Business Loans Blog and Resources

Guest Post by Michael Deane COVID-19 has caught many business owners unprepared. Small businesses are particularly vulnerable in this crisis as most are not as well established and might have already been struggling prior to the pandemic. The present circumstances demand that it's time to develop a new strategy, a new financial plan that will help you get back on your feet. If you’re in a dilemma as to what to do to help your business recover, here are a few guidelines for your small business financial planning amidst COVID-19. Perform a financial health check The first step of financial planning for small businesses is to figure out what you're up against financially. An assessment is needed to see the status of your business and to identify your next step according to the results. Assessing your current situation is essential for developing a financial plan. This includes analyzing your cash flow and whether you’re able to carry on with your business in the next 6–12 months. Consider the following questions:  What is your current position? Do you have enough funds to continue? For how long?  Based on your cash flow assessment, you will have clear insight into your financial situation, and you’ll be able to make a decision: continue with your business or put a halt on some or all of your operations.  If your cash flow analysis clearly shows that you can’t operate for the next six months with your existing assets and revenue as is, you can consider shutting down some of your operations or making the difficult decision to let some of your employees go.  Recreate your budget  Using the results of your previous cash flow analysis, start working on a new budget to keep your small business alive. Your previous budget from before the pandemic is no longer relevant because circumstances have changed drastically. In times of global crisis, we must adjust our spending. More importantly, we must learn from this pandemic and prepare for similar future events.  While crafting your budget, keep in mind all the issues (however improbable they sound) that might affect your business. The reason why many small businesses have struggled amid the coronavirus is the reality that they did not have an emergency fund that would keep them going until things would go back to normal. If at all possible, consult a financial expert to help you with your cash flow assessment and budgeting, including a plan to save for future crises.  Cut unnecessary spending Spending money on unnecessary things during regular times is hurting your business, but doing so during the COVID-19 crisis can easily ruin you. If you’re struggling to keep your business alive, you need to cut all the unnecessary costs such as software subscription, advertising, and so on. Cut all the things that are not absolutely essential at the moment.  Another way to cut spending is to reduce your working hours. Consider canceling orders if the contracts allow it or at least delay them. Reach out to your debtors if you have any and see if you can get some payments.  Given the circumstances, your debtors are probably in a similar situation as you are so you a little understanding is necessary. However, you can discuss the possibility of smaller, periodic payments at least.  If you have to let employees go, consider automating tasks using AI-powered solutions. AI technology does not only cost less than a full-time employee but can significantly boost customer service experience. These bots can work 24/7 either independently or in collaboration with human agents.  Apply for government assistance Global leaders around the world are trying to help businesses recover from COVID-19 by releasing relief and stimulus packages for entrepreneurs. These packages include help for businesses that keep their current staff and/or hire new employees.  Examine your eligibility for government assistance and make sure to apply on time. This financial aid from the government can ensure the survival of your small business. You could keep your staff and continue to operate without shutting down any segments of your business. Read more: Paycheck Protection Program 101: How to Get a Business Loan under the CARES Act   Another option is to seek investors that could provide a much-needed financial injection.  Contact your bank Contact your bank and discuss the ways your bank can help you overcome the hardships of this pandemic. This includes getting payment extensions on mortgages and loans, seeking a refund for any unused premium policies, etc.   Contact your landlord  If you had to shut down your business temporarily, you’re probably in no situation to continue paying your lease, at least not the full amount. The best thing you can do is reach out to your landlord and consider negotiating a new arrangement.  Given the global situation, there is a high probability your landlord will understand your position and reduce your rent since you’re not using the premises. Additionally, various cities have implemented or are considering implementing moratoriums on evictions from both commercial and residential properties.  Stay up to date  Staying informed is crucial during this crisis. Follow the important information on COVID-19 released by the government and trusted sources that may affect your small business.  Governments are also working out ways to help small businesses, and it is important to stay up to date with the changes so you don't miss any opportunities for relief via special loans or grants.  COVID-19 has disrupted the entire world, and we can expect the consequences to be felt in the next six months or longer. How we prepare for this upcoming period is crucial.  Read more: Consider These 10 Adjustments Before Making Payroll Cuts  Michael Deane has been working in marketing for almost a decade and has worked with a huge range of clients, which has made him knowledgeable on many different subjects. He has recently rediscovered a passion for writing and hopes to make it a daily habit. You can read more of Michael's work at Qeedle.

