Domain Names, Explained

Domain Names

Domain Names are human-readable words (e.g., amazon.com) that directs Internet browsers to specific files on a specific server.

As an analogy, a domain is like a physical address but on the Internet. Like a physical address, they don’t really do anything on their own, but they are critical to understand when you are building an online project.

That’s the short version. But there’s more to domains & domain registration than the definition. I’ll cover common questions like –

  • What is a Domain Name?
  • What is DNS?
  • What is Domain Privacy?
  • How Domains, DNS & Privacy Work Together
  • How Much Does A Domain Name Cost?
  • Can You Just Buy A Domain Without Hosting?
  • I Bought A Domain, Now What?
  • Popular Domain Name Registrars & Next Steps

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

What is a Domain Name?

The Internet is nothing but a bunch of connected devices with IP Addresses (usually a series of numbers like 192.168.0.1). IP Addresses are not only hard to remember, but they change frequently.

A domain name is a human-readable series of letters that gets matched with an IP Address so that a person operating a browser will find the device (usually a server with files) that they want to find.

In the physical world, the analogy is that Addresses are to Domain Names what Geo Coordinates are to IP Addresses.

Now – you can take this analogy pretty far, and it answers quite a few common questions. For example, like physical addresses,

  • Domain Names are mainly for convenience and memorability. You don’t have to have one…but it makes finding your work *much* easier.
  • Domain Names can have prestige based on neighborhood. Everyone knows 5th Avenue in New York City. But 5th Avenue only has prestige from the businesses that exist there.
  • Domain Names are regulated and structured by a central governing entity.
  • Domain Names are partly determined by country and availability.

Now, the central governing entity in this case is ICANN. They manage the structure of the domain name system while delegating responsibility for individual domain names to registrars.

ICANN has also approved a series of Top Level Domains (TLDs) that are meant to pair with specific devices / websites. Many are country pairs but many are also industry related. Domain Name Registrars literally register and lease your domain name on an annual basis for a fee.

We’ll get to providers & what to look for in a moment.

But what actually connects a domain name to a device / files / website? Well now we are talking about the Domain Name System (DNS).

What is DNS?

The Internet Domain Name System (DNS) is the protocol that translates a domain name request to an actual IP address request.

Every domain name requires you to set name servers. Name Servers do the work of the DNS. These name servers then allow you to define “records” for where each request will go.

You can tell a request for incoming email to look in a folder. You can tell website requests to look in another folder, etc.

Your domain name does not work at all without an attached DNS name server. It simply exists. And a DNS name server does not work with a domain name.

Now, access DNS name server is usually included when you buy a domain name or when you buy hosting (a place to put your website files). But it’s important to know that you don’t have to have your DNS name server in any specific place.

Namecheap DNS Setup

It’s usually simplest to set your name servers with your hosting company (rather than your domain registrar) since they are the ones actually routing your traffic to folders. However, if you are technically adept, many people use a DNS provider like Google, Cloudflare or others separate from their registrar and hosting company.

But the key part here is that no matter where your DNS name server lives, you still have to set it at your registrar. They are the ones who control all your registration data – and your privacy.

So let’s briefly touch on Domain Privacy and the products around that.

What is Domain Privacy?

Domain Privacy is a product that a domain registrar is authorized to sell under certain regulations. Under the ICANN license agreement, you *must* provide correct contact information with your domain name registration. Your contact information is stored in the public WHOIS database.

This requirement is to correct spam, abuse, and technical issues that can arise with domain names & DNS operation.

The side effect of a public WHOIS database is, well, you can probably guess. This is the Internet after all.

Scrapers, spammers, stalkers, and salespeople have a habit of helping themselves to the public contact information and misusing it. Although sometimes you can use it to find the spammers yourself 🙂

Public WHOIS

Domain Privacy is meant to solve that issue. Basically you pay for your registrar to act like a middleman in public. They publish their contact information in place of yours and promise to pass along any important information to you.

Domain Privacy comes at a cost, even though many registrars are starting to bundle it for “free” (i.e., including the base cost in the total cost).

Hover Bundle

Either way, it’s a good idea and a worthwhile upgrade, if only to reduce spam and random phone calls.

How Domains, DNS & Privacy Work Together

Here’s how all this works out in a real life example.

  1. This site’s domain name is shivarweb.com.
  2. The domain name is registered at NameCheap with the DNS name servers pointed to my host, InMotion Hosting.
  3. InMotion’s DNS name servers are set to direct web traffic to a folder on my VPS Hosting server that will deliver my website files (like this page, all of its images and design). They will also deliver any email sent to [email protected] onward to Google, where I receive my email.
  4. My registration information lives at NameCheap, where I have WHOIS Privacy Protection. NameCheap can get in touch with me, but no one else can.

That’s how a domain name, DNS, and WHOIS privacy all work together.

But there are still quite a few questions that come up. Here’s how I answer them.

How Much Does A Domain Name Cost?

A domain costs a flat annual fee depending on several factors including the base cost of the top level domain (TLD), the status of the domain, and your registrars’ business model & markup.

In other words, it depends 🙂

You can expect to pay $10 to $30 per year for an inactive generic top level domain (e.g., a .com, or .org domain that is not currently registered).

If you are buying a country TLD (e.g., .co.uk or .ca or .tv) or premium TLD (e.g., .ninja or .wedding or .movie) then you can expect to pay a base cost plus the registrar’s model & markup.

If you are buying a domain that is currently registered, then you will have to negotiate a private party price or wait to buy it at auction when it expires. Most big registrars either have their own marketplaces or participate in a domain marketplace.

GoDaddy Auctions

The quickest way to see how much a domain name costs is to simply search for it. Most of my readers use NameCheap (for their low annual renewal prices and user experience), so I’ve embedded their search tool below.

Find a domain starting at $0.88

powered by Namecheap

But you can also use the search tool at domain registrars like GoDaddy (cheap upfront) or Hover (focus on support) or even direct at hosting companies who usually offer a free domain (like Bluehost or InMotion).

Now, the big wild card with domain costs are your registrar’s business model and markup. I’ve written many reviews of different registrars. There is no “best” registrar. But there is one (or several) that match your goals.

Every domain registrar is out to make a profit. But they aim to make a profit in different ways. Your job as a consumer is to find one that matches your goals, and remember that if something is too good to be true, then it’s not true. If you get a super cheap domain upfront, then you will pay for it over time. If a company overpromises the world for an expensive domain…you’re probably going to just get an expensive domain.

I’ll cover different providers’ business models below.

Can You Just Buy A Domain Without Hosting?

Yes – you can absolutely buy a domain without buying hosting. In fact, there are a few good reasons to buy a domain without hosting.

  1. Your project is not ready, but you want to claim your domain name now.
  2. You want to redirect your domain name to an existing project (ie., on Facebook, Medium, Amazon, elsewhere).
  3. You want to speculate on a domain name idea. This practice is not as lucrative as in the past, but it is a thing.
  4. You want to protect trademark of phrasing.

There are of course plenty of other good reasons, but that is up to you. The point is that you can buy a domain without hosting. You’ll just need to pay the $10 to $20 per year to keep it registered.

I Bought A Domain, Now What?

Once you’ve bought a domain, there are a few things that you can / should do.

If you are setting up a new website, then you’ll also need hosting / website builder / ecommerce platform depending on what you are building. For diversity sake, I like to get hosting separate from domains. But, if your domain provider has a good deal (or you want convenience) then you can just follow their onboarding).

Once you’ve bought hosting / website builder subscription, then you’ll need to point your DNS to your hosting company / website builder.

Namecheap DNS Setup

After that, all the remaining steps will happen at your hosting company / website builder.

If you are setting up an email setup or other Internet project, then you can set DNS settings with the DNS nameservers that should be bundled with your registration subscription. You can set MX records for email (ie, Google Suite) or @ records to point to a live project.

If you need to redirect visitors to an existing project, then you’ll set the 301 records to the target with UTM parameters for tracking.

If you ware just leaving it alone for a while, then you can place limited advertising or a parking page.

Popular Domain Name Registrars

There are a lot of domain registrars on the Internet. They range from Big Brands like GoDaddy to hip upstarts like Hover to companies that do registration as a complement (like hosting or website builder companies).

They all have tradeoffs. I’ve listed a few of my favorites with a buying guide here. I’ve also reviewed many individually here and compared the two biggest brands here.

But the key to shopping is to ask yourself what you really prefer. Do you want a cheap first year only to pay more on subsequent years? Do you want phone customer support or is chat fine? Do you want an established brand or small upstart? Do you want a simple user experience or lots of complementary products? Do you want a wide TLD selection or no? Do you plan on buying a lot of domains or a single one? Do you want the convenience of buying a domain & hosting from one company or do you want the control of buying them separately?

My domains are hosted at either NameCheap (almost all of my long-term personal domains), GoDaddy (for quick ideas & some clients), or Google Domains (for experiments). But I have clients who use Hover (review) and bundle domains / hosting somewhere like Bluehost or InMotion or Shopify or Wix.

They all work fine in their own way, but you should find the one that fits you.

Next Steps

Domain names are very interesting. In many ways, they are a core ingredient to a successful website. In other ways, they don’t really matter (see thefacebook.com, basecamphq.com and all the other terrible original domains of now big businesses).

But if you have an idea, a project or a need for an online presence, then go grab your domain name and put it to use!

The post Domain Names, Explained appeared first on ShivarWeb.

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SBA Loans For Women: What You Need To Know

Being an entrepreneur is never easy. However, if you’re a female entrepreneur, you may face even more challenges when owning and operating your own business. After all, until the passage of H.R. 5050: Women’s Business Ownership Act in 1988, women in many states couldn’t even receive a business loan without having a male cosigner. Thanks to this legislation, more resources are available for women business owners. Unfortunately, though, women still face challenges when applying for business loans and financing.

If you’re a female business owner or you’re ready to start your own business, don’t lose hope. There are resources available to fund the launch or expansion of your business. One of the best resources? The Small Business Administration.

The Small Business Administration — or SBA — provides a variety of resources, including affordable loan programs, to female entrepreneurs. Ready to learn more? Read on to find out more about the SBA, growing your business with SBA loans, and additional resources available for women-owned businesses.

What Is The SBA?

The SBA was founded in 1953 to provide assistance to small business owners. The SBA provides various resources to help small business owners become successful entrepreneurs. This includes in-person and online counseling, low-cost training, and advocacy for small businesses. One of the SBA’s most significant resources is its low-interest loan programs.

Securing a traditional loan from a bank or credit union can be tough for any business owner. These financial institutions view small businesses as a risk, even when the business has established a track record of success. Because traditional lenders tend to avoid risky borrowers, many business owners have the door shut in their face.

At this point, there are a few options to consider. Alternative lenders have fewer requirements but much higher rates and less favorable terms. Low borrowing limits through these lenders may also prove to be a problem.

