An Unsecured Business Loan Can Help A Startup Grow. Personal Loans Won’t

How an Unsecured Business Loan Can Be the Dynamite that Helps Your Business Explode

When you are trying to grow a business, you have plenty of funding options.  The first one most think of is a loan. What most don’t realize is that there are many different types of loans.  The most basic options are secured loans and unsecured loans.  However, you also have to choose between business loans and personal loans.  For helping a business grow, you are better off to choose business loans every time.  Securing a business loan will help your business grow long term, even if it is an unsecured business loan.  Personal loans do not carry the same advantage.

Here’s why.  Payments on personal loans, whether secured or unsecured, are going to be reported to your personal credit. That is great for your personal finances, but it doesn’t really help your business credit at all.  If you have business loans, even an unsecured business loan, those payments will be reported on your business credit report.  When this happens, your business credit grows, which will absolutely help you grow your business in the future.

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

Why Personal Loans Aren’t a Good Idea

If you finance your business on personal loans, a number of things can happen.  The first is that you can completely mess up your debt-to-credit ratio.  This is a problem regardless of whether you are making your payments on time.

The debt-to-credit ratio shows how much of your available credit you are using. As a general rule of thumb, personal credit limits are lower than business credit limits.  Conversely, business expenses are typically much higher than personal expenses.  This is the perfect recipe for balances that stay at or near limits, even when you are making payments.

The other reason it isn’t a good idea to use your personal credit to finance your business is this.  If your business finances hit hard times, your personal finances will go down too.  There would be no protection.

What is an Unsecured Loan?

unsecured business loan Credit Suite2

Now that we’ve established why you need to use business credit for your business and not personal credit, let’s talk about business financing.  Specifically, let’s talk about an unsecured business loan. It is important to understand what an unsecured business loan is before you can understand how it can help you grow your business.

Basically, this is a loan that you get solely on the merits of your business credit.  There is no collateral or personal security put up to help you get the loan. The only risk mitigation by the lender is the reliance on your business credit score. While some may check your personal credit score also, applying with your business information ensures that the payment history will be on your business credit report.

As you can imagine, this means that you need  a pretty stellar business score to get an unsecured business loan. The thing is, once you are there, you can use the funds to do whatever you need to to grow your business without having to worry about using any part of your business as security.

The question then becomes, how on earth do you get the strong business credit you need to qualify for an unsecured business loan?

How to Get Business Credit

Business credit is vastly different from personal credit in many ways.  Perhaps the most glaring difference is that while personal credit kind of just happens based on your spending and paying habits, business credit has to be initiated and built intentionally.  How do you start?

  • Incorporate your business as a corporation, S-corp, or LLC
  • List separate business contact information in directories
  • Obtain an EIN and a DUNS number
  • Open a bank account in your business’s name and run all business expenses through that account.

These steps will help you establish your business as an entity with finances separate from your own. That means vendors will report credit information in your business name. Thus, your business credit will be born.

What’s the Next Step?

Next, you have to do business with starter vendors from the vendor credit tier.  They are vendors that will offer net 30 or higher invoices and report your payments to the business credit reporting agencies. As this continues, your business credit score will grow to the point that you can apply for credit cards from the retail credit tier.

The retail credit tier includes those credit cards that are linked to a specific retail store.  This might include, for example, Staples, Lowes, or Best Buy credit cards.  You need several of these reporting positive payment history.  When that happens, you can begin to apply for cards in the fleet credit tier.

Fleet cards are those that can be used for fuel and automobile maintenance from companies such as Fuelman and Shell.  After enough of these are reporting you can apply for cards in the retail credit tier.

The retail credit tier is the top tier.  Once you are here, you can apply for those standard Mastercards and Visa cards that are not linked to a specific retail store or fuel company.  Get a few of these reporting and handle the credit responsibly.  Then, you will have a strong business score that should allow you to qualify for an unsecured business loan.  This means, you will not have to put up collateral or personal security, and your personal credit should not be affected by your business credit.

