Capital One Spark Miles VS Chase Ink Preferred

spark miles vs ink preferred

Business travel. Maybe you hate it, maybe you enjoy it. Either way, for certain types of businesses, work-related travel is an unavoidable expense. Get a business credit card with travel rewards, and you’ll be able to recoup a portion of your travel expenses in the form of points or miles, which can then be used to book more travel, among other things.

Capital One’s Spark Miles for Business and Chase’s Ink Business Preferred cards are two of the most prominent and popular business credit cards for travel rewards. They are similar to each other in many ways, but there are some pertinent differences in the way rewards are earned and used. These differences mean that the Spark Miles card will be a better fit for certain small business owners while Ink Business Preferred will provide more value for businessfolk with different spending priorities.

Let’s sort it all out to determine which of these travel rewards credit cards fits your business needs.

Capital One Spark Miles Chase Ink Business Preferred

$95 (waived the first year)

Annual Fee

$95

18.74%, Variable

Purchase APR

17.99% – 22.99%, Variable

  • 50,000 miles if you spend $5,000 within the first 3 months of opening your account
  • An additional 150,000 miles if you spend $50,000 in the first 6 months
Bonus Offer

80,000 points if you spend at least $5,000 within the first 3 months of opening your account

N/A

Purchase Intro APR

N/A

N/A

Balance Transfer Intro APR

N/A

None

Foreign Transaction Fee

None

2 miles per dollar spent on all purchases

Rewards

3 points per dollar spent on the first $150,000 in combined purchases on travel, shipping purchases, internet/cable/phone services, and advertising purchases made with social media and search engines each account anniversary year; 1 point per dollar on all other purchases

  • Employee cards at no additional cost
  • Points do not expire while your account is open
Other Benefits
  • Points are worth 25% more if redeemed for travel via Chase Ultimate Rewards
  • Points can be transferred to other travel programs on a 1:1 point basis
  • Points do not expire while your account is open
  • Employee cards at no additional cost

Compare

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To learn about other business credit cards specializing in travel rewards, check out our recent piece on the best business credit cards for travel.

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Eligibility Requirements

Both the Ink Preferred and the Spark Miles cards require a credit score of at least 690 in order to qualify.

Fees & Interest Rates

Neither the Spark Miles card nor the Ink Business Preferred offers an introductory 0% APR period, so we’re starting off even on that front.

The Capital One Spark Miles card offers a variable APR of 18.74%, while the Chase Ink Business Preferred carries a variable APR of between 17.99% and 22.99%. While applicants with the best credit scores may get a better interest rate with Ink Preferred, Spark Miles will give a slightly better interest rate to everyone else, as the rate doesn’t change based on your credit.

While both cards carry a $95 annual fee, the Spark Miles card waives your fee for the first year. Chase Ink Preferred does not.

As for other fees, neither card charges a foreign transaction fee, and while the Spark Miles card charges no balance transfer fee, Ink Business Preferred charges a balance transfer fee of 5%. Overall, Spark Miles comes out ahead when it comes to minimizing fees.

Bonus Offer

Capital One’s Spark Miles card currently offers the most impressive bonus offer of the two cards, but you’ve got to spend a lot in order to get the full bonus. The card offers 50,000 miles if you spend $5,000 within the first 3 months of opening your account and an additional 150,000 miles if you spend $50,000 in the first 6 months. If you’re going to be charging a lot to your Spark Miles card in relatively short order, you stand to pick up 200,000 bonus miles. Not bad! (Keep in mind that this is a limited-time offer)

The Chase Ink Business Preferred card offers 80,000 bonus points after you spend $5,000 on purchases in the first 3 months after opening your account. If you’re going to spend at least $5,000 in your first 3 months of card use but not $50,000 within 6 months, Ink Preferred will give you a juicier bonus, but if you’re going to spend the higher amount, Spark Miles offers the better bonus.

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Earning Rewards

Capital One’s Spark business cards tend to have simple and straightforward rewards earning structures, and the Spark Miles card is no exception. You’ll get an unlimited 2 miles per dollar on all purchases. It’s nice to not have to concern yourself with spending categories and earning limits.

Chase Ink Preferred’s reward structure is more complex. You get 3 points per dollar on the first $150,000 per year you spend in combined purchases on travel, shipping purchases, Internet, cable and phone services, and on advertising purchases made with social media sites and search engines. All other purchases get you one point per dollar spent with no earning limits.

The takeaway here is clear: If your business spending falls largely into the Ink Preferred’s bonus categories, you stand to earn more rewards with the Ink Preferred. If your business spending is more varied or is concentrated in areas outside the Ink Preferred’s high earning categories, the Spark Miles card may better benefit your business.

Of course, the value you can extract from your miles/points is relevant to this discussion as it determines how valuable your earned rewards are in the first place. Let’s discuss!

Redeeming Rewards

The Ink Business Preferred card lets you use your points to book travel via Chase Ultimate Rewards. When you do this, your points are worth 25% more than they would be worth otherwise. That’s like having 25% more points at your disposal! The only drawback is that you have to use Chase’s booking portal to book travel and enjoy this 25% value boost. Your other points options? You can transfer your points to one of Chase’s travel partners on a 1:1 point basis or you can redeem for cash (1 cent per point).

With the Spark Miles card, you don’t have to use Capital One’s travel portal to use your miles, though you certainly can. You can just redeem your miles for statement credit after purchasing your tickets elsewhere. Unfortunately, whether you book your travel with Capital One or with someone else, your points won’t get a 25% value boost. And while you can redeem your miles for cash, you’ll only get a half-cent per mile for them, making your miles half as valuable when used on things other than travel. We don’t recommend doing this!

While the Spark Miles card allows for more flexibility in terms of how you can use your miles for travel, the 25% value boost you get with Ink Preferred when using Chase’s travel portal is a major plus. Additionally, the points you earn with the Ink Preferred are twice as good as your Spark Miles points if you want to redeem your points for cash. Slight edge goes to the Ink Business Preferred.

Benefits & Other Perks

Both cards offer a similar array of travel and shopping benefits, such as extended warranty protection, auto rental collision damage waivers, and travel/emergency assistance. Both cards also offer access to Visa SavingsEdge, a program that lets you save up to 15% off on certain purchases from participating merchants.

Again, neither card carries a foreign transaction fee, so you can make purchases when traveling abroad to your heart’s content.

Which Is Best For Your Business?

The Spark Miles card and the Ink Business Preferred card have some characteristics in common, but their main points of departure are their respective rewards programs and their bonus offers.

Choose Chase Ink Business Preferred If…

  • Your business spending largely aligns with the Ink Preferred’s high points earning categories (travel, shipping purchases, Internet/cable/phone services, advertising purchases made with social media sites and search engines)
  • You want to enjoy the 25% value bonus you’ll get for your points when booking travel (and you don’t mind sticking to Chase’s travel portal)
  • You have excellent credit and you want a potentially lower APR

Chase Ink Business Preferred



Apply Now 

Annual Fee:


$95

 

Purchase APR:


17.99% – 22.99%, Variable

Choose Capital One Spark Miles If…

  • Your business spending is varied and doesn’t align with the Ink Preferred’s high earning categories
  • You really don’t want to be restricted in how you redeem your miles for travel
  • You plan to spend enough within the first 6 months that you stand to benefit from the Spark Miles’s bonus offer of 200,000 miles

Capital One Spark Miles For Business


Compare

Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


18.74%, Variable

Final Thoughts

It would be nice if I could give you a clear winner in this battle of the business credit card titans. The truth is, some small business owners will be better served by Chase Ink Business Preferred while others would do well to choose Capital One Spark Miles. Hopefully, this article will help you determine which group you fall into.

Unsure if you’ll qualify for one of these cards? Check out these links for help!

  • How To Improve Your Personal Credit Score
  • Best Free Credit Score Sites
What’s Next
    • Check out the top 8 small business startup loan options
    • Business loan options that don’t require a credit check
    • Your guide to low-cost SBA loans

The post Capital One Spark Miles VS Chase Ink Preferred appeared first on Merchant Maverick.

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The Best Business Loan And Financing Resources For California Small Businesses

California is the world’s 5th largest economy, making it one of the more exciting states in which to operate a business. The opportunities in the Golden State are vast, but so are the costs of opening and operating a small business. If you need financing in California, your problem won’t be finding prospective lenders — in fact, the problem will be that your choices will be overwhelming, especially in the more urbanized portions of the state.

Not sure where to start? We’ll take a look at some of the financing options available to California-based small businesses, as well as touching on the ways the state’s regulations affect borrowing.

The Best Online Business Lenders For California Businesses

Online lenders have become an increasingly popular source of financing for businesses that need money quickly. Most offer abbreviated and easy application processes and time-to-funding that can be measured in days rather than weeks or months.

Convenience, of course, comes at a cost; these lenders will often charge a higher rate than a traditional bank lender would. The best of these lenders provide their products transparently, while the more unscrupulous ones will attempt to obfuscate their fees and the terms of their products. Federal regulations protect individuals from these practices, but small business lending isn’t covered by those laws. As of 2018, however, California small businesses are covered by SB 1235, which extends truth-in-lending protections at the state level. It’s a little early to gauge the consequences of the law, but differences in state regulations, interest rate caps, etc. play a role in the states in which online lenders can operate, and what products they offer within those states.

However, because online lenders aren’t physically bound to a region, the online lenders you have access to in California will, for the most part, be the same as those available to small businesses in New York and Kansas (the lender might be based in Utah or Delaware). In most cases, there’s little, if any, advantage to working with an online lender based in your own state.

Some of the better online lenders operating within California include:

LoanBuilder

If you’re looking for speed and convenience with a touch of customizability, it’s worth taking a look at PayPal’s LoanBuilder service. They offer a short-term loan product with weekly payments, reasonable (for an online lender) rates, and no additional, hidden fees to wade through. You also don’t need to have great credit to qualify.

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Lendio

If you don’t have a lot of time to compare loan offers, you may want to outsource that workload to a company like Lendio. Lendio doesn’t originate its own loans, but rather serves as a matchmaking service for borrowers and lenders. There’s no fee for using the service as a borrower, which puts it a step above many of its competitors.

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Lending Point

California has a reputation for being a land of startups, but financing your risky business venture can be extremely challenging. Lending Point offers traditional installment loans in small amounts to individuals with good credit. Great if you need a little more money to get things off the ground.

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OnDeck

OnDeck is one of the bigger names in online lending, offering a mix of short-term loans and lines-of-credit to businesses that need money quickly. They’re willing to work with businesses with fairly poor credit, while offering transparent and relatively reasonable terms.

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California Banks & Credit Unions

Online lenders may let you apply for much-needed funds from the comfort of your computer chair, but if you’re looking for the best rates, you’re still going to want to talk a bank or a credit union.

Banks, and especially credit unions, usually operate in a regional or local capacity, and your business relationship with them may include not just loans, but checking and savings accounts. In fact, it’s not unusual for banks and credit unions to lend primarily to their existing customer base. If you have a good relationship with your local bank or credit union, you may want to consider them for your lending needs.

You can also consider some of the larger, national and regional banks operating within California. The entities include:

Chase Bank

America’s biggest bank has a substantial presence, as you might guess, in America’s most populous state. Despite their size and market share, they’re still pretty traditional when it comes to business loans, so you’ll have to seek out a branch in your area. Luckily, Chase maintains over 1,000 branches in California.

If you can make their requirements and don’t mind dealing with an enormous lender, Chase offers some of the best business loan rates out there.

Borrower requirements:
• Must have excellent credit (high 600s)
• Must have access to a Chase Bank branch
Read our Chase Bank review

US Bank

For the middle of the country, US Bank is often the biggest player around, having a substantial presence in states that are underserved by other large, national banks. They also operate on the West Coast, however, with over 600 branches in California.

While they’re still enormous, US Bank is often cited as being one of the more personable big banks.

Borrower requirements:
• Must be located in a state served by U.S. Bank
• Must have been in business for two years
Read our U.S. Bank review

Bank Of America

Another bank that’s easily accessible within major population centers is Bank of America. Like other traditional lenders, Bank of America has very stringent lending standards. They do offer a more modernized application process than many of their competitors, however.

Line of credit borrower requirements:
• Must have been in business at least 2 years.
• Must have a personal credit score of 670 or above.
• Must have revenue > $200,000 for unsecured products, or greater than $250,00 for secured products.
Read our Bank of America review

Credit Unions

Credit unions tend to be smaller and more regionally or industry specific than large banks. As a basis of comparison to the banks above, the most prolific credit union in California, Golden 1 Credit Union, has only 74 branches. However, as non-profits, credit unions can often provide perks and rates to their members that banks can’t or won’t. Not every credit union offers business loans and the ones that do may have tight restrictions governing what that money can be used for. Most credit unions do offer personal loans, however.

Some of the more accessible credit unions in California include:

  • Golden 1 Credit Union
  • UNIFY Financial Credit Union
  • SchoolsFirst Federal Credit Union
  • San Diego County Credit Union
  • First Technology Federal Credit Union

The California Small Business Loan Guarantee Program (SBLGP)

You may have heard of the Small Business Administration (SBA). The SBA is a federal agency that guarantees certain types of loans to help small businesses access better rates and terms than those businesses would otherwise qualify for.

Californians can still take advantage of those programs, but they additionally have the option of using the state’s SBLGP program. Like SBA loans, SBLGP loans are guaranteed, meaning an outside entity (in this case the state of California) is assuring a percentage of the loan will be repaid to the lender.

The state program is a lot smaller than the SBA program, with slightly shorter loan terms and lower maximum borrowing amounts. It does have some advantages over the SBA 7(a) program, however, including a lower guarantee fee, faster application, and less strict qualifications. You will, however, need to demonstrate that the loan will help promote job growth and retention within California, as well as make sure your lender participates in the program.

Bad Credit? Your Best Options

Bad credit can still be a huge impediment in keeping your business running smoothly, but the days where everyone was expected to maintain squeaky clean credit are long gone. If your credit is disqualifying you from traditional lending sources, you still have options.

  • Online Lenders: The online lending industry grew in the ashes of the 2008 market crash, with many specializing in lending to businesses with good fundamentals but bad credit. Some of the lenders use predatory practices and should be avoided at all costs, but there are many that have established transparent and reasonable lending practices.
  • Credit Cards: This is not a loan per se, but one of the easier ways to build your credit back up is to get a credit card and pay it off every month. Even if you don’t qualify for the sexiest business credit cards are there, many companies are willing to extend small credit lines to risky customers. In the worst case scenario, there’re still secured credit cards.

What To Consider When Choosing A Lender

With all the potential choices out there, choosing a lender who fits your needs can feel like an overwhelming task. Here are some ways to narrow down your options a bit.

Consider:

  • Your Industry: Not every lender offers their product to every type of business. Not only that, but there are advantages to working with lenders who have a lot of experience funding businesses like yours.
  • The Amount You Need: Make sure the lender can, at least potentially, provide the amount of money you’re seeking. Subsequently, you’ll want to be certain you can repay what you borrow.
  • Rates & Fees: How much is it going to cost you? Are the lenders rates in line with the industry standard? Do they tell you what additional fees they charge, or do they hide them?
  • How Quickly You Need The Money: You’ll be looking for a different type of lender and financial product if you need the money this week versus a month or two down the road.
  • Term lLengths: You’ll want to know how quickly you have to pay the money you’re borrowing back. Make sure your revenue can keep up with it.
  • The Type Of Expense Being Financed: Some financial products (like equipment loans) are limited in what they can be used for. Do you need a lump sum of cash? Or do you need a line of credit that you can draw upon periodically?
  • Collateral: Secured loans and lines of credit require some form of collateral, usually in the form of an asset, real estate, or cash deposit. If you don’t have collateral to put it, you’ll want to look at unsecured loans.

