Best Business Credit Card Signup Bonus Offers

Finding a credit card with a great welcome offer is an easy way to earn some extra cash or bonus travel miles. If you’re a small business owner, finding places to save an extra buck is always important.

Of course, there are numerous credit cards and many different types of bonus offers. Figuring out your best option can be tricky. Our list below aims to help you sift through all your options—helping you find what you’re looking for faster!

Best Signup Bonus For Rewards Points: Chase Ink Business Preferred

Chase Ink Business Preferred



Apply Now 

Annual Fee:


$95

 

Purchase APR:


17.74% – 22.74%, Variable

This card from Chase comes with a hefty points reward for new accounts. Simply spend $5,000 within the first three months of opening your account and you’ll receive 80,000 bonus points. When you redeem those points through Chase Ultimate Rewards, you can receive the equivalent of $1,000 towards travel. If travel rewards aren’t for you, Chase Ultimate Rewards also lets you redeem points for gift cards, cash back, and Amazon shopping.

Those points can be transferred on a 1:1 basis to an array of airline and hotel reward programs as well. For general rewards with Chase’s Ink Business Preferred, you earn three points per $1 spent on travel, shipping purchases, Internet, cable and phone services, and on online advertising purchases. You then get one point per dollar on everything else.

Chase also runs a referral program that nets you 20,000 bonus points (up to 100,000 per year) when a business owner you invite signs up for a Chase Ink Business Preferred card.

Check out the full details with our in-depth review.

Best Signup Bonus For Cash Back: Capital One Spark Cash For Business

Capital One Spark Cash For Business


capital one spark cash select
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Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


18.74%, Variable

If you simply want cash back as a bonus offer, it’s hard to beat Capital One’s Spark Cash For Business card. This card rewards you with $500 if you spend at least $4,500 within the first three months of opening your account.

Because Capital One bundles in unlimited 2% cash back on all purchases, you’ll also be receiving some of the best cash back rewards a credit card can offer. The $95 annual fee is also waived for your first year.

Get the complete run-down on the Spark Cash For Business by reading Merchant Maverick’s review.

There are a few other business cards with $500 cash back welcome offers. We’ve listed them below in alphabetical order:

  • Chase Ink Business Cash: $500 cash back if you spend $3,000 in your first three months.
  • Chase Ink Business Unlimited: $500 cash back if you spend $3,000 in your first three months.
  • Wells Fargo Business Platinum Card: $500 cash back if you spend $5,000 in your first three months.

Best Signup Bonus With No Annual Fee: Chase Ink Business Unlimited

Chase Ink Business Unlimited


chase ink business unlimited
Apply Now 

Annual Fee:


$0

 

Purchase APR:


14.99% – 20.99%, Variable

Want a nice signup bonus but don’t want to deal with a pesky annual fee? The Chase Ink Business Unlimited card might just be for you. Spend over $3,000 in your first three months and you’ll get $500 cash back without needing to worry about an annual fee.

For base rewards, Chase offers unlimited 1.5% cash back on all purchases. You also won’t have to worry about paying interest for your first year—this card carries a 0% intro APR for the first 12 months.

If you need more details on the Ink Business Unlimited, check out Merchant Maverick’s full review.

It’s also worth a mention that if you spend a lot on specific categories, you may prefer Chase’s Ink Business Cash card. It features the same welcome offer of $500 after spending $3,000 within the first three months. However, purchases within the office supply store, Internet, cable, and phone categories net you up to 5% cash back. You also get up to 2% cash back on money spent at gas stations and restaurants. For a holistic report, read our Ink Business Cash card review.

Best Signup Bonuses For Travel

Best Signup Bonus For General Travel: Capital One Spark Miles For Business

Capital One Spark Miles For Business


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Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


18.74%, Variable

Those that want a solid welcome offer aimed at travel without being locked into a particular airline or hotel brand should consider Capital One’s travel business card. Spark Miles For Business dishes out 50,000 miles if you spend $4,500 within your first three months. You’ll be able to use those miles for tickets on any airline, booking any hotel, purchasing travel packages, and more.

It does come with a $95 annual fee, although this is waived your first year. For general rewards, you get an unlimited two miles per dollar spent. When it comes to redeeming your rewards, there are no blackout dates and no minimum points requirement.

Visit Merchant Maverick’s complete review to get in in-depth look at Capital One’s Spark Miles card.

Chase’s Ink Business Preferred (mentioned above) is also a nifty card for travelers because points are worth 25% more when redeemed for travel through Chase Ultimate Rewards. You can also transfer your points on a 1:1 basis to a selection of airline and hotel rewards programs. Our full review has all the details.

Best Signup Bonus For Airline Points: Delta Reserve for Business Credit Card from American Express

Delta Reserve Credit Card for Business from American Express



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Annual Fee:


$450

 

Purchase APR:


17.74% – 26.74%, Variable

For those looking at welcome offers of airline-specific cards, your best option will usually come down to which airline you use the most. However, when it comes to picking one airline-specific travel credit card, our choice goes to American Express’s Delta Reserve for Business Credit Card. This card will reward you with 70,000 miles and 10,000 Medallion Qualification Miles once you spend $5,000 within your first three months. Note that this offer expires 11/07/2018.

Its base rewards include two miles per dollar spent on Delta purchases. Everything else you buy gets one mile per $1 spent. You also get a free checked bag, priority boarding, and Delta Sky Club access. There’s an additional bonus offer handing out 15,000 miles and 15,000 Medallion Qualification Miles if you spend $30,000 or more during a calendar year.

Of course, there’s plenty of other airline-specific offerings with excellent welcome offers. Here’s a non-exhaustive list, ordered alphabetically:

  • AAdvantage Aviator Business Mastercard from Barclays: 60,000 miles once you make your first purchase within 90 days.
  • Alaska Business Card from Bank of America: Buy one ticket, get one for only taxes and fees plus 30,000 miles if you spend $1,000 or more within 90 days of opening your account.
  • CitiBusiness / AAdvantage Platinum Select World Mastercard: 70,000 AAdvantage miles if you spend $4,000 in your first four months.
  • Gold Delta SkyMiles Business Credit Card from American Express: 30,000 miles if you spend $1,000 in your first three months and a $50 statement credit once you make a Delta purchase in your first three months.
  • JetBlue Business Card from Barclays: 50,000 points if you spend $1,000 in the first 90 days.
  • Platinum Delta SkyMiles Business Credit Card from American Express: 50,000 miles and 10,000 Medallion Qualification Miles if you spend $3,000 in your first three months and a $100 statement credit once you make a Delta purchase in your first three months.
  • Southwest Rapid Rewards Premier Business Credit Card from Chase: 60,000 points if you spend $3,000 in your first three months.

Best Signup Bonus For Hotel Rewards: Hilton Honors American Express Business Card

Hilton Honors American Express Business Card



Compare

Annual Fee:


$95

 

Purchase APR:


17.74% – 26.74%, Variable

Like with airline-specific cards, your best option for welcome offers from hotel rewards cards really comes down to where you stay the most. The best all-around welcome offer, however, hails from the Hilton Honors American Express Business Card. This rewards card packs in a bonus of 125,000 points if you spend $3,000 within the first three months of opening your account.

For regular rewards, you’ll get 12 points per dollar when you make purchases at hotels and resorts within the Hilton brand. You’ll also snag six points per $1 spent when making U.S.-based purchases at gas stations, wireless telephone service providers, shipping merchants, and restaurants. You can also pick up six points per dollar when booking travel through American Express’s travel website or on car rentals booked directly from specific car rental companies. All other purchases will nab you three points per $1 spent.

Don’t frequent Hilton branded hotels? Here’s a couple more bonus offers from hotel rewards cards to glance over:

  • Starwood Preferred Guest Business Credit Card from American Express: 100,000 points if you spend $5,000 in your first three months.
  • Marriott Rewards Premier Plus Business credit card from Chase: 75,000 points if you spend $3,000 in your first three months.

Comparison of the Best Business Credit Card Signup Bonus Offers

Card Name Best For Bonus Offer Requirements Next Steps

Chase Ink Business Preferred

Reward points

80,000 points

Spend at least $5,000 within the first 3 months of opening an account

Apply Now

Capital One Spark Cash For Business

Cash back

$500 cash back

Spend at least $4,500 within the first 3 months of opening an account

Compare

Chase Ink Business Unlimited

No annual fee

$500 cash back

Spend at least $3,000 within the first 3 months of opening an account

Apply Now

Capital One Spark Miles For Business

General travel rewards

50,000 miles

Spend at least $4,500 within the first 3 months of opening an account

Compare

Barclays AAdvantage Aviator Business Mastercard

Airline points

60,000 points

Make at least one purchase within the first 90 days of opening an account

Compare

Hilton Honors American Express Business Card

Hotel rewards

125,000 points

Spend at least $3,000 within the first 3 months of opening an account

Compare

The post Best Business Credit Card Signup Bonus Offers appeared first on Merchant Maverick.

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SBA Loan Default: What Happens When You Default And What You Can Do About It

A small business owner may be passionate and committed to their ideas, but things don’t always go according to plan. If you lack funds or are worried about making payments for your SBA loan, it may be time to start learning about delinquency and defaulting on loans.

From Delinquent To Default

A loan will go into default when a borrower repeatedly fails to meet the legal conditions of the loan. Before you default on a loan, chances are the loan will first be deemed delinquent. Although they aren’t exactly the same problem, both loan delinquency and default can do serious damage to your credit score. A loan becomes delinquent as soon as you have missed or are late making a payment, even if only by one day. If your loan becomes delinquent, your lender may charge you late fees or increase your interest rate. If you don’t take care of a delinquent loan quickly, it can easily lead to a default.

When Is My SBA Loan In Default?

Depending on the specifics of your loan agreement, a delinquent loan will fall into default status after a certain amount of time has passed and no action has been taken on the outstanding balance. Lenders will usually wait anywhere from 90–120 days before considering a delinquent loan to be in default.

Tips To Avoid Defaulting On Your Loan

Communicate With Your Lender

If you’re struggling to make payments on your loan, you should first contact your lender to discuss your position. This is always preferable to waiting until the problem worsens. You may find a better way to fix your temporary financial issues by speaking with your lender transparently, rather than waiting for the loan to default.

Create A Modified Repayment Plan

If you communicate honestly with your lender, they may be open to helping you create a more feasible payment plan or reducing the overall cost of your loan. SBA partner lenders are almost always willing to work with borrowers since they lose money when they have to chase down someone in SBA loan default. You can expect any proposed repayment plan to be largely in favor of the lender, but it will most likely be a better option than defaulting.