Note: The Paycheck Protection Program closed August 8, 2020.  As is the case with nearly all aspects of the COVID-19 pandemic, new updates and decisions are being made every day.  But amid many unknowns, small business owners can count on some relief starting Friday, April 3 thanks to the $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act), which was signed into law on March 27. The aid package includes a $349 billion economic relief program through the Small Business Administration (SBA) called the Paycheck Protection Program (PPP).  When the initial aid ran out, additional funding was allocated to the PPP and the program is continuing to accept applications until June 30, 2020.  Beyond the Paycheck Protection Program, additional assistance is available to small business owners and individuals via an Economic Injury Disaster Advance Loan of up to $2 million with a $10,000 advance available. In addition, through its Debt Relief program, the SBA will pay the principal and interest of current 7(a) loans for a period of six months and the principal and interest of new 7(a) loans issued prior to September 27, 2020.  As a small business owner, here's what you need to know about Paycheck Protection loans.  What is the purpose of the Paycheck Protection Program?  The PPP was designed to support job retention by financially incentivizing business owners to keep employees on the payroll.  How does it differ from the SBA's existing loan programs?  The SBA ordinarily provides financial assistance to small businesses primarily through its 7(a) lending program. The PPP is a new program under 7(a) that significantly differs from the other lending programs. Paycheck Protection loans are granted the following unique allowances:  Short-term forbearance  100 percent guaranteed Collateral and personal guarantee requirements are waived  No government or lender fees  Possibility of loan forgiveness  What if my business has a different SBA loan? If your business is paying off a different SBA disaster loan, the due date for that loan has been deferred through December 31, 2020.  Businesses with pending SBA disaster loans can also get a Paycheck Protection loan as long as the loans are being used for different things.  What businesses are eligible?  Any business with fewer than 500 employees (including sole proprietorships, independent contractors, and self-employed individuals) for which "current economic uncertainty makes the loan necessary to support your ongoing operations" is eligible for a loan, according to the Treasury Department's PPP fact sheet. Private non-profit organizations and 501(c)(19) veterans organizations affected by COVID-19 are also eligible.  Your company must have already been in business as of February 15 to qualify.  What size loan can my business get?  A business's maximum loan amount is determined by eight weeks of prior average payroll costs plus an additional 25 percent, or 2.5 times your total payroll expenses for the loan period, up to $10 million.  A single business can only apply for one Paycheck Protection loan.  What expenses does the loan cover?  A Paycheck Protection loan covers the following: Salary wages, commissions, and tips capped at $100,000 per employee Employee benefits including vacation, parental leave, medical leave, and sick leave Mortgage interest, rent, and utilities incurred or in force before February 15, 2020 In some cases, interest on other debts  What is the interest rate for loans under the program?  The interest rate has been set at 1 percent. That number may rise but the interest rate has been capped at 4 percent.  What is the timeline for relief and repayment?  The loan provides economic relief for costs incurred from February 15 to December 31, 2020.  Loan payments are deferred for six months and have a maturity of five years. In other words, the first payment is due after six months of the loan origination date and the full loan is due after five years.  Is there loan forgiveness?  There is a financial incentive to maintain your workforce. The SBA will forgive loans for the first 24 weeks if all employees are kept on the payroll and the money is used for payroll, rent, mortgage interest, or utilities.  The amount of loan forgiveness includes payroll costs for employees below $100,000 in annual income.  Forgiveness is reduced if the workforce or wages are reduced, but you can possibly preserve some of your loan guarantee by rehiring employees you've already laid off in response to COVID-19-related economic uncertainty.  There is a maximum 10-year maturity for loan forgiveness.  How are lenders compensated? Lenders participating in the PPP are given the following incentives by the SBA:  Favorable regulatory treatment  Reimbursement for processing fees based on the disbursed loan amount 5 percent for loans up to $350,000 3 percent for loans greater than $350,000 and less than $2 million 1 percent for loans of $2 million or more  PPP loans on a lender's balance sheet receive 0 percent risk weight  Where can I find and select an approved lender?  Lenders are mobilizing to prepare for the onslaught of loan applications to answer the greater demand for business loans during this time. The SBA has approved over 1,800 lenders in its network which includes any participating SBA 7(a) lender, federally insured credit union or depository institution, and Farm Credit System.  Best Company's mission is to help consumers find trustworthy companies that deserve their business. If you don't already have a lending institution or are looking to make a change, we encourage you to consider reviews-based rankings as you shop for a lender for your Paycheck Protection loan. The current top-ranked business loans companies are as follows:  Lendio  Headway Capital (temporarily not accepting new applicants)   Kabbage View the complete list of best business loan lenders here.    What do I need to apply?  Just as you would generally for business loan preparation, you need to gather documentation. Fortunately, a loan under the PPP does not require a separate review by the SBA so your eligibility will be determined by the funding institution via guidelines from the SBA. Presumably, this will greatly shorten the approval period so you can get funds soon after applying for the loan.  The U.S. Treasury Department's CARES Act resource page has a sample application you can download as a reference, though you'll apply for the loan through your chosen lending institution.  Prepare documentation of the following information, and you're ready to apply online through your lender: Business TIN number Average monthly payroll Expected payroll costs from February 15–December 31 Number of jobs supported by your company Employee headcount over time A list of all owners holding at least a 20 percent stake in the business and affirm they are not party to federal crimes 

You may make every effort to keep your personal and business finances separate, including registering your business as an LLC with its own TIN and using another bank account for all company finances. But would these measures guarantee that your personal finances are completely safe? It turns out that securing financing for your business can impact your personal credit score. While it should be your goal to protect yourself as much as you can from any financial shortcomings of your business, some lenders make this pitfall inescapable. Read on and learn how business loans affect personal credit. How would a business loan affect my personal credit? If you’re a growing business without a substantial financial history, or if you choose a type of loan that lenders consider high risk, you’ll likely have to furnish more personal information in an application and could be susceptible to an impact on your credit score. Your personal credit can be affected by business loans in a few ways: Hard credit inquiries Personal guarantees Lenders reporting to personal credit bureaus Hard credit inquiries To start, some lenders will check your personal credit score alongside your business credit score if you lack a financial history for your company. “This credit check, called a hard inquiry, can slightly lower your credit scores,” says Greg Mahnken, credit industry analyst for Credit Card Insider. “Generally speaking, as long as you aren’t applying for a lot of credit in a short time, hard credit inquiries won’t affect your credit by much or for very long.”  