Final Thoughts

As costly as it can be to do business in California, you should have no shortage of funding options to keep your business afloat and growing. This region is well-served by banks and credit unions, and most online lenders are willing and able to fund within the state. Additionally, state-guaranteed business loans and one of the more borrower-friendly regulatory regimes in the nation gives business owners in California advantages that businesses in other states don’t enjoy.

Need more resources to help you find that loan or credit card you’re looking for? We can help you compare lenders and credit cards.

The post The Best Business Loan And Financing Resources For California Small Businesses appeared first on Merchant Maverick.

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The Best Business Loans For Good Credit

As a business owner with good credit, you’re in a great position when it comes to loans and other financing options. A good credit score is one of the most important factors lenders consider when assessing risk. In fact, a solid credit score is one factor that puts you in the “low risk” category. That means you’re more likely to qualify for loan and financing options with lower rates and better terms.

However, having good credit isn’t the only piece to the financing puzzle. Before applying for a business loan, it’s important to go into the process knowing more about lender requirements, types of loans available, and what you need to apply for a loan. Read on to learn more about the business loans available for borrowers with good credit and which options are best for your financial situation.

What Is Good Credit?

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If you’ve ever applied for a personal or business loan or any kind of financing, you know how important credit scores are to lenders. Your credit score is a measure of your risk. A good credit score shows that you’re low risk. You pay your debts on time each month, your credit history is free of major blemishes like bankruptcies, charge-offs, and defaults, and you’re a reliable borrower. Because of that, more creditors are willing to work with you.

So, what makes a good credit score? Generally, a score of 700 or above is considered “good” on a scale of 300 to 850, although some lenders may view a score in the high 600s as a good score.

Having a high credit score helps you qualify for more financing options with lower rates, improved terms, and a lower overall cost of borrowing. As a business owner, having a good credit score is extremely important. Whether you want to hire more employees, acquire a business, build new facilities, or receive cash for an unexpected emergency, you’ll have more options with a good credit score.

In this article, we’ll focus on the best loan options for business owners with good credit scores. If your score is holding you back from receiving these loans, however, you still have options. Check out loan options for bad credit to find financing that’s the right fit for you.

Best Loans For Purchasing Equipment

equipment financing

No matter what type of industry you’re in, there typically comes a time when you need equipment. Whether you need tools to manufacture your products, require a delivery or company vehicle, need new appliances, or must purchase a point-of-sale system, all equipment has one thing in common: it costs money. If you need to purchase equipment to expand your business or to replace outdated or broken equipment, and you don’t have the cash up front, there’s a funding option for you: equipment financing.

If you apply for an equipment loan, a lender provides you with the cash needed to purchase equipment. All you have to pay is a reasonable down payment. With good credit, you may even qualify for $0 down financing. After receiving your loan and making your purchase, you can put the equipment into use for your business immediately. Then, you simply pay your lender back through fixed installments that are applied toward the loan principal and the lender’s interest and fees. Once you make all payments as scheduled, the equipment belongs to you.

If you need to upgrade equipment frequently, you may consider another type of equipment financing. With an equipment lease, you sign a lease for a period of time — on average about two years. You agree to make scheduled payments to the lender through the duration of the lease. Once the lease period ends, you can return the equipment and choose a new model. You’ll then sign another lease. You’ll never take ownership of the equipment unless you pay a lump sum at the end of your lease.

Recommended Lender: Lendio

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Lendio is a loan aggregator that connects borrowers with equipment loans from $5,000 to $5 million. Repayment terms for equipment loans are from 1 to 5 years, and interest rates for the most creditworthy borrowers start as low as 7.5%.

Equipment financing can be used to purchase any type of equipment, including software, furniture and fixtures, commercial vehicles, and even solar panels for your facilities. To qualify for equipment financing, you must be in business for at least 1 year, have a credit score of at least 650, and have at least $50,000 in annual revenue.

Best Loans For Business Expansion

Expansion is a huge milestone for your business. Expansion means that you’re growing bigger and getting better at what you do. Unfortunately, opening another office, upgrading your existing facilities, or purchasing a new commercial building doesn’t come cheap. Instead of cleaning out your bank account, fund your expansion with a Small Business Administration loan.

The Small Business Administration has made it easier for businesses to get affordable loans. Even if you’ve been turned down for a traditional loan, you may be eligible to receive a loan through an SBA intermediary lender. Portions of SBA loans are backed by the government, taking some of the risk off of lenders and opening up more low-interest financing options for small businesses.

Recommended Lender: SmartBiz

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Through SmartBiz, you can receive SBA 7(a) commercial real estate loans from $500,000 to $5 million. Your loan can be used to purchase a commercial property or refinance your existing property.

If you’re expanding your business in other ways, SmartBiz also offers working capital and debt refinancing loans from $30,000 to $350,000. These funds can be used for hiring employees, purchasing inventory or equipment, marketing, and other business expansion plans. Interest rates for SmartBiz’s SBA loans are between 6.75% and 9% with repayment terms from 10 to 25 years.

To qualify, you must be an eligible business based in the US and must meet the requirements of a small business as defined by the SBA. You must be in business for at least 2 years. To qualify for a 7(a) commercial real estate loan, your credit score must be at least 675. For working capital and debt refinancing loans, a minimum credit score of 650 is required. Your credit report must be free of recent bankruptcies, foreclosures, settlements, charge-offs, and defaults on government loans. For commercial real estate loans, the real estate that’s purchased must be at least 51% owner-occupied.

Recommended Lender: Fundera

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You can also apply for SBA loans through Fundera. With Fundera, you can receive between $5,000 and $5 million with repayment terms between 5 and 25 years. Interest rates begin at 6.75%, and you can receive funding as fast as 3 weeks after applying.

Most borrowers that are approved for an SBA loan through Fundera have a credit score of 680, annual revenue of at least $180,000, and a time in business of over 4 years. When applying for an SBA loan through Fundera, the lender will walk you through the process and help you select the SBA program that’s right for you, including 7(a) loans, CDC/504 loans, or Microloans.

Best Loans For Working Capital

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You can’t operate a successful business without working capital. While your incoming cash flow should cover daily expenses in theory, sometimes you may fall a little short. This is when a working capital loan can help.

A working capital loan gives you the money you need to cover your operating expenses, from payroll to debt payments. These short-term loans give you access to the money you need right away and are paid back through regularly scheduled payments.

Recommended Lender: BlueVine

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BlueVine offers two financing options for business owners. The first is a line of credit from $5,000 to $250,000. Proceeds from your line of credit can be used as working capital or to fund any business expense. Repayment terms are set at 6 months or 12 months with rates as low as 4.8%. Monthly or weekly payment options are available.

To qualify for a BlueVine line of credit, you must have a credit score of at least 600. You must be in business for at least 6 months and have at least $100,000 in annual revenue.

Another financing option available through BlueVine is invoice factoring. If your working capital has been affected by unpaid invoices, invoice factoring offers a solution. BlueVine has factoring lines up to $5 million with rates starting at 0.25% per week. The lender provides 85% to 90% of the total of your unpaid invoice up front. Once the invoice is paid, you receive the remaining amount, minus the lender’s fees.

To qualify, you must be a B2B business with a minimum credit score of 530 and $100,000 in annual revenue. You must also be in business for at least 3 months to qualify.

Recommended Lender: Breakout Capital

breakout capital

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Another financing option to boost your working capital is a business loan from Breakout Capital. This lender issues loans up to $250,000 with repayment terms up to 24 months. Rates start at 1.25% per month, and you can select from daily, weekly, or monthly repayment schedules. A one-time origination fee of 2.5% of the total loan is charged by the lender. Prepayment rebates are also available if you choose to pay off your loan early.

To qualify, you must be in business for at least 1 year and have a personal credit score of at least 600. Monthly revenue of at least $10,000 is required to receive a Breakout Capital loan.

Breakout Capital also offers FactorAdvantage, an invoice factoring service. Through this service, you can receive up to $500,000 for your unpaid invoices. There are no time in business, personal credit score, or monthly revenue requirements to qualify.

Best Loans For Marketing & Advertising

You have an existing client base, but in order to scale your business and boost your profits, you need more customers. The best way to draw in new customers and clients is with a marketing and advertising campaign.

Unfortunately, effective marketing and advertising cost money — money that may not be in your budget. Instead of putting off marketing your business, consider a term loan to help you fund your marketing and advertising expenses.

A term loan is a loan that provides you with a set amount of money up front which is later paid back through regular installments. Repayment terms are typically spread out over a few years, and payments are made daily, weekly, or monthly toward the principal loan amount and fees and interest charged by the lender.

Since a term loan is for a specific amount of money, it’s important that you know exactly how much you need before applying. Take the time to calculate your marketing and advertising costs to ensure you receive the money you need for your campaign.

Recommended Lender: OnDeck

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OnDeck offers several financing options for your marketing and advertising needs. This lender has short-term and long-term loans available up to $500,000. Short-term loans are repaid within 3 to 12 months and have simple interest rates as low as 9%. Long-term options are available with repayment terms from 15 to 36 months with annual interest rates as low as 9.99%.

To qualify for OnDeck term loans, you must be in business for at least 1 year. A personal credit score of 500 and $100,000 in annual revenue are also needed to qualify. Origination fees of up to 4% are added to your loan, and you can sign up for fixed daily or weekly payments.

If you want a more flexible financing option, OnDeck also has lines of credit up to $100,000 with APRs starting at 13.99%. To qualify for a line of credit, you must be in business for at least 1 year, bring in $100,000 in annual revenue, and have a personal credit score of at least 600.

Best Loans For Cash Flow Problems

No business is immune to cash flow problems. Maybe it’s a slow season or an emergency expense affected your incoming cash flow. Regardless of your financial challenges, you need cash flow to keep your business operating as it should.

If temporary cash flow issues are impacting your operations, consider a financing option such as a merchant cash advance (MCA) a short-term loan to receive the money you need quickly. Merchant cash advances have a reputation for being one of the most expensive forms of financing. However, a financial product like American Express Merchant Financing can provide the benefits of MCAs without the notoriously high fees.

Recommended Lender: American Express Merchant Financing

American Express OptBlue

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Through American Express Merchant Financing, you can receive between $5,000 and $2 million that is repaid over 6, 12, or 24 months. A fixed fee between 1.75% and 20% is charged based on your creditworthiness and other factors, including term length. Your loan is repaid through daily debits or through your receivables, including American Express transactions.

To qualify for American Express Merchant Financing, you must have at least $50,000 in annual revenue and at least $12,000 in annual credit and debit receivables. Your business must accept American Express cards, and you must be in business for at least 2 years.

Recommended Lender: IOU Financial

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If you don’t qualify for American Express Merchant Financing, another short-term option to consider for resolving cash flow problems is a small business loan from IOU Financial. You can apply for $5,000 to $300,000 with repayment terms between 6 and 18 months. A factor rate of 1.15 to 1.31 is charged by the lender.

To qualify, you must sign a personal guarantee. You also need at least 10 deposits each month in your business checking account. A personal credit score of 600, a time in business of at least 12 months, and annual revenue of $120,000 are requirements to qualify for IOU Financial’s short-term business funding.

Best Loans For Cash Shortages

You need to make payroll, but your business banking account is running low. You have upcoming expenses, but the cash just isn’t there. If you’re facing cash shortages in your business, a line of credit can fill in the gaps.

A line of credit is a flexible form of revolving credit. Once approved, your lender will set a credit limit. You can make multiple draws up to and including your credit limit. Most lenders initiate transfers immediately, so you’ll receive the cash you need in your account as quickly as the next business day. You won’t have to wait for approval with each draw, so you’ll quickly and easily receive the money your business needs.

Fees and interest are only charged on the used portion of your credit line. As you make payments, funds will become available to withdraw again as needed.

Recommended Lender: Kabbage

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Kabbage issues lines of credit up to $250,000. Repayment terms are 6 months or 12 months, and your payment is automatically withdrawn each month. Kabbage charges fee rates between 1.5% to 10% for each month you carry a balance.

To qualify for a Kabbage line of credit, you must be in business for at least 1 year. Revenue requirements are: $50,000 annually or $4,200 per month for the last 3 months. There is no minimum credit score required to qualify. Loan approval and your credit limit are based on the performance of your business.

One standout feature of this lender is the Kabbage Card. In addition to taking traditional draws, you can use your Kabbage Card for instant access to capital. Once you use your Kabbage Card, a new loan will be added to your account with the same rates and terms as traditional draws.

Best Loans For Supplies & Inventory

Supplies and inventory are critical for the success of your business. Without your required supplies, your business won’t run efficiently. Without inventory, you won’t be able to service your customers. Your operations may slow down … or even come to a screeching halt.

While your incoming cash flow will often cover the costs of supplies and inventory, there may be times when this just isn’t enough. An emergency expense that comes at the wrong time or a seasonal uptick in sales are just two scenarios where it becomes difficult to handle the burden of purchasing supplies and inventory alone. When this occurs, consider the benefits of inventory financing.

Inventory financing is a loan or line of credit that is used to purchase supplies or inventory to keep your business operating as it should. You’ll receive the upfront cash you need to make your purchase, then repay the loan through regularly scheduled payments. This is an affordable way to purchase your supplies and inventory when your bank account is running low or you don’t want to tie up all your funds.

Recommended Lender: StreetShares

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StreetShares offers several financing solutions for the purchase of supplies and inventory. Through StreetShares, you can receive a Patriot Express line of credit between $5,000 and $250,000 with repayment terms of 3 to 36 months. Interest rates are between 6% and 14%, with a draw fee of 2.95%. Your line of credit is repaid weekly.

Installment loans between $2,000 and $250,000 are also available through StreetShares. You can borrow up to 20% of your annual revenue. These loans come with terms of 3 to 36 months. Interest rates are between 6% and 15% with closing fees up to 4.95%.

To qualify for a StreetShares installment loan or line of credit, you must be in business for at least 1 year and have annual revenue of at least $25,000. A personal credit score of at least 620 is required to receive a StreetShares line of credit.

Best Loans For Emergency Funds

Chart of Accounts

An emergency always strikes when we least expect it and brings with it expenses that just aren’t in our budgets. Emergency funding needs can put a dent in your bank account and temporarily derail your operations.

If you’re stuck without an emergency fund and shuffling around your finances isn’t a viable option, it’s time to consider a business loan. There are multiple financing options that will work for you  — such as credit cards, lines of credit, and short-term loans — but regardless of what you choose, you need financing and you need it fast.

Recommended Lender: American Express Business Loans

American Express OptBlue

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With an American Express business loan, you can receive $3,500 up to $50,000 with repayment terms of 12, 24, or 36 months. Amex loans come with fixed interest rates starting at 6.98% up to 19.97%. Amex loans can be approved within seconds and funds sent within 3 to 5 business days.

To qualify, you must be the cardholder on an eligible American Express Business Card and be a US citizen that’s at least 18 years old. You must also be pre-approved in order to apply.

