Research suggests the mineral bolsters the immune system against Covid and other diseases.
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Stocks fell on Thursday as investors paused in the wake of already-robust gains seen on Wall Street so far this week.
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Building Business Takes a Lot of Hard Work, but it Isn’t as Hard as You May Think
The key to building business successfully is to set your business up for success in the beginning. Everyone knows that the key to building anything strong is to have a solid foundation, and the same is true of building a business.
Building Business Means Setting Up a Strong Foundation and Following Through
No one wants to go back to the beginning to build a foundation. It is always best to take the extra time to build a solid foundation on the front end. That usually takes some extra work and more than a few extra steps. While it’s true that building business is not for the faint of heart, this extra work is always worth it. Here is how to begin setting up your business for success.
Building Business: It’s all in the Plan
Not only is a business plan necessary when it comes to getting business loans, but it is necessary to the day to day operations of your business as well. Virtually all successful entrepreneurs will tell you that a major key to success is to plan to work and work the plan.
Most traditional lenders are going to need to see a business plan as part of the loan application process. Truthfully, it’s best to hire a professional business plan writer if possible. They can work with you to get all the necessary information and put it together in the traditional format.
If you cannot hire a business plan writer however, there other options. The Small Business Administration offers a template, and your local small business development center may also be able to help.
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For a business plan to be taken seriously by a lender, it needs to include the following:
A Strong Opening
An Executive Summary
This is a complete summary of the business idea.
Description
The description goes into further detail than the summary, describing the business. This is where you work to build excitement about your business.
Strategies
Layout your plan for getting started. Do you have a marketing plan, area in mind for location, or idea of how many employees you will start with? What is your ramp up plan?
Market Research
Market Analysis
This actually includes two parts. All that market research you did goes here:
Analysis of audience
What need will your business fill, and for who? Are you a child care facility filling a need for affordable child care for working moms? Are you an eatery filling a need for a lunch spot for those working downtown? How will your business fill the need? All of that information goes in this section.
Competitive Analysis
Is there already a business working to fill this need? Is there room for more? How do you plan to compete with them?
If you are not a new business, this will be a market analysis that supports your need for funding, or that shows your business is strong and growing.
The Plan
Plan for Design and Development
How is all of this going to play out, from start to finish. What steps are you going to take? This is more detailed than your strategies section.
Plan for Operation and Management
Who will own or does own the business and who will run or currently runs it from day to day. This could be as simple as stating that you are the sole owner and operator, or as complicated as laying out a complete partnership plan or board or directors’ format. It just depends on how your business works.
Financials
Financial Information
This section includes current financials, projections, and a budget plan for the loan funds you are applying for. Lenders need to see that you know how to handle the funds you get, and that you have a plan to pay them back.
Working the Plan
Don’t fall into the trap of thinking the official business plan is only for lenders to help you get loan approval. It isn’t. Your business plan should be a useable, practical tool that you can follow and refer back to. That is key to building business. Are sales down? Refer to your plan. Struggling with cash flow? What does the plan say? Work the plan you worked so hard on and trust the process. Also, remember to revisit the plan occasionally even if things are going well to look for ways to improve it, or adjust it if necessary.
Building Business: Licenses
Do you need a business license? What type of license do you need? Ask yourself these questions and find the answers to begin building business on a solid foundation.
Which Types of Business Licenses Do You Need?
If a federal agency regulates your business activities, you will need a federal license. The Small Business Administration lists the following industries as needing a federal license.
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- Agriculture
- Alcoholic beverages
- Aviation
- Firearms, ammunition, and explosives
- Fish and wildlife
- Commercial fisheries
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and television broadcasting
- Transportation and logistics
The SBA also has a wealth of other information you need to know for starting your business, from help writing a business plan to finding funding.
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Building Business: What Funding Options are Available
There are a number of funding options available to help you when building business. Which one you choose will depend on a number of variables. It’s likely the best option will be some combination of the many possibilities, including how fundable your business is. We break them down for you below.
Traditional Term Loans
These are the loans from traditional lenders such as banks and credit unions. As a business, your business credit score can help you get some types of funding even if your personal score isn’t awesome. That isn’t necessarily the case with this type of funding however.
With a traditional lender term loan, you are almost always going to have to give a personal guarantee. This means they will check your personal credit. You will need a personal credit score of 700 or higher to gain approval usually, with the best terms and rates coming at 750 or higher.
Of all of the available business funding types, this is the hardest to get, but is also typically the option with the lowest interest rates and most reasonable terms.
SBA Loans
These are traditional bank loans, but they have a guarantee from the federal government. The Small Business Administration works with lenders to offer small business loans that they may not be able to get otherwise based on their credit history. Because of the government guarantee, lenders are able to relax a little on the personal credit score requirements.
