How To Accept Credit Cards Online

So you’ve realized you want to start selling online. Good for you! The ecommerce market is certainly booming. But before you can start raking in the money, you probably have a few questions, like “how do I make a website?” and “how do I accept credit cards online?” Here’s the good news: There are plenty of software options and payment processors to choose from! The bad news? There are plenty of software options and payment processors to choose from. So how do you choose?

As always, there’s no one perfect solution for everyone. You need to know your business (and where you want to go with it) and have a rough idea of what you need. If you have no idea where to start, never fear! In this article, we’ll cover some of the basic considerations about accepting credit card payments online, as well as types of payment processors and how to accept credit card payments online with and without a website. We’ll also discuss some of our favorite solutions for ecommerce and provide resources to help you learn more.

5 Questions To Ask Before You Start

It’s really important, before you dive headlong into any kind of financial investment in your business, to sit down and make sure that you know what you want and what you need. I say that a lot, but with selling online it’s especially important to look before you leap because if you get any component of your setup wrong, redoing it will cost time and money.

So before anything, here are some questions to consider:

  1. How technologically savvy are you? Simply put, are you even able to build and maintain your website yourself? If you’re not exactly a technological wizard, your priority should be finding an easy-to-manage solution. You can also outsource tasks you can’t handle yourself, such as design or even data entry for the creation of products. Of course, if you have an ambitious idea and no ready-made solution exists, or you need a lot of customization, you might need a developer who can work with software APIs to create what you need. You can find freelance developers to help out as you go, but the more high-tech you go, obviously, the more you should consider having a full-time developer.
  2. Do you already have a website? If yes, do you like your website? Would you rather abandon it for a better site with more features? If you already have a site and don’t want to go through the effort of creating a new site to sell a handful of products, payment buttons or plug-ins are better options. If you don’t have a site or you don’t mind nixing your current site in favor of something better, shopping cart software might meet the brief nicely. But of course, you don’t need a website to accept payments online. We’ll talk about all of these options more below.
  3. What’s your budget? When it comes to numbers, you need to look at both upfront costs and monthly (or yearly) costs. How much can you spend at the outset, and how much do you expect to be able to afford on a monthly or annual basis? Keep in mind the more technically advanced your website, the more you can expect to pay to build and maintain it. Likewise, the busier your site — the more products you have and the more sales you make — the more you can expect to pay. Don’t forget the tangential costs, such as hiring a designer or a developer, or data entry, and of course, the costs of payment processing itself!
  4. What are you selling? Whether you’re offering digital goods, subscriptions/services, or retail products, look for service providers that cater to your industry so you don’t have to find creative workarounds. Many solutions are generalized for a broad array of merchants, but with add-ons and integrations to make them more tailored. You can also find payment processors and software that offer ready-made specialized solutions and service plans, such as micropayments for merchants who sell low-priced digital goods.
  5. How comfortable are you with handling security features? If you want to sell online, you have to make sure your website is secure. That means ensuring your site is PCI compliant. The more involved you are in the payments process and the more sensitive information your website handles, the more of a burden you are taking upon yourself. Fortunately, many payment processors and other software providers offer solutions to keep your customers’ information secure and reduce your PCI burden — in some cases, you may not need to do anything at all.

Once you’ve got the answers to these questions and a list of the features you need and want, it’s time to actually start looking at your options. One of your primary considerations should be finding a payment processor. However, depending on your business model, you might want to first look at what kind of ecommerce options work for you and then select a payment processor from the available options.

We’ll begin by talking about payment processors and go on to look at what other software or platforms you should explore.

Types Of Payment Processors

No matter how you go about finding a payment processor — choosing a standalone, going with the default processor included with your shopping cart, or choosing a recommended partner from a software provider — you need to consider what kind of business model the processor uses. If you’ve been here before and read any of my other articles, you know that I am talking about the difference between third-party payment processors versus traditional merchant accounts.

Traditional merchant accounts are very stable. It would take a clear violation of either your contract or card network rules in order to trigger an account termination, and you’re unlikely to encounter a hold on funds unless you’ve had a series of issues with chargebacks or fraudulent transactions. However, most merchant account providers expect you to have an established business and a monthly volume of $10,000 in credit card transactions. Plus, setting up a merchant account will typically take a few days. It could take longer depending on how many processors are on your short list and how much negotiation is required.

Third-party processors are not quite as stable as merchant accounts. That’s because instead of issuing separate accounts for each of their merchants, everything is lumped together in one giant, communal merchant account. It takes very little effort to apply for an account with one of these processors, and you can often get approved and set up to accept credit cards online within a day. Factor in no monthly minimum volume requirements and third-party processors provide a great way for new businesses to take payments. However, the trade-off is that you’ll face greater scrutiny and a higher risk for account holds or terminations, often with no warning. Check out our article on how to prevent merchant account hold and freezes to learn how to reduce your risk.

While third-party processors are riskier than merchant accounts, they are a great option for new businesses who don’t know what sort of volume they can expect and don’t have an established history. Even for established businesses, there are some advantages: namely, third-party processors offer predictable, flat-rate pricing, so you know exactly how much you’ll pay. The best merchant account providers typically offer interchange-plus pricing, which, while clear and transparent, doesn’t make it easy to accurately estimate processing because interchange rates vary.

It’s up to you to decide which type of processor is right for your business. I do want to point out that some software companies (ecommerce shopping carts, point of sale solutions, invoice platforms, and more) often build white-label payments into their solutions. These solutions can take the form of third-party processors or merchant accounts, so make sure you investigate before just going with the default processor. In addition to their native payment processing services, most ecommerce software providers support integrations with an assortment of merchant accounts and third-party payment processors.

Square is our top-pick for third-party payment processor. In addition to predictable, flat-rate pricing with no monthly fees or contracts, Square offers a whole suite of seamlessly integrated apps to address in-person and online sales at no charge at all. eCommerce transactions process at 2.9% + $0.30 each.

For merchant accounts, we recommend CDGcommerce, which offers flat-rate pricing and an interchange-plus option depending on the merchant’s payment volume. There are no monthly minimums and no contracts, just a $10 monthly fee. Low-volume merchants will pay 1.95% + $0.30 for most transactions, or 2.95% + $0.30 for premium, corporate, or international cards. Merchants who process more than $10,000/month are eligible for interchange-plus pricing with a 0.30% + $0.10 markup.

Does Your Payment Processor Include a Gateway?

If you want to accept credit card payments online, it’s not enough to find a credit card processor. You also need a gateway. As the name suggests, a gateway is an intermediary software program that transfers the payment data from your website to the customer’s bank to be approved or declined (and then routes the money to your merchant account).

Many payment processors offer gateways as part of their services. For example, PayPal, Square, and Stripe all offer gateways bundled with the rest of their services at no additional cost. CDGcommerce offers its Quantum gateway as part of its services for online merchants.

However, some processors will charge you a setup fee and/or a monthly fee for use of the gateway. While it’s fair and legitimate to charge for this service (especially if you’re being offered other discounts or freebies in exchange), there’s no reason for you to overpay, either. Make sure you know how much a gateway service will cost if it’s not offered for free.

While it’s rare to find a processor that doesn’t include some sort of gateway access, they do exist. In the event that you find yourself leaning toward one of these processors, you can find your own gateway. Authorize.net is nearly universally compatible and reasonably priced, which makes it a good option for most merchants. (Worth noting: CDGcommerce’s gateway, Quantum, also includes an Authorize.net emulation mode to maximize compatibility.)

Want to know more about how payment gateways figure into your ecommerce setup? Check out our article, The Complete Guide to Online Credit Card Processing With a Payment Gateway, for more information.

How To Accept Online Payments With A Website

A website is a pretty integral part of selling online (but it’s not 100% necessary — we’ll look at some alternatives in the next section). As mentioned above, the first question to consider is: Do I already have a website? Then ask yourself: Do I like that website, or would I rather start over completely? Fortunately, there are solutions for both of these scenarios. For existing sites, you can implement payment buttons or seek out a plug-in or extension that supports ecommerce.

Adding Payments To An Existing Site

best templates

If you’ve used a site builder such as WordPress, Weebly, Wix, or Squarespace, it’s fairly simple to implement online payments. Simply check out the sitebuilder’s available third-party apps, extensions, and plugins. If you already know which payment processor you want to use, you can search directly for an available add-on. Otherwise, you can browse and see what options are ready-made for you. These add-ons will allow you to securely collect payment information from your customers as well as manage the order fulfillment process. Do your research and go with solutions from your site builder rather than third parties, if possible. Check reviews of any plugins or extensions you add and make sure they are well supported and any glitches are fixed in a timely manner.

If you run a WordPress site, WooCommerce or Ecwid could be good starter options. WooCommerce is actually a free plug-in to add to your site, with a basic theme and your choice of payment processors. It’s a very modular setup, so you can choose from a mix of free and paid extensions that allow you to customize WooCommerce to your needs. That includes payment processors, subscription tools, the ability to create add-ons (such as gift wrap for products), and more. Most WooCommerce add-ons are charged on an annual basis, which could require more of an up-front investment than a monthly subscription, so be aware of this fact.

Ecwid is another plug-in designed for WordPress. However, it also works on an assortment of other website-building platforms, including Wix and Weebly, Ecwid does offer a free plan for businesses with 10 or fewer products, but for higher-tiered plans you’ll pay a monthly subscription fee. Ecwid supports a wide assortment of integrations, including payment gateways. With higher plan tiers, you also get access to expanded sales channels.

Wix and Weebly’s website builders can be used for blogging, personal portfolios, and any other purposes. They both offer online store modules. Online stores from Wix start at $20/month with no transaction fees and your choice of processors. Upgrading to an eCommerce plan is fairly simple from within the Wix dashboard and won’t require any substantial reworking. Simply add the “My Store” module to your dashboard, make the upgrade, and start creating products.

Finally, there’s Weebly. Square actually bought Weebly in the spring of 2018, so it’s possible we could see Weebly start to favor Square pretty heavily in the future. For now, though, Weebly’s online store plans start at $8/month (on a yearly plan), with a 3% transaction fee on top of your processing costs. The transaction fee drops off with higher-tier plans, leaving just the monthly fee.

The other way to add payments to an existing site is to look for a payment processor that supports customizable payment buttons. A good payment button creator will give you power over the appearance of the buttons as well as the settings for transactions. The obvious, go-to solution for many is PayPal, which offers a pretty powerful array of tools. PayPal’s buttons are a good option whether you are selling a single product or multiple ones. You can set up payment buttons to allow products to be added to a cart or to go directly to checkout. PayPal even allows nonprofits to create a “Donate” button for their site, which can be configured for one-time and recurring donations.

An alternative to PayPal is Shopify Lite, an entry-level solution. For $9/month plus transaction costs (2.9% + $0.30), you can accept payments on your website by adding payment buttons. The plan also includes access to Shopify’s mPOS app and the ability to sell on Facebook (we’ll talk about that option in the next section, too.) And it’s worth mentioning that Ecwid also supports the creation of custom buy buttons.

While adding payments to an existing site is incredibly convenient and often requires little work, you won’t get quite as many tools as you would with a hosted ecommerce software solution. Which brings us to the best solution if you would rather build a new site or have no website to start with:

Building A New Site With Shopping Cart Software

eCommerce software apps, sometimes also called shopping carts or shopping cart software, are hosted, all-in-one solutions to online sales. Adding an ecommerce feature to an existing website requires you to choose a platform, buy the domain, and pay for hosting, but with shopping carts, you’ll get everything in a single package: online sales and product management, hosting, and sometimes even the ability to buy a domain name directly. Typically, shopping carts will also help you centralize control of sales across multiple channels, so that if you sell on social media, on eBay, or through another channel, you can handle order fulfillment through a single platform. That even includes buying postage (at a discounted rate) and printing the shipping labels. Some shopping carts will offer marketing tools or integrations with marketing platforms, as well as integrations with point of sale systems.

As far as payment processing goes, some shopping carts have opted to include their own white-label payments as a default part of their services. One such cart is Shopify, which offers its own Shopify Payments service (read our review). However, this is just a white-label version of Stripe. Be aware that choosing a payment processor other than the default can incur additional fees.

Generally speaking, even if a shopping cart doesn’t offer all of the features you want, you can search the app market for available extensions and integrations to get what you need. It’s worth researching the available add-ons as well as the native software features.

There’s a lot to consider and compare with a shopping cart. Obviously, you can use a sitebuilder such as Weebly or Wix, which both offer eCommerce modules. Then there are ecommerce-exclusive platforms, including Shopify and BigCommerce, which make it easy to build your site and customize the design (and even offer blogging so you can centralize control of your website).

If you want a whole lot of freedom and have coding knowledge, an open-source platform such as Magento might be more to your liking. Open-source platforms tend to be chock-full of specialized features (particularly if they have attracted active user communities) and you have almost limitless control of your site. A closed-source, SaaS platform is certainly a lot easier and more convenient for business owners who are just starting out and want to go the DIY route.

If you aren’t sure what you want, we recommend you start by checking out Shopify and BigCommerce, both of which are affordably priced for new businesses and offer extensive customer support resources. They also both offer multi-channel sales manage so you can sell through your own site and through other platforms but manage all of your orders from a single portal.

If you’re still curious about what makes a great ecommerce platform, check out some of our other resources!

  • The Beginner’s Guide to Starting an Online Store (eBook)
  • Shopping Cart Flowchart: Choose the Right eCommerce Software for Your Business (Infographic)
  • Shopping Carts 101: How to Choose a Shopping Cart for Your Business (Article)
  • Questions to Ask Before You Commit to a Shopping Cart (Article)

Managing Services, Subscriptions & Other Recurring Charges

A lot of merchants, from accountants and other professional service provideres to lawn care and cleaning services, could benefit from being able to automate recurring charges. And of course, the ability to automate charges is essential for SaaS providers and subscription-box sellers.

Generally speaking, the ability to accept recurring payments — for monthly services or subscriptions — isn’t a default option for payment processors or shopping carts, which tend to be retail-focused. However, you can find plenty of solutions that will work with your existing eCommerce setup. For example, Stripe and Braintree both offer extensive subscription management tools along with their payment gateway and processing services. Add-on services such as Chargify, Recurly, and ChargeBee work with a variety of processors. Zoho Subscriptions and Freshbooks also offer recurring billing tools. PayPal offers recurring billing tools for its merchants; Square offers “recurring invoices” but not a lot of advanced customization for subscription billing.

Proper research will be very important when selecting a provider that offers all of the features you need, whether you require metered billing for usage-based online services, the ability for customers to upgrade to a higher tiered plan mid-billing cycle, the ability to offer free trial periods and extend them, or a way to calculate taxes. Tools that automatically update expired cards can also help reduce failed charges and therefore improve revenues and reduce customer loss.

Accepting Online Payments Without A Website

Most people equate taking payments online with having a website. That is the most common option, but you don’t actually need your own website. Let’s talk about a few of the alternatives for how to accept credit cards online.

Creating Online Invoices

You could create your own invoices in Microsoft Office and send them out via email, but then you’ve got to keep track of which invoices have been sent and which have been paid — and you’ve still got to deal with waiting for the check in the mail. Online invoicing solutions can eliminate every single one of these hassles.

Generally speaking, invoicing software is cloud-based, so you can access it anywhere. You can customize invoices and send them via email (or generate a shareable link to the invoice). But unlike old-fashioned invoicing, these invoices include a link to pay directly in the invoice. Your customers follow the link, enter their payment details, and bam! You get paid much quicker.

Depending on which invoicing software you choose, you can get some powerful features. For example, PayPal allows you to enable partial payments on an invoice if you are willing to accept installment payments. Square’s invoicing links up with the platform’s customer database, allowing you to send recurring invoices and even store customer cards on file to make getting paid even easier. Zoho Invoice, which starts at $0/month, also allows for a customer database, as well as project management (so you can generate an invoice based on the number of hours worked). Shopify offers invoice creation within its platform at no additional charge as well — and this feature is even available on the Lite plan.

