COVID-19 wreaked havoc on the world’s economy.  Business owners are helpless as they watch their businesses slip away. It can seem like there are no options, but there are.  Do you know how to finance a business? There are lots of options, regardless of what the economy is like?  

Best Options for How to Finance a Business 

The economy changes direction much like the wind.  It’s just the way of the world.  Still, none of us have ever seen anything quite like COVID-19 before.  Things may never truly be the same, which means adapting to a new normal is going to be vital. You can’t adapt the way you do business however, if you can’t afford to do business at all.  You need to know how to finance a business regardless of the economy.

How to Finance a Business: Credit Line Hybrid

One of the best options for how to fund a business is the credit line hybrid.  This is revolving, unsecured financing.  It allows you to fund your business without putting up collateral, and you only pay back what you use.  

Do You Qualify? 

You do need good personal credit.  It should be at least 680.  In addition, there can’t be any liens, judgments, bankruptcies or late payments.  Furthermore, in the past 6 months you should have less than 4 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.

Get up to $150,000 in financing so your business can thrive.

Why is a Credit Line Hybrid Awesome? 

There are many benefits to using a credit line hybrid.  First, it is unsecured, meaning you do not have to have any collateral.  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. 

How to Finance a Business: Credit Cards

Don’t discount credit cards when considering how to finance a business.  In fact, they are probably the easiest and fastest source of funds to help keep you afloat right now.  You have to be smart, and you have to be responsible, but they are definitely a legit option. 

Brex Card for Startups

This Brex Card has no yearly fee.  You will not need to supply your Social Security number to apply. Also, you will not need a personal guarantee. However, this card does not work for every  industry. 

To determine creditworthiness, Brex checks a company’s cash balance, spending patterns, and investors. Rewards include 7x points on rideshare and 4x on Brex Travel. Also, you can get triple points on restaurants and get double points on recurring software payments. Get 1x points on everything else.

Capital One® Spark® Classic for Business

The Capital One® Spark® Classic for Business is another to check out. It has no annual fee and there is no introductory APR offer. The regular APR is a variable 24.49%. However, you can get unlimited 1% cash back on every purchase for your company and there is no minimum to redeem.

While this card is within reach if you have fair credit scores, beware of the APR. If you can pay promptly, and completely, it’s a good deal.

Ink Business Unlimited℠ Credit Card

The Ink Business Unlimited℠ Credit Card has no annual fee and a 0% introductory APR. After that expires, the APR is a variable 14.74 to 20.74%. 

You can earn 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 initial 3 months from account opening. You can get rewards for cash back, gift cards, travel and more using Chase Ultimate Rewards®. It takes superb credit to get approval for this card.

Blue Business® Plus Credit Card from American Express

The Blue Business® Plus Credit Card from American Express also has no  no annual fee and  a 0% introductory APR for the first year. After that, the APR is a variable 14.74 to 20.74%.

You can get double Membership Rewards® points on everyday business purchases like office supplies or client dinners.  This applies to the first $50,000 spent each year. You get 1 point per dollar after that.  You will need great to exceptional credit to qualify.

American Express® Blue Business Cash Card

Another one to look into is 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. However, its rewards are in cash instead of points. You get 2% cash back on all eligible purchases up to $50,000 per calendar year. After that, it’s 1%.

There is no yearly fee, and there is a 0% introductory APR for the first one year. Afterwards, the APR is a variable 14.74 to 20.74%.  You will need great to superb credit to qualify.

Capital One ® Spark® Cash for Business 

Check out the Capital One® Spark® Cash for Business. It has an introductory $0 annual fee for the initial year. After that, this card costs $95 per 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 first 3 months from account opening. Get unlimited 2% cash back. Redeem any time without any minimums.  You will need great to outstanding credit scores to qualify.

Get up to $150,000 in financing so your business can thrive.

Discover it® Business Card

Another one to check out the Discover it® Business Card. It has no yearly fee. There is an introductory APR of 0% on purchases for twelve months. After that is over,  the regular APR is a variable 14.49 to 22.49%. 

You get unlimited 1.5% cash back on all purchases, with no category restrictions or bonuses. Also, they double the 1.5% Cashback Match™ at the end of the first year. There is no minimum spend requirement either.

You can download transactions easily to Quicken, QuickBooks, and Excel. Note: you will need great to exceptional credit to get approval for this card.

Marriott Bonvoy Business™ American Express® Card

If your normal course of business includes travel, and you think you may return to that once everything calms down, have a look at the Marriott Bonvoy Business™ Card from American Express. It has an annual fee of $125. There is no introductory APR offer. The regular APR is a variable 17.24 — 26.24%. You will need good to outstanding credit to get this card.