Instead of simply accepting a loan with less-than-desirable terms, many business owners look to the SBA to receive loans with competitive rates and terms, even when they’ve been turned down for other loans.

Overview Of SBA Loan Programs

Loan Program Description More

7(a) Loans

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

Review

Microloans

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

Review

CDC/504 Loans

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

Review

Disaster Loans

Loans used to rebuild or maintain business following a disaster. 

Review

How The SBA Helps Women-Owned Businesses

The SBA’s Office of Women Business Ownership was created to enable and empower female entrepreneurs. Training and counseling are available to all women through Women’s Business Centers, with over 100 educational centers open nationwide.

The Office of Women’s Business Ownership collaborates with other organizations to provide additional resources to women entrepreneurs. We’ll explore some of these resources a little later in this post.

The SBA also provides federal contracting opportunities for women through the Women-Owned Small Business Federal Contracting program. Through this program, certified women-owned businesses can compete for federal contracts.

The SBA does not discriminate when it comes to funding and resources. Women-owned businesses can take advantage of everything that the SBA has to offer. Female entrepreneurs can apply for all SBA loans provided they have a “small business” as defined by the SBA and meet all other requirements. These loans open up funding opportunities for women to launch or grow their small businesses.

One important thing to note here is that the SBA is not a lender. Instead, this organization has created guidelines that keep interest rates low and repayment terms flexible. Money is loaned through lenders known as intermediaries. An intermediary can be a bank, credit union, nonprofit organization, or another lender. The SBA takes the risk off of lenders by guaranteeing large percentages of most loans. This makes it easier for lenders to loan to small businesses, which can then take advantage of these affordable financing opportunities when other options aren’t available.

How To Qualify For An SBA Loan

One of the most valuable resources available through the SBA is access to low-cost loans. Female entrepreneurs that don’t qualify for traditional loans can receive competitive rates and terms through SBA programs.

Starting or expanding your small business takes capital … and sometimes, lots of it. Purchasing or leasing a commercial building, buying equipment, and even having working capital for daily expenses can be a financial burden that most entrepreneurs can’t handle alone. This is when an SBA loan can really be beneficial.

Women can apply for any SBA loan product, provided they meet the requirements. The first requirement is that the business must meet the SBA’s size standards for a small business. The SBA limits the number of employees, annual revenues, and net worth of the business.

To receive an SBA loan, your business must be based in the United States. Most loans are only available to for-profit businesses, although SBA Microloans are also open to nonprofit childcare centers. Businesses in certain industries are also ineligible to receive SBA loans. These industries include, but are not limited to:

  • Multi-Level Marketing Schemes
  • Real Estate Investment Firms
  • Religious Institutions
  • Lending Firms
  • Businesses In Illegal Industries
  • Government-Owned Businesses
  • Gambling Businesses

When applying for SBA loans, your personal credit score will be a factor for approval. Though credit requirements vary by lender, most SBA intermediaries require a solid credit score at least in the mid-600s. Of course, the higher your score, the higher your chances are to receive a loan. Your credit report must also be free of:

  • Recent Bankruptcies
  • Tax Liens
  • Defaults On Government Loans

Other negative items on your credit report will need to be explained to your lender, and depending on the severity, may disqualify you from receiving a loan.

You must also show sufficient revenue to cover your monthly loan payment. Your lender will evaluate your revenue and your current debts during the underwriting process to determine if you can afford the new loan.

Depending on the loan you apply for and the total borrowing amount, you may also be required to pay a down payment and/or put up collateral to secure the loan. You may also be required to pay fees to receive your loan including but not limited to:

  • Guarantee Fees
  • Origination Fees
  • Packaging Fees
  • Loan Service Fees
  • Closing Costs

To qualify for an SBA loan, you must have invested your own time and money into your business. You also must have exhausted all other financing options before applying.

Can I Get An SBA Loan If I Have Bad Credit?

To qualify for an SBA loan, a solid credit score is required. Credit score requirements are not set by the SBA, but this doesn’t mean that your score isn’t important. Your personal credit score is, in fact, an important factor considered by intermediary lenders.

Most lenders want to see a credit score of at least 620, while scores over 700 are preferred. If your credit score falls below 620 or your credit report has negative items such as bankruptcies, foreclosures, or collections, the chances of receiving an SBA loan are slim to none.

If your credit prevents you from receiving an SBA loan, there are a few options. The first is to work on your credit, build your score, and apply when you meet all requirements. Start by receiving your free credit score online, reviewing your credit report, disputing any errors, and paying your current debt obligations as agreed. Although this can be a lengthy process, building your credit score will open up many affordable financing opportunities for you, including SBA loans.

If your financing need is more urgent, you can apply for loans and other financing for bad credit borrowers. Be aware, however, that these loans have less favorable terms, higher interest rates, and are more expensive than SBA loans.

Types Of SBA Loans For Women-Owned Businesses

Now that you have a general understanding of SBA loans, which loans are best for women-owned businesses? While all SBA loans are available to female entrepreneurs, three loans stand out the most: SBA 7(a) loans, Microloans, and CDC/504 loans. Let’s delve into the details of each type of loan to help you determine which is best for your business.

SBA 7(a) Loans

The SBA 7(a) loan is one of the most popular loan options for small business owners. Through the 7(a) program, borrowers are eligible to receive up to $5 million that be used for nearly any business purpose, including the purchase or expansion of an existing business, refinancing existing debt, or to pay startup costs.

Repayment terms are based on the borrower’s ability to repay and are up to 10 years for loans used as working capital or up to 25 years for loans used for commercial real estate. Interest rates are based on the amount borrowed and the repayment terms. The maximum interest rates for a 7(a) loan is the prime rate plus a markup between 2.25% and 4.75%. Check out the current rates for SBA loans.

SBA 7(a) Loan Base Rates + Markups

Loan Amount Less Than Seven Years More Than 7 Years

Up to $25,000

Base rate + 4.25%

Base rate + 4.75%

$25,000 – $50,000

Base rate + 3.25%

Base rate + 3.75%

$50,000 or More

Base rate + 2.25%

Base rate + 2.75%

SBA 7(a) loans of $25,000 or less do not require collateral. Loans of more than $25,000 up to $350,000 may require collateral based on the lender’s policies. All loans that exceed $350,000 must be secured with collateral. Fixed assets of the business are used to collateralize the loan, although trading assets and personal real estate may be used as collateral if needed. A guarantee fee must be paid by the borrower for 7(a) loans over $150,000.

Women-owned businesses may also qualify to receive the SBA’s Community Advantage loan. Through this program, business owners can receive up to $250,000. Loan proceeds can be used for nearly any business purpose, just like with the 7(a) loan. Repayment terms are the same as the 7(a) program, and the maximum interest rate is the prime rate plus 6%.

What makes this loan different from the traditional 7(a) loan? The Community Advantage program is designed for small businesses in underserved markets. Women-owned businesses, businesses located in low-to-moderate income areas, businesses in rural areas, and businesses that are less than 2 years old qualify for funding through this program.

SBA Microloans

If you have smaller capital needs, the SBA Microloan program may be the right financing solution for your business. Women-owned businesses can apply for up to $50,000 through this program. The average loan amount distributed through this program is $13,000. These loans are distributed through nonprofit lenders.

SBA Microloan proceeds can be used as working capital, to purchase equipment or fixtures, or to cover improvements. Microloans can’t be used to repay existing debt.

Maximum repayment terms are set at 6 years. The interest rate is based on the lender’s cost of funds. The lender can add a maximum of 8.5% to its cost of funds when distributing loans. There is no guarantee fee required with these loans. Collateral and/or a personal guarantee may be required by the lender as a condition of receiving the loan.

SBA Microloan Rates & Terms

SBA 504 Loans

Borrowing Amount

$500 – $50,000

Term Lengths

Up to 6 years

Interest Rates

6.5% – 13%

Borrowing Fees

Possible fees from the loan issuer

Personal Guarantee

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

Collateral

Collateral normally required, but depends on the lender

Down Payment

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

SBA CDC / 504 Loans

If you need to purchase commercial real estate or update your existing facilities, consider applying for an SBA CDC/504 loan. This program is a little bit different from other SBA programs because you work with two different lenders.

Proceeds from an SBA CDC/504 loan can be used to purchase buildings, land, or long-term equipment, to improve land or update facilities, to pay costs for new construction, or to refinance debt connected to purchasing or updating facilities or equipment.

This is how the SBA CDC/504 program works: a Certified Development Company that is licensed through the SBA provides 40% of your project costs up to $5 million. A private lender provides 50% of the project costs. You are responsible for paying the remaining 10%. If you’re a new business or purchase a special-use property, you may have to pay up to 10% more.

Your CDC loan comes with repayment terms of 10 or 20 years. Interest rates for the portion of the project funded by the CDC are based on the 5-year and 10-year U.S. Treasury issues. Interest rates and repayment terms funded by the private lender vary.

SBA 504 Loan Rates & Terms

SBA 504 Loans

Borrowing Amount

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

Term Lengths

10 or 20 years

Interest Rates

Fixed rate based on US Treasury rates

Borrowing Fees

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

Personal Guarantee

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

Collateral

Collateral required; usually the real estate/equipment financed

Down Payment

10% – 30%

For these loans, additional collateral is not typically required. The assets being purchased act as the collateral. All owners of 20% or more of the business are required to sign personal guarantees to receive this loan.

How To Apply For An SBA Loan

If your business needs financing and you meet the requirements of the SBA, you can apply for an SBA loan. The steps that you take next are determined by the type of loan you select.

To apply for an SBA 7(a) loan, the first step is to find an intermediary lender. You can do this through the SBA’s Lender Match service, which connects you with a lender in your area. You can also get referrals through your existing financial institution.

If you’re applying for an SBA Microloan, you’ll need to find a nonprofit lender in your area. If you’re applying for an SBA CDC/504 loan, you will need to find a CDC that is licensed with the SBA, as well as a private lender that will loan money to cover 50% of your project costs.

Once you’ve found a lender, you’ll fill out an application for the loan of your choosing. In addition to providing details about your business, you may also be required to provide a breakdown of ownership, a summary of how loan proceeds will be used, and details surrounding how you plan to pay back your loan.

Documentation will also be submitted with your application. This documentation will be used to determine if your business qualifies for funding. While requirements may vary by lender, expect to present the following items:

  • Business & Personal Credit Scores/Reports
  • Business Licenses
  • Articles Of Incorporation
  • Business & Personal Income Tax Returns
  • Cash Flow Statement
  • Balance Sheet
  • Profit & Loss Statement
  • Business Plan
  • Financial Projections

Depending on the loan product you select, additional documentation may be required. For example, a letter of intent from a private lender is needed when applying for an SBA CDC/504 loan.

As you move through the application process, be prepared to provide information on the collateral being used to secure the loan (if required) and all owners should be ready to sign a personal guarantee.