For most merchants, Square Invoices may be the most appealing, as it’s available with a Square account at no additional charge. However, Shopify’s built-in invoicing will work for merchants who want to sell with or without a website. Merchants who need project management as part of their invoicing should look at Zoho Invoice.

Using Online Form Builders

So you don’t have a website, but you still need to collect user information and accept payment. Online form builders offer an easy way to do both. Plus, you can post links to forms on social media or send them out via email.

Off the top of your head, you might think of Google Forms, which is free to use and quite advanced for a freemium software. However, it doesn’t integrate seamlessly with payment processors. Your best option, in this case, would be to use PayPal’s embeddable buy buttons and include the button in the form’s submission confirmation page as a second step. However, you’ll have to manually reconcile the payment records versus form submissions.

Subscription-based form builders will cost you money but offer far more capabilities than Google Forms, including direct integrations with payment processors/gateways such as PayPal, Stripe, Square, and Authorize.net. Subscriptions generally work on annual or monthly plans, but one option, Cognito Forms, offers an entry-level plan that charges 1% of the transaction amount instead. (Note, that’s in addition to any processing fees.) Other form solutions worth looking into are Zoho Forms and Jotform. Zoho Forms starts at $10/month and includes unlimited forms and up to 10,000 submissions. It integrates with both PayPal and Stripe. Jotform’s paid plans start at $19/month and are limited to 1,000 submissions, but include integrations for quite a few payment processors, including PayPal, Stripe, Square, and even Dwolla. Cognito Forms’ paid plans start at $10/month plus 1% of the transactions and include up to 2,000 form submissions. Integrations include PayPal and Stripe.

And we haven’t even talked about event registration sites. There are a lot of them, but the one many people are likely familiar with is EventBrite. EventBrite allows you to put all the details of your event online and sell tickets — including setting multiple tiers of admission and promotion cards, automatically setting price changes for registration deadlines, and so on. You can even collect marketing data about your patrons, from their zip codes to how they heard about the event. Your event is searchable from within the EventBrite platform, allowing people searching for something to do to discover your event as well. EventBrite does charge fees on top of processing costs, but these can actually be passed onto event registrees, saving you some money at least.

Selling On Social Media

It wasn’t all that long ago that the idea of being able to buy products directly through social media channels was novel and experimental, but nowadays you can create your own online shop through Facebook, or sell on Instagram or even Pinterest.

With Facebook, you just need a Facebook business page to get started. You can choose your payment processor (PayPal or Stripe) and start manually uploading products, all of which have to be reviewed by Facebook before they can go live. An easier option is to link your Facebook shop to an online store builder such as BigCommerce, Ecwid, or Shopify.

Shopify is actually an interesting solution because, while its core offering is an online shopping cart, it offers a “Lite” plan for $9/month that includes access to its mPOS app, buy buttons for a website, and a Facebook store with automated tools to make the process easier. You wouldn’t necessarily have to go through the hassle of building a website with Shopify just to sell on Facebook, but you still get more tools than you would by going through Facebook directly. Check out our Shopify Lite review for an in-depth look at the plan and all its features.

Selling on Instagram requires you to have a Facebook shop (because Facebook owns Instagram) to create what it calls “Shoppable posts.” That shop can be managed directly via Facebook itself, or via Shopify or BigCommerce as one of multiple sales channels. I’d like to point out that Instagram isn’t available as a sales channel with the Lite plan; you’ll need to upgrade to Shopify Basic at $29/month to be able to manage sales via Instagram.

Lastly, Pinterest allows merchants with a business account to create “Buyable pins,” so you can sell from your Pinterest page. Unlike Facebook, where you can manage the buyable pins from the platform, to sell through Pinterest you will need to go through either Shopify or BigCommerce and actually apply for approval before you can start selling.

Shopify Lite is an ideal option if you want to start with Facebook and maybe add buy buttons to a website. You can upgrade to Shopify Basic ($29/month) to get your own site, plus access to Instagram and Pinterest if that appeals to you.

Selling In Marketplaces

Online marketplaces are a good alternative to having your own website if you’re selling retail goods. You don’t have to pay for hosting or invest anything in web design. You simply create your product listings using the tools provided and publish them. Marketplaces allow you to get your products in front of a large audience without you having to build a stream of traffic yourself. However, the trade-offs are that you generally pay more in fees (listing fees, seller’s fees, and payment processing) than you would with your own website, and you have zero control over the design of the site or even how your products are displayed. Generally speaking, you are limited to using whatever payment processing the marketplace offers as well.

A few popular marketplaces include:

  • eBay
  • Etsy
  • Amazon
  • Jet (owned by Walmart)
  • Ruby Lane

Accepting Payments Through Virtual Terminals 

The final alternative is a bit of a stretch, I’ll admit, but it can be a powerful tool for some merchants. A virtual terminal is a web portal where you can manually enter credit card information to process a transaction. (There’s the stretch: VTs require an internet connection, so they’re technically online payments.)  Virtual terminals are a necessity for merchants who want to accept payments over the phone (or even by mail).

Some payment processors offer a virtual terminal as part of their software package, others as an add-on. These providers include PayPal, Payline Mobile, Square, and Fattmerchant. However, if you want the best value for a virtual terminal, we recommend Square. You pay only the payment processing costs (3.5% + $0.15) and it is interoperable with the rest of Square’s platform.

Beyond Credit Cards: Alternative Online Payment Methods

Credit cards are the go-to for accepting payments online, but they aren’t the only options. For starters, there are ACH bank transfers, which are generally less expensive for merchants to process. They’re often preferred in B2B environments, but some consumers favor them too.

Offering ACH processing as an additional option, especially if you’re in the B2B space, could win you more customers. According to a 2017 Payment Benchmarks Survey by the Credit Research Foundation and the National Automated Clearing House Association (NACHA), ACH transfers currently account for 32 percent of B2B transactions, lagging behind checks, which took the no. 1 spot at 50 percent. Credit cards account for just 11 percent of B2B transactions. By 2020, the survey estimates that ACH will take the top spot and account for 45 percent of B2B transactions.

Despite this, most merchant accounts or even third-party processors don’t offer ACH by default. Some offer it as an add-on plan, others may require you to look for a supplemental option for ACH acceptance.

ACH is far from the only option as far as “alternative” payment processing now, too. Mobile wallets are bridging the gap between in-person and online payments, and card networks have implemented their own online checkout options for cardholders. The major advantage to accepting these options is that they offer an extra layer of security for consumers. For example, Apple Pay on the web still requires biometric authentication before approval.

Some of these alternative payment methods include:

  • Apple Pay on the Web
  • Google Pay
  • Microsoft Pay
  • Chase Pay
  • MasterPass
  • Visa Checkout
  • Amex Express checkout

Apple Pay and Google Pay are fairly widely supported, but you may not see the other options on this list everywhere.

Two noteworthy providers that offer ACH, as well as other alternative payment options, are Stripe and Braintree. However, both are developer-focused platforms, so you’ll need someone with the technical know-how to implement them. Merchant accounts that specialize in eCommerce and provide a solid gateway might offer these options too.

We recommend Stripe because of its extensive developer tools, customizable checkout, and resources for recurring billing. The company also offers round-the-clock customer support (an admittedly recent addition to its feature set). Plus, Stripe is great for international merchants who want to be able to accept localized currencies in Europe and Asia.

Begin Accepting Payments Online

Starting an online store and learning how to accept credit cards online can seem like a daunting task! There are so many factors to consider, but I hope I’ve been able to shed some light on the process and point you in the direction of some good options. A merchant account can give you security and stability, but it may not be the most cost-effective option for low-volume merchants. A third-party processor can get you set up quickly with predictable pricing that often favors low-volume merchants, but the trade-off is account stability. And of course there’s the matter of compatibility: You need to make sure that whatever payment processor you choose offers a gateway compatible with the software (and sales channels) you want to use.

But you also need to have a good idea of what you can afford to spend up front and on a monthly basis and understand your limitations when it comes to technology and software. If you want to go the DIY route, you’ll need to be fairly tech-savvy. Otherwise, be prepared to outsource tasks to designers, developers, and even admin assistants. Some software solutions make it incredibly easy to do everything yourself, others will require lots of hands-on effort to make them work.

If you’re still not sure where to go from here, we recommend you check out our article: The Best Online Credit Card Payment Processing Companies. You can also view our merchant account comparison chart for a quick look at our favorite providers.

Have questions? We’re always happy to hear from our readers, so please leave us a comment!

The post How To Accept Credit Cards Online appeared first on Merchant Maverick.

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Guide To Buying ShopKeep Hardware

There are a lot of reason why ShopKeep is among our most recommended point of sale systems for small businesses. This product remains one of the more affordable options on the market while giving you a wide variety of features to help your retail or restaurant establishment function efficiently. Chances are, if you’ve decided to go with ShopKeep or are heavily leaning in that direction, you appreciate convenience. You don’t want to spend any more time than absolutely necessary sweating some of the seemingly mundane aspects of starting a business — such as researching and purchasing all of the necessary hardware you might need.

Fortunately, ShopKeep makes this process easy as well. ShopKeep offers an impressive array of hardware bundles and individual items from some of the top-rated companies around all for purchase through their website, making it possible to get absolutely everything you need in one convenient stop. Here’s a brief overview of the hardware that ShopKeep has to offer.

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Hardware Delivery & Shipping

To get started, ShopKeep will ship all hardware within the continental United States for free with no minimum purchase and all orders generally arrive within 7 business days. They will also ship to Hawaii, Alaska, and Canada for an additional fee.

ShopKeep has a generous replacement policy, offering to replace any new equipment that fails to work properly within one year. The same agreement applies to refurbished hardware for 90 days. You may also return any hardware, no questions asked, within 30 days of purchasing it to receive a full refund. Shipping back to ShopKeep is free.

Get Started With ShopKeep

Hardware Bundles

ShopKeep offers some convenient Starter Kits to get your business up and running quickly.

  • Basic Starter Kit for iPad: $809 or $839 if you choose Bluetooth printer
    • 14×16  Cash Drawer
    • Epson 2″ Ethernet Printer or Epson 2″ Bluetooth Printer (
    • iPad Air Stand
    • Ethernet Credit Card Reader
    • Compatible with Apple iPad Air/Air 2 and Apple iPad Pro 9.7″
  • Basic Quick Service Starter Kit for iPad: $1166 or $1196 if you choose Bluetooth printer
    • 14×16 Cash Drawer
    • Epson 2″ Ethernet Printer or Epson 2″ Bluetooth Printer
    • iPad Air Stand
    • Ethernet Credit Card Reader
    • Epson Kitchen Printer
    • Ethernet Cable
    • Compatible with Apple iPad Air/Air 2 and Apple iPad Pro 9.7″
  • Basic Restaurant and Bar Hardware Kit for iPad: $1166 or $1196 if you choose Bluetooth printer
    • 14×16 Cash Drawer
    • Epson 2″ Ethernet Printer or Espon 2″ Bluetooth Printer
    • iPad Air Stand
    • Ethernet Credit Card Reader
    • Epson Kitchen Printer
    • Ethernet Cable
    • Compatible with Apple iPad Air/Air 2 and Apple iPad Pro 9.7″
  • Basic Retail Hardware Kit for iPad: $1297 or $1327 if you choose Bluetooth printer
    • 14×16 Cash Drawer
    • Epson 2″ Ethernet Printer or Epson 2″ Bluetooth Printer
    • iPad Air Stand
    • Ethernet Credit Card Reader
    • 1D Laser Barcode Scanner
    • Compatible with Apple iPad Air/Air 2 and Apple iPad Pro 9.7″
  • Complete Quick Service Hardware Kit for iPad: $1369 or $1399 if you chose Bluetooth printer
    • 14×16 Cash Drawer
    • Epson 2″ Ethernet Printer or Epson 2″ Bluetooth Printer
    • iPad Air Stand
    • Epson Kitchen Printer
    • Ethernet Cable
    • Cash Drawer Mount
    • Thermal Paper – 50 Roll Case
    • 1-Ply Bond Paper – 50 Roll Case
    • Ethernet Credit Card Reader
    • Compatible with Apple iPad Air/Air 2 and Apple iPad Pro 9.7″
  • Complete Restaurant and Bar Hardware Kit for iPad: $1369 or $1399 if you choose Bluetooth printer
    • 14×16 Cash Drawer
    • Epson 2″ Ethernet Printer or Epson 2″ Bluetooth Printer
    • iPad Air Stand
    • Epson Kitchen Printer
    • Ethernet Cable
    • Standard Duty Cash Drawer Mount
    • Thermal Paper – 50 Roll Case
    • 1-Ply Bond Paper – 50 Roll Case
    • Ethernet Credit Card Reader
    • Compatible with Apple iPad Air/Air 2 and Apple iPad Pro 9.7″
  • Complete Retail Hardware Kit for iPad: $1519 or $1549 if you choose Bluetooth printer
    • 14×16  Cash Drawer
    • Epson 2″ Ethernet Printer or Epson 2″ Bluetooth Printer
    • iPad Air Stand
    • 1D Laser Barcode Scanner
    • 7 Series USB Charging Cradle
    • Cash Drawer Mount
    • Thermal Paper – 50 Roll Case
    • 1″ x 1.5″ Barcode Labels
    • Label Printer
    • Ethernet Credit Card Reader
    • Compatible with Apple iPad Air/Air 2 and Apple iPad Pro 9.7″
  • Mobile Register Kit: $198
    • iPad Mini Handheld Enclosure
    • Lightning Credit Card Swiper
    • Compatible with iPad Mini 2/3
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A La Carte Hardware Options

Of course you can also purchase hardware a la carte if you don’t need everything in one of the packages or already have existing hardware that is compatible with ShopKeep.

Card Readers:

  • Magtek Lightning Credit Card Swiper: $99
  • Ingenico Credit Card Reader (EMV Enabled): $329
  • Ingenico Bluetooth Credit Card Reader
  • Vault Credit Card Reader Stand: $49

Printers:

  • Epson Bluetooth Printer: $269
  • Epson Ethernet Printer: $239
  • Epson Kitchen Printer: $331
  • DYMO Label Printer: $119

Cash Drawers:

  • APG 13×13 drawer: $109
  • APG 14×16 drawer: $112
  • APG 16×16 drawer: $139
  • Cash drawer mount: $35
  • Cash drawer till: $29
  • Cash drawer till cover: $29

Barcode Scanners:

  • Socket Mobile 1D Scanner: $269
  • Socket Mobile 2D Imager Barcode Scanner: $449
  • Socket Mobile 7 Series USB Charging Cradle: $79
  • Socket Mobile 2D Imager Stand: $149

iPad Enclosures;

  • iPad Mini Handheld Enclosure: $99
  • iPad Mini Stand: $109
  • iPad Pro Stand: $139
  • iPad Stand: $129
  • Freeform Made iPad POS Stand: $199

You can also purchase gift cards, labels, printer and receipt paper, and a variety of USB and ethernet codes directly through ShopKeep.

Get Started With ShopKeep

Ready To Buy ShopKeep Hardware?

No matter how equipped or completely green you are as you’re starting your business, ShopKeep has you covered. Not only do they provide you with a wide variety of hardware options, they are stocked with some of the most trusted and best-reviewed brands on the market.

If you’ve decided to go with ShopKeep, you’ve already made an informed decision for your POS needs. They also make it very difficult to go wrong when selecting all of your necessary hardware. Hopefully, we’ve just simplified the process slightly.

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The post Guide To Buying ShopKeep Hardware appeared first on Merchant Maverick.

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The Complete Guide To Credit Bureaus: Equifax VS Experian VS TransUnion

The Complete Guide To Credit Bureaus: Equifax VS Experian VS TransUnion

If you’ve ever applied for a loan — whether it be for a car, a house, or even a small business — then I’m sure you’re well acquainted with the importance of credit scores. But what about credit reports?

Credit reports tell lenders about your credit history and indicate how reliable you are as a borrower. But more than that, credit reports help you understand your credit, improve your credit score, and prevent fraud and identity theft. So how do you get your credit report? That’s where credit bureaus like Equifax, Experian, and TransUnion come in.