Recommended Lender: FundBox

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If you don’t qualify for an American Express business loan, another fast financing option for small business owners is Fundbox. You’ll receive a credit decision for a Fundbox line of credit in just minutes. Once approved, you can make your first draw instantly and receive a deposit as soon as the next business day.

Through Fundbox, you can apply for flexible lines of credit up to $100,000. The lender charges fees starting at 4.66% of the draw amount. Repayment terms are set at 12 or 24 weeks.

To qualify, you must have an active business checking account and at least two months of activity in Fundbox-supported accounting software. If you don’t work with accounting software, you can supply bank statements from the last three months. You should also have a minimum annual revenue of $50,000, and your business must be based in the US.

Best Loans For Starting A Business

All of these financing solutions work well for established businesses, but what if you need money to get your business up and running? Time in business and annual revenue requirements could hold you back from receiving a loan, even if you have a high credit score.

Put your good credit to use by applying for a personal loan to use for business. Because it’s a personal loan, factors such as your time in business or revenues won’t be a factor for approval. Instead, the lender will consider your own personal credit history and income when approving your loan. If you have good credit and enough income to support a loan payment, you can receive a very affordable loan that can be used to launch your business or cover startup costs.

Recommended Lender: LendingPoint

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You can receive up to $25,000 with a LendingPoint personal loan. Repayment terms are 24 to 48 months. APRs for LendingPoint personal loans range from 15.49% to 35.99%. Lending Point charges origination fees between 0% and 6% of the total loan amount.

To qualify for a loan, you must reside in one of the 43 states where LendingPoint operates. Applicants in Washington D.C. are also eligible to apply. Additional requirements include a minimum income of $20,000, a verifiable bank account in your name, and a credit score in the 600s.

Recommended Lender: Prosper

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Prosper personal loans are available in amounts from $2,000 to $40,000. APRs range from 6.95% to 35.99%. Repayment terms are 3 years or 5 years.

To qualify for a Prosper loan, you must have a credit score of at least 640. You must also have a debt-to-income ratio below 50%. You must have a source of income, although there are no minimum income requirements. Your credit report must have less than five credit bureau inquiries within the last 5 months, no bankruptcies within the last 12 months, and at least three open trades.

Recommended Lender: Upstart

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Upstart personal loans are available from $1,000 to $50,000. Repayment terms are 3 years or 5 years with fixed rates between 8.89% and 35.99%.

To apply for an Upstart loan, you must be at least 18 years old. Applicants in Iowa or West Virginia are ineligible to apply. You must have a personal bank account with an institution located in the US, and you must have a full-time job, a job offer within the next 6 months, a part-time job, or another source of income. A minimum personal credit score of 620 is required to qualify.

Further credit requirements include no delinquent accounts, bankruptcies, or public reports. You must have less than 6 credit inquiries from the last 6 months, although student loans, mortgages, and vehicle loans are excluded. Upstart will also consider your DTI when approving your loan.

What To Consider When Choosing A Lender

Now that you have an idea of the types of loans available for your business, the next step — if you choose to move forward — is to find your lender. Maybe you’re torn between a few lenders, or you want to do your own research to find the most affordable loan option. When you’re searching for a lender, ask yourself the following questions.

How Much Money Do I Need?

This simple question will help you narrow down the playing field. If you need $100,000 but a lender has maximum loan amounts of $10,000, move on to the next option. Before you apply, know the amount that you need — and make sure it coincides with the amount that you can afford.

Do I Meet All Requirements?

Even if you meet the credit score requirements of the lender, make sure you meet all other requirements as well. Get the most up-to-date view of your credit score by receiving your free credit score online. Most lenders have basic requirement for age and citizenship. However, others have minimum requirements for your annual income and revenues, time in business, and DTI ratio.

How Will I Use The Loan?

Some lenders have restrictions on how loan proceeds are used. For example, an equipment loan can’t be used as working capital. It can only be used to purchase equipment. Plan how you will use the loan to determine which type of loan best fits your financial needs. Then, find a lender that offers this type of loan.

What You Need To Apply For A Business Loan

Improve Business Loan Application

By this point, you should know the amount of money you need (and can afford) and the type of loan that’s best for your business. You may even have a list of lenders that you’re considering. Before you apply, know what to expect before heading into the application process.

For all loans, you’ll need basic information about yourself and your business. This includes:

  • Business Name
  • Legal Name
  • Contact Information: Email address, phone numbers, address
  • Annual Income
  • Annual Revenue
  • Federal Tax ID
  • Social Security Number

Depending on the type of loan and the amount you’re seeking, you may have to provide additional information and documentation, including:

  • Business & Personal Income Tax Returns
  • Profit & Loss Statements
  • Balance Sheets
  • Debt Schedules
  • Voided Check
  • Business Plan
  • Driver’s License

Requirements vary by lender, so make sure to review and submit all documentation requested during the application process. Also, be sure to keep in contact with your lender to provide additional information and documentation as needed until your loan is approved and funded.

Final Thoughts

Having a high credit score will help you obtain a business loan, but don’t lean solely on your solid credit. Research your lenders, know your options, and find products suitable for your financial needs to ensure you get the low-interest, affordable loan your business deserves.

The post The Best Business Loans For Good Credit appeared first on Merchant Maverick.

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Fast Approval Business Credit Cards For Small Business Owners

instant approval business credit cards

When you run a small business, funding needs can arise out of nowhere, leaving you scrambling for the fastest cash possible. This is clearly shown by the frequency with which people search for terms like “instant approval credit cards.” So, how quickly can you really get a new business credit card in your hands, and what can you do to ensure the process goes as rapidly as possible?

What Are Fast Approval Credit Cards?

The terms “fast approval credit cards” and “instant approval credit cards” are used interchangeably to refer to the same kinds of credit cards. Of course, “instant” is an appealing word to use from a marketing perspective. Just remember: if it sounds too good to be true, it most likely is.

Are Instant Approval Credit Cards Really Instant?

In a word: No.

You’ve probably received credit card mailers marked as “preapproved offers,” or, similarly, as offers with “preliminary approval.” Does this mean that if you accept the offer, you get a card to use immediately? Sadly, no, it does not.

When you get that “preapproved” credit card offer, all that means is that the credit card issuer has done a soft pull of your credit score and found that you’re likely to be in the card’s target demographic. However, if you respond favorably to the offer, the card issuer will continue with the underwriting process. Only after the successful completion of this process will you be sent a card — a process which is, of course, not instant, as snail mail is not instant!

Now, there are certain instances where you can get instant (or near-instant) approval for a business credit card and get issued an instant card number after approval. However, keep in mind that most credit card issuers either won’t do this or will only do this with particular cards. American Express is one of the few big players in the industry offering instant card numbers for all its credit cards, yet some consumers still report being unable to get an instant card number after getting approved.

While it may be possible for you to get an instant card number with your fast approval credit card, don’t count on being able to do so. It’s one of the more opaque aspects of the credit card industry, and you might not get an instant number despite getting instant approval for a card that putatively offers this feature. Plus, the instant card number is of limited utility anyway — you won’t be able to use it for in-person purchases.

If My Application Is Approved Instantly, Can I Start Using My Card Immediately?

No matter how quickly you’re approved for a business credit card, you’ll still have to wait for your card to arrive in the mail. Just as there is no such thing as a free lunch, there is no such thing as a truly “instant” business credit card, unless you’re able to obtain an instant card number.

Who Qualifies For Fast Approval Credit Cards?

Fast approval credit cards don’t work similarly for all applicants. The truth is, whether the card you apply for is a “fast approval” card or not, you’re going to be approved more quickly if you have good-to-excellent credit. It’s quite the catch-22, as those most likely to require a credit card in as little time as possible are largely not those with the best credit.

With good or excellent credit, you may well be approved nearly instantly upon meeting the card issuer’s credit and income requirements. When an applicant has less impressive credit, a credit card issuer has more work to do to determine the applicant’s financial worthiness. This results in a process that is less instant than many business applicants would prefer.

To see how credit card approval typically plays out, have a look at the following (taken from Capital One’s application FAQ):

Capital One will attempt to provide a decision in 60 seconds or less. Sometimes system availability affects our ability to make a credit decision or, in some cases, we need to collect additional information. If so, you will receive further details either via email or letter within 7-10 business days.

If your credit isn’t so hot, card issuers are more likely to require “additional information” of you.

Timeline For A Typical Business Credit Card Application

instant approval business credit cards

When you’re seeking to get a business credit card in as little time as possible, there are some simple things you can do to ensure that you don’t end up waiting any longer than is absolutely necessary.

How To Increase Application Speed

If everything goes right, you can often be approved for a new business credit card in less than a minute. Let’s go through what you can do to make this happen.

Check Your Credit Score

When you know your credit score, you can apply for the business credit cards you know you’ll be likely to qualify for. Remember, the more your credit score exceeds the card issuer’s minimum requirements, the more likely it is that you’ll be approved quickly.

Not sure what your credit score is? Don’t pay the credit bureaus just to learn your own credit status! Instead, read our piece on the best free credit score sites and check your credit score without giving a dime to anybody.

Gather Your Business & Financial Information

Be sure to have the following information ready before you apply for a business credit card.

  • Business Name (if you’re a sole proprietor, use your name)
  • Business Address
  • Type Of Business (corporation, partnership, LLC, etc.)
  • Your Business Role
  • Tax ID Number (use your Social Security number if you’re a sole proprietor; use your Employer Identification Number (EIN) for other business types)
  • Years In Business
  • Number Of Employees
  • Annual Business Revenue
  • Estimated Monthly Spending

Head To The Internet

Getting approved for a credit card online is quicker than getting approved via phone or snail mail. Take advantage of that big beautiful Information Superhighway when applying for that business credit card.

Best Overall Fast Approval Business Credit Card

Capital One Spark Classic For Business


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Annual Fee:


$0

 

Purchase APR:


24.74%, Variable

The Capital One Spark Classic For Business is a very solid business credit card — one that offers fast approval to business owners with at least fair (or average) credit.

Spark Classic is the most egalitarian of Captial One’s triumvirate of business credit cards. The card’s minimum credit score is 580, making Spark Classic the only Capital One business card available to entrepreneurs with fair credit. Meet the credit requirements, and you’re likely to get that elusive Instant Approval.

The card’s APR is relatively high and the rewards program is rather modest (you get 1% cash back on all purchases), but the card’s true value lies in its ability to build your credit. Capital One will report your credit activity to multiple credit bureaus (not all issuers of business credit cards do this), which means that with every monthly payment you make on time, you improve your credit score. With enough use, the Spark Classic can help boost your credit score to the point where you’ll be eligible for business cards with lower APRs and better rewards programs.

Best Fast Approval Credit Card With 0% Intro Rate

Chase Ink Business Unlimited


chase ink business unlimited
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Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

Chase Ink Business Unlimited — Chase’s newest business credit card — may have a higher standard for instant approval than the Spark Classic (the Ink Business Unlimited requires an applicant to have good or excellent credit), but if you meet this threshold and are able to get instant approval, the Ink Business Unlimited is an excellent choice for business use, particularly if you have some large purchases to make within a year.

Chase Ink Business Unlimted offers a 0% introductory APR for the first 12 months. This means that if you need to make a large emergency purchase, you can do so without the added pressure of having to pay off your entire balance right away to avoid being hit with interest charges.

The Ink Business Unlimited also offers 1.5% cash back on all purchases, as well as a $500 cash back bonus after you spend $3,000 within the first three months.

Best Fast Approval Credit Card For Cash Back

Capital One Spark Cash Select For Business


capital one spark cash select
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Annual Fee:


$0

 

Purchase APR:


14.74% – 22.74%, Variable

Capital One Spark Cash Select For Business is a business credit card offering instant approval only to those with excellent credit. But if you make the grade, you stand to be handsomely rewarded with a generous cash back program.

Spark Cash Select offers a flat 2% cash back on all purchases. It’s a higher cash back earning rate than you’ll find with most competitors offering a flat cash back rate, and as such is an excellent choice for entrepreneurs with excellent credit looking for a fast approval card with great cash back earning potential. You won’t have to bother tracking spending categories — just earn 2% cash back on all purchases.

As nice as that unlimited 2% cash back is, the card does carry a $95 annual fee after the first year. If you’re dead-set against paying an annual fee, consider Capital One’s Spark Cash card instead.

Capital One Spark Cash For Business


capital one spark cash select
Compare

Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


18.74%, Variable

You’ll earn unlimited 1.5% cash back instead of 2% and your card won’t have Select in the name, but on the plus side, the Spark Cash carries no annual fee.

Best Fast Approval Credit Card For Travel Rewards

Blue Business Plus Credit Card from American Express



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Annual Fee:


$0

 

Purchase APR:


12.99% – 20.99%, Variable

The Amex Blue Business Plus card is a great business card for those looking for travel rewards value. Furthermore, as I mentioned, American Express is one of the few card issuers that will, in many cases, issue you an instant card number after you get approved.

With the Blue Business Plus, you’ll earn 2x rewards on all purchases up to $50,000 each calendar year. Your points can be used to book travel via American Express Travel, a well-regarded travel rewards program. Your points can even be spent on taxi fare in New York City!

An Alternative To Fast Approval Credit Cards: Online Business Lines Of Credit

If you need funding for your business ASAP but are not enthused about the fast approval business credit cards currently available, consider a business line of credit. Lines of credit work more like credit cards than term loans. You borrow funds up to a certain limit and you only pay interest on what you borrow.

Some lenders offer instant approval, in which case the only waiting you’ll need to do will be for the funds to arrive in your account. Let’s take a look at a few business lines of credit offering instant approval.

Kabbage

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Kabbage is well-known for its remarkably quick application process. With Kabbage’s streamlined approval process, you may well be able to start drawing funds within a few minutes of getting approved. Want fast money? Kabbage can deliver.

However, that doesn’t mean Kabbage is all sweetness and light. The costs associated with a Kabbage line of credit are relatively high. You may end up paying 10% of your borrowing amount each month in fees. Your effective APR ranges from 24% to a whopping 99%.

With rapid approval and a maximum borrowing amount of $250,000, Kabbage’s lines of credit hold significant appeal for the entrepreneur in need of fast cash, despite the drawbacks. Now, let’s check out another online lender offering business lines of credit.

Fundbox

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Fundbox’s business lines of credit are easier to qualify for than those of Kabbage — you only need to have a compatible business bank account for at least six months or compatible accounting/invoicing software for at least three months. There are no time-in-business requirements and there’s no strict credit score requirement to meet.

You can establish a maximum credit line of $100,000 with Fundbox, so larger businesses might find Kabbage’s lines of credit more fitting of their needs.

Final Thoughts

It always helps to be aware of your full range of options when looking for expedited business funding. If your poor credit score and/or lack of business track record puts you out of the range of most of the products listed here, you can always consider a secured business card. They don’t typically offer instant approval, but secured business cards are among the easiest business cards to obtain due to the requirement that you post collateral. The arrangement means you’re essentially borrowing from yourself. Read our piece on secured business credit cards for more information.

Want to learn even more about business funding? Check out the following resources.

  • How To Get A Small Business Line Of Credit
  • Business Credit Cards For People With Bad Credit
  • Merchant Maverick’s Small Business Loan Comparison Chart

The post Fast Approval Business Credit Cards For Small Business Owners appeared first on Merchant Maverick.