What Happens If You Default On An SBA Loan

Seizure Of Collateral & SBA Guarantee

If no alternative options are possible, or you have no ability to make payments, your lender may force you to default on the loan. They will then begin standard loan collection procedures, as outlined on your SBA loan agreement.

First, your lender will contact you via phone and email. You should know that FTC guidelines that restrict how often, when, and how collectors may contact you don’t apply to business loans, so any restrictions on this communication will depend on which state your business operates.

The bank will then be able to seize any collateral you put up on the loan, first business assets and then personal, per your agreement. If your business has failed and there are no remaining assets to fulfill repayment, your personal guarantee will be invoked. Alternatively, they may force you to sell your assets, or obtain a court order demanding any money in your business accounts.

If the loan is still not repaid in full, the lender will then file with the SBA for the guaranteed portion of the loan, minus any amount they were able to collect through alternative means.

Transfer To The Treasury Department

Although the loan will have been fully paid back to the lender at this point, the process is unfortunately not over. The SBA will then contact you for repayment of the funds they gave to the bank as part of your SBA loan agreement. This communication will come in the form of a 60-day demand letter.

This letter states that your case has been transferred to the Treasury Department, which will demand you either settle the debt, or provide an “offer in compromise.” The Treasury Department has the ability to garnish wages, withhold future tax refunds, or file suit against you in a civil court. They will collect the debt by any means necessary if you have not resolved by the given deadline. While it is still possible to settle with the SBA at this point, it is much more difficult.

An “offer in compromise” is a proposed payment plan (or smaller lump sum) than what is being demanded by the Treasury Department. It is only a viable option if your business has completely ceased all operations and been liquidated. This compromise will open a dialogue and allow the Treasury to determine your ability for repayment.

When creating an appeal, you will need documentation of tax returns, business and personal assets, income statements, expense reports, and more. These documents should serve as proof that you cannot repay the borrowed funds to the SBA in a reasonable time period, and show you are in need of a more lenient payment option. If your argument is convincing, the Treasury will opt to work on an offer in compromise so they can recover some of the funds lost on your case.

Final Thoughts

Above all else, remember that defaulting on an SBA loan is serious, but it is not the end of the world. Although it can be a stressful time, it is possible to recover after you’ve settled the debt. Do what you can to avoid defaulting, but if you must, just keep moving forward, and keep improving your financial health!

The post SBA Loan Default: What Happens When You Default And What You Can Do About It appeared first on Merchant Maverick.

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Long-Term Business Loans: Eligibility And How To Find The Best

You’re a business owner, and you’ve encountered a financial hurdle in the form of a large business expense. This expense could be completely unexpected, such as the sudden breakdown of equipment, or it could be planned, like a business expansion through the improvement of facilities or the purchase of commercial real estate.

No matter what it is, a big expense can be difficult to pay up front. When it’s an unexpected or emergency expense, the situation can be even worse. However, many smart business owners have found a solution for these large expenses: long-term business loans.

If spreading out the cost of a large expense over a longer period of time sounds appealing to you, this financing option may be the right choice for your business. However, you don’t want to rush to fill out an application with a lender just yet. Instead, do your research and boost your knowledge. Read on to learn more about the rates, terms, benefits, and drawbacks of long-term business loans.

How Do Long-Term Business Loans Work?

A long-term business loan is a type of loan that is paid back over a longer period of time. The lender loans the borrower a set amount of money for business expenses, such as purchasing a commercial vehicle or real estate, buying equipment, or hiring new employees.

With the help of a long-term loan, the business does not have to pay a large sum out-of-pocket. Instead, a lender will provide the needed funding, which the business will pay back in fixed amounts over several years, along with interest and fees.

What Term Lengths Can I Get With A Long-Term Loan?

The term lengths of a long-term loan vary based on a number of factors, including the amount of the loan, the policies of the lender, and how the funds will be used. In general, most long-term business loans have terms between three and 10 years. However, some long-term loans, such as those used to purchase commercial real estate, may have repayment terms of 20 years or more.

What Kind of Interest Rates Can I Expect From A Long-Term Loan?

Like other business loans, long-term loans do not come with set interest rates. Interest rates vary by lender, the creditworthiness of the borrower, and the amount of the loan. The most qualified borrowers with the best credit histories can often receive interest rates below 5% from a conventional lender like a bank. Startup businesses or businesses with a poor credit history may receive interest rates of 30% or more from alternative lenders.

Who Qualifies For Long-Term Business Loans?

project management software

Requirements to qualify for a long-term business loan vary by lender. However, there are a few general requirements set by most lenders.

Anyone applying for a long-term business loan must have a legitimate business expense that will be paid using the loan proceeds. The borrower must own at least 20% of the business. All borrowers must have a minimum credit score of 600, although higher scores are required to receive the best terms and interest rates. Most conventional lenders also require a business to be in operations for a minimum of 2 years.

There are also annual revenue requirements that must be met. For most larger loans exceeding $100,000, collateral is typically required. Even when specific collateral is not required, a personal guarantee or blanket lien will usually be part of the loan contract.

Can I Qualify For A Long-Term Business Loan If I Have Bad Credit?

Banks and other conventional lenders often have high credit score requirements, lending only to borrowers with scores in the high 600s or above.

Many lenders will also look at credit history and not just the credit score. Bankruptcies, foreclosures, or defaults on past loans can all disqualify borrowers from receiving long-term loans.

For borrowers with bad credit, alternative lenders may be an option. These lenders will approve borrowers with scores as low as 600. However, interest rates will often be much higher for these borrowers. Borrowers with scores below 600, or who want to lock in the best rates and terms, should pull their free credit report and score, work to pay off current debt, and take additional steps to boost their scores before applying for a long-term business loan.

Looking for a lender that works with bad credit?

Lender Borrowing Amount Min Credit Score Time To Funding Next Steps

$2K – $5M 550 1-2 Days Apply Now

$5K – $500K 550 1-3 Days Apply Now

$5K – $500K 500 2-5 Days Apply Now

$5K – $250K 500 2-5 Days Apply Now

Are Startups Eligible For Long-Term Loans?

Most conventional lenders want to work with businesses that have been in operations for more than two years. For startups and new businesses, getting long-term funding can be a challenge but isn’t impossible.

While new businesses may not qualify for traditional bank loans, there are other options. Small Business Administration programs, for example, provide funding opportunities for startups. Alternative lenders are also less stringent with their time in business requirements.

Applicants should be prepared to show that the business will be able to pay back the loan. Instead of providing traditional documentation (like income tax returns), business plans and future projections may be required by the lender during the application process.

When Would A Business Need A Long-Term Loan?

business line of credit loan

There are many situations where a business might need a long-term loan. In fact, just about any large business expense could be covered via a long-term loan, including:

  • Business expansion
  • Improvement or remodel of existing facilities
  • Purchase of commercial real estate
  • Business acquisition
  • Purchase of commercial vehicle or vehicles
  • Purchase of expensive equipment
  • Purchase of inventory or supplies
  • Hire new employees
  • Refinance existing debt 

The important thing to remember here is that long-term business loans can be used for just about any business purpose. However, the overall cost of the loan (including fees and interest) should always be taken into consideration. The return on investment should always outweigh the cost of the loan, and a long-term loan should only be accepted if the extra funding will help the business grow and be successful.

Pros & Cons of Long-Term Business Loans

When there’s a need for a loan, it’s easy to get blinded by the prospect of money without really thinking about the benefits and drawbacks of borrowing. Smart borrowers look at the long-term pros and cons of taking out the loan to determine if it will truly benefit the business.

Pros

  • Small Monthly Payments: Large expenses can be broken down into affordable monthly payments by taking out a long-term business loan.
  • Low Interest Rates: Borrowers with the highest credit scores can take advantage of interest rates of less than 5%, making this one of the most affordable loan options.
  • Debt Consolidation: Borrowers that use long-term loans to consolidate or pay off high-interest debt can save thousands of dollars over the course of the loan.

Cons

  • Variable Interest Rates: Some long-term loans come with variable interest rates, so be cautious. While a variable rate may help you save money when market rates fall, there is always the possibility that rates could increase, leading to a more expensive loan.
  • Overall Costs: The overall cost of a loan over its lifetime can be quite expensive, especially for any borrower without a stellar credit rating. Even for the most qualified buyers, fees and interest can really tack on extra money to the loan, so it’s important to fully understand the total cost of the loan before signing the contract.
  • Collateral Requirements: For most long-term loans, collateral is required. In some cases, the collateral will be the item being purchased with the loan proceeds, such as equipment, a vehicle, or real estate. In other instances, borrowers will need to put up business assets, personal assets, sign a personal guarantee, or agree to a blanket lien before the loan is disbursed.
  • High Credit Score Requirements: A long-term loan can be one of the most difficult loans to obtain. To get the most affordable funding, a great credit score (with no negative items on the credit history) is required. While some lenders may work with borrowers with lower scores, interest may be much higher and terms not as favorable.
  • Documentation Requirements: Because long-term loans are often for very large amounts of money, lenders want to ensure that all borrowers are able to pay back the loan. This means that there is a lot of paperwork involved in the application process. Borrowers must come prepared to take the time needed to provide the lender with all documentation to qualify for the loan.
  • Long Approval Process: Depending on the lender, getting an approval for a long-term business loan could take months — not ideal for a business that needs funding immediately.

Where To Find Long-Term Business Loans

Once a business decides to take the leap to obtain a long-term loan, the next step is to apply with a lender. Fortunately, it isn’t difficult to find a lender that specializes in long-term business loans. Most business owners turn to three main sources for their long-term financing needs: the Small Business Administration, banks and credit unions, and alternative lenders.

The Small Business Administration (SBA)

The Small Business Administration provides lending programs that are a hit with business owners. The SBA sets guidelines that keep interest rates low for borrowers, while also providing a guarantee to lenders. Because of this guarantee, SBA-approved lenders, or intermediaries, are more willing to loan money to small businesses.

The SBA offers several long-term loan programs. The most popular is the 7(a) program, which offers up to $5 million for almost any purpose with a maximum repayment term of 10 years. Falling under the 7(a) umbrella is the Community Advantage Loan that offers the same competitive rates and terms for businesses in underserved communities, while the Veterans Advantage program offers long-term loan options for military veterans and service members.

The SBA Microloans program is another option for smaller financing needs. These loans provide up to $50,000 that can be repaid over a maximum term of 6 years.

For businesses that want to improve their facilities or purchase real estate, 504 loans provide 40% of funding toward these projects. A maximum of $5 million can be distributed through this program, with repayment terms set at a maximum of 25 years.

SBA loans can be obtained from intermediary lenders including SBA-approved banks, credit unions, non-profit agencies, and Commercial Development Companies. Learn more about the rates, terms, and requirements of SBA loan programs.