Trouble will come if you field too many inquiries in a short amount of time, which could happen if you continuously receive rejections while seeking a business loan but move forward with applying. Mahnken warns that hard credit inquiries stay on your report for two years, so make sure you read all of the requirements for a particular product before applying and see if you can work with a company that does a soft credit pull. Lendio is one company that performs a soft credit check when you apply, meaning the check won’t affect your score. Personal guarantees If you haven’t been in business long, it may be hard to get a business loan without a personal guarantee. Signing an agreement to pay a business loan out of your personal pocket (or with your personal assets) should your company be unable to pay could make you hesitate. Some products are more likely to require a personal guarantee: SBA loans Business lines of credit Unsecured term loans Loans that require a personal guarantee typically come with perks, such as better interest rates and repayment terms. Other products are less likely to require a personal guarantee: Merchant cash advances Equipment financing However, these products can have their own drawbacks, such as higher interest rates and shorter repayment terms. Some companies have funding options that don’t require a personal guarantee in order to be more accessible. Fundbox offers lines of credit that require no personal guarantee. It can be nerve-racking to think your personal credit score will be affected if you’re unable to pay off a business loan, so you might be tempted to choose a product based on this factor alone. However, keep in mind that no option is a good choice if you don’t have a sound business plan, and even then, extenuating circumstances can occur. The best choice you can make is to select a lending option with great rates and terms that you are confident you can pay off with your financial planning. Lenders reporting to personal credit bureaus Lastly, check whether the lender you’re working with will report to personal credit bureaus in addition to the business ones. “If your business is a sole proprietorship or a partnership, it’s very likely that a business loan is going to appear on your personal credit reports,” Mahnken explains. “If your business is a corporation or LLC, your lender may or may not report to your personal credit reports in addition to business credit bureaus.” However, reporting to a personal credit bureau might not be all bad. “If you are returning a loan on time and following all terms and conditions, then FICO could go up as well,” says Bradley Stevens, founder of LLC Formations. “Otherwise, it could go down dramatically in the worst-case scenario.” How can I prevent a business loan from hurting my personal credit score? For the best-case scenario, you should be assessing the market need for your business and creating a strong financial plan. But it’s impossible to foresee every obstacle, so it’s better to protect your personal finances as much as possible from the start. You can check with a lender to see whether the company performs a hard credit pull or reports to personal credit bureaus, and ask the lender which products would require a personal guarantee so you can steer clear if possible. Ready to Apply? Learn more about business loans by looking at the top-rated companies and their offerings. Explore Your Options

Guest Post by Kali Geldis There are more small business financing options available today than ever before, but small business owners need to be a little more savvy than they were a few years ago, when the bank around the corner was the one-stop choice for a small business loan or line of credit. Although a traditional bank loan, a line of credit, or an SBA-guaranteed loan might be the first thing that comes to mind when a business owner is looking for financing, they aren’t the only choices. Depending on your situation, there are other options worth considering. Let’s talk about three little-known financing options for business that are worth considering. If not “little known,” it's safe to say these options are often overlooked and underappreciated by business owners as a reliable source of borrowed capital. Trade credit Payment terms from a vendor and supplier might not be a $100,000 small business loan; however, they are powerful ways to leverage credit and start building a strong business credit profile, particularly for a new business Early-stage businesses struggle more to access borrowed capital than just about any of their more mature counterparts. Lenders want to see a track record of good credit practices that aren’t there yet, revenues that haven’t had a chance to flourish, and cash flow that simply isn’t consistent enough to support periodic payments. Fortunately, trade credit (or vendor credit) is often available to most businesses that request it and helps demonstrate how they can responsibly leverage credit to build a healthy and thriving business. Before you apply for trade credit, make sure you do the following: Confirm that the vendor or supplier will report your credit history to the appropriate business credit bureaus. If they don’t, you might be successful at building a strong credit history with that particular vendor, but it won’t help you build a strong profile. Whether or not they report to the credit bureaus might not be the most important criteria when choosing a vendor, but it’s certainly up there. Make every invoice payment on time. The business credit bureaus look at the credit relationships you have with your suppliers in the same way they look at your history with any other type of small business financing. Making timely payments is the single most important thing you can do to build a strong business profile, so you have access to other types of credit in the future. Take advantage of any early payment discount terms that might be offered. I know of more than one small business that is able to augment their payroll expense every month by taking the 10% discount offered if they pay in 10 days as opposed to paying in 30 days. Business credit cards Although business credit cards are very popular among small business owners, don’t overlook their value as an easy and convenient way to access borrowed capital simply because they are so familiar. Most businesses that offer products and services to other small businesses accept credit cards, and many utility companies will allow you to make payments with plastic too. Business credit cards also offer another easy entry into business credit for early-stage businesses. The qualification criteria is much less strict than a traditional loan application, you only pay interest on the amount of credit you use, charges are itemized in your monthly statements making it easy to monitor and control spending. And spending limits will likely be increased over time as you demonstrate that your business will meet its credit obligations.. Depending on the business card you choose, many offer cash back on purchases, points for office supplies, or mileage and other travel benefits for business owners who need to travel as part of their business. Friends and family According to the Gardiazio Business School at Pepperdine University, 19 percent of the businesses they surveyed in 2019 for their 2019 Private Capital Markets Report looked to financing from friends and family for borrowed capital. This has been a pretty consistent number over the years, making loans from friends and family one of the most popular ways for both new and more mature businesses to borrow. Borrowing from a relative might not be the first choice for most entrepreneurs and certainly has risks — an awkward Thanksgiving dinner or family reunion to name a couple of them — but if treated right, it is an option worth considering. Here are a few tips for making a loan from a family member or old college roomate work: Don’t treat things casually. Formalize things with a contract that spells out your payment obligation including payment amount, payment frequency, and what happens if you miss a payment. Keep track of every payment and regularly report on the balance and status of the loan. Even though they might be a friend or a family member who loves you, make sure you are regularly communicating with them so they know you are serious and intend to repay the entire loan amount. Be prepared for some occasional unsolicited advice. It’s safe to assume they will be more invested and interested in your business now that they have some of their own money on the line.  The takeaway  For many business owners, borrowed capital is how they fuel business growth and fund other initiatives to build a healthy business. When looking for financing, don’t overlook options that might not equate to a lot of cash, but certainly offer a lot of value. If you can creatively utilize smaller amounts of money to create bigger results, your business will be in a better position to respond to changes in the marketplace and have greater flexibility to meet your customer demands, all while maintaining a solid bottom line. Afterall, it’s creative problem solving that is the skill that sets the most successful small business owners apart and allows them to create wildly successful products and unrivaled services to meet their customers' needs. Kali Geldis has a decade of experience guiding individuals through the confusing world of credit and finance. She serves as the Editorial and Marketing Director for technology company Nav. 

