. 

Despite the often less favorable interest rates and terms, these are a great option for those looking for recession startup business loans. 

Crowdfunding as an Alternative to Recession Startup Business Loans

Crowdfunding is not technically a loan, though some crowdfunding sites offer a lending option. These are more in line with investments. This means you do not have to pay them back. 

It won’t work for everyone.  You have to set a goal for the amount of investment you want. With some sites, if you do not reach that amount, you do not get your funds. Other crowdfunding sites are more flexible, allowing you to take whatever you can get. 

The main reason this doesn’t technically fall into the category of business loans is that the main product is not a loan. You do have to provide in depth information however, and most sites require you to offer backers an incentive for their investment. It is only fair to mention, also, that it may be harder to find those willing to participate in crowdfunding during a recession.

Angel Investors

Again, this isn’t a loan, but it is an option if finding recession startup business loans is proving difficult. The idea is very similar to that of crowdfunding, except you replace the crowd with one investor.  Sometimes it is two or three investors. It is a few, and not a crowd, that provide the bulk of the funding. 

It’s important to note that angel investing in your endeavor can be really informal.  Even your mother can be an angel investor. 

Invoice Factoring

If you have been in business long enough to have open invoices, invoice factoring could be an option. The lender is not concerned with your credit, because they will not be collecting from you.

They will pay you a discounted value for your open invoices and then attempt to collect the full amount from your customers. This is an excellent funding option, but it does not operate exactly the same as traditional loans.

Credit Line Hybrid

A credit line hybrid is the funding option many do not know about, and it is perfectly suited for business funding during an economic downturn. It allows you to fund your business without putting up collateral, and you only pay back what you use.  

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

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

What are the Benefits of a Credit Line Hybrid? 

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

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

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

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

Self-Funding with Friends and Family During a Recession

Your friends and family are often your best source of recession startup business loans.  If they believe in your cause and have the funds, they may be willing. They may also be more flexible and generous in terms of interest rates and repayment terms. It never hurts to ask. 

If you have savings or retirement funds available, there is no doubt you will have guaranteed approval with what’s called securities-based financing. An added bonus is that you can repay yourself, and if you choose to do so with interest, even a little, you could end up better off. If you need to take it more slowly, you can do that too. You can be as flexible as you want with yourself. 

Avoid the Hunt for Recession Startup Business Loans

If you are weary of the hunt, start now working to establish and build business credit. Many times, this is an issue for the simple reason that business owners do not understand business credit and personal credit are not the same thing. 

By working to establish a credit score for your business separate from your own, you make it easier to fund your business endeavors in the future. 

First Things First

If you do not currently have business credit and need to get it established, there are some simple steps you can take to get started. 

  • Incorporate your business as a corporation, S-corp, or LLC.
  • Get your business its own phone number and address separate from your own.  
  • List this information under your business name in all the directories. 

These steps establish your business as its own entity separate from you and your finances. This is the essential first step to establishing business credit. 

Build Strong Business Credit

This should be the ultimate goal.  Once your business is its own entity, you can work on building, or repairing, bad credit. When that part is complete, you no longer have to worry about finding funding based on your personal credit alone. You will just be able to apply for a loan and negotiate for the best terms and rates. 

How do you get there? First, make sure you are doing business with vendors that report to the credit agencies. Then, get whatever credit you are eligible for. 

Even if you don’t need credit at the moment, get something. Make your payments on time, consistently. This builds a credit score where there was none before, and it can begin to repair a poor credit score. 

 

A Successful Hunt Many Not Even Include Recession Startup Business Loans

There is always an obstacle to overcome. There is always a problem of some sort. Don’t let the finding recession startup business loans be the thing that keeps you from starting and running a successful business.   

You may be able to find a loan, but if you can’t, there is more than one way to bag the prize. The alternatives to business loans for startup funding are numerous. If the regular weapons are not available for whatever reason, find another way. Take a look at alternative lenders, invoice factoring, merchant cash advance options, Crowdfunding, Angel Investors, or even friends and family.

