Payoff Personal Loan Review: Is A Payoff Loan Right For You?

Pros

  • Suited for consolidating and paying off credit card debt
  • Competitive rates
  • No late fees or early payment fees
  • Good customer support
  • Time to funding: 2 to 5 business days

Cons

  • Minimum credit score of 640
  • High borrower requirements
  • Origination fees of 0-5%

Overview

payoff personal loan review

Unlike many online vendors of personal loans, Payoff’s loans are tailored for one specific type of borrower: Those looking to consolidate and pay off their credit card debt.

Payoff offers fixed-rate personal loans for debt consolidation as well as continuing financial guidance and support via Member Advocates. Payoff describes Member Advocates thusly:

Member Advocates are the people who make up our dedicated, local team working with you one-on-one to support your personal journey toward financial wellness. As a company, we’re heavily invested in our Members’ success, and we only succeed when you make positive steps toward financial wellness.

By consolidating your credit card bills into one monthly payment, you can improve your credit score. You’ll be making one payment to pay down your debt instead of several, which helps to simplify your finances and improve your credit utilization ratio. According to Payoff, those who use their loans to eliminate at least $5,000 of credit card balances “see an average FICO® Score boost of 40 points.” Payoff Loan Members will also get a free monthly update of their FICO® Score so they can track their progress.

Payoff loans are well-suited to consolidating and paying down debt. If, on the other hand, you’re looking for a personal loan to fund a startup business, you should instead check out the options listed in our comparison of the top personal loans for funding a business.

Read on to see if Payoff’s personal loans are right for you.

Services Offered

Payoff offers fixed-rate installment loans for paying off credit card debt.

Borrower Qualifications

The requirements for getting a personal loan from Payoff are as follows:

Column Heading Data

Time in business:

N/A

Personal credit score:

640 or higher

Business revenue:

N/A

Payoff is particularly clear in laying out the eligibility requirements for a loan. The primary requirement is that your FICO® Score must be at least 640. However, there are additional benchmarks you must meet.

For one thing, you must have a debt-to-income ratio of 50% or less. As for your annual income, it must be at least $40,000. You must also have at least three years’ worth of credit history as well as two open and satisfactory trades, meaning you have at least two credit lines on which you’ve been up-to-date on your payments. You cannot have any current delinquencies, nor can you have had any delinquencies longer than 90 days over the past year.

You must also be a US citizen or permanent resident. Another factor to consider: Payoff loans are not currently available to residents of Massachusetts, Mississippi, Nebraska, Nevada, or West Virginia.

Terms & Fees

These are the terms and fees for Payoff’s personal loans:

Column Heading Data

Borrowing amount:

$5,000 – $35,000

Term length: 

2 to 5 years

Interest rate:

5.65% – 22.59%

Origination fee:

0% – 5%

APR:

5.99% – 24.99% (fixed)

Collateral:

None (Unsecured)

According to Payoff, “Your repayment terms will depend on your APR and loan term. Example: A loan of $16,000 at 10.99% APR will have a monthly payment of $407 for 48 months.” Your payments will be withdrawn directly from your designated checking account each month.

Because Payoff loans come with fixed rates, your monthly payments will always be the same amount, which should help simplify your budget. Furthermore, if you miss a payment, you won’t be charged a late fee. Instead, a company representative will work with you to formulate a plan to get you back on track. You may get the option to defer or skip your payment or to change your payment date. Payoff gives the borrower a greater degree of flexibility than most personal lenders.

While Payoff does charge an origination fee of between 0% and 5%, that’s the only fee you’ll face. There are no application fees, early/extra payment fees, or check processing fees.

Application Process

The application process for a Payoff debt consolidation loan is conducted online. The documents Payoff asks to see will vary depending on the individual applicant, but Payoff asks that you be prepared to provide the following:

  • A bank statement or bank credentials to securely link your bank account
  • A driver’s license, passport or state issued ID to verify your identity
  • Your two most recent paystubs (or most recent tax return if you’re self-employed) to confirm your income

According to Payoff, after the verification process is completed, most approved loans are funded within two to five business days.

Sales & Advertising Transparency

Payoff is more transparent than most lenders when it comes to its loan products. Along with an FAQ and a comprehensive support page, Payoff also provides a “document upload guide” to walk you through preparing the documents you’ll need to submit with your application.

Customer Service & Technical Support

Payoff provides customer support via live chat for basic questions. For more thorough support, Member Advocates are available to help you set financial goals and develop a plan for paying back your loan.

Negative Reviews & Complaints

The professional reviews of Payoff I’ve come across are all rather favorable, with the only caveat being that the requirements for borrowers to qualify are rather high. Accordingly, some commenters report being rejected for a Payoff loan despite having favorable financial circumstances.

Positive Reviews & Testimonials

Most professional and customer reviews of Payoff’s loan products are positive. Payoff loans have been praised for having competitive rates, a lack of extraneous fees (the absence of late fees is particularly nice), a solid reputation as a lender, and a high degree of customer support and guidance.

Payoff currently has an A+ rating from the BBB.

Final Verdict

Payoff may be a specialized lender, but if you fall into Payoff’s target audience (someone with a solid credit history and decent income who nonetheless needs help consolidating and paying off credit card debt), the company is a good choice for a lender. Payoff’s high degree of transparency and lack of extraneous fees lends credibility to the company, as does the lender’s great reputation in the industry. The worst thing one can say about Payoff’s loans is that the high eligibility requirements may put them out of reach for many of the people who might stand to benefit from a debt consolidation loan. But for those who qualify, you could do a lot worse than a Payoff loan.

As ever, make sure to comparison shop when seeking a personal loan. Only through doing your due diligence will you find the best rates and terms available to someone in your precise financial situation.

The post Payoff Personal Loan Review: Is A Payoff Loan Right For You? appeared first on Merchant Maverick.

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Retail Business Loans And Financing Options

Owning a retail business isn’t without its challenges. Whether you’re growing rapidly and need extra money for expansion or you’re in the middle of a slow season that’s impacted your cash flow, one thing is clear: you need money for your business to operate smoothly.

Sure, pulling the money you need from your own bank account is ideal, but this isn’t always possible. Maybe the money’s not there … or maybe you don’t want to put yourself in a bind by tying up your funds. In these situations, what do you do when you need a financial helping hand? Take a cue from other smart retailers and find a retail business loan that’s right for you.

There comes a time when most small businesses have to take out a loan, and retail businesses are no exception. The key is to understand your options to find the best, most affordable loan that you can use to take your store to the next level, cover an unexpected emergency, or even get your business off the ground. Read on to learn more about the retail business loan and financing options available for any situation.

The Best Loans For Retail Businesses

Financing Need Best Loan Type Recommended Lender
Business Expansion SBA Loan SmartBiz
Purchasing Equipment Equipment Financing Lendio
Emergency Funding Short-Term Loan LoanBuilder & IOU Financial
Cash Flow Shortages Business Credit Cards Ink Business Preferred from Chase
Purchasing Inventory Line of Credit OnDeck
Purchasing a Point of Sale System POS Financing CDGcommerce

1. Business Expansion

Business is booming, and you’re ready for an expansion. Maybe you’re an online retailer and you’ve decided it’s time to open your first brick-and-mortar store. Perhaps you want to open an additional location, or you want to do a complete overhaul of your facilities. No matter what the situation, your retail business is growing, which is exciting … but also very expensive.

Instead of hindering your growth by draining your checking account, consider applying for a loan that provides the funds you need, but spread out into affordable monthly payments.

Small Business Administration 7(a) Loans

The Small Business Administration is a government organization that provides resources to small business owners just like you. One of the most popular resources the SBA offers small business owners is low-cost loan options. Although there are several great programs to consider, the SBA 7(a) loan is one of the most popular among small business owners.

The SBA 7(a) loan is a loan that can be used for essentially any business purpose. This includes business expansion, the purchase of equipment, to use as working capital, or to even save money by paying off high-interest debt.

Through the 7(a) program, you can receive up to $5 million. Because up to 85% of the loan proceeds are backed by the government, SBA-approved lenders (known as intermediaries) are more willing to give these loans out. This is ideal if you’ve been unable to qualify for traditional loan options.

SBA 7(a) loans have low interest rates capped at a maximum of 4.75% — added to the prime rate — based on the loan amount and your repayment terms. Repayment terms are available up to 10 years for most uses, while loan proceeds being used for commercial real estate come with maximum terms of 25 years. SBA 7(a) loans are available to qualified borrowers with a credit score in the high 600s.

Recommended Option: SmartBiz

The SBA 7(a) loan sounds pretty great, doesn’t it? If you’re interested in this loan, you could visit an intermediary lender in your area, such as a bank or credit union. However, this process can often be a hassle for the busy retail business owner. Simplify the process of applying for an SBA 7(a) loan by working with SmartBiz.

With SmartBiz, you can fill out an easy online questionnaire to find out if you’re qualified for an SBA loan. Once you’re prequalified, the service will match you with a lender and assign a relationship manager to help you through the application process.

Getting approved and funded takes several weeks for most applicants. Other times, the process may drag out over several months if more information is needed by your lender. Even though the waiting time to receive this type of loan exceeds that of other financing options, the low overall cost and the flexibility that comes with the 7(a) loan is often worth the wait for many small business owners.

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2. Purchasing Equipment

Your technology and equipment are seriously outdated. Or maybe your business is growing so fast that your problem is not replacing equipment, but adding more. Instead of spending thousands out of pocket, there’s a more affordable solution when you need to replace or purchase long-term equipment: equipment financing.

Equipment Financing

Equipment financing is a type of business financing used to purchase new equipment for your business. With equipment financing, you’ll be able to take possession of much-needed new equipment immediately without paying the entire cost up front.

With an equipment loan, you’ll pay a down payment that is usually 10% to 20% of the total cost of the equipment. The remaining amount, along with interest and fees charged by the lender, will be loaned to you and is paid back through scheduled payments over a longer period of time. At the end of your repayment period, you will own the equipment. This makes the purchase of new or replacement equipment much more affordable.

Equipment leases are another form of equipment financing. With equipment leasing, you’re essentially paying to use the equipment. At the end of your lease, you can return the equipment and take out another lease on the latest model. Unlike a loan, you will never own the equipment unless you pay a lump sum at the end of the lease. However, if you upgrade equipment frequently or want a lower down payment, a lease may be the right option for you.

Recommended Option: Lendio

If equipment financing sounds like the right loan option for your business, find a lender using Lendio. Lendio is a loan-matching service that connects you with the right lender that offers loans to best fit your needs.

Equipment financing through Lendio lenders is available in amounts from $5,000 up to $5 million. Terms of up to 5 years are available. Interest rates for the most qualified buyers start at 7.5%.

Column Heading Data

Credit limit:

$5,000 – $5,000,000

Term length:

1 – 5 years

Interest rate:

7.5%+

Origination fee:

By lender

Collateral:

Usually the equipment being financed

When using Lendio, you’ll fill out an application and within 72 hours, you’ll receive loan offers from multiple lenders. This allows you to review your options to find the most affordable loan with the best repayment terms.

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3. Emergency Funding

Even if you’re on top of your business and finances, there may come a time when an unexpected emergency arises. It happens to the best of us, usually when we are least prepared for it. If an emergency pops up and you need extra cash immediately, a short-term loan could offer just what you’re looking for.

Short-Term Loans

A short-term loan is exactly what the name suggests: a loan that comes with short terms of 1 year or less. These loans have their benefits for small business owners. Borrowers with low credit scores, a short time in business, or with low annual revenues often qualify. However, the biggest benefit is how quickly you can receive the money with a short-term loan. With some lenders, you can apply, be approved, and have the money in your bank account in just 24 hours.

However, short-term loans don’t come without their drawbacks. This fast form of financing comes at a cost. Short-term loans do not have interest rates, but instead, use something called a factor rate. This fee is paid back along with the principal balance over a short period of time. Often, this factor fee, along with other costs such as origination fees, can make these loans more expensive than long-term options. However, when you’re in a financial bind and need money quickly to keep your retail business running smoothly, a short-term loan may be your best option.

Recommended Options: PayPal LoanBuilder & IOU Financial

PayPal’s LoanBuilder provides short-term funding up to $500,000, which can be repaid over a period of 13 to 52 weeks based on the amount of the loan received. The LoanBuilder application takes just 10 minutes to complete. Once approved, you can receive your funds as soon as the next business day.

Qualified borrowers must be in business for 9 months and have at least $42,000 in annual revenue. All borrowers must have a minimum credit score of 550.

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Check Eligibility

Another short-term loan option is IOU Financial. This lender offers loans up to $300,000. Requirements include being in business for a minimum of one year, bringing in revenue of at least $100,000, and making at least 10 deposits per month into your business bank account.

Repayment terms are available from 6 to 18 months, and once your loan is 40% paid off, you can renew if additional funding is needed. Repayments are made through fixed daily or weekly payments.

4. Cash Flow Shortages

From time to time, a retail business may face cash flow shortages due to a slow season or other challenges. When this happens, daily operations may be affected. You have the same expenses, but your revenues are down, posing a financial challenge for your business. You don’t have to sit back and let these situations drag your business down. Instead, a business credit card can help you fill in these gaps.

Business Credit Cards

A business credit card provides you with a revolving line of credit that you can use to pay your suppliers, vendors, and other expenses. The issuer of the credit card will provide you with a credit limit. You can spend up to and including that limit, using the card as often as you need.

A business credit card allows you to make an instant purchase without having to wait for approval from the lender. You’ll only pay interest on the amount of the credit line that has been used. Payments are made monthly and are applied to the interest and the balance on your card.

One great feature about business credit cards is that many offer rewards programs. With qualifying business purchases, you can earn cash back or points that can be redeemed toward rewards.

Recommended Option: Ink Business Preferred from Chase

The Chase Ink Business Preferred credit card is a top choice among retailers and other business owners because of its great rewards program. If you spend $5,000 within three months of opening your account, you receive 80,000 bonus points. For every purchase, you’ll continue to rack up points.

This credit card also offers additional benefits not offered by other credit card issuers, such as cell phone protection. This card comes with a variable APR of 17.99% to 22.99% with a $95 annual fee.