Once all documentation and information are gathered, the lender will evaluate your application, taking into consideration factors including credit score, credit history, time in business, and your ability to repay the loan. Don’t be surprised if the lender has questions or requests more information throughout the process. Make sure that your contact information is up to date and you make yourself available to keep the process moving forward.

The underwriters may take several weeks to review your full loan application. With banks and traditional lenders, you may wait 2 to 3 months (or longer) from the application stage to funding. Some lenders offer expedited services to help you get the money you need fast, so if time is an issue, shop around for intermediary lenders that offer fast approvals and funding, like SmartBiz or Lendio.

SmartBiz

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Through SmartBiz, you can apply to receive anything from $30,000 to $5 million to finance your small business. If you want to expand your business, refinance debt, hire employees, purchase inventory or equipment, launch a marketing campaign, or just have funds to use as working capital, consider applying for SmartBiz’s SBA 7(a) Working Capital and Debt Refinancing Loans.

Qualified borrowers can receive up to $350,000 through this program and can be funded in as quickly as 7 days. To qualify, you must have a minimum credit score of 650, a time in business of at least 2 years, and a credit history free of bankruptcies, foreclosures, charge-offs, and settlements. Your credit report should also be free of defaults on government-backed loans and tax liens.

You can also apply for up to $5 million for a 7(a) Commercial Real Estate Loan through SmartBiz. You must have a credit score of at least 675, a time in business of at least 2 years, and no delinquencies or defaults on government loans. The property being financed with loan proceeds should be at least 51% owner-occupied. You must also show proof of sufficient income to cover your loan payment.

Lendio

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Through Lendio, you can apply for the SBA 7(a) loan, the SBA 504 loan, and the SBA Express loan. Loans are available for $50,000 up to $5 million.

To qualify, you must meet all the requirements for receiving an SBA loan. Documentation can be uploaded securely to Lendio’s platform, and if you encounter any trouble along the way, you can work with your personal funding manager.

The average time for funding SBA loans through Lendio’s platform is 30 to 90 days.

Other Business Resources For Women

As mentioned earlier in this article, the SBA offers more than just loans for women-owned small businesses. One program offered through the SBA is the Women-Owned Small Business Federal Contracting program.

Through this program, women-owned businesses can bid on federal contracts with less competition. Only businesses that are certified WOSBs are eligible to compete for these contracts. To qualify, a business must be a small business as defined by the SBA, be at least 51% owned and controlled by U.S. citizens that are female, and have women in charge of day-to-day operations and long-term decisions.

Women that operate economically disadvantaged businesses can bid on federal contracts with even less competition, provided they meet all requirements of the SBA.

Even though legislation has been leveling the playing field for female entrepreneurs, the Center for Women’s Business Research found that almost half of women business owners don’t seek outside sources of funding for their business. The SBA believes that one reason women may not seek financing is that they don’t understand the process and may be unsure of who to ask for more information. The SBA has online resources, Women’s Business Centers, and local SBA offices that provide counseling, training, and loan information to women business owners.

There are plenty of other resources for female entrepreneurs outside of the SBA. The National Women’s Business Council offers nearly 200 resources through the Grow Her Business initiative, including accelerators and incubators, business competitions, conferences, crowdfunding, and alternative lender programs.

The National Association of Women Business Owners also provides resources to help empower women business owners. This organization offers training, education, and virtual networking to female entrepreneurs.

Entrepreneurs can also take advantage of many funding opportunities outside of SBA loans. Learn more about grants and small business loans available for women-owned businesses.

Final Thoughts

Women have come a long way in recent years, especially when it comes to entrepreneurship. The great news is that there are plenty of resources available to female entrepreneurs — you simply need to know where to look. By taking advantage of resources like SBA small business loans, you’ll be able to start, build, or grow your business, taking it to new levels you never thought possible.

The post SBA Loans For Women: What You Need To Know appeared first on Merchant Maverick.

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Business Loans For Food Trucks: Best Financing Options

Food trucks are rolling out across cities and towns across the nation, bringing delicious dining options to businesses and events. These mobile businesses don’t just benefit hungry diners, though. Restaurants-on-wheels also open up new opportunities for entrepreneurs. With operating costs that are only a fraction of what it would be to open and maintain a traditional restaurant, food trucks are a more affordable way to bring your tasty food to the masses.

Even though your costs are cut, that doesn’t mean they’re nonexistent. You still have to consider the cost of supplies, equipment, POS software, and the truck itself. Whether you already own a food truck business and want to expand or you’re ready to launch your business, these expenses add up quickly … and if you’re like most business owners, you don’t have the funds just sitting in your checking account.

The good news is you don’t have to be a millionaire to start or expand your food truck business. There are plenty of financing options available for your business expenses, from purchasing a new food truck to upgrading equipment and hiring employees.

Ready to roll out your food truck business? Read on to learn more about the types of financing available to you, how to apply, and our recommended options.

Financing Need Best Loan Type Recommended Lender
Purchasing Or Renting A Food Truck Equipment Financing Lendio
Working Capital SBA Loan SmartBiz
Supplies & Inventory Line Of Credit Fundbox
Hiring & Covering Payroll Installment Loan StreetShares
Cash Flow Shortages Short-Term Loan OnDeck
Emergency Funds Business Credit Card Chase Ink Unlimited

Purchasing Or Renting A Food Truck

It’s no surprise that one of the most important pieces of your food truck business is the food truck itself. Your truck is your mobile restaurant, allowing you to peddle your tasty treats all over town. Without a food truck, you simply don’t have a business.

Unfortunately, the truck will also be one of your biggest expenses. A custom truck stocked with all of the equipment you need to make your edible creations could cost upwards of $200,000 — an expense that just isn’t financially feasible for most entrepreneurs.

Whether you’re investing in your first food truck or adding to your fleet, there are two options to consider: purchasing and renting/leasing. Let’s explore the differences between loans and leases to determine which option is best for your business.

Vehicle Loans VS Leasing

If you want to purchase a food truck, commercial auto loans or equipment loans are your best financing options. These loans can help you buy an expensive food truck without having to pay the full purchase price out of pocket.

When you receive an equipment or vehicle loan, you’ll be required to pay a percentage of the purchase price as a down payment. This is typically 10% to 20% of the total cost, although this can vary by lender. In most cases, the higher your credit score, the lower your down payment requirement will be. However, you may want to consider putting a larger amount of money down to reduce the amount of your loan and decrease your monthly payment.

After making the down payment, the lender will loan you the remaining balance so that you can take possession of the vehicle immediately. Then, you’ll repay the loan through monthly payments for a set period of time. Your monthly payment will be applied to the balance of your loan, as well as to interest charged by the lender. Once you’ve made all loan payments as agreed, you’re the owner of the food truck and can keep it, trade it in for a new truck, or sell it outright if you choose.

If you have an established food truck business, a loan may be the best option for you. Once you pay off your loan, you’ll own the vehicle free and clear and can use it in your business as long as you need.

If you don’t have collateral, it’s no problem. For most equipment and vehicle loans, the equipment being purchased — in this case, your food truck — will act as the collateral.

On the other side of the coin is food truck leasing. When you lease a food truck, you’re essentially renting it. A lease does have a few similarities to a vehicle or equipment loan. With a lease, you are required to pay a down payment. After paying your down payment, you can put the food truck into service.

When you sign a lease, you agree to make monthly payments over a period of time — usually 2 to 3 years. Once your lease ends, you can return the vehicle and sign a lease on a new truck. Some lenders may also give you the option to pay a lump sum at the end of your lease to purchase the truck.

When should you consider a lease over a loan? If you’re new to the industry, a lease may be the better option for you. If things go pear-shaped and you decide to not move forward with your business, you can simply return the truck at the end of your lease. A lease is a good option when you’re not yet sure if you’re in this business for the long haul.

If you’re short on funds for a down payment, a lease may also be the better choice. In many cases, leases have lower down payment requirements. You may also score lower monthly payments with a lease.

However, if you do plan to use your food truck for a longer period of time, purchasing your equipment with a loan is a wise move. While a lower down payment and lower monthly payments are more cost-efficient over the short-term, a lease is often more expensive over the long term.

Still stuck between a loan and a lease? Learn more about equipment loans and leases to make the right decision for your business.

Recommended Option: Lendio

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Lendio is an online loan aggregator that connects you with a network of lenders that best fit your financial needs. One of the options that you can apply for through Lendio is equipment financing.

With equipment financing, you can receive between $5,000 and $5 million for the purchase of your food truck. Interest rates through Lendio’s network start at 7.5% for the most creditworthy borrowers. The proceeds from your loan can be used to purchase a new or used food truck. You can also use equipment loans to purchase other equipment for your business, such as a new grill or a point-of-sale system.

To qualify, you must have a credit score of at least 650. If your score is lower, you may still be able to receive equipment financing through Lendio provided you can show proof of solid cash flow and revenue over the last 6 months. You must also have a minimum of $50,000 in annual revenue and a time in business of at least 12 months.

Working Capital

You just can’t operate a successful business without working capital — money that is used to cover your daily operating expenses. Even though the average daily expenses of a food truck — think fuel for your vehicle, payroll, and other operating expenses — are far less than the operating costs of running a restaurant, they can still pile up.

The money you make from selling your food should cover your daily operating costs and add to your profits, but what happens when you fall a little short? Unexpected expenses, a slow season, or other hurdles can pose a challenge to your business and leave you short of the working capital you need.

If you need working capital, there are a variety of financing options to consider, but one of the most affordable is a loan from the Small Business Administration.

SBA Loans

SBA loans come with low interest rates and favorable, flexible terms for small business owners. Even if you’ve been turned down for a traditional bank loan in the past, you may qualify for an SBA loan. The SBA guarantees portions of each loan. This takes the risk off SBA lenders — known as intermediaries — and opens up affordable business loan options for entrepreneurs.

SBA loans are a preferred choice for many small business owners because they have low interest rates, long repayment terms, high borrowing limits, and can be used for nearly any business purpose, including working capital.

Recommended Option: SmartBiz

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One of the drawbacks of applying for an SBA loan is how lengthy and difficult the process can be. Finding the right lender, gathering the required documentation, and waiting for approval can take weeks — or in some cases months.
If the challenge of receiving an SBA loan has held you back from applying, there’s an easier option to consider: SmartBiz. This online lender specializes in simplifying SBA loans from the prequalification stage to approval and funding.

Through SmartBiz, you can apply for SBA working capital loans from $30,000 up to $350,000. These loans have a variable interest rate — the base rate plus 2.75% to 3.75% –, making the total interest rate between 8% and 9%.
Your working capital loan can be used in many ways, whether you need to purchase inventory or equipment, hire staff, cover operating costs, or even refinance existing debt.