A majority of small businesses fail in ten years; only half make it to the five-year mark.  Is that hard to digest? Those are findings by the Bureau of Labor Statistics, and they mostly remain steady through strong and weak economies. Here’s why most of those businesses fail: money. According to a study conducted by Fractl, nearly a quarter of businesses say they ran out of cash; 13 percent complained that they lacked financing. So who is getting financing? And how much cash are they getting? A recent study by Biz2Credit had some interesting answers. Restaurant failure proves to be a myth You might assume that restaurants are less likely to receive funding because they have a high failure rate, but you’d be wrong on both accounts.  Fundera’s research concluded that “survival rates for food services are really pretty similar to other industries.” They’re likely to succeed or fail in similar numbers to the rest of the small business world. And Biz2Credit debunks the second half of the myth — the restaurant and accommodation industry has the highest financing approval rate at 51 percent, according to their analysis of 2018 funding trends. This could, in part, be due to the rise of alternative lenders. Banks prioritize mitigating their risk, and they still hold the assumption that many food service ventures are risky business. The bad press and misinformation surrounding food service failure perpetuates negative stereotypes, and it prevents many traditional lenders from giving their stamp of approval. The rise in approval for the restaurant industry may also have something to do with average revenue; restaurant and accommodation companies average $509,996, the highest amount of any industry Biz2Credit analyzed. The health care industry comes in second with 37 percent approval While food service has stereotypes working against it, the health care industry has stereotypes working for it. Traditional lenders see health care companies as more stable and dependable, and they’re more likely to finance a health care startup. That might be why health care companies see 37 percent loan approval rates. Though, interestingly enough, health care companies may soon be treated with the same hand of caution as food service companies. As health intersects with tech, digital health startups are receiving bad press for a string of failures.  Healthcare companies have the second highest approval rates, but they’re funded on average $49,835, the second lowest of any industry. Information technology companies see a high average funding amount The IT industry boasts a 35 percent loan approval rate, and when a company is approved, it’s likely to see a large wad of lended cash. IT companies have the highest average funded amount at $102,029. IT startups have ups, downs, and complete flops. But lenders usually have faith in high returns: the tech industry overall has returns of 34 percent, the highest of all ranked market sectors. It might also help that the average credit score for an IT company is 633, at the top of the industry pack. The personal services industry has low average credit and low loan approval Tailing the list of industry approval rates, personal services see 16 percent approval. Personal services can be a catchall category, including beauty and grooming, gyms, laundromats, landscaping, and cleaning. It’s plain to see that most of these services could be small businesses focused on serving a local community, and it might be hard to prove to a lender that expansion will be profitable. The personal service industry’s low average credit score backs up this assumption that personal services might not be the best lending choice: personal service companies have an average credit score of 590. Most lenders want to see 550 or above for consideration, so some companies might dip below this requirement. Are you worried because you operate a personal services business? No need. You can break the mold by impressing lenders with timely payments and a high credit score, a sound business model, and evidence of profitability. Interested in finding out more? Biz2Credit created a helpful infographic detailing its findings. Check out their study for the full industry breakdown. If you’re looking into business loans yourself, check out our top lenders. You’ll have several options for your business's unique situation, regardless of your industry. Biz2Credit's Business Loans Learn more about Biz2Credit and what it can offer businesses by way of working capital loans, SBA loans, lines of credit, and more.  Biz2Credit Review

Guest Post by Natasha Lane The simplest rule of running your own business is knowing that in order to make money, you need to spend it first. Most of the time, this will be a real balancing act, so you’ll need to educate yourself on the ways to solve (and prevent) a cash flow crisis. First and foremost, be honest with yourself. Are you here to learn something new, or are you already facing money issues? Regardless of your answer, remember: Do. Not. Panic. Every problem has a solution. Consider all your options in a calm and collected manner, and you’ll be able to make the most of these nine hacks. 1. Create a system that works As an entrepreneur, you need to remember that 99 percent of your success relies on organization and time management — especially if you’re the only employee in your company. That’s why you need to set aside the time to create systems that will work for you. Familiarize yourself with spreadsheet software options such as Google Sheets, Microsoft Excel, or Apple Numbers, and use them to track your finances. Create columns or tabs that will give you easy access to data such as the following: Incoming funds (including sources and payment dates) Expected expenses (along with deadlines) Money put aside for unexpected costs The money you have that is currently tied up 2. Stay on top of payments One of the surefire ways to avoid debt is to ensure you’re making all payments on time. This will prevent your expenses from piling up, allowing you to have a better idea of how much money you have available. Being vigilant about outgoing costs will also minimize the risk of having to pay interest rates. You can use a spreadsheet system, or even a simple calendar to keep track of all important due dates. Most business owners prefer to take care of expenses first, but if you’re confident about your planning skills and cash flow, you could also create a timeline that allows you to make the absolute most of your receivables before settling costs. 3. Know your funding options In many cases, the simplest fix to a cash flow crisis is the best one. If you’re in the process of expansion and need a boost to your capital, you can look at traditional and alternative financing solutions. Seek out options that allow you to tailor the repayment terms to your personal needs so that you can reap all the benefits without putting your company at risk. 4. Accelerate receivables One of the things entrepreneurs particularly struggle with is invoicing their work. This is a task you do not want to put off, unless, of course, you’re willing to risk not being paid on time. If you don’t have money to waste, you might want to start sending out invoices more frequently. Or try setting up a system that will (gently) remind your clients that their payment due date is approaching. Furthermore, make it easy, heck, make it beneficial for your customers to pay you on time.  