Recessions come and go.  It is the nature of the economy.  No matter what, it just happens.  It can be counted on the same way as the sunrise and sunset.  Thankfully, it doesn’t have to bring success or progress to a halt.  Explore your options and be diligent to find the funding you need for your business. You have to get creative and seek out alternative methods, and that is okay.  Having a strong business credit score can definitely help also.  Find out more about that here.  

Just don’t give up.  Remember, the key is to put yourself in a better situation so that once you survive the battle, you can win the war. 

The post On the Hunt: Finding Elusive Recession Startup Business Loans appeared first on Credit Suite.

Six Ways to Creatively Fund a Startup Without Using Equity During a Recession Cycle

Creative Recession Cycle Funding For New Businesses

As an entrepreneur, raising money for your new startup business can seem hard to execute. You’ve probably seen dozens of competition funds out there, so you have chances to secure funding. Ultimately, you want funding for your startup to come from investors. But getting investors can be impossible for a new startup. Recession cycle funding for startups can happen.

Using your equity might seem like the best idea to fund your business as you wait for investors to come. Most new startup business owners, fall prey to taking out the equity to fund the business before the revenue starts rolling in. You don’t have to take out equity to fund your startup. It’s not necessary. The success of your business solely comes from decisions you make as the business owner.

Here are some ways to creatively make money for your new startup without taking out of your equity.

Recession Era Funding

The number of United States financial institutions as well as thrifts has been decreasing progressively for a quarter of a century. This is from consolidation in the marketplace along with deregulation in the 1990s, decreasing barriers to interstate banking. See: https://www.fundera.com/blog/happened-americas-small-businesses-financial-crisis-six-years-start-crisis-look-back-10-charts

Assets focused in ever‐larger financial institutions is problematic for small business proprietors. Big banks are a lot less likely to make small loans. Economic recessions mean banks become extra mindful with lending. The good news is, business credit does not depend on financial institutions.

Recession Cycle Funding: Crowdfunding

Use Kickstarter. There’s a method to the madness in using Kickstart to fund your startup. First, do your research before pitching your idea to Kickstarter. Find out if there’s another project they have approved like your startup. So if they deny your idea, refer to similar projects they have approved. And when you ask for money from Kickstarter, be realistic and ask for money to help you survive for a few months. Don’t forget to spread the word to your friends and family asking them to help fund your start up.

Recession Cycle Funding: Bootstrap

Put your Money in First. When you first start out, tap into your own saving accounts, home equity, retirement accounts, etc. This might seem a bit risky, but you should invest in your own startup venture before you expect other investors to put money into it. Most investors will want to see the owners of the business have invested some of their own cash in the business to show confidence.

But there can be some issues with bootstrapping your business.

Still, here are some ways to bootstrap to build more financial resources.  

Share and Save on Services and Equipment

Share office services and equipment. You’ll probably need to get a co-work space where you can share the office space and equipment with other business owners. This will help you cut the cost of renting an office space and paying the high monthly rent.

Use the computers and servers you have. Don’t go out and buy new equipment when you start your startup. Use the computers, software, and desks, etc., you already have. Don’t spend extra money renting new equipment.

Recession Cycle Funding: Grants

Pursue non-dilutive capital. Look for government grants to get more money for your startup. Cities and states have grant programs offering low-interest rates on loans. Having access to these resources give startups the ability to qualify for large sums of money.

Recession Cycle Funding: Startup Business Credit Cards

Business credit cards can be a great way to get a startup off the ground.

We looked at a number of business credit cards, and did the research for you. So here are our picks.

Per the SBA, business credit card limits are a whopping 10 – 100 times that of personal cards!

You can get a lot more money with business credit. And you can still have personal credit cards at stores. So you would now have an added card at the same stores for your company.

You don’t need collateral, cash flow, or financials to get business credit. This is still true during a recession cycle.

Benefits can vary. So, make certain to choose the benefit you would prefer from this assortment of alternatives.

Dependable Credit Cards for Fair to Poor Credit, Not Calling for a Personal Guarantee

Brex Card for Startups

Look into the Brex Card for Startups. It has no annual fee.