In this post, we’ll cover everything you need to know about credit bureaus. Then we’ll break down the “big three” credit bureaus so you can confidently understand your credit report and score.

What Is A Credit Bureau?

Let’s start with the basics.

A credit bureau is a business organization that collects and sells data regarding the credit history of individuals. They typically collect data such as your credit card and loan balances, the number of credit accounts you have, your payment history, any bankruptcies, etc. Today, there are dozens of credit bureaus, but the “big three” are Equifax, Experian, and TransUnion.

Credit bureaus arose to help lenders quickly gauge the reliability of a potential borrower. In the past, you could go to the good ol’ general store and the owner would know you, your character, and whether or not putting your items on “charge” (or on credit) was a good idea. That method may have worked in the past, when communities were small and isolated, but there had to be a better way moving forward. Thus credit bureaus were born.

Credit bureaus collect data on potential borrowers and sell it to banks to help them make informed lending decisions. The oldest of the “big three,” Equifax, started capitalizing on this need all the way back in 1899.

Today, the credit bureaus have streamlined and computerized the whole process by compiling the data they collect into a credit report and credit score. While every credit bureau calculates credit scores differently, and every lender has different credit score requirements, credit reports and credits scores allow for a more universal measuring stick to judge potential borrowers by. Recently, credit bureaus also have branched out to providing dozens of additional products to help individuals and businesses alike, including identity protection, business marketing, and more.

How Do Credit Bureaus Collect My Information?

Okay, we admit it all sounds a bit creepy. Big Brother’s always watching, right? Well, yes, but it might comfort you to know how credit bureaus collect and share your information.

Credit bureaus mainly collect information from credit institutions with which you already have a relationship, such as:

  • Banks
  • Credit card companies
  • Student loan providers
  • Auto loan providers

Credit bureaus do not have access to these accounts; instead, the credit institutions share the information with the credit bureaus. Credit institutions are not obligated to share information and can give data to one, two, three, or none of the major credit bureaus. Typically, credit bureaus store data on your balances, available credit, payment history, and the number of open and closed accounts you have. Collection agencies and debt collectors may also report to the credit bureaus if you have any delinquent activity.

The rest of the information credit bureaus collect comes from public court records. They access these records in search of any possible bankruptcies, tax liens, repossessions, and foreclosures.

How Do Credit Bureaus Use My Information?

Now that you know how credit bureaus collect your information, you’re probably wondering how they use your information?

Credit bureaus use your information to create credit reports and credit scores. They then share your information with potential lenders, landlords, and employers for a number of reasons. Your credit report may be pulled up in the following scenarios:

  • When a lender is checking your credit to see if you qualify for a loan
  • When a landlord is deciding whether or not to accept your rental application
  • When a new employer needs to run a background check
  • When a utility provider is about to start a service contract with you

Credit bureaus also sell information for marketing purposes. Say a lender is looking for potential customers with poor credit who might need a credit card. The lender will reach out to a credit bureau, which will then sell the lender a prescreening list of qualifying individuals and their basic contact information. (If you’ve ever wondered how you end up with so many preapproved credit cards flooding your mailbox, this is it.)

However, there are rules that protect you and your data — particularly the Fair Credit Reporting Act (FCRA).

The FCRA is a law that states you have the right to know your credit report and the right to dispute any errors on your credit report. It also lays out what is a “permissible purpose” for a lender to pull your credit and what is an “impermissible purpose.”

If a potential lender, landlord, utility provider, future employer, insurer — you name it — wants to view your full credit report, they must have a permissible purpose and your permission first. In some cases, a potential lender will simply let you know that they will do a credit pull, and by following through with the application, you grant them permission to do so. In other cases, a landlord might have you use a tenant screening service like ExperianConnect, where you have to download your credit report and share it with them directly.

If you aren’t comfortable with credit bureaus prescreening your information and sending it to third-party lenders, you can use OptOutPrescreen.com to prevent this. Continue onto the “What To To Do In Case of Fraud Or Identity Theft” section to learn more ways to protect your credit report and personal information.

Credit Reports VS Credit Scores

Since credit bureaus use your credit history to compile both a credit report and a credit score, it’s important to know the difference between the two.

Credit Report Credit Score

A report prepared by credit bureaus that shows an individual’s credit history, including payment history, loan balances, credit limits, and personal information (such as your social security number, birth date, and address).

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A number that indicates an individuals creditworthiness and is based on the individual’s credit history, payment history, and other data compiled by credit bureaus.

On a credit report, you’ll see detailed information about your credit history. A typical credit report will give you a full breakdown of all your open or closed credit accounts, bank accounts, loans, and payment history. Below, you’ll se an example of a credit report and what it might include (this is only page 1 of 4, so you can imagine how detailed your full credit report might be):

The Complete Guide To Credit Bureaus: Equifax VS Experian VS TransUnion

A credit score, on the other hand, provides much less detail. You’ll usually be given your credit score in tandem with a graphic indicator of whether your credit score is poor, fair, good, or excellent. You may be able to drill down to see the factors that affect your credit score, and you may not. Here’s an example of a credit score and how it might appear:

The Complete Guide To Credit Bureaus: Equifax VS Experian VS TransUnion

Think of it like this: a credit report is a detailed report of what your credit history is, while a credit score is an interpretation of what your credit history means. Your credit score is one of the biggest factors lenders use when considering loan applications; the higher the score, the more likely you are to pay your loan back — at least, in a lender’s eyes.

It’s worth noting one more key difference between credit reports and credit scores. Credit bureaus are legally obligated to give you a free credit report once a year, whereas there is no law requiring them to provide a credit score. This means you’ll have to pay a fee to access your credit score through one of the “big three.” There are free credit score sites if you want to avoid this fee. Check out our post The Best Free Credit Score Sites to learn more.

Note: In certain situations — like unemployment, identity theft, and fraud — you can access your credit report multiple times a year without charge.

How Credit Scores Are Calculated

Credit scores are all based on similar data but can vary significantly depending on the credit score model. Credit scores are generally affected by the following:

  • Your payment history
  • How much credit you use versus how much credit is available in an account
  • The number of accounts you have open
  • How long your accounts have been open
  • The types of credit you have (such as credit cars, loans, mortgages, etc.)

How this information is transformed into a credit score depends on the credit model being used. There are two main types of credit models: FICO scores and VantageScore.

FICO Scores VS VantageScore

The FICO score model was created by Fair Isaac Corporation in 1989 (hence the name FICO). FICO credit scores range from 350 – 850 and are determined by these five factors, which are ranked in terms of importance by percentage:

  • Payment History: 35%
  • Amounts Allowed: 30%
  • Length Of Credit History: 15%
  • New Credit: 10%
  • Credit Mix: 10%

The VantageScore model was created by Equifax, Experian, and TransUnion in 2006. This model also uses a 350-850 scale. Scores are determined by the following six factors that are ranked by level of importance rather than a percentage:

  • Payment History: Extremely influential
  • Percentage Of Credit Limit Used: Highly influential
  • Age & Type Of Credit: Highly influential
  • Total Balances & Debt: Moderately influential
  • Available Credit: Less influential
  • Recent Credit Behavior & Inquiries: Less influential

VantageScore claims that it is “the scoring model that is more accurate.” However, the FICO scoring model is used more predominantly in the lending industry.

Why Is My Credit Score Different With Each Bureau?

It makes sense that your credit score may vary depending on whether the potential lender is using the FICO or VantageScore model. But when the “big three” all use the VantageScore model, why do you get a different credit score from each credit bureau?

Remember earlier when we said that credit institutions aren’t required to share information with the credit bureaus? They can choose to share data with one, two, three, or none of the “big three.” This means that Equifax, Experian, and TransUnion don’t have access to exactly the same data, which accounts for the difference in credit scores.

This is why it’s important to treat your credit score as a “guesstimation” rather than an end-all number. Credit scores are ever-changing and lenders all have their own way of calculating and evaluating your credit score. Check your credit score so you have a general idea of what it is, and try to keep your score as close to 850 as possible, but don’t stress over-much about the exact three-digit number.

Reasons To Use A Credit Bureau

Now that you know what credit bureaus are and how they work, when should you use one? It’s simple: use a credit bureau anytime you want to know or need to know your credit report or credit score. Here are five of the most common scenarios for when you should use a credit bureau.

 

1. When Applying For A Loan

When applying for a loan, a potential lender is going to consider both your credit report and credit score, so it’s extremely important that you know your credit report and score beforehand. This way, you can correct any errors on your credit report and make sure you meet the lender’s minimum borrower requirements before you apply.

If there are errors, they can take a while to set right. Additionally, if you don’t meet the credit score requirement, raising your credit score can take time. Knowing the state of your credit before applying gives you the time to put your best foot forward and significantly increases your chances of being approved for a loan.

For more tips and tricks about increasing your chances of securing the loan you want, read our post on improving your loan application.

2. Before Renting An Apartment Or House

Potential landlords almost always run a credit report in order to decide if you’re trustworthy enough to make your monthly payments on time. Knowing your credit report beforehand is key. Again, if there are any errors, you can correct them before your future apartment or house is on the line. Or, if there is a missed payment or some other potential red flag on your credit report, you can try to explain the situation to your landlord in advance rather than being flat-out rejected.

3. To Improve Your Credit Score

If you are wanting to monitor and improve your credit score, you need to know your score first. Each of the “big three” allows you to purchase your credit score. They also offer credit monitoring subscriptions that allow you to regularly view your credit score and receive alerts when there are any changes to your credit score.

If you don’t want to pay for a monthly credit monitoring service, check out the best free credit score sites.

4. To Doublecheck For Credit Errors

As we mentioned earlier, you don’t want to be stuck with an error on your credit report right when you’re in the middle of the application approval process for a new loan or mortgage. Check each of the big three credit bureaus for errors as they all collect and maintain different information.

5. To Prevent Fraud & Identity Theft

Another benefit of using a credit bureau is fraud prevention and identity protection. If you stay on top of your credit report, you can pinpoint anything fishy and secure your information. When it comes to fraud and identity theft, the sooner you notice a problem, the better. One of the best parts about using one of the “big three” credit bureaus is that they all offer some form of fraud monitoring and extra security measures (which we will cover in more detail).

Bonus: To Help Run Your Business

As an added bonus, Equifax, Experian, and TransUnion all offer additional business services to help business owners manage, expand, and secure their small businesses. These services include everything from analytics to customer acquisition to risk management to fraud prevention and more.

What To Do If There’s An Error On Your Credit Report

If you find an error on your credit report, you’ll need to report and dispute that error with each individual bureau since each bureau collects and utilizes different information. Each bureau has their own process for disputing. You’ll need to go to their individual sites to find details on how to fix an error on your credit report.

One of the reasons it’s so important to check your credit report regularly is that it can often take months to properly fix an error on your credit report. For more details on common credit report mistakes and how to dispute credit report errors, visit the FICO website.

What To Do In Case Of Fraud Or Identity Theft

The Complete Guide To Credit Bureaus: Equifax VS Experian VS TransUnion

When it comes to fraud and identity theft, you don’t want to take any chances. If you suspect fraud related to any of your credit cards, bank accounts, or identity — or if your identity has been stolen — it’s important to take action right away. You can do so by submitting a fraud alert or security freeze (sometimes known as a credit freeze).

Both a fraud alert and security freeze are steps to secure your credit report and personal information, but they differ slightly.

Fraud Alert Security Freeze

A fraud alert warns credit bureaus that there might be fraudulent activity, so potential lenders will need to take extra measure to verify your identity before extending credit.

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A security freeze blocks lenders from accessing your credit report at all until the freeze is lifted by you (usually using a pin).

Fraud alerts usually last 90 days (unless you’re an identity theft victim, in which case you can extend the alert). To place a fraud alert, contact Equifax, Experian, or TransUnion and follow their instructions. You only need to contact one of the big three credit bureaus to place a fraud alert as they will notify the other two credit bureaus.

A credit freeze has the advantage of being much more secure. However, you will have to lower the freeze each you time you or a lender need to view your credit report, and you may be required to pay for the service. Unlike a fraud alert, you will have to place a security freeze with each of the three bureaus.

How Do The Big Three Credit Bureaus Compare

Now that you know the basics about credit bureaus and the reasons to use one, how do you know which credit bureau to use? How do the big three compare to each other? And what products do each credit bureau offer? Here’s a basic breakdown that compares Equifax, Experian, and TransUnion. Read on to learn more about each credit bureau.

Equifax Experian TransUnion

Free Annual Credit Report

✓

✓

✓

Credit Score

$15.95

$19.99

$19.95

Credit Monitoring

✗

Starts at $0/mo

$19.95/mo

Identity Protection

✓

✓

✓

Business Credit Score

✓

✓

✓

Number of Business Services

11

12

15

Equifax

The Complete Guide To Credit Bureaus: Equifax VS Experian VS TransUnion

Best For…

Individuals looking to check their Equifax credit report and score and in need of a free credit lock service.

The oldest of the three credit bureaus, Equifax has been around since 1899. While the company has grown significantly over the years, the Equifax motto to “always focus on its customers” has stayed the same. Today, Equifax offers basic credit report and credit score services as well as several business products. The most notable aspect of Equifax is its free credit lock service that allows individuals to protect their data at no additional cost.

Products Offered

Equifax offers basic credit report and credit score services, as well as a free credit lock service.

  • Credit Report: As with every credit bureau, you can access your free Equifax credit report at annualcreditreport.com.
  • Equifax Credit Score: You can purchase an Equifax credit score for $15.95. This score will be accessible for 30 days.
  • Lock & Alert: This free service allows individuals control over their credit report by locking and unlocking the report as needed. They even have a mobile app and send alerts every time your account is unlocked or locked.

Business Services

You can purchase a single business credit report from Equifax for $99 or a multi-pack for $399.95. You can use this to view your own business credit or to ascertain the credit health of a potential business partner, supplier, or new customer.

In addition to business credit reports, Equifax offers 11 products to help you run your small business. These products range from customer acquisition to risk mitigation to credit monitoring to fraud prevention and more. Visit the Equifax website to learn more about their business offerings.

Experian

The Complete Guide To Credit Bureaus: Equifax VS Experian VS TransUnion

Best For…

Individuals looking to view their Experian credit report or to actively monitor their credit report and credit score from all three credit bureaus.

Equifax began as part of TRW Information Systems and Services INC. back in 1968, and has since had a long history of acquisitions and advancement. Of all three bureaus, Experian offers the most personal products for monitoring and protecting your credit. What really sets Experian apart is that you can monitor your credit report from each of the three bureaus, so you can have all your credit information in one place. Experian also offers a FICO score simulator, which is invaluable for seeing what your FICO score could be if you make changes to your credit.

Products Offered

Experian offers personal credit monitoring and identity protection products as well as loan matching and credit card matching services.

  • Credit Report: As with every credit bureau, you can access your free Experian credit report at annualcreditreport.com.
  • Experian Credit Report & Score: You can purchase your Experian credit report and FICO credit score for $19.99. This purchase is only good for a one-time view.
  • 3 Bureau Credit Report & FICO Score: For $39.99, you can view your Experian, Equifax, and TransUnion credit report as well as your FICO credit score. This purchase is only good for a one-time view.
  • Experian CreditWorks Basic: View your Experian credit report for free every month.
  • Experian CreditWorks Premium: For $24.99/month, you can view your FICO score and gain access to Experian’s credit monitoring, identity protection, and credit lock services. This service includes the 3 Bureaus Credit Report. This product lets you view your credit reports and credit score daily, and it includes a FICO score simulator as well.
  • Experian IdentityWorks Plus: Experian’s identity protection service starts at $9.99/month and includes dark web surveillance, identity theft insurance up to $500,000, lost wallet assistance, credit lock, and identity theft monitoring and alerts. Includes credit monitoring for Experian and FICO score alerts. You can add child identity protection as well.
  • Experian IdentityWorks Premium: Experian’s most expensive identity protection service is $19.99/month and includes dark web surveillance, identity theft insurance up to $1,00,000, lost wallet assistance, credit lock, and identity theft monitoring and alerts. Includes credit monitoring for all three credit bureaus and FICO score alerts. You can add child identity protection as well.