Are you developing a new product? Enable pre-orders. Do you offer services such as consulting, writing, tutoring (or anything else)? Offer a monthly subscription fee that’ll give you a steady source of income. Offer payment plans that will break large sums into smaller parts. This way, you’ll have access to needed funds before you’ve even completed a project. Don’t be afraid to get creative, as it might just allow you to create the cash flow system you need. 5. Negotiate payables The fact is, the expenses of running a growing business often exceed the rate at which you’re able to make money. Sure, you could back down from expansion, but you could also negotiate with your suppliers regarding payment due dates. Solutions such as supply chain finance have proven time and again that they can be used to overcome cash flow crises. If it worked for Nike, it just may work for you. 6. Don't tie up money in inventory That’s another mistake small business owners tend to make. Sure, you want to be prepared, but is purchasing a full year’s worth of inventory really the best way to go? Not only does this take money out of your budget for other things, but it may also be creating unnecessary costs in terms of storage space. Do keep in mind, however, that there is an exception to this rule. Ordering larger quantities of products or materials could be a way to save money. This is due to the fact that suppliers will be more willing to offer discounts on big purchases. If you know that you’ll be making an order every couple of months, you could try to negotiate better purchasing terms. Why not ask for a better price or a payment plan that will suit your cash flow more naturally? Asking won’t cost you a thing, and you may just end up saving a ton. 7. Build strong relationships with partners If you’re not already paying attention to your relationships with vendors and suppliers, it’s high time you started. While the business world can be ruthless, making sure that the people and companies you cooperate with are happy is a great way to secure your future (and optimize your cash flow). Of course, this doesn’t mean that you should be working at your own expense in order to satisfy all their wants. Rather, it’s about showing them that they’re valued. Even a small loyalty discount or the willingness to meet someone halfway in a difficult negotiation can make a lot of difference. This way, you’re not only building a stronger foundation for your business relationship, but you’re also developing a connection that you can all benefit from, both in the present and the future. 8. Tighten your belt You probably already know this, but it may not be a bad idea to go through your assets and expenses, eliminating those that are not an integral part of you actually making money. You’d be surprised at how much you can save by evaluating your costs. 9. Bring in help Last but not least, if you’re facing an imminent cash flow crisis, you should consider bringing in a professional to help. You can choose to consult a financial advisor, or even hire someone more experienced than you on a full-time basis. This could greatly contribute to your bottom line, freeing up your time to do the things you excel at. The bottom line There you have it, nine easy solutions you need to start implementing today if you want to fix or avoid a cash flow crisis. If you find that the idea of financial troubles is causing you anxiety, practice getting into the habit of regularly reviewing your company’s finances. Similarly, it may not be a bad idea to start getting into a more positive mindset. After all, some of the biggest brands in the world are where they are because they had the courage to turn obstacles into opportunities. Natasha Lane is a lady of a keyboard with a rich history of working in digital marketing and growth hacking fields. She is always happy to collaborate with awesome blogs and share her knowledge with the hope that someone out there will find it quite helpful.

When you’re trying to find a business loan, you’re trying to balance your risk with your reward. Naturally, many entrepreneurs value low interest rates because of this.  While a low interest rate shouldn’t be your only measure of a quality lender or loan type, it can certainly inform your decision when choosing a loan. What is an interest rate, anyway? You might have heard interest rate and APR used together, but it’s important to distinguish the two. Interest rate — This covers the cost of borrowing the loan principal, shown as a percentage. This won’t include all additional fees, only the percent of a loan that will be interest. Interest rates can be fixed or variable. Fixed — This type of interest rate won’t change over the life of the loan. This can be a benefit if you get a good rate when you take out the loan. Variable — This type of interest rate fluctuates based on market changes. A variable interest rate can rise and fall, which could be a benefit if you catch a variable interest rate as rates decline. APR — The APR is the annual percentage rate, including the interest rate and additional fees such as origination fees, closing costs, application fees, etc. This is a more holistic approach to looking at the cost of a loan, so dig into this when you start seeking one out. How do lenders decide your interest rate? So what determines your interest rate when you’re looking at financing options? We asked some experts to weigh in. Jack Choros, Content Manager at CPI Inflation Calculator, opens the conversation with some financing facts everyone should know: “The success of any credit application usually relies on the five Cs of credit: Character — Will you pay on time? Capacity — Do you have the resources to pay off your credit? Capital — Is your business stable? Conditions — Can you agree to and meet conditions that lower the bank’s risk? Collateral — What can the bank take if you can’t pay?” What this boils down to will depend on your lender. “Some basic criteria that affect interest rates are your personal and business credit score, financial strength, use of funds, and time in business,” says Jay Chang, Senior Vice President of Sales Acceleration at Lendio.  And traditional lenders sometimes have different criteria from online lenders. Some online lenders look at hundreds of data points to assess your loan application. Jeffrey Bumbales, Director of Strategic Marketing and Partnerships at Credibly, explains that no lender is going to be the same: “Each lender has its own proprietary scoring model. Your file will appear more or less risky (and thus, expensive) depending on how well you stack up against the model.”  What types of business loans will typically have higher interest rates? Lenders consider several facets of your business when setting an interest rate. But there are some types of loans that, regardless of your flawless credit score and lengthy time in business, will generally have higher interest rates. What are they? Merchant cash advances and invoice financing “If a business opts for merchant cash advances or an invoice financing loan, interest rates will be high if measured annually,” explains Jared Weitz, CEO of United Capital Source. “Because these programs use ‘factor rates,’ which compute to one fee for the life of the financing, it’s not possible to measure these programs the same as we would a traditional business loan.” Fixed rate loans Jack Choros agrees that cash advances typically carry higher rates. However, he also mentions a couple other types of business loans: “Fixed loans typically are also financed at higher rates.” Remember what we said about fixed rates having the benefit of consistency? They can also have the drawback of a higher rate than a variable loan, because lenders can’t adjust interest for market changes.  