This credit card is reserved for borrowers with good to excellent credit. Check out our other top picks in business credit cards.

Chase Ink Business Preferred



Apply Now 

Annual Fee:


$95

 

Purchase APR:


17.99% – 22.99%, Variable

5. Purchasing Inventory

You need inventory, and you need it now. If you need to purchase inventory to keep your business running and time is of the essence, a business line of credit may be just what you need out of a small business loan.

Line Of Credit

With a line of credit, a lender issues you a credit limit. You can make multiple draws up to and including this limit whenever you want. The funds will typically be in your account within a few business days, although some lenders offer immediate transfers.

Interest is only applied to the portion of the funds that have been withdrawn. Interest rates vary by creditworthiness, with the most qualified borrowers receiving rates around 6% while high-risk borrowers may see rates of 20% or more.

Payments are made on a scheduled basis and are applied toward the principal and interest. Repayment terms and schedules vary by lender.

Recommended Option: OnDeck

OnDeck is an alternative lender that provides lines of credit to business owners. Lines of credit up to $100,000 are available to eligible borrowers. Repayment terms up to 12 months are available. Rates are as low as 13.99%, and weekly payments are automatically deducted from your business bank account.

OnDeck is known for its fast application process and low borrower requirements. Borrowers of this loan must have a credit score of at least 600, have been in business for at least 1 year, and have a minimum revenue of $100,000 per year.

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6. Purchasing A Point Of Sale System

POS hardware

 

If you own a retail business, you already know the importance of a point of sale system. This centralized system allows you to keep track of inventory, receive payments, and provide receipts for purchases.

Whether you’ve opened a new store or you want to upgrade your outdated system, you can receive a new POS system without paying a lot of money up front with POS financing options.

POS Financing

POS financing allows you to purchase or lease a POS system without paying the full amount up front. Depending on the company you work with, full financing options for all hardware and software may be available.

In addition to POS financing, you may also consider a credit card processing app. These are usually more affordable, are less complicated, and don’t require lengthy contracts. This option is best for smaller retail businesses, while larger businesses should stick with a full POS system.

Recommended Option: CDGcommerce

CDGCommerce is a retail credit card processing company that offers affordable point of sale systems. The company offers the Harbortouch Echo featuring the CDG POS+ app that can be rented for just $49.00 per month. An annual equipment insurance fee is also required at a cost of $79.00, but compared to the costs of purchasing a system, these fees are quite affordable.

Ready to upgrade but unsure of which POS is right for you? Read on to learn more about choosing the right retail POS system for your business.

When You Want To Start A Retail Business

All of these options are great for established retail businesses, but what if you haven’t even gotten your business off the ground yet? For most aspiring business owners, financing is the barrier that is holding them back.

It may be difficult to qualify for a startup loan. After all, you don’t have the sales, revenues, and financial documents to back up your success. When you want to start a business, you have to get creative with your funding options.

If you want to apply for a business loan, you can look to options such as the SBA Microloan program, which provides up to $50,000 to small business owners. These low-cost loans aren’t easy to obtain, though. You’ll need to make sure that you’re prepared for the lengthy application process by preparing your personal financial documents, creating a detailed business plan, and outlining future projections. Your score must be in the high 600s to qualify.

SBA 504 Loans

Borrowing Amount

$500 – $50,000

Term Lengths

Up to 6 years

Interest Rates

6.5% – 13%

Borrowing Fees

Possible fees from the loan issuer

Personal Guarantee

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

Collateral

Collateral normally required, but depends on the lender

Down Payment

  • No down payment for most businesses
  • Possible 20% down payment for startups
  • Possible 10% down payment for business acquisition loan

Other startup loan options are available, such as online lenders like Fundwise Capital. For borrowers with a poor credit history, there are other alternative loan options but these often come at a much higher cost.

If you have a high personal credit score, you can also consider taking out a personal loan to fund your startup costs. With a personal loan, your income and personal credit score will be considered. This could potentially help you score a lower cost loan that can be used to start your retail business.

Lender Borrowing Amount Term Interest Rate Min. Credit Score Next Steps

$2K – $25K 2 – 4 years 15.49% to 30% 600 Apply Now

$1K – $50K 3 or 5 years 8.16% – 27.99% 620 Apply Now

$2K – $35K 3 or 5 years 6.95% – 35.99% APR 640 Apply Now

lending club logo

$1K – $40K 3 or 5 years 5.32% – 30.99% 640 Compare

Ways To Improve Your Chances Of A Successful Application

Improve Business Loan Application

Once you’re ready to apply for your business loan, you can do some prep work in advance to expedite the process. Before you even start filling out an application, the first step is to know your credit score and determine whether it is high enough to qualify for the loan you’re seeking.

You can receive your free credit score online to find out where you stand. Review your credit report carefully for any errors. If there are any negative items on your report, be prepared to explain those to your lender.

If your credit score is low and your funding need isn’t urgent, you may consider taking a few easy steps to raise your credit score. You’ll be rewarded with lower interest rates, better terms, and more financing options.

You can also prepare your paperwork and documentation in advance. Although requirements vary by lender and the type of loan you’ve selected, you’ll generally need a few items, including:

  • Bank Statements
  • Personal Financial Statements
  • Business Balance Sheet
  • Profit & Loss Statement
  • Income Statements
  • Business Licenses
  • Articles Of Incorporation

When the time comes to apply for your loan, you’ll need to know exactly how much you need and why you need the loan. It’s also important to remember that most loans require a blanket lien or personal guarantee. Most lenders require a personal guarantee to be signed by anyone with at least 20% ownership in the business, so be prepared to have all owners ready to sign the contract as needed.

Finally, when you do apply for your loan, be sure to make yourself available to the lender. Sometimes, lenders require additional documentation or have questions about your application. Taking the time to work with your lender will help you finish the process smoothly.

Final Thoughts

Getting a business loan can be tough, whether you’re an established retail business owner or just getting started. However, there are plenty of options available if you take the time to do your research, go into the application process prepared, and have a good reason for taking out the loan which will improve the return on investment for your business.

The post Retail Business Loans And Financing Options appeared first on Merchant Maverick.

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Square Loyalty Program Review

Square Loyalty Promotional Image

The concept of a punch card is nothing new; coffee shops the world over have been slinging their punched out business cards alongside foamy espresso beverages for decades. Likewise, the concept of companies offering rewards to returning companies goes way back into the annals of entrepreneurship. But as the business sector dives further into the capabilities of digital tools, loyalty programs have come along for the ride.

Square has been tinkering with loyalty features since 2012. About two years ago, they stopped offering a free add-on to the basic Square POS, creating a paid-for loyalty product instead. After some concerns about that initial re-launch, Square Loyalty is back again with a new pricing scheme and feature list.

Square has consistently expanded its business products and generally does a decent job at creating useful tools that people feel confident implementing in their businesses. How well does the new version of Square Loyalty measure up? Let’s find out!

Reader eCommerce Retail Food Service
Free App & Reader Square eCommerce Square for Retail Square for Restaurants
Get Started Get Started Get Started Get Started
Free, general-purpose POS software and reader for iOS and Android Easy integration with popular platforms plus API for customization Specialized software for more complex retail stores Specialized software for full-service restaurants
$0/month $0/month $60/month $60/month
Always Free Always Free Free Trial Free Trial

Pricing

The price of Square Loyalty is determined by how many “loyalty visits” you get in a given month. A loyalty visit is exactly what it sounds like: whenever a customer signs up for or returns to your loyalty program, that counts as one visit. Square tracks your visits, then charges you based on the following pricing scheme:

Loyalty Visits Price Per Month
1-50 $25
50-100 $35
101-200 $50
201-500 $75
501-1,000 $125
1,001-2,500 $175
2,501-5,000 $250
5,001-10,000 $500

If you think you will require more than 10,000 loyalty visits in a single month, you will need to get in touch with Square for more information on exact pricing.

Ease Of Use

The team at Square has built their brand on the simplicity of their software; just about anyone can pick Square up and use it with little-to-no training. Not surprisingly, the loyalty rewards program operates with the same simplistic design. This is a system designed for intuitive use on both sides of the register for customers and employees alike. As long as you already use Square products for payment processing and point of sale, this will work just fine for you.

Setting up your rewards account is as simple as determining the economy of your rewards points (how many should customers get after a visit?) and creating the rewards themselves (how will customers spend their points once they have accumulated?). From there, you can refine your system as time goes on, making adjustments as needed–you will want to be clear with your customers about what is going on, though!

On the customer side, simply have new program members enter their phone numbers to sign up. From then on, your Square Register will remember the customer and apportion their points on subsequent views. Speaking as one who has encountered Square loyalty rewards in the wild, I can report that the system works well, and is even a little exciting!

Features

Square Loyalty comes with the following features:

  • Points System: You get to pick between three different loyalty schemes: by visit, by amount spent, or by item. Customers will get text message updates on the number of points they have built up. Basically, your decision for which system to use will come down to your industry and business model. Selling beverages or baked goods? Visit-based rewards might be best. Working retail? Amount-based might be best. Selling niche products? You might want to go by item.
  • Customer Rewards: You can select three different kinds of rewards that align vaguely with the three different loyalty schemes: free item, discount on the entire sale, or discount on a product category. Obviously, some business types will find one of these systems more useful than others; it’s up to you to determine which will be best for you.
  • Customer Data: Once your customers sign up for loyalty rewards, you can begin tracking information about them. In some industries — coffee shops, for example — you get to know repeat customers quickly as a matter of course. In others, it may be valuable indeed to know a bit more about your clientele, particularly things like their most purchased items and how often they visit your shop.
  • Analytics: Square gives you a bird’s eye view of how your loyalty program is helping your business, showing data on all your customers and how often they visit your shop. You can see how many people use your loyalty rewards, how many points they have, and more. This is the feature that will tell you how well your loyalty program is working, so I definitely recommend checking this out.

Final Thoughts

Square boasts that customers who enroll in their loyalty programs spend 37% more than non-enrolled customers. A cynical person might point out that the kind of person who signs up for a loyalty program would be automatically more likely to spend more at a particular store than other, but at the same time, 37% is difficult to argue with.

But is Square’s loyalty feature ultimately worth the price? I definitely found the monthly cost a bit prohibitive; $50 for just over 50 loyalty visits is a lot. It is possible that at higher subscription levels the price comes down and makes more economic sense, but in order for that to be true, you will need more customers to sign up.

On the other hand, from what I can tell, the feature set works reasonably well — especially when you consider how closely it plays with Square’s flagship POS product. That right there might make it worth it to stop and consider coughing up the cash, especially if you are using one of those snazzy new Square Registers. I suspect many Square Loyalty users hop on board the hype train for this very reason; they are already using some kind of Square product in the first place. In fact, one of the biggest caveats to Square Loyalty (apart from price) is the fact that in order to use it, you will have to already be using Square POS (at the very least); if you have a different system, this is not the loyalty program you have been looking for.

As usual, the final decision comes down to you. Are you using a Square product? Is the touted increase in customer engagement worth what might be an excessive price? Fortunately, you can give it a try before deciding for sure. Be warned though! Though Square provides a generous 30-day trial, your customers may feel less than generous if they discover that your rewards program has up and disappeared just as they were about to redeem one of their rewards. Tread carefully then, and make sure you are confident in your decisions before committing even to the free trial.

Reader eCommerce Retail Food Service
Free App & Reader Square eCommerce Square for Retail Square for Restaurants
Get Started Get Started Get Started Get Started
Free, general-purpose POS software and reader for iOS and Android Easy integration with popular platforms plus API for customization Specialized software for more complex retail stores Specialized software for full-service restaurants
$0/month $0/month $60/month $60/month
Always Free Always Free Free Trial Free Trial

The post Square Loyalty Program Review appeared first on Merchant Maverick.

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The Best Business Loans For Trucking Companies

You’re the owner of a trucking company, and it’s time for expansion through the purchase of new equipment, hiring of new employees, or improvements to your facilities. The good news is that this means your business is growing. The bad news? That growth comes at a price, and the costs may be too much for your bank account.

Or maybe your situation is different. An unexpected emergency has cropped up, and you feel trapped. You’ve crunched the numbers, and it looks like you’re facing a major financial hurdle. How do you handle this financial crisis?

Whether you’re growing quickly or life has thrown a curveball your way, you need extra money. Instead of clearing out your checking account, it’s time to consider a financial option that many smart business owners take advantage of every day: a business loan.

A business loan is a great way to expand your trucking business or get you out of a financial bind. The key is to know what type of loan best fits your needs, is the most affordable, and provides the greatest return on investment. Whether you own a large trucking business with multiple drivers or you’re an owner-operator with one vehicle, read on to learn more about the loan options available for your business.

Loan Type What Is It?

SBA Loans

Low-cost loans offered by the Small Business Administration in partnership with financial institutions. Can be used for most business financing purposes.

Equipment Loans

Loans used to purchase equipment such as semi-trucks.

Medium-Term Installment Loans

Traditional term loans that can be used for most business financing purposes.

Business Lines of Credit

Credit lines from which the business can draw funds at any time, without going through an application process. Used for working capital or other short-term needs.

Short-Term Business Loans

Quick business loans used for working capital or other short-term needs.

Business Credit Cards

Small business credit lines used for everyday business expenses such as fuel and maintenance costs.

Small Business Administration (SBA) Loans

Best for…

Business owners with high credit scores who need to make a large purchase with affordable monthly payments.

Types Of Loans Offered By The SBA

The Small Business Administration offers several programs that provide funding for trucking companies. SBA loans are backed by the government, opening up new financing opportunities for small businesses that don’t qualify for conventional business loans.

The SBA 7(a) loan program is one of the SBA’s most popular offerings. With a 7(a) loan, borrowers can receive up to $5 million to be used for almost any business purpose, including the purchase of equipment or machinery, real estate or land purchases, or even acquiring another business.

If you run a smaller trucking operation or you’re an owner-operator and you have an expense that requires $50,000 or less, the SBA microloans program may be an option for you. The average loan distributed through this program is $13,000. Funds can be used toward the purchase of machinery or equipment, working capital, or supplies.