You will not need to provide your Social Security number to apply. And you will not need to supply a personal guarantee. They will take your EIN.

Nonetheless, they do not accept every industry.

Likewise, there are some industries they will not work with, as well as others where they want added documentation. For a list, go here: https://brex.com/legal/prohibited_activities/.

To determine creditworthiness, Brex checks a business’s cash balance, spending patterns, and investors.

You can get 7x points on rideshare. Get 4x on Brex Travel. Also, get triple points on restaurants. And get double points on recurring software payments. Get 1x points on everything else.

You can have poor credit scores (even a 300 FICO) to qualify.

Find it here: https://brex.com/lp/startups-higher-limits/

Secure Business Credit Cards for Fair Credit

Capital One® Spark® Classic for Business

Take a look at the Capital One® Spark® Classic for Business. It has no yearly fee. There is no introductory APR offer. The regular APR is a variable 24.49%. You can earn unlimited 1% cash back on every purchase for your company, without any minimum to redeem.

While this card is within reach if you have fair credit scores, beware of the APR. But if you can pay on schedule, and in full, then it’s a bargain.

Find it here: https://www.capitalone.com/small-business/credit-cards/spark-classic/

Recession Cycle

Establish business credit fast and beat the recession with our research-backed guide to 12 business credit cards and lines.

Exceptional Business Credit Cards with No Yearly Fee

No Yearly Fee/Flat Rate Cash Back

Ink Business Unlimited℠ Credit Card

Check out the Ink Business Unlimited℠ Credit Card. Past no yearly fee, get an introductory 0% APR for the first one year. After that, the APR is a variable 14.74 – 20.74%.

You can get unlimited 1.5% Cash Back rewards on every purchase made for your company. And get $500 bonus cash back after spending $3,000 in the first 3 months from account opening. You can redeem your rewards for cash back, gift cards, travel and more through Chase Ultimate Rewards®. You will need excellent credit to get approval for this card.

Find it here: https://creditcards.chase.com/business-credit-cards/ink/unlimited

Recession Cycle

Establish business credit fast and beat the recession with our research-backed guide to 12 business credit cards and lines.

Company Credit Cards with a 0% Introductory APR – Pay Zero!

Blue Business® Plus Credit Card from American Express

Take a look at the Blue Business® Plus Credit Card from American Express. It has no yearly fee. There is a 0% introductory APR for the first 12 months. After that, the APR is a variable 14.74 – 20.74%.

Get double Membership Rewards® points on everyday company purchases like office supplies or client dinners for the first $50,000 spent annually. Get 1 point per dollar afterwards.

You will need great to outstanding credit scores to qualify.

Find it here: https://creditcard.americanexpress.com/d/bluebusinessplus-credit-card/

American Express® Blue Business Cash Card

Also have a look at the American Express® Blue Business Cash Card. Note: the American Express® Blue Business Cash Card is identical to the Blue Business® Plus Credit Card from American Express. But its rewards are in cash instead of points.

Get 2% cash back on all eligible purchases on up to $50,000 per calendar year. After that get 1%.

It has no yearly fee. There is a 0% introductory APR for the first one year. Afterwards, the APR is a variable 14.74 – 20.74%.

You will need good to excellent credit scores to qualify.

Find it here: https://creditcard.americanexpress.com/d/business-bluecash-credit-card/

Terrific Cards for Cash Back

Flat-Rate Rewards

Capital One ® Spark® Cash for Business

Check out the Capital One® Spark® Cash for Business. It has an introductory $0 yearly fee for the first year. After that, this card costs $95 each year. There is no introductory APR deal. The regular APR is a variable 18.49%.

You can get a $500 one-time cash bonus after spending $4,000 in the initial three months from account opening. Get unlimited 2% cash back. Redeem at any time without minimums.

You will need great to excellent credit scores to qualify.

Find it here: https://www.capitalone.com/small-business/credit-cards/spark-cash/

Flat-Rate Rewards and No Yearly Cost

Discover it® Business Card

Check out the Discover it® Business Card. It has no annual fee. There is an introductory APR of 0% on purchases for 12 months. After that the regular APR is a variable 14.49 – 22.49%.