Other Types of Small Business Financing

It’s probably wise at this point to discuss the various types of small business financing available.  There are options between business credit cards and unsecured small business loans.  It isn’t all or nothing, and each one can play a part in helping your business grow.

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

Types of Loans

There are various types of loans including:

●        Traditional

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

●        Line of Credit

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

●        Invoice Factoring

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

●        Merchant Cash Advance

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

Where Can I Find an Unsecured Business Loan and Other Small Business Financing Options?

It really does no good to discuss small business financing if we don’t tell you where to find it.  Here are a few options to consider.  Remember though, even if you are applying based on business credit, some lenders still want to see your personal credit score. Also, these guys aren’t the only game in town.  Be sure to do your research to find the best lender for your needs.

Upstart

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

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

They offer various types of financing products to fit a broad range of needs. There is something for everyone.  Debt consolidation and personal loans are included, in addition to business loans.

Quotes are available online in minutes.  Learn more in this comprehensive review.

StreetShares

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

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

Kabbage

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

Kabbage is a great option if you need cash quickly. Also, their non-traditional approach puts less weight on your credit score, so they may work well for borrowers that still have some work to do in that department.

Fundation

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

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

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

Why is an Unsecured Business Loan Better Than a Personal Loan?

When you take out an unsecured business loan, you not only protect your business from the bank in case of default, but you ensure your personal assets are protected as well.  In addition, as you continue to build your business credit score by making payments on-time, you guarantee yourself the ability to access the funding you need to grow in the future.

Whether you need to add equipment, open a new location, or simply buy more inventory to supply the demand, you can rest easy knowing you will be able to get the funding you need.

An Unsecured Business Loan Can Help Your Business Grow

Many businesses are started on the merits of the owner’s personal credit.  It certainly isn’t unheard of, and in fact, it is likely the norm.  Before your business starts, it can’t exactly have credit, can it? However, once you are up and running, it is important to start building business credit.  Then, when the time comes to grow and expand, you are more likely to have access to an unsecured business loan.  This will be much more effective at helping your business grow than a personal loan ever could be.

The post An Unsecured Business Loan Can Help A Startup Grow. Personal Loans Won’t appeared first on Credit Suite.

Kick Off a Student Startup and More –10 Brilliant Business Tips of the Week

The Hottest and Most Brilliant Business Tips for YOU – Kick Off a Student Startup and More

Our research ninjas at Credit Suite smuggled out ten amazing business tips for you! Be fierce and score in business with the best tips around the web. You can use them today and see fast results. You can take that to the bank – these are foolproof! You can do more than just kick off a student startup.

Stop making stupid decisions and start powering up your business. Demolish your business nightmares and start celebrating as your business fulfills its promise.

And these brilliant business tips are all here for free! So settle in and scoop up these tantalizing goodies before your competition does!

#10. Get on Google’s Good Side

Our first jaw-dropping tip is all about improving your search engine rankings.  Young Upstarts lays it all out for us.

It’s all about search. Seriously. Because unless you’re a big company (and if you’re reading this blog, then you probably aren’t. Yet), you are going to depend on people discovering you. There are, of course, things you can do offline. Send out paper newsletters, buy radio ads, go to conventions, or hand out flyers. Buy billboard space or run ads on TV. But you also have to get discovered online. Yes, even if your demographic group isn’t normally online. Why? Because their friends or family undoubtedly are.

Hitting the top of Google searching rankings is key!

Discovering You

So you’re scanning the internet horizon for figurative ships. How do you send up a signal flare to them? We really loved the idea of essentially asking typical questions and then answering them in your blog or other website copy.

Where can I find a great auto mechanic? Who makes the best gnocchi? Which home projects will add the most value to my house? How do I introduce a new puppy into my household? What is the best way to get an ink stain out of a dress shirt? When is the local Little League team next playing? Why can’t I mix bleach and ammonia?

Asking and answering questions on your website can help you rank on Google – so long as those are the questions your customers and prospects are asking.