Note: For Experian CreditWorks and IdentityWorks products, you can receive a discount for purchasing an annual subscription rather than a monthly subscription.

Business Services

Experian does offer business credit scores, although they aren’t forthcoming about the cost. The credit bureau also offers Experian Connect (a tenant screening service) and Experian Mailing List Builder (a customer acquisition service).

In addition, Experian offers 11 other business services ranging from customer management to risk management to debt recovery to consulting services and more. Visit the Experian website to learn more about their business offerings.

TransUnionThe Complete Guide To Credit Bureaus: Equifax VS Experian VS TransUnion

Best For…

Individuals looking to check their TransUnion credit report and score and to manage their business and its credit.

TransUnion started back in 1968 as a holding company for a railroad leasing organization known as Union Tank Car Company. Today, TransUnion is the smallest of the three credit bureaus but packs the biggest punch where business services are concerned. TransUnion also offers a credit score simulator — it is a great tool for improving your credit score as you can see how your credit could be affected if you made certain changes to your credit.

Products

TransUnion offers basic credit report and credit score products, as well as a free credit monitoring and identity theft service.

  • Credit Report: As with every credit bureau, you can access your free TransUnion credit report at annualcreditreport.com.
  • TrueIdentity: This is TransUnion’s free credit monitoring and identity theft protection service. It includes unlimitedTransUnion credit reports, a credit lock service, and alerts.
  • Credit Monitoring: For $19.99/month, you can have access to unlimited TransUnion credit report and score views, as well as credit lock, credit change alerts, and a score trending and score simulator tool.

Business Services

TransUnion offers business credit scores, although they aren’t forthcoming about the cost. The credit bureau also offers SmartMove, a tenant screening service.

In addition, TransUnion offers business products covering 14 fields, including marketing, fraud detection, healthcare revenue protection, customer acquisition, and more. Visit the TransUnion website to learn more about their business offerings.

Which Credit Bureau Should I Use?

Now that you know a little more about each of the three credit bureaus, the question becomes: Which credit bureau should I use?

The answer is all three of them.

We promise this isn’t a trick answer. Since each credit bureau collects different data regarding your credit history, it’s incredibly important to check your credit report with Equifax, Experian, and TransUnion. Luckily, you are legally guaranteed a free annual credit report from each bureau.

One recommendation is to stagger your annual free credit report. Check your Equifax report, then your Experian report four months later, and then your TransUnion report after another four months. This way you can always have a rough idea of what your credit report looks like without losing a penny. Another option is to use ExperianCreditWorks, which monitors all three credit bureaus and your FICO score for $24.99 a month.

If you simply want more control over your credit report and credit score, Experian offers the most bang for your buck in terms of personal credit monitoring and identity protection. However, TransUnion offers the most business-related products.

Ultimately, choosing which of the three credit bureaus’ monitoring services is right for you will depend on your budget and the level of control you want. The most important thing is to actually monitor your credit regularly. Take advantage of your free annual credit reports and know your credit score at the very least. Being proactive about your credit report can help ensure your credit report is accurate and can help catch any early signs of fraud, and knowing your credit score is the first step to improving your credit score.

Read our post 5 Ways To Improve Your Personal Credit Score and The Ultimate Guide To Improving Your Business Credit Score to learn more.

The post The Complete Guide To Credit Bureaus: Equifax VS Experian VS TransUnion appeared first on Merchant Maverick.

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SBA Loans For Startups: Types, Terms, and How To Apply

Your startup is off the ground and you’re ready to make your next move, but you need funding — or maybe you have a fantastic idea that will completely shake up your industry, and you’re anxious to get your project rolling. Whether you’re in the early stages of setting up a new business or you need a boost to get started, financing is a necessity. However, when lenders look at you, they don’t see the “next big thing.” Instead, they see just one other big thing: risk.

Startups are viewed by lenders as bigger risks than established small businesses, but don’t give up just because you think funding isn’t available. Although it may be more difficult to obtain startup unsecured business loans, it isn’t impossible. With SBA loans for startups, you’ll have access to the financing you need without high interest rates and unfavorable terms.

Ready to grow your business or find government loans to start a business? Read on to learn more about the loan options that can take your startup to the next level.

How Can The SBA Help My Startup?

The Small Business Administration was established to provide small business owners with the resources they need to successfully operate their own businesses. In addition to training and advocacy, the SBA offers loan programs that give business owners the money they need for anything from acquiring a business or franchise to hiring new employees to funding equipment purchases.

The SBA helps all small businesses, including startups. It’s no secret that startups are viewed as riskier endeavors. Whereas established businesses have proof of their success in the form of financial statements, tax returns, and other documents, startup owners are reliant on their business plans and industry experience. After all, the idea behind a startup may be a game-changer, but it isn’t yet proven—at least not in the eyes of a lender.

The SBA offers different loan programs than you’ll see elsewhere. In fact, funding isn’t distributed directly through the SBA. Instead, they have established several loan programs targeted at small businesses and startups through intermediaries — think banks, private lenders, and even non-profit organizations. The SBA has outlined a set of standards for each program; because the administration backs these loans, there’s less risk for lenders – and more funding opportunities for you.

These standards keep interest rates low and terms flexible. SBA loans are designed to help businesses grow and/or stay above water (as opposed to drowning in debt).

Types Of SBA Funding For Startups

The SBA doesn’t offer funding that is specific to just startups. Instead, new businesses can qualify for many of the programs that are used by established businesses. Most of the SBA loan programs don’t have a requirement for time in business. However, it is important to note that you will have to find an intermediary that works with startups once you’ve evaluated your options and selected the type of loan that works for your business.

Microloans

The first resource for startups that need smaller loans should be the SBA Microloan program. Under this program, small businesses can receive up to $50,000 from a non-profit intermediary. On average, the typical amount funded through the Microloan program is $13,500.

Microloans are available to startups provided that they are for-profit businesses and have a solid business plan. Interest rates vary by lender, ranging from 6.5% to 13%. The average typically falls on the lower side at approximately 7.5%. The maximum maturity for a microloan through the SBA is 6 years.

Fees may be required by the intermediary to receive a microloan. Intermediaries can charge between 2% to 3% of the loan amount for packaging fees. Additional fees to close the loan, including recording fees, collateral appraisals, and credit reports, may also be passed on to the borrower.

The SBA limits how the funds from microloans are used by the borrower. Loan disbursements can be used to purchase materials, furniture, supplies, inventory, and other necessary items for the startup. The money can also be used as working capital. Funds can not be used to purchase real estate or to pay off or refinance existing debt.

The SBA Microloan program is a great choice for any startup that needs working capital or to purchase equipment that will help expand the business or get a project off the ground. However, startups that need more capital or don’t want as many limitations on how they spend their funding will be better served by another SBA loan product. If microloans seem to fit your needs, learn more before connecting with a lender.

Standard 7(a) Loans

The SBA 7(a) program is the most popular choice for most startups and small businesses because of the flexibility it offers.

Startups can receive up to $5 million in funding through the 7(a) loan program. In addition to having access to higher loan amounts, borrowers will also have more flexibility in how they can use the funds. Standard 7(a) loans can be used for equipment or inventory, the purchase of property, refinancing debt, renovations, or other purposes.

Under this program, payment terms vary depending on how the loan proceeds are used and the borrower’s ability to repay the loan. For real estate purchases, the maximum repayment term is 25 years. If the proceeds are used for equipment financing, inventory, or working capital, repayment terms are set for a maximum of 10 years. Interest rates vary but remain very competitive at 7.25% to 9.75%. Borrowers can also expect to pay up to 3.5% for guaranty fees, and a down payment may be required with the purchase of real estate or equipment. Find out more about the terms, rates, and eligibility of SBA 7(a) loans.

The long repayment terms, low interest rates, and overall flexibility make this a top choice for many startups and small businesses. That said, 7(a) loans can take a while to be processed and funded — a potentially major drawback for business owners who need cash fast. Potential borrowers can expect to wait a minimum of 30 to 90 days to get through the entire process from application to funding. Startups that require money sooner should consider other options, such as peer-to-peer lending or another source of funding.

SBA Community Advantage Loans

A startup that doesn’t meet the eligibility criteria for the standard SBA 7(a) loan should consider applying for the SBA Community Advantage program. This program offers very similar rates and terms to the traditional 7(a) program with just a few minor differences.

One of the most significant differences is the maximum amount that can be borrowed through this program. Borrowers can receive up to $250,000 with an SBA Community Advantage loan. The identical guidelines from the 7(a) program apply for how the money is spent. It can be used to purchase another business, finance equipment, or for just about any business purpose. Interest rates for these loans are comparable to those set forth by the lender based on SBA guidelines.

While the lowered maximum loan amount is a drawback, this program can be extremely beneficial for startups. This is because Community Advantage loans are designed for underserved communities, such as low-income areas. However, startups are also qualified to receive these loans. Businesses that have been operating for two years or less that have been disqualified from other loans may receive a Community Advantage loan if all requirements set by the SBA have been met.

SBA Express Loans

Another SBA product similar to the standard 7(a) loan is the SBA Express Loan program. This loan program offers benefits including low interest rates and long repayment terms. However, there are two main differences between the 7(a) and the Express programs: the maximum loan amount and the approval turnaround.

Applicants for the SBA Express loan can receive up to $350,000 through the program. This could be a drawback for anyone seeking more capital. However, this program’s biggest advantage is that it comes with expedited turnaround times. After the application is submitted, an approval decision is guaranteed within 36 hours. Although the time it takes to complete the process and receive funding could add weeks to the timeline, getting an approval quickly means that small business and startup owners no longer have to shop around and can rest assured that the money they need will soon be on the way.

Because only a maximum of 50% of the loan is backed by the SBA, interest rates may be slightly higher than the standard 7(a) loans. However, all interest rates must fall within the SBA’s guidelines, so borrowers won’t get slapped with ridiculously high interest rates.

If this sounds like it’s the right type of loan for your startup, learn more about SBA Express loans.

SBA CDC/504 Loans

The SBA CDC/504 loan program is designed for small business owners who want to make a fixed asset purchase to expand or update their business. This loan provides funding for the purchase or upgrade of commercial space or land, the purchase of long-term equipment, or refinancing debt related to the upgrading or expansion of the business.

This loan program is different because it requires the borrower to work with two partners to finance 90% of the costs of the project. A bank or other lender will loan a maximum of 50% toward the project cost. A Certified Development Company, or CDC, will provide up to 40% of the cost of the project. 504/CDC loans are backed by the SBA. The borrower is responsible for paying the remaining 10% of the project cost.

The interest rates for these loans are determined by the 5-year and 10-year U.S. Treasury issues market rates. Currently, maximum interest rates are just above 5%. Terms of 10 and 20 years are available under the 504 loan program.

This program is a good choice for startups looking to expand or improve their commercial space. With fixed interest rates, longer terms, and up to 90% financing, this is a very competitive product. However, business owners seeking capital or funds to use for other purposes will be better off applying for other SBA loans. Potential borrowers will also have to take the time to find a lender and a CDC to work with under this program, which could be time-consuming.

SBA Startup Loan Borrower Requirements

Who can qualify for a startup SBA loan? Restaurant startups, tech companies, or any other businesses that have been in business for two years or less (and meet the requirements of the SBA) are eligible.

It’s important to note that because these loans have such favorable rates and terms, they can be difficult to obtain. In order to get an SBA startup business loan, you’ll have to find an intermediary that works with startups. You’ll also need to come prepared with the right credit score and documentation to qualify.

For all of the SBA sources of funding for startups mentioned here, there are a few basic requirements across the board. Qualified businesses must be for-profit operations. They must do business in the United States, and they must have an adequate amount of owner equity. SBA loans should also be pursued after all other means of funding have been exhausted. The business must also demonstrate a reasonable need for requesting the loan.

Businesses that invest in real estate, engage in illegal operations, operate as non-profits, or specialize in loaning money are disqualified from applying for these programs.

To qualify for an SBA loan, one of the most important things to remember is that a good credit score is required. Generally, scores should not fall below 680, but this can vary by lender. Credit reports should reflect a good payment history, and any negative items must be explained to the lender. There should be no recent bankruptcies, foreclosures, or tax liens on the report. Personal credit history and business history (if applicable) will be considered by the lender.

If loan proceeds are to be used to acquire a business or to purchase property or equipment, equity or a down payment of 10% or more may be required based on the lender. Ready to learn more? Read on for more information about the requirements of SBA loans.

Do SBA Startup Loans Require Collateral?

Another potential requirement of receiving an SBA startup loan is collateral. In short, collateral is something of value that is pledged in the event that a borrower defaults on the loan. Collateral can be real estate, equipment, vehicles, or other items of value.

Because startups are seen as riskier investments by lenders, it’s very common to have to put up collateral in order to receive funding. The one exception to this rule is when the loan does not exceed $25,000. Through the 7(a) standard, Express, and Community Advantage programs, no collateral is required under SBA guidelines for any loan up to $25,000. Loans exceeding this amount will require collateral potentially valued up to the total amount of the loan. For CDC/504 loans, the project being financed often serves as the collateral.

For microloans, the SBA does not require collateral but does advise lenders to follow lending best practices and collect collateral or equity if deemed necessary.

Personal guarantees are also required to obtain SBA loans. This means that a borrower agrees to put up personal assets if they default on the loan. In the event that a startup does not have enough business property, personal assets will be used to back the loan.

One important thing to note is that while startups will not necessarily be disqualified from SBA loans by a lack of collateral (if all other conditions are met), your chances of being funded will improve if you have at least some collateral.

How To Get An SBA Loan For A Startup

Now that you’re familiar with the options the SBA has to offer and you’ve found a product that fits your needs, it’s time to get the application process rolling. The first step is to find an SBA-approved lender that operates in your area. If you have a working relationship with a financial institution, you can ask for recommendations. You can also be connected with a lender through the SBA’s Lender Match service.

In addition to finding a lender that offers SBA loans, it’s also important to inquire as to whether they work with startups. Some lenders see startup companies as too much of a risk, so it’s important to ask before devoting too much time to the process. You’ll also want to ensure that they work with startups on the specific loan that’s grabbed your interest.

Once you’ve connected with a lender, you’ll have to speak with them on the phone or, in many cases, meet with them face-to-face. While each lender has its own requirements, there are a few things you’ll always need to have on hand when applying for an SBA loan.

Because startups don’t have the history of a more established business, documentation — like three years of business income tax returns or several years of business financial statements — won’t be available. Instead, you can provide a few other standard documents, as well as a couple of additional items required from new businesses.

As previously mentioned, credit scores and reports are extremely important. Even if you haven’t yet established business credit, your personal score and report will be evaluated by a lender. If you aren’t sure of where you stand, check out these resources for getting your free credit report online. Dispute any inaccuracies with the credit bureaus and be prepared to explain any black marks on your report.

Additional SBA startup loan requirements include your personal financial statement, personal income tax returns for the last three years, resumes for each principal of the business, and your business certificate and licenses.

Because you are seen as a risky borrower, you will need a solid business plan that includes details about the current status of your business, as well as future plans. You will also need business projections. A projection of at least one year is the minimum, but more may be required by your lender. You must also be prepared to prove that you have several years of experience in the industry. A minimum of 2 years is generally preferred.

The lender will evaluate your personal credit, your business plan, and your ability to repay the loan. Once the SBA startup loan application process is completed and all paperwork has been submitted, you’ll simply need to wait for final approval. This could take weeks or even months if a challenge arises. With an SBA Express loan, you’ll receive your decision within 36 hours. Once approved, you’ll work with the lender to close your loan and receive your funds.

Final Thoughts

The process for obtaining an SBA loan is daunting for any business. As a startup, the process can be even more complicated. However, with a solid business plan in place and a good credit score, it’s possible to obtain the funding you need with competitive rates and terms and put your new business on the path to success. Good luck!

The post SBA Loans For Startups: Types, Terms, and How To Apply appeared first on Merchant Maverick.