SBA Loan Terms & Fees

Interest rates for the 7(a) loan program are set at the prime rate plus a maximum markup of 4.75% based on the amount of the loan and the repayment terms. Currently, interest rates fall between 7.5% and 10%. Interest rates can be fixed or variable. Repayment terms are up to 10 years or 25 years for real estate purchases. A down payment of 10% to 20% is typically required.

Intermediary lenders can charge various fees for a 7(a) loan, including origination fees, loan packaging fees, and guarantee fees up to 3.5%. Veteran-owned small businesses can apply for the Veterans Advantage loan, which offers the same rates and terms as the 7(a) program but with reduced guarantee fees.

On average, interest rates for SBA Microloans fall between 8% and 13%. The maximum repayment term for this type of loan is 6 years. Lenders may charge fees for a microloan such as application fees, loan processing fees, and closing costs.

SBA Loan Borrower Eligibility

To qualify for an SBA loan, a borrower should have a credit score of at least 680. The borrower’s credit report should be free of bankruptcies, foreclosures, and past defaults on government loans.

The borrower must be an owner of a for-profit business that is based in the United States. All borrowers must also meet the guidelines for a small business as defined by the SBA. This limits the number of employees, net worth, and annual revenues of the business.

Borrowers must have a legitimate purpose for taking the loan, and they must have exhausted all other options before applying for an SBA loan. Both startups and established businesses are eligible for SBA loans. All borrowers will be required to sign a personal guarantee.

Where To Find SBA Loans

SBA 7(a) loans are available through SBA intermediary lenders. These lenders could be banks, credit unions, or private lenders. The SBA offers its Lender Match tool which matches you with a lender in your area. You can also apply online through a service like SmartBiz.

Review

Visit Site

Streamlines SBA loan process for:

  • Debt refinancing
  • Working capital
  • Commercial real-estate

Highlights:

  • Suited for small and large businesses
  • Excellent terms and fees
  • No prepayment penalty

SBA microloans are available through participating non-profit organizations.

Equipment Loans

Best for…

Businesses that need to purchase expensive equipment (including a new or used truck) but don’t have the money to buy it outright.

Equipment Loan Uses

An equipment loan is exactly what it sounds like: a loan that is used to purchase equipment. In the trucking industry, this could mean the purchase of a new or used truck, a trailer, or other long-term physical assets that are necessary for operations. This type of loan allows you to break down the cost of expensive equipment into smaller payments that are easier to manage.

Equipment Loan Terms, Fees, & Down Payment

Equipment loan terms and rates vary based on the lender selected, the amount of the loan, and the creditworthiness of the buyer. The most qualified buyers may be eligible for interest rates as low as 5%. However, applicants that face challenges, such as a low credit score, may be stuck with an interest rate of 24% or higher. The average repayment terms are between 3 and 7 years.

Fees that may be associated with taking out an equipment loan include origination fees and administrative fees. Down payment requirements also vary. Borrowers with very high credit scores and a long time in business may qualify for 100% financing with $0 down. Other borrowers may have to pay an average down payment of 10% to 20%.

Even if you qualify for 100% financing, it’s usually a smart move to put some money down for your loan. This will reduce your amount of debt immediately and can also help prevent a situation where the equipment becomes obsolete before you’ve fully repaid the loan.

There is typically no additional collateral required, as the equipment being purchased with the loan serves as the collateral.

Borrower Eligibility For Equipment Loans

One of the benefits of equipment loans is that there are options available for everyone, even if you have a low credit score or haven’t been in business for very long. It should be noted that borrowers with these challenges will face higher interest rates, increased down payments, and an overall more expensive loan.

Equipment loans are available to borrowers with credit scores as low as the mid-500s. Time in business requirements vary, but most lenders require at least 6 months in business, although there are other options for startups and new businesses.

Borrowers must use the loan funds to purchase eligible equipment. As previously discussed, a down payment may also be required in order to receive the loan.

Equipment Loans VS Leases

There are two types of equipment financing you may consider: equipment loans and equipment leases. The type you choose is based on the specific needs of your business.

With a loan, you’ll make scheduled payments that go toward the principal balance and interest. This is a smart option if you need equipment but don’t want to foot the entire bill immediately. Although this ultimately costs more than an outright purchase, it allows you to make lower, more affordable payments. Once all payments have been made, the equipment is yours. If you plan to keep your equipment for many years, this is the best option for you.

When you lease equipment, you’re essentially renting from the lender. You make payments each month to be able to use the equipment. Once your lease is over, you’ll return the equipment and can upgrade to the latest model. In some cases, you may be able to pay the remaining balance if you’d like to own the equipment outright.

With leases, monthly payments may be more affordable and it’s possible to find leases that don’t require a down payment. However, the total cost of the lease typically winds up being more expensive than loans due to higher interest rates.

Leases are a good choice for you if you need to upgrade your equipment frequently to have the latest and greatest model. It may also be an option if you don’t have the down payment required for an equipment loan.

Where To Find Equipment Loans

There are several options for finding equipment loans. Many banks and credit unions offer equipment financing programs. There are also lenders that specialize in equipment financing. Some equipment manufacturers even have their own finance programs in place. Check out our comparison of equipment financing to find the best rates and terms for your business. Or get the process started with one of the lenders below:

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

Medium-Term Installment Loans

Best for…

Businesses that need funds to purchase equipment, refinancing existing debt, or use as working capital.

Medium-Term Installment Loan Uses

A medium-term installment loan is a loan that is paid off over a period of 1 to 5 years. With this type of loan, you can break down the cost of a purchase or receive working capital while repaying with low monthly payments.

Medium-term installment loans can be used for any business purpose. These loans can be used for the purchase of new equipment. You can use the funds for working capital. Loan proceeds can be used for business expansion or acquisitions. You can even use these loans to refinance existing debt.

Medium-Term Loan Terms & Fees

Loan terms and fees vary by lender and creditworthiness. Borrowers with the highest credit scores can receive loans with rates of about 6%. Borrowers with lower credit scores may receive interest rates up to 30%.

Typical fees you may be required to pay to receive a medium-term loan include application fees and origination fees. Collateral may be required based on your credit score and the amount of the loan. A personal guarantee or blanket lien is typically required.

Borrower Eligibility For Medium-Term Loans

Although medium-term loans may have higher interest rates and be more expensive than long-term options, qualifying is not as difficult. To qualify, you should have a minimum credit score of 600 with at least $100,000 in annual revenue, although these requirements may vary by lender.

Where To Find Medium-Term Loans

Some banks and credit unions offer medium-term loans, but these loans require high revenues and credit scores. If you don’t qualify, you can seek out an alternative lender that provides medium-term loans for less-qualified borrowers or try your luck with one of the online lenders below:

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

Business Lines Of Credit

Best merchant online credit card processing companies image

Best for…

Businesses that want access to capital on demand.

Business Line Of Credit Uses

A business line of credit is similar to a credit card. A borrower has a credit limit set by the lender and can make multiple draws as needed up to and including the credit limit. The money can be used for any business expense, from unexpected emergencies to covering operational expenses or purchasing equipment.

Business Line Of Credit Terms & Fees

With a business line of credit, you only pay interest and fees on the borrowed amount. For example, if you have a total credit line of $200,000 but have only spent $50,000, you’ll only pay interest or fees on the $50,000. Fees and interest vary by lender and range from 1% to over 30%. The more creditworthy you are, the better rates you will receive.

Repayment terms also vary, but most lenders offer terms of 6 months or 12 months depending on the amount borrowed. Some lenders may offer longer repayment terms. However, it’s wise to pay off your balance as quickly as possible to avoid unnecessary fees and interest and lower the overall cost of your loan.

Borrower Eligibility For Business Lines Of Credit

Eligibility for lines of credit varies by lender. Some lenders, such as banks, may require credit scores in the 600s to qualify for a line of credit. Alternative lenders typically have much lower requirements. Some of these lenders do not have credit score requirements at all, and instead, look at the performance of the business to determine eligibility and maximum credit limits.

Time in business requirements may be as low as three months, while annual revenue requirements may be $50,000 or less, depending on the lender’s policies.

Where To Find Business Lines Of Credit

Some banks offer business lines of credit to borrowers with high credit scores. Alternative online lenders also have lines of credit available for borrowers with poor scores or who are looking for immediate funding. Read our full reviews of line of credit providers or get the ball rolling with one of the lenders below:

Lender Borrowing Amount Draw Term Draw Fee APR Next Steps

$6K – $100K 6 months None Starts at 13.99% Apply Now

$2K – $5M Varies Varies Varies Apply Now

$5K – $5M 6 months 1.50% per draw 21% – 65% Apply Now

$1K – $100K 12 weeks None 12% – 54% Apply Now

Short-Term Business Loans

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

Best for…

Business owners that are forced to cover emergency expenses.

Short-Term Business Loan Uses

Short-term business loans are loans that are paid back over a very short period of time. This period of time varies, but it will not exceed one year.

Short-term loans are one of the most expensive forms of credit, so it is best to only use these loans when absolutely necessary. Because funding is fast (potentially as short as 24 hours), a short-term loan is best for emergency situations when time is of the essence.

Borrowers that have not been in business long or have low personal or business credit scores may have no other options than to seek a short-term loan. If this is the case, the return on investment should be calculated to determine if the loan is worth the high cost.

Short-Term Loan Terms & Fees

Terms and fees for short-term loans vary by lender and creditworthiness. Most short-term loans come with a factor rate that determines the total amount that will be repaid. Learn more about factor rates for short-term loans and how to calculate repayments.

With other short-term options, borrowers with high credit scores may find short-term options with interest rates below 10%. However, borrowers that are viewed as “risky” by the lender may be hit with interest rates up to 80%.

Repayment terms vary. For some short-term loans, the full loan is repaid within a few weeks. For other loans, the amount is repaid up to a year. Repayment schedules may be daily, weekly, or monthly.

For short-term loans, some fees may be required, including origination fees and maintenance fees. A personal guarantee or blanket lien is typically required.

Borrower Eligibility For Short-Term Loans

Qualifying for a short-term loan isn’t difficult. There are loans available to borrowers with credit scores as low as 500. Some lenders also have very low monthly or annual revenue requirements, as well as shorter time in business requirements.

Where To Find Short-Term Loans

You can receive a short-term loan by applying with online alternative lenders or one of the lenders below:

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

Business Credit Cards

Best for…

Covering emergencies that require immediate funding or for recurring expenses, like fuel purchases.

Business Credit Card Uses

When used responsibly, a business credit card can be an enormous asset to a trucking business. A business credit card offers a revolving line of credit that can be used any time it’s needed. This is especially helpful when an emergency arises.

Business credit cards can also be used to earn rewards on your business’s recurring expenses, such as gas to fuel your rigs.

However, even though you can use your credit card whenever you want doesn’t mean that you should. The interest rates on credit cards can really stack up, and you could end up paying hundreds (or thousands) of dollars in interest over time. Keeping high balances can even lower your credit score due to high credit utilization.

However, with responsible use that includes paying off (or paying down) your card each month, you’ll even be able to boost your credit score while having access to extra capital when you need it. In addition, many credit cards offer rewards programs that allow you to earn points or cash back after every qualifying purchase.

Business Credit Card Terms & Fees

Like other types of loans, terms and fees vary based on the lender and creditworthiness of the borrower. Interest rates typically start around 14% and rise to over 25%. Many cards have introductory APR offers of 0% for qualified borrowers.

You may have to pay fees based on the card that you select, including annual fees, foreign transaction fees, cash advance fees, and balance transfer fees. Some lenders may also charge fees to issue employee cards.

Borrower Eligibility For Business Credit Cards

To qualify for the best interest rates, borrowers should have a credit score at least in the high 600s. Lenders will evaluate your income and your business revenue to determine your credit limit. You will also need a federal tax ID. If you’re a sole proprietor, you will be required to give your social security number.

If you have bad credit or revenue challenges, you may qualify for a card with a higher APR or a secured card. A secured card will require a refundable cash deposit before it is issued. As you use your secured card responsibly, your credit limit will increase and you may become eligible for an unsecured card.

Where To Find Business Credit Cards

The first place to look for a business credit card is at your own bank or credit union. However, if your financial institution does not offer this product or you fail to qualify, you can apply online with other credit card issuers. Learn more about the top business credit cards or check out the cards below, which are perfect for new business owners.

Card Name Best For Next Steps

SimplyCash Plus Business Credit Card from American Express

Cash back

Compare

Chase Ink Business Preferred

Travel rewards

Apply Now

Chase Ink Business Cash

No annual fee

Apply Now

Blue Business Plus Credit Card from American Express

0% introductory rate

Compare

Capital One Spark Classic For Business

Fair credit

Compare

Wells Fargo Business Secured Credit Card

Bad credit

Compare

Trucking Business Loan FAQs

Can I get a trucking business loan if I have bad credit?

If you have a lower credit score due to past mistakes, there are still loan options available to you. While higher credit scores are required for SBA loans, borrowers with poor credit can qualify for other loans, including short-term options, lines of credit, and business credit cards.

In order to get the most affordable loan and the best repayment terms, it’s best to go into the application process with a solid credit score. If possible, take steps to rebuild your credit before applying to lower your financing costs.

I am an owner-operator. What are my best business loan options?

As an owner-operator, there are several business loan options available for you. For the purchase of a truck, you should consider equipment financing. You may also be able to qualify for the SBA Microloans program, which provides up to $50,000 in financing for expenses.

Short-term loans, lines of credit, and business credit cards are also available to you, but these typically come at a higher cost.

I’m starting a trucking company. Am I eligible for a trucking startup loan? What are my best options?

There are many options available for trucking startup companies. The best option for borrowers with credit scores in the high 600s are loans from the SBA. SBA loans provide low interest rates and flexible repayment terms for startups and established businesses.

Because you won’t have traditional documentation like business tax returns and financial statements, your application will need to include a detailed business plan and future financial projections. You’ll also need to prove that you have industry experience in order to qualify.

If you have a good credit score, you could also consider taking out a personal loan. With a personal loan, qualifying will be based on your own income and credit score, with no requirements for annual revenues, business credit score, or time in business. This is another affordable loan for borrowers that want to start their own business.

Can I get a grant for my trucking company?