#9. More Love for Google – and Facebook – Ads

The next awesome tip is about writing your best-ever Google and Facebook ads. Wordstream does us a huge favor! There are two great tips per platform. We loved this article so much that we think you should click through and read the whole thing.

Yes, it’s worth it.

Platforms and Uniqueness

It used to be, if you were advertising in the local penny saving paper and the area’s big newspaper, you would use the same or almost the same ads. Don’t do that here.

For Google, the best takeaway, we feel, is to get to the point fast and make every letter count. Most people are just scanning Google, so you want to get them as quickly as you can.

And for Facebook, we think the best point is to blend in. After all, how often do you click on obvious ads on Facebook?

We’ll wait.

Okay, we got tired of waiting. But in all seriousness, many people go to Facebook to connect with family and friends, and to relax. They may or may not be shopping. But while they’re busy looking at a cousin’s new baby or playing Words With Friends, or arguing politics, they are still the same people who need haircuts or to sell their homes or ship their goods out of state.

When an ad looks a lot like something that isn’t an ad, it can really shine on Facebook.

Student Startup Credit Suite

If you are as passionate about succeeding in business as we are, please help us spread the word about how to take the plunge and save time and money – and your sanity! Kick off a student startup and more!

#8. A Place for Every File – And Every File in its Place

Our following life-changing tip concerns getting organized with a filing system that works for your office. Small Biz Trends gets us in line. Now, this article is about paper files. But the truth is, you can adapt it for computer files with almost no effort. But first, let’s look at paper.

Sort, Classify, and Keep it all Together

After talking to your staff about filing – because they’re going to be using the system, too – sort your documents! Maybe you thought there would be a lot of documents from the Houston office, but it turns out you only have 5, whereas you have 500 from your Little Rock office. Then you’d best make sure your system allows for different amounts of storage for each section.

Tag everything! And hey, that works for purely electronic files as well. If you are, say, a wedding photographer, your sections might be something like traditional, religious, LGBTQ+, and destination. As a result, for weddings with a full Catholic mass, you should tag them as religious.

Pro tip: to adapt for purely electronic files, use the tags section of Microsoft Office documents. And when it comes to Google docs, you can do it with a naming convention. That naming convention can work for both your documents and the folders they live in.

Think of one thing, and one only – if someone arrived tomorrow, and they had never seen your office or files or industry before, would they be able to find most things? If not, then it’s time to get organized.

#7. Unwind Your Brain and Dust Out Your Mental Cobwebs

Speaking of getting organized, for our next sensational tip, we looked at decluttering our incredibly busy days.  Entrepreneur tells us something we already know or at least can guess. That is, our lives are filled to the overflowing with … stuff. We are on constantly. We are distracted every moment.

Egad, that’s no way to live.

So this great article has some ideas for cleaning out some of that detritus. One of our favorite ideas was strategic time blocking. That is, the concept is to list what you need to do and rank them in order by priority level. Then block off time periods to get each of these tasks done – and focus only on that task during the allotted time frame.

This is, by the way, how your intrepid blog writer gets these Friday blog posts accomplished. Writing time is spent, well, writing. It’s not spent answering emails. Does this mean there are never any breaks? Of course not. And if a quick email will get someone unstuck, then it’s done. But otherwise, the time is spent getting the blog post written and out the door.

More on this kind of focus in Tip #5.

#6. CPR For Your Startup Dream

This tip is so cool, and it works! Entrepreneur tells us all about keeping the startup dream alive.

Our favorite tip was about preventing burnout. The idea is to, essentially, cultivate a growth mindset. How can things change? And how can your company benefit from such changes?

This dovetails well with another tip, to have a business plan which allows for change. And that makes a lot of sense to us. Consider this: a decade ago, would you have believed it if someone told you that you could get same-day delivery from a non-local company? Yet you can with Amazon. Would you have believed it if someone told you people would open up their spare rooms and rent them out to vacationers? Yet that is precisely what AirBnB is all about.

So why assume anything is going to always be the same. Business is kind of like a shark that way. It keeps moving forward, or else it stagnates.