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How To Finance A Medical Marijuana Dispensary

Financing any small business is a headache, but acquiring funding for a medical marijuana dispensary can be even more of a challenge. Medical — and recreational — marijuana is legalized in states across the nation, but it is still illegal under federal law. These laws make it more difficult for owners of medical marijuana dispensaries to apply for loans, open merchant accounts, or receive other types of financing to cover operating expenses or to scale their businesses.

However, even though financing may be limited, there are options out there. To fund your business, you have to know where to look and even get a little creative when other options don’t pan out. Whether you need money to expand your business or you’re seeking funding for your startup, we’ll review the financing options available to you and how to qualify. Read on to learn more and to move toward financing your medical marijuana dispensary.

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Medical Marijuana Dispensary Funding Challenges

Obtaining funding for any business is no easy task. You have to find a lender that offers the best rates and terms to receive the most affordable loan. Once you’ve identified your lender, you go through the underwriting process, making sure you have all of your paperwork in order to prove that your business is qualified to receive financing. Challenges may pop up throughout the process. Depending on the lender you work with, it may take weeks or even months to receive financing, from start to finish.

With a medical marijuana dispensary, there are even more hurdles you have to clear on the race to financing. Even though more states are legalizing medical marijuana, it remains illegal under federal law. Most lenders want to avoid the potential legal repercussions of working with businesses in the cannabis industry, as these businesses are considered high-risk. Even opening a checking, savings, or merchant account for most medical marijuana dispensaries is a hassle, while receiving financing through traditional lenders is nearly impossible.

And if you do find a financial institution that will allow you to open accounts, there are many associated costs, including fees for background checks and for regular reports to the Treasury Department’s Financial Crimes Enforcement Network. Businesses that don’t have merchant accounts and work with cash have additional business expenses to protect their earnings — think high-tech video surveillance systems and reinforced windows and doors.

In other words, medical marijuana dispensaries have the same expenses as regular businesses (utility bills, property leases, etc.) as well as additional expenses to keep their business protected. These expenses pile up quickly, but due to legal issues, traditional financing is often not an option. Therefore, medical marijuana dispensaries either have to make enough capital on their own to keep the business moving forward, or these business owners have to seek out other means of financing.

See our guide on best practices for using personal credit cards for business expenses

Can I Get A Dispensary Loan From A Bank?

Banks are insured by the Federal Deposit Insurance Corporation. A bank that works with companies that violate federal law will not be insured by the FDIC. This includes medical marijuana dispensaries. Instead of taking on this risk, most banks opt to simply avoid working with businesses in the cannabis industry.

There are also legal issues that a bank could potentially face when working with businesses in the cannabis industry. For example, a bank could be charged with money laundering for accepting deposits from a medical marijuana dispensary. Although the odds of this law being enforced are slim, lenders simply don’t want to take that risk.

For those reasons, most banks will not loan money to medical marijuana dispensaries or other businesses in the cannabis industry. While a FinCEN report showed that over 400 banks in the U.S. operated accounts with marijuana businesses in early 2018 — up 20% from early 2017 — marijuana businesses still do not have access to a full range of banking and financial services offered to other businesses, such as loans, credit cards, and merchant accounts.

When most business owners can’t receive funding from banks, they turn to another great resource: the Small Business Administration. The SBA provides educational materials, training, and low-interest, long-term loan options when small businesses can’t receive traditional loans. Do medical marijuana dispensaries receive access to these same loans?

Unfortunately, the SBA does not work with medical marijuana dispensaries. A policy went into effect on April 3, 2018, that prohibits SBA intermediary lenders from providing loans to businesses in the marijuana and hemp industries.

Though this news may be understandably frustrating if you’re seeking an affordable loan, there are financing options available to you. You just won’t find them at a bank or through the SBA.

Equity Financing For Medical Marijuana Dispensaries

business line of credit loan

One option that you may consider to fund your medical marijuana dispensary is equity financing. With equity financing, an investor or group of investors will provide you with the capital your company needs in exchange for ownership interest in your business.

Debt refinancing — traditional loans, lines of credit, and other financial products — requires you to make regular payments along with interest and fees. With equity financing, you’ll receive the money you need without having to make these regular payments. However, the tradeoff is that your investor will own a stake in your company. Once your business becomes profitable and successful, your investor will be able to take a percentage of your profits for the life of your business, unless you buy them out.

The benefit of equity financing is that you won’t have to worry about paying interest or regular payments right away. The drawback is that you are giving up ownership, and in some cases, the investor may be able to have a say in the operations of your business. For example, if later down the road you decide to make a large purchase to expand your business, the equity investor may disagree. With equity financing, you no longer have full control over your business.

The Best Loans For Marijuana Businesses

If equity financing isn’t for you and traditional bank financing and SBA loans are off the table, how do you get financing for your medical marijuana business? Alternative lenders have made it easier than ever to receive funding. While rates and terms may not be as favorable as traditional financing, solid revenues and a high credit score can help you score affordable loans to fund operations or expansion of your business.

While you may find alternative lenders are more willing to work with your business, just know ahead of time that some lenders may have restrictions on financing businesses in the cannabis industry. Before applying, do your research to find lenders that work with medical marijuana dispensaries and other high-risk businesses.

You also need to consider what type of financing you need for your business. Whether you need a flexible line of credit or financing to purchase new equipment, alternative lenders have options available for you.

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Short-Term Loans

When you receive a short-term loan, you’ll receive one lump sum that can be used for any business purpose. A short-term loan can be used as working capital, to purchase equipment, for hiring new employees, or for other business expenses.

Although some short-term loans are true to their name and have shorter terms of 12 months or less, some lenders have repayment terms up to 3 years. Depending on the lender you choose, you may have daily, weekly, or monthly payments.

One way that short-term loans differ from other loan options is that most do not have an interest rate. Instead, a multiplier known as a factor rate (or factor fee) is used by the lender. This factor rate is a one-time fee that is added to the cost of the loan and replaces traditional interest. Like interest rates, your factor rate is typically determined by a combination of factors such as the performance of your business and your personal and business credit histories.

One of the benefits of short-term loans is that you often receive money quickly. Some lenders provide funding in as little as 24 hours, while others may approve and fund your loan in 3 to 5 days.

Equipment Financing

If you need capital to purchase new equipment, equipment financing is an option that’s available to you. With equipment financing, you can purchase nearly any type of equipment for your business, from vehicles to point-of-sale systems to furniture and fixtures.

There are two types of equipment financing. The first is an equipment loan. When you receive an equipment loan, you’ll pay 10% to 20% of the total cost of the equipment. The lender will pay the rest of the costs so that you can take possession and put the equipment into use immediately. If you have good credit, you may qualify for $0 down financing. However, putting at least a small percentage down, even when it’s not required, helps lower the cost of borrowing and your payment amounts.

After you’ve received your equipment, you’ll pay the borrower on a scheduled basis — typically weekly or monthly. Your payments will go toward the balance of the loan as well as the interest charged by the lender. Once you have made all payments as scheduled, you take full ownership of the equipment.

The second type of equipment financing is an equipment lease. With an equipment lease, you may also have to pay a down payment. Once you make the down payment, you can use the equipment through your lease period. Once the lease period ends, you return the equipment and sign a new lease for updated equipment.

With an equipment lease, you never own the equipment unless you pay the remaining balance at the end of your lease. A lease may be a good idea if you plan to upgrade any of your equipment regularly. Equipment leases may also come with lower down payment requirements and lower monthly payments. However, you’re essentially renting the equipment and you may end up spending much more over the long term with leasing.

Lines Of Credit

If you need a flexible form of financing, a line of credit is an option to consider. With a line of credit, you don’t receive just one lump sum. Instead, the lender will set a credit limit for your account. You can make multiple draws from your line of credit up to and including the credit limit.

With a line of credit, interest or a fixed fee will only be charged on the borrowed amount. Fees and interest vary by lender and are usually based on your creditworthiness or business performance.

Even if you have credit challenges, you may qualify for a line of credit. Some lenders base their approvals solely on cash flow and other performance factors.

A line of credit is good for any small business because it is so flexible. Funds can be used for any business purpose, and you won’t have to wait for approval. Once you initiate the draw, the lender typically transfers the funds to your banking account immediately, and you can access your funds as soon as the next business day.

Lines of credit are also flexible in how they’re used. You can use funds to cover operating expenses, hire new employees, handle an emergency situation, or for any other business purpose.

Merchant Cash Advances

If you haven’t been in business long, have a low credit score, or don’t qualify for other loan options, you may consider applying for a merchant cash advance.

Even though you can receive funding quickly through a merchant cash advance, these loans often have high interest rates and short repayment terms. This is why it’s more important than ever to do your homework to find a lender with the best rates and terms.

When you take a merchant cash advance, you agree to sell future revenue to the lender. The lender pays you a lump sum amount, and a factoring fee is added to the amount of the loan. Other fees may also be added.

The lender will then withdraw money from your account on a regular basis. Most lenders take payments daily, while others may have weekly or monthly schedules. These withdrawals will be made until the loan balance and all fees have been repaid.

Some merchant cash advances have fixed payments. Others deduct a specific percentage of your sales. When sales are up, your payment is higher. When sales are down, your payments are lower.

The funds from merchant cash advances can be used for any business purpose, including the purchase of supplies, inventory, and equipment or for use as working capital.

Crowdfunding Your Medical Marijuana Dispensary

go fund me for business start up

Another option for financing your medical marijuana dispensary is crowdfunding. With the rapid growth of the internet, crowdfunding has become a popular option for many small businesses, even those in controversial industries.

Crowdfunding is a way to raise money from multiple investors in exchange for equity or rewards. With crowdfunding, you’ll promote your campaign online by sharing with friends and family and posting links to social media. Anyone can donate to help you reach your fundraising goal.

There are two types of crowdfunding campaigns. The first is equity crowdfunding, which is when you give up equity in your business in exchange for investments. The second is non-equity crowdfunding. With this type of campaign, you won’t give up ownership of your company but will instead offer a reward or benefit to investors.

The tricky part of crowdfunding is that medical marijuana dispensaries are prohibited from posting on many of the most popular crowdfunding platforms. However, there are a few platforms that allow businesses in the marijuana industry to launch and promote campaigns.

One crowdfunding platform to consider is Fundable. Through Fundable, you have the option of launching a rewards campaign, an equity campaign, or both. It’s important to note that equity campaigns on Fundable can take years to complete. There is no limitation on the length of your equity campaign. However, you must pay a hosting fee of $179 per month through the duration of your campaign.

The Best Financing Options For Startups

As we’ve already established, finding financing for your medical marijuana dispensary can be a challenge. While there are options available for established businesses, what if you’re brand new to the industry or haven’t even opened your doors yet?

If you need financing to get your business off the ground, there are funding options for startups. The first step is to determine what expenses you’ll have and how much money you’ll need before exploring your financing options.

The Costs Of Starting A Medical Marijuana Dispensary

A medical marijuana dispensary has many of the same expenses as any other startup business, with a few added expenses since this is still such a new and controversial industry.

Before you even get your business started, you will have to apply for licenses and permits. Application and licensing fees range from a few hundred dollars to several thousand. In the state of Colorado, for example, licensing fees are $20,000. One of the first things you should do before starting your business is to learn about the laws, requirements, and fees specific to your state.

Because you’ll operate a storefront, you’ll need to rent, lease, or purchase commercial space. If utilities aren’t included in your monthly rent, these additional expenses will add to your total startup costs. You may have to do some remodeling to make the space suitable for your business, which will add in more costs.

Even if you plan to run a very small dispensary, you’ll still need staff. Whether you’re hiring one person or ten, you’ll need to consider the costs of hiring and training staff members and managers.

Additional purchases for your dispensary include a POS system, furniture, fixtures, and a high-tech security system. One of the most important expenses is your inventory, which is a recurring cost you should consider when calculating your total business expenses.

When planning how to fund these expenses, there are a few financing options to explore. One option may work well to best fit your needs, or you may consider combining a few options to fully fund your startup business.

Crowdfunding

Crowdfunding is a way to raise funding for your startup business. For a medical marijuana dispensary, an equity-based campaign is typically the best option. Even so, it may take several months or longer to raise the money you need to start your business.

Unlike other businesses, you can’t just go to any crowdfunding site. Marijuana dispensaries are prohibited from using some of the most popular crowdfunding platforms. However, as I mentioned above, Fundable is one option to consider. You can also explore options that are centered solely on the cannabis industry, such as Fundanna and CannaFundr. These are relatively new options, so it’s important to do your research, explore all associated fees, and know what you’re getting into before signing up.

Alternative Lenders

Alternative online lenders could help you receive the money you need to fund your medical marijuana dispensary. These lenders are typically more flexible to work with than traditional lenders, although interest rates and fees may be higher and terms not as favorable. Alternative lenders provide a variety of financing options for you, including short-term loans and lines of credit.

Before applying, make sure that you choose a lender that works with businesses in the cannabis industry and other high-risk businesses. Some lenders have restrictions on lending to medical marijuana dispensaries, so make sure to choose a lender that is willing to work with you. There are even online lenders that specialize in financing businesses in the cannabis industry.

Personal Loans For Business

If you have a solid credit score and steady income, you may qualify for a personal loan that you can use to finance startup expenses.

This is an option that many startups choose because the revenue, time in business, and business credit score aren’t taken into consideration for loan approval. However, you do have to disclose how the funds will be used. Some lenders may not loan money due to the industry you’re in, so you may have to shop around for a lender willing to work with your situation.

Investors

One way to finance your startup is to find an investor. Seek out private equity firms, venture capitalists, or angel investors that will provide the funds you need in exchange for a stake in your company.

Credit Cards

A business credit card is a good option for any business. A credit card can be used to pay recurring expenses, cover an emergency, or pay for startup expenses. There are plenty of great credit card options for good and fair credit borrowers. If you have bad credit, you may also qualify for unsecured or secured credit cards, although your credit limit will be lower and interest rates higher.

What You Need To Qualify For Medical Marijuana Dispensary Business Financing

The requirements needed to qualify for medical marijuana dispensary financing are similar to requirements for any other type of business.

Your requirements will vary based on the lender you select, as well as the type of financing you seek. For example, applying for a business credit card may require basic information, such as your name, the name of your business, contact information, and annual revenue. Applying for a loan or line of credit may require additional information and documentation.

Before you gather your documents, though, there is some prep work that can be done on your end. Calculate how much money you need for your business. Then, figure out if your business is able to afford the loan.

Next, pull your free credit score online. If you have credit challenges, working to build your credit may help you qualify for more options at better rates. If you’re in a time crunch to receive your financing, there are bad credit loan options available, but you should expect higher fees and interest and a more expensive overall cost of borrowing.

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Once you’ve established how much money you need (and can afford) and where you stand in terms of credit, it’s time to start shopping for lenders. After you’ve narrowed down your selection, understand the requirements of each lender. Again, this varies but you should generally expect to present the following:

  • Personal Information: Name, Social Security Number, and contact information
  • Business Information: Business name, address, and Federal Tax ID
  • Business & Personal Credit Score
  • Personal Background Check
  • Business Licenses & Permits
  • Business & Personal Bank Statements
  • Profit & Loss Statement
  • Income Statement
  • Balance Sheet
  • Detailed Business Plan

Final Thoughts

Operating or opening a medical marijuana dispensary comes with its challenges. While many options available to other businesses aren’t open to you, this doesn’t mean that you won’t be able to find financing. With a little research and creativity, you can find a lender that is willing to work with you to help make your business a success.