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How To Choose The Best Products to Sell Online

Best Products to Sell Online

You’ve probably landed here on this beautiful wall of text because you’re wanting to start an online store and are wondering, “What are the best products to sell online?”

The short version – it depends 🙂

The long version – keep reading for specific ideas to find the best product for you to sell online.

There are hundreds of articles out there talking about trending products for [insert year here], the best all-time products, rising products, etc., but these resources are typically 100% based on what’s happening now.

So, how do you know what the best products are in general?

Again, spoiler alert: there is no such thing as a best product to sell online!

Sure, there are basic principles to stick to, such as

  • products with a high average order value
  • things that can be drop shipped / don’t require a high-touch in store experience
  • products that can be shipped cheaply and easily, etc.

But with that said, if you look at the brands that are killing it online right now, like Native, Dollar Shave Club, and Tuft & Needle… they break all of those “rules”. Native sells deodorant, Dollar Shave Club built an entire business on super-cheap razors, and Tuft & Needle sells mattresses (a product that typically requires a high-touch in-store experience with high shipping costs).

I’m a firm believer that there’s no such thing as the “best” anything — instead, I operate from “best for your skills, knowledge, resources, and goals”.

So when it comes to starting your online store, the key is to move out of the “best product to sell online” mindset and into the “best product for ME to sell online” mindset. And that’s a product that fits your skill set, knowledge, resources, timeline, and market demand.

There are several approaches to finding the best product to sell online for you… and that’s what I’ll be breaking down in this post.

How to Find the Best Products to Sell Online (For You)

The Product Research Route (Amazon scraping, Adplexity, etc)

Thanks to platforms like Amazon, anyone can sell something online — and luckily for you, there is a giant trove of product data just waiting for you on the Internet.

One way to figure out what to sell is by looking at other products that are performing well and weighing those against your own wants and needs.

The goal here is to collect data on what’s working already, then reverse engineer an ecommerce strategy to sell it.

For example, let’s say you’re looking on Amazon for bestselling dog toys. You could look at niches within dog toys to niche-down into subcategories, look at best-selling products within those subcategories, see top sellers to identify competitors — the opportunities are endless.

Amazon Bestselling Dog Toys

The bonus here is you don’t have to do this manually — and you’re not limited to Amazon’s data. Spy tools like Adplexity and Jungle Scout can aggregate product data across several ecommerce platforms and even show you competitor’s ads so you can reverse engineer a marketing strategy that works.

With that said, keep in mind that everyone has access to this data, which means you won’t be the only one reverse engineering a successful product. What’s really going to set you apart is choosing a successful product that fits your own criteria and knocking your marketing strategy out of the park.

The Persona Research Route

People are constantly searching for things online. Think about your own behavior — where do you go when you’re looking for the “best swimsuits for speed” or “most durable dog toys for puppies”?

As a business owner, you can use this data to figure out what people actually want and give it to them. In marketing, this approach is known as creating a persona (marketing jargon for a description of your ideal customer).

An effective persona defines what your ideal customer actually wants. Who are they? What problems do they have? How can you solve these problems.

Use tools like Facebook Audience Insights, Pinterest, Google Display Planner, Trend Hunter, and basic keyword research (see here) to create 2-4 personas that outline your ideal customers. Be as descriptive as possible by including things like job title, favorite device, pay scale, main frustrations & problems, end goals, what they do in their spare time, etc. Use this detailed guide by Moz to guide you through the process.

Remember that your personas don’t have to be the end all be all. The focus here is to define your initial target market that’s small enough you can effectively reach them but large enough to get some insight on what products will fit their needs (and to get some initial sales and feedback on those products so you can polish what you’re offering).

Nearly every business started this way (think about how Facebook started by targeting college students). Here’s a podcast episode explaining this concept [skip to the ~ 11-minute mark].

The Sell What You Know Route

Perhaps the most self-explanatory method for finding the best product to sell online is selling what you know. What are you good at? Passionate about? Experienced with? Use that experience, channel it into a need, and sell it.

Take Quad Lock, a bike mount designed by a biker who was unsatisfied with the mounts on the market, so he designed one he wanted and sold it. The founder used used his own experience (biking) and pain point (ineffective mounts for his iPhone) to create a product that others love too.

Keep in mind though, it isn’t just about the product. Quad Lock leveraged reviews and Facebook and Google ads to get the right people to the product. You’ll need to have a proper and realistic marketing funnel behind whatever it is you’re selling.

The Build an Audience Route

Traditionally, ecommerce business owners take a “build it and they will come” approach to product development and selling online. This method takes the opposite approach. Instead of creating a product and finding an audience to sell it to, you’ll first build an audience and bring them a product they actually want.

Both approaches have advantages — again, there is no blanket “best” way or “best” product to sell online. Once again, it depends on your goals.

Building your product first and selling it to an audience could bring in revenue faster (as long as you build a product that actually sells). However, you do run a higher risk of creating a product that doesn’t fit the market as well as it might if you were to build an audience first, learn about them, and give them what you want.

The tradeoff here is time vs. money. If you have the time to build out an audience, nurture them, and build a minimally viable product to get feedback on, this route can save you the headache of launching a product that no one wants (see The $100 Startup). However, if you need to generate revenue quickly, this path might not be the best option.

The Rapid Product Testing Route

If you’ve ever donated to a kickstarter campaign, or if you know anything about Tim Ferris and the 4-Hour Work Week, then you know how successful rapid testing a bunch of product ideas can be.

Ferriss did it with different ads, headlines, and even book titles until he found what worked, and you can take the same approach with your own product development. The goal here is to get a ton of data quickly. What are people clicking on? What are they signing up to learn more about? What’s sticking? Once you have that info, keep what works and get rid of what doesn’t.

Again, the tradeoff here is time and/or money. You have to give yourself enough of a runway to actually test and get the data, whether you’re starting a campaign on Kickstarter, offering email and social demos to find that one customer with a new idea, or running multiple Google Adwords campaigns to test which promotions get the most traction.

The Niche / Tailwind Route

Sometimes it’s worth sticking to what’s already working. Similar to reverse engineering products that are performing well and fit your criteria, you can also find a growing niche and/or company and build out products that complement them.

A classic example of this is the cell phone case industry. Before the iPhone blew up, cell phone cases were practically non-existent. But once the iPhone took off, an entire niche industry was born.

This is happening all the time. Think about Peloton — the at home spin bike that’s building an entire submarket that needs attention. There are constantly new opportunities to hop on board with what’s working and complement it with submarket products of your own.

The Supplier / Numbers Route

Keep in mind that you don’t always have to supply a product. Sometimes the best product to sell online could be one that someone else has created. In this scenario, you’d focus on building a killer marketing strategy for the product.

For example, let’s say you have a dentist friend who has a patented a new mouthguard that’s amazing, but he has no idea how to sell it. You could start an ecommerce business with exclusive access to the product at a price that makes sense. He’d be your supplier while you’d focus on getting sales.

Even if you don’t know someone directly who has an amazing product, you could always research suppliers on AliExpress or Alibaba, or connect to people who have great industry contacts in a niche you know well enough to navigate profit margins and create a marketing strategy that gets the products to move.

Alibaba

Either way, you’re removing yourself from the product definition. Instead, you’re looking at suppliers who have already created a killer product and need someone (AKA you) to sell it.

Next Steps / Takeaways

Finding the best products to sell online really has less to do with there being a “best” product and more to do with having a system and approach to finding a product that fits your own needs, skills, and means.

Instead of randomly brainstorming and endlessly searching online for that one big idea, take time to do an inventory of your own needs. Think about your skill set, knowledge, resources, and timeline to launch your product. Then, choose one of the methods above to find the product that best aligns with your defined criteria.

You also want to find the best way to sell – here’s how to choose the best ecommerce platform.

The post How To Choose The Best Products to Sell Online appeared first on ShivarWeb.

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Should I Buy A Franchise & How Do I Start?

buying a franchise

Becoming a franchise owner is a career path some people look into when their life circumstances change. For example, recent retirees or veterans returning to civilian life often turn to franchising. But really, you don’t have to have any special circumstances or qualifications to become a franchisee. You do, however, need to know what you’re getting into before you make such a major decision.

While there are plenty of benefits to owning a franchise, there are some downsides too, and you’ll need to determine which things you can live with and which will be dealbreakers for you.

There are specific perks to purchasing an existing franchise, also sometimes called a “franchise resale,” as opposed to opening a new franchise location: you will start out with a cheaper initial investment and an established customer base, with minimal setup or hiring requirements, provided that equipment and employees are included in the sale.

However, when buying an existing franchise, you’ll also need to do careful pre-purchase research to make sure the franchise is a good investment—the owner could be selling because the franchise is underperforming due to a poor location, for example.

In this post, I’ll go over the pros and cons of buying a franchise to help you figure out whether you should make the leap of becoming a franchise owner. I’ll also give you some useful tips on how to start down the path of owning your own franchise business.

Pros Of Buying A Franchise

Buying a franchise is not for everyone. But there are some unique benefits to this career move, making it perfectly suited to the right type of entrepreneur.

1. Turnkey Business

A franchise can be considered a “turnkey business,” which means that it has pretty much everything you need to start operations immediately. All you need to do is “turn the key,” so to speak, to open up for business and start selling.

With a franchise purchase, the sale typically includes the facilities, equipment, and software systems (including the point of sale and accounting software), and even the (already trained) employees in most cases. Your raw materials suppliers, operating procedures, and advertising strategies are already in place as well, requiring only your capital investment and personal labor to get started.

Besides having all the ingredients to start operations, as a franchisee, you open for business on Day 1 with a proven and successful business model. This helps undercut the risks of owning your own business, especially if you are new to business ownership.

2. Minimal Startup Costs

Aside from the cost to purchase the franchise, and sometimes the franchise transfer fee (you should try to get the selling franchisee to pay this if you can), there are negligible startup costs to get your franchise resale up and running, since, well, it’s already up and running!

You will, of course, have to start purchasing your own raw materials to keep operations going, though you will need to invest less startup capital overall than you would if you opened a franchise from scratch.

While business acquisitions have lower startup costs in general compared to new businesses, this is especially the case with franchise acquisitions, as the uniform nature of any franchise brand allows for few, if any, significant changes in operations from one owner to the next.

Note that when you buy an existing franchise, most franchisors will not have you pay a franchise fee—the costly fee required to open a new franchise—but they may require you to pay for initial training.

3. Built-In Support

Technical support, customer support, and other assistance is an inevitable and potentially costly part of just about any business endeavor. A big benefit of being a franchise owner is that you don’t have to figure these things out for yourself. The parent company typically provides training, marketing campaigns, assistance with management, and customer support. And when purchasing an existing franchise, support channels such as technical support, employee support, etc., will already be open and readily accessible, so all you’ll have to do is learn them.

Aside from an initial training fee when you join the franchise, the cost of training and other support channels is included in the royalty fees you pay the franchisor from your gross sales.

As a franchisee, can also easily access a network of support and advice from other franchisees online. Even if you just want to vent or relate to other franchise owners, there are plenty of websites and message boards where you can do this.

4. Brand Recognition

Everyone already knows your franchise brand and you already have tons of fans on day one. A well-known product advertises itself, meaning you will need to devote very little time and energy to marketing.

Though you will be required by the franchisor to spend some of your profits on advertising, you can rest easy knowing that your personal efforts will not be the only way people will find out about your business. In many cases, you simply pay the franchisor an advertising fee and do not undertake any marketing efforts yourself.

There’s also always a chance your franchisor will come up with a new product or viral national marketing campaign that could make your product even more popular, with no blood, sweat, or even tears required on your part.

5. Easier To Get A Loan

It is typically much easier to get a loan to buy a franchise than it is to get a loan to buy an independent business. A franchise is seen by lenders as less risky, as there is an established business model; with a franchise acquisition, there is an established revenue stream as well.

Many franchisors provide their own financing programs for franchise owners, and there are also alternative lenders who specialize in franchise financing. You might even be eligible to get a low-interest loan through the Small Business Administration if your franchise is listed in the SBA Franchise Directory.

For quick capital at somewhat higher interest rates, you will find plenty of alternative online lenders willing to help finance your franchise purchase or provide you with working capital or line of credit, should you need a loan later down the road.

Cons Of Buying A Franchise

Okay, so now that you know the upsides of buying a franchise, it’s important that you understand the pitfalls as well. Whether or not you can live with these downsides will determine whether becoming a franchise owner is right for you.

1. Fees & Expenses

Although there aren’t too many startup fees involved in a franchise resale, there are still significant fees and operating costs involved in franchise ownership overall.

It is a general rule in the franchise world that after various fees are taken out, about one-third of pre-tax profits go to the franchise. Some one-time and ongoing costs of franchise ownership include:

  • One-time franchise transfer fee (if the seller does not agree to pay it)
  • Initial training fee when you first start working for the franchise
  • Royalty fees, which allow you to use of the franchise’s logo and proprietary assets; often calculated as a percentage of gross sales, e.g., 5% of all sales, but may also be a fixed amount that is charged periodically, irrespective of sales
  • Advertising fees to support franchise-wide marketing campaigns (even if you don’t have any say over how your advertising dollars are spent)
  • Proprietary product costs—usually, you’ll have to purchase your products and/or raw materials from the franchisor or from their dedicated distributor, even though you might be able to find the materials cheaper elsewhere
  • Audit fees for periodic financial audits of your franchise
  • Renewal fee charged to renew your franchise contract once the current contract expires

All of these ongoing expenses cut into your margins, and if you’re not meeting your sales goals, it’s possible that your franchise will lose money and not be profitable, at least not right away.

Because of the various costs and fees associated with running a successful franchise, it’s important that you have some money saved or another source of income that you can live off of and use to help pay these costs until your franchise starts making decent money.

2. Competitive Threat

As a franchise owner, whenever a new location of your franchise opens in your area, you will wince and worry about how much of your business will be lost to the competing location.

Franchisors do maintain strict control over franchise territories to prevent market oversaturation, but they will err on the side of opening more locations in a territory to squeeze every last dollar out of that region, even if an individual franchise’s profit margins suffer.

Thus, every time a new franchise location opens in your territory, your market shrinks, and you have no recourse against your competitor; it’s not like you can just decide to move your franchise in a place of your choosing, or change up your product offerings, as you could with an independent business.

3. Less Control Over Business

Running a business where all procedures and policies are mapped out for you can be easier, in some ways. You don’t have to figure out how to run your business effectively because business-critical decisions have been decided for you, and are typically based on significant market research.

However, if you are a creative thinker or are used to managing a business on your own terms, franchise ownership might make you feel trapped and frustrated. Individuals who love coming up with innovative business solutions or who excel at finding more efficient ways of doing things will likely have more success as independent business owners.

4. Possibility Of Contract Terminations & Changes

One of the areas you don’t have any control over as a franchise owner is your business’s future as dictated by your franchise contract.

At the end of your contract term, the franchisor might cancel your contract if they’re not impressed with your franchise’s performance, or they could amend the contract to terms you don’t agree with. In such cases, you could be forced out of business or see reduced profits due to contract changes such as higher royalty rates, territory shrinkage, or others.

Although it is possible to negotiate the terms of any franchise agreement with the help of a franchise attorney, it is inevitably a David vs. Goliath type situation when going up against a big corporation with a lot of money and resources at their disposal.

5. Negative Press Can Hurt Sales

Yet another aspect you have little control over as a franchise owner is the company’s overall reputation. Consider how the following events could affect your business:

  • The company makes a tone-deaf advertising campaign that offends a lot of people
  • Employees at another franchise do something shocking/illegal
  • A company executive says/does something controversial or offensive

All of these are potentially newsworthy and hashtag-worthy events — you can probably think of several recent examples just off the top of your head.

Through no fault of your own, any bad press that attaches to your parent company in the public eye could hurt your franchise’s sales and even cause people to boycott your business.

Tips On Starting Your Franchise Journey

If you think you might want to buy a franchise, you can start with some simple tasks today or whenever you have some free time to do some research.