#5. It’s Time to Kick Off a Student StartupStart a business in college and more fabulous business tips Credit Suite

So, speaking of startups…

Grab this mind-blowing tip while it’s hot!

If you’ve ever begun a business while still listening to lectures, then you’ve undoubtedly kicked off a student startup. But how do you do it? Noobpreneur says you just might never be too young to start a business. So why not kick off your student startup while you’re still going to class?

Balance Your Life and Your Student Startup

We loved this tip! Because it speaks to something that is an issue for, well, just about everyone. That is, just when do you say no? When and how do you turn off the clock and phone? What happens when you put the laptop to bed?

Of course your new student startup business is wildly important. But so is your education! Considering how many small businesses fail, it behooves you to continue and complete your schooling.

Just like not quitting your day job until you’re absolutely certain your business can make it financially – don’t quit your school, either.

Focus! Also Known As: Ignore the Squirrels

This tip is good for anyone, any age, any generation. Basically, of course, we all need to focus and master the clock. This means creating a schedule, and sticking with it. Why? Because it means certain aspects of your life can go on autopilot. It makes those tasks a lot easier.

So it’s story time.

A Fer-Instance

Consider this: you set your alarm clock for, say, 6:30 AM every day. While you don’t necessarily micromanage every moment of every day, you finish eating, working out, and showering by 7:30 AM every day. Sometimes you’re ready at 7:29:59. Sometimes you’re early. But no matter what, you hit that drop dead time of 7:30.

As a result, you make it to the 8:00 AM commuter train almost every single morning. Every now and then, there’s traffic when you’re driving to the station. Or you can’t find a parking spot in time. And if you walk, there are going to be days when the going is slow, such as there’s a lot of snow on the ground, and your neighbors haven’t cleared it yet.

For a good 200 – 250 days per year of work, you make it to the 8:00 train over 95% of the time. That is, 190 – 238 days per year, you get to work on time. Hey, that’s awesome.

And Then There’s This …

Now let’s look at what happens when you don’t set your alarm clock. Or maybe you do, but you have to remember to do so. And like most people, you don’t remember every single thing you need to do. So sometimes you just plain forget. Now you get up at 7:00 AM when the alarm isn’t set. That is, you’re not sleeping till noon.

But now you’ve got choices to make. Do you work out and miss your train? If you do, then the 8:15 AM train will probably be more crowded. And more so for the 8:30 AM train. And if you thought it was hard to find a parking spot at around 7:55 AM, it’s going to be considerably harder at 8:25 AM. So you might be at the station on time but you miss the next train anyway, because you can’t find a place to keep your car.

Or let’s say you skip the workout and get in on time. Er, yay? Kinda, sorta. But you miss out on the energy boost you get from working out. You break your streak. And maybe it gets harder to focus.

Of course these are simple examples. And pretty much everyone has some sort of an alarm. But consider what life would be like if you put a hard end time on your binge watching? Or if you laid down a mental law where you can’t spend more than 5 minutes selecting your clothes for the day?

Tick tock.

Student Startup Credit Suite

If you are as passionate about succeeding in business as we are, please help us spread the word about how to take the plunge and save time and money – and your sanity! Kick off a student startup and more!

#4. Selling Your Products and Services By the ‘Gram

Check out this spectacular tip, all about selling on Instagram. Foundr tells us this platform has more features for sellers of goods rather than services. But that doesn’t mean companies which sell services are out in the cold! Rather, they need to be a bit more creative.

One great tip we liked was to do Instagram Live. This doesn’t require you to be a seller of goods to work! So, what do you do if you don’t sell stuff? How about a quick how-to? Or a tipoff of when you’re next having a sale – or where your next new outlet is opening? Maybe you can offer a fast tip to help your followers.

You have expertise. Now share it live on Instagram!

#3. Let’s Be Business Friends!

It’s not your imagination: this winning tip can help you forge new relationships with collaborators and customers. Copyblogger lets us know how.