Most businesses do not qualify for grants. If you find a grant that you are eligible for, it’s important to note that competition will be stiff. The process for receiving a grant also doesn’t happen overnight, so if you need money for your trucking company fast, you’ll want to explore other options, including the loans mentioned in this post or other options, such as P2P lending or crowdfunding.

Final Thoughts

No matter what your financial needs, there’s a loan available to help you start or expand your trucking business. The key is to understand your options, shop around, and determine if the return on investment exceeds the cost of the loan. Even if your funding needs are urgent, it’s critical to borrow responsibly to put your trucking business on the road to success.

The post The Best Business Loans For Trucking Companies appeared first on Merchant Maverick.

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Best Credit Cards For New Business Owners

If you’re a new business owner, getting a credit card sounds like an awesome idea. Credit cards help you build credit, save you money with rewards, and enable you to make large purchases without needing cash on hand.

But as a new business owner, you may be wary of applying for a credit card because your company lacks credit history. The good news? Many card issuers will take your personal credit history into account. This means that if you’ve maintained a good personal credit score, you have an excellent chance of qualifying for a business credit card. The even better news? There are plenty of options even for those with limited credit history or poor credit scores.

We’ve researched some of best credit card options for new business owners and listed them below. Read on through to determine which one is right for you!

Comparison Of The Best Credit Cards For New Business Owners

Best for Card
Cash back SimplyCash Plus Business Credit Card from American Express
Travel rewards Chase Ink Business PreferredSM
No annual fee Chase Ink Business CashSM
0% introductory rate Blue Business Plus Credit Card from American Express
Fair credit Capital One Spark Classic For Business
Bad credit Wells Fargo Business Secured Credit Card

Best Card For Cash Back Rewards: SimplyCash Plus Business Credit Card from American Express

SimplyCash Plus Business Credit Card from American Express



Compare

Annual Fee:


$0

 

Purchase APR:


14.24% – 21.24%, Variable

Offering up to 5% cash back on some purchases, the SimplyCash Business Credit Card from American Express is hard to beat. It also provides you with some choice when it comes to cash back categories, meaning that you can customize this card to fit your spending habits.

This nifty card gives you 5% back on purchase made at U.S. office supply stores and on wireless telephone services purchased directly from U.S. service providers (up to $50,000 spent per calendar year). You’ll then get to pick one category from the below list of eight options to earn 3% cash back:

  • Airfare purchased directly from airlines
  • Hotel rooms purchased directly from hotels
  • Car rentals purchased from select car rental companies
  • U.S. gas stations
  • U.S. restaurants
  • U.S. purchases for advertising in select media
  • U.S. purchases for shipping
  • U.S. computer hardware, software, and cloud computing purchases made directly from select providers

As with the 5% categories, you’ll earn the 3% cash back up until you spend $50,000 in a calendar year (after which you’ll receive 1% back). All other purchases will net you 1% cash back.

SimplyCash Plus gives you the ability to buy above your credit limit. There is no annual fee, and 0% intro APR for the first nine months.

Need a more detailed breakdown? Visit our full review.

Best Card For Travel Rewards: Chase Ink Business Preferred

Chase Ink Business Preferred



Apply Now 

Annual Fee:


$95

 

Purchase APR:


17.99% – 22.99%, Variable

While this card from Chase is simply a rewards card, it packs in a lot of bonuses for those that travel frequently.

To start, Ink Business Preferred users get three points per dollar spent on travel, shipping purchases, Internet, cable and phone services, and on advertising purchases made with social media sites and search engines each account anniversary year (up to $150,000 spent). All other purchases get one point per dollar spent. You’ll then be able to redeem your points for 25% more when you redeem them for travel through Chase Ultimate Rewards.

Beyond those basic rewards, Chase also lets you transfer your points on a 1:1 basis to nine airline and four hotel reward programs. If you need something other than travel rewards, you’ll also be able to redeem points for Amazon.com purchases, gift cards, and cash back, making this an extremely versatile card.

If you want more information on this card, check out Merchant Maverick’s complete review.

Best Card With No Annual Fee: Chase Ink Business Cash

Chase Ink Business Cash



Apply Now

Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

This card from Chase lets you earn up to 5% cash back when you make purchases at office supply stores and on internet, cable, and phone services (up to the first $25,000 spent). You can also earn 2% back when spending at gas stations and restaurants (up to the first $25,000 spent). Everything else earns you 1% back.

The cherry on top of all those rewards is that you won’t have to worry about paying an annual fee—this means you’ll end up with savings no matter how much you spend yearly.

The Ink Business Cash also features a 0% intro APR rate for the first 12 months, a very generous offer. Chase is currently offering a welcome bonus of $500 cash back when you spend $3,000 within your first three months of opening an account.

If you want all the deets, read our full review.

Best Card With A 0% Introductory Rate: Blue Business Plus Credit Card from American Express

Blue Business Plus Credit Card from American Express



Compare

Annual Fee:


$0

 

Purchase APR:


12.99% – 20.99%, Variable

If you need to make a big purchase but can’t pay it all up front, having a card with 0% APR is very helpful because you won’t accrue interest. With a 0% intro APR for the first 15 months, the Blue Business Plus Credit Card from American Express has one of the longest 0% intro rates.

On top of that generous intro APR period, the Blue Business Plus also packs in some solid rewards. As a base, you’ll earn two points per dollar spent up to $50,000 yearly, and then one point per dollar thereafter.

Amex also grants you expanded buying power, which enables you to spend above your credit limit. Additionally, this card does not carry an annual fee.

Get the full breakdown on the Blue Business Plus with the complete review from Merchant Maverick.

Best Card For Fair Credit: Capital One Spark Classic for Business

Capital One Spark Classic For Business


Compare

Annual Fee:


$0

 

Purchase APR:


24.74%, Variable

One of the easiest small business credit cards to get, the Capital One Spark Classic for Business was made for those who want to build their credit. Despite being aimed at those with lower credit, this card still offers some decent perks.

To start, its base rewards dole out an unlimited 1% cash back without any sort of annual fee. This means you’ll be saving money no matter what your yearly spending rate is. Additionally, you’ll be able to add employee credit cards at no additional cost. Capital One requires no foreign transaction fees—great if your business needs overseas travel.

For the in-depth rundown on Spark Classic, head on over to our full review.

Best Card For Bad Credit: Wells Fargo Business Secured Credit Card

Wells Fargo Business Secured Credit Card


business credit cards fair credit
Compare

Annual Fee:


$25

 

Purchase APR:


Prime + 11.90%

One of the lone secured cards for business, the Wells Fargo Business Secured Credit Card is an appealing option for those looking to boost a low credit score. Wells Fargo targets this card for those just starting a business, businesses with little or no credit, and those with past credit problems.

You also have a couple of reward options: get 1.5% cash back or one point per dollar spent, which can be redeemed for gift cards, merchandise, airline tickets, and more. Besides the base bonuses, you won’t need to worry about paying program or foreign fees. However, you’ll need to fork over $25 annually, and you can add up to 10 employee cards.

Want more low credit options? Check out our breakdown of the best business credit cards for those with bad credit.

FAQs About New Business Credit Cards

Do I need business credit to get a business credit card?

No, when you apply for a business credit card, issuers will also consider your personal credit history, which can be used to guarantee repayment.

What business information do I need to supply to get a credit card?

When applying for a business card, issuers usually request your company’s business tax identification number. If you don’t have one, you can often supply your personal social security number instead. They’ll likely ask you for your business’s legal structure, its ownership type, and its age. It’s also not uncommon for issuers to request your annual revenue, how much you spend, and which country your business is located in.

Can I still get a business credit card if I’m not registered as a business?

Yes, you don’t need to be officially registered as a business to get a business credit card. Find out more with our guide to business cards for the self-employed.

Can I get a new business credit card without signing a personal guarantee?

Usually, no. If you’re a new small business owner, you’ll most likely have to sign a personal guarantee.

Can I use personal credit cards for business?

Yes, there are a number of reasons why you might prefer a personal card, from better legal protection to better potential rewards. We go into more depth on the subject in our personal credit card guide.

Comparison Of The Best Credit Cards For New Business Owners

Card Name Best For Next Steps

SimplyCash Plus Business Credit Card from American Express

Cash back

Compare

Chase Ink Business Preferred

Travel rewards

Apply Now

Chase Ink Business Cash

No annual fee

Apply Now

Blue Business Plus Credit Card from American Express

0% introductory rate

Compare

Capital One Spark Classic For Business

Fair credit

Compare

Wells Fargo Business Secured Credit Card

Bad credit

Compare

The post Best Credit Cards For New Business Owners appeared first on Merchant Maverick.

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Commercial Construction Loans: The Ultimate Guide

You’ve reached the point in your business when it’s time to expand. Maybe you’re renting your office space and you’ve decided that it’s time to build your own office building. Perhaps you’ve outgrown your property and you want to add on to your existing space. Your scenario could be completely different: you’re a new business just getting off the ground and you want to build your property from the ground up.

No matter what the circumstances, many businesses face a situation where real estate construction or improvements are the next steps for business expansion. Of course, this expansion comes at a very high cost – a cost that many businesses can’t afford to pay up front. This is when it’s time to consider taking out a commercial construction loan.

As with any other type of financing, it’s important to understand the mechanics behind a commercial construction loan. Read on to learn more about commercial loans, when you should consider applying, and what to expect throughout the application process.

What Is A Commercial Construction Loan?

A commercial construction loan is a type of loan that is used to finance the costs associated with the construction or renovation of a commercial building. The funds from a construction loan can be used to pay for labor and materials for the construction of a new property, the purchase and development of land for a new commercial property, or the renovations of existing properties.

Why Take Out A Commercial Construction Loan?

Business owners that plan to purchase existing commercial properties can get a loan known as a commercial mortgage. However, if you plan to renovate your existing space or construct a new building from the ground up, you’ll need to apply for a commercial construction loan.

New construction and renovations can be expensive — think hundreds of thousands or even millions of dollars. Most growing businesses don’t have this type of cash on hand, so instead, they turn to a commercial construction loan. With commercial construction loans, lenders provide funds throughout the construction process to pay for labor, materials, and land development so you don’t have to cover the costs yourself.

How Commercial Construction Loans Work

Commercial construction loans are different from other loans. Most loans are structured so that the borrower receives the full amount of the loan as one lump sum. Once the loan is received, the borrower begins to pay back the loan through scheduled payments over a set period of time. Commercial mortgages, for example, often have a monthly repayment schedule over 10 years or longer.

With commercial construction loans, the full amount of the loan is not received up front. Instead, the borrower will work with the lender to create a draw schedule. This means that partial amounts of the loan will be released as the project hits new milestones. For example, the first draw will be for the clearing and development of land. The next draw may then occur when the foundation is poured. Another draw will be released when the building has been framed, and so on.

As each milestone is completed, a lender will typically require an inspector to confirm that the work is completed before releasing the next draw. This will continue until all milestones have been completed and the full amount of the loan has been distributed.

With a commercial construction loan, you will only pay interest on the portion of the loan proceeds that have been received. If the total cost of your new construction is $500,000 but the lender has released just $100,000, you will pay interest on $100,000.

Typically, a commercial construction loan is structured so that the borrower pays only the interest until the loan has been fully dispersed. Borrowers can then pay off the principle in one lump sum at the end of the construction project.

But once the project is done and the full amount of the loan is due, what does a borrower do next? Instead of having to make one large payment, the borrower now can receive a commercial mortgage. The property will serve as collateral, and the borrower will use the funds from the commercial mortgage to pay back the commercial construction loan. With the new mortgage, the lender will now be locked into more affordable monthly payments over a longer period of time.

Other commercial construction loans like the Small Business Administration CDC/504 loan provides more long-term options so an additional loan following the completion of the project will not be needed.

Interest Rates

For commercial construction loans, borrowers should expect to pay interest rates between 4% and 12%. Borrowers with the best credit scores will receive the lowest interest rates. The type of lender you work with is also a factor. A commercial construction loan from a bank will typically have the lowest interest rate, while hard money lenders charge more interest for their loans.

Fees

There are several fees that may be associated with taking out a commercial construction loan. The fee types and amounts vary by lender. Some fees you may have to pay for this type of loan include:

  • Guarantee Fees
  • Processing Fees
  • Documentation Fees
  • Project review Fees
  • Fund control Fees

Down Payment

Because a commercial construction loan is a high-risk loan, a down payment is required. By paying a down payment, the borrower takes some of the risk off of the lender. Typically, down payment requirements are 10% to 30% of the total project cost. Rarely will a lender fund 100% of the costs of a commercial construction project.

Conventional lenders use a calculation known as loan-to-cost for commercial construction loans. The loan-to-cost ratio is calculated by dividing the total amount of the loan requested by the total project cost. Let’s say, for example, a business is requesting a loan of $190,000 for a project with a total cost of $200,000. The loan-to-cost in this example would be 95%.

Though requirements vary by lender, most require a loan-to-cost of 80% to 85%. For the example above, the lender would loan $160,000 at 80% and $170,000 at 85%.

If this occurs, what does the borrower do? While they may be forced to come up with the remaining costs out-of-pocket, there is another option — mezzanine loans — which we’ll discuss a little later.

Borrower Requirements: How Commercial Lenders Evaluate Eligibility

Not all construction projects are eligible for a commercial construction loan. There are several factors that a lender will consider in order to determine eligibility.

One of the first things that a lender will look at is your credit score. Because these are high-risk loans, lenders want to work with low-risk borrowers with high credit scores. Though credit requirements vary by lender, you should have a credit score at least in the high 600s before applying to qualify for loans such as the SBA CDC/504 loan. Other lenders may require a minimum score in the 700s. Business credit scores will also be evaluated.

The lender will also consider your debt-to-income ratio, also known as DTI. This ratio shows the relationship between the income and the debt of your business on a monthly basis. Typically, lenders look for a debt to income ratio of 43% or less, although some lenders may have stricter requirements. The lower your DTI, the higher your chances for approval. To calculate your DTI, use the following formula:

Total Monthly Debt Payments / Gross Monthly Income = DTI

Learn more about how to calculate and lower your DTI before applying for a loan.