Loan Program Description More

7(a) Loans

Small business loans that can be used for many many business purchases, such as working capital, business expansion, and equipment, inventory, and real estate purchasing.

Review

Microloans

Small loans, with a maximum of $50,000, which can be used for working capital, inventory, equipment, or other business projects.

Review

CDC/504 Loans

Large loans used to acquire fixed assets such as real estate or equipment. 504 Loans are offered in partnership with Community Development Companies (CDCs) and banks.

Review

Disaster Loans

Loans used to rebuild or maintain business following a disaster. 

Review

Banks & Credit Unions

Banks are a very popular source for obtaining long-term business loans because of low interest rates and favorable terms. However, qualifying for these loans can be difficult. Credit scores must be very high, the application and approval process can be lengthy, and banks often have strict requirements in terms of time in business and annual revenues. Businesses that do qualify, however, will find bank loans are easily one of the most affordable loans on the market.

Credit unions also offer very competitive rates and terms, and many businesses prefer to work with these lenders because of the more personalized service they receive. Credit unions may have a bit of flexibility in terms of their requirements, but all borrowers should come to the table with a high credit score and a stable business history.

Businesses pursuing these types of loans can start with the financial institutions where they have already established accounts. Businesses that would rather shop around for the best rates and terms can check out our top banks for business loans to get started.

Alternative Lenders

Alternative lenders offer some benefits that banks, credit unions, and SBA intermediaries do not, including fast approval and funding and lower credit score requirements. However, there are also several drawbacks to working with alternative lenders. Higher interest rates are one of the biggest drawbacks. Lower maximum loan amounts are another. Learn more about the benefits and drawbacks of alternative loans.

Most alternative lenders set their maximum repayment terms at just 5 years. Depending on the amount borrowed, this could mean higher monthly payments, especially with higher interest rates that can even exceed 30% in some cases.

However, the return on investment may be enough for a business to move forward with one of these loans. These loans are best for businesses that don’t meet the qualifications of other lenders, including but not limited to credit score, time in business, or annual revenue.

Long-Term Business Loan Calculator

It is absolutely critical to understand the full cost of a long-term business loan prior to signing your loan contract. Before borrowing, use our long-term business loan calculator to get an overview of what to expect from your loan. This calculator provides estimates of monthly payments, the total amount of interest that will be paid, and the total cost of the loan. Knowing the numbers before applying for a loan is a key step for any financially-savvy business owner.

Learn more about the loan calculator and how to best use it before you apply for a long-term business loan.

Final Thoughts

A long-term business loan can be a smart and affordable way to fund large expenses. However, to get the most out of this type of financing, it’s important to do your research to find the lowest interest rates and best terms. Evaluate why you need the money and the return on investment, then find the lender that offers a loan that best fits your needs.

Looking for an online lender that provides long-term business loans? We recommend starting with the following:

Lender Borrowing Amount Term Req. Time in Business Min. Credit Score Next Steps

smartbiz logo

$30K – $350K 10 – 25 years 2 years 650 Apply Now

$2K – $5M Varies 6 months 550 Apply Now

$25K – $500K 6 months – 5 years 2 years 620 Compare

lending club logo

$5K – $300K 1 – 5 years 12 months 600 Compare

The post Long-Term Business Loans: Eligibility And How To Find The Best appeared first on Merchant Maverick.

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FreshBooks VS Wave

Freshbooks-vs-Wave

FreshBooks VS Wave

Accounting

✓

Features

✓

Pricing

✓

Tie

Hardware & Software Requirements

Tie

Tie

Users & Permissions

Tie

✓

Ease of Use

✓

Mobile Apps

✓

Customer Service & Support

Tie

Negative Reviews & Complaints

Tie

Tie

Positive Reviews & Testimonials

Tie

✓

Integrations

Tie

Security

Tie

?

Final Verdict

?

ReviewVisit

ReviewVisit

Choosing the right software for your business isn’t easy, especially when you have two great choices to pick from like FreshBooks and Wave.

FreshBooks has been helping small business owners with their invoices and expenses since 2003. The software offers strong mobile apps, excellent customer service, and good customer reviews. A recent redesign has made the software easier to use than ever.

Wave is completely free accounting software that has grown to support over 3 million users. The app offers strong accounting with ample features including project management, invoicing, and a basic ecommerce tool. Wave is also the only accounting software besides QuickBooks Online to offer lending services.

But which software is better? That’s what we’re here to tell you.

At Merchant Maverick, our goal is to help you to find the best software for your small business needs. So to make your decision easier, we’ve carefully researched and tested both products. We’ll put FreshBooks and Wave head to head by comparing features, pricing, customer experience, reputation, and more, so you don’t have to. Read on to see which software is best for your business.

Don’t have time to read the whole post? Or looking for a different accounting option? Check out our top-rated accounting solutions to see our favorite recommendations.

Accounting

Winner: Wave

This one’s easy. Wave wins by default because FreshBooks is not accounting software. While FreshBooks does offer a few basic bookkeeping tools, it does not use double-entry accounting. It also has no bank reconciliation features, no accounts payable, and no customizable chart of accounts.

Wave, on the other hand, uses double-entry accounting and offers both accrual and cash-basis accounting. The software offers bank reconciliation, journal entries, a detailed chart of accounts, and basic reporting,

Features

Winner: Wave 

FreshBooks Features Wave

✓

Invoicing

✓

✓

Estimates

✓

✓

Client Portal

✓

✓

Expense Tracking

✓

✘

Bank Reconciliation

✓

✓

Chart of Accounts

✓

✘

Accounts Payable

✓

✘

Inventory

✓

✓

Time Tracking

✓

✓

Project Management

✓

✓

Reports

✓

✘

Journal Entries

✓

✓

Sales Tax

✓

✓

Multi-Currency

✓

✘

Lending

✓

The two programs are pretty on par in terms of invoice template choices, time tracking, importing/exporting, and multi-currency support. However, Wave’s features are more developed than those of FreshBooks. Wave offers 5 more reports than FreshBooks, better project management, and better inventory. Wave also offers key features that FreshBooks is missing like bank reconciliation, vendor management, accounts payable, and a brand new ecommerce tool called Checkouts.

Pricing

Winner: Wave

You can’t beat free. Wave costs $0/month — no gimmicks, no tricks, no limitations. The only thing you have to pay for is adding payroll, payment processing, or bookkeeping help from a professional Wave advisor. FreshBooks costs $15/month – $50/month. FreshBooks is more expensive and offers fewer features, so businesses get a lot more bang for their buck with Wave.

Hardware & Software Requirements

Winner: Tie

As cloud-based software, both FreshBooks and Wave are compatible with nearly any device so long as you have an internet connection.

Users & Permissions

Winner: Tie

Neither FreshBooks nor Wave shines in the “additional users” department. With FreshBooks, each pricing plan only comes with one user. You can add additional users for $10/month each, but you can’t set any user permissions. Wave was designed for the small business owner, meaning it’s not possible to have additional users. You can add “collaborators” who can view or view and edit your Wave account, but there are no permissions available here either.

If you’re looking for multiple users and strong users permissions, take a look at Zoho Books, QuickBooks Online, or Xero instead.

Ease Of Use

Winner: FreshBooks

Both Wave and FreshBooks have attractive interfaces that are well-organized and easy to use. However, FreshBooks has better customer support which helps you learn to navigate the software faster.

Mobile Apps

Winner: FreshBooks

FreshBooks is well-known for its strong, full-featured mobile apps. Wave, on the other hand, has separated its apps into Receipts by Wave and Invoices by Wave. Neither app is full-featured and many users complain that they want a single, all-encompassing Wave app instead.

Customer Service & Support

Winner: FreshBooks

When it comes to customer support, FreshBooks can’t be beaten. FreshBooks offers great phone support with hardly any wait times. Representatives are generally friendly, helpful, and well-informed. In addition, FreshBooks offers a detailed help center, email support, and a comprehensive blog. Wave only offers phone support for payroll and payment processing users, leaving regular users a well-developed help center and email support. Most emails are responded to within a day, but it’s harder to get a quick response than with FreshBooks.

Negative Reviews & Complaints

Winner: Tie

Both FreshBooks and Wave are loved by customers. Each software receives mostly positive reviews, with a few negative complaints thrown in. For FreshBooks, users call for more features, better invoice templates, and true accounting. Wave users complain of limited mobile apps, lack of integrations, and occasionally slow servers.

Positive Reviews & Complaints

Winner: Tie

FreshBooks and Wave have a similar ration of positive to negative complaints. Most users seemed thrilled with both programs and each software receives high marks across popular review sites. FreshBooks users love that the software is easy to use, offers professional invoicing, and has great customer service. Wave users love the software’s features, ease of use, and, of course, its price.

Integrations

Winner: FreshBooks

FreshBooks offers 70+ integrations as opposed to Wave’s four, so if add-ons are important to your business, FreshBooks is clearly the way to go.

Security

Winner: Tie

Both FreshBooks and Wave offer strong security. They each use 256-bit SSL encryption, redundancy, and regular backups, and they each host their servers with trusted security providers.

And The Winner Is…

While FreshBooks reputation for ease of use is well-earned, the software doesn’t always live up to these high expectations. First of all, despite its advertising, FreshBooks isn’t true cloud accounting software.

Wave, on the other hand, offers true accounting software and an incredible number of features for $0/month. In addition to the basic tools you’d expect from an accounting software, features like lending and Checkouts set the software apart and allow Wave to give even QuickBooks Online a run for its money. For small businesses looking to save money, you can’t beat Wave. The software is also ideal for Etsy users and ecommerce businesses.

That being said, businesses that don’t need the accounting capabilities or a large number of features may find FreshBooks to be a good choice. The software has better mobile apps and customer service than Wave. However, FreshBooks is far more expensive than Wave and your money only goes a short way with the software.

Perhaps, after reading this, neither option seems like the right choice for you. Our comprehensive accounting reviews can help you explore all of your options so you can choose the perfect software for your business.

Check out our full FreshBooks and Wave reviews for more information.

The post FreshBooks VS Wave appeared first on Merchant Maverick.

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The Complete Guide to PayPal’s Fees, Rates, and Pricing

As a consumer mobile wallet, PayPal is darn-near ubiquitous. But with more than 17 million merchants worldwide calling PayPal their payments processor, it’s also a massive force in the merchant services industry. So if you’re looking for a quick and easy way to get set up with credit card payments, whether for a POS system or online, PayPal is probably going to be on your radar, and with good reason.