Our favorite tip, hands down, was to craft a shareable summary. Because the last thing most people want is a long, drawn-out pitch or explanation.

Why, It’s a Lot Like This …

Elevator pitches. They didn’t go out with shoulder pads. They are as relevant today as they ever were before. And, it can be argued, they are even more vital now. After all, how much free time have you got these days?

If you said ‘not much’, then you are far from alone. So how do you summarize a complex concept? And, more importantly, how do you get people to want more than just your summary.

Here comes a secret from the world of publishing.

Blurbs.

Hear us out.

Back Cover Copy

Grab a paperback off your shelf. Doesn’t matter which one. Look at the blurb on the back.

It began for the Losers on a day in June of 1958, the day school let out for the summer.

That’s the first sentence of the blurb for a book that’s over 1100 pages long – Stephen King’s It. You don’t have to read 1100 pages to know what the book is all about. You don’t even have to read 100. The entire blurb is 16 sentences long, and it makes you want to read more.

Consider a similar exercise for your summary. Your summary will undoubtedly be longer than 16 sentences. But it’s got the same purpose – give information, enough so a person knows what’s going on.

And then give them a reason to want to know more.

#2. On Bended Knee, Engage Your Customers

Our second to last unbeatable tip can give you a new perspective on creatively increasing customer engagement.  Succeed As Your Own Boss states there are some great ways to actively engage your current customers. Some are a bit involved and may be costly. Others are pretty easy to implement.

But it all comes down to one irrefutable truth – keeping your current customers is easier than cultivating new ones. And it’s also cheaper! So instead of thinking – what have you done for me lately? – adopt an attitude of gratitude.

Also, you can enlist your employees to the cause. Consider this – what if your company does tech support? There’s a big difference between bored workers who can’t wait to get a customer off the line and enthusiastic, interested employees who are friendly and offer extras.

Case in Point

Your intrepid blog writer has a website and a blog. As in, not for work. And like many websites, there have on occasion been technical issues. Contacting the internet service provider is a decent experience. The downsides are wait times. But that’s understandable once you realize what the tech support people are doing.

Tech support goes the extra mile. They suggest products which can prevent future issues – and they often find discounts for those products. Or they hand out their direct numbers and ask for a call back to find out if everything is still going all right.

Are these employees incentivized? Probably. But they can still make customers feel special. And they can convert angry customers who are ready to quit into customers who want to stay. You know, customers who just might blog about their experiences for work. Like, er, me.

#1. Permanent Solutions to Temporary Business Problems

We saved the best for last. For our favorite remarkable tip, we focused on the Holy Grail – solving business problems – for good! Entrepreneurs’ Organization says there are some pretty permanent ways to solve systemic issues.

Our fave tip was the first one – to get to the root cause of issues. But we caution you, gentle reader, that sometimes this can be a little painful. It can feel a touch too much like rocking the business boat. But you’re going to need to rock it anyway.

Case in point.

Dig Up the Roots of Your Business Problems

Over 35 years ago (egad, has it really been that long?), your intrepid blog writer practiced law. Well, one year, secretary after secretary found a new job. Or they would take maternity leave and never return. One retired. Why?

It all came down to one reason – the office manager. Once the managing partner started exit interviews, the truth came out. This office manager had been an expensive hire, and was supposed to be efficient.

Yet the quite literal bottom line is, efficiency isn’t worth a hill of beans if all of the employees abandon ship.

So the office manager was shown the door. And the clerical staff stopped finding other jobs. The ones on maternity came back – and the firm could ooh and ahh at the pictures of their little ones. All it took was digging at the root of the problem, even though it was not an easy decision.

You can make those decisions, too. And you can get to the heart of your business problems, and change things for the better.

So which one of our brilliant business tips was your favorite? And which one will you be implementing now?

Student Startup Credit Suite

If you are as passionate about succeeding in business as we are, please help us spread the word about how to take the plunge and save time and money – and your sanity! Kick off a student startup and more!

The post Kick Off a Student Startup and More –10 Brilliant Business Tips of the Week appeared first on Credit Suite.