Business credit cards Choros continues, “Of course, business credit cards will be higher than all of those other credit facilities just because of the convenience it affords and the fact that credit cards are designed for paying off more immediate expenses.” A business credit card is a perfect example of a product with a high interest rate that isn't necessarily a bad thing. This lending option is intended for quick payoff, so it makes sense that there's a penalizing interest rate if you neglect it. With this in mind, Bumbales asserts that your interest rate “completely depends on the file. Some equipment financing products only require a 400+ credit score as the transaction is collateralized by the machine. In general, obtaining the best pricing is less about the specific product and more about the specific file.” Having a strong application will do more for you than choosing a loan type based on rate estimations. Which types of business loans typically will have lower interest rates? Typically, any secured loan options will have lower interest rates. A lender is more likely to give you good terms when you have collateral. Bumbales agrees: “Products that are harder to qualify for, are collateralized, or generally less risky tend to have more favorable pricing.” SBA loans Of course SBA loans come with great rates and repayment terms; they’re backed by the Small Business Administration, which reduces lender risk. Chang notes that they have some of the lowest interest rates. Naturally, SBA loans have many requirements. The SBA website mentions requirements including being a for-profit business, operating in the United States, having invested equity, and having no other lending options. Traditional bank loans Weitz also notes the low interest rates of SBA loans, but he mentions that traditional lenders also offer low rates: “In 2020 the annual interest rate for these types of loans is between 2 percent and 15 percent.” Traditional bank loans can have a slow approval time and lots of paperwork, but the payoff for more work is low interest rates. But similar to Bumbales’ advice on high-interest loan types, Weitz reminds readers, “The best thing to do is to shop around and make sure you are approaching lenders that meet your business size and financial requests.” Don’t choose solely based on loan type. How do you decide on a good business loan? For one thing, there’s a lot more to look at than an interest rate. Creating a plan of attack will help you shop for business loans with a clear goal in mind. Evaluate why you need a loan “Do your due diligence and vet out what you need the loan for and how quickly you can repay it,” advises Weitz. “This will direct you towards the better options for you. A low interest rate isn’t the only thing to look at when you are determining loan options, make sure you agree to any collateral requirements, duration of the loan, prepayment penalties and other fees that apply if you deviate from the loan guidelines.” Shop around “My advice to entrepreneurs seeking a good business loan interest rate is to shop at more than one bank,” says Choros. “Just because a bank may already have a lot of your business, doesn’t mean they will give you the best rate on a new loan or credit product. Don’t take anything for granted. There’s always a bank out there willing to give you a better rate as long as you’re willing to do some shopping around.” Determine the ROI “Examine the opportunity and the ROI on the investment and compare it to the interest rates,” suggests Chang. “Many borrowers look solely at the interest rates, but forget to compare it with the potential ROI.” So, what's a good interest rate on a business loan? As with most things in life: it depends. According to our sources, you can find annual interest rates as low as 2 percent for traditional bank loans and small business loans, but rates for these lending options typically hover around 3 percent to 4 percent on the low end. Determining the ROI for your loan will help you find the best interest rate and terms for your needs; you may find that a loan with a high interest rate and short repayment term is better for your business. What Interest Rates Do You Qualify For? Learn more about business loans you may qualify for by looking at the top-rated companies and their offerings. Explore Your Options

Guest Post by Angela Ash Innovation is the name of the game nowadays, no doubt about it. While this is a well-established fact, the mechanisms by which things change for the better are not easily defined and established. That’s why hiring new talent is difficult, and keeping them is even more difficult. Startup founders have their own preferences, which do not necessarily always align, mainly because they operate in different industries and aim for different targets. Still, some traits are more likely to be observed in talented individuals than in regular nine-to-five employees. For one thing, talented individuals always look for business environments characterized by high levels of freedom. In plain words, that means that they want the autonomy to make risky decisions, along with the freedom to overlook short-term goals. Naturally, this practice is directly opposed to the traditional way of doing business, which makes the clash between the large conglomerates and startups even more obvious. If you are not willing to compromise on the rigid rules of traditional business, you will not be able to keep talent in your company for long. Finally, innovation is synonymous with risk. Before you even start looking for innovators, you need to accept that many projects will not pay off. It is important to keep encouraging teams that fail at their first attempt so that they can be inspired to bring forth the necessary business changes in the long run. So, how do you recognize talented people? 1. Look for people with high standards In most cases, innovative mindsets come coupled with high standards (often incredibly high, in fact). Because people with high expectations will give their best to achieve their goals, they are likely to employ all their creativity — a practice that often plays out in unexpected ways. Such people are also positive — a defining feat of the entrepreneurial mindset. It is not a difficult leap to conclude that people with the disposition for entrepreneurial negativity see fewer opportunities and are highly unlikely to be risk takers. 2. Look for people thinking outside the box Innovative people are basically dreamers. They are capable of thinking up projects traditional businessmen usually don't. It is, however, important to remember that even when people have talent, they do not necessarily have the means to make their ideas become reality. Dreamers should be encouraged and given the necessary resources to make big changes happen. The easiest way to spot such people is by observing how they work. In most cases, they will make their incredible results appear easy to achieve. Additionally, they will use technology to their benefit, and even be a little disruptive as they shake things up. Finally, remember that famous quote attributed to Bill Gates: “I always choose a lazy person to do a hard job, because a lazy person will find an easy way to do it.” People thinking outside the box operate in a much similar fashion. They’ll find shortcuts and unexpected strategies to make their dreams come true. 3. Look for action-takers Innovation is risky business, as already mentioned. It is, therefore, not sufficient only to have creative ideas and high standards. You should also be willing to take action to actually make those things happen. All entrepreneurs are risk-takers because startups are a fast-paced environment. Anyone unable to catch up with the constant changes will be out of the game soon enough. That’s why it is important to be willing to take the necessary risks as they pop up (and they do, all the time). If prospective employees prefer a nine-to-five job and are satisfied with performing their tasks in an orderly fashion, they are not innovators. Innovators always look for ways to improve performance and products, even when given menial tasks. 