To qualify, you must be a U.S. citizen or permanent resident. You must also have a time in business of at least 2 years and show proof that you have sufficient cash flow to cover your monthly loan payment. All borrowers applying through SmartBiz must also have a credit score of at least 640. Your credit report should be free of bankruptcies or foreclosures within the last 3 years, defaults on government loans, and outstanding tax liens.

SmartBiz offers a prequalification tool that makes it easy to see if you’re eligible for an SBA loan. The form takes just 5 minutes and will automatically tell you if you qualify to apply. If you do, you can proceed with the application and receive funds as quickly as 7 days after completing your application. If you don’t qualify, SmartBiz can connect you with lenders that offer non-SBA loans that could help with your working capital challenges.

Supplies & Inventory

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Running a food truck requires keeping supplies and inventory on-hand at all times. From paper products to food, there are a number of supplies that you need to keep your business operating smoothly. These expenses are recurring, and while your profits should be enough to pay for supplies and inventory, this isn’t always the case.

Whether you have a seasonal increase in sales that require more supplies and inventory or you have cash flow issues that have left your bank account lower than usual, sometimes you need a financial boost. If you need financing to cover the costs of supplies and inventory, a line of credit can help.

Lines Of Credit

A line of credit is a flexible financing option to cover business expenses. When you receive a line of credit, a lender will provide you with a credit limit — the maximum amount you can borrow. You can make multiple draws up to and including this credit limit. Once you initiate a draw from your line of credit, the funds are transferred to your bank account. Most lenders transfer funds immediately, and you can access them as soon as the next business day. Some lenders even have options that give you access to your funds within just minutes.

Once you’ve made a draw on your line of credit, you will make regularly scheduled payments to the lender, which will be used to pay off the balance as well as fees and/or interest charged by the lender. As you pay off your balance, funds will become available for you to use again.

You can use a line of credit to purchase your inventory and supplies as needed. Whether you’re facing a planned expense or a completely unexpected emergency, a line of credit gives you the flexibility you need to make sure you can continue to serve your customers without a hitch.

Recommended Option: FundBox

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Fundbox is a popular option for businesses seeking a line of credit because of its lenient requirements. Even if you’ve had credit challenges in the past, it doesn’t matter with Fundbox. This company takes the performance of your business into account when issuing lines of credit.

Through Fundbox, you can be approved for a line of credit up to $100,000 that can be used for any business purpose. If you have a low personal credit score, it isn’t a problem. There are no credit requirements to qualify for a Fundbox line of credit. However, you do need to have at least $50,000 in annual revenue, a business checking account, and a business that is based in the United States. Additionally, you must grant access to your accounting software so Fundbox can analyze the performance of your business. If you don’t use a supported accounting software, you can also submit business bank statements from the last 3 months.

Once you’ve been approved for a line of credit, you can initiate draws into your business checking account. With each draw, a fee will be charged. Fees start at 4.66% of the amount drawn. You will receive your funds in your account as quickly as the next business day. Repayment terms are 12 or 24 weeks, and payments are made weekly through ACH debits. If you repay your loan early, all remaining fees are waived.

Hiring & Covering Payroll

Hiring new employees means that your business is expanding, but this expansion comes at a cost. Or maybe you’re facing a completely different situation and you’re struggling to meet your current payroll. Whether you’re adding to your crew or just trying to overcome a financial hurdle to cover payroll, there are financing options to consider, including installment loans.

Installment Loans

An installment loan provides you with a lump sum of money that is paid back through regular payments over a set period of time. Each payment will be applied toward the balance of your loan, as well as toward fees and/or interest charged by the lender.

Your fees and/or interest will vary based on the lender you select and factors such as your personal credit score. The more creditworthy you are, the more affordable your loan will be. Repayment schedules may be daily, weekly, or monthly depending on the policies of your lender.

If you choose an installment loan to cover hiring or payroll costs, you need to run some calculations before you apply. Since you receive a lump sum, calculate how much you need to cover payroll or how much it will take to hire new employees to ensure you request enough money. If you’re unsure of how much money you need, consider applying for a line of credit or another form of flexible financing.

Recommended Option: StreetShares

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If you need an installment loan, you can apply for $2,000 to $250,000 through StreetShares. Repayment terms are between 3 and 36 months with APRs of 7% to 39.99%. A closing fee of 3.95% to 4.95% is added to the cost of your loan. Repayments on your loan are made weekly.

If you want a more flexible option, you can also receive a line of credit from StreetShares. You can receive between $5,000 and $250,000 with repayment terms between 3 and 36 months. A draw fee of 2.95% is charged for your loan, and APRs are between 7% to 39.99%.

To qualify for a term loan or line of credit with StreetShares, you must be in business for at least 1 year. A minimum revenue of $100,000 per year is required, as well as a personal credit score of at least 620.

Cash Flow Shortages

A cash flow shortage can negatively affect your entire business. Without sufficient cash flow, you’re unable to cover your daily operating expenses, pay your bills, or serve your customers. You lose profits, resulting in even more cash flow problems. Before you know it, your cash flow issue has spiraled out of control.

Cash flow shortages can occur at any time. In the food truck industry, for example, colder winter weather may affect the number of customers you have. Fewer customers mean less cash … and an increased chance of cash flow shortages.

Before you get to that point, take control of your finances by covering cash flow shortages with a short-term loan.

Short-Term Loans

With a short-term loan, you receive the cash that you need quickly and pay it back through regular payments over a set period of time. While some short-term loans come with repayment terms of 12 months or less, some lenders offer up to 3 years to repay your loan.

Many lenders do not use a traditional interest rate for short-term loans. Instead, these lenders opt to use a factor rate. This is a multiplier that determines the fixed fee added to your loan. Let’s say that you borrow $10,000. The factor rate is 1.3. Multiply the borrowing amount times the factor rate to find the total repayment. In this example, the total is $13,000. This means that your fixed fee for borrowing is $3,000. Learn more about factor rates and how they’re used to determine the cost of your loan.

A short-term loan is a good option when you know exactly how much money you need. If you need a more flexible option, consider applying for a line of credit or business credit card.

Recommended Option: OnDeck

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With OnDeck, you can apply for business loans up to $500,000. There are two different options to consider: short-term loans and long-term loans.

OnDeck’s short-term loans have repayment terms of 3 to 12 months with simple interest rates as low as 9%. This means that your interest rate is calculated as a percentage of your loan amount. For example, if your loan of $20,000 has 10% simple interest, you will pay $2,000 in interest.

OnDeck also has long-term loans with repayment terms of 15 to 36 months. Annual interest rates start at 9.99%.
An origination fee is also added to the cost of your loan. For your first loan, you will pay 2.5% to 4% of the total loan amount. Second and subsequent loans qualify for lower origination fees. All loans are repaid daily or weekly through automatic ACH withdrawals.

To qualify, your company must be in business for at least a year. You need at least $100,000 in annual revenue. Your personal credit score must be at least 500.

If you’re looking for a more flexible financing option, OnDeck also offers lines of credit up to $100,000 with APRs starting at 13.99%. To qualify, your company must be in business for at least a year and have $100,000 in annual revenue. You must also have a credit score of at least 600 to receive an OnDeck line of credit.

Emergency Funds

Your food truck is in need of repairs. Your equipment has suddenly given out and needs to be replaced. An unexpected expense has come out of nowhere and has turned your finances upside down. When an emergency arises, don’t panic. Know that there are emergency loans and other financing options available to help you overcome financial hurdles.

In an emergency, you need access to funds quickly. You don’t have days or weeks to wait for a loan approval. In these situations, a business credit card could help.

Business Credit Cards

Once you’re approved for a business credit card, you can put it into action immediately. You don’t have to wait for approval from the lender each time you use your card. If a sudden emergency pops up, your credit card is ready to use. You can use it to pay your suppliers or vendors, pay a bill, cover food truck repairs, or for other business expenses.

When you receive a credit card, the issuer will set a credit limit. You can spend up to and including this limit anywhere credit cards are accepted. Each month, you’ll make a payment that will be applied toward the principal balance and the interest charged by the lender. As you pay off your balance, your credit will become available to use again.

If you apply for a credit card for your business, make sure to compare interest rates and to read all of the fine print. Many cards come with introductory APRs that increase at a later date so make sure you’re aware of all terms for your card. You may also consider applying for a rewards card, which provides you with cash back or points to use for perks and benefits each time you use your card.

Recommended Option: Chase Ink Business Unlimited

Chase Ink Business Unlimited


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Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

With Chase Ink Business Unlimited, you can earn unlimited 1.5% cash back with every business purchase. This card comes with a 0% introductory APR for the first 12 months, followed by a 15.24% to 21.24% variable APR. There’s no annual fee, and you can even receive $500 cash back after spending $3,000 within the first 3 months of opening your account.

To qualify for the Chase Ink Business Unlimited, you must have good to excellent personal credit. Unsure if the Chase Ink Business Unlimited is right for you? Check out other credit card options:

  • Compare Chase Ink Business Credit Cards
  • Best Business Credit Cards For Good Credit
  • Top Business Credit Cards For Fair Credit

When You Want To Start A Food Truck Business

The financing options previously discussed are great for established businesses, but what about food truck startups? Time in business requirements, annual revenues, and business credit scores are required for many loans, so what’s your next move if you fall short of these requirements?

New businesses and startups may not have as many financing options as established businesses, but there are options out there if you know where to look.

For example, you may not qualify for an SBA 7(a) loan, but you could get a smaller loan through the SBA Microloans program. Through nonprofit intermediary lenders, you could receive up to $50,000 to cover startup costs for your new food truck business. Although the maximum borrowing amount is $50,000, the average loan distributed through this program is $13,000, so this is an option that is best for startups with lower capital needs.

Sometimes, you may even have to get a little creative with your financing. Consider crowdfunding to raise money for your business. With crowdfunding, you’ll use an online platform to raise money to fund your startup costs. Investors will invest money in your food truck business in exchange for equity or a reward of your choosing. Your crowdfunding campaign can be a success if you effectively spread the word about your business through social media and other online outlets and offer equity or rewards that are enticing to investors.

If you have good credit, look beyond business loans and consider taking out a personal loan. Your personal income and credit score will be the main qualifying factors with a personal loan. With this option, you can receive very competitive interest rates and terms on a personal loan that can be used to fund your new food truck business. Learn more about using a personal loan for business.

Friends and family that are willing to invest may also be a financial option for your new business. If you receive a loan from your friend or family member, make sure that everything is in writing and that you pay as agreed, just as you would with any other lender.

Bad Credit? Your Best Food Truck Financing Options

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If you have a low personal credit score, your financing options are limited. Your low score will also result in higher interest rates and a higher overall cost of borrowing. Instead of being stuck with these higher costs and less desirable financing options, the smartest financial move is to build up your credit.

Know where you stand by applying for your free credit score and report online. Review your credit report for any errors and dispute any erroneous information to have it corrected or removed. Continue paying all loans, credit cards, and other debts as agreed. With a few easy steps, you can boost your credit score. With a higher score, you’ll be able to qualify for better, more affordable loans and financing.