But should you choose PayPal as your payments processor, and what will it cost? The good news is that PayPal offers transparent, pay-as-you-go pricing with no monthly fees, no account termination fees, or other hidden costs. You can predict fairly well what you’ll pay with PayPal, and all payment processing fees are deducted before PayPal deposits funds in your account.

The one major drawback is that PayPal is a third-party processor, also referred to as an aggregator. That means the company essentially onboards merchants as sub-users of one, giant merchant account that includes the entirety of PayPal’s merchant base. This means that the company does minimal underwriting before approving an account. You don’t need to provide much info beyond confirming your identity to open an account. However, this does mean you face a greater amount of scrutiny after opening an account, and PayPal can terminate your account or place a hold on funds with no notice to you.

That sounds worrisome, but the reality is it only happens to a small percentage of merchants. You can also take steps to protect yourself by recognizing the common red flags that processors look for and avoiding them. Check out our article on how to avoid merchant accounts holds and terminations to learn more.

PayPal obviously isn’t the right choice for everyone. There are restrictions on the types of products merchants can offer, and it doesn’t support certain business models. High-risk businesses should look somewhere else for a merchant account. However, most merchants should be fine with a PayPal account for payment processing.

Read on for a closer look at what you can expect to pay with PayPal as your business’ credit card processor! You can also check out our PayPal and PayPal Here reviews for a focused look at the products and services.

Payment Processing Fees

The major concern for most merchants who use (or are considering using) PayPal are the payment processing costs, so we’ll start there. PayPal offers predictable, flat-rate pricing for all merchants. You don’t have to worry about higher interchange for American Express cards, or MCCs, or qualified vs non-qualified transactions. Your exact rate will depend on the type of transaction.

Merchants who use PayPal’s mPOS app, PayPal Here, or integrate with one of PayPal’s POS partners (such as Vend), will pay the following for in-person transactions:

  • 2.7% per swiped, dipped or tapped transaction
  • 3.5 + $0.15 per keyed transaction

For online transactions, including monthly subscription charges, donations, and digital invoices, PayPal charges the following:

  • 2.9% + $0.30 per online transaction

That’s it. Really. The simplicity of PayPal’s pricing is one of the biggest draws for merchants. You can predict fairly easily what your pricing will be and, because PayPal deducts its fees before depositing funds in your account, you don’t have to worry about an end-of-the-month invoice or going over a limit and incurring additional fees.

What About Alternative Payment Processing Rates?

If you’re wondering whether PayPal offers any sort of alternative payment plans, the answer is yes. Merchants with an average transaction size under $10 can opt for the micropayments plan. PayPal also offers a nonprofit discount for online transactions to qualified 501(c)(3) nonprofits.

  • Micropayments Plan: 5% + $0.05 per transaction. (Note: This rate applies to all transactions, even those above $10)
  • Nonprofit Discount (Online Only): 2.2% + $0.30 per transaction

If you integrate with one of PayPal’s partner POS systems, such as Vend or TouchBistro, you may be eligible for special discounts  (presumably volume-based) or other promotions. However, these offers aren’t clearly disclosed, just advertised on the POS software sites.

Other PayPal Fees For Payment Processing

While PayPal does charge a few extra fees relating to payment processing, they aren’t many. But these are what you might come across:

  • 1.5% Cross-Border Transaction Fee: For US merchants who accept online payments from buyers out of the country, or in-person transactions involving a card from outside the US, PayPal charges a 1.5% cross-border fee. That means, for example, that a US merchant accepting a Canadian card at a POS terminal will pay 4% of the transaction value to PayPal.
  • 2.5% Currency Conversion Fee:  If PayPal has to convert the currency before it deposits the funds in your account, you’ll pay another 2.5% conversion fee. Whether you have to pay the conversion fee depends on the customer’s bank and whether it will handle the currency conversion (usually at a cost to the customer).
  • $20 Chargeback Fee: Chargeback fees are pretty standard, and if a customer files a chargeback against you, PayPal will assess a $20 fee in addition to withdrawing the funds to cover the transaction amount.
  • Refund Fee: In the event of a refund, PayPal will refund the percentage-based fee from the transaction to you, but keep the fixed fee. For most in-person transactions that means you’ll pay nothing. However, refunds on keyed transactions mean you’ll pay $0.15. Refunds on online or invoiced transactions will cost $0.30. PayPal can be a bit confusing about how this works in its transaction summaries, but be aware that you will pay a fee for most refunded transactions, albeit a small one.
  • 1% Instant Transfer Fee: If you’d like to move your PayPal balance to a bank account immediately, you can do that — for a fee. PayPal charges merchants 1% of the transfer value, capped at $10 per transfer, but your funds will be available typically within 30 minutes (s0 long as your bank’s system isn’t incredibly slow). You’ll have to connect an eligible debit card to support instant transfers as well. However, if you prefer to have instant access to funds without paying a fee, don’t forget that PayPal offers a business debit card that’s linked to your PayPal balance, too.

Software Fees

One of the big draws for PayPal is the lack of software fees. Instead of paying a monthly fee for PayPal’s ecommerce features, you pay only the payment transaction costs (in most circumstances — but we’ll come back to this in a moment). While you’ll need to arrange for your own domain and web hosting, you can implement PayPal’s “buy” and “donate” buttons with no additional costs. You can send digital invoices for free and only pay the transaction cost when the invoice is paid.

Likewise, access to PayPal’s mPOS app, PayPal Here (read our review) is also free. However, if you opt to integrate PayPal into a POS app, invoicing software, or another platform, you’ll be responsible for those software costs. PayPal doesn’t charge anything for use of the integration.

Also, take note: PayPal doesn’t charge merchants any PCI compliance fees, account maintenance fees, customer service fees, or termination/account closure fees.

However, PayPal does offer a couple of advanced software options that come with additional costs:

  • PayPal Payments Pro: The “Pro” plan from PayPal has two advantages. One, it includes a virtual terminal to accept payments over the phone by keying in a card from a browser window.  Two, it allows merchants to keep the checkout process on their own website rather than redirecting to PayPal to complete a transaction. This does come with a couple of concerns. For one, you’re not automatically PCI compliant and you’ll need to take additional steps to handle your PCI compliance. Two, $30/month for a virtual terminal is pretty pricey considering you’ll still pay higher rates than swiped/dipped/tapped transactions. Square and Shopify both offer free virtual terminals. Also, opting for PayPal Payments Pro and the Virtual Terminal will mean a few different transaction fees to worry about:
    • 3.5% American Express Fee: Any Amex cards will process at the higher 3.5% rate if you’re on the Pro plan.
    • 3.1% + $0.30 Virtual Terminal Fee: Any transactions processed through PayPal’s Virtual Terminal process at 3.1% + $0.30, plus the international transaction fee if applicable.
  • Recurring Billing: If you’d like to sell subscriptions (software, gift boxes, etc.), PayPal does offer a set of recurring billing tools. Recurring payments are available with PayPal’s Express Checkout Option at no additional charge, but if you have PayPal Payments Pro and want advanced tools, they’ll cost you $10/month. This doesn’t apply to “Donate” buttons, which have their own option for donors to choose between a one-time or recurring donation.

  • Mass Payouts: If you need to distribute funds to multiple parties, PayPal’s Mass Payouts feature might be an appealing option. You have two options here: using PayPal’s API to handle the command, or uploading a spreadsheet. Which method you choose affects how much you pay — if you opt to upload a spreadsheet through PayPal’s website, you’ll pay 2% per transaction, capped at a maximum $1 USD, which is pretty reasonable. If you opt for the API, you’ll pay a flat fee of $0.25 USD per payment. This is a great way to distribute payments to contractors, for example, or manage marketplace payments if you use PayPal’s platform.

PayPal Hardware Costs

Unless you’re integrating PayPal with a POS system or using the free mPOS, PayPal Here, you won’t have to worry about hardware costs. But if you do, you’ll have a few options for card readers:

  • Chip & Swipe Reader: PayPal’s entry-level chip reader sells for $24.99. In addition to EMV capabilities it supports magstripe transactions, but no contactless payments. However, it does connect to phones and tablets via Bluetooth and comes with a convenient mounting clip.
  • Chip & Tap Reader: To get a credit card reader that supports magstripe, EMV, and contactless payments, you’ll need the Chip and Tap reader, which sells for $59.99. We’ve already reviewed this reader as well as the optional charging dock ($30 separately, or bundled for $79.99), with a very positive rating. Again, the Chip and Tap reader connects via Bluetooth. In addition to the charging dock, it comes with a convenient mounting clip.
  • Chip Card Reader: The Chip Card Reader was the first EMV-enabled card reader PayPal offered, and it’s still the only hardware option for merchants who want to integrate with one of PayPal’s POS partners. It sells for $99 on the PayPal site, with an optional charging dock. Given the price point, it shouldn’t surprise you to learn that this all-in-one reader connects via Bluetooth.

  • Mobile Card Reader: PayPal used to offer its entry-level swipe-only reader for free, but now it sells for $15 because PayPal, like most processors, really wants you to start accepting EMV. Use of the mobile reader comes with limitations on accounts, so if you do a decent volume of credit card transactions and don’t want to encounter any holds on your funds, you should avoid the mobile reader at all costs:

*Key-in transactions and sales over $500 in a 7-day period made with the Mobile Card Reader are subject to an automatic 30-day reserve where funds are held in your PayPal account to cover the high risk associated with these types of transactions. For increased protection from fraudulent transactions, we recommend using a chip card reader. All PayPal accounts are subject to policies that can lead to account restrictions in the form of holds, limitations, or reserves. Additional information about these policies can be found in the PayPal User Agreement.

Apart from the cardreaders, PayPal doesn’t offer any proprietary hardware. If you need a countertop register setup, you can choose from an array of tablet stands, receipt printers, and cash drawers. A few select models are confirmed to work, while many others are “unofficially supported” in that they’re likely to work in most cases. The PayPal Here app doesn’t officially support any external barcode scanners (it supports in-app scanning using the device’s camera), but Bluetooth-enabled scanners may work with your setup.

Is PayPal Actually a Good Value?

We’ve talked pretty extensively about the cost of using PayPal, but we haven’t really talked about value. Because value is so much more than just the actual, physical cost. Value encompasses convenience, customer service, and other extra factors that could easily justify paying more than the absolute lowest prices.

PayPal isn’t the absolute cheapest processor out there — especially not for businesses that handle more than $10,000/month in credit card transactions. Larger businesses may be eligible for merchant accounts with volume discounts. For low-volume businesses, PayPal often does offer more competitive pricing because of the lack of monthly fees. The flat-rate pricing, especially for in-person transactions, can mean cost savings over interchange-plus.