Want to get started with a loan for your medical marijuana business right away? Try LoanBuilder.

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The post How To Finance A Medical Marijuana Dispensary appeared first on Merchant Maverick.

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The Best Airline Credit Cards For Businesses

One of the best ways a frequent flyer can save money is through a credit card designed specifically for air travel. These cards often give you bonus miles when you purchase airfare or spend money on other travel expenses. Plus, you can usually earn miles for making regular purchases, such as for gas or on meals at restaurants. Cards can also come with other perks, such as access to VIP lounges or free checked bags. All in all, having a good, airline-specific card can make your travel cheaper and more relaxing, allowing you to focus on what matters: making your business better.

As with many credit cards, there are numerous options with plenty of variables to consider. Don’t know which one might be the best fit for your business? Keep reading to get the full breakdown.

Best For Recommended Credit Card
American Airlines Barclays AAdvantage Aviator Business Mastercard
Delta Air Lines Delta Reserve Credit Card for Business from American Express
Southwest Airlines Southwest Rapid Rewards Premier Business Credit Card
United Airlines United MileagePlus Explorer Business Card
Alaska Airlines Alaska Airlines Visa Business Credit Card from Bank of America
JetBlue Airways JetBlue Business Card from Barclays
General Travel Capital One Spark Miles Select For Business
Bonus Offer Capital One Spark Miles For Business
No Annual Fee Bank of America Business Advantage Travel Rewards World Mastercard
Rewards Program Chase Ink Business Preferred

How Airline Credit Cards Work

Airline credit cards give you rewards for purchases on travel, usually with a specific airline and—in some cases—when booking at hotels or car rentals. They can give you additional rewards in other categories, too, including purchases on gas, at restaurants, or on cell phone services. Finally, it’s not uncommon to receive rewards for any charges made on the credit card, although your earn rate will often be relatively low.

How Much Are Airline Miles Worth?

This really depends on the airline and the rewards program that comes bundled with your card. As a general rule of thumb, one air mile equals one cent; however, it can frequently be worth more on an array of airlines.

How Can I Redeem Airline Miles?

You’ll be able to redeem your miles when booking flights with the specific airline tied to your card (unless you have a general travel card). Some redemption programs also let you use your miles on other travel-related purchases, such as on hotel rooms or car rentals.

Benefits & Drawbacks Of Airline Credit Cards

Airline credit cards provide frequent flyers with an excellent way to earn rewards simply by traveling. You can also use your card on regular purchases to earn miles, ultimately saving you money when it comes time to book flights. All in all, an airline credit card could be a great tool to add to your business’ money-saving arsenal, especially if there’s already an airline that you use frequently for air travel.

However, airline-specific cards often don’t always offer much flexibility. That’s because you’ll be tied down to one specific airline, both when it comes to how you earn and how you redeem rewards. If you need greater flexibility because you frequent multiple airlines but still want to earn extra rewards while traveling, you’ll likely want a general travel card that’s not connected to a single airline.

Best Credit Cards By Airline

Because many air travel cards are for specific air carriers, you may want something that fits your favorite airline. Here’s a look at the best cards offered by some of the major airlines:

American Airlines: Barclays AAdvantage Aviator Business Mastercard

Barclays AAdvantage Aviator Business Mastercard



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Annual Fee:


$95

 

Purchase APR:


17.99% or 26.99%, Variable

This co-branded card from American Airlines and Barclays offers two AAdvantage miles for every dollar you spend on eligible American Airlines purchases. You’ll also keep that two miles per dollar clip when you make eligible purchases at office supply, telecom, and car rental merchants. Everything else will net you one mile per dollar spent.

Beyond base rewards, the welcome offer grants you 50,000 bonus miles once you make a purchase within your first 90 days. You’ll further nab a 5% AAdvantage mileage bonus on your account anniversary based on the total number of miles earned using your card.

Other benefits include a free checked bag for you and up to four companions on American Airline itineraries as well as a companion fare for one guest after you spend $30,000 during an account year. In addition, the AAdvantage Aviator Business Mastercard carries no foreign transaction fees and boasts preferred boarding.

Those that frequent American Airlines may also want to check out the AAdvantage Platinum Select World Mastercard from CitiBusiness. It packs in the same base rewards as the Aviator Mastercard; however, it lacks in terms of the extra perks and benefits.

Delta Air Lines: Delta Reserve Credit Card for Business from American Express

Delta Reserve Credit Card for Business from American Express



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Annual Fee:


$450

 

Purchase APR:


17.74% – 26.74%, Variable

Frequent flyers of Delta will want to consider the Delta Reserve Credit Card for Business from American Express. Expect to snag two miles for every dollar you spend on Delta purchases. Everything else will earn one mile per dollar. It’s also worth noting that if you have SkyMiles membership, you’ll earn an additional five miles per dollar on Delta-marketed flights. That means you’ll rack in an impressive seven miles per dollar when you fly Delta.

Otherwise, this card offers 40,000 bonus miles and 10,000 Medallion Qualification Miles when you spend $3,000 in your first three months. Further perks include 15,000 bonus miles and 15,000 Medallion Qualification Miles each calendar year when you spend $30,000, plus you’ll be able to double those bonuses when you break $60,000 spent in a calendar year. There are also some other standard travel bonuses, such as a free checked bag, priority boarding, and complimentary access to Delta Sky Club.

Do be aware that there’s a rather hefty $450 annual fee bundled with this card. That means you’ll need to spend a decent amount to offset the fee.

Other options for Delta riders include the Gold Delta SkyMiles Business Credit Card and the Platinum Delta SkyMiles Business Credit Card, both from American Express. Both are bundled with the same base reward rate as the Delta Reserve card, but don’t pack the same punch when it comes to additional perks.

Southwest Airlines: Southwest Rapid Rewards Premier Business Credit Card

Southwest Rapid Rewards Premier Business Credit Card


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Annual Fee:


$99

 

Purchase APR:


17.99% – 24.99%, Variable

If you fly Southwest regularly and are looking for a business credit card to pick up Southwest-specific rewards, the Southwest Rapid Rewards Premier Business Credit Card from Chase is your only option. It doles out two points per dollar on Southwest purchases and one point per dollar on everything else.

You’ll be able to check your first two bags for free and you won’t have to worry about change fees. If you make $3,000 in purchases during your first three months, you’ll be rewarded with 60,000 bonus points. You’ll pick up some more bonus points on your account anniversary, too, as this card dishes out 6,000 points.

Points also stick around as long as your account is open, so you won’t need to worry about spending points quickly. However, do note that this card does carry a $99 annual fee.

United Airlines: United MileagePlus Explorer Business Card

United MileagePlus Explorer Business Card


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Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


17.99% – 24.99%, Variable

Fly United? Your sole option is the United MileagePlus Explorer Business Card from Chase. Like most airline-specific cards, this card will give you two miles per dollar spent on tickets purchased from United. As an extra perk, you’ll also earn two miles per dollar when you buy at restaurants, gas stations, and office supply stores. For all other purchases, you’ll get the standard one miles per dollar.

Outside of those base rewards, United and Chase will reward you with 50,000 bonus miles when you spend $3,000 on purchases in the first three months your account is open. You can further nab 10,000 bonus miles after you spend $25,000 on purchases each calendar year. You’ll also get priority boarding and additional employee cards can be requested for free. As an extra bonus, the card’s $95 annual fee is waived the first year.

Alaska Airlines: Alaska Airlines Visa Business Credit Card from Bank of America

Alaska Airlines Visa Business Credit Card from Bank of America



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Annual Fee:


$50

 

Purchase APR:


16.99% – 24.99%, Variable

Those that frequent Alaska Airlines will need to look no further than the airline’s Visa business card co-offered by Bank of America. This card grants you three miles per dollar spent when you make purchases directly with Alaska Airlines and one mile per dollar on everything else.

For extra perks, you’ll get a companion fare ($0 fare for a companion plus taxes and fees starting at $22) plus 30,000 bonus miles when you make $1,000 in purchases during your first three months. Additionally, you’ll get a companion fare every account anniversary. You also don’t need to worry about foreign transaction fees when traveling internationally or blackout dates when redeeming rewards. There is, however, a $50 annual fee (plus $25 per employee card).

JetBlue Airways: JetBlue Business Card from Barclays

JetBlue Business Card from Barclays



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Annual Fee:


$99

 

Purchase APR:


17.99% to 26.99%, Variable

JetBlue regulars will want to look at the airline’s business card that’s offered in conjunction with Barclays. For this card, expect to earn six points per dollar spent on JetBlue purchases, two points per dollar at restaurants and office supply stores, and one point per dollar on all else.

You can also take advantage of JetBlue’s 50,000 bonus point welcome offer by spending $1,000 during your first 90 days. Other benefits include 5,000 points every account anniversary, one free checked bag for you and up to three companions, and 50% savings on eligible in-flight purchases. You also won’t need to worry about foreign transaction fees, and you can collect $100 in statement credit annually when you purchase a JetBlue Vacation package for $100 or more.

As for annual fees, this card will cost you $99 annually, but you won’t have to worry about points expiring for as long as your account is active and there are no blackout dates when redeeming rewards.

Best General Travel Card: Capital One Spark Miles Select For Business

Capital One Spark Miles Select For Business


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Annual Fee:


$0

 

Purchase APR:


14.74% – 22.74%, Variable

Capital One’s Spark Miles Select For Business dishes out a simple (and unlimited) 1.5 miles for every dollar you spend—no dealing with categories or figuring out if something is eligible. On top of that, this card has no annual fee, which means that you won’t need to worry about spending a certain amount to make the card worth it.

Because this card isn’t connected to a specific airline, you can use your miles on a vast array of travel purchases, including flights, hotel rooms, and travel packages. Capital One simply requires that you book your trip through a travel website, travel agent, or other travel resource while using your card. You can then use the Capital One’s Rewards Center to redeem your miles and receive an account credit for the cost of your travel purchase.

Other perks include 20,000 miles if you spend $3,000 in purchases within your first three months. You can also request additional employee cards for free and there are no foreign transaction fees.

Best Bonus Offer: Capital One Spark Miles For Business

Capital One Spark Miles For Business


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Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


18.74%, Variable

Capital One also offers a second travel card in the form of Spark Miles For Business. This card is similar to the Select version with a simple rewards scheme. However, it grants an unlimited two points per dollar spent instead of 1.5. Do note that this card includes a $95 annual fee, so you’ll have to spend a decent amount to cover that cost with rewards.

With that in mind, Capital One bundles in a healthy bonus offer of 50,000 miles if you spend $5,000 in your first three months and 150,000 miles when you spend $50,000 in your first six months. Besides that, the annual fee is waived for the first year, meaning that you can really reap rewards throughout your first 12 months.

Like with the Select, you’re able to redeem your miles on a vast array of travel purchases, ranging from flights to hotel rooms to travel packages. You’ll simply need to book your trip through a travel website, travel agent, or other travel resource while using your card. You can then redeem your miles through the Capital One’s Rewards Center to receive an account credit for the cost of your travel purchase.

Best For No Annual Fee: Bank of America Business Advantage Travel Rewards World Mastercard

Bank of America Business Advantage Travel Rewards World Mastercard


bofa business advantage travel rewards
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Annual Fee:


$0

 

Purchase APR:


13.24% – 23.24%, Variable

If you’re looking to snag some travel rewards without dealing with an annual fee, Bank of America has you covered with their Business Advantage Travel Rewards World Mastercard. This options nets you an unlimited 1.5 points per dollar spent on all purchases. Besides that, when you book travel through Bank of America’s Travel Center you’ll double your reward rate to three points per dollar.

There are also several other ways to earn more rewards. To start, Bank of America will hand you 25,000 bonus points when you spend $1,000 during your first 60 days. Additionally, if you enroll in the Business Advantage Relationship Rewards program, you can nab an additional 25% – 75% rewards boost to every purchase.

Bank of America includes a few more perks, too. This card requires no foreign transaction fees and you’ll get a 0% introductory APR period for the first nine months.

Best Rewards Program: Chase Ink Business Preferred

Chase Ink Business Preferred



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Annual Fee:


$95

 

Purchase APR:


17.99% – 22.99%, Variable

For the best overall rewards program, our pick goes to Chase’s Ink Business Preferred. This card, which works as a general travel card, doles out three points per dollar spent (up to $150,000) 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. You then get one point per dollar spent on everything else.

The real advantage, however, comes in how you redeem points. If you redeem points through Chase Ultimate Rewards for travel, you’ll get 25% more value. On top of that, Chase allows you to transfer your points to an array of airline and hotel reward programs on a 1:1 basis.

Beyond its excellent options for redeeming points, the Ink Business Preferred also comes with no foreign transaction fees and employee cards can be requested for no additional cost. Chase also bundles in a welcome offer of 80,000 points when you spend $3,000 or more during your first three months. However, there is a $95 annual fee to keep in mind.

Final Thoughts

If you’re still looking for a credit card to suit your travel needs, check out our best business cards for travel. You can also use a personal card for business—an especially handy tactic if your favorite airline doesn’t feature a business credit card. Read our guide to using a personal credit card for business to learn more.

The post The Best Airline Credit Cards For Businesses appeared first on Merchant Maverick.

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Low Interest Rate Loans: Top Options This Month

Imagine this scenario: You’re a business owner. You’ve been in business for a year or two, and your business is thriving. Until this point, you’ve not taken out a loan. However, your growing business is at a point where it needs extra capital. Maybe it’s time to hire new employees, purchase equipment, or relocate to a larger building.

Now, picture this: You’re ambitious, you have a solid business plan, and you’re ready to launch your business. You need capital to fund your startup costs, but banks won’t even give your business plan a second glance.

Do either of these situations sound familiar? Business loans are notoriously difficult to receive. In addition to a high personal credit score, your business must have a solid credit score, your annual revenue must hit a certain threshold, and most loans require a time in business of at least two years.

If you don’t meet these requirements, what do you do? Do you have any funding options? Are you stuck with business loans that cost an arm and a leg after high interest and fees? Do you wait months — or years — until you can qualify?

Actually, there’s a better solution. If you have at least a fair credit score, you can apply for a low interest personal loan that can be used to fund your startup, cover your operating expenses, or pay for your expansion.

Ready to learn more? Read on to find out more about personal loans, what you need to qualify, and our picks for the best loans for your credit score.

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8.16% – 35.99% APR

620

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6.95% – 35.99% APR

640

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15.49% – 35.99% APR

600

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9.95% – 35.99% APR

580

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discover personal loans

6.99% – 24.99% APR

660

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6.95% – 35.89% APR

600

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6.26% – 14.87% APR

660

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What Is A Personal Loan?

When you receive a personal loan, a bank, credit union, or online lender will provide you with a lump sum of money. The total borrowing amount is based on the amount you request, your credit score and history, and your ability to pay back the loan. You may qualify for an unsecured loan, which is not backed with collateral. If you have a low credit score or request a high borrowing amount, you may receive a secured loan that is backed by collateral,  an asset of value used to guarantee the loan.