1. Be Strategic When Choosing Your Franchise Sector

Food —  particularly fast food — is typically the first thing that comes to mind when thinking about franchises, but there are plenty of franchising opportunities even if you don’t want anything to do with food service.

In addition to quick-service and full-service restaurants, other major players in the franchise industry include:

  • Gas stations & convenience stores
  • Clothing/shoe stores
  • Gyms
  • Beauty salons
  • Janitorial services
  • Hotels/motels
  • Real estate agencies
  • Car dealerships
  • Vision centers/optical goods
  • Private postal centers
  • Children’s services (e.g., daycare, preschool, kids’ sports)
  • Pet stores and services
  • Medical services

When determining which type of franchise you’d like to purchase, it’s important to consider market trends in addition to your own personal preference.

  • Which franchise sectors are growing, and why?
  • Which sectors are shrinking?
  • Which franchise brands have been doing well in recent years? Which ones are suffering?

These are just a few quick market research queries you can answer with some targeted Google searches.

2. Talk To Other Franchisees

Of course, you will want to talk to the owner of any franchise you’re considering buying and ask them why they’re selling and other pertinent questions. But it’s also important to get feedback from other franchise locations so you can get a well-rounded view of the particular perks and pitfalls of owning that type of franchise.

You can find the contact information for other franchisees in the Franchise Disclosure Document (I’ll talk more about that document in a moment) and also check message boards and blogs to find whatever “dirt” you can about the franchise. This way, you can know more about what you can expect and decide for yourself whether you’re willing to risk having a similar experience as other franchisees.

3. Determine Your Budget & Financing Options

Before you get too ahead of yourself, you need to know all the costs involved in purchasing a franchise and what you can afford.

Besides the cost of purchasing the franchise, startup fees, and working capital, you also need to factor in your personal expenses. According to the FTC’s Consumer’s Guide to Buying a Franchise (a must-read for any potential franchisee), it could take a year for your franchise to become profitable. Potentially, it could take even longer to turn a profit if the franchise was not profitable at the time of purchase. As a buffer, it’s important to have access to enough capital to ensure you will be able to survive even if your franchise doesn’t!

Once you have a rough idea of how much money you need, you can look into franchise financing options, if necessary. My posts on the best loans for franchises and how to get business acquisition loans are required reading if you’re researching loans to acquire an existing franchise.

4. What Is The USP?

When it comes to any business, the USP, or Unique Selling Proposition, is crucial in determining the business’s success. This is especially true with franchises, as the brand’s uniform nature makes it difficult to differentiate one franchise from the next. With that said, there are still important differences between different franchises within the same brand, and you need to figure out if the franchise you’re considering purchasing has something that makes it unique. Some examples include:

  • Prime Location: Is the franchise right off a popular freeway exit? How close is the nearest location of this franchise?
  • Added Features: For example, some McDonald’s restaurants have play structures and others do not.
  • Unique Building Or Business Space: A building’s age, design, and layout can all affect how attractive it is to patrons.

It may also be possible to add your own USP to a franchise. When working within the confines of a franchise contract, it can be difficult or impossible to offer something unique in terms of your products or services. However, there are still ways you can make your franchise location outshine the rest.

For example, you can keep your gym franchise much cleaner than the other gym locations in your city. Or, if you read online reviews saying that the tax preparation franchises in your town have incompetent staff, you can take efforts to make customer service shine at your tax prep franchise. You may also be able to invest in structural improvements before your grand reopening, such as improved equipment or a new franchise point of sale system.

5. The FDD & Other Pre-Sale Due Diligence

Once you determine which franchise interests you, you’ll need to do various pre-purchase due-diligence, such as reviewing financial documents, performing a business valuation, and making sure the franchisor approves of the transfer (they may not approve in some cases). Assuming you don’t have a legal background, hiring a franchise attorney can help you with most of these pre-purchase tasks.

Another important part of the pre-sale process reviewing the Franchise Disclosure Document (FDD). This document contains important information about the entire franchise brand as well as individual franchise locations and franchisees. If you find out in the FDD that the franchise you want to buy has had a lot of owners in the past few years, this may indicate that the franchise location is not profitable or that the franchisor has not provided adequate support to this location.

Final Thoughts

Buying a franchise is not right for everyone. However, it might be right for you if …

  • You want to own a business but don’t necessarily have a specific skill or vision
  • Lack of control over how to run your business doesn’t bother you
  • You have savings or additional income to live on until your franchise opens and becomes profitable (for example, retirement income)
  • You are a hard worker by nature and good at following the rules
  • The franchise you’re considering purchasing is a successful one and/or you have something unique you can add to make it successful

If you follow all of the tips I’ve laid out in this post, you will be well on your way to becoming a successful franchisee.

Quickly compare franchise loan options:
Lender Borrowing Amount APR Req. Time in Business Min. Credit Score Next Steps

$2K – $5M

Varies

6 months

550

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smartbiz logo

$30K – $350K

6.36% – 9.57%

2 years

650

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applepie capital logo

$100,000+

Approx. 9% – 16%

N/A

N/A

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$25K – $500K

7.4% – 36%

2 years

620

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For more information on lenders that will help finance your franchise purchase, contact us and we’ll be happy to suggest a suitable lending service to help you get that franchise loan.

The post Should I Buy A Franchise & How Do I Start? appeared first on Merchant Maverick.

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SBA 504 Loans: Your Guide To SBA/CDC Real Estate & Equipment Loans

The SBA 504 loan is a financing program offered by the Small Business Administration and Certified Development Companies. The loans, while selective, are open to eligible, for-profit small businesses operated by United States citizens and resident aliens. 504 loans are fit for small businesses in search of fixed interest rates with long-term financing and smaller down payments.

What Is The SBA CDC/504 Loan Program?

The SBA CDC/504 Loan Program is a financing program backed by the Small Business Administration. The goal of the program is to promote business growth and job creation through the support of small businesses.

The SBA connects recipients with a Certified Development Company (CDC). CDCs are non-profit organizations, certified and regulated by the SBA. These CDCs provide fixed-rate, long-term financing in partnership with lenders and the SBA. There are around 260 CDCs in the nation, which serve their local economies.

How Can SBA 504 Loans Be Used?

Often, 504 loans are referred to as SBA Real Estate Loans or SBA Commercial Real Estate Loans because of their strict usage policies, which make them a great option for purchasing fixed assets, like real estate.

In fact, proceeds from a small business real estate loan can only be used for fixed assets and few soft costs. The money cannot be used for working capital, inventory, or consolidating or paying debt.

Recipients of 504 Loans can use the proceeds to:

  • Purchase an existing building
  • Purchase land and land improvements
  • Construct new facilities
  • Renovate existing facilities
  • Purchase machinery and equipment for long-term use
  • Refinance debt in connection with renovating facilities or equipment

If your needs for financing don’t fit the bill, consider looking into the SBA 7(a) Loan Program, which offers broader options for small businesses.

CDC 504 Loan Pros & Cons

If you’re wondering whether this loan program is right for your small business, look into the pros and cons. Some small business owners prefer the 504 over the 7(a) loan and vice-versa. Consider the following if you’re looking into receiving a 504 loan:

Pros

  • Offers 90% financing, resulting in savings and improved cash flow for small businesses.
  • 504 Loan recipients often enjoy lower rates than those with traditional loans.
  • Recipients can include any 504 refinancing costs within the given loan.
  • Borrowers have the option to use given equity in the fixed asset as collateral.
  • The 504 Loan offers lower down payments of around 10%, compared to 25–30% on traditional loans.
  • Recipients of 504 loans can receive long-term capital: 20-year, fully amortized financing.

Cons

  • The CDC 504 Loan is selective about borrowers and usage of funds. If you meet all qualifications, this may be a positive for your business. For many businesses, however, this can be a burden. If you need funds for versatile needs and need a flexible loan, the 504 is not for you.
  • While borrowers can use funds to refinance eligible business operating expenses, there is a maximum 85% loan-to-value, meaning such operating expenses may not exceed 25% of the total value of eligible fixed assets.   
  • Prepayment penalties exist during the first half of the loan term. These rates are usually 100% of interest lost in the first year, 90% of interest lost in the second year, and so on, until the tenth year, in which it is equal to 0%.

SBA 504 Loans VS 7(a) Loans

If you’ve been doing your research on SBA loans, you know that 7(a) loans, like 504 loans, can be used to purchase real estate and equipment, construct, and renovate. So, what is the difference between a 504 loan and a 7(a) loan?

CDC / 504 Loans SBA 7(a) Loans

Loan Size

The CDC portion of the loan has a size limit, but the overall loan can be used to finance larger projects.

Offers flexibility for size projects, but are generally used for smaller sized projects.

Interest Rates

504 loans offer fixed-rate financing, which locks in low rates for the full length of the loan.

Usually has lower fees, but are variable, not fixed, and are adjusted quarterly. Rates typically rise over time.

Prepayment Penalty

High prepayment penalties

Prepayment penalties vary depending on loan

Loan Structure

  • 50% Bank Loan
  • 40% CDC Loan
  • 10% Borrower Down Payment

Varies depending on risk. Minimum 10% down payment for the borrower.

Loan Fees

Fees are negotiated per the 50% bank loan. Can be financed within the 504 loan.

Fees are based on the size of the loan. Can be financed within the 7(a) loan. An extra .25% of fees can be charged on portions of a 7(a) loan exceeding $1 million.

Do You Qualify? Borrower Requirements For SBA 504 Loans

To be eligible for an SBA 504 Loan, there are strict requirements a business must meet:

  • Borrowers must first meet the SBA size requirements
  • Businesses must have a tangible net worth less than $15 million.
  • You must also have an average net income less than $5 million (after federal income tax) the two previous years before applying.
  • Businesses must be for-profit
  • Businesses must be owned by U.S. citizens or resident aliens with permanent resident status.

For businesses wishing to gain financing for projects involving real estate, the business must occupy a minimum of 51% of rentable property for existing structures. Businesses intending to build a space must intend to occupy at least 60% of rentable property, with the intention of occupying 80% with growth.

As the 504 Loan is intended to directly create jobs, borrowers must also meet the job creation and retention requirement. This requires the business to create one job per $65,000 received in SBA financing. If the borrower is a small manufacturer, they must create one job per $100,000 borrowed.

If your business engages in other credible community goals, the job creation requirement can be waived. Such initiatives include community development goals, public policy goals, or modernizing facilities for health, safety, or environmental reasons.

There is no minimum credit score required, although it is best that you know ahead of time whether you can afford a small business loan.

SBA 504 Loan Terms, Fees, and Amounts

SBA 504 Loan Interest Rates & Fees

504 loans offer fixed rates and fees, set by the current market rate for 5-year and 10-year Treasury issues. If you’re receiving financing through a 504 loan, you can expect long-term fixed rates. SBA loan rates and fees will vary depending on the loan amount, lender, etc. 504 fees often include:

  • Interest Rates
  • CDC Servicing Fees
  • Central Servicing Agent Fees
  • SBA Guarantee Fees
  • Bank Fees
  • Third Party Fees (if applicable)
  • Prepayment Fees

SBA 504 Loan Borrowing Amounts

There is no maximum project size for businesses applying for a 504 loan. There is, however, a maximum SBA loan amount of $5 million. This debenture varies if the borrower is a small manufacturer or is planning an eligible energy project. Such borrowers can qualify for up to $5.5 million.

The CDC/504 Loan Application Process

Businesses applying for a 504 Loan should be prepared to provide evidence of eligibility, indebtedness, and creditworthiness. The 504 Loan application is roughly thirteen pages long and requires information on project cost, energy efficiency goals, debenture pricing, etc. Once the application is completed, it should be submitted to the CDC, which will then forward the information to the SBA Loan Processing Center.

Final Thoughts

The SBA 504 Loan Program is a great option for small businesses in need of cash for fixed assets, expansion, or modernization. If you need fixed interest rates, long terms, and a smaller down payment, this might be for you. Check out our SBA Loan Calculator to estimate everything you need to know about your individual loan.

If 504 loans aren’t quite what you’re looking for, try checking out the 7(a) Loan Program, which offers wider flexibility for many small business owners. Applying for financing can be an arduous task, so always consider your individual business and make your decision based on what’s right for you!

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SBA Disaster Loans: Do I Qualify For One?

Whether your area was affected by a wildfire, tornado, record-setting hurricane or another catastrophic event, the next steps can feel daunting or overwhelming. Many homes and businesses find that insurance won’t cover as much as they thought—and that leaves a large gap between where they are now and the ability to move forward with everyday life as usual.

Thankfully, there is an option to finance the funds needed to rebuild—funds that can help not only business owners, but homeowners as well. Offering no upfront fees, no penalties for paying off the loan early, and low interest rates, an SBA disaster loan can help you begin to put the pieces back together after a life-altering event.

What Are SBA Disaster Loans?

While the primary mission of the Small Business Administration is to support entrepreneurs, with special programs focused on women, veterans, low-income, and minority business owners, this agency also offers low-interest loans to assist business owners, homeowners, and renters after a disaster. No matter where you fall in the insurance spectrum — whether you’re covered well, are underinsured, or have no protections — FEMA recommends applying for an SBA loan to cover gaps in insurance coverage or to provide bridge funding before the insurance check arrives.

Read on to find out more about the types of SBA disaster loans and to find the option that fit your situation best. It’s time to get the financing you need to recover your business and your life.

Business Economic Injury Disaster Loans

The Economic Injury Disaster Loan Program (EIDL) provides financial assistance to both small businesses and private, non-profit organizations that are located in a declared disaster area. Coverage depends on the amount of economic injury sustained but isn’t necessarily calculated by the actual physical damage to the business. Coverage for an economic injury disaster loan is capped at $2 million dollars, but the amount you can finance is based on the actual economic injury you’ve sustained after a disaster. So if sales have dipped because people simply can’t get to your storefront location, or the area was closed but your property isn’t damaged, for instance, an economic injury disaster loan may be able to help you cover costs associated with loss of business.

Am I Eligible For The Economic Injury Disaster Loan Program?

To be eligible for an economic injury disaster loan through the SBA, you’ll need to be located in a disaster-declared country or contiguous county. This type of loan is open to private organizations or small business owners who have sustained economic injury because of the declared disaster. In addition, repayment terms will be dependent on your ability to repay the loan.

Your first step in learning more is to visit the SBA’s Disaster Loan Assistance page where you can look up eligible disaster areas, apply online, and check your application status. Read on to learn more about the qualifications and other frequently asked questions in the proceeding sections below.

Business Physical Disaster Loans

If your business has sustained physical damage in a declared disaster area, you can apply for a physical disaster loan to receive the financial assistance you need to move ahead. There is no business too small or too large to apply—and most nonprofit organizations may also be eligible for an SBA loan to help rebuild after a disaster strikes.

Repayment terms can be flexible and will depend on your ability to repay the loan. Your repayment period can be up to 30 years with an interest rate that will not exceed 4% if you cannot obtain credit with another source and no more than 8% for those who have available credit options elsewhere.

How Can I Tell If My Area Is A Declared Disaster?

To check all currently declared disasters and determine if you can apply for disaster loan assistance, visit the U.S. Small Business Administration webpage for more information. You’ll find a listing of states, incidents, and affected incident periods.

If you know you are in a declared disaster area and you have sustained physical damage to your business, the next steps you need to take are to visit the SBA site and begin the application process for disaster loan assistance.

What Can An SBA Physical Disaster Loan Be Used For?

Business physical disaster loans from the SBA “must help return damaged property to its pre-disaster condition through repairs or replacements.” Funds can be used to purchase or repair machinery, equipment, fixtures, inventory, and of course, building improvements—anything at your physical location that was damaged by the disaster.

Home & Physical Property Disaster Loans

As mentioned at the beginning of the post, the SBA typically focuses on supporting the entrepreneur through small business growth. However, if you’re a homeowner or renter in a declared disaster area, you may also find help to rebuild from the U.S. Small Business Administration. The SBA offers home and property disaster loans—affordable financial assistance in the form of long-term, low-interest loans for any loss that isn’t covered by your insurance or other coverage means.