Get unlimited 1.5% cash back on all purchases, with no category restrictions or bonuses. They double the 1.5% Cashback Match™ at the end of the first year. There is no minimal spend requirement.

You can download transactions| quickly to Quicken, QuickBooks, and Excel. Note: you will need great to superb credit to receive this card.

https://www.discover.com/credit-cards/business/

Bonus Categories

Ink Business Cash℠ Credit Card

Take a look at the Ink Business Cash℠ Credit Card. It has no annual fee. There is a 0% introductory APR for the first year. After that, the APR is a variable 14.74 – 20.74%. You can get a $500 one-time cash bonus after spending $3,000 in the initial 3 months from account opening.

You can get 5% cash back on the initial $25,000 spent in combined purchases at office supply stores and on net, cable, and phone services each account anniversary year.

Get 2% cash back on the first $25,000 spent in combined purchases at gasoline stations and restaurants each account anniversary year. Get 1% cash back on all other purchases. There is no limit to the amount you can earn.

You will need superb credit to get approval for this card.

Find it here: https://creditcards.chase.com/business-credit-cards/ink/cash?iCELL=61GF

Boosted Cash Back Categories

Bank of America® Business Advantage Cash Rewards MasterCard® credit card

Take a look at the Bank of America® Business Advantage Cash Rewards MasterCard® credit card. Get an 0% introductory APR for the first 9 billing cycles of the account. Afterwards, the APR is 13.74% – 23.74% variable. There is no yearly fee. You can get a $300 statement credit offer.

Get 3% cash back in the category of your choice. So these are gasoline stations (default), office supply stores, travel, TV/telecom & wireless, computer services or business consulting services. Earn 2% cash back on dining. So this is for the initial $50,000 in combined choice category/dining purchases each calendar year. After that get 1% after, with no limits.

You will need outstanding credit scores to qualify.

Find it here: https://promo.bankofamerica.com/smallbusinesscards2/

Flexible Financing Credit Cards – Take A Look at Your Alternatives!

The Plum Card® from American Express

Check out the Plum Card® from American Express. It has an introductory yearly fee of $0 for the first year. Afterwards, pay $250 per year.

Get a 1.5% early pay discount cash back bonus when you pay within 10 days. You can take up to 60 days to pay without interest when you pay the minimum due by the payment due date.

You will need good to exceptional credit scores to qualify.

Find it here: https://creditcard.americanexpress.com/d/the-plum-card-business-charge-card/

Unbeatable Cards for Jackpot Rewards That Never Expire

Capital One® Spark® Cash Select for Business

Have a look at the Capital One® Spark® Cash Select for Business. It has no annual fee. You can get 1.5% cash back on every purchase. There is no limit on the cash back you can get. Also earn a one-time $200 cash bonus when you spend $3,000 on purchases in the first 3 months. Rewards never expire.

Pay a 0% introductory APR for 9 months. Then pay 14.49% – 22.49% variable APR afterwards.

You will need good to outstanding credit to qualify.

Find it here: https://www.capitalone.com/small-business/credit-cards/spark-cash-select/

Recession Cycle

Establish business credit fast and beat the recession with our research-backed guide to 12 business credit cards and lines.

The Recession Cycle Funding for You

Your absolute best business credit cards hinge on your credit history and scores.

Only you can pick which features you want and need. So be sure to do your homework. What is outstanding for you could be catastrophic for somebody else.

And, as always, make sure to establish credit in the recommended order for the best, fastest benefits.

Recession Cycle Funding: Takeaways

Raising money during a recession cycle might feel a little overwhelming. It takes time to build up funds to start a new business. But you don’t have to feel you have to use your equity to fund your new business. There are so many other ways you can find money to help your business grow. Don’t get focused on making quick money. Think about the long-term growth of your company, and how your decisions today will affect its finances in the future. Develop a plan to find money from different resources before using company equity. And yes, you can even do this during a recession cycle.

The post Six Ways to Creatively Fund a Startup Without Using Equity During a Recession Cycle appeared first on Credit Suite.