4. Look for people interested in achievements, rather than great salaries It goes without saying that everyone looks for a good salary, but it is also true that most people don’t go beyond that. If they get enough money, they will happily do their jobs, never looking for any actual change. In fact, they will be well opposed to it, since risks don’t always pay off. Talented people have a vision that salaried people rarely do. They are passionate about company goals and always look for ways to improve them. 5. Look for people willing to include others in their mission There’s no doubt that when employees get along, positive results are inevitable. That is achieved only when the vision and the mission of the company are more important than personal differences. It is no wonder that startups encourage team building activities and workshops where everyone is encouraged to propose their ideas, as this is the fastest way to get people connected by a higher purpose. Unlike business traditionalists, innovators know for a fact that cooperation is essential for success, especially in risky environments where innovation is ultimately linked. Simply put, startups are, in many ways, similar to families, since failing is not an option. Everyone faces challenges, and everyone succeeds or fails. 6. Look for originality Needless to say, copycats never drive innovation. It is original ideas that make businesses stand out in competitive environments. Innovators are resourceful no matter the challenge and capable of turning the situation to their benefit, even when additional funds are not around (which happens most of the time). In a nutshell Innovation is hard work and a joint effort. Risks are a given, and so is failure. However, there are different ways to define failure. Magnus Goransson, Design Director of Lego’s Creative Play Lab, argues that the definition of failure depends on the glasses people are looking through. Commenting on Lego’s Nexo Knights, Goransson says that they were a huge success among Germans, but a complete failure among American kids. “So what glasses are we actually looking through when we talk about failure? Because it seems like depending on the glasses you put on, they change what failure is,” says Goransson. It would only seem fitting to apply this approach to all things innovation. Talented people will always look for ways to turn the situation to their benefit, because they are positive thinkers, willing to take risks, and ready to include everyone in their mission. Just remember to reward them appropriately! Otherwise, they’ll take their talents elsewhere. Employee retention is a big problem all over the globe these days, but it doesn’t have to be your problem! Keep your employees happily engaged, and you’ll keep those team members that you searched so effectively to find in the first place! Angela Ash is a professional content writer and editor, with a myriad of experience in all forms of content management, SEO, proofreading, outreach, and social media. She currently works with Flow SEO, a boutique agency founded by Viola Eva, which offers in-depth SEO analysis, custom SEO strategies, and implementation.

Guest Post by Gabby Miele Problems in business can happen to the best of us. Even when you have thoughtfully executed your ideas, you’re still going to come across hurdles that will lead you to fail. And sometimes you may fail big. However, this doesn’t mean the end of your business.  If anything, it’s a test for how well you can bounce back. It’s your choice whether to fight back or just sit there feeling defeated. If you have encountered a failure in your business recently, make sure to keep reading because we’ll share with you the best ways that you can bounce back. 1. Identify the problem When we are struck with failure, it can be hard to look at the reality of the situation. The last thing we want to do is to investigate what really happened. But, this is absolutely the most important step in bouncing back. Go back to the issue and list the factors that could have affected it. Then, rank them by which had the most impact. By knowing what caused the problem, you can then take the right steps to fix it so it doesn’t happen again. 2. Ask for support So you’ve identified the problem but you are lost on how to solve it. This is the right time to ask for support. Approach your mentor or someone in your industry that you respect. They can give you advice on what step to take next and also some perspective. You’ll find yourself feeling better knowing that setbacks happen to everyone and the best ones grow even stronger from it. 3. Communicate with your customers If customers are affected by your recent complications, make sure to let them know. No one likes to hear bad news from the wrong party. It’s always better to hear from you. This builds your reputation and keeps your customers’ trust. 4. Get some feedback This time you want to hear from your employees. They might just have a unique perspective on the situation and give you insights that you never would have thought of yourself. These are the people working in your everyday operations so it’s essential that you get their thoughts. 5. Take care of your financials Your finances often get the most impact during a company setback. Keep its health in check by ensuring you are not losing even more money than you should be. This may mean cutting back on unnecessary business expenses and fast tracking your other sources of revenue. You may also want to keep direct deposits easier with money transfers. Do this both for your employees and suppliers. This ensures that the money in your business keeps flowing while you are recovering from the setback.  6. Shift your focus When you’re faced with a setback, it’s easy to get stuck because you’re afraid that you’ll make an even bigger mistake. You cannot dwell on your failure long. As we said, how you react to this problem will determine how successful your business will be. If you respond with self-defeat, you will sink even further. More than anything, attitude is important for bouncing back from a business complication. After you have taken the first essential steps above, it is now time to shift your focus to the solution. This means making a plan for how you’re going to solve a problem. Share with the team what their responsibilities are for this plan and create timelines for when the action steps will be executed. The goal is not to succeed necessarily but to simply move away from the setback so things are running normally again. Business complications can either make or break you. Which one are you going to be? Gabby Miele is an Outreach Analyst and Content Manager in Philadelphia, Pennsylvania. 