If you’re in a hurry to receive money, waiting for months (or even longer) to build your credit score may not be an option for you. If you need financing quickly, there are options, but be aware that these options come at a higher cost.

If you have bad credit but your business is performing well, consider applying for a line of credit. Lenders like Fundbox and Kabbage consider the performance of your business — not your credit score — as the most important qualifying factor. With these lenders, simply fill out a short form with your personal information, then link your business accounts and/or accounting software to see how much you qualify to receive. Once approved, your line of credit is available to use immediately.

Another type of financing available to borrowers with bad credit is a merchant cash advance. When you receive a merchant cash advance, you receive a lump sum of money in exchange for future revenue. The merchant cash advance company uses a factor rate to add a fixed fee to the total amount borrowed. The money is then repaid through daily ACH withdrawals, although some providers offer weekly or monthly repayments.

With MCAs, you may have fixed or variable repayments. With some providers, the amount you pay never changes. With others, the amount you pay is based on a percentage of your sales. When you have higher sales, your payment is higher. When sales are down, your payment is lower. What you pay depends on the agreement you sign with your provider.

It’s important to proceed with caution when receiving an MCA. Financial experts advise against this type of financing due to the high costs and short repayment terms, which could lead to more debt. If you have a low credit score and no other financing options, carefully weigh out the pros and cons before signing a contract with an MCA provider.

There are also alternative lenders online that are willing to work with borrowers with credit challenges. Shop around, compare your options, and make sure that your return on investment justifies the cost of taking out an alternative loan.

What You Need To Apply For Food Truck Financing

When you apply for food truck financing, what you need to apply is based on the type of loan you’re applying for and the lender you’re working with. At the very least, you’ll need to fill out an application providing personal information including:

  • Full Legal Name
  • Legal Business Name
  • Contact Information: Phone number, email address, mailing address
  • Federal Tax ID
  • Social Security Number
  • Annual Revenue

For some types of financing, like lines of credit and business credit cards, little more is needed. However, loans such as equipment financing and SBA loans may require additional information and documentation, including:

  • Business & Personal Bank Statements
  • Business & Personal Income Tax Returns
  • Balance Sheet
  • Profit & Loss Statement
  • Business Plan
  • Financial Projections
  • Resumes For All Business Owners
  • Debt Schedules

Requirements vary and a complete list of all required information and documentation will be provided by your chosen lender.

Final Thoughts

Running a food truck can be extremely lucrative, but like any other business, you may encounter financial challenges. When this occurs, just know that there are loans and financing that can be used to cover unexpected expenses, expand your business, or even start a new business.

Understand the types of financing available to your business, shop around for the best rates, and make all payments as agreed to open up future financing opportunities and to prove yourself as a responsible borrower and business owner.

The post Business Loans For Food Trucks: Best Financing Options appeared first on Merchant Maverick.

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Understanding Rollovers As Business Startups (ROBS)

You’re ready to start your own business, and you just need the financing to bring your ideas to life. However, in your journey to become a business owner, you may encounter challenges. Many new business owners find that securing a business loan is easier said than done. When it comes to requirements surrounding time in business, annual revenues, and personal and business credit history, you may find yourself falling a little short.

Whether you want to purchase a franchise, acquire a business, refinance your existing business, or start a new business, sometimes you have to get a little creative with your financing. One idea that probably hasn’t crossed your mind is a Rollovers as Business Startups plan. If you have a retirement account, read on to learn how you can leverage this account to start or grow your business.

What Is A ROBS?

Rollovers for Business Startups — or ROBS — is a type of transaction you can use to fund your new or existing business if you can’t take out a loan or work with outside investors. This method of funding your business does not involve borrowing money. Instead, you are rolling over funds from your individual retirement account, 401(k), or another retirement account to use as financing for your business.

Since you aren’t borrowing or cashing out your retirement account, ROBS allows you to invest your retirement funds without being penalized. A ROBS transaction is a financing choice for many entrepreneurs that don’t qualify for startup loans or traditional financing.

How A ROBS Plan Works, Step-By-Step

A ROBS plan is a complicated transaction, which is why most people that choose this funding avenue work with an attorney or a ROBS provider. However, even if you work with an expert, it’s important to understand how the process works.

Step 1: Establish A C-Corp

The first step of the rollover is to establish a new C corporation, an entity with shareholders that are taxed separately from the entity. A C corporation is the only business structure that will work with a ROBS.

Step 2: Set Up A New 401(k)

The next step is to set up a new retirement plan for the business. The business then becomes the sponsor of the 401(k) plan. In most cases, the entrepreneur will be the only employee of the new corporation and will be the only participant in the 401(k) plan, although you may wish to discuss other options with your ROBS provider or attorney.

Step 3: Roll Over Existing Retirement Accounts

Through a series of legal forms, funds from an existing retirement account are transferred to the newly-created 401(k) plan. Because these funds have been rolled over, the transaction is not a taxable distribution and will not incur penalties.

Step 4: Use Funds From 401(k) To Purchase Stock

Funds in the new 401(k) plan are then used to purchase stock in the C corporation. Now, the C corporation has cash from the sale of the stock.

Step 5: Build Your Business

With money in your pocket, you can use funds to acquire a business, fund your startup, or inject money into an existing business — all without tax liabilities or penalties.

Who Qualifies For A ROBS?

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Anyone with an eligible retirement plan qualifies for a ROBS. The most common retirement plans used for this purpose include 401(k) plans, 403(b) plans, and defined contribution plans like Traditional IRAs, Simplified Employee Pension, and Thrift Savings Plans. You may also use a combination of qualifying plans.

The retirement plan you use to fund your business cannot be from your current employer. Most employers will not allow you to roll over your account while you’re still working for them. However, plans from prior employers, your own 401(k), or self-directed IRAs are eligible to roll over.

Earlier, we discussed the steps for setting up your ROBS. Those steps included setting up a new C-corp and becoming an employee. This isn’t just something that you write on the forms and forget. You must be a legitimate employee for the business. While there are no hard rules as to how much time you devote to the business, you should expect to commit at least 1,000 hours per year. If this doesn’t work for you, consider other financing options for your business.

You also must ensure that you meet all the requirements of your chosen ROBS provider. Some providers have requirements related to the minimum amount of money in your retirement fund, how you’re using the funds, and the type of requirement account you plan to roll over. Before selecting your ROBS provider, understand their requirements. We’ll offer up provider recommendations a little later in this article.

Pros & Cons Of Using A ROBS

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A ROBS sounds like a great way to finance a business, doesn’t it? Approached correctly, a ROBS can be a financially-savvy move. However, it’s also important to understand that there are drawbacks to using a ROBS. Before you dive in, weigh out the pros and cons to determine if this is the right financial solution for your situation.

Pros

  • No Debt: You aren’t borrowing against your retirement account or taking out a loan. With a ROBS, you’re leveraging your retirement account to receive the money you need for your business, so you won’t be indebted to a lender.
  • No Interest: Because you aren’t taking a loan from a lender, you won’t have to worry about paying interest for borrowed funds. This means that you’ll have more money to invest in your business.
  • Easy To Qualify: If you have a qualifying retirement account, you can get the financing you need with a ROBS. You won’t have to worry about your personal or business credit score, a lack of revenue, or any other factor considered by a lender. Because you are leveraging your own account and aren’t taking out a loan, the requirements of traditional lenders do not apply.
  • No Penalties: When you withdraw your retirement funds to finance your business, you may be subject to early withdrawal penalties and taxes. With a ROBS plan, you won’t have to pay these costs, leaving more money in your pocket.
  • No Personal Guarantees Or Collateral: Remember, a ROBS is not a loan, so you won’t have to sign a personal guarantee or put up collateral to receive your funds. With a business loan, you may be required to do one or both, which means that if your business fails and you can not pay back your loan, you risk losing your personal assets. With a ROBS, the money invested from your retirement account is the only thing at risk.

Cons

  • Risk Of Losing Your Investment: Although you won’t have to worry about losing your personal assets if your business fails, you do risk losing your money for retirement. Of course, there have been many entrepreneurs that have started successful businesses using a ROBS. However, you should know that there is always a risk involved. If your business fails, you lose your retirement money.
  • Fees & Tax Liabilities: Unlike a business loan, you won’t have to pay interest to a lender with a ROBS plan. However, this doesn’t mean that this strategy doesn’t come at a price. Because you are creating a C-corp, your tax liabilities may be higher than other business structures. If your transaction is not set up properly, you may have to pay penalties to the IRS if you’re audited. This is why it’s so important to select a ROBS provider that understands the process and is able to help avoid missteps when setting up and maintaining your ROBS. Setting up and maintaining your ROBS also has associated costs. With most providers, you’ll be required to pay a setup fee, as well as monthly maintenance and reporting fees.

The Best ROBS Providers

While it is possible to roll over your retirement funds to finance your business yourself, handling the paperwork and navigating the legal requirements can be confusing. Instead of tackling this difficult task on your own, leave it to the experts. If a ROBS sounds like the right next step for you, consider working with one of these two lenders: Guidant Financial and Benetrends.

Guidant Financial

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In addition to financing options — including Small Business Administration loans and unsecured loans –, Guidant Financial offers ROBS to eligible applicants.

To qualify, you must have at least $50,000 in a rollable retirement or pension account. Eligible accounts include:

  • 401(k)
  • 403(b)
  • Traditional IRA
  • Thrift Savings Plan (TSP)
  • Simplified Employee Pension (SEP)
  • Keogh

With Guidant Financial, you can roll over up to 100% of your account balance to fund your business. Most applicants receive funding approximately 3 weeks after starting the application process.

To set up your ROBS, Guidant Financial charges a setup fee of $4,995. An additional $139 per month is charged as a Plan Administration fee.

Benetrends

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Benetrends Financial offers a variety of business funding solutions, including Small Business Administration loans, equipment leases, securities-backed lines of credit, and startup loans. One of the company’s most popular funding options is its Rainmaker Plan.

The Rainmaker Plan is a ROBS that was first launched by Benetrends in 1983. With this plan, you can roll over your 401(k) or IRA to receive funding for your business in as little as 10 days. Benetrends offers an in-house team of professionals that will offer guidance throughout the process. When you apply with Benetrends, you’ll work with a Financial Funding Expert to design a custom plan to best fit your business needs.

Benetrends also offers Audit Shield protection, which protects your plan in the event of an IRS or Department of Labor inquiry or audit.

To get started, Benetrends charges an initial setup fee of $4,995, which includes setting up your plan and your C-corp. After paying your initial fee, a monthly service fee of $130 is charged for ongoing retirement plan services. Fees are all-inclusive and include services such as audit protection, legal support, and compliance at no additional cost.