Lenders will also consider your debt service coverage ratio, or DSCR. This shows the relationship between the income and debt of your business on an annual basis. To calculate for yourself, use the following formula:

Net Operating Income / Current Annual Debt Obligations = DSCR

The DSCR is a bit different from DTI because you want this number to be higher. This shows that your business is bringing in enough income to cover new debts. Most lenders look for a DSCR of 1.25 or higher, but again, requirements vary by lender. Learn more about calculating your DSCR.

The lender will also look at your industry experience and your current business financials to determine if you qualify for a loan. You’ll need to submit detailed construction plans for approval before a loan can be issued. In some cases, the plans may need to be altered based on any risks spotted by the lender, so your ability to be flexible in your plans is key.

Types Of Commercial Construction Loans

Now that you know more about the commercial construction loan process, it’s time to explore the different types of loans available.

SBA CDC/504 Loan Program

The Small Business Administration (SBA) CDC/504 loan is one of the most popular commercial construction loans. This is because these loans come with low down payments, competitive interest rates, and credit score requirements in the high 600s.

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%

With this loan, an SBA-approved Certified Development Company will fund 40% of the costs to renovate existing facilities, build new facilities, or purchase/improve land. Up to $5 million is available for borrowers.

Another lender will need to provide 50% of the project costs, while the borrower will be responsible for the remaining 10%. In some cases, borrowers may be required to pay 20%. Repayment terms are available up to 20 years, and interest rates are based on the market rates of U.S. Treasury issues.

SBA 7(a) Loan Program

The SBA also has the 7(a) program, which can be used for the purchase or construction of commercial real estate.

Through this program, borrowers can receive up to $5 million with repayment terms up to 25 years. Interest rates are based on the prime rate plus a maximum of 2.75%. To qualify, borrowers should have a credit score in the high 600s and a down payment of 10% to 20%.

Here are the base rates and markups for a 7(a) loan from the SBA:

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%

Bank Loans

A traditional commercial construction loan from a bank is another option for business owners. Rates, repayment terms, and down payment requirements vary. Generally, a minimum down payment of 10% is required, maximum repayment terms of 25 years are standard, and fixed and variable rates are available. You can start your lender search by talking to your current financial institution about your financing needs. See our post on the best bank loans for small business if you’re interested in specific recommendations.

Mezzanine Loans

Earlier in this post, we discussed loan-to-cost ratios. When a loan-to-cost ratio is lower and the borrower needs to come up with additional money, a mezzanine loan may be an option. This type of loan is secured with stock. If the borrower defaults, the lender can convert to an equity stake. With a mezzanine loan, the borrower has more leverage and can achieve a loan-to-cost ratio of up to 95%.

Where To Find Commercial Construction Loans

You know about the types of loans available to you, so where do you find a lender? This all depends on the type of loan you’re seeking.

An SBA-approved intermediary lender (which includes banks, credit unions, and private lenders) distributes 7(a) loans. For CDC/504 loans, an SBA-approved non-profit CDC provides this funding, although you’ll also have to find another lender to finance 50% of your project costs.

Banks and credit unions provide many commercial construction loan options, including SBA loans, traditional loans, and mezzanine loans.

Finally, commercial construction loans can be obtained through hard money lenders. These are private money lenders that provide short-term funding options for commercial construction projects. While there are a few benefits to working with these lenders, including minimal upfront costs and faster funding, these loans typically come with higher interest rates and fees than options from other lenders.

How To Apply For A Commercial Construction Loan

Once you’ve found a lender for your commercial construction loan, the next step is to begin the application process. During this process, the lender will evaluate your personal and business financials, your credit score, and other factors that will determine both whether you’re approved and what your interest rates and terms will be.

Because construction loans are considered high-risk, you will need to provide the lender with a detailed business plan. This should include an overview of what your business does, its financials to date, details about your current operations, and future projections.

You will also need to provide your lender with details about the project. This includes a complete plan with specs and designs. An expected project cost, including estimates for contractors, materials, and other expenses, must be provided with your application.

Personal and business financial documents will also need to be submitted during the application process. These include, but are not limited to, personal and business tax returns, profit and loss statements, balance sheets, bank statements, income statements, and debt schedules showing current debt obligations. Documentation requirements will vary by lender.

The lender will pull your credit score during the process. Remember, lenders are looking for scores in the high 600s. With some lenders, negative items such as bankruptcies, foreclosures, and past defaults on loans may automatically disqualify you from receiving a loan. For negative items on your credit report, an explanation to the lender may be required.

Because this is such a high-risk loan product, lenders will typically take at least a minimum of several weeks to go over your information. During this time, more documentation may be required or your lender may have questions, so make sure to make yourself available to expedite the process.

Once the lender underwrites and approves your loan, you’ll move into the closing process. This entails going over the loan agreement, which will include all dates and milestones throughout the process. Once all paperwork has been signed and the closing process is complete, you’ll be ready to begin the expansion of your business.

Final Thoughts

It’s always exciting to reach a point in your business when it’s time to expand, but getting the financing you need can be a challenge. If your future plans include constructing new facilities or upgrading your current building, getting a commercial construction loan doesn’t have to be stressful.

If you understand the types of loans and requirements and do some prep work ahead of time, you’ll be able to approach your lender with confidence and get through the lending process with ease.

The post Commercial Construction Loans: The Ultimate Guide appeared first on Merchant Maverick.

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Small Business Startup Loans: Your 8 Best Options

Getting a small business loan can be tough. As a business owner, you have to prove to a lender that you’re worth taking an investment risk. You have to demonstrate that both you and your business are creditworthy and provide evidence that your business is bringing in enough revenue to cover the cost of the loan. For an established business, the process is time-consuming but not too difficult. For startups, however, this can be more than a little tricky.

Unless you’re independently wealthy, you need capital to get your startup business off the ground. Chances are, though, you keep hitting brick wall after brick wall when it comes to financing. You don’t have the required time in business to work with this lender, and you don’t have the documentation required by that one. You need money for your startup, but you can’t seem to find it.

Don’t worry — there are loan options for startup businesses. In this post, we’ll review eight of the best options, including the benefits, drawbacks, and what to know before you apply.

Loan Type What Are They?
Microloans Installment loans of $50,000 or less.
Personal Loans Loans in which the borrower’s eligibility is based on their personal profile, not the business profile.
Equipment Loans Loans used to purchase equipment.
Business Credit Cards Credit lines for everyday business expenses.
SBA Loans Low-cost loans offered by the Small Business Administration and its partners.
Crowdfunding Financing in which the funds are sourced from a pool of investors or backers.
Invoice Financing Financing in which the business’s unpaid invoices are leveraged to obtain working capital.
Friends & Family Financing sourced from the borrowers friends and family.

1) Microloans

Microloans are smaller loans that provide up to $50,000 for small businesses and startups. This type of financing is best for companies with smaller capital needs.

Microloans can generally be used for any business purpose, although specific lenders may have their own restrictions in place. Generally, microloans can be used to purchase supplies or inventory, equipment, or can be used as working capital.

The Small Business Administration’s Microloans program is a very popular choice for small business owners. This program is open to any startup or business that fits the definition of a small business set by the SBA, which limits the number of employees, annual revenues, and net worth of a business. For-profit businesses and non-profit childcare centers located in the U.S. are eligible to apply. Loans of up to $50,000 with repayment terms of up to 6 years are available through non-profit intermediary lenders. The average microloan given by SBA intermediaries is $13,000.

SBA 504 Loans

Borrowing Amount

$500 – $50,000

Term Lengths

Up to 6 years

Interest Rates

6.5% – 13%

Borrowing Fees

Possible fees from the loan issuer

Personal Guarantee

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

Collateral

Collateral normally required, but depends on the lender

Down Payment

  • No down payment for most businesses
  • Possible 20% down payment for startups
  • Possible 10% down payment for business acquisition loan

Other non-profit organizations also offer microloans. Repayment terms and maximum borrowing amounts vary by lender.

One of the biggest benefits of microloans is that they typically come with very low interest rates and are more affordable than other startup loans. Non-profit organizations and SBA intermediary lenders that offer microloans may also provide additional resources for small businesses owners, including training, workshops, and mentorships.

The biggest drawback of microloans is the low maximum borrowing amount, which could be limiting for businesses that have larger expenses, like the need to purchase commercial real estate. Another drawback is the length of time it takes to receive a loan. From application to funding, getting a microloan can take several weeks or longer.

The availability of microloans may also be limited. Many non-profit organizations get their money through government grant programs, limiting the number of new borrowers that are accepted.

2) Personal Loans

When applying for a business loan through a bank or other conventional lender, both personal and business information will be considered, including personal credit score, business credit score, and annual business revenues. For new businesses that don’t meet these qualifications, getting a bank loan is out of the question, right?

Not necessarily. Business owners with high personal credit scores can apply for a personal loan from a bank or credit union. The credit history and income of the applicant — not the business — will be considered when applying for a personal loan.

Even businesses that don’t meet the credit and income qualifications of banks and credit unions can get a personal loan to use for business expenses. This can be accomplished through alternative lenders that have fewer requirements for qualifying for a loan.

A personal loan is a good choice for a startup business because the history of the business is not a consideration for approval. For personal loans, the borrower will just need to prove their personal creditworthiness and show that they are financially able to pay back the loan.

Many personal loans can be used for most business purposes, but some may have restrictions on how the proceeds are used based on the lender’s specific policies.

Banks and credit unions offer low interest rates and long repayment terms, resulting in a more affordable loan. Of course, these low-cost loans are reserved for the most qualified borrowers with credit scores at least in the low 700s.
Applicants with a low personal credit score will face higher interest rates and a higher overall cost of borrowing. In some instances, applicants with credit or income challenges will need to seek out alternative lenders for a personal loan.

Maximum loan amounts may be lower for personal loans than business loans. Depending on the amount needed, a business loan with higher limits may be a better choice for business owners with higher capital needs.

Be aware that, at tax time, business owners with a business loan can write off interest payments. With personal loans, business owners are unable to write off these payments, therefore missing out on these tax benefits.

3) Equipment Loans

An equipment loan is a loan that is used to finance long-term equipment, such as machinery, industrial kitchen appliances, or a commercial vehicle. This type of financing allows business owners to purchase expensive equipment through affordable monthly payments instead of paying the full cost up front.

One of the great things about equipment loans is that many businesses, including startups, can qualify. Revenue, time in business, and credit requirements are not as strict, with most lenders requiring a score in the low 600s to qualify. Approvals can be given within just days of applying, although timelines vary based on the lender.

Equipment financing isn’t for everyone, though. This type of loan can only be used for the purchase of equipment. The equipment purchased could also become obsolete and may need to be replaced again before the loan is fully repaid.

Ready to apply for equipment financing? We recommend the following 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

4) Business Credit Cards

Business credit cards work just like personal credit cards. The lender provides a set credit limit, and you can use your card up to and including that credit limit to pay merchants, vendors, suppliers, and for other business expenses.

Since there are fewer requirements to qualify for a business credit card than there are for other types of loans, many startups go this route when they need extra capital. Unsecured cards are available to business owners with scores in the low 600s, although higher scores get higher credit limits and lower interest rates. Borrowers with bad credit scores may qualify for a secured card, which requires a deposit or collateral and helps rebuild credit.

One of the perks of business credit cards is that many have rewards programs. When the card is used for qualifying business purchases, points can be racked up to redeem toward airline miles, cash back, and other rewards.
The downside of business credit cards is high interest rates, which can really add up over time. Keeping a high balance for a long period of time will result in a loan that is more expensive than other options. This is why it’s recommended to pay down debt as quickly as possible to avoid potentially paying thousands of dollars in interest.

5) Small Business Administration (SBA) Loans

The Small Business Administration doesn’t just offer microloans. In fact, the SBA has several programs to help startups get the funding they need.

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

The SBA 7(a) program offers up to $5 million for almost any business purpose, from refinancing existing debt to purchasing real estate or acquiring a new business. The Veteran’s Advantage program offers the same benefits with reduced fees for military veterans, while the Community Advantage program provides funding options for businesses and startups in underserved communities.

The SBA also has the CDC/504 loan that funds 40% of project costs for the purchase or improvement of commercial real estate.

For all programs, applicants must be a small business as defined by the SBA and can apply for these loans through an SBA intermediary lender. Applicants should have a solid credit score in the high 600s and no bankruptcies, foreclosures, or past defaults on government loans.

SBA loans are popular with small businesses and startups because of their low interest rates and long repayment terms of up to 10 or 25 years. SBA loans are some of the most affordable loans available.

Because large portions of SBA loans are guaranteed by the government, lenders are more willing to lend to small businesses. Many businesses qualify for SBA loans when banks and other lenders have turned them down.

However, SBA loans aren’t without their drawbacks. The application and approval process can take weeks (or, in some cases, months), so these loans aren’t ideal for startups that need funding immediately.

The application process is also time-consuming and qualifying can be difficult. Business owners must have a strong credit history and meet all qualifications of the SBA to apply for these loans.

6) Crowdfunding

startup crowdfunding

Crowdfunding is a relatively new type of business financing, but it’s really growing in popularity, especially among startups.

With this type of loan, you pitch your idea on a crowdfunding platform. Through this platform, you can reach investors and others that believe in your business and are willing to invest their money to help you get your idea off the ground.

Crowdfunding gives you access to thousands of investors. A successful campaign can yield the funds you need in a very short amount of time without the fees and interest that come along with other loan options. In exchange for their investment, most businesses offer rewards and perks like first access to a new product.

One of the benefits of crowdfunding is that anyone can do it, even if you have poor credit or other challenges that make you ineligible for other types of loans.

Even though anyone can make a campaign, not everyone can be successful. In order to get the money you need through crowdfunding, you have to put in the work, which includes sharing your campaign on social media, websites, and blogs, marketing effectively to potential investors, and offering incentives that make donors want to give.

7) Invoice Financing

If your new business has a shortage of capital due to unpaid invoices, invoice financing may be an option to consider. With invoice financing, you receive a payment for your unpaid invoices to resolve short-term cash flow issues.