In addition to the amount you borrow, fees and the interest charged by the lender will be added onto the loan. You’ll then repay the loan, plus interest and fees, over a set period of time (typically 2 years or longer). The loan is paid back in installments until the balance, fees, and interest have been repaid.

Personal loans can be used for a variety of purposes. Some borrowers may use the loan to consolidate debt, pay off credit cards or high-interest loans, cover an emergency expense, or for other personal financial needs. However, personal loans can also be used for startup costs and small business expenses.

Receiving an affordable business loan can be extremely difficult. Lenders review your business credit score, personal credit score, time in business, and annual revenues. If you’ve only been in business for a short time or you haven’t yet built a business credit history, your options may be limited  — and expensive.

However, if you have a solid credit score, you can receive an affordable personal loan with great rates and terms. Your personal loan can be used to pay startup costs, purchase equipment, hire new employees, or for working capital.

Personal loans are based on your personal credit score, credit history, and income. Your business will not be a consideration for approval, so taking out a personal loan could be a smart financial move if you face challenges that make it difficult to receive a small business loan.

It is important to remember that not all personal loans can be used for business expenses. If you plan to use a personal loan for business purposes, make sure that the lender has not placed limitations prohibiting loan proceeds to be used for this purpose. The recommended options in this article can all be used for business purposes.

Typical Interest Rates & Fees

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When you receive a personal loan, you not only pay back the amount that you’ve borrowed, but you also pay interest to the lender. Banks, credit unions, and other lenders want to work with low-risk borrowers. These lenders evaluate multiple factors to determine the risk level of each loan applicant.

A low-risk borrower would be someone with a high credit score, a solid credit history free of major blemishes, an annual income large enough to cover the cost of the loan, and a low debt-to-income ratio. A high-risk borrower would be an applicant with a low credit score, a spotty credit history, income challenges, and a high DTI.

Being a high-risk borrower comes at a price, in the form of interest. If a high-risk borrower is approved for a loan, the interest rate will be much higher – think 30% or more for personal loans. On the other hand, if you’re a low-risk borrower, you’ll receive a lower interest rate, which means a lower overall cost of your loan.

Borrowers with excellent credit scores can expect to receive an interest rate of around 6%. Based on your creditworthiness and the interest rates of your lender, this number may rise.

That’s why it’s so important to shop around for options. Many lenders offer a prequalification tool that you can use before applying for your loan. This will give you an idea of whether you’re approved and how much you can expect to pay. We’ll discuss this in more detail later in this article.

Another step you can take before you apply for a personal loan is to find out your credit score. There are multiple websites that allow you to access your credit score at no cost. Pull your score, look over your report, and make sure you have a good understanding of your credit history. If you have some credit challenges, you can take a few easy steps to boost your score before applying if you want to receive the best interest rates. While there are loan options available for borrowers with fair or poor credit, you may pay hundreds (or even thousands) more for your loan than a low-risk borrower.

Other costs may include fees charged by the lender. Some loans, such as Discover Personal Loans, come with no additional fees. However, other options may include fees such as:

  • Origination Fees
  • Application Fees
  • Late Payment Fees
  • Credit Insurance Fees
  • Prepayment Fees

Lenders are required to disclose all fees associated with their financial products, so make sure that you review all paperwork and fee schedules carefully to ensure you’re getting the most affordable option.

The Best Loans For Excellent Credit

Discover Personal Loans

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Discover has moved beyond just credit cards to provide qualified borrowers with affordable personal loans. With Discover, you can receive between $2,500 and $35,000 with fixed rates of 6.99% to 24.99% based on creditworthiness. Repayment terms of 36, 48, 60, 72, and 84 months are available so you can build a loan that best fits your financial needs.

One of the biggest benefits of Discover Personal Loans is that there are no origination fees. In fact, if you pay your loan on time each month, there are no additional fees. With Discover, you can receive a same-day decision, although approvals for some borrowers may take additional time. If you decide that you don’t want to take the loan after acceptance, you can return all funds within 30 days without having to pay any interest.

To qualify for a loan, you must be at least 18 years old and a U.S. citizen or permanent resident. A minimum household income of $25,000 is required. Applicants must have a credit score of 660; however, the average credit score of borrowers of a Discover personal loan is reported as 750.

SoFi

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SoFi is a popular lender for personal loans because of its high borrowing limits. You can apply for a loan between $5,000 and $100,000 through SoFi. The fixed rate APR range is between 6.99% and 14.99%. There are no origination fees, prepayment penalties, late fees, or hidden fees with a SoFi loan. Repayment terms are between 3 and 7 years.

To qualify for a SoFi personal loan, you must live in a state serviced by the lender. You must be employed, have sufficient income, or have an offer for employment that begins within the next 90 days. While there is no hard cut-off for credit score requirements, borrowers must have a solid credit history with a credit score in the high 600s.

The Best Loans For Good Credit

Prosper

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With Prosper, you can apply for personal loans of between $2,000 and $40,000. Repayment terms are set at 3 or 5 years. APRs range between 6.95% and 35.99% and are based on creditworthiness of the borrower. Origination fees (between 2.41% and 5%) apply when accepting a Prosper loan.

To qualify for a Prosper loan, you must have a personal credit score of at least 640. Other credit requirements include a DTI below 50%, no bankruptcies within the last year, fewer than five inquiries over the last 6 months, and at least three open trades on your credit report. If you’ve borrowed from Prosper before, you must meet all of the previous conditions, as well as no previous charge-offs of Prosper loans. If you’re a repeat borrower, you must not have been declined for a loan from Prosper within the last four months as a result of delinquency or returned payments on a Prosper loan.

The underwriting and loan verification process may take up to 7 business days. Once approved, funds are transferred to your bank account and should be received within 1 to 3 business days.

Upstart

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Upstart offers loans of $1,000 to $50,000. Interest rates are between 8.89% and 35.99% for qualified borrowers. Repayment terms are 3 years and 5 years. According to Upstart, 99% of approved applicants receive their funding in just one business day after accepting their loans. A one-time origination fee of 0% to 8% of the loan amount will be deducted from the loan before it is issued. There are no prepayment penalties if you choose to pay your loan off early.

What’s unique about Upstart is that your credit score isn’t the only factor used to approve your loan. This lender looks at your credit score, years of credit history, your education and area of study, and job history to determine if you qualify.

However, this lender still has credit requirements. All applicants must have a FICO or Vantage score of at least 620 to qualify, although Upstart will work with borrowers with limited credit histories. Credit reports should be free of bankruptcies, public records, and delinquent accounts. You must have fewer than 6 credit inquiries on your report within the last 6 months, although vehicle loans, mortgages, and student loans are exempt from this requirement. Upstart will also consider your debt-to-income ratio (DTI) before your loan is approved.

You can be prequalified with Upstart within minutes of submitting your application. The underwriting process generally takes 24 to 48 hours. Once you’re approved, you should receive your loan proceeds within 2 business days.

Lending Club

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Through Lending Club, you can apply for personal loans between $1,000 and $40,000. Your loan can be repaid over 3 years or 5 years. Lending Club’s APRs are between 6.95% and 35.89%. The annual interest rate and a one-time origination fee of 1% to 6% of the loan balance are included in the APR. There are no additional fees when you receive a Lending Club personal loan.

To qualify for a Lending Club personal loan, you must have a credit score of at least 600. As with other personal loans, a higher credit score yields a lower interest rate, APR, and overall cost of borrowing. The entire process from application to approval takes about 7 days, while funding may add an additional few days to the timeline.

The Best Loans For Fair Credit

Lending Point

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Lending Point offers personal loans of $2,000 to $25,000. Interest rates are between 15.49% and 30%. Origination fees are between 0% and 6% when taking out a Lending Point personal loan.

While the interest rate may seem high, Lending Point loans are aimed at borrowers with fair credit scores. To qualify for a loan, all borrowers must have a credit score in the 600s. Borrowers must have a minimum annual income of $20,000. All borrowers must be located in one of the 34 states where Lending Point does business. Applicants in Washington, D.C. are also eligible to apply.

Lending Point loans can be approved immediately. Once approved, additional information and documentation are required for underwriting. In most cases, the underwriting process can be completed and the loan approved within hours. After approval, you may receive your funds in your bank account as soon as the next business day.

Avant

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Avant loans are available in amounts from $2,000 to $35,000, although limits vary by state. Term lengths are between 2 years and 5 years, with APRs of 9.95% to 36.99%. An administration fee of 0.95% to 4.75% is applied to your loan.

To qualify, you must have a minimum credit score of at least 580, although most borrowers have a credit score between 600 and 700. Avant loans are available to borrowers in all states except for Colorado, Iowa, Vermont, and West Virginia.

After applying for an Avant loan, you may receive an immediate loan offer. Verification, underwriting, and funding your loan takes only a few business days.

What You Need To Qualify For A Loan

The great thing about all of the loan options discussed in this article is that you can receive them all from the comfort of your home or office. You don’t have to spend hours in a bank with a huge folder full of documents. Instead, you’ll be able to apply for your loan, complete the underwriting and verification process, and receive loan proceeds online.

The information and documentation needed to receive your loan vary by lender. For all the loans mentioned above, you must be a citizen or permanent resident of the U.S. All applicants must be at least 18 years old. You must reside in a state where your lender conducts business. You must also have verifiable income, although limits vary by lender. A checking account is also required for direct deposit of your funds.

No matter what lender you apply with, some basic personal information is always required. This includes your full legal name, date of birth, Social Security Number, and contact information. You will also need to provide information about your annual income and employment.

While this information may be sufficient to prequalify you for a loan, additional information and documentation are typically required during the underwriting process. Some of the most common requirements include:

  • Copy Of Driver’s License
  • Personal Bank Statements
  • Personal Tax Returns
  • Personal Credit Score & Report
  • Proof Of Address: Lease agreement, voter registration, utility bill, etc.

How To Check Your Eligibility

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You’re shopping around for lenders, and you’re ready to make a commitment. Before you dive into the application process, first find out if you qualify for the loan. Lenders have made this easier than ever by offering ways to prequalify directly from their websites.

You should have an idea what types of loans you qualify for before even taking this step by reviewing your credit score and report. If your credit score is in the low 600s and a lender requires a score of 680 to qualify, you’ll know to look at other lending options.

Once you’ve reviewed your score and report and have an understanding of a lender’s requirements, you can fill out a prequalification form on each lender’s website. On this form, you enter basic data such as your name, birthdate, and Social Security Number. You may also need to input the total loan amount you seek, as well as your annual income. Once you’ve submitted the form, you may receive an approval instantly and can proceed with the full application. In some cases, you may be declined for a loan, while other lenders may require additional information.

When you’re shopping around for loans in this way, most lenders only perform a soft credit pull. Make sure this is the case each time you submit a prequalification form. Multiple hard inquiries can not only lower your credit score but can also disqualify you from receiving loans due to a high number of credit inquiries.

Once you’ve been prequalified, most lenders provide you with a tentative loan amount and interest rate. It may be wise to shop around to find the most affordable loan option, also taking into account any additional fees added to the cost of the loan. Once you’ve found the best option for your financial situation, proceed with applying for the loan.

Final Thoughts

Finding a loan for your small business can be tricky. But even when one lender shuts the door, there’s probably another way in (even if it takes a little creativity). With a solid personal credit history, you can find an affordable loan option for your small business via a personal lender — if you take the time to research your options. Good luck and happy borrowing!

The post Low Interest Rate Loans: Top Options This Month appeared first on Merchant Maverick.

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What Is A Confession of Judgment? Should I Sign One?

As you might expect, any financial agreement will be a trek into the frightening realm of legalese. If you aren’t up on your jargon–and even if you are–you’re likely to run into some unfamiliar terms. One of the more ominous ones you may encounter in the alternative lending world is the confession of judgment.

Is it as bad as it sounds? At the risk of spoiling the big reveal of this blog post, “yes.” While this post is no substitute for legal advice, we can provide some basic information about what a confession of judgment is, where you’re likely to encounter one, and whether it’s usually a good idea to sign one. Read on and we’ll try to break it down for you.

Collateral & Personal Guarantees

When you apply for a loan or cash advance, your funder needs to prepare for the possibility that you will be unable or unwilling to pay back your balance in full. Usually, they will require some form of collateral. With traditional secured loans, this usually means putting up an asset you own, ranging from real estate to heavy equipment to a cash deposit. If you default on your loan or advance, your funder can then recoup some of their loss by keeping your collateral.

A confession of judgment isn’t collateral, per se. In fact, it’s usually paired with a form of unsecured “collateral” called a personal guarantee. A personal guarantee is essentially a promise to pay back your loan or MCA with personal assets should your business be unable to. If that gives you pause, it should; putting your personal assets at risk raises the stakes for you as a borrower since it’s removing the distinction between yourself and your business. Sounds like a pretty good deal for your funder, though, right?

On paper, it looks like a solid win, but enforcing a personal guarantee can be an ordeal for lenders. In many cases, they’ll need to bring a lawsuit against the guarantor to recoup their losses. That’s where the confession of judgment comes in.

Confession Of What?

So let’s say a funder is taking on a high-risk borrower for an unsecured loan or MCA. They think there’s a reasonable chance the borrower will default, but they don’t want to sink the money and time into a lawsuit to enforce the personal guarantee. As a condition for the loan or MCA, the borrower may have to sign a confession of judgment.

A confession of judgment allows the funder to go after the borrower’s personal assets as though they’d successfully received a judgment against them in court. That means the funder bypasses most of the due process the borrower normally be afforded: no trial, no hearing, no opportunity for the borrower to defend himself or herself. The funder simply needs to file the confession of judgment with their county clerk or appropriate agency. The courts will then inform the borrower that a judgment has been made against them.

As you can imagine, confessions of judgment are controversial. Not every state uses them (they’re more prevalent in the Mid-Atlantic states) and even among those states they may not be applicable to all financial contracts in your jurisdiction (most of those state only allow them for commercial transactions). They may be valid only for specific types of debt and for a specific amount of time. A confession of judgment can apply to debts currently outstanding or those that will become due in the future. Be sure to speak to a lawyer about any specific questions you have about how your jurisdiction adjudicates confessions of judgment.

Should You Sign A Confession Of Judgement?

No. Not if you can help it. You should always think long and hard before signing any of your legal rights away, and a confession of judgment is no different. Depending on your jurisdiction, it can severely impede your ability to protect yourself from collection efforts.

On the other hand, if you’re able to pay off your loan or MCA without any issues, the confession of judgment won’t ever really come into play. It’s only filed if your funder is unable to collect on your debt. If there’s no need to start a collection action against you, it’s simply another piece of paper you signed.

But again, you should really avoid signing one if you can possibly help it.

What If I’ve Already Signed One?

Don’t panic! If you’re making your payments on time, it’s unlikely that you’ll even need to think about your confession of judgment again. A confession of judgment has specific triggers that need to be met before it’s valid. In most cases, this trigger will be missing payments.

If your funder has actually filed a confession of judgment against you, the picture isn’t as rosy. In most states, however, you’re not completely out of options even if you reach this stage. You may still be able to negotiate a settlement with your funder, for example, or even have your confession of judgment vacated. The latter may require proving that the terms required to trigger the confession of judgment were never meant. It’s also possible for the borrower to be negligent in making it clear that you’re signing important rights away when they initially presented the confession of judgment to you. Be sure to speak with a lawyer to find out what solutions are possible in your case and your state.