In fact, it is possible to get an SBA micro-loan with a personal credit score between 620 and 640. These are very small loans, up to $50,000. Personal collateral is also usually a requirement.
The trade-off with SBA loans is that the application process is long and involved.
Business Line of Credit
This is basically the traditional lender’s version of a business credit card. The credit is revolving, meaning you only pay back what you use, just like a credit card. However, rates are typically much better than a credit card. The application and approval process is similar to that of a traditional term loan.
If you need revolving credit and can qualify for a term loan, this is a good option. It is great for bridging cash gaps and covering short term expenses without the high credit card interest rates.
There are no cash back rewards or loyalty points. This makes some business owners prefer business credit cards despite higher interest rates.
Invoice Factoring
If you are an established business with accounts receivable, then you might consider invoice factoring. This is where the lender buys your outstanding invoices at a premium, and then collects the full amount themselves. You get cash right away, without waiting for your customers to pay the invoices.
This is a good option if you need cash fast. It can also work if you do not qualify for other funding types. The interest rate varies based on the age of the receivables.
Non-Traditional Lenders
These are private lenders, not traditional banks and credit unions, that offer terms loans. Usually they operate online. The difference between these and traditional lenders is that the loans have looser approval requirement and a much faster application process. Most often you can simply apply online, get approval in as little as 24 hours, and the funds are in your account within 24 to 48 hours after approval.
These are an option if your personal credit isn’t terrible and you need money quickly.
Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.
Crowdfunding
Crowdfunding is a newer option for finding investors. While the average Joe that wants to start a business needs funding, it is not always possible to find one or two large investors. With crowdfunding, you can literally have a crowd of investors fund your business in $5 and $10 increments.
There are many crowdfunding sites, but Indiegogo and Kickstarter are the most popular. The platforms are similar but there are some important differences. The most obvious is the timing of when you actually receive the funds that other invest in your company.
Find out more about each option here.
Grants
These are typically offered by professional organizations. There are some government grants available also. Competition can be stiff, but they are definitely worth applying for if you think you may qualify.
While requirements vary from grant to grant, and most are only awarded to a certain number of recipients, this is an option is worth looking into if you fall into one of these basic categories.
- Women owned business
- Minority owned business
- Businesses run by veterans
- Businesses in low income areas
There are also some corporations that offer grants in a contest format that do not require much other than that you meet the corporation’s definition of a small business and win the contest.
Business Credit Cards
These get a bad rap, but in lieu of another option, they aren’t a bad option. The draw is that they are available to most, even if their credit score that isn’t awesome. The catch is, the lower the credit score, the higher the interest rate. Also, there are limits on how low they will go with a credit score.
However, this is one type of funding that most of the general public is eligible for at any given time. They do a credit check, but your credit doesn’t have to be as high as it would be to gain approval for a traditional loan.
The downside of business credit cards is that they typically have a high interest rate. The upside is that many of them offer rewards in the form of cash or points that can be helpful.
Building Business: Marketing
Once you have your foundation set, you have to actually build up the business. That means getting others to buy whatever you are selling. Marketing is a term used for getting your product and service out there for others to see.
The number one beginner tip for marketing is to know who you are marketing to. You need to know what types of people will be buying your product so that you know how to convince them they need it. This step was probably taken care of in the marketing section of your business plan.
How you market will vary based on your budget, but these days social media marketing is huge. It’s a lower cost option than traditional television and news print, yet highly effective. If you can get just one post to go viral, you’ve done something. Get people talking about your product on social media and your marketing could basically be done for you, depending on what you are selling.
Of course, there is still a place for, and even a need for, traditional marketing when building business. Generally speaking, the best bet is to hire a professional to handle all aspects of marketing.
Building Business: Networking
This is an aspect of building business that so many do not really think about until after the fact. It can have a huge impact though. Of course, these days, as with marketing, much networking is done online through social media channels. There is something to be said for face to face connections however.
While much of your business may be run online, limiting face to face interaction, take some time to consider ways to connect locally. There could be those that need your services or product right in your area. Try joining your local chamber of commerce. They typically have events like business after hours that support this type of networking.
Building Business Isn’t Hard, but it Does Take Work
Building a successful business takes a lot of hard work and a lot of luck. Things can go wrong, even if you do everything right. You have to have a business plan, find funding, nail marketing, and work at networking. However, if you set yourself up for success in the beginning, work hard, and don’t lose momentum, you may end up with something fabulous.
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The Tale of Elusive Minority Business Loans: Where to Find Them and What It Takes to Get Them
Minority Business Loans are Out There, You Just Have to Know Where to Look
The United States is full of those considered to be “in the minority.” In fact, in some areas the majority of the population is considered to belong to a minority group! This is why minority business loans are more important than ever. Ensuring minority business owners have the funding they need to help their business thrive is vital to the economy.