How Much Can I Borrow?

To repair your home to its pre-disaster state, you can borrow up to $200,000—but you won’t be able to use this as working capital to upgrade or make additions to your home unless these are required by a building authority or code update.

In addition to repairing structures, you also might be able to borrow up to $40,000 to replace your personal property such as clothes, furniture, or other contents in your home. You can’t use the funds to replace antiques, collections, a pleasure watercraft, or recreational vehicles, however.

If you are a homeowner or renter who needs to rebuild in a declared disaster area, this option from the SBA can be the boost needed to move ahead.

What Types Of Businesses Are Eligible For SBA Disaster Loans?

buying a franchise

Below are some of the more common questions relating to eligibility for an SBA disaster loan. While the SBA certainly has guidelines and eligibility requirements, there is hope even if you don’t have a lot of collateral or you have some past credit issues.

Is My Business Eligible For A Disaster Loan?

In addition to your business being located in an officially declared disaster area, there are some other guidelines to keep in mind when it comes to eligibility. Most of the qualifications to receive an SBA loan are covered in the answers to the most commonly asked questions below, but in a nutshell, it’s going to come down to your location, creditworthiness, ability to repay, and collateral.

More About The SBA Disaster Loan Process

Does The SBA (Or FEMA) Perform Credit Checks?

Yes, to obtain a disaster loan you will need to demonstrate a history of creditworthiness. The SBA will perform a credit check. If you’re worried that your lack of credit history will deter you from getting the funds you need, take heart –there’s another route to demonstrating your ability to pay. The SBA will examine your history of paying utilities, rent, or insurance as positive evidence that you can repay.

It’s a wise move to know your credit score before you apply, so you can be prepared. Take advantage of some of the best free places to check your credit and stay informed.

What About Disaster Relief Loans For Bad Credit?

As stated above, the SBA will perform a credit check on your accounts. While you need to show you have regularly made payments on accounts, you don’t need to be too concerned if you have a few negative marks on your credit report, as long as the majority of your accounts are in good standing with the reporting agencies.

Do I Need Collateral?

If you need more than $25,000, the SBA will likely require collateral to secure your loan. Typically, they will accept real estate or other assets to secure your loan, but don’t be too discouraged if you don’t have collateral. If you are otherwise eligible for an SBA economic injury loan and have no collateral to provide, for instance, you may simply be required to pledge what is available instead of being denied. The program is set up to be as accessible as possible, so you will be considered whether you have collateral or not.

How are Disasters Declared?

Only businesses located in an officially declared disaster area can access SBA disaster loans. Generally, there are seven ways a disaster can be declared:

  1. A Presidential Declaration for Individual Assistance is requested by the governor of a state. The presidential declaration activates FEMA and will automatically make SBA disaster loans accessible to businesses and private, non-profit organizations.
  2. An Administrative Agency Declaration can be made by the governor of the state to activate SBA’s disaster loan program available to businesses, homeowners, and renters alike.
  3. A Presidential Declaration for Public Assistance can also be requested by the governor. Once the President approves, business physical damage and economic injury loans are made available.
  4. The Secretary of Agriculture can declare a disaster area. The SBA will then also declare the availability of disaster loans relating to businesses engaged in agriculture.
  5. A Governor Certification Declaration occurs when a governor goes to the SBA directly and requests a declaration based on certification of the damages an area has.
  6. The Secretary of Commerce may determine that some eligible small businesses have economic injury directly related to commercial fishery failures or resource disasters.
  7. A Military Reservist Declaration can be made for individuals who are considered “essential employees” and are called up to active duty as military reservists during a period of military conflict. Working capital loans can be made available to businesses that aren’t able to meet ordinary and necessary operating expenses due to the absence of essential employees.

SBA Disaster Loan Terms & Rates

The table below will give you a quick peek of terms and rates for the two business-focused SBA disaster loans—the economic injury disaster loan and the business physical disaster loan.

SBA Disaster Loan Application Process

As mentioned above, your first step in the application process for an SBA disaster loan is to fill out an application at the Disaster Loan Assistance portal through the SBA. Here you will be able to verify whether you’re in a disaster area, apply online (or find the phone numbers you need), and check on your application once it’s been submitted.

When you’re trying to recover from a disaster and start rebuilding, time is of the essence. This is why it’s important to begin gathering the documents you’ll need to keep things moving forward:

  • Start making an itemized list of your losses
  • Include the estimate to repair or replace items
  • Obtain a copy of the necessary federal document (income tax information) that is referenced in the application
  • Provide a brief history and overview of your business
  • Gather business and personal financial statements

The good news is that, unlike a typical SBA loan, funding for a Disaster Loan can be completed in as little as 7-21 days. You may receive your funds in increments as you begin repairing to cover necessary costs.

Need An Alternative To Federal Disaster Loans?

If you’re forced to seek alternatives to an SBA loan, you’ll find you do have other options. Whether the SBA is denying disbursement or you simply want to shop around and find the best financing options for your particular situation, check out our Small Business Loans Comparison Page for more information. With an online loan, you may be able to get your funds faster, you’ll want to pay attention to rates and repayment terms; these will typically be less attractive than what the SBA can offer.

After a disaster, you may feel that you’re treading water for a while. Fortunately, with the help of disaster assistance loans, you do have hope and resources to make progress again. Follow the references listed above to learn more and start the healing and recovery process.

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SBA Loans For Veterans: Everything You Need To Know About VA SBA Loans

After serving their time in the military, many veterans choose to start their own businesses. In fact, military veterans own about 7.5% of the businesses in the United States. Just like any other small business owners, there comes a time when these entrepreneurs need funding, whether it’s for purchasing equipment, expanding the business, or funding a startup project. And like civilians, many veterans are looking for a business loan that will help them expand their business without forcing them to shoulder extra debt. For these business owners, an SBA VA loan could be the answer.

What Is The SBA?

Before going into the specifics of SBA loans for veterans, it’s important to first know what the SBA is and how it offers benefits to small businesses. SBA stands for Small Business Administration. This is a government organization that offers assistance to small businesses. Through the SBA, business owners have access to education, information, and training. The SBA serves as an advocate for small businesses and provides a critical piece of the entrepreneurial puzzle: business financing.

How Can The SBA Benefit Veterans?

Getting a business loan is tough for anyone, but it can be especially difficult for military veterans. This is because traditional loans require a strong financial history. Many veterans and servicemembers on active duty may find that they have gaps in their credit history. If they’ve been deployed for any length of time, they may not have credit cards, utility bills, mortgage payments, or other records credit unions use to judge creditworthiness. This can make obtaining a business loan very difficult, if not impossible.

This is where the SBA can be of service to veterans. While SBA loans require typical paperwork and items such as credit scores and income verification, lenders are able to work with military veterans’ unique situations to provide them with the funding they need. Because these loans are backed by the SBA, lenders are more willing to lend to qualified borrowers, while business owners enjoy VA SBA benefits including low interest rates and flexible terms. (This is ideal because veterans won’t be stuck getting subprime traditional loans that can push them into debt or even bankruptcy.)

Types Of SBA Loan Programs For Veterans

small business loans for veterans

The SBA offers multiple programs that provide money for veterans and servicemembers. SBA disabled veterans loans can also help inactive servicemembers that were injured in the line of duty. SBA loans are often difficult to obtain, but selecting the right product beforehand and knowing what to expect during the application process can help ease the path to obtaining funding.

The Veterans Advantage Loan Program

The Veterans Advantage Loan Program is similar to the 7(a) Loan Program — the most popular option for SBA loans. This is a popular choice for veterans and civilians alike because the loan can be used for just about anything. This includes expanding a business, acquiring a new business, financing a franchise, renovations, construction, equipment, working capital, or even refinancing old debt.

The Veterans Advantage Loan Program offers the same great benefits with reduced guaranty fees for veteran-owned businesses. Under this program, veterans can borrow up to $5 million. SBA 7(a) Veterans Loan for business acquisitions and expansions have terms of up to 10 years; commercial real estate purchases have terms up to 25 years, while equipment financing loans can be paid back over a period of up to 15 years.

For 7(a) Loans less than $125,000, there is no guaranty fee. For loans between $125,001 and $150,000, the fee is just 1%. For loans up to $350,000, the fee is 1.5%. The maximum upfront guaranty under this program is 3.75% for loans from $700,001 up to and including $5 million. Interest rates vary on these loans from 7.25% to 9.75%. Find out more about the terms and rates of SBA 7(a) loans.

One of the biggest drawbacks to an SBA 7(a) Loan is the timeline for receiving the money. The application, approval, and funding process can take months in most cases. However, the SBA does offer SBA Express Loans for veterans, which can provide faster approval, although the timeline for receiving the funds varies from lender to lender. Through the Express program, the SBA guarantees that the application will be processed within 36 hours. SBA Express Loans for veterans are available in amounts up to $350,000, and there is never an upfront guaranty fee for veteran-owned businesses.

The Military Reservist Economic Injury Disaster Loan Program

Reservists and National Guard members have learned to expect the unexpected. Servicemembers know that a deployment could come at any time, forcing them to leave family, friends, and business responsibilities behind. Military reservists and members of the National Guard who face economic hardship during or after a deployment can get the financing they need for their business with an SBA loan.

The Military Reservist Economic Injury Disaster Loan Program is designed to help cover operating costs while a veteran is on active duty. These loans are available in amounts up to $2 million with maximum terms up to 30 years. The maturity of the loan is based on the applicant’s ability to repay the loan. For these loans, collateral is required for any amount over $50,000. It’s important to note that the SBA will not turn down a loan simply for lack of collateral, but the borrower will be required to put up any available collateral, including real estate.

These loans are very attractive to military veterans because of their repayment terms and their low interest rates. SBA Veteran Loan rates are currently set at 4%. These loans provide the working capital needed to pay necessary expenses; funds can not be used for income or profit loss, refinancing debt, or business expansion.

Does The SBA Offer Grants For Veterans?

Unfortunately, there are no SBA grants for veterans. However, the organization provides a variety of resources to give veterans the tools they need to succeed in business. These programs are funded by the SBA and are available to servicemembers, veterans, and in some cases, military spouses.

SBA training programs include Boots to Business, the Women Veteran Entrepreneurship Training Program, Service Disabled Veteran Entrepreneurship Training Program, and the Veteran Federal Procurement Entrepreneurship Training Program. More details on these training programs are available through the SBA website.

What About The SBA Patriot Express Loan Program?

The SBA Patriot Express Loan program was established in 2007. Under this program, veterans and eligible spouses were able to apply for up to $500,000 in business funding at rates that ranged between 2.25% and 4.75%. Unfortunately, this program was discontinued in 2013 and is no longer available. Veterans that wish to take advantage of a similar program can apply for the SBA Express Loan.

Who Qualifies For A VA SBA Loan?

To qualify for the Veterans Advantage Loan Program, the small business must be at least 51% owned and controlled by veterans, service-disabled veterans, active-duty military in the Transition Assistance Program, or a reservist or National Guard member. Spouses of veterans, active-duty service members, reservists, or National Guard members also qualify, as well as spouses who were widowed because of death during service or death from service-related disabilities. These requirements also apply to SBA Express Loans.

Non-servicemembers and civilians can apply for an SBA 7(a) loan under the traditional terms. They will not receive the discounted guaranty rates provided to veterans.

Veterans and servicemembers applying for the Veterans Advantage Loan Program must meet all requirements set forth for SBA 7(a) Loans. Requirements include a credit score of at least 680 (in most cases) as well as personal collateral. The business must not be delinquent on any debts to the government and should not have any foreclosures or bankruptcies on their credit report. All borrowers should be in business for at least 2 years, although startups are eligible with adequate industry experience and a solid business plan.

Applicants must also have fewer than 500 employees and less than $7.5 million in sales each year. The business must be for-profit and should have a qualifying need to receive funding. It’s also recommended that alternative resources are sought before applying for an SBA loan. Businesses that engage in investments, rentals, and lending are not qualified. Learn more about the requirements for obtaining this type of loan.

The Military Reservist Economic Injury Disaster Loan Program is available to servicemembers, reservists, or National Guard members who are on active duty. The servicemember must apply for the loan while on active duty or for a period of one year following the end of active service or discharge.

Any veteran that has been dishonorably discharged from their branch of service is not eligible to receive funding through the SBA Veteran Loan Programs.

How To Apply For SBA Loans For Veterans

After choosing which VA SBA Loan is right for you, the next step is to be prepared for the application process. Although the process can be tedious, taking the necessary steps and knowing what to expect will help everything go smoothly.

Credit scores do play a factor in receiving SBA loans. Generally, a credit score of 680 or higher is required. There are multiple online resources that can be used to check your score and obtain a free credit report so that any errors can be addressed. Please note that if there are any negative items on your report, the lender will require a valid explanation. Personal and business credit reports are reviewed by all lenders.

For the SBA Veterans Advantage Loan program, a potential borrower must choose a qualified lender. The SBA offers a Lender Match service that connects businesses with a lender in their area. While some applications can be completed online, lenders generally require a phone call or in-office visit by the applicant.

For the Military Reservist Economic Injury Disaster Loan Program, applications can be obtained by contacting the Disaster Assistance Customer Service Center via phone or email.

After getting in touch with a lender, it’s time to gather the required paperwork.

  • DD Form 214 is required for veterans, service-disabled veterans, or spouses of veterans.
  • Transitioning active-duty military members, reservists, and National Guard members must have a copy of DD Form 2.
  • DD Form 1173 is required for spouses of transitioning active-duty military members, reservists, or National Guard members.
  • Military widows are required to have documentation from the Department of Defense.

To obtain an SBA VA Loan, you must be prepared to show that you can repay the loan, operate your business successfully, and put up 10% to 25% equity. Other documentation will be required during the application process, including:

  • At least three years of business and personal income tax returns
  • Financial statements, projections, business certificates, and licenses
  • A business plan.

Requirements vary, so you can ask your selected lender about their requirements so you can gather the needed information.

Veterans who choose SBA Express Loans will receive notification of approval within 36 hours, although funding the loan will take weeks or months. On average, the application, approval, and funding process for SVA 7(a) Loans takes a minimum of 60 to 90 days. If this timeline doesn’t work for you or you don’t meet the qualifications of obtaining an SBA loan, find out more about other funding options for veterans.

Final Thoughts

Although the process of applying for an SBA loan isn’t easy, the competitive terms make it worth it for many servicemembers, veterans, and their families. SBA Veteran Loans allow those who serve their country to be able to truly live the American Dream through successful ownership of their own business.

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The Best Offshore Merchant Account Providers

Offshore Merchant Account Providers

Ordinary payment processing is complicated. But finding good offshore, international, or high-risk payment solutions can be a real nightmare. If you fall into one of these categories, you’ve likely had your merchant account applications denied at least a few times. Even worse, perhaps you’ve had your processing service terminated and your money withheld from you for months. We understand your struggle. We’ve seen hundreds of businesses go through the exact same thing, and we’re here to help you find the perfect offshore merchant account for your high-risk business.

If you’re just looking for a run-of-the-mill high-risk merchant account for your business, you’ll want to check out our article The Best High-Risk Merchant Account Providers. The high-risk category often includes business types that you wouldn’t normally associate with the term “high-risk,” such as airlines or online furniture sales. While these types of businesses are usually treated as high-risk by banks and processors, they can usually be approved for a domestic merchant account by working with a high-risk specialist.

For our purposes, we’ll use the terms offshore merchant account and international merchant account interchangeably, as they mean the same thing. Both terms refer to a merchant account that is underwritten by a bank or processor that is situated in a different country from the one where the business is located. The most common reasons for needing an offshore account include the following:

  • You do a significant amount of business in a foreign country and need to accept payments in the local currency.
  • Your business has offices in multiple countries, and you need separate merchant accounts for each location.
  • Your business is considered to be so risky that you cannot obtain a regular high-risk merchant account in your own country.

Below, we’ll discuss the factors to evaluate when considering an offshore merchant account and several special features that you’ll want to include in your service. We’ll also profile four offshore merchant account providers that we feel offer superior service and overall value in comparison to their competitors.