For many businesses, securing more financing is the key to accelerating growth. There are several effective pathways to getting a loan for your business, and there are plenty of good reasons to seek one out. We asked entrepreneurs for their stories with business loans, and they responded with their own accounts. If you’ve been wondering where entrepreneurs apply, how many times they apply, and what they apply for, check out their experiences. These individuals prove that success comes in many different forms. Ray Zinn, Silicon Valley’s Longest Serving CEO “I secured a loan with a bank — something that was and is still unheard of in Silicon Valley. “It wasn't easy to convince a bank to loan me the money to start my company but I personally guaranteed the loan which helped. Also, I ended up agreeing to some very onerous requirements which included having to be profitable from the very start, something else that is unheard of in Silicon Valley. No startup is profitable in its very first quarter, but we were.” Most entrepreneurs won't land a loan to launch their business; banks want to see evidence of profitability before they lend. In Zinn's case, he had to agree to a strict condition that many new businesses would not be able to honor. But Zinn says he wasn't looking to angel investors, venture capitalists, or friends and family to loan him the money — he was determined to run his company without the involvement of these types of investors, who can sometimes demand too much stake in a business. Zinn's method allowed him a degree of freedom that many startups can't match. Sarah Franklin, Cofounder of Blue Tree AI “I was thousands of dollars in debt before starting my digital marketing and SEO business, but had a clear goal and plan to become successful and be financially free. “I thought for many weeks about taking a business loan out and was unsure if I was ready for more bills. After a lot of research and mapping out ideas, I came to the conclusion that a loan would be the best start to grow my business. “Since I work in the online industry developing highly effective technology techniques and software, looking for an online lender was a no brainer. It well suited my job and lifestyle and would allow me to better my skills and knowledge in this realm of work. “It took me three tries before getting the loan I was applying for, but it sure was worth the wait. Once this was achieved, we properly set up a functioning system to reach big goals within our business.” Franklin applied with online lenders, which are sometimes less stringent with their requirements. Traditional lenders want to see a high credit score and a history of success, but they can offer you low rates if you're approved. Conversely, online lenders often examine several more factors to analyze the potential for success before approving an applicant. “It took me three tries before getting the loan I was applying for, but it sure was worth the wait.” Jacob Seiter, Founder of MyBestWallets “A time came when my business was flourishing fair enough and I decided to expand it. For this purpose, I required new employees and upgraded web design, as well as official equipment. After all estimation, I concluded that [even] after paying interest on the loan still, I could generate more revenue as per expectation. “I had chosen online lenders because we were taking the loan for the long term, not for a year, and required minimum interest rates. I had no issues in following the payment schedules. The most important thing was I got quick loan approval after applying to three lenders. “It helped us to target the related goals. . . . Now we have a planned expansion with remarkable success.” Seiter wanted a quick loan, and online lenders allow you to move faster than a traditional lender. Working through a loan marketplace, like Lendio, would allow you to apply to several lenders at once. Cassy Aite, CEO of Hoppier “We applied for a business loan because we couldn’t scale without hiring new people. We knew we had a good chance of increasing our revenue massively, but there was no way to do it without hiring new people — and we couldn’t afford to pay for that. So basically, we needed money to make more money, so we applied for a business loan. “We applied traditionally because we had been through the process before. We didn’t have to look for long — the second lender we spoke to approved our loan because we had solid data about our business, including CAC, LTV, MRR, and other relevant metrics. “The loan helped us grow from 10 to 50 people in just under six months. We used the money for salaries rather than complex growth hacks, and it paid back to us tenfold.” Aite's story exemplifies a common reason for securing a business loan: hiring more personnel. Tim Fulton of Small Business Matters asserts that the average revenue per employee for a small business is $100,000. It's not as clear-cut as more employees directly leading to more revenue, but if you quintuple the size of your workforce like Aite did, it's likely to pay you back. “We used the money for salaries rather than complex growth hacks, and it paid back to us tenfold.” Mike Bran, Founder of ThrillAppeal.com “I applied for a business loan after running my business for a year. The reason behind this was I started from freelancing and collected enough money to support my business for a year. Moreover, I wanted to understand the basics of business practically before taking any big move. So, I thought about applying for a loan when my business started generating a 27 percent profit. I had confidence in myself that now I can upscale it. I took out a loan to expand my business because, at that time, I was completely aware of my past mistakes and already had working strategies. “I believe in this digital era; we do not need traditional lenders. Online vendors have a massive database of individual investors and institutions. Moreover, I had the option to see my loan progress. I had a peace of mind by knowing that they have transparent fees and terms unlike most of the traditional lenders. My credit score was above 600, so my application got accepted in the first try. “Before taking a business loan, I prepared a detailed plan of using it. I was completely aware of my W's — what, who, why, when, and where. So, online lenders were my source for a loan, and my plan was ready. I was aiming to reach new clients. For this purpose, I needed digital marketing and increasing the workforce by 40 percent. We invested much in digital marketing because, at that time, we had enough budget to invest and to handle new orders effectively. As a result, my clientele increased and profit increased by 30 percent. I aimed to increase it to 35 percent, which I did not achieve. Still, I expanded my business successfully, which was the primary purpose behind taking the loan.” Bran spent time building up his business before applying to an online lender, and it only took him one shot to be accepted. Bran had the foresight to invest his funding in a service some small businesses overlook: digital marketing. By increasing his digital presence, his profit increased 30 percent, and it's a testament to his careful planning and strategic use of his loan. Paul Bromen, CEO of HelpfulHabitat.com and UponaMattress.com “After success with my first website UponaMattress.com, I was looking to buy another one. I had some money in the stock market I could have used, but I didn't want to pay taxes on my gains by selling. Taking out a loan meant that I could keep that money working. I knew that if I ran into trouble I could always sell the stock and pay off the loan. “I worked with a traditional lender for an SBA loan, but opted for a loan from a family member instead. The interest rate was about the same, but I was able to move much faster to capitalize on a deal. “The loan helped me quadruple my business and allowed me to pursue new markets. I gave my assistant more hours and hired two new writers.” Bromen already had a way to pay off his loan if things went south, which is more than many entrepreneurs can say. If you're a careful investor, you may see yourself in Bromen's story. SBA loans have plenty of perks, like long term lengths and a cap on their interest rates, but Bromen opted for a loan from family because he was able to move forward faster. We've mentioned that loans from traditional lenders can take a long time to get approved, but you can also wait a long time before the amount is usable. Could a Business Loan Finance Your Dream?  Learn more about business loans that could help you start your own business by looking at the top-rated companies and their offerings. Explore Your Options