The thing is, if you do not know where to look or what you are looking for, it can be difficult to snag one minority business loans. We are here to help you have a successful hunt.
The Best Sources for Minority Business Loans
There really are several sources for minority business loans. It is necessary to know the specifics of each however, before you can move in for the kill. Some only offer minority business loans to those in certain cities. Some are only available if you are looking to land government contracts. Each have their own requirements, and it takes a ton of time and research to figure it all out. We have a lot of research here to save you time. You do not have to start from scratch.
Business Consortium Fund, Inc.
This program is designed specifically for minority businesses. It is certified by the US Department of the Treasury. Businesses can qualify for $75,000 to $500,000 after approval. Amounts above $500,000 are on a case by case basis.
Funds can be used for working capital, equipment financing, and contract financing. To apply, you have to certify your business through National Minority Supplier Development Council. Additionally, you must have a supplier relationship with the Council.
National African American Small Business Loans
These loans are only available to low- and medium-income communities in Chicago, Los Angeles, and New York. The NASBLF provides capital to African American minority-owned businesses not eligible for traditional financing.
Loans range from $35,000 on the low end to $250,000 on the high end. Technical assistance and financial consultation services are also available to business owners. Allowable fund uses include expansion, equipment purchases, and cash flow. They only have $30 million total to loan out in a year, unless more grant funds become available to the program.
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Accion
Accion offers funding in all states for minorities, veterans, women, those with disabilities, and low to medium income business owners. Loan amounts range from $200,000 to $300,000. They work to help build businesses from the beginning, and can put owners in contact with other banks, non-profits, and government resources that help build a network of support.
The minimum credit score for these loans is 575, and you cannot be 30 days late on credit cards, loan payments, or bills. In addition, you will not qualify if you have any late rent or mortgage payments over the past year.
Community Development Financial Institutions Fund (CDFI)
This group lends to those communities that are traditionally underbanked, including business owners that are minorities. Since the Community Reinvestment Act of 1977, banks are required to offer funding in communities that find it hard to qualify for traditional funding. Big banks often fund minority business owners indirectly through their CDFI partners.
To locate a CDFI, contact the local business development center or your local Small Business Development Center office. They can hook you up.
While the application process can be lengthy, they do offer assistance to prepare for future bank loans. In addition, their rates are competitive within the U.S.
Union Bank Business Diversity Lending Program
This program from Union Bank assists minority business owners with loans and lines of credit. To qualify as a minority for this program you must be Hispanic, American Indian, Latino, Asian, Alaskan Native, African American, Native Hawaiian, or other Pacific Islander.
A business that has revenue of up to $20 million could qualify for a loan of up to $2.5 million. However, you must be in business for at least 2 years, and the minority business owner must own at least 51 percent.
Indian Affairs
Businesses owned my Native Americans can get financing from the federal government through the Indian Affairs branch. An individual can fill out an application for up to $500, 000, but business entities and tribal enterprises my apply for more.
Potential borrowers can apply with any lending institution, they just have to use the Indian Affairs application. If the funds are used for construction, renovation, or refinancing, there are additional requirements. Generally, a list of collateral, a credit report, and an analysis of business operations are required.
Camino Financial
They are an online lender that offers minority-owned businesses loans and business solutions. They process all of their lending online, which makes it easy and convenient. Their microloans range from $5,000 to $50,000. They also offer small business loans between $10,000 to $400,000.
There is no collateral requirement. Also, you can pay off the loan any time with no penalties or fees. Pre-qualification happens within 24 hours, and since all documents are submitted online, you do not have to make unnecessary trips to turn in or sign papers.
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Other Options for Minority Business Loans
If you do not qualify for any of those already mentioned, or if you need more funding than what you can get with them, you may need a plan B. There are other options out there, but first you should know that traditional big banks are probably not on the list.
Why Big Banks Probably Will Not Work
Big banks are what most people think of as the first stop when it comes to getting a loan. That is true for some, but for most small business owners they are not the way to go. This is true whether they are looking for minority business loans or business loans in general.
Here’s why:
● Small businesses represent small loans with higher failure rates than larger businesses. Most are not at ease lending to companies with less than $1 million in sales.
● Big banks like collateral, and small businesses are less likely to have sufficient collateral for the loans they need. They are more likely to be leasing assets than larger businesses may own and offer as collateral.
● They also like to see a personal credit score of at least 680. Many small businesses, especially those that are less than 3 years old, do not have this.
So, what are small businesses to do if they need funding? What if the specific minority business loans are not enough? Consider these other options.