Final Thoughts

A ROBS isn’t the right financial solution for every aspiring entrepreneur. In some cases, you may want to explore other options, including SBA loans, traditional loans, and startup loans. However, if you have a qualifying retirement plan, you’ve reviewed the benefits and drawbacks, and you don’t want to go through the hassle of securing a traditional loan, this may be the right financing option to launch or recapitalize your business.

The post Understanding Rollovers As Business Startups (ROBS) appeared first on Merchant Maverick.

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The Best Medical Practice Business Loans And Financing Options

Doctors are among the top-paid professionals in America, but the cost of doing business sure isn’t cheap. There’s the pricey medical equipment, medical licensing costs (not to mention the cost of medical school to earn those licenses!), malpractice insurance, practice management software, medical association fees … and the list goes on. On top of the steep expenses associated with running any type of medical clinic, the slow nature of insurance reimbursements means you are often not even paid for your services in a timely manner.

On the bright side, doctors and other medical professionals are prime candidates for business financing, as they have low default rates and plenty of business collateral in the event that they do default. Whether you decide to go through a bank or an alternative (online) lender will depend partly on your qualifications as a borrower and partly on what you need the loan for. In this post, I explore which types of loans and specific lenders are best suited for different medical practice loan purposes.

Financing Need Best Loan Type Recommended Lender
Building a new clinic Bank loan Lendio
Purchasing medical equipment Term loan or Equipment financing OnDeck
Working capital Term loan or Line of credit Fundation
Practice expansion SBA loan SmartBiz
Hiring & payroll Business line of credit Kabbage
Cash flow shortages Business credit card Ink Business Preferred From Chase
Emergency funds Short-term loan LoanBuilder

Best Loan For Building A New Medical Clinic

Private practices looking to open a new medical clinic will sometimes need a business loan to build and open their clinic, including both construction and other startup costs. In order to take on such an endeavor, you will likely need a large sum of money that will, in many cases, exceed the amount of capital you could feasibly borrow from an online lender (online lenders’ borrowing limits tend to max out around $500K). Even if you are moving into an existing building, you’ll need a sizable loan to outfit your new clinic with equipment, insurance, staff, etc.

Bank Loan

A bank loan is usually going to be the best option to open a brand-new medical clinic. Bank of America, US Bank, Wells Fargo, and many other banks and credit unions across the country offer specialized loans for medical practices, in large amounts that can cover the cost of a new construction.

This is a good option for doctors who can wait up to several months to get a long-term loan to finance their new office or clinic. To qualify for a bank loan, you’ll need strong business credentials and a down payment, but if you are in the position where opening your own medical clinic is the next logical step for you, you probably already have these qualifications.

Recommended Option: Lendio

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Although Lendio is technically an online lending service, they connect borrowers with bank loans as well. Their partners include both big banks and credit unions, making it easy to borrow as much as $5 million to build and open your new medical clinic. Lendio does not originate loans; rather, they serve as a one-stop shop for business financing by connecting borrowers with appropriate lenders in on online marketplace.

Lendio is a good option for medical practice construction loans, as Lendio will shop your request around and present the best loan offers, so you can easily compare offers and decide on the best loan for your business.

To learn more about commercial construction loan options, read Commercial Construction Loans: The Ultimate Guide.

Best Loan For Purchasing Medical Equipment

Often, medical practices need to purchase medical equipment but don’t have the capital to buy the equipment outright. Some reasons for needing a medical equipment loan could include replacing broken equipment, investing in new technologies, buying equipment to expand your services, replacing outdated equipment to meet new industry regulations, or buying equipment to outfit a new practice.

Term Loan Or Equipment Financing

There are various ways to finance a major equipment purchase, but two common financing types for this purpose are term loans and equipment financing. A term loan is a traditional installment loan wherein borrowers receive a lump sum that is repaid in installments over a period of several months to years, depending on the term length. You can obtain a term loan from either a bank or an alternative/online lender; if you are purchasing multiple pieces of equipment for a new practice, or a very costly item such as an MRI machine, you may need to pursue a bank loan.

Equipment financing is another way for medical businesses to purchase equipment and is also suitable for very large equipment purchases, such as a CAT scanner. This type of financing includes both leases and loans, and is typically self-securing, meaning it doesn’t require any collateral other than the equipment itself. Leases are a more expensive way to secure equipment, as you do not own the equipment at the end of the term—but if your borrower qualifications (credit score, time in business, etc.) are weak, this type of financing is easier to get than an equipment loan or term loan.

Recommended Option: OnDeck

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OnDeck offers fast, easy, short-term business loans that work great for one-time purchases such as medical equipment for a new or existing practice. This online lender originates loans of up to $500K, with term lengths of up to 3 years. To prequalify, you only need 12 months in business and $100K in revenue. Having poor credit may not be a problem, but more qualified applicants will receive lower interest rates.

With a time to funding of just a few days, an OnDeck loan is especially useful when you need to replace broken medical equipment ASAP and can’t wait a month or two for a bank loan to come through.

If you prefer to go the equipment financing route, check out our chart of the best equipment financing lenders.

Best Loan For Working Capital

Best Time Tracking Integrations

Working capital, i.e., money to run your day-to-day business operations, is the lifeblood of any business—especially for doctors, who might have to wait long stretches between insurance reimbursements. Whether you work as a surgeon, dentist, chiropractor, dermatologist, spider vein specialist, or any other type of doctor, you coffers need to be full even if your appointment book is also full.

Term Loan Or Line Of Credit

A term loan is always an option for working capital, and many online lenders offer loans with “working capital” right in the loan description. A term loan is suitable for short- or medium-term working capital needs. A working capital (term) loan is a good “general” type of business loan to have if you have various expenses you need to cover in the near-future.

A line of credit is another option, and one more suited for long-term working capital needs. With an LOC, you can withdraw cash only as needed and only need to repay what you borrow. You can think of a line of credit as a sort of “cash cushion” to tide you over during short times, even if you don’t know if or when those slim times will arise.

Recommended Option: Fundation

fundation logo

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Fundation offers installment loans up to $500K and lines of credit up to $100K to shore up your working capital funds. Term loans are repaid on a bi-weekly basis, while lines of credit are repaid monthly. You will need to have an established business with at least 3 full-time employees (including yourself) in order to apply, so not all businesses will qualify. But if you meet the qualifications, Fundation is one of the highest-quality loan/LOC providers online, with competitive terms, excellent customer service, no prepayment penalty, and a time to funding of only 2–7 days.

To learn about more working capital loan options, read Working Capital Loans: What They Are And Where To Find Them.

Best Loan For Medical Practice Expansion

When it’s time to expand your medical practice by opening a second clinic, it’s also likely time to take out another loan. Whether you are constructing or purchasing a new office space to see patients, you are likely a very qualified borrower at this point in terms of your revenues, time in business, collateral, etc. Thus, you can likely qualify for a high-quality loan from a bank or from the SBA (if you don’t yet exceed their size and income requirements).

SBA Loan

SBA loans have the best rates, and if your business has strong qualifications as most expanding medical practices do, the SBA will be keen to lend to you. According to 2016 SBA data, dentist offices and medical offices (excluding mental health specialists) are respectively the third and fifth top recipients of SBA loans in terms of number of loans. Medical practices have a low default rate and lots of collateral in the event that the borrower does default. Therefore, an established private practice that wants to expand to a second office is a prime candidate for an SBA loan, such as a general 7(a) business loan or a CDC/504 loan.

Depending on which type of SBA loan you apply for, you can use the proceeds to purchase an existing building or land or construct new facilities. You can also use the funds to buy equipment for your new offices or to renovate an existing building. However, it’s important that you’re not overqualified. For example, to qualify for an SBA CDC 504 loan (commercial construction loan), you must have a tangible net worth of less than $15 million and an average net income of less than $5 million. If your practice is larger than this, then you’ll need to secure a regular bank loan.

Recommended Option: SmartBiz

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SmartBiz is an online marketplace offering a fast and efficient way to get an SBA loan, including commercial real estate loans. Through SmartBiz, you can get an SBA loan of up to $5 million, without having to do as much paperwork or wait as long as you would for a standard SBA loan (several months). This online-SBA loan hybrid isn’t as quick as a lot of other online lenders, potentially taking about a month for funds to come through, but it’s still a lot faster and easier than applying for an SBA loan the traditional way.

If you want to know more about your options for getting an SBA loan to open a second doctor’s office, you can read up on SBA loans for real estate. If you are expanding your practice by acquiring another medical practice, I recommend you read my post on how to get a business acquisition loan.

Best Loan For Medical Clinic Hiring & Payroll

Medical clinic payroll loans are sometimes necessary when you’re in a pinch and need to pay your staff but don’t have enough cash on hand. Similarly, you might take out a loan to hire a doctor or specialist that will add considerable value to your practice. A loan may be especially crucial if a key staff member or practice partner quit abruptly and you need to hire a replacement fast.

Business Line Of Credit

As mentioned earlier, a business line of credit can act as a “cash cushion” to draw from when you’re short on funds. Even if business is slow, you still need to pay your staff, and an LOC lets you transfer funds to your business bank account immediately. Similarly, you can use this capital to take on a short-term or unexpected staffing expense such as hiring a new specialist. Even if you’re not currently having an issue funding the payroll, it’s important that you have a source of funds available to help fill any gaps that could arise.

A short-term loan is also an option for a payroll emergency, but an LOC is more appropriate for ongoing expenses such as payroll.

Recommended Option: Kabbage

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It’s wise to plan ahead a bit so that you already have the LOC in place before you need to draw from it to fund the payroll. However, life doesn’t always work out so neatly. If you’re having problems paying your staff, you’re likely in a desperate, if not dire, situation and need money ASAP if you want to keep your practice open. To help you out in such times, Kabbage has one of the fastest LOCs in the business; in many cases, medical practice owners can apply, receive a funding decision with personalized rates and fees, and start drawing funds within just a few minutes.

Kabbage can also be used for other working capital needs for your medical practice and is a terrific option if you don’t have great credit, as they consider your business performance in lieu of your credit history. However, the rates and fees can also be pretty high, so if you have strong credit and/or some time to wait for funds to come through, you might get cheaper capital through a lender like Fundation.

Best Loan For Cash-Flow Shortages

Cash-flow shortages can happen to any of us, but doctors are especially vulnerable to them due to slow insurance reimbursements. Usually, you know payments are coming through eventually, but you have gaps during the month or year when cashflow is not as strong as you need it to be to support various daily and periodic business expenses.

Business Credit Card

Credit cards work well for smoothing out cash shortages for a business’s day-to-day expenses, because you can charge both large and small expenses, and also earn reward points or cash-back while you’re at it. Even better, if you’re able to pay off your balance with each monthly statement, you aren’t charged any interest or fees at all except for a small annual fee. With timely payments, you’ll also help build your business’s credit profile.

Credit cards are also good for cashflow gaps because unlike most short-term loans where you have to make payments on a weekly or even daily basis, credit cards let you make monthly payments. If you’re looking to charge a large expense and don’t expect you’ll be able to pay it off in the near future, you might even be able to find a card with a 0% APR introductory rate for the first year.