But the real value in PayPal is the massive consumer trust and convenience. Just about everyone recognizes the PayPal name, and with 200+ million consumer users around the world, it’s safe to say a lot of people have PayPal accounts. The barriers to entry are minimal — you don’t need a huge amount of technological experience to implement PayPal for in-person or online payments. As long as you aren’t using PayPal Payments Pro, you don’t even have to worry about PCI compliance. PayPal handles it for you, at no additional cost.

Apart from the issue of account terminations or funding holds, the only other consistent complaint about PayPal is its customer service, and reports vary. Some merchants say they’ve never had a problem with customer service. Others say that their support reps have been downright unhelpful when they’ve called in. Fortunately, PayPal offers extensive self-help resources so you should be able to deal with most technical issues without having to contact PayPal directly.

I can’t say unequivocally that PayPal is right for everyone. It’s not. But it is a really good option for a lot of merchants, especially low-volume businesses that are just starting out. For a closer look at PayPal and all its services, we recommend checking out our PayPal and PayPal Here reviews.

If you’re not sure PayPal is right for you, I suggest looking at our Square vs. PayPal article, as the two companies are fairly similar in their business models and offerings.

Thanks for reading! If you have any questions or comments, we’d love to hear from you, so please drop us a comment!

The post The Complete Guide to PayPal’s Fees, Rates, and Pricing appeared first on Merchant Maverick.

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FreshBooks VS Classic FreshBooks

 

FreshBooks review

FreshBooks VS FreshBooks Classic

Tie

Accounting

Tie

Features

✓

Pricing

✓

Tie

Hardware & Software Requirements

Tie

✓

Mobile Apps

Tie

Customer Service & Support 

Tie

Tie

Negative Reviews & Complaints

Tie

Tie

Positive Reviews & Testimonials

Tie

✓

Integrations

Tie

Security

Tie

?

Final Verdict

?

Visit

Visit

FreshBooks has been a part of the accounting scene since 2003 and is one of the biggest names in the invoicing and accounting industry. In 2017, the company launched a completely new version of the software, but unlike most companies, FreshBooks didn’t simply eradicate the older version — users can choose between FreshBooks or Classic FreshBooks.

But which version is better? How does new FreshBooks stack up to the tried and true Classic FreshBooks? What’s the difference between each version, and — most importantly — which version of FreshBooks is right for you?

That’s exactly what we’re here to answer. We’ll give you the complete lowdown on both FreshBooks and Classic FreshBooks, and only one can come out on top.

At Merchant Maverick, our goal is to help you to find the best software for your small business needs. So to make your decision easier, we’ve carefully researched and tested both products. We’ll put FreshBooks and Classic head to head by comparing features, pricing, customer experience, reputation, and more, so you don’t have to. Read on to see which software is best for your business.

Don’t have time to read the whole post? Or looking for a different accounting option? Check out our top-rated accounting solutions to see our favorite recommendations.

Accounting

Winner: Tie

Despite the company’s name — “FreshBooks Cloud Accounting” — neither FreshBooks nor Classic FreshBooks is actually a true accounting software program. The apps don’t use double-entry accounting and don’t support key accounting features like accounts payable and bank reconciliation. The latest version of FreshBooks does offer a chart of accounts, which is a step in the right direction, but you can’t customize or edit the accounts.

My main beef with FreshBooks as a company isn’t that the apps lacks these features, but that FreshBooks advertises itself as a cloud accounting software when it’s really more of an invoicing and light bookkeeping tool.

For small business owners who aren’t looking for a full accounting package and just want a few tools to manage their income and expenses, FreshBooks or Classic FreshBooks could both be good choices.

Features

Winner: Classic FreshBooks

FreshBooks Features Classic FreshBooks

✓

Invoicing

✓

✓

Estimates

✓

✓

Client Portal

✓

✓

Contact Management

✓

✓

Expense Tracking

✓

✘

Inventory

✓

✓

Project Management

✓

✓

Time Tracking

✓

✓

Reports

✓

✘

Default Email Messages

✓

✘

Request Customer Review

✓

✓

Sales Tax

✓

✓

Multi-Currency

✓

✓

Importing/Exporting

✓

On paper, the programs look pretty similar in terms of features, but the depth of Classic FreshBooks’ offerings far surpasses the newer version of FreshBooks.

Classic FreshBooks offers a full inventory feature, the ability to create default email messages, the ability to request customers reviews, more advanced time tracking, and nearly 20 more reports than FreshBooks. The one feature FreshBooks has over Classic FreshBooks is a built-in communication feature for you to talk with customers and your employees.

While the company is constantly updating FreshBooks, the new version has a long way to go before it can stand up to the robust, developed feature set of Classic FreshBooks.

Pricing

Winner: Classic FreshBooks

FreshBooks offers three pricing plans ranging from $15 – $50/month. Classic FreshBooks offers four pricing plans ranging from $12.95 – $39.95/month plus a fifth custom plan for larger businesses. You can receive a small discount for purchasing a yearly subscription instead of a monthly subscription of either version of the software.

Classic FreshBooks takes the cake here because it’s more scalable and gives you more bang for your buck in terms of features.

Hardware & Software Requirements

Winner: Tie

As cloud-based software, both FreshBooks and Classic FreshBooks are compatible on nearly any device so long as you have an internet connection.

Users & Permissions

Winner: Classic FreshBooks

Neither FreshBooks nor FreshBooks Classic is particularly well-suited for companies with multiple users. FreshBooks only offers a single user for each price plan, although you can purchase additional users for $10/month each. Classic FreshBooks offers 1 – 2 users depending on the pricing plan, and additional users can be purchased for $10/month each.

Classic FreshBooks requires extra users to log in with your same login, though you can set user permissions, whereas FreshBooks has no user permissions at this time. Classic FreshBooks wins by a hair in this category.

Ease Of Use

Winner: FreshBooks

Here is where the new design shines. The current version of FreshBooks worked out some of Classic FreshBooks’ navigational difficulties, making FreshBooks easier to use than ever. Both apps share the same great customer service so it’s easy to get help if you want some extra assistance learning and using the latest software.

Mobile Apps

Winner: Tie

FreshBooks has always been known for strong mobile apps, and the latest version is no exception. Both FreshBooks and Classic FreshBooks offer fully-featured mobile apps that make it easy to run your small business on the go.

Customer Service & Support

Winner: Tie

FreshBooks, as a company, offers some of the best customer support around. Both FreshBooks and Classic FreshBooks offer phone support, email support, in-software help, and well-developed help centers. Phone wait times are almost non-existent and representatives are friendly and helpful. The company also maintains an active FreshBooks blog with tons of information on how to succeed as a small business.

Negative Reviews & Complaints

Winner: Tie

For as long as we’ve been following FreshBooks, the software has been much-loved by users and received only a small handful of complaints. Today this is still the case. The tricky part about FreshBooks reviews is that it’s nigh impossible to tell which reviews refer to New FreshBooks and which refer to Classic FreshBooks.

Some users complain that they don’t like the new update and miss Classic FreshBooks, while others praise the new version and say they like it more than the original. The verdict is still out on which version users will end up likely best, which is why we’ve left this category as a tie.

Positive Reviews & Testimonials

Winner: Tie

Both Classic FreshBooks and FreshBooks have received positive praise from customers and high marks as far as customer ratings go. While it is again difficult to tell which version customers are referencing in reviews, it’s easy to see this pattern: users love that FreshBooks is easy to use, has excellent customer service, and offers great invoicing with strong mobile apps.

Integrations

Winner: FreshBooks

When the new version of FreshBooks first launched, integrations were a big issue. Now FreshBooks offers 70+ integrations, which beats out Classic FreshBooks’ 40+ integrations.

Security

Winner: Tie

FreshBooks uses the same security measures for both of version of the software. The company uses 256-bit SSL encryption, Cisco-powered firewalls, and regular intrusion detection and vulnerability testing. Data is backed up onto two Rackspace-hosted servers in undisclosed locations.

And The Winner Is…

Classic FreshBooks!

I’m a firm believer in the “if it ain’t broke, don’t fix it philosophy.” There are certain aspects of Classic FreshBooks that could be improved, but instead of adding more features, FreshBooks sacrificed looks for functionality with the release of New FreshBooks. While New FreshBooks is slightly easy to navigate and has a nice UI, FreshBooks already had a nice UI and user experience — plus, what FreshBooks users were crying out for were more features, not less. FreshBooks doesn’t have an inventory feature and is missing key automations like default email messages that were available with Classic FreshBooks but are no missing.

And to top it off, not only does FreshBooks offers fewer features than Classic FreshBooks, but it’s also more expensive and supports fewer users (with no accountant access either).

To be fair, the company is constantly releasing updates for FreshBooks and the new version offers far more integrations than Classic FreshBooks.

In this case, choosing which program is right for you will highly depend on the features your business needs. New users who haven’t used FreshBooks Classic may find the newer version suits their needs well. Veteran FreshBooks users might want to switch back to Classic until the latest version goes through a few more round of updates.

Or, maybe after reading this review you want to find a less expensive invoicing solution or a full-fledged accounting solution. Our invoicing reviews and accounting reviews can help!

If you’re an existing FreshBooks user, we’d love to hear from you! Let us know which version you like best in the comments below.

The post FreshBooks VS Classic FreshBooks appeared first on Merchant Maverick.

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Slow-Paying Customers? 10 Tips To Get Your Invoices Paid Faster

Slow Paying Customers? 10 Tips To Get Your Invoices Paid Faster

If your company relies on invoices, you’re probably all too familiar with slow-paying customers. According to the popular accounting software Xero, “More than a third of small business invoices are paid late.”

Late invoices seem like an inevitable part of running a business, but they don’t have to be. That’s why we’ve created a list of practical steps you can take to increase your chances of getting paid on time.

Here are our top ten tips to get your invoices paid faster.

Send Online Invoices

If you’re still mailing invoices manually, now is the time to start saving time and money by switching to e-invoices. Sending invoices online is easy, cost-effective and best of all — fast.

Instead of spending time printing invoices, stuffing envelopes, and waiting on the mailman, you can send your invoices to customers instantly. Your customers get their invoices faster, which means you get paid quicker. And you won’t need to worry any longer about whether your invoice got lost in the mail or sent to the wrong address. Most invoicing software programs offer invoice tracking so you can see exactly when your customer receives and views their online invoice.

When it comes to small businesses, time is money. But money is also money. With e-invoices, you’ll save both. While you may need to spend a small monthly fee on invoicing or accounting software, you won’t have to purchase envelopes, ink, paper, stamps, etc., and you can use your newfound free time for managing other more important aspects of your business.

Take a look at some of our favorite online invoicing options or continue reading to learn all of the perks invoicing software offers.