Invoice Financing Invoice Factoring

Uses invoices as collateral for a line of credit

Sell invoices for immediate cash

You are granted a credit facility based on the value of your unpaid invoices, and can draw from your available funds at any time

Factor gives you an advance when the invoice is sent and sends you the rest once the customer pays (minus a factoring fee)

You are responsible for collecting invoice payments

Factor is responsible for collecting invoice payments

There aren’t strict requirements on credit scores, time in business, or annual revenues with invoice financing. The quantity and quality of the invoices are typically the most important factor. In other words, are the invoices enough to cover the lender’s fees, and are the customers likely to pay? If so, you have a good chance of qualifying for invoice financing.

While invoice financing is quick and easy, this type of loan doesn’t come without its drawbacks. Fees could be as high as 30% of the invoice total, making this a very expensive form of financing.

This is also a loan that fills a very specific niche: businesses that have cash flow issues because of customers that are slow to pay. If you don’t have unpaid invoices or the quantity or quality are not up to par based on the lender’s standards, another loan option will need to be explored.

8) Friends & Family

To get your startup off the ground, you may turn to an investor you already know: a friend or family member. Just because you know them, though, doesn’t mean that you should just expect them to lend to you. Instead, you should be prepared with a presentation similar to what you would give a bank to let your friend or family member know why they should place their bets on your business.

When working with friends and family, you’ll need to create a payment schedule and sign an agreement. Remember, everything should be in writing. There are even online platforms that help you create and sign agreements and set up a repayment schedule.

You can negotiate a deal with friends and family that works for both of you, which is something you can’t do with other lenders. However, business — especially a deal gone bad — has the potential to destroy relationships, so make sure everything is in writing and treat the business relationship just as you would with a formal lender.

Are You Prepared For A Startup Loan? What You Need To Do Before Applying

Once you’ve selected the type of loan you’d like to receive, you may be tempted to visit a lender or jump online to begin filling out your application. However, before you apply, there are a few steps you should take to ensure you’re ready to receive your funds.

Register Your Business

Before getting started, you’ll need to register your business. How you do this depends on your business structure. For most startups, naming your business, registering in your state, and getting a federal tax ID are the basic steps you need to take.

You’ll also need to find a registered agent in your state, file all state documents, and pay any applicable fees.

Get A Business Bank Account

Before applying for a loan, you’ll need to open a business bank account. A business bank account will be where any funds are direct deposited. A business bank account also makes it easy for bookkeeping purposes by keeping your personal expenses separate from business expenses.

Opening a business bank account will also help you establish a relationship with a bank or credit union. As your business expands, you can open additional accounts, such as a business credit card or loan, with your financial institution.

Check Your Credit Score

Credit score plays a huge role in most loans, so it’s always important to know your score before filling out an application. To see where your credit stands, go online to pull your free credit report and score.

To qualify for the best rates and terms, your score should be in the 700s. Scores in the high 600s still qualify for SBA loans and other affordable options. Scores that are in the low 600s and below will have more limited options with higher interest rates and terms that are not so favorable.

While you can still get a loan with a low credit score, it’s wise to boost your credit before applying to get a more affordable loan. You can do this by making your payments on time every month, avoiding hard inquiries, and paying down your debt to lower credit utilization. Find out more about how you can raise your credit score.

Make A Business Plan

One of the main challenges a startup will face is proving to the lender that their business will be successful. Since this won’t be documented by historical success, a startup will have to prove themselves in a different way: with a solid business plan.

To create a business plan, remember to have a few key elements including:

  • Executive Summary: An introduction to your business that summarizes your plan.
  • Business Outline: How does your business stand apart from the competition? What problem does your business solve?
  • Marketing Plan: How will you reach your target market and bring in customers?
  • Operations Details: An overview of your operations, including your location, available space, and equipment.
  • Financial Projections: How much profit you expect to make over a set period of time.

Prepare Financial Documents

When applying for a business loan, your lender will require personal and business documentation. Although requirements vary based on the type of loan and the lender’s requirements, you should be prepared with the following documents:

  • Personal tax returns
  • Personal financial statements for all owners
  • Balance sheet
  • Income statement
  • Business financial statements
  • Profit and loss statement
  • Business licenses and registrations

Decide How Much You Need

You should know how much money you want to borrow before applying for a loan. To do this, you’ll need to perform a few calculations. For example, if you need money to purchase inventory, get estimates from suppliers. If you’re purchasing new equipment, get a few quotes for the equipment you need.

When applying for a loan, you’ll need to tell the lender the exact amount you’re seeking, as well as an explanation of how the funds will be used. It’s also important to remember that just because you need it doesn’t mean you can afford it. Learn more about calculating the affordability of your loan.

Startup Business Loan FAQs

Do startup business loans require a down payment?

A down payment may be required based on the type of loan and the amount selected. A down payment shows a lender that you’re serious about your business and you have something to lose if the business is not successful.

Some SBA loans and personal loans require down payments. Other types of funding, such as invoice financing, do not have down payment requirements.

Can I get a startup business loan if I have bad credit?

There are small business loans available for borrowers with bad credit. However, you should be aware that the interest rates for these loans are often much higher and your options are more limited.

If you have bad credit, loans such as equipment financing, business credit cards, lines of credit, and invoice financing are available. Term loans may also be available through alternative lenders.

To open up more options and get better rates, it’s best to work on boosting your credit before applying. However, if your financial needs are urgent, make sure to shop around for the most affordable option. Taking out a high-cost loan that doesn’t offer a good return on investment can throw you further into debt and drag your credit score down with it.

Can I get a startup business loan with no credit check?

Almost every lender will at least perform a soft pull of your credit to get an idea of where you stand in terms of credit. However, depending on the type of loan you select and the lender you choose to work with, other factors — such as the performance of your business — may play a larger role in approval than your credit score.

Conventional lenders like banks will always require a credit check, but there are a few alternative options available that do not have this requirement.

Do banks offer business loans to startups?

Banks have very strict lending requirements for business loans. Startups are seen as risky investments from a lender’s standpoint. While it isn’t completely impossible to receive a loan from a bank, it will be extremely difficult.

To qualify, a borrower must have a very high personal credit score, extensive industry experience, and very detailed business plans. Financial projections will also be required, in addition to other documentation proving that the business has a high chance for success — and paying back the loan.

Because it is so difficult for startups to qualify for bank loans, many startup owners turn to SBA programs for their funding needs. A government guarantee on loans takes some of the risk off of lenders while providing startup and small business owners with rates and terms that are competitive with bank loans.

What is the quickest way to get a loan for my startup?

There are several ways to get quick funding for your startup. Financing options like lines of credit, business credit cards, and short-term loans from alternative lenders can be approved in just minutes, giving you access to funding almost immediately.

However, a speedy loan comes at a price. These loans come with high interest rates, extra fees, and are much more expensive over the long term.

What type of startup business loan has the lowest interest rates?

SBA loans have among the most competitive interest rates among all business loans. If you have a high credit score, personal loans from banks and credit unions also have very low interest rates.

Final Thoughts

Getting a business loan for your startup may take research and a few additional steps, but don’t let a closed door leave you feeling defeated. Understand the types of loans to pursue, what you need to do before applying, and how to present your business, and you’ll soon be on your way to receiving the business loan you need.

The post Small Business Startup Loans: Your 8 Best Options appeared first on Merchant Maverick.

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WordPress Hosting vs. Web Hosting Explained

WordPress Hosting vs. Web Hosting Explained

Choosing the best web hosting plan for your specific project has always been a bit confusing. Plan features never line up. Terminology never matches. And pricing varies according to current discounts and plan length.

But that was before the latest trend – WordPress-specific hosting plans.

Nearly every hosting company offers a “WordPress Hosting Plan” in some form.

Sometimes those plans are nothing more than a headline change. Sometimes they very well-priced for the extra services. And sometimes they are plainly upsells with dressed up “features.”

It’s maddening – because here’s the thing. WordPress software runs fine on typical web hosting.

You do not need “WordPress Hosting” to run WordPress software. All you need is a Linux-based hosting account that supports PHP and mySQL.

Both are run of the mill features since the early 2000s. So what’s with all the WordPress Hosting plans vs. Web Hosting plans?

Well – sometimes a WordPress-specific plan is absolutely worth paying for. WordPress does have some needs & requirements that are not “generic” so some companies can offer seriously better service, support & performance for WordPress installs.

Here’s how they differ along with features worth paying for, and what to look for when shopping for the right host for your specific project and next steps.

Disclosure – I receive referral fees from companies mentioned on this site. All data & opinions are based on my experience as a paying customer or as a consultant to a paying customer.

WordPress Hosting vs. Web Hosting Overview

WordPress software will run fine on standard Web Hosting. In fact, most companies offer an auto-installer to make the process easy.

However, WordPress Hosting plans should provide features that…

  1. The hosting company can provide better at a “global level” than you can.
  2. The hosting company can use to provide consistency.
  3. The hosting company can provide as a bundle that is a better value than you can buy individually.

If a WordPress Hosting plan does not do any of those three conditions AND charges more money – then it’s a bad deal.

That said, do not throw out all WordPress Hosting plans as overpriced upsells. Some are worthwhile and some are amazing. Your goal as a customer is to understand what features you actually need.

WordPress Hosting Features Considered

There is a myriad of features that hosting companies will bundle (or highlight) in their sales material. Here are a few of the broad feature categories to consider with WordPress Hosting.

I’ll also point out how you can do the same thing on standard web hosting.

Speed & Performance

There are a ton of variables that affect website speed. There is no single factor that makes your website “fast” – especially with WordPress.

Advantages of WordPress Hosting

WordPress Hosting means that your account shares a server with other WordPress installs.

This means a few things –

  1. The server’s resource usage is more predictable.
  2. The server’s configuration can be more specific.
  3. Upgrades can happen faster, due to #1 and #2.

Different hosting companies will go further than others on their configuration.

It’s usually hard to tell who actually does what though. It’s important to read the fine print to see what they *actually* do.

If you see things like “increased PHP memory” or “NGINX” or “PHP7” – then you know that they have made special considerations for an advanced WordPress configuration.

Now, there are companies like SiteGround, InMotion, and Bluehost that all have a strong bias toward WordPress in their standard web hosting. Often, their standard web hosting will be “better” for a WordPress install than some hosting companies’ “WordPress Hosting.”

Lastly, there are companies like WP Engine and Flywheel that *only* do WordPress installs. WordPress is their one thing. They are able to customize their servers to force speed considerations at the global server level rather than at the install level.

Doing the Same with Web Hosting

So all that sounds great, but the open secret about WordPress speed is that you can do 90% of a specialized WordPress hosting plan on a solid, but standard hosting account.

Think of it as buying a house that is good for “entertaining guests.” Sure – there are some houses that come prebuilt with a nice kitchen, a good deck, and comfortable furniture. But you can create a great house for “entertaining guests” on your own – provided you have a generally solid house.

Most hosting companies allow changes to PHP version and extra allocation of memory.

If your server has a solid response time, then you can do almost all the caching that you need via a plugin.

If you take the time to understand all the variables of website speed, then you’ll be fine with a standard (and cheaper) shared hosting account.

In fact, most hosting companies allow even advanced configurations like NGINX on VPS accounts.

In the end, you are paying for convenience with a WordPress Hosting plan. They bundle many performance features that you can assemble on your own with standard web hosting.

That said, there can be a real difference in raw configuration and resource allocation, which we will look at next.

Configuration & Resource Allocation

Like I mentioned earlier, the core difference between a “WordPress Hosting” plan and a standard “Web Hosting” plan for the hosting company is that they know what will be running on a specific server.

Since they know what will be running, they can configure the server and allocate resources specifically for WordPress.

Some of these features will be near useless (like auto-installing “common” plugins). But some can be useful and worth the money for some.

Advantages of WordPress Hosting

A WordPress Hosting plan can pre-configure many web technologies for quick setup within WordPress.

For example, using an SSL with WordPress is not super-complicated, but it does need many steps. A WordPress hosting plan can provide a pre-configured setup.

Same with a content delivery network (CDN). A CDN can speed up content delivery around the world.

It’s not super-hard to integrate one with WordPress, but it does need some steps. A WordPress Hosting plan can automatically “hook one up.”

The same goes for a staging site (ie, “test site that syncs with your live site) or memory allocation or auto installers.

Doing the Same with Web Hosting

The thing about resource allocation and configuration is that you are straight-up paying for convenience.

That’s not a bad thing – often convenience is worth it. But before purchasing a plan because it promises “WordPress features” – it’s important to remember that there’s rarely a feature that you can’t reproduce on standard web hosting.

For example, many hosting companies cap allocated memory, but you are free to increase it via an edit in wp-config.php. It might require looking up a tutorial or using a 3rd party service, but it is possible.

Sometimes that’s an upsell, but sometimes convenience is the difference between bad site or a good site – as in the case of security.

Security & Vulnerabilities

WordPress security sounds complicated and scary, but it does not have to be.

WordPress is inherently secure. WordPress has notoriety with security because it’s so popular. It’s a big target. It also allows anyone to install any “plugin software” that can create vulnerabilities.

Securing your website is a bit like securing your house. You can never guarantee against a break-in but you can become less of a target.

Practicing basic precautions will protect against most attacks. But it’s important to maintain a backup in case someone *really* wants to break-in.

Advantages of WordPress Hosting

Like resource allocation, WordPress Hosting plans provide hosting companies with predictability so that they can provide the same custom maintenance to all their accounts.

They can secure all their servers running WordPress to protect against WordPress-specific threats.

They can do bulk upgrades and instantly apply security patches. They can identify vulnerabilities across many accounts.

In other words, they can provide routine maintenance services since they are maintaining all their WordPress accounts as one.

Doing the Same with Web Hosting

That said, most all WordPress Hosting-specific services are routine. They are rarely “above and beyond.”

Just because you have a WordPress Hosting plan does not mean that security is “done.” You still need strong passwords. You need to maintain reputable (and ideally, minimal) plugins.

WordPress Hosting services might take care of routine maintenance, but that’s something that you can easily do on your own.

The key security difference between the two is, again, convenience. But – it’s convenience that leads to habits. Practicing security means having secure habits.

If you are the type of person who needs convenience & ease of use for good habits, then you’ll appreciate WordPress Hosting plans’ security features.