Community Banks: Minority Business Loan Heroes
Community banks can be a great option. They are more easily accessible to small businesses in general. They tend to have better customer service and care more about the people involved than the bottom line. Often, they are more interested in building relationships with their lenders than their big bank counterparts are. However, their rates and terms are typically just as good as those with the larger lenders.
The downside is, as a brick and mortar financial institution they are still going to be slow. You will have to make multiple trips to the bank, and the whole process can be kind of long and drawn out.
The Small Business Administration
The Small Business Administration, or SBA, offers a number of options for minority business loans. They do not lend funds themselves, but rather work with lenders to offer security, so that they can make loans to those business owners that may be considered higher risk than what they would normally consider approving.
SBA Community Advantage loans:
Community advantage loans from the SBA are designed for businesses in underserved communities that need less than $250,000. You can find lenders that work with the SBA on this program using the SBA Lender Match tool.
SBA microloans
They also have microloans available of up to $50,000. These are offered through nonprofit organizations. With interest rates ranging from 8% to 13% and maximum repayment terms of six years, they can work well for those need minority business loans
One of the SBA’s partners in this program is The Opportunity Fund. According to them, of its borrowers, 90% are minority business owners.
SBA 8(a) business development program
If you are a small business interested in government contracts, an 8(a) certification can help. Your business must be at least 51% controlled by individuals that are “socially and economically disadvantaged.” This includes minorities, veterans, and women.
SBA 7 (a) Loans
These are not specifically for minorities, but they are available to minorities as well as everyone else. They are 10-year loans of $30,000 to $350,000. Rates range from 9.7% to 11.04%, and they can turn around in as little as seven days, though they more often take up to several weeks.
Alternative Lenders and Minority Business Loans
While not necessarily only for minorities, many alternative lenders offer loans that meet the challenges often faced by those seeking business loans. One of the greatest issues for small business owners when it comes to small business financing is credit score. The following loans are available with a lower credit score than what is typically required by traditional lenders.
Fundbox
There is no minimum credit score, but if you have at least $50,000 in annual revenue you can qualify for a line of credit from Fundbox. You also need to be in business for at least 3 months. Amounts range from $1,000 to $100,000 with rates from 10.1% to 79.8%. Terms are for 12 weeks, and you can have your funds as quickly as the next business day.
Kabbage
Another lender that will make loans on credit scores as low as 500 is Kabbage. Terms are for 6, 12, or 18 months and amounts range from $2,000 to $250,000. Interest rates are higher, at 24% to 99%. Funding can take several days, but sometimes happens in just a few minutes.
QuarterSpot
QuarterSpot is another option, and it is preferable for many as the terms go up to 18 months. Loans range from $5,000 to $250,000, but rates are pretty high at 30% to 70%. Approval can happen in as little as 24 hours.
Credibility Capital
Loans with Credibility Capital range from $50,000 to $400,000. Terms are for 1,2, or 3 years, and rates range from 10% to 25%. Funding usually takes around 7 days.
SmartBiz
SmartBiz offers low cost financing for expansion. These are SBA loans, but with SmartBiz funding happens a lot faster than with traditional banks. In fact, they can take a few weeks rather than a few months.
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Business Credit is Better
These minority business loans are heavily dependent on personal credit scores. That’s well and good, and if you qualify and need funding now, go for it. Regardless of whether or not you qualify for these loans however, you need to be building business credit.
Business credit is credit that is not connected to your personal credit score. It is based on the merits of your business alone. It is much better to use business credit than personal credit to fund your business. For one thing, if your business goes bust, your personal credit will not be affected directly. However, handling business transaction using your personal credit can negatively affect your credit score even if you make all of your payments on time.
This is due to the fact that, by nature, personal credit limits are lower than business credit limits. At the same time, business transactions are more expensive than personal ones. This means that if you fund business transactions on personal credit, you will always be close to maxing out your credit. That raises your debt-to-service ratio, which in turn lowers your credit score.
How Do You Get Business Credit?
The first step is to make your business look fundable. That means separating it from yourself in all ways possible. There needs to be a business address that is separate from your own, as well as a dedicated business telephone number through a toll-free exchange.
In addition, you need to incorporate. That means choosing between a corporation, s-corp, or LLC. A sole proprietorship or partnership will not work for business credit building. Next, apply for and EIN. It functions similarly to an SSN, but for your business.
There are a ton of other steps to establishing business credit, but these will give you a great start.
Don’t Give Up on Minority Business Loans
One thing is for certain, there are a ton of options out there for minority business loans. The only catch is that not all of them will work well for every minority owned business. We have given you enough to get you started, now get moving figuring out which ones will work for you. In the meantime, start building business credit so you can fund your business using its own credit and not your personal credit.
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