Recommended Option: Ink Business Preferred From Chase

Chase Ink Business Preferred



Apply Now 

Annual Fee:


$95

 

Purchase APR:


17.99% – 22.99%, Variable

This is one of the most popular business cards on the market, and for good reason. Medical professionals and other business owners earn extra points (redeemed for cash or milage) for common business expenses such as internet, phone, advertising, and travel. Some other perks include a signup bonus, additional cards for employees at no extra cost, and cell phone protection.

Ink Business Preferred from Chase is particularly useful if you or your staff need to travel to medical conferences to learn about the latest treatments in your field or give presentations. But even if you don’t travel much, the card still rewards you for standard business purchases including online advertising, which most doctors and dentists spend a lot of money on. At the same time, you’ll also be able to solve your problem by covering cashflow gaps.

Note that you do need to have at least “good” credit to get this credit card. Check out our business credit card comparison page to compare Chase’s business credit cards and others. Or, if you need more money than you can access with a credit card, look at some cash flow loan options.

Best Loan For Emergency Funds

Lawsuits, acts of God, vandalism, and theft are just a few types of emergencies your medical practice could face. Malpractice lawsuits are an especial risk for doctors — particularly those in certain fields, such as cosmetic surgery. Malpractice insurance may not cover all of these costs, unfortunately, in which case you’ll need to take out a loan.

Short-Term Loan

Emergencies need fast solutions, and the fastest solution is a short-term loan. Though the borrowing rates are higher than a long-term loan, a short-term loan is easier to qualify for and you’ll get the money in just a few days. If your business was damaged physically or financially by a natural disaster, you might also be eligible for an SBA Natural Disaster Loan.

If you’re only getting the loan to protect yourself against a possible emergency in the future, a line of credit card or business credit card would be a more appropriate option than a short-term loan.

For further reading, check out Emergency Business Loans: 7 Ways To Get Business Funding Fast.

Recommended Option: LoanBuilder

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LoanBuilder stands out from most short-term lenders for a few key reasons: LoanBuilder loans are relatively inexpensive (for a short-term loan), there is no origination fee or any other up-front fees, and borrower requirements are low. LoanBuilder allows you to “build” your perfect loan, letting you adjust to your liking the loan amount and term length and seeing how those adjustments affect your loan’s total cost and weekly payment amount.

Note that voluntary health organizations (nonprofit medical centers) are among LoanBuilder’s restricted industries, so you’ll need to own a for-profit medical practice to apply for this loan.

We hope that your emergency does not exceed $500K, which is what LoanBuilder and most other short-term lenders max out at. For a big, BIG emergency, you can use a service like Lendio to search for loans of up to $5 million.

Do Banks Offer Medical Practice Business Loans?

Banks do, indeed, offer medical practice business loans. You can use a business loan from a bank or credit union to open a new practice, expand your current practice, buy equipment, access working capital, or cover just about any other medical business need. However, bank loans can be difficult to qualify for if you don’t have at least two years in business, on top of strong revenues and excellent credit. Thus, a bank loan is best for established medical practices that wish to borrow a large sum to expand their clinic or build a new one. As mentioned previously, it is possible for new practices to qualify for a bank loan (to build a new clinic, for example), but you’ll have to have strong business credentials and enough money for the down payment.

Some bank loans are SBA loans, which means the loan is guaranteed by the U.S. Small Business Administration. These loans are some of the best loans you can get, as they have both low rates and fair terms.

If you need a smaller amount of money, say $10K–$50K, or you don’t have the rock-solid borrower credentials banks like to see, it’ll be easier and faster to get a loan from an alternative/online lender.

Pros Of Bank Loans:

  • Lower interest rates and longer repayments terms (compared to an online lender), especially if you qualify for an SBA loan
  • Access to large amounts of capital for major investments such as building a new clinic or acquiring commercial real estate
  • Banks may be willing to overlook medical school debt
  • Some specialized medical practice loans are available

Cons Of Bank Loans:

  • Long application process involving lots of paperwork
  • Requires (likely multiple) in-person visits to the bank
  • Can take months for money to come through even after approval, due to a lengthy underwriting process
  • Can be difficult for newer practices to qualify for

On the other hand, an online lender can offer:

  • Quick and painless application process
  • Access to capital within the same business week
  • Only need fair credit, modest revenues, and 6 months-to-1-year in business to qualify
  • Can borrow small amounts of money, as little as $5K

Something else to consider when deciding between a bank business loan vs. an online business loan is that doctors tend to be well-qualified and have their pick of financing options. So, a medical professional taking out a loan will usually pay lower interest rates than would a borrower from another industry. This means that even though online loans tend to be more expensive in general, a doctor might pay only slightly higher rates for an online lender than they would for a bank loan, and without having to jump through all the extra hoops required to get a bank loan.

What To Consider When Choosing A Lender

Some important things you’ll need to consider when choosing a lender are as follows:

  • How much money you need
  • Which loans you qualify for
  • The loan’s fees and repayment terms
  • How much and how often your loan payments will be (and whether you can afford them)
  • Whether you’re willing to pay a little extra for the convenience of an online loan

In order to find out all the important information you need to make an informed decision, you will need to apply for multiple loans so you can compare their offers. It’s easy to prequalify for most online loans within minutes; if you are pre-approved, the lender will present you a loan offer with the rate they’re willing to give you based on the information you’ve supplied. In many cases, getting pre-qualified will not affect your credit score at all. (You’ll need to supply more information about your business and agree to a hard-pull on your credit only if you accept the offer.)

Like I mentioned earlier, you can use an online loan matchmaker service to save time and pre-apply to various loans at once. This is also a good way to figure which loans are appropriate for your financing needs if you have no clue where to start.

What You’ll Need To Apply For A Medical Practice Loan

Before you apply for any loan, you’ll first want to check your credit score to make sure there are no major issues. If you have a little time to improve your personal credit score and your business credit score (if you have one), polish up that credit to the best of your ability. Next, it’s time to start pre-applying!

When you pre-apply for a loan, you’ll usually just need to supply a few pieces of information, such as:

  • When you started your medical practice
  • How much money you need
  • How soon you need the money
  • What you need the loan for

The lender will generally check your credit at this time. In many cases, this will be a “soft pull,” which will not affect your credit score. However, if in doubt, ask customer service before applying if pre-qualifying will affect your score.

Some other key pieces of information and documentation you need, possibly a little later in the application process, are:

  • Your Tax ID number (EIN) and Social Security number
  • Documents to verify your identity
  • Recent personal and business federal tax returns
  • Average bank balance with recent business bank statements
  • Estimated annual gross revenues
  • Proof of business ownership
  • Copy of medical license and other relevant licenses and permits
  • Proof of insurance
  • Total outstanding business debts
  • Financial statements, such as P&L and balance sheet

The exact application requirements and documents vary from lender to lender, and as you might have guessed by now, you’ll need to supply a lot more information and documentation if you are applying for a bank loan or SBA loan. Online loans, by contrast, require a lot less. To qualify for a Kabbage online line of credit, for example, you’ll just need to give the lender read-only access to your business bank account.

Here are some useful references for further reading so you can learn more about applying for a business loan for your medical practice:

  • Small Business Loan Requirements: What You Need To Apply
  • 20 Tips To Improve Your Business Loan Application
  • How To Get A Small Business Loan: The Step-By-Step Guide

Final Thoughts

Most doctors who go into private practice will need a loan at some point in their career. With medical business financing, you can keep your practice as healthy as you keep your patients, even during slow or uncertain times. You can also use business financing to expand your growing medical practice, making timely investments that will take your practice to the next level.

In general, financial institutions love to lend to doctors, who typically have strong cash flow and are unlikely to default on their debts. Even if you have middling credit and medical school debt, you still probably have plenty of choices when it comes to financing your practice. The growing availability of alternative lenders in recent years provides even more choices, even for medical professionals with a tattered financial past.

The most important thing when obtaining a loan for your medical practice is to consider all of the financing options available and determine which is best for your particular needs. If you follow all the advice I’ve outlined for you in this article, you will be well on your way to securing a high-quality loan to help build your dream practice.

The post The Best Medical Practice Business Loans And Financing Options appeared first on Merchant Maverick.

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How To Advertise on Quora Effectively

Quora Ads

Quora Ads are one of the myriad options for advertising online. Like eBay, Reddit, and LinkedIn, Quora is one of those Web 2.0 properties that feels like it should be dated, but remains surprisingly relevant.

In fact, while Quora is itself has been around since 2009, Quora’s self-serve Ad Platform only rolled out in 2016.

Quora has 300 million active users and some interesting reasons to advertise.

Why Use Quora Ads

First, you have access to both social data and search intent.

Like Pinterest and Reddit, you can reach people based on demographic and psychographic data AND you can reach people who are actively searching for answers OR you can layer both to run hyper-targeted campaigns to people who are both your target customer and actively researching.

Second, you have access to lots of qualified organic traffic. Quora has plenty of internal usage. But their organic search traffic is their secret weapon.

Due to their brand and enormous amount of content, they rank well in Google & Bing for highly qualified search terms. I’ve written how you can use Quora for “barnacle” SEO and content.

But – that approach requires work. With Quora Ads, you can pay to jump to the front of the line. Advertise on pages that rank well for target keywords.

Quora Ad Alternative

Third, you get to define best practices & deal with lower competition.

Every big brand and agency is on Google & Facebook. Best practices and budgets are well-defined. Quora requires more work and thought to succeed.

I’ll share my experience in this post, but my main takeaway is that there is no “right” answer. Quora is still wide-open and open for testing & experimentation. If you have more time / skills than budget, Quora is a great place to go.

How To Setup Quora Ads

Quora has done an excellent job with self-service. The platform is straightforward and comes with a surprisingly useful email course.

To get started, all you need is some basic business information.

Within your Ads Manager Dashboard, you can Manage Ads, setup a Quora Pixel, manage your retargeting audiences, and setup email reports.

Whether you setup an ad campaign or not, I highly suggest that you immediately implement your Pixel, dabble with Audiences and setup a couple curated Email Reports.

Quora has a the familiar menu of retargeting audiences. Standard setup is for Website Traffic.

In the next step, you’ll setup your Quora Pixel to tag visitors. You can pre-segment your Website Traffic to make retargeting a bit easier.

3 Quora Remarketing

If you have a lot of educational content on your site, I would start with that segment. Quora is a common research tool, especially with high-consideration purchases. If you can reach users doing intensive research across platforms, you’ll be less likely to lose them.

Additionally, once you’ve built an audience, you can create a Lookalike Audience.

This feature is huge because you can reasonably expand your reach across Quora to reach someone who you *know* is familiar with your brand.

Remember how I mentioned that Quora is hybrid social / search? This is where that power comes in.