Factors To Consider When Selecting An Offshore Merchant Account

While many offshore merchant account providers also specialize in high-risk accounts more generally, not all high-risk processors work with international merchants or provide offshore accounts for domestic merchants. Many high-risk specialists only work with US-based businesses, and only provide accounts through US-based banks and processors. Before you apply for an offshore account, you’ll want to confirm that the company you’re considering works with businesses located in your country. This information might be spelled out explicitly on the provider’s website, or you might have to talk to their sales staff to get a confirmation.

Providers that specialize in setting up offshore merchant accounts can usually get you an account in just about any country around the world, though obviously, there are exceptions. As a US-based merchant, don’t expect to set up your offshore account in a place like Afghanistan or North Korea. It’s simply not going to happen. With the exception of countries limited by political considerations or a high level of instability, however, the possibilities are wide open.

In most cases, you should aim to get an account in a country where you expect to do a significant amount of business. On the other hand, if your business is going to operate exclusively in the United States, an offshore account serves mainly as a last resort for getting a merchant account when you simply can’t get approved for a domestic high-risk account. Banking regulations are more relaxed in certain other countries, and the willingness on the part of banks and processors to work with high-risk businesses is also more favorable. At the same time, you should be aware that setting up an offshore account under these circumstances, while it might be your only option for accepting credit cards, can present some serious risks to you as well. Your ability to pursue a legal remedy against a foreign bank or processor might be severely limited – or even nonexistent. At a minimum, you should consider legally registering your business in the country where your account will be located. Even with legal standing in the country, however, be aware that it might be extremely inconvenient and expensive to pursue a legal action outside of your own country.

There’s also an increased risk that you could become the victim of fraud or identity theft. Banks in other countries collect the same personal data about you and your business that US-based banks do, but they don’t always do as good a job of protecting it. You’ll want to keep an especially close eye on your merchant account, your business account, and any personal accounts about which you’ve released information to get approved for an offshore merchant account.

High-risk merchant accounts are notorious for including higher processing rates and account fees, and offshore accounts can be even worse. Providers know you’re particularly desperate and some, but not all, will take advantage of your situation by charging you as much as they think they can get away with. We recommend that you shop around and compare multiple quotes when looking for an offshore account. Don’t accept the first offer from a bank or processor just because they’re the first one that hasn’t rejected your application due to the nature of your business.

Note that merchant account providers who market offshore accounts often downplay or fail to mention these risk factors, so it’s up to you to look out for yourself. Do your own independent research, compare multiple offers, and thoroughly review all contract documents before you sign up for an account.

Special Features Of Offshore Merchant Accounts

For the most part, you’ll want the same services and features for an offshore account that you would want for a traditional merchant account. This includes processing hardware such as credit card terminals and POS systems for retail merchants, and a robust payment gateway for eCommerce merchants. You’ll also want an online account dashboard of some kind that allows you to monitor your sales in real-time. While online account access is now a standard feature in the United States, you might not always find this feature with an offshore account. Mail-order and telephone-order (MOTO) businesses often find a virtual terminal to be the most cost-effective method for inputting transactions. Depending on the needs of your business, a smartphone- or tablet-based mobile processing system might also be important. Almost all providers offer some type of mobile processing system these days, either as a proprietary product or through a partnership with a third-party provider. Be aware that very few mobile processing systems have begun to offer EMV-compatible card readers, and you’ll often be stuck with a magstripe-only reader.

In addition to these basic merchant account features, there are several special features that your offshore merchant account might (or might not) include. How important these features are to your business will be determined by how you intend to use your account. Extra features to look for in an offshore merchant account include the following:

  • Multi-Currency Support: If you’re going to do business in a foreign country, it only makes sense that you’ll want your customers to be able to pay in their local currency. Multi-currency accounts allow you to maintain balances in multiple currencies and can save you a ton of money in currency conversion costs.
  • Currency Conversion Services: Having an offshore account will invariably require you to convert funds into your own local currency at some point. Most offshore account providers include built-in currency conversion services that allow you to convert foreign funds when it comes time to transfer them to your business account. While these services can sometimes offer you much lower conversion fees than what a bank would charge you, it still pays to shop around for the best deal on this service. You might save money by using an international transfer service such as TransferWise or OFX.
  • Expanded Anti-Fraud Features: Offshore merchant accounts invariably involve a higher degree of risk of fraud than their traditional counterparts, so you’ll want as many extra services to avoid it as you can get. Most offshore account providers offer a number of enhanced anti-fraud features as a standard part of their service. These features automatically detect suspicious activity, hopefully stopping any fraudulent activity before it can affect your business. Providers are increasingly turning to artificial intelligence (AI) features to improve their ability to detect potential fraud beyond what would be possible with a traditional algorithm.

With these considerations in mind, let’s take a brief look at four of our overall favorite offshore merchant account providers:

Durango Merchant Services

Durango Merchant Services is a small merchant account provider headquartered in Durango, Colorado. Established in 1999, the company specializes in providing high-risk and offshore merchant accounts to hard-to-place businesses. They work with a wide variety of banks and processors to find a suitable account for almost any business. While they can’t place 100% of the merchants who apply to them, their track record is very good, and their sales process is so transparent and honest that we’ve even seen praise for the company from merchants who’ve been turned down for an account.

If you need an offshore account, Durango has you covered. Their accounts include multicurrency support as well as enhanced anti-fraud features to keep you protected. They can set up accounts in countries as diverse as Germany, Panama, Spain, and many others.

Durango doesn’t try to set you up with expensive leases when it comes to processing equipment. Instead, they offer a variety of terminals for sale right on their website. Options include both wired and wireless models, with some offerings that support NFC payments. They also sell the iPS Mobile Card Terminal, which connects to a smartphone to provide mobile payments capability in conjunction with the iProcess mobile app. If you’re using a virtual terminal, they sell the MagTek DynaMag, a USB-connected magstripe card reader that attaches to your computer. Unfortunately, it’s Windows-only. Durango currently doesn’t offer any POS systems for sale.

The company supports eCommerce through its proprietary Durango Pay payment gateway, which integrates with the numerous processors the company uses and includes support for most of the popular online shopping carts. Durango’s gateway also features an Authorize.Net Emulator, which allows it to interface with any shopping cart that works with Authorize.Net (see our review).

Because Durango works with such a wide variety of third-party processors to set you up with an offshore merchant account, they don’t list rates or fees on their website. These will vary tremendously depending on which processor they set you up with. While we normally like to see more transparency from merchant account providers, in this case, it’s understandable. Depending on your qualifications, you can expect either an interchange-plus pricing plan or a tiered one. Merchant accounts through Durango don’t seem to have standardized fees. Again, these will depend on the terms that your backend processor imposes.

Durango assigns a dedicated account manager to every one of their merchants, which means you’ll be talking to the same person every time you have an issue. While this can sometimes be problematic outside of regular business hours and when your account manager isn’t available, overall it provides a much higher level of service than you’ll get from a random customer service representative.

Pros

  • Direct sales of processing equipment
  • Reasonable rates and fees based on your business and your backend processor
  • Dedicated account manager for customer service and support

Cons

  • No support for POS systems
  • USB card reader not compatible with Mac computers

For more information about Durango Merchant Services, read our complete review.

SMB Global

SMB Global logo

SMB Global is a new high-risk provider that was spun off from one of our favorite providers, Payline Data in 2016. Headquartered in South Jordan, Utah, the company specializes in providing merchant accounts to high-risk and offshore businesses. Using a variety of backend processors, they’re able to approve a merchant account for almost any high-risk business (including those selling CBD oils). They have an excellent reputation for fair prices and top-notch customer service.

As a newly-established business, SMB Global is still a little rough around the edges, lacking a mobile processing system and credit card terminals for retail merchants. At the same time, they offer a full range of services for eCommerce merchants, including a choice between the NMI Gateway and Authorize.Net.

Because they work with so many banks and processors to get you approved for an account, the company doesn’t offer any pricing information. Processing rates, account fees, and contract terms will all vary widely depending on which backend processor is handling your account. While we highly recommend that you request an interchange-plus pricing plan, be prepared to have to accept a tiered plan instead, particularly if you haven’t been in business for very long. Likewise, you can also expect to have a standard three-year contract with an automatic renewal clause and an early termination fee if you close your account early. As a high-risk merchant, you should be prepared to have a rolling reserve included in your account agreement.

SMB Global requires a minimum processing volume of $50,000 per month for an offshore merchant account, although they will occasionally waive this requirement if your business has a very strong financial history. Offshore accounts support multi-currency processing, allowing you to avoid cross-border fees. They also feature dynamic currency conversion, letting your customers pay in either their local currency or the currency in which you bill them.

Pros

  • Offers international merchant accounts to a wide variety of industries
  • Reasonable pricing and contract terms
  • Excellent customer service

Cons

  • No mobile app
  • No information available about credit card terminals or POS systems

For a more detailed look at SMB Global, be sure to check out our full review.

Host Merchant Services

Host Merchant Services is a relative newcomer to the merchant accounts business, first opening in 2009. The company is headquartered in Newark, Delaware and has a second office in Naples, Florida. While they primarily cater to traditional, low-risk businesses, they can accommodate several categories of high-risk businesses and also offer offshore accounts. Their interchange-plus-only pricing and a full range of products and services make them an excellent choice – if you can get approved. A former web hosting company, HMS is ideally suited for eCommerce merchants. They use TSYS as their primary backend processor, but can also work with several international banks and processors to get you an account.

For retail merchants, HMS offers a variety of Verifone and Equinox (formerly Hypercom) terminals. Terminals are offered for sale, and the company does not lease its equipment. While prices are not disclosed on the HMS website, you should be able to negotiate a very reasonable deal on terminals, especially if you need more than one. If you already have a compatible terminal, they’ll reprogram it for free.

HMS also offers a variety of POS systems that utilize either tablets or touchscreen displays. Choices range from an 8” tablet-based system up to a 17” touchscreen monitor. The company’s Starter, Plus, TouchStation Plus, and Custom POS options should meet the requirements of just about any business that needs or wants a POS system.

If you need a mobile processing capability for your business, HMS has you covered, offering the ProcessNow mobile payments system via a partnership with TSYS. ProcessNow works with either iOS or Android phones, but the current card reader is magstripe-only and requires a headphone jack to plug into.

As a tech-focused company, eCommerce is HMS’ specialty. The company has recently introduced their proprietary Transaction Express payment gateway, which includes a free virtual terminal. HMS also supports a large number of third-party gateways, including Authorize.Net.

HMS uses interchange-plus pricing exclusively for its low-risk merchants, but you might have to pay tiered rates if you have an offshore account. While they don’t disclose their rates on their website, they’re based primarily on monthly processing volume and are very competitive. Fees are not disclosed either, but include a $24.00 annual fee, a $14.99 monthly account fee (which includes PCI compliance), a variable payment gateway fee ($5.00 per month for Transaction Express, $7.50 per month plus $0.05 per transaction for Authorize.Net) and the usual incidental fees (i.e., chargebacks, voice authorizations, etc.). High-risk and offshore merchants should expect to pay higher fees than these, and possibly additional fees as well. In particular, be prepared to have a rolling reserve included as part of your account.

HMS provides customer service and support via 24/7 telephone and email. Chat is available via the HMS website during regular business hours. They also feature an extensive collection of articles and blog posts on their site for customer education. Support quality appears to be well-above-average, based on the almost complete absence of complaints about it on the BBB and other consumer protection websites. If your business falls into one of the categories of high-risk activities that the company can accommodate, HMS is an excellent choice for an offshore merchant account.

Pros

  • Full range of products and services for retail and eCommerce businesses
  • Exclusive interchange-plus pricing plans (for low-risk businesses)
  • Excellent customer service and support

Cons

  • Rates and fees not disclosed on website
  • Can only accommodate a small number of high-risk business categories
  • Mobile card reader not EMV-compliant

For more information, see our complete review.

Easy Pay Direct

Easy Pay Direct logo

Easy Pay Direct is headquartered in Austin, Texas and has been in business since 2000. The company’s primary product is their proprietary EPD Gateway, but they also provide full-service merchant accounts for international, high-risk, and traditional non-high-risk merchants. High-risk merchants will have to pay a premium in terms of processing rates and account fees, whether they’re partnered with a domestic or offshore bank or processor. However, the additional expense is entirely reasonable under the circumstances.

Like most offshore merchant account specialists, Easy Pay Direct works with a variety of banks and processors, both domestic and international, to find one that’s a match for the needs of your business. You’ll have to pay a $99 account setup fee to get started, but considering the extra effort required to underwrite a high-risk or offshore account, we feel the expense is justified in this case. Processing rates will be under a tiered pricing plan, but you should still have some room to negotiate your rates, especially if you have a high monthly processing volume. Contracts generally follow the industry standard, or a three-year initial term that automatically renews for one-year periods after that. One very positive feature about Easy Pay Direct’s contracts is that they do not have an early termination fee, even for high-risk businesses. While this isn’t quite the same thing as true month-to-month billing, it does make it much easier to close your account without penalty if you have to.

One helpful feature offered by Easy Pay Direct is called load balancing, where a business can divide its incoming funds among multiple merchant accounts. This is particularly helpful for high-risk businesses that often exceed the monthly processing volume limits imposed by the processor underwriting their account. Just be aware that you’ll usually have to pay separate monthly fees for each account, so it might not be cost-effective for some merchants. Also, be aware that you might not need this feature if you opt for an offshore account. Underwriting guidelines in some (but by no means all) foreign countries are more relaxed, and you might not have a monthly processing limit imposed on your account at all.

Although Easy Pay Direct doesn’t get as much attention as other, better-known processors, it’s a solid choice for merchants in the high-risk category or those who need an offshore account. We particularly recommend the company for high-risk eCommerce businesses due to the robust feature set of their EPD Gateway.

Pros

  • Load balancing feature for high-risk merchants
  • No equipment leases
  • No early termination fee

Cons

  • $99 account setup fee
  • Three-year contract with automatic renewal clause

Check out our full review of Easy Pay Direct for more information.

Final Thoughts

Having a hard-to-place business doesn’t mean you have to run your company through Bitcoin. You can accept credit card payments just like any other business by finding a payment processor that will set you up with the right acquiring banks. At the same time, you need to be fully aware that, for a US-based business, signing up for an offshore merchant account is a risky endeavor. You’ll want to be very cautious and carefully research any provider you consider, even the ones we’ve recommended above. Take extra care to protect your sensitive personal financial data and be sure your account includes additional fraud prevention features. You might also want to consider registering your business in the country where your merchant account is located – just in case. Having a merchant account in Panama might sound very tempting if you’ve been repeatedly turned down by domestic providers, but it will be very expensive to have to travel there in person if you later run into legal troubles with your account provider.

Of the four offshore merchant account providers we’ve reviewed above, Durango Merchant Services is undoubtedly the best all-around provider of the group. They disclose more detailed information about offshore accounts than any of the other providers. SMB Global is also an excellent choice. While the company itself is very new, they have an impressive track record from their days operating as the high-risk division of Payline Data. Finally, both Easy Pay Direct and Host Merchant Services offer a solid line-up of products and services for both eCommerce and retail merchants. If you need an offshore account to break into the world of accepting credit cards, they both have everything you need to get started.

Finally, we can’t caution you strongly enough that selecting and setting up an offshore merchant account involves a higher level of risk on your part, and you’ll need to be extra cautious in choosing a company to go with. Relaxed underwriting guidelines and a general lack of monthly processing limits make offshore accounts very tempting to merchants who’ve had a hard time getting their business approved for a traditional account, but these advantages come at a price. If anything goes wrong in your relationship with your provider, you might face some real challenges in pursuing a legal remedy. You should also be aware that if this happens, the US-based provider that brokered your account will not be able to help you in most cases.

Do your homework! Research your provider thoroughly and review all contract documents very carefully before signing up. While these steps won’t eliminate the chance of things going sideways somewhere down the road, they will shift the odds considerably in your favor.

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