Delta SkyMiles® Reserve Business American Express Card

This is a great option if flying is your thing.  Even if you don’t fly in the course of business, you can use the rewards for personal travel.  Take a vacation from being stuck in your house! 

The Delta SkyMiles® Reserve Business American Express Card does have a $550 yearly fee! There is no introductory APR offer. Instead, the regular APR is a variable 17.24 — 26.24%.

That doesn’t sound great, but this does.  Get up to 100,000 Bonus Miles and 20,000 Medallion® Qualification Miles. You can earn 80,000 bonus miles and 20,000 Medallion® Qualification Miles after you spend $5,000 in your first three months. Plus, get an extra 20,000 bonus miles after your first anniversary of card membership.

Get triple miles on Delta purchases and 1.5 x miles on eligible purchases the rest of the year after you spend $150,000 in a calendar year. Get a companion certificate annually upon renewal. And you get one $100 statement credit every 4 years. Or you can get one TSA Pre ✓® statement credit every 4.5 years which is an $85 value.

You will need great to excellent credit to qualify.

How to Finance a Business: Online Lenders

Online lenders are private companies that operate completely online.  They are also known as private lenders or alternative lenders. 

BlueVine 

You will find with most any online lender, they often offer options more similar to invoice factoring and lines of credit.  This is because these present fewer risks than straight term loans.

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. Your personal credit score has to be 600 or above. It is important to note also, that BlueVine does not offer a line of credit in all states.  

Upstart

Upstart is an online lender that uses a completely innovative platform for loans.  The company itself questions the ability of financial information and FICO on their own to truly determine the risk of lending to a specific borrower.  They choose to use a combination of artificial intelligence (AI) and machine learning to gather alternative data instead.  They then use this data to help them make credit decisions.

This alternative data can include such things as mobile phone bills, rent, deposits, withdrawals, and even other information less directly tied to finances.  The software they use learns and improves on its own. You can use their online quote tool to play with different amounts and terms to see the various interest rate possibilities.  Typically, business loans are available ranging from $1,000 to $50,000.  Interest rates vary greatly, ranging from 7.5% to 35.99%.  Repayment terms can be either 3 -year or 5-year. 

To be eligible for a loan with Upstart, you must meet the following qualifications:

• Credit score of 620+
• No bankruptcies or negative public records
• No delinquent accounts
• Meet debt to income standards (they only note they will check this ratio, not what their standards are.)
• Have fewer than 6 inquiries in the past 6 months on your credit report, not including those related to student loans, vehicle loans, or mortgages

These are the requirements they list on their website.  One independent review said that the requirement for the debt to income ratio is a maximum of 45%. It also says that the minimum annual income has to be at least $12,000.  

Fora Financial 

Founded in 2008 by college roommates, online lender Fora Financial now funds more than $1.3 million in working capital around the United States. There is no minimum credit score, and there is an early repayment discount if you qualify.

The minimum loan amount is $5,000 and the maximum is $500,000. The business must be at least 6 months in operation and the monthly revenue has to be $12,000 or more. There can be no open bankruptcies.

OnDeck 

Obtaining financing from OnDeck is quick and easy. First, you apply online and receive your decision once application processing is complete. If you receive approval, your loan funds will go directly to your bank account. The minimum loan amount is $5,000 and the maximum is $500,000.

Just like any other online lender, they do have certain requirements to qualify for a loan.  For example, a personal credit score of 600 or more.  Also, you must be in business for at least 3 years. Annual revenue must be at or exceed $100,000. In addition, there can be no bankruptcy on file in the past 2 years and no unresolved liens or judgements.

Get up to $150,000 in financing so your business can thrive.

How to Finance a Business: When to Go Another Route

Of course, you may want to try to fund your business without debt.  While it is certainly possible to get some funding without debt, it is much more likely your business will have to take on at least some debt. However, non-debt options are definitely great for reducing the amount of debt your business takes on.  Start with trying to find investors.  Although for small businesses, this will likely look different than you imagine.  Most likely you will need to find angel investors or consider crowdfunding. 

Grants are also an option.  This is especially true if you meet certain criteria.  While grants are available to business owners of all types, there are many specifically geared toward minority business owners, women business owners, business owners that are veterans, and those in low-income areas. 

How to Finance a Business: There Is No One Size Fits All

The truth is, the answer to the question of how to finance a business is going to be different for almost every business owner.  Varying credit scores, revenue amounts, and times in business will all make a difference. Sometimes it helps to have someone walk you through the process of figuring out what types of funding and financing will work best for your specific situation. Either way, you need to know all the options and look at each one carefully to figure out the be combination for your business.

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