For example, imagine you are recruiting entry-level engineers out of college.

You have the ability to tag visitors to your site, and then reach them throughout Quora whenever they are asking career related questions.

Plus – you’ll get insight into the types of questions that you your audience asks. This feeds back into a successful content strategy based on data that *only* you have access to.

Lastly, if you have permission, you can upload a list of current contacts to rebuild your existing customers within Quora.

It’s a lot of work, but for high consideration campaigns, it’s worthwhile.

Like any & all retargeting strategies – Audiences can be creepy, invasive, and sometimes illegal in the European Union without explicit consent.

Most people either consent or live in jurisdictions that do not require explicit consent. These tools do exist and are worthwhile for many businesses. Retargeting is here to stay. The key is to keep it classy. Time, thoughtfulness, and testing creates the best outcome for advertisers, publishers, and customers.

Email Reporting is straightforward. But I would set the settings you like so that you actually view the reports rather than automatically deleting them.

4 Quora Email Reports

Now you’ll need to set your Quora Pixel, which is the snippet that “fires” on your webpage to track website visitors.

The setup depends on your website, but you’ll need to place it wherever you have your Google Analytics tag.

5 Quora Pixel

Now you can get started on a campaign! Head to Manage Ads and select your objective.

6 Quora Ads Create Campaign

If you select Conversions, you’ll need to select a conversion type to pass to your Quora Pixel. You’ll also have to manually tag any actions (like Add to Cart).

Conversion Tracking is accurate and can be worthwhile. But unless you are running large campaigns, some of this Conversion Tracking might not be worth the effort.

8 Quora Ads Conversions

For my campaigns (and most advertisers), I use the Traffic objective. But I also tag all of my ads so that I can track conversions within my existing Google Analytics setup.

9 Quora Ads Objective

Once you’ve created your Campaign objectives, you’ll need to set up a new Ad Set.

Ad Sets each have their own targeting and bids. After setting up an Ad Set, you’ll write individual Ads for each ad set.

But Ad Sets are where the fun really happens.

You have 4 primary targeting methods. I’ll cover each below. But the short version is that you can do –

  • Topic Targeting – Target content that falls within a category regardless of user interest.
  • Question Targeting – Target specific questions on Quora regardless of topic or user.
  • Audience Targeting – Target your audiences everywhere on Quora (see above).
  • Interest Targeting – Target people who are interested in a topic regardless of content.

After that, you can choose several secondary targeting methods. You can focus your ads by Location or Device. You can also exclude specific questions or audiences (ie, people who have successfully purchased from your site).

10 Quora Ads Targeting

Topic and Question Targeting are my favorite options. They both target based on content not the user.

When you are looking to expand reach or target based on intent – this is the option that you should use. Topic Targeting lets you quickly target a bunch of questions quickly.

The key to Topic Targeting is to provide Quora with a relevant but broad set of keywords. There’s a bit of an art to it, but be sure to play around with different combinations before committing to a set of Topics.

Additionally, make sure you go and manually explore those Topics to vet the questions, the likely audience, and and related Topics that you are missing.

11 Quora Ads Topic Targeting

But if you have time, the best targeting option is Suggested Questions.

With this option, you can advertise with specific ads on specific questions.

From a purely data perspective, this targeting option is the only place to get Weekly Views stats for Quora questions, which can help your content marketing efforts separate from any paid campaigns.

13 Quora Question Ad Suggestions

Interest Targeting targets the user rather than the content that they are looking at. This option is great for casting a wide-net to reach your audience everywhere on Quora.

However, note that you’ll reach them even when they are looking at irrelevant questions. This option is great to layer with other options (like exclude questions). Be careful using it alone though.

12 Quora Ads Interest Targeting

There are also options for targeting an existing audience and also a Broad Topic option.

After selecting your targeting with exclusions and bids set, you’ll need to create your actual ads.

Quora provides lots of space and encourages “content-like” ads. They want complete sentences that are relevant to your targeting. They are not great for hard-sells, but pair *very* well with custom landing pages or educational content.

Be sure to add UTM parameters to your landing page URL to effectively track visits throughout Google Analytics.

 

14 Quora Ad CreationThat’s how you setup Quora ads. But keep in mind that the magic is in customized ads, landing pages, targeting and constantly improving each metric.

That said – how do Quora ads perform “out in the wild”? I’ve run a few campaigns for myself and for clients. Here’s the results of my most recent campaign.

My Experience with Quora Ads

Now – I almost exclusively use Question Targeting for my Quora ads. I also commit to spending probably too much time on research for my small campaigns (although some of that research gets re-used for content campaigns).

The campaign highlighted below was a fairly small content promotion campaign. I had a new piece of content that I wanted to promote without traditional, manual outreach.

I found several questions that aligned with the content. I devoted around $100 to promotion.

Quora Campaign Results

This campaign aligned with the common takeaways from my Quora campaigns.

  • The impressions were high for such a niche topic – and surprisingly consistent day to day.
  • The CTR was uncommonly high for online ads.
  • Conversions were solid.
  • Cost per click was a bit higher than expected, but nowhere near Google Ads territory.

Additionally, I did not have to filter or account for a lot of spam (I’m looking at you, Google Display and Facebook…).

My numbers in Google Analytics lined up perfectly with Quora. Engagement was high and as I’d hoped.

Quora Ads Experiment

All in all, this (and all my campaigns) go back to the same general takeaways for Quora Ads.

  • Quora Ads are hard to roll out “at scale” but are very effective with the right amount of time devoted to set up & research.
  • They are great for high consideration ads and great to reach new, smart audiences.
  • You have to have the right website content to provide good, engaging landing pages.
  • Often small campaigns are worthwhile simply for the data.

In many ways, they remind me of both Pinterest and Reddit Ads. They aren’t for everyone, but certainly a solid opportunity for the right advertisers.

Next Steps

Quora Ads are not for everyone. There’s not a ton of inventory. To do it well, you really need to spend some time on your research and ad setup.

However, in an increasingly crowded and expensive online ad market, the market represents a solid opportunity.

At the very least, you should go set up an account and grab the Quora Pixel to build an audience.

From there, you can reach you existing users on yet another platform. You can expand your reach based on small tests and the time you have to research interests.

If you found this article useful, please link, share or bookmark. Happy advertising!

The post How To Advertise on Quora Effectively appeared first on ShivarWeb.

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The Best eCommerce Platforms For Your Small Business

Selecting the best ecommerce platform for building your online store can be tough. I find it helpful to keep in mind that shopping for this type of software is similar to shopping for any other product (you just happen to be shopping for shopping cart software, which I’ll grant is slightly strange). You ultimately need your ecommerce software to do two primary things: to serve your particular online selling needs, and to accomplish this for an affordable price.

If you’ve heard of any ecommerce software up to this point, you’ve probably heard of a platform called Shopify. Shopify often receives top billing in this category, and with good reason. Still, it’s by no means the perfect solution for everyone. Along with Shopify, we’ve compiled a few other great options worth considering in your search for an online home for your store.

Shopify BigCommerce 3dcart Ecwid Wix

3dcart

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Monthly Cost

$9 – $299

$29.95 – $249.95

$19 – $229

Free – $99

$25 – $40

Core Features

Great

Excellent

Excellent

Good

Good

App Store

Very Large

Large

Moderate

Moderate

Small/Moderate

Ease Of Use

Very Easy

Easy

Moderate

Very Easy

Easy

Web Design

Great

Good

Good

OK

Excellent

Customer Support

Great

Great

Good

Good

Good

From a bird’s-eye view, our main reasons for recommending these platforms are user-friendliness, a solid feature set, and an accessible price. Notice that they’re also all SaaS (Software as a Service) platforms, meaning you are not responsible for downloading, installing, and hosting the shopping cart on your own server. Instead, you subscribe to the service (most often for a monthly fee), and all the hosting and software updates that underpin your online store are automatically handled for you. Easy! eCommerce software has been trending in this direction over the past several years, and the available SaaS options have only become more robust and customizable over time.

What To Look For In An Ecommerce Platform

Before we discuss the individual recommendations further, here’s a quick overview of the key factors we consider when evaluating ecommerce software:

  • Pricing: How does the monthly subscription system work (what factors determine the different pricing levels), and what are the options/costs associated with accepting payments from shoppers?
  • Features & Add-ons: How strong is the core feature set of the software, and how well can these features be expanded upon using the platform’s associated app marketplace?
  • Ease Of Use: How steep is the learning curve for ecommerce beginners (particularly those without any coding experience)? What is the balance between user-friendliness and the capability of the platform to accomplish both basic and advanced tasks?
  • Web Design: How attractive, modern, and functional are the available theme templates for designing storefronts? What customization options are available, and how robust/flexible are these tools?
  • Customer Support: What is the availability and quality of email, live chat, and phone support for the software, along with any other self-help resources provided by the company and user community?

And, of course…

  • User Reviews: What are real store owners (like you!) saying about the software, both good and bad?

That’s our basic guideline. Now, we’ll take a closer look at each platform, highlighting the main benefits and drawbacks of each one, along with the types of online sellers we think the software typically suits best. We’d definitely recommend reading our full review of each platform before making your final choice. We’ve also posted one-on-one comparisons for several of the platforms if you’d like to check out those in-depth articles as well.

1. Shopify

As mentioned, Shopify is our most commonly recommended ecommerce platform. The combination of strong core features, an exhaustive app marketplace, and high ease-of-use put Shopify at or near the top of most SaaS ecommerce platform rankings.

Pricing

There are technically five Shopify plans, but the three subscription levels in the middle are considered the standard options for most SMB owners needing an online store. The price jumps between the three middle plans are based primarily on additional features and the ability to set up more staff accounts. Here are all five levels:

  • Shopify Lite: $9/mo. Embeddable cart, but no standalone store website.
  • Basic Shopify: $29/mo.
  • Shopify: $79/mo.
  • Advanced Shopify: 299/mo.
  • Shopify Plus: Custom pricing. Reserved for enterprise-level customers.

When it comes to accepting payment from your customers, you should note that this is the only platform on our list that charges an extra commission per sale. This goes above and beyond the normal processing fees you’ll need to pay to your credit card processor. Shopify’s commission decreases incrementally as you climb the subscription ladder: 2% on Basic, 1% on Shopify, 0.5% on Advanced.

You can avoid these extra Shopify transaction fees if you sign up for the in-house payment processor — Shopify Payments (powered by Stripe) — but this gateway is only available in 10 countries. In addition to eliminating the extra transaction fee, Shopify struck a deal with Stripe to offer lower payment processing fees with Shopify Payments than if you were to use Stripe (or a similar processor) by itself. These discounts apply to your processing if you’re on the Shopify Plan or the Advanced Shopify Plan.

Shopify does provide over 100 alternative gateway options. You’ll just be saddled with that extra percentage Shopify charges per sale when you stray from Shopify Payments.

Features & Add-Ons