Offer Online Payments Options

Slow-Paying Customers? 10 Tips To Get Your Invoices Paid Faster

One of the other great perks of using online invoices is the ability to accept online payments. When it comes to getting invoices paid fast, the key is to make it as easy as possible for customers to pay you.

That’s why payment processors are so important. They’re quick, convenient, and available with almost all invoicing and accounting programs offers multiple payment processing options.

According to the popular invoicing software FreshBooks, offering an online payment option significantly increases your chances of being paid on time; and according to Xero, companies that accept both online credit card payments and Paypal payments get paid 20 days faster than those that don’t.

To learn more about accepting online payments, download our free Beginner’s Guide to Payment Processing. If you’re already sending online invoices but aren’t yet accepting online payments, read our post The Best Payment Processors For Accounting Software.

Choose The Right Invoice Template

Believe it or not, choosing the right invoice template can play a role in getting your invoices paid on time.

Most invoicing software programs offer multiple templates options. You want to pick a template that is attractive, simple, and clear to read. This includes choosing a legible, easy-to-read font like Arial or Helvetica (I usually shy away from serif fonts, like Times New Roman, as they are harder to read and often make the invoice look outdated and cluttered).

According to Invoice Ninja:

[An invoice] that’s colorful, distinctive, and attractive in appearance will stand our in their minds. This can help clients to remember your invoice and nudge them towards paying promptly.

Not only do you want an attractive invoice, but you also want an invoice that clearly shows:

  • The invoice due date
  • The invoice amount
  • Your company’s contact and payment information
  • The products or services the customer is paying for
  • The invoice’s terms and conditions

Clarifying and highlighting this information makes it easier for your customers to know when and how to pay you, which can speed up the payment process.

Here are a few examples of strong, attractive invoice templates:



Pick The Right Date

Choosing an invoice template with a clear due date is a definite step in the right direction, but you also want to make sure you choose the right due date.

Oftentimes, you’ll see invoices that say “due upon receipt.” This is a perfect example of what not to do. It doesn’t give a clear due date, which encourages late payments. Another term you often see is a “Net 30” due date. This means that the invoice payment is due 30 days after the invoice is sent. Some customers may not be familiar with this notation. Instead, be clear and specific. If an invoice is due 30 days after it’s sent and it was sent on September 1st, just say that the invoice is due September 30th. When customers have a set-in-stone deadline, they are more likely to pay on time.

If you want your invoices to be paid faster, also consider moving up your due date. If you typically have invoices due 30 days after they’re sent, try moving that up to 15 days. This way you are spending less time waiting on cash.

Give Discounts

merchant cash advance industry

 

You catch more flies with honey than vinegar, and invoicing is no exception. A great way to get your invoices paid fast is to offer a small discount for customers who pay early. Maybe consider offering a 5% or 10% discount for customers who pay their invoices in the first ten days. Everyone likes saving money, so those customers who are looking for savings will jump on the deal and pay their invoice quickly. While you may lose a small amount of your sale, you’ll receive cash faster, which may be more than worth it.

This option may not be for everyone or every type of business, but is definitely worth considering if your business is struggling with cash flow due to late invoice payments.

Enforce Late Fees

If incentives don’t work, you can also consider charging a late fee or interest for late payments. While no one likes to be the bad cop, sometimes you have to take drastic measures to receive your hard-earned money.

If you do go this route, be sure to clearly state your late fee policy on your invoice’s terms and conditions and send reminders to inform your customers that you will begin calculating interest or charging a fee if you don’t receive your invoice in time.

Send Invoices Right Away

Get your merchant funds fast. Image description: Clock with money underneath it

Your customers can’t pay you if they haven’t been sent an invoice. That’s why staying on top of invoicing is one of the most important things a business owner can do. The sooner you send your invoice the sooner you can get paid. Plus, customers are more likely to pay quickly for items or services that they just received.

It can be easy to become overwhelmed and fall behind on invoices. Luckily, there are tons of great invoicing tools out there to help automize your invoicing process. Nearly every invoicing software allows you to send recurring invoices to repeat customers. Apps like Zoho Invoice and QuickBooks Online allow you to auto schedule invoices in advance to help save time. And programs like Invoice2go offer great mobile apps so you can send invoices on straight from your phone.

Send Payment Reminders

Slow-Paying Customers? 10 Tips To Get Your Invoices Paid Faster

Another way to avoid late-paying customers is to send regular invoice payment reminders. Sometimes people simply forget and need a nudge in the right direction toward payment. Send invoice reminders a few days before the invoice is due, the day the invoice is due, and a few days after the invoice is missed.

Hopefully, the first reminder will be enough to get you your payment. If not, continue sending email reminders and calling them on the phone. No one likes to chase down payments or be a nag, but it’s your responsibility to follow up with slow-paying customers.

One of the perks of invoicing software is that most programs allow you to create automatic payment reminders, which saves a lot of time. These programs almost always have an Accounts Payable report as well so you can view your customer’s outstanding balances without having to manually track who hasn’t paid yet.

Invoice In Phases

If you run a project-based business, consider invoicing in phases. Instead of sending one giant invoice at the end of the job, maybe try invoicing once certain phases of the tasks are complete. Or, consider charging a deposit for your work to discourage customers from avoiding payment altogether. This way, you can even out your cash flow.

Use Invoicing Software

When it comes to getting your invoices paid on time, invoicing software is integral. With it, you can send invoices quickly, automize your invoicing process, and encourage customers to pay quickly with online payments.

Here at Merchant Maverick, we highly recommend that small businesses use invoicing software at the very least, or purchase full-fledged accounting software to send online invoices and balance the books. In this post, we’ve already mentioned several of the great perks of e-invoicing and invoicing software.

Here is a full list of the reasons you should use invoicing software:

  • To automate your invoicing process
  • To send online invoices to customers
  • To accept invoice payments from customers directly online
  • To see when your customers have received and viewed their invoices
  • To send automatic payment reminders to late-paying customers
  • To construct default terms and conditions that automatically appear on every invoice
  • To create default invoice email messages to make sending invoices faster
  • To run helpful reports like Accounts Receivable and Sales by Customer
  • To send invoices on the go with mobile apps
  • To save on paper, ink, and time

If you’re ready to start getting faster invoice payments by using invoicing software, here is a comparison of the top invoicing software options that have the best offerings:

Zoho Invoice Invoice Ninja Invoicera FreshBooks

Review Visit

Review Visit

Review Visit

Review Visit

Pricing

$0 – $29/month

$0 -$12/month

$0 – $15/month

$0 – $50/month

Customer Support

Very Good

Very Good

Good

Very Good

Ease of Use

Very Easy

Easy

Very Easy

Very Easy

Business Size

Small – Medium

Small

Small – Medium

Small

Number of Invoice Templates

16

10

7

2

Autoschedule Invoices

✓

✘

✓

✘

Payment Reminders

✓

✓

✓

✘

International Invoicing

✓

✘

✘

✘

Number of Payment Processors

11

35

30

2 – 6

If you want the same great invoicing features but with added bookkeeping functionality, here are the four best accounting programs for invoicing:

Zoho Books QuickBooks Online Wave Zipbooks

ReviewVisit

ReviewVisit

ReviewVisit

ReviewVisit

Pricing

$0 – $29/month

$15 – $50/month

$0

$0 – $125/month

Customer Support

Very Good

Poor

Good

Good

Ease of Use

Very Easy

Easy

Very Easy

Easy

Business Size

Small

Small – Medium

Small

Small

Number of Invoice Templates

15

5

3

1

Autoschedule Invoices

✓

✓

✘

✘

Payment Reminders

✓

✓

✓

✓

International Invoicing

✓

✘

✘

✘

Invoice Strength Score

✘

✘

✘

✓

Number of Payment Processors

12

15

2

2

If you need help deciding which software is right for you, check out our comprehensive invoicing software reviews, take a look at our post How To Choose Invoicing Software, or leave us a comment below.

What If My Customers Still Don’t Pay Their Invoices On Time?

So what happens if you try all 10 of these tips and you still have late-paying customers? That’s where invoice financing comes in.

With invoice financing, you can sell your unpaid invoices to a factoring company in exchange for immediate cash or you can use your invoices as collateral for a line of credit.

If you’re suffering from inconsistent or poor cash flow due to slow-paying customers, invoicing financing might be the perfect solution for you. Read our Merchant’s Guide To Invoice Financing to learn more or compare the invoice financing options.

Instead of feeling powerless against late invoices, you now have ten tricks under your sleeve to help get those invoices paid faster (eleven if you count invoice financing!) Take action against slow-paying customers and start getting your invoices paid faster today.

The post Slow-Paying Customers? 10 Tips To Get Your Invoices Paid Faster appeared first on Merchant Maverick.

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Do I Need To Pay A Down Payment To Get A Small Business Loan?

If you’re a small business owner, you already know that growing, taking care of emergencies, and even just handling day-to-day operations takes capital — and lots of it. Sometimes, when expenses can pile up, it makes sense to consider turning to a small business lender for a helping hand.

After you’ve calculated the amount you need, selected a lender, and started the application process, however, you may hit a financial roadblock: you need ready money to put a down payment on the loan.

To obtain a small business loan — especially for a large amount — lenders often require the borrower to pay a percentage out-of-pocket as a down payment. But why is this required? It seems a bit counterintuitive, after all. You’re borrowing money because you need more, but you have to pay money up front to actually receive the loan.

Is there a way around this apparent Catch-22? What loans require down payments, and what are your options if you don’t have the funds to pay the down payment? Read on to find out more.

Why Lenders Require A Down Payment

If you’ve ever taken out a large loan before, you’re already familiar with down payments. Car loans and mortgages are two examples of loans that require down payments. Let’s say that you go to the car dealership to purchase a car for $30,000. A 10% down payment is required. This means that you will pay $3,000 out of pocket, while the lender will loan you the remaining $27,000 to be paid over the next several years.

Down payments work the same way for business loans. But why do lenders require it?

Requiring a down payment is just one of the ways that lenders lessen their risk. When you make a down payment, you’re investing your own money, which demonstrates to the lender that you’re serious about the loan and more likely to pay it back. It will also be easier for the lender to recoup at least part of their money in the event of a default. If an asset must be repossessed to pay off the debt, the lender will not have to sell the item for full value in order to recoup their investment.

Of course, down payments aren’t just good for lenders — they benefit you, too. By putting up a down payment, you’re able to lower the amount of money that you borrow. This means that not only will your monthly payments be smaller, but you also will save on interest over time, making the loan more affordable over the long term.

Do All Loans Require A Down Payment?