If you are the type of person who sets up systems and habits (and you will be actively using your site) – then you can re-create every security feature on standard web hosting.

In fact, sometimes you can do security even better with a 3rd party plugin. I use the one from JetPack (maintained by WordPress.com) that does security scanning, automates updates and does backups all in one.

Either way – it’s important to think critically about what you personally need.

Customer Service & Support

Understanding your needs & habits factors into customer service & support as well.

It’s easy to dismiss customer support until you need it. And you will need it working with WordPress. WordPress has a lot of moving parts that can create issues quickly.

Since WordPress is free, community-supported software, it does not have professional support bundled with installation.

When you install WordPress software, you are relying on your own troubleshooting ability. You “own” any problems with it.

Your hosting company’s support usually only covers problems with your hosting account – not the software on your hosting account.

Advantages of WordPress Hosting

When a hosting company sells a “WordPress Hosting” plan – they usually make some sort of promise to provide software support…to a point.

And the “point” depends on your hosting company. It’s important to read the exact text to see how far their commitment goes.

A WordPress Hosting specialist like WP Engine or Flywheel will often take ownership of your issues and simply solve it.

Some hosting companies will simply guarantee that your rep is trained on WordPress issues.

It all depends.

*Side note – this is WordPress.com’s main pitch. They are the commercial side of the WordPress software community. They do provide WordPress-only support to the software & hosting bundle. I wrote about the difference between WordPress.com and WordPress software here.

Doing the Same with Web Hosting

WordPress drives a *ton* of business to many hosting companies. Many hosting companies are basically WordPress Hosting companies by default.

If you go with a hosting company like SiteGround, InMotion Hosting or Bluehost – then your tech support rep will be proficient in common WordPress issues.

Additionally, you can always make use of Google, the WordPress.org forums, paid support via JetPack, or many of the premium plugin providers.

Your support journey might take a few stops, but it’s free and open. And sometimes it’s higher quality since you “own” the issue and are learning more about your site.

Either way, the choice comes down to the price of convenience. Do you want a single, go-to support option (WordPress Hosting plan) or do you want to put your own system together (standard Web Hosting)?

Software & Bonus Features

This balance between choosing your own 3rd party software and bundling extends to software and bonus features.

Many WordPress Hosting plans offer lots of bundled software with WordPress. They might have premium themes, plugins or even SSL certificates or CDN subscriptions. It’s all quite attractive.

The important thing here is, again, choosing convenience over control. And thinking through exactly what you want.

Advantages of WordPress Hosting

With WordPress Hosting plans, their bundled services usually work well. They are simple to install and come at an attractive price.

With an SSL, you can quickly secure your site without going through a 3rd party.

With a CDN, you can speed up your site without the confusing setups and API keys.

With a theme collection subscription, you get access to a range of designs for free.

Doing the Same with Web Hosting

On the flip side, you can usually get all the software and bonus features bundled with WordPress Hosting for a better price if you put in the time and planning.

Theme makers are a dime a dozen. You find exactly what you are looking for and buy one a la carte somewhere on the Internet. Same with plugins.

SSLs, CDNs, and other bonus features are available somewhere for the price and selection that you want.

For example, I wanted an Extended Validation SSL for this site – I had to get it from a 3rd party rather than my hosting company. I decided that I wanted to use MaxCDN rather than CloudFlare. That kind of thing.

If you want to use the products bundled with WordPress Hosting plans, then factor that into your decision.

But if you know that you want different software anyway, then be sure to add it to the “total cost of ownership” with your WordPress Hosting plan.

WordPress Hosting Providers Overview

I have tried out a lot of hosting companies as a consultant and as a customer. Most of my projects use WordPress, though I usually work with standard web hosting installs.

Here’s an overview of some of the well-known brands that I’ve used. Skip to next steps here.

InMotion WordPress Hosting

InMotion is a fast growing independent hosting company. I use them for this site. They are reworking their WordPress plans, but right now they are a focused version of their Business Hosting plans. InMotion provides WordPress-focused support regardless of plan. They do bundle a drag-and-drop builder with WordPress Hosting plans. Worthwhile plans.

Read my InMotion review.

See InMotion Hosting plans.

Bluehost WordPress Hosting

Bluehost is the big brand in the WordPress world. Bluehost’s WordPress Hosting plans are pricey. But – they do add a lot of value – including running WordPress on an NGINX VPS platform.

Read my Bluehost review.

See Bluehost Hosting plans.

SiteGround WordPress Hosting

SiteGround is a fast-growing independent hosting company. I use them for several side projects. Like InMotion, they are reworking their WordPress plans. But right now, they bundle free CDN and NGINX settings. They also have a one-click staging setup for WordPress. Worthwhile plans.

Read my SiteGround review.

See SiteGround Hosting plans.

WP Engine WordPress Hosting

WP Engine was the first “Managed WordPress” hosting company. They only do WordPress. Due to that specialization, they offer a lot of unique features that are worth their pricing. Worthwhile plans.

Read my WP Engine review.

See WP Engine WordPress Hosting plans.

GoDaddy WordPress Hosting

GoDaddy is the big brand in the web hosting space. Their WordPress Hosting plans are fine, but overpriced IMO given the value-adds.

Read one of my GoDaddy reviews.

See GoDaddy Hosting plans.

HostGator WordPress Hosting

HostGator is a well-known budget brand. They are sister companies with Bluehost. HostGator’s WordPress Hosting is a rebranded form of their Cloud Hosting. Cloud Hosting is a bit of a different beast. Basically, HostGator hands your install to Amazon/Google/etc for a flat rate and a usable dashboard. It’s interesting, but not comparable to other WordPress Hosting plans.

Read one of my HostGator reviews.

See HostGator Hosting plans.

iPage WordPress Hosting

iPage is another well-known budget focused host. They are also sister companies with Bluehost. Their WordPress Hosting plans are web hosting plans with pre-installed software.

Read my iPage review.

See iPage Hosting plans.

WordPress.com WordPress Hosting

WordPress.com is a commercial website builder owned by Automattic and running only on WordPress software. They bundle hosting, software and support into a single package. Their founder, Matt Mullenweg, wrote the original WordPress software. If you want a more controlled but sleeker experience, WordPress.com is where you go.

Read my WordPress.com review.

See WordPress.com Hosting plans.

Next Steps

The short version of WordPress Hosting vs. Web Hosting is one of convenience vs. control.

If the convenience of WordPress Hosting is worth the higher price point, then go for it. It’s worth it. One of my clients swears by his plan and his ability to “just pick up the phone and have it fixed.”

If you are sticking with a budget or simply want more control over 3rd party services, then be confident in your decision to use standard web hosting. WordPress was built for everyone. It does not need and will not need specialized hosting services to run well.

You might be interested in my Best WordPress Hosting Quiz here or my WordPress setup guide here.

I also wrote an explainer to explain what is WordPress hosting here.

Good luck!

The post WordPress Hosting vs. Web Hosting Explained appeared first on ShivarWeb.

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The 6 Best Business Lines Of Credit For Bad Credit

Each small business is unique, but every business has at least one thing in common: they all need money to operate. Whether it’s for day-to-day operations, a major purchase, or the dreaded unexpected emergency, businesses need ready cash — and lots of it.

In an ideal world, you would just reach for your checkbook or debit card every time an expense popped up. Unfortunately, things aren’t that cut and dry in the real world. Customers are late in paying their invoices; businesses have seasonal slumps; unexpected emergency expenses cut into the bottom line.

Wouldn’t it be great to have on-demand access to cash whenever it was needed? Actually, there is a small business financing solution that works that way: a business line of credit.

What happens, though, when you have poor credit? Maybe you’ve tried to qualify for other business financing in the past and have been turned down. The great news is that business lines of credit are available to everyone, even applicants with low credit scores.

Ready to learn more? Read on for more information about business lines of credit, including what they are, how you can use them, and how to obtain one — even if you have less-than-perfect credit.

What Is A Business Line Of Credit?

A business line of credit is a type of revolving credit. The lender provides the business owner with a credit limit. Much like they would with a credit card, the borrower can make as many draws as needed — up to and including the total credit limit — to get fast access to funding. Interest and fees are charged only on the balance that has been used by the borrower.

Once a borrower begins to make draws, the money is paid back at a later time on a scheduled basis, which could be weekly, monthly, or on another schedule set by the lender. Payments are made toward the principal balance, as well as toward the interest and fees charged by the lender. As money is paid back, it becomes available to borrow again.

Is A Credit Card A Type Of Line Of Credit?

Business credit cards are another type of revolving credit, and while very similar to lines of credit, they aren’t exactly the same thing.

A credit card allows a borrower to make multiple purchases up to and including the set credit limit. Cards can be used for online purchases or brick-and-mortar establishments that accept credit cards.

Cash draws can be made from a credit card, but these draws typically come with higher fees and interest rates. With most credit cards, you also can only access a certain percentage of your total credit limit as a cash advance. When cash is needed, a line of credit is the better option.

However, credit cards have their own benefits. Credit cards can be used immediately, while lines of credit draws may take 24 hours or longer. Credit cards also offer rewards programs, allowing users to rack up airline miles, bonus points, and cash back with every use. Lines of credit do not offer these rewards.

When Should I Use A Line Of Credit?

A line of credit is handy any time you need quick access to money. A line of credit can be used when an emergency expense arises; it can also be used for purchases that you’d rather pay off over time.

Really, a line of credit can be used for any business expense. However, like other types of financing, line of credit loans should only be used when needed. Interest and fees can make this a very expensive form of credit. Before spending, ask yourself if the return on investment will be worth the cost or if there are more affordable alternatives available. If you do decide to make a draw, try to pay the balance off as quickly as possible to avoid paying unnecessary interest or fees.

When Should I Look For Other Financing Options?

In some scenarios, you may want to look into other financing options. For very large purchases, a long-term loan with a lower interest rate may be a more logical choice.

One of the major benefits of a line of credit is how fast you can receive the money you need. For emergencies, this may be the only option. However, if you are planning to make a purchase that isn’t an immediate need, it may be best to shop your options to find the most affordable type of financing.

What Is Considered Bad Credit?

business card for bad credit

Some lenders have their own standards to define bad credit, but in general, a score between 350 and 599 is considered poor.

A low credit score could occur for a number of reasons. A missed payment, a foreclosure, collections, or bankruptcy can pull a credit score down quickly. Even having too many new accounts or high credit utilization can drag a score down. Unfortunately, most lenders don’t consider the circumstances and just see one thing with a low credit score: risk.

Why Is My Personal Credit Score Important?

Lenders consider borrower risk before approving a loan. The lower the risk, the more likely the lender will be to approve the loan. The higher the risk, the higher the chances are of a rejected application. If a risky borrower is approved, interest rates are usually much higher and terms are not as favorable.

Personal credit score plays a big role in assessing risk. Borrowers with high credit scores will have more financing options and will receive the best rates and terms. Borrowers with lower credit scores will be limited in their options. They may qualify for lower amounts and suffer from higher overall loan costs. In some cases, borrowers with low scores will be unable to qualify for unsecured loans. These borrowers will have to put up collateral or pay a deposit for a secured loan.

How Quickly Can I Improve My Personal Credit Score?

Unfortunately, boosting your personal credit score isn’t an overnight process. While it’s possible to raise your score by a few points in just a few weeks, the process of raising your credit score from “bad” to “good” could take months – or in some cases, years.

The first step to improving your personal credit score is to pull your report and score to see where you stand. This can be done at no cost online. Look carefully through your report for any erroneous items that can be disputed with the credit bureaus. A mistake on your credit report will need to be proven to the creditor and then corrected or deleted.

If you have open lines of credit, make sure to pay your balances down as quickly as possible. Not only will this help you save on interest over time, but it will also lower your credit utilization, which in turn can help raise your credit score.

At the very least, make sure that you’re making minimum payments on all of your accounts each month. A late or missed payment can severely affect your credit score. Do not make too many inquiries into new accounts, and don’t open too many new accounts at the same time. All of these moves throw up a red flag to lenders.

Finally, raising your score can sometimes be a waiting game. Hard inquiries remain on your credit report for two years, while bankruptcies and foreclosures stay on your credit report for seven years. While you can work in other ways to build your credit in the meantime, only time will erase these past mistakes.

Is My Business Credit Score Important?

If you’re a business owner, you have a business credit score in addition to your personal score. A business credit score shows your business’ credit history and helps lenders assess whether or not you are a risky borrower.

Lines of credit, credit cards, and loans taken out for your business will all affect your business credit score. As with your personal credit, if you make late payments or miss payments on a business account, your score will be lower. Your business will be viewed as a riskier investment. If your score is high, lenders will feel more confident in giving you the financing you seek.

A business credit score is important when applying for financing, so it’s vital to ensure that your business credit score is as high as possible. The best loan products, like long-term bank loans and commercial mortgages, are reserved for borrowers with high personal and business credit scores. For many lines of credit, business credit score is considered by the lender when determining whether to approve your application.

The Best Business Lines of Credit For Bad Credit

Whether you have an emergency expense and need money quickly or you just want to have a backup form of funding on-hand for the future, a line of credit can be good for your business. Before you apply, become familiar with the best lines of credit for borrowers with poor credit scores.

Fundbox

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Fundbox provides business lines of credit up to $100,000 for qualified borrowers. In order to qualify, all applicants must have a business checking account and a recommended yearly revenue of $50,000. Businesses must be based in the U.S. or in select U.S. territories. Applicants must have at least two months of activity in Fundbox-supported accounting software such as QuickBooks. If this qualification is not met, an applicant can provide bank statements to prove three months of transactions in a business bank account. There are no minimum credit scores to qualify.

The application process for Fundbox takes less than 10 minutes and most applicants can receive an approval decision in 3 minutes or less. Once approved, the borrower can access funds immediately, with most transfers going through as quickly as the next business day. Fundbox charges fees starting at 4.66% on the amount drawn. Balances can be paid early and any remaining fees will be waived. Repayments are made weekly over 12 or 24 weeks.

Kabbage

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Kabbage provides up to $250,000 via lines of credit. While Kabbage does pull your credit score, the lender focuses more on business performance than credit history, so borrowers with low credit scores can be approved.