How Do I Avoid Signing A Confession Of Judgement?

While personal guarantees are pretty common in the alternative lending market, confessions of judgment are significantly less so. It’s generally funders that deal with high-risk borrowers who will employ them, and even then they may not require them for every borrower. If your funder tries to get you to sign one, make sure you’ve exhausted all your other options before waiving your legal rights and putting your personal assets at risk.

Even if your credit rating or the age of your business has limited your options to merchant cash advances, you can still take your business to a funder who won’t lock you into quite so punishing terms.

Need some other options? We can get you started.

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

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Business Loans For HVAC Companies

business loans for hvac companies

It’s hard to imagine modern life without the benefit of the work done by the HVAC industry. HVAC companies (HVAC refers to heating, ventilation and air conditioning) are tasked with keeping us warm in the winter, cool in the summer, and breathing safely as we live our lives in the archipelago of enclosed spaces that comprises our indoor universe.

With the economy in a period of expansion, demand for new construction has risen, and where the construction industry goes, so goes HVAC work. After all, these new offices, homes, and transportation systems aren’t going to keep themselves ventilated and comfortable.

As with any industry, HVAC companies have their own particular financing needs. There’s no shortage of loan products out there, offered by banks, online lenders, credit card issuers, and even the federal government. But you probably knew that already. The question most relevant to you is: Which types of loans best fit the specific financing needs you’re going to have in the course of operating your HVAC business?

That’s where Merchant Maverick comes in. We’ll help make sense of the lending market for you and direct you to the loan products that best fit your specific needs. Let’s get down to the nitty-gritty and delve into how to get a business loan for an HVAC company.

Financing Need Best Loan Type Recommended Lender
Marketing & Advertising Medium-Term Loan Fundation
Equipment Purchasing Equipment Loan Lendio
Business Expansion SBA Loan SmartBiz
Emergency Funds Business Credit Card Chase Ink Business Unlimited
Working Capital Short-Term Loan PayPal LoanBuilder
Covering Payroll Line Of Credit OnDeck

Loans For Marketing & Advertising

business loans for HVAC

Whether your HVAC company is just finding its legs and seeking to generate new leads or is established but working to expand, marketing and advertising are integral to an HVAC business’s success. Of course, such a campaign costs money, and the funds need to come from somewhere.

While we’re not here to tell you how to run your marketing campaign, here’s a quick tip: Reach out to people just before summer and winter begin. It’s when your services will be most in demand — for obvious reasons!

Medium-Term Loans

A medium-term loan is an installment loan (a loan that is repaid periodically over a defined period of time with interest) with a term length of between two and five years. You can typically borrow more with a medium-term loan, but if your anticipated marketing campaign won’t cost that much, a short-term loan would be appropriate.

A medium-term loan can obviously be used for any business purpose. However, since you should be able to more accurately estimate the cost of your marketing campaign than many other types of business expenses, a loan in which you borrow a specific amount of money is particularly appropriate here.

Recommended Option: Fundation

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Founded in 2011, Fundation has since become one of the leading “alternative” lenders, boasting competitive rates, a solid reputation, and fixed-rate pricing (the interest rate will not increase over the life of the loan). Fundation’s term loans max out at $500K; accordingly, Fundation’s borrower qualifications are stricter than those of many online lenders. Fundation also offers lines of credit of up to $100K.

Fundation’s installment loans are offered with terms of one to four years and are fixed-rate, meaning the assigned interest rate will remain unchanged over the life of the loan. Additionally, Fundation sports a rapid time-to-funding, typically between two and seven days.

Loans For Equipment Purchasing

business loans for hvac companies

The HVAC industry relies on heavy equipment — the bigger the building, the heavier the equipment. Of course, these heating and cooling systems don’t come cheap. While any loan products can be used to cover the cost of purchasing HVAC equipment, there’s one type of loan tailored for this purpose: Equipment loans.

Equipment Loans

In many ways, an equipment loan resembles a traditional installment loan — you’ll be paying down the principal plus interest with monthly payments. The advantage of the equipment loan is that the equipment you purchase with the funds serves as collateral. Equipment loans are therefore secured loans, and secured loans typically have better rates and terms than their unsecured counterparts.

With an equipment loan, the lender usually covers most of the cost of purchasing the equipment, leaving around 10% to 20% to be covered by you. On occasion, however, the lender might be willing to cover the entire cost.

Equipment Leases

An equipment lease is another means of equipment financing. Such leases fall into one of two categories: Capital leases and operating leases.

With a capital lease, you are considered to be the owner of the equipment in question, so the arrangement resembles a loan in many ways. You make your monthly payments throughout the course of the lease. Afterward, you pay a small residual to close your account.

An operating lease lets you essentially rent the equipment during the lease, making monthly payments. When the lease ends, you can either return the equipment or buy it at fair market value, giving you a nice degree of flexibility.

See our article on equipment loans vs equipment leases for more information.

Recommended Option: Lendio

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Lendio isn’t your typical lender. In fact, Lendio isn’t a direct lender at all. Lendio is a loan aggregator, which means that you submit a single loan application which Lendio then passes on to multiple lenders, saving you time and effort. Within about three days of submitting your application, you should be fielding multiple equipment financing offers.

Through Lendio, you can find an equipment loan as large as $5 million, with loan terms ranging from one to five years and interest rates as low as 7.5% for highly qualified borrowers.

Loans For Business Expansion

business loans for hvac companies

Let’s say your HVAC company has been thriving and is ready to expand to meet the challenges of our glorious future of relentless climate extremes. Without an infusion of cash, however, your expansion plans may not be feasible. If you’re looking for a sizable loan at a reasonable interest rate, consider an SBA loan.

SBA Loans

The Small Business Administration (SBA) is an agency of the federal government meant to assist small businesses in obtaining funding. For the most part, the SBA does not lend directly to businesses. Rather, it guarantees up to 85% of loans offered by SBA-approved lenders. These lenders are known as intermediaries.

While SBA loans feature competitive rates and terms, be warned that borrower requirements tend to be rather stringent.

Here’s a rundown of four of the main SBA loan programs with links to articles describing the programs in greater detail.

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.

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Microloans

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

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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.

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Disaster Loans

Loans used to rebuild or maintain business following a disaster. 

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Recommended Option: SmartBiz

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There is no shortage of SBA-approved lenders out there. However, if you’re looking to grow your HVAC business with an SBA loan, you might find the complex SBA application process to be intimidating and fraught with peril. The beauty of SmartBiz is that the company helps simplify and streamline the application process for you so that you can make sense of it all.

SmartBiz is not a lender. Describing themselves as the “white knight in small business lending,” SmartBiz will match you with an SBA-approved lender after helping you through the onerous application process. You’ll need to have at least two years of business history behind you and a personal credit score of at least 650, but if you meet these and other requirements, you can get an SBA-backed loan of up to $350,000 with interest rates between 8% and 9%. Not too shabby!

Loans For Emergency Funds

business loans for hvac

Let’s say the construction industry takes a downturn, leaving you with less business. You still have employees to pay and expenses to cover. How should a company in your position deal with unexpected cash flow problems? When you need a flexible funding solution you can draw from on an as-needed basis, consider a business credit card.

Business Credit Cards

As business credit cards tend to feature higher interest rates than business loans, they aren’t an ideal funding mechanism in many instances. But when unexpected situations arise and you need a stop-gap measure to temporarily plug some funding holes, there’s nothing like the ease and convenience of a business credit card. With the right card, you can cover emergencies while earning rewards and/or cash back along the way.

A good credit history will help you get lower interest rates and a higher credit limit. However, even with a less-than-stellar credit history, there are options available to you, including secured credit cards, which require a security deposit.

If you’re unsure of your credit score, whatever you do, don’t pay for a credit check. Here are some websites that let you check your credit score for free.

Recommended Option: Chase Ink Business Unlimited

Chase Ink Business Unlimited


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Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

The Chase Ink Business Unlimited card is a great way to cover those unexpected expenses while earning 1.5% cash back to boot. If you’re using a credit card to cover emergencies, you’re probably not looking for a card with rotating cash back spending categories or lavish travel benefits. The Ink Business Unlimited comes without these extraneous distractions so you can focus on getting your HVAC business out of a jam while earning cash back on everything you buy.

Keep in mind that you’ll need good to excellent credit to qualify for the Ink Business Unlimited. If your credit doesn’t fit that description, check out these options for business owners with poor credit.

Loans For Working Capital

loans for hvac businesses

Working capital refers to the money you use to keep your business running on a day-to-day basis. When times are good, your cash flow should be sufficient to keep your company running smoothly. The problem is that without extraordinary luck, times will not always be good, particularly in a field prone to seasonal slow-downs like the HVAC industry.

When seeking a loan for this purpose, you’ll want something that affords you a high degree of flexibility in terms of what you can spend your funds on. For this reason, a short-term loan may be worth your consideration.

Short-Term Loans

A short-term loan is an installment loan that must be repaid within 12 months or less. Payments must be made on a weekly or even daily basis and are normally deducted automatically from your business account. If approved, you can usually get your funds within a few days. Short-term loans are all about fast money, both in terms of getting the money and paying it back.

Instead of charging interest on what you borrow, short-term lenders charge you a flat fee known as a factor rate. This factor rate is a multiplier that determines the lender’s fee. I’ll give an example: Take out a $50,000 loan at a 1.2 factor rate, and you’ll be paying $60K for the loan over the agreed-upon term length.

Recommended Option: PayPal LoanBuilder

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PayPal’s LoanBuilder is what the name suggests. You essentially build your own loan by customizing its elements to fit your particular situation. The loans offered range from $5K to $500K and term lengths run from 13 to 52 weeks.

LoanBuilder’s lender requirements aren’t terribly strict. Your business must have been running for at least 9 months. Your annual revenue must be at least $42,000 and your personal credit score must be at least 550. As ever, your credit history and your company’s overall health will determine your maximum borrowing amount and your rates.

Loans For Covering Payroll

 

Heating and cooling systems don’t install themselves. To ensure that our apartments, workplaces, and shopping centers don’t become unlivable nasty hellscapes, an HVAC business needs workers. Workers need to be hired, trained, and paid, all of which costs money.

If you need help hiring new employees (or paying the ones you already have), consider a line of credit.

Lines Of Credit

A line of credit operates on the same principle as a credit card. Instead of receiving a lump sum of dinero all at once, you’re given a credit line you can draw from whenever you feel the need. As with a credit card, you’ll have a credit limit to contend with, and you pay fees and interest only on the funds you use, not the total amount of the line of credit.

Recommended Option: OnDeck

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If you need funding quickly, consider a line of credit from OnDeck. Approval should come in a matter of days, and the credit requirements are not particularly strict. Your credit line can run anywhere from $6K to $100K.

One thing to keep in mind about OnDeck’s lines of credit is that they are a short-term funding mechanism, lasting only about 6 months.

What To Consider When Choosing A Lender

business loans for hvac businesses

For business owners seeking a loan, there has never been a wider array of funding options. To help narrow down your search, consider the following questions.

Why Do I Need A Loan?

Before you can even start looking at particular options, you need to be certain of the purpose of your loan. Whether you’re looking to expand your business or purchase new equipment, only by defining your precise need can you select a loan product that fits what you seek to accomplish. Otherwise, you’re flying blind without any point of reference.

No one lender or loan makes sense for every business need under the sun. Know what it is that you need and shop accordingly!

Am I Qualified?

There’s no need to examine a lender in detail if you won’t qualify for its loans in the first place. Try to find and examine a lender’s minimum qualifications before going through the terms and fees with a fine-toothed comb.

Vendors of business loans nearly always inquire about your time in business, credit rating, and revenue. On each of these measures, the lender may have a strict cutoff point where, if you don’t meet the benchmark, you don’t qualify. Alternately, they may just use this information to determine your rates. Either way, it’s information you’ll need to provide.

Do The Rates & Terms Meet My Needs?

It’s obviously important to consider a lender’s rates and terms when deciding on what loan to pursue. Make sure you can afford the funding; nothing will give you nightmares like taking out a loan you can’t repay. However, a lender’s reputation and business practices are equally important. To get a sense of just how a lender treats its customers, try to find user feedback on the company in question wherever you can. Read enough reviews (we do business loan reviews, you know!) and borrower feedback and you’ll get a pretty good idea as to whether the lender is an honest broker or a predator fixing to bleed you dry.

What You Need To Apply For HVAC Business Loans

The number of documents you’ll have to round up depends on the lender. Naturally, you’ll need the basics — name, business name, address, telephone number, email address, social security number, and federal tax ID number. Many lenders will require much more, however. Here are some documents you should be prepared to submit, depending on the lender:

  • Business & Personal Credit Reports/Score
  • Business & Personal Bank Statements
  • Business & Personal Tax Returns
  • Profit & Loss Statements
  • Balance Sheets
  • Income Statements
  • Business Licenses
  • Business Owner Resumes
  • A Business Plan

For a more thorough look at how to apply for a business loan, read our in-depth take on business loan requirements.

Final Thoughts

Now more than ever, we need the HVAC industry at the top of its game. As I write this, wind-driven fires have spread dangerously smoky air over large parts of my tinder-dry home state of California, and proper indoor ventilation is literally the last line of defense for many in the affected areas.

When seeking a loan for your HVAC company, do your due diligence, explore all your options, and get your documents in order. This should set you up nicely for getting the loan that paves the way for your success.

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

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19 Reasons To Get A Business Loan (And How To Get Started)

business loan reasons

There are so many good reasons to get a business loan that you probably haven’t even considered half of them. For example, have you ever thought about taking out a loan to hire a new employee or getting a loan for the sole purpose of building your business’s credit? Those are both valid reasons to apply for business financing, and there are many other reasons that might not have ever crossed your mind.

While many small businesses are debt-averse — afraid to apply for financing because they don’t think they have good enough credit, or unsure if they can afford repayments — it’s a simple fact that you need money to make money. In some ways, living debt-free can actually hinder your business’s growth or even its ability to stay afloat. You might also be surprised at the wide variety of financing products available for almost any type of business pursuit.

Even if you’ve never applied for financing before, a business loan is definitely something to think about if you are short on funds or are considering a new opportunity or investment that could advance your business.

Read on for a look at 19 reasons you might want to take out a business loan.

Or, skip down to the “Types of Business Loans” section to see if what type of loan you should pursue for your particular business need.

1. Start A Business

Want to get your brand-new business off the ground with a running start? A startup loan can help you do just that. A few startup-friendly lenders will lend to brand-new businesses with no time in business, while others will want to see that you have 6 months’ worth of revenue.

However, startup loans are not by any means easy to get for spanking new businesses lacking in experience, especially if your business is still in the “idea stage.” If this sounds like you, you might consider a crowdfunded loan or small business grant in lieu of traditional financing.

2. Increase Working Capital

Working capital—the money required for day-to-day business operations—is a big reason businesses might need to apply for financing. For myriad reasons, your business may simply be short on cash. Sporadic cash flow, business growth spurts, and seasonal sales fluctuations are just a few reasons businesses apply for a working capital loan.

In many circumstances, you might not know exactly how much money you need, but expect you’ll need some extra working capital in the near future. In such cases, you might be wise to apply for a short-term business line of credit that you can draw from as needed.