Most larger business loans — including commercial mortgages, commercial auto loans, and equipment loans — do require a down payment in order to get approval for funding.

Whether a down payment is needed at all — and, if so, the required amount — will often vary based on the creditworthiness of the buyer. For example, a borrower with a solid history may qualify for a “zero down” offer or very low down payment, whereas a borrower with a troubled credit history may be required to pay a down payment to be approved for the loan.

One thing to consider is that when there is a minimum down payment requirement, it’s a wise move to put more money down, if possible. As previously discussed, this means you’ll need to borrow less money, leading to lower payments and long-term interest savings.

How The Cost Of A Down Payment Is Determined

There are a few factors that determine the cost of a down payment. The first is the lender’s policies. Lenders may automatically require a down payment for specific loans or loans that exceed a certain amount.

Credit history also plays a role in the amount of the down payment. Down payment requirements are often lower for borrowers with high credit scores and solid credit histories. In some cases, these borrowers may even qualify for no-down payment offers. Borrowers with low scores may be required to make a down payment before even being considered for a loan.

Collateral may also play a role in the amount of the down payment. If sufficient collateral has been put up to cover the loan in case the borrower defaults, a down payment may not be required. For other loans with no specific collateral requirements, a down payment may be required based on the amount of the loan and the creditworthiness of the borrower. This also holds true for loans where the assets being purchased with loan proceeds (such as vehicles, real estate, or equipment) serve as the collateral.

Typical Down Payment Requirements

Whether a loan requires a down payment is based on a number of factors, including the type of loan selected. For some loans, a down payment is always required but may vary based on the profile of the borrower and other considerations, such as the amount of the loan. For other loans, a down payment may not be required at all.

Loan Type Typical Down Payment Requirement

Bank Loans & Lines of Credit

0% – 20%

Online Loans & Lines of Credit

None

SBA 7(a) Loans

10% – 20%

SBA CDC / 504 Loans

10% – 30%

Business Acquisition Loans

10% – 20%

Commercial Real Estate Loans

10% – 30%

Equipment Loans

0% – 20%

Invoice Financing

None

Bank Loans & Lines of Credit

Business loans from a bank are typically reserved for the best borrowers. Even so, banks want to protect themselves from risk as much as possible, which is why a down payment to receive a loan is required, especially for higher loan amounts.

The typical down payment requirement for a bank loan is 10% to 20%. The down payment amount will be based upon the amount borrowed, how the loan funds will be used, the borrower’s credit history, and how the loan will be collateralized.

Business lines of credit from a bank are different in that a down payment is not required. Secured lines of credit may require collateral but will not require a down payment. Learn more about collateral requirements for business loans. A personal guarantee or blanket lien may be required in place of specific collateral for some loans.

Online Loans & Lines of Credit

More business owners are turning to online loans because they are convenient to apply for, are funded quickly, and have qualification requirements that are less strict than conventional loans.

Online loans and lines of credit are also a top choice for business owners for another reason: they do not require a down payment. However, for most loans, collateral or a personal guarantee will be required to secure the loan. Learn more about personal guarantees before applying for your next loan.

Looking for a reputable online lender? The following lenders offer good rates and terms for online loans and lines of credit:

Lender Borrowing Amount Term Interest/Factor Rate Req. Time in Business Min. Credit Score Next Steps

$5K – $500K 13 – 52 weeks x1.029 – x1.1872 9 months 550 Apply Now

$5K – $500K 3 – 36 months x1.003 – x1.04/mo 12 months 500 Apply Now

$2K – $5M Varies As low as 2% 6 months 550 Apply Now

$20K – $500K 1 – 4 years 7.99% – 29.99% APR 2 years 660 Apply Now

SBA 7(a) Loans

The Small Business Administration 7(a) program provides loans to small businesses through intermediary lenders. These loans are very popular because of their high limits (up to $5 million), low interest rates, and flexible terms.

Like other lenders, SBA intermediaries will require a down payment that is sufficient to mitigate risk. Intermediary lenders typically require a down payment of 10% to 20% for 7(a) loans. The down payment amount is based on the borrower’s credit history, the amount of the loan, and the amount of collateral, if any, that is used to secure the loan.

SBA CDC / 504 Loans

SBA CDC/504 loans are loans that are used for the purchase or improvement of commercial real estate. With these types of loans, a borrower works with two lenders – an SBA-approved Certified Development Company and a traditional lender like a bank.

The CDC provides 40% of the total project cost as a loan, while the second lender loans 50% of the total cost. This leaves the borrower with the remaining 10% to be paid as a down payment. Based on the credit profile of the borrower and the amount funded, an additional 10% to 20% may be required by some lenders.

Business Acquisition Loans

When money is borrowed to acquire a business, a down payment is required. Again, it all comes down to the risk posed to the lender. Low-risk borrowers with stellar credit scores and high-value collateral can often receive down payments for business acquisition loans as low as 10%.

However, loans for borrowers with lower credit scores, loans of higher amounts, or loans that aren’t fully collateralized may require higher down payments up to 20%.

Commercial Real Estate Loans

Commercial real estate loans are used to purchase land or property for commercial use. A commercial real estate loan is similar to a personal mortgage, including the need for a down payment.

Many lenders require a minimum 10% down payment for commercial real estate loans. However, requirements vary by lender, so in some cases, up to 30% of the purchase price may be required as a down payment.

With commercial real estate loans, the lender considers the loan-to-value, or LTV, ratio. This means that the lender looks at the appraised value of the property compared to how much the borrower is requesting. A higher LTV poses more risk for the lender, especially when the borrower doesn’t have a solid credit history. To lessen this risk, a higher down payment may be required to lower the LTV.

The SBA CDC/504 loans discussed previously offer an alternative if you’re looking to purchase commercial real estate with a lower down payment.

Equipment Loans

An equipment loan is a type of financing that is used to purchase equipment and machinery needed for a business to continue or expand operations. Equipment loans may require a down payment, although there are options available for 100% financing with no down payment required. Equipment that holds its resale value will most often qualify for very low or no down payments. Because it serves as the collateral and can be repossessed and sold if the loan goes into default, there is less risk for the lender.

However, depending on the amount of the loan needed and other factors, including credit history, an equipment loan may require a down payment of up to 20% of the total value of the equipment.

Think equipment financing is right for you? Check out these lenders:

Lender Borrowing Amount Term Interest/Factor Rate Additional Fees Next Steps

$2K – $5M Varies As low as 2% Varies Visit Site

$5K – $500K 24 – 72 months Starts at 5% Yes Compare

Up to $250K 1 – 72 months Starts at 5.49% Varies Compare

Invoice Financing

With invoice financing, lenders provide an advance on cash for unpaid invoices. This type of loan is best for businesses that have cash flow issues due to unpaid invoices.

With invoice factoring, the lender provides you with a percentage of cash up front. Once the lender collects payment from the customer, the remaining percentage is paid to you minus any fees and interest collected by the lender.

Invoice discounting is similar. However, most of the unpaid invoice is advanced to you up front. Once you are paid by the customer, you pay back the advanced funds, along with any fees and interest charged by the lender.

With invoice factoring and invoice discounting, the unpaid invoices act as the collateral. Because the collateral reduces the risk for the lender, there are no down payments required for this type of loan.

What To Do If You Can’t Afford A Down Payment

You need a loan in order to expand your business, but you can’t afford the down payment – now what? Fortunately, there are a few steps you can take when you’re struggling to come up with the funds to make the down payment.

The first thing you can do is consider different loans to find options with lower down payment requirements. SBA loans typically have lower down payment requirements than loans from banks. If you meet the qualification requirements, consider applying for SBA loans, which also have very competitive rates and terms.

You can also explore loan options that don’t require a down payment, such as online loans and lines of credit. Remember, though, paying a down payment will help reduce the amount that you borrow, the monthly payment, and the overall cost of the loan.

Another strategy involves credit cards, but not in the way that you might think. While you can certainly choose to put a down payment on a credit card, this isn’t a wise financial move. Interest charges will rack up as long as there is a balance, keeping the business in debt. Instead, this strategy involves paying off your credit cards and other debts. Once old debts are paid off, the money being used to pay balances, plus interest, can then be applied toward the down payment.

If the financing need isn’t immediate, you can also consider saving the money. You can put money in a savings account or into certificates of deposits, money market funds, or other short-term investment vehicles.

If a low credit score is an issue that contributes to a high down payment, pull your free credit report and score and get to work building your credit profile to qualify for lower down payments — along with improved interest rates and terms — in the future.

While it’s possible to use credit cards or other borrowed funds to pay your down payment, this ultimately just adds to your business debt, so it’s best to avoid these methods if possible.

Final Thoughts

A down payment for a small business loan may seem like an inconvenience, but this requirement is put in place to protect the lender. The good news is that the lender isn’t the only one that will benefit. Having a solid down payment for your business loan will help you save money over the long-term in interest fees, while also reducing your monthly payments and lowering your debt — all keys to smart, responsible borrowing.

Looking for a business loan? Start here.

Lender Borrowing Amount Term Interest/Factor Rate Req. Time in Business Min. Credit Score Next Steps

$5K – $500K 13 – 52 weeks x1.029 – x1.1872 9 months 550 Apply Now

$5K – $500K 3 – 36 months x1.003 – x1.04/mo 12 months 500 Apply Now

$2K – $5M Varies As low as 2% 6 months 550 Apply Now

$20K – $500K 1 – 4 years 7.99% – 29.99% APR 2 years 660 Apply Now

The post Do I Need To Pay A Down Payment To Get A Small Business Loan? appeared first on Merchant Maverick.

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SBA Franchise Loans: A Complete Guide

If you’re a franchise operator, you know that getting started can be tricky. Franchises offer flexibility and support for owners, but require capital to get started. Chances are, you’ll need an influx of cash at some point during your career as a franchisee. Whether you’re starting a new franchise or growing an existing one, an SBA Franchise Loan can be a helpful tool. As part of their larger mission, the Small Business Administration offers funding for small business franchises that need capital. Once determined eligible, franchises can enjoy the flexibility and low rates of a small business loan, backed by the SBA.

SBA Franchise Loan Eligibility

Applying for an SBA Loan is an arduous process, and for franchises, the process does have an additional step. Thankfully, the SBA has worked to make the extra step a bit easier for larger, more established franchised businesses.

What Franchises Are Eligible For Financing?

The SBA has a simple way for most franchises to determine their eligibility for a loan. The Franchise Directory is a list of all brands reviewed by the SBA. If you find your franchise listed on the directory, it pre-qualifies you for SBA financial aid.

If your franchise has not already been deemed eligible by the SBA, you can apply to be added in the directory by submitting an agreement. You may also be asked to submit a Franchise Disclosure Document (FDD) and other applicable documents. The FDD will ask for information on your business, including its financial history and marketing strategies.