To qualify for a Kabbage line of credit, businesses must have been in operations for a minimum of one year. There are revenue requirements: either $50,000 in annual revenue or $4,200 monthly revenue for the last three months. Kabbage requires borrowers to link their business accounts (PayPal, QuickBooks, business bank accounts, etc.) to determine if they qualify and how much they are qualified to receive.

With Kabbage, the application and approval process takes approximately 10 minutes. Once approved, borrowers can draw money immediately, and funds are usually transferred the next business day. Kabbage has also released the Kabbage Card, which lets borrowers use funds immediately anywhere VISA is accepted.

Kabbage offers repayment terms of 6 or 12 months. Payments are made monthly through automatic withdrawals. Kabbage charges fees between 1.5% and 10% on the borrowed amount based on business performance.

Headway Capital

headway capital

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Headway Capital provides lines of credit up to $100,000. Minimum qualifications for a Headway Capital line of credit is annual revenue of at least $50,000 and at least one year in business. The business must also be located in one of the states served by the lender. There are no minimum credit score requirements, although a soft credit pull will be performed during the application process.

Headway Capital offers repayment terms of 12, 18, or 24 months. Weekly or monthly payment options are available. Fees, minimum initial draw amounts, and maximum credit limits vary by state. Applicants for Headway Capital lines of credit can be pre-approved in just minutes. Once underwriting is complete and the loan is approved, borrowers can draw immediately from their line of credit and receive the funds as quickly as the next business day.

OnDeck

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OnDeck provides lines of credit up to $100,000 for qualified business owners. All applicants must be in business for at least one year with annual revenue of at least $100,000. The applicant must also be a majority owner of the business and have a credit score of at least 600. Business and personal credit scores, as well as business performance, will be evaluated for approval.

Rates for OnDeck lines of credit are as low as 13.99%, although the average APR is 32.6%. Repayment terms are weekly and made over a 6-month period. Once approved, borrowers can make a draw on funds immediately. With an ACH transfer, money will be received within 1 to 2 business days. OnDeck also offers Instant Funding, which transfers funds to an eligible business debit card in just minutes.

Two Credit Cards For Merchants With Bad Credit

If you want to pay your vendors, contractors, and suppliers, a business credit card may be the right choice for you. A credit card gives you instant access to funding without waiting for transfers, and you can withdraw cash if needed. Not only will you be able to use your funds immediately, but business credit cards can also help you boost your credit score to apply for other types of financing in the future.

Capital One Spark Classic

Capital One Spark Classic For Business



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Annual Fee:


$0

 

Purchase APR:


24.74%, Variable

The Capital One Spark Classic is a popular choice with business owners that have lower credit scores. To qualify, all applicants must have a credit score of at least 580. This is an unsecured card that comes with a 24.74% variable APR and no annual fee.

One of the advantages of this card is that it has a 1% cash back offer for every business purchase. Rewards are unlimited, and there is no minimum to redeem. The Capital One Spark Classic comes with fraud coverage and free employee cards. Using the card responsibly can also help you boost your credit while giving you access to the capital that you need.

Capital One Secured Mastercard

Secured Mastercard from Capital One



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Annual Fee:


$0

 

Purchase APR:


24.99%, Variable

The Capital One Secured Mastercard is a personal credit card, but it can be used by a business owner who wants to rebuild their credit.

There is no annual fee, and this card comes with a 24.99% variable APR. The Capital One Secured Mastercard is a secured credit card that requires a refundable deposit of $49, $99, or $200 based on the creditworthiness of the applicant. Once approved, a credit line of $200 will be available. Once five monthly payments have been made on time, borrowers will receive a credit limit increase. Over time, borrowers can receive higher credit lines and qualify for additional Credit One products.

Final Thoughts

Having a low credit score can make qualifying for a business loan difficult but not impossible. Lines of credit and credit cards can help even borrowers with low scores receive the money they need to build their businesses. By applying for the right line of credit and using it responsibly, you will not only keep your business operating smoothly but can also build your credit in the meantime to qualify for more financing options in the future.

The post The 6 Best Business Lines Of Credit For Bad Credit appeared first on Merchant Maverick.

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Top Business Credit Cards For Fair Credit

business credit cards fair credit

A business needs a degree of spending flexibility in order to survive and thrive. However, when it comes time to apply for a business credit card to help keep your business running smoothly, you may be disappointed to discover that your ability to get a business credit card is determined not only by the financial history and health of your business, but by your personal credit score as well. (If you don’t know your credit score, here’s an article detailing how you can check your credit score for free)

If you’re running a business while having less-than-stellar personal credit, you may find your credit score to be a hindrance when looking for a business credit card that fits your spending needs; many business credit cards require the applicant to have good-to-excellent personal credit.

Here at Merchant Maverick, we don’t believe that an imperfect credit history should stand in the way of your entrepreneurial dreams. That’s why we’ve gathered together a list of business cards specifically marketed to business owners and entrepreneurs with fair credit. And if you’re looking for more guidance, read our article on how to use business credit cards to your advantage.

What Is Fair Credit?

The inherent problem with calling certain credit cards good for people with “fair” credit is that terms like “fair” and “good” credit are not standardized, so financial products and review sites have differing definitions of what constitutes “fair” credit. We define fair credit as a credit score between 600 and 669, but other sources may differ somewhat. Note that “fair” credit is often called “average” credit — the terms are used interchangeably.

Why Do Card Issuers Check Your Credit Score?

Because credit card issuers are jerks.

I kid, I kid. The real reason is that your personal credit score is just another data point for business credit card issuers to consider when evaluating the credit risk of a prospective card user. Your business revenue will also be evaluated, but your personal credit comes into play as well. For the card issuers, it’s all about whether or not you’re likely to be able to make your payments on time, and your personal credit score affects that likelihood.

Best Unsecured Business Card For Fair Credit

Nearly every business credit card that’s marketed towards folks with fair credit is a secured credit card, meaning that you pay a security deposit that establishes the amount of your credit line. This way, if you default on your payments, the issuer can just claim your security deposit (and thus takes on less risk). With a secured card, you’re essentially borrowing money from yourself. This may sound absurd, but it is a great way to build up your business and personal credit (assuming the card issuer reports to the business and personal credit bureaus) so long as you make your monthly payments.

However, there’s an exception to this general rule. The Capital One® Spark® Classic for Business is an unsecured business credit card for business owners with fair credit. An unsecured card is a “typical” credit card in that you do not have to make a cash deposit or post any other physical collateral in order to obtain it.

Capital One® Spark® Classic for Business

Capital One Spark Classic For Business



Compare

Annual Fee:


$0

 

Purchase APR:


24.74%, Variable

Spark Classic is an ideal business card for the business owner seeking to build up their business credit. That’s because Capital One will report your card activity to both personal and business credit bureaus (not all cards do this). Just by making your payments on time, you’ll be improving your credit. This is particularly important when your business is just getting off the ground and hasn’t built up much of a credit history.

Credit cards that are available to those with fair/average credit typically aren’t big on bonus offers and rewards — and the Spark Classic is no exception. There’s no bonus offer or introductory 0% APR period, though you will earn an unlimited 1% cash back on all purchases. Not bad for a fair credit business card. The card carries a relatively high APR, but this, too, is to be expected with this sort of business credit card. Cards with lower APRs are typically harder to qualify for.

Best Secured Business Cards For Fair Credit

Now, let’s delve into the secured business credit card scene. (To learn more about secured business credit cards, have a look at our article on the subject, What Is A Secured Business Credit Card?)

Wells Fargo Business Secured Credit Card

Wells Fargo Business Secured Credit Card


business credit cards fair credit
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Annual Fee:


$25

 

Purchase APR:


Prime + 11.90% on purchases

There’s a lot to like about the Wells Fargo Business Secured credit card. It’s a secured business card that’s available to business owners with fair or even bad credit. You can establish a credit line of between $500 to $25,000 depending on the amount of your secured deposit. Enroll in the rewards program and you’ll earn 1.5% cash back on every purchase, which is surprising for a “fair credit” credit card, most of which either have no rewards program or give 1% cash back. Additionally, the APR is quite reasonable and is lower than that of most of the business credit cards competing for this segment of the market.

As for the downsides: There’s a $25 annual fee attached to each card you get, so while you can get up to 10 cards for your employees, this could cost you up to $250 a year. Furthermore, to apply for the card, you must first establish a savings and/or checking account with Wells Fargo, and given Wells Fargo’s tainted reputation (deservedly so) owing to recent ethical lapses, you may not be eager to do this. This also means you’ll have to apply in person at a Wells Fargo branch to set up an account (you can’t do this online), and some areas have no Wells Fargo banking locations. For instance, most of New England is, for better or worse, devoid of Wells Fargo branches.

Additionally, while the rewards program currently carries no annual fee, this wasn’t always the case, and that fee could always return at some point in the future.

BBVA Compass Secured Visa® Business Credit Card

BBVA Compass Secured Visa® Business Credit Card


business credit cards fair credit
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Annual Fee:


$0 the first year, $40 each subsequent year

 

Purchase APR:


18.24%, Variable

The BBVA Compass Secured Visa® Business credit card is another secured credit card option for business owners. Unfortunately, it is currently only available in California, Texas, Florida, Alabama, Arizona, Colorado, and New Mexico. You’ll also have to apply for the card in person at a BBVA Compass branch.

With the BBVA Compass Secured card, you’ll make a secured deposit of at least $500 (no maximum amount is listed). You earn 1% cash back with every purchase, and the APR, while higher than that of the Wells Fargo Business Secured, is still lower than that of many cards in this market space. You can also get additional cards for your employees at no additional cost. This can be quite important when your business is just starting out!

Unfortunately, the card carries a $40 annual fee, though this fee is waived for the first year. There’s also a 3% foreign transaction fee, though many up-market credit cards feature this fee as well.

The BBVA Compass Secured Visa is a very solid secured business credit card, hampered only by its limited availability.

Business Edition Secured Visa Credit Card

Business Edition Secured Visa Credit Card


business credit cards fair credit
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Annual Fee:


$39

 

Purchase APR:


19.74%, Variable

The Business Edition Secured Visa® credit card is offered through multiple banks (First National Bank and Cathay Bank are two examples), so the features offered may vary slightly; however, the card carries most of the following features in common regardless of the issuer.

The Business Edition Secured Visa card requires you to make a security deposit of at least $2,000, so if you wanted to make a smaller security deposit, you’ll have to apply for one of the other cards listed here. If, on the other hand, you’re prepared to make a large security deposit, you’re in luck, as you can deposit as much as $100,000. Your credit line will be 110% of your security deposit, meaning you’ll be able to borrow slightly more than the amount you deposited, which is nice.

The card typically carries a variable APR of 19.74%, though this may vary a bit depending on the issuing bank. Sadly, there’s a $39 annual fee that is not waived for the first year.

While there is no cash back to earn through purchases on this card, you will be able to enroll in the Visa Savings Edge program, which can earn you rebates at a number of different retailers, gas stations, and restaurants.

Best Secured Personal Cards For Fair Credit

For most business owners, a secured business card is preferable to a secured personal card. A business card issuer reports to the business credit bureaus, thus helping you build business credit (the free employee cards you can get with some issuers is a helpful bonus as well). However, a secured personal card can help you fund your business as well, often while helping to build your personal credit, which can be important in helping you secure other forms of business funding in the future.

Let’s discuss a few of the best secured personal credit card options out there.

Green Dot primor® Visa® Gold Secured Credit Card

Green Dot primor Visa Gold Secured Credit Card



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Annual Fee:


$49

 

Purchase APR:


9.99%, Fixed

The Green Dot primor® Visa® Gold Secured credit card may have a convoluted name, but it’s a very simple credit card. The card is fairly unique in that there are no credit score requirements to apply for this card. They won’t even perform a credit check.

There are no rewards or cash back to earn, and the only benefits attached to the card are auto rental insurance and zero fraud liability. So what does the Green Dot primor® Visa® Gold Secured provide?

The card’s minimum security deposit is just $200 while the maximum is $5,000, and it features an enticingly low fixed APR of just 9.99% — one of the lowest APRs you’ll find in any credit card. The card also carries a grace period of 25 days until interest on purchases will start to accrue, so paying off your card in full before the payment due date each month will result in you avoiding interest charges.

The card’s primary downside? The $49 annual fee, which is decidedly on the high side for this type of credit card.

OpenSky® Secured Visa® Credit Card

OpenSky® Secured Visa® Credit Card



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Annual Fee:


$35

 

Purchase APR:


19.14%, Variable

The OpenSky® Secured Visa® Credit Card is another personal credit card you can get without even having your credit score checked. In fact, you don’t even need a bank account to get this card!

The OpenSky Secured Visa requires a security deposit of between $200 and $3,000. The APR is a variable 19.14% — a bit on the high side, though you can do worse with a card of this sort. There’s also a $35 annual fee, and there are no rewards to earn; no cash back to rack up with your purchases. On the plus side, your card activity is reported to all three credit bureaus, helping you build up your credit history.

FAQs About Business Credit Cards For Fair Credit

Can I Get A Business Credit Card With No Credit Check?

Not exactly. While the business cards I’ve listed here are very unlikely to reject anyone for having a low personal credit score (with the exception of the Spark Classic, which requires a personal credit score of at least 550), they will generally perform a credit check. However, some secured personal cards (like the two I mentioned in this article) will approve your application without performing a credit check.

How Can I Improve My Credit Score?

The most important thing you can do is to pay your bills on time — not just your credit card bills, but any other bills you have, as late payments can negatively impact your credit score for seven years.

Another factor to consider is your credit utilization ratio. Your credit utilization ratio is the sum of your total credit card balances divided by your total available credit. Basically, it’s a measure of how much of your total available credit you’re actually using. If lenders see that you’re not maxing out your credit cards, they’ll view you as less of a lending risk. A credit utilization ratio of 30% or less is ideal.

Beyond that, try not to apply for credit willy-nilly. When you apply for a credit card, assuming the issuer performs a credit check, a hard inquiry will be created on your credit report, which will impact your score for two years. With too many hard inquiries, your credit score will suffer.

For more on how to improve your credit score, check out 5 Ways To Improve Your Personal Credit Score.

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