3. Purchase Inventory

Businesses new and old, large and small, commonly apply for financing to cover the cost of purchasing inventory or raw materials to make products. A healthy inventory allows you to have enough product on-hand to meet demand and keep customers happy.

Retail businesses, in particular, often require financing to replenish stocks, particularly is your store sees a big sales up-tick during certain seasons. For example, a company that sells a popular holiday gift might take out a short-term loan to purchase product ahead of the holiday season, and then repay that loan with the proceeds of their seasonal sales.

4. Purchase Equipment

Almost all businesses require equipment of some sort — especially businesses involved in manufacturing, as well as those in the food and service industries. Whether you need professional gym equipment or even a business vehicle, such assets can represent a major expense to a new, struggling, or expanding business.

Purchasing equipment may necessitate a business loan, or perhaps you’d rather charge it on your business credit card if your credit limit is high enough. One popular way to buy business equipment is equipment financing, as this type of loan typically does not require any collateral other than the equipment itself.

5. Hire New Talent

According to the National Small Business Association, data going back as far back as 1993 shows a strong connection between businesses’ ability to hire employees and their ability to get financing. Indeed, payroll is a significant expense businesses must contend with, including not just wages, but healthcare and other benefits, as well as employee training. In some cases, businesses even have to reduce their number of employees or scale back employee benefits if they don’t have sufficient access to financing.

While taking out a loan to hire someone is always a risk, it’s true that employees are a business’s greatest asset; if the employee is worth their salt, they will eventually justify the expense of the loan.

6. Expand Products/Services

Businesses in the growth stage, as well as stable businesses trying to increase revenues and/or stay competitive with peers, will need to expand their offerings from time to time. Regardless of how you’re going to achieve a product or service expansion, an installment loan or another type of business loan can help you make the necessary investments to keep your offerings fresh and relevant.

7. Open A New Location

Your business is growing fast and you need to open a new location. Expanding to a new location is a major undertaking requiring a lot of capital, but one that can pay off tremendously in time.

If you have at least two years’ time in business, you may be eligible for a long-term business expansion loan with low interest rates. Businesses purchasing real estate to open a new location be eligible for a commercial real estate mortgage such as those offered by the SBA through the  SBA CDC/504 program. There is even such a thing as real estate crowdfunding for businesses.

Or, say you own an online business and want to establish your first physical location, you might consider a startup loan to help get your new operations up and running.

8. Pay Taxes

Ideally, you will set aside enough money throughout the year to pay your business taxes when the tax man comes a knockin’. But alas, life doesn’t always work out that way, which is why small businesses frequently take out loans to pay taxes.

Rather than get in trouble with the IRS for not paying your taxes, you are much better off using a business loan or even a cash advance to pay your taxes.

9. Create A Safety Net

A safety net is a cash or credit “cushion” you can use to fall back on during slim times. Perhaps you own a seasonal business or simply have cash-flow problems from time to time; even though you don’t require any extra working capital at the present moment, you feel good knowing it’s available if and when you need it.

You’re probably especially aware of the need for a safety net if you’ve been caught without one in the past, and had to pay overdraft bank fees or get an expensive short-term loan to cover unforeseen shortfalls.

A revolving line of credit, working capital loan, or even a business credit card can all help provide a safety net for a future rainy day. If there are no rainy days on the immediate horizon, you will have some peace of mind knowing you’re prepared for anything.

10. Refinance Another Loan

While it may seem strange to take out a loan to pay off another loan, debt refinancing is a popular and sometimes necessary reason to take out a business loan. You might choose to refinance your business debt because you are offered a loan with better rates and fees, or you might choose to consolidate multiple loans into one loan.

If you’re considering refinancing a loan you are currently paying on, check out our Complete Guide To Refinancing Small Business Debt.

11. Buy A Business

A business acquisition loan, or a loan to buy a business, is another popular category of business loans. You can take out this kind of loan to expand your current business’s offerings with the purchase of another business, or to buy a business even if you don’t have an existing business (in which case you will probably need a startup loan).

Depending on your business credentials, the health of the business you want to purchase, and other factors, you may be able to get a business acquisition loan through a bank or the SBA. You might also finance your business purchase through a business expansion loan or a startup loan from an online lender. There are also franchise loans available to individuals looking to purchase a new or existing franchise.

12. Buy Out A Partner

business loan vs personal loan

Sometimes it just doesn’t work out with a business partner. But just because your partner agrees to be bought out doesn’t mean you’ll necessarily have the money to do so. In these circumstances, you can get a business loan to execute a partner buyout.

There is not really a specific type of loan for partner buyouts but you can use many standard business loans for this purpose, including an SBA standard 7(a) loan.

13. Cover Construction Costs

Perhaps you want to expand or improve your physical business location(s) with renovations or improvements, or maybe you want to construct a brand-new building for your business. Either way, a commercial real estate loan—also called a commercial mortgage or commercial construction loan—is the type of financing you need.

You can use a commercial construction loan, typically obtained through a bank or credit union, to pay for construction costs such as labor, materials, and land development. Hard money loans are another option to pay for business construction.

14. Cover Unpaid Invoices

Businesses with a lot of outstanding invoices can free up pending earnings using a type of loan called invoice factoring.

The financer fronts you the money that your customers owe you, and then you repay them as the customers pay off their debts. With this type of financing, your business does not necessarily need to have good credit, as the invoice factor is more concerned with your customers’ credentials than with your business’s.

15. Buy Insurance

Insurance is a major business expense. Business insurance requirements vary by state and industry. Liability insurance, property insurance, employee healthcare insurance, malpractice insurance, and flood insurance are just a few types of insurance your business might need. For certain business loans, you even need insurance in order to get the loan in the first place. For example, you may need life insurance and various other types of insurance to qualify for an SBA loan.

While, ideally, insurance costs will be included in your budget as a percentage of your gross sales, a business loan or line of credit can help your business pay your insurance policy during times you cannot afford to do so.

16. Cover An Unexpected Expense

Remember that safety net we talked about earlier? Well if you don’t have it, you could have no choice but to take out a loan after-the-fact to cover an unexpected business expense that you didn’t budget for. This could be anything from replacing some expensive equipment that failed unexpectedly to making repairs after a natural disaster. Fortunately, an emergency business loan can help your business cover the expense of just about anything life can throw at ya.

17. Advertise Your Business

Marketing/advertising is a business expense that can cost a lot of money upfront but will hopefully pay off in the long run. SEO and online advertising, commercials, billboard advertising, radio ads, and promotional materials are all types of marketing for which you could need a loan, especially if you’re hiring a marketing agency to try to achieve big results.

18. Build Credit

A lot of small businesses don’t have much of a business credit history, even though the business owner herself might have good credit. Taking out a business loan is one way of establishing a business credit history rather than using your personal credit for your business. Building business credit will allow you to separate your personal and business credit profiles, and will also put you in a good position if you need to ask for a business loan in the future.

For more information on this and other ways to build your business credit history read my Ultimate Guide To Improving Your Business Credit Score.

19. Take Advantage Of A Business Opportunity

Every now and again, your business may be presented with an awesome opportunity that is just too good to pass by—even if you can’t afford the whole thing up front. Business success requires a lot of pragmatism and planning, but there is also some degree of risk-taking and, dare I say it, magic. Whatever that special something is, if you get a “spidey sense” that a certain opportunity will help take your business to the next level, it can pay off handsomely to trust your intuition and go out on a limb to make that investment.

Of course, going out on a limb in this case likely means taking out a business loan. Just make sure you’re not so focused on the opportunity that you rush things and say yes to the first loan offer you come across. It’s absolutely essential to compare multiple loan offers to make sure you are getting the best deal.

Types of Business Loans

I’ve discussed many types of business loans in this post, and it can be confusing to sort through all the different loan categories if you don’t know what you need. To help simplify things, I’ve made a chart with brief explanations of different loan types discussed, and below that, I included longer descriptions of some popular loans you should know about.

Resource Description

Startup Loan

Financing for businesses 6 months old or younger.

Crowdfunded Loan

Funds sourced from a network of backers or investors. 

Small Business Grant

Free funds granted to businesses, normally for a specific project. 

Working Capital Loan

Financing to cover daily operating expenses of running a business.

Business Line of Credit

A credit facility from which your business can borrow money at any time. 

Short-Term Loan

Usually a higher-interest loan that you pay back quickly, typically within a year. 

Business Credit Card

Credit card used for business expenses.

Equipment Financing

Self-securing loan to finance major equipment purchases.

Installment Loan

A standard type of business loan also called a term loan, repaid in regularly scheduled installments.

Long-Term Business Expansion Loan

Usually a large, low-interest loan, repaid over 5 or more years.

Real Estate Crowdfunding

Crowdfunded capital to purchase real estate for a business.

Merchant Cash Advance

Expensive but quick source of business financing for merchants who need fast funds.

Business Acquisition Loan

Loan to purchase a business.

Franchise Loan

Loan to open a new franchise or purchase an existing franchise.

SBA 7(a) Loan

Standard business loan backed by the U.S. Small Business Administration.

Commercial Real Estate Loan

Long-term loan to purchase commercial real estate for a business.

Hard Money Loan

Shorter-term real estate loan similar to a mortgage, requiring the property you’re purchasing as collateral. 

Invoice Factoring

Service which converts your small business’s outstanding invoices to cash.

Emergency Business Loan

Fast loans to cover business funding emergencies. 

Installment Loan

Term loans, also called “installment loans” are a broad category of business loans. This type of funding is paid back in periodic installments, with interest. It may be a short- or long-term loan. Higher-quality term loans typically give you a longer amount of time to repay the loan, and let you pay via monthly installments (vs. weekly or daily installments with short-term loans). However, you will need at least 2 years in business, plus good credit and strong revenues, to qualify for a long-term business loan, particularly if you borrow from a bank; online lenders have less strict requirements.

Long- and medium-term loans are useful for established businesses making long-term investments in fixed assets like property or renovations, though they can also be used for working capital.

You can get term loans from a bank or credit union, though the lenders below offer reasonably quick installment loans as well:

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

smartbiz logo

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

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

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

lending club logo

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

Short-Term Loan

Short-term business loans—installment loans that are repaid in 3 years or less, or sometimes in a matter of months—usually come in smaller amounts with higher rates when compared to long-term loans. Short-term loans also tend to require weekly or daily repayments. Although they are more expensive and less desirable than long-term loans in a lot of ways, short-term loans are relatively fast and easy to get and don’t have as stringent borrower requirements in terms of credit score, income, or time in business.

Because they have such a short repayment schedule, short-term loans are good for short-term problems, such as one-time expenses/investments.

The following lenders offer good terms and reasonable rates if you need a short-term loan:

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 – $300K 6, 9, 12, 15, or 18 months x1.15 – x1.31 1 year 600 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

Merchant Cash Advance

Merchant cash advances are not technically loans; rather, they are advances on your future sales or revenue. With a cash advance, you’ll receive a lump sum, which you’ll then begin repaying out of your daily credit card sales.  The interest charged on MCAs is usually calculated in terms of a factor rate rather than interest rate—for example, you might have a factor rate of 1.3, which means you’ll have to repay 1.3x the amount you borrowed. A typical factor rate for an MCA is between 1.2 and 1.4.

An MCA is good for an emergency situation where you need a large sum of money quickly and/or have bad credit, but you have a healthy daily cash flow. It does not help you build business credit because it’s not actually a loan and these lenders don’t usually report to credit agencies.

Generally, we don’t recommend MCAs if you’re eligible for another type of financing, but the following cash advance providers are reputable:

Lender Borrowing Amount Min Credit Score Time To Funding Next Steps

$5K – $500K 550 1-3 Days Apply Now

$2K – $5M 550 1-2 Days Apply Now

$5K – $500K 500 2-5 Days Apply Now

$5K – $250K 500 2-5 Days Apply Now

Business Credit Card

Business credit cards are useful the same way personal credit cards are useful—they allow you to pay for large or small expenses even if you don’t have the cash on hand, while also earning you rewards and building your credit history. Of course, you can get yourself into trouble if you don’t pay off the balance in a reasonable amount of time. With that said, business credit cards are super handy for any type of business expense that doesn’t exceed your credit limit, particularly if you can find a card with a 0% introductory rate, like the ones below.

Credit Card 0% Introductory Period Next Steps
American Express Blue Business Plus 0% APR on purchases and balance transfers for the first 15 months Compare
Chase Ink Business Unlimited 0% APR on purchases and balance transfers for the first 12 months Apply Now
American Express SimplyCash Plus 0% APR on purchases for the first 9 months Compare
Capital One Spark Cash Select For Business 0% APR on purchases for the first 9 months Compare
Bank of America Business Advantage Cash Rewards Mastercard 0% APR on purchases and balance transfers for the first 9 months Compare

Even if you don’t have an expense looming on the immediate horizon, a business card is just good to have in case you need it.

Business Line of Credit

A business line of credit is an amount of money available for you to draw from as needed. You only have to pay back what you borrow (plus interest). Similar to term loans, you can get a line of credit from a bank or online lender. Not unlike a business credit card, a line of credit is useful to have just in case you need to make up for any type of shortfall or gap. An LOC can come in handy especially if you have a seasonal business or a business with occasional cash flow problems. Additionally, a line of credit, like the ones offered by the lenders below, can help you build business credit.

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

Invoice Factoring

Invoice financing, sometimes called invoice factoring, is when you sell your business’s unpaid invoices to a credit facility. The facility fronts you the amount of the unpaid invoice (minus a percentage they charge as a fee), and you then repay the lender as your customers repay you. Note that you do still need to repay the lender even if your customer never pays you.

Invoice financing is a useful type of financing for businesses with a lot of unpaid invoices that want to free up some cash. The borrower requirements are usually pretty relaxed, as invoice finance companies are more concerned with your customers’ creditworthiness rather than your business’s.

Equipment Financing

Equipment financing is useful for the purchase of any type of equipment or machinery your company needs but can’t afford outright. This type of “self-securing” financing does not require any collateral other than the equipment itself, and you usually don’t need to have excellent credit or much else in the way of borrower credentials. If you default on the loan you could lose the equipment, but if you make all your payments, you will eventually own the equipment.

We recommend the following equipment financers:

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

Do You Need A Business Loan? Next Steps

If you’ve decided you need a business loan, it’s time to take the next steps to secure one.

1. Compare the different types of small business loans discussed above and determine which type of loan best suits your need. Or, read more about common types of business loans.

2. Take a look at our free guide to small business loans.

3. Calculate how much you can afford to borrow.

4. Take a look at our favorite lenders.

Once you complete your initial research by taking these steps, you should have a very good idea of what to look for in a loan and which type or types of financing are best for your situation. You’re now ready to start applying!

To save time applying to multiple loans, you might consider using a lending matchmaker service like Lendio, which allows you to compare multiple loans tailored to your needs.

Final Thoughts

Applying for business financing can be daunting, given all the myriad types of loan products out there, and the possibility of being rejected for financing. You might also be worried about your ability to make payments on the loan.

However, if you have a good reason to apply for a business loan, there is a very decent chance that there is a lender willing to lend to you with feasible, realistic terms. With those funds, you’ll be able to address whatever needs your business has while building up your business credit profile with each repayment.

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 – $300K 6, 9, 12, 15, or 18 months x1.15 – x1.31 1 year 600 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

The post 19 Reasons To Get A Business Loan (And How To Get Started) appeared first on Merchant Maverick.

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