This process does add extra steps to your SBA Loan application, so it is much faster to acquire an SBA Franchise Loan if your franchise is already in the Franchise Directory. If you don’t wish to be added to the Franchise Directory, you have the option of simply applying for an eligibility review for your franchise.

What Eligibility Requirements Do Franchisees Have To Meet?

After your franchise is approved, you as a franchisee must also meet certain qualifications. Most borrowers are required to have management or direct industry experience. You must also have an acceptable personal credit history with no personal or corporate bankruptcies. The SBA has basic guidelines applicants of any loan must meet. This includes meeting size requirements, for-profit business status, and operations within the United States. You must have an acceptable personal background, a business plan, and financial statements. In most cases, you will be required to put up collateral and sign a personal guarantee.

The ideal borrower has an acceptable business history with a franchise of at least two years. Lenders want to know that your franchise will be a success, so the more successful locations your business already has, the better. Popular franchise types include retail, fitness, daycare, food service, and hospitality.

Ineligible For SBA Funding? Try These Lenders

Many businesses find it difficult to qualify for SBA loans, as the requirements are difficult to meet. If you find that you are ineligible for SBA funding, you can check out these alternatives to SBA funding, which are often easier to qualify for and can provide funding faster with less paperwork. Lenders like ApplePie Capital, Funding Circle, and SmartBiz offer some of the best online loans for franchises.

How Can Franchises Use SBA Financing?

To fund your franchise, you will probably need a 504/CDC Loan or a 7(a) Loan. 

General SBA 7(a) Loans

7(a) Loans are the most popular and versatile of SBA Loans. They are backed by the SBA in amounts up to 85%, making them a popular choice for businesses ineligible for traditional business loans. A 7(a) program offers long-term loans, favorable rates, and flexibility. Funds from a 7(a) can be used for short- or long-term working capital, furniture, fixtures, purchasing a pre-existing business, refinancing corporate debt, construction, refurbishment, and supplies.

SBA 7(a) Loan Base Rates (Plus Markup)

Loan Amount Less Than Seven Years More Than 7 Years

Up to $25,000

Base rate + 4.25%

Base rate + 4.75%

$25,000 – $50,000

Base rate + 3.25%

Base rate + 3.75%

$50,000 or More

Base rate + 2.25%

Base rate + 2.75%

SBA CDC / 504 Loans

504/CDC Loans are a more competitive loan product offered by the SBA and Certified Development Companies (CDC). These loans also offer long-term financing and small down payments, but have less flexibility in what buyers may purchase with funds. A 504 Loan can be used for heavy machinery, the purchase of existing buildings, construction, and refurbishment.

SBA 504 Loan Rates & Terms

SBA 504 Loans

Borrowing Amount

No maximum, but the SBA will only fund up to $5 million

Term Lengths

10 or 20 years

Interest Rates

Fixed rate based on US Treasury rates

Borrowing Fees

  • CDC servicing fee, CSA fee, guarantee fee, third party fees (however, most of these fees are rolled into the interest rate or cost of the loan)
  • Possible prepayment penalty

Personal Guarantee

Guarantee required from anybody who owns at least 20% of the business

Collateral

Collateral required; usually the real estate/equipment financed

Down Payment

10% – 30%

What’s The Difference Between A 7(a) Loan & A 504 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.

How To Apply For An SBA Franchise Loan

Applying for an SBA Franchise Loan is a similar process to applying for any other type of SBA Loan. Once your franchise has been approved or been confirmed on the Franchise Directory, the process of applying for a loan will remain the same. You will need the following information for your application:

  • Personal Credit History
  • Personal Financial Statement
  • Business Plan

These are all customary documents for an SBA application. You can get started with your application online and be connected with potential lenders within two days.

Final Thoughts

Operating a franchise can be a great way to become a business owner. Franchises offer the independence of a small business with the guidance and support of a larger corporation. If this sounds like a good option for you, an SBA loan program can be another supportive infrastructure to have on your side. While applying for an SBA Loan can be a difficult process, the benefits of flexibility and support are well worth the effort.

The post SBA Franchise Loans: A Complete Guide appeared first on Merchant Maverick.

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How Long Does It Take To Get An SBA Loan Approved?

Wondering what the turnaround time is for an SBA loan?

With typical lenders, the process of receiving an SBA loan takes up to 2-3 months. Some lenders will offer funding in as little as 30 days, although these efficient lenders are quite rare. The process requires patience; potential borrowers must go through many steps of paperwork and vetting. You will need to prepare all necessary documents, meet with a lender, complete more documents, wait on underwriting, and finally wait for closing.

The more exact and correct you can be in your preliminary applications, the better chance you have of getting a faster response from the SBA. Most importantly, be prepared to wait, and don’t be surprised if you aren’t regularly updated on the status of your application.

Read on to find out how long you may have to wait and how to speed up the process!

SBA Loan Approval Time

SBA 7(a) Loan Approval Time

An SBA 7(a) Loan usually takes about 2-3 months to be approved. If you have the option of working with an SBA Preferred lender, your application may be approved much faster, comparatively. Of course, the exact time it will take to be approved depends highly on you and your lender.

SBA 504 Loan Approval Time

As with other loans, the time allotted for SBA 504 Loans vary drastically. On average, the loans take around 30–45 days from application to funding. Approval time can, however, take anywhere from 1–6 months. Because the 504 lending program is a dual-approval loan involving both a CDC and the SBA, there are more variables to consider. The timeline relies heavily on the borrower and their specific needs.

SBA Microloan Approval Time

SBA Microloans are given in smaller amounts, so the process can be somewhat shorter. Receiving a Microloan can take an average of 4 weeks or more. Your application must be approved by both an intermediary lender and the SBA, so patience is key when waiting on a Microloan.

SBA Disaster Loan Approval Time

Receiving an SBA Disaster Loan is a three-step process: Application, Property Verification & Loan Processing Decision, and Loan Closing & Disbursement of Funds. The SBA states that the first and second step takes an average of 4 weeks. Step 3 takes around 5 days for borrowers to receive funds.

What About SBA Express Loans?

Are Express loans actually faster than regular SBA loans? In short, yes. The downside is that, while the processing time is much quicker than other SBA loans, the maximum loan amount is low at $350,000. The Express Loan can be approved within 36 hours, making it the fastest SBA loan application process.

Why SBA Loans Take So Long: The SBA Loan Application Process

When applying for an SBA loan, know that you’ll need to be patient. Most SBA loans will require a lot of documentation and verification, which makes the process quite lengthy.

If you’re applying for a 504 Loan, your application will be roughly thirteen pages long. You’ll need information on project cost, energy efficiency goals, debenture pricing, and more. Because the 504 Loan is a dual-approval process, it can take even longer. Your completed application will be submitted the CDC which will then assess the application and forward it to an SBA Loan Processing Center.

Other SBA loans have similar processes in which a potential borrower must fill out an online form describing the business’s needs. From there, the SBA will match you with potential lenders with whom you can discuss rates and terms and formally apply for their loan.

These in-depth applications do take time to fill out. Once the application is completed, the documents must be reviewed by multiple sets of eyes, which makes the waiting periods lengthy.

First Step: Putting Together An SBA Loan Application Package

Here are some items you will need in your SBA Loan Application Package:

  • Business Plan: Your lender wants to see concrete evidence that your business will be able to pay back the loan. You can show this by including:
    • A description of your small business, including information on your product/service.
    • Future plans for your business.
    • An outline of your team.
  • Statement of Purpose: This is your opportunity to tell the SBA what you intend to do with any funding you receive. You will need:
    • A statement on how the loan will benefit your business.
    • An explanation of how you, as a business owner, have invested your personal resources into the business.
    • Any other information you have about your loan request.
  • Financial Statements: Here’s where you can show the lender that the numbers are in your favor. To show that you are financially capable you will need:
    • Personal Financial Statements: personal net worth, debts
    • Cash Flow Statements: income, expenses
    • Income Statements: profit, loss
    • Balance Sheets: business value and/or net worth

Next Step: Underwriting

Formal underwriting for an SBA loan usually takes about 2–3 weeks. This time allows either your underwriting team or loan officer to discuss any questions or concerns they may have about your loan. During this time, you may be asked to participate in more meetings to discuss your plans, or even to fill out more paperwork. The Underwriting period can take longer if the SBA requests extra documentation.

Final Step: Approval & Loan Disbursement

Once you’ve been approved, it generally takes funds about 5 days to reach your account. This can vary depending on the type of loan and your particular case. Be sure to ask your lender how long it takes for approved funds to be disbursed.

How Does SBA Loan Turnaround Time Compare To Other Types Of Business Loans?

We’ve established that SBA loans can take up to 90 days or more to be approved and released to small businesses. In comparison to other business loans, this is quite a lengthy process. When applying for a traditional business loan at a bank, you can expect to get an answer within only 2–4 weeks. An even faster option is an online business loan. Online resources such as Credibility Capital, Currency Capital, Funding Circle, and more boast short applications that take minutes and can provide funding within as little as 24 hours.

The appeal of an SBA Loan, of course, is not that it is quick or simple, but that it is guaranteed in amounts up to 85%, and often offers low rates and long terms.

Need Cash Fast? Two Ways To Get An SBA Loan If You Need Cash Now

Best Time Tracking Integrations

If you need cash quickly, be sure to fill out your SBA paperwork and preliminary applications as accurately and robustly as possible. This is your best bet of getting a fast response from the SBA. The less they have to do to get information from you, the better your experience will be.

Of course, a speedy response is not a guarantee, even if you do have all your documents in order. If you truly need to know your funds will be here sooner than later, you can check out these resources for small business owners:

  • Apply for an SBA loan through SmartBiz, an online resource that allows small business owners to apply for SBA loans without most of the hassle associated with the traditional process. By applying online, much of the cost, time, effort, and paperwork are eliminated. The usual 60– 90-day process is condensed into a 30-minute, user-friendly process, featuring pre-approval. SmartBiz even claims that some users receive funding in as little as five days.
  • Get A Bridge Loan. A bridge loan is a transitory, short-term loan that your small business can use until all of your needed funding comes in from other sources. If you’re looking for a bridge loan without a prepayment penalty, check out the small business loan comparison chart.

Final Thoughts

While SBA loan applications do take a bit longer than traditional and online business loan applications, they do have their positive qualities. If you think an SBA loan is right for you, begin the application process before you need cash. Most importantly, be sure to look into all your options before making a decision on what is best for your small business!

The post How Long Does It Take To Get An SBA Loan Approved? appeared first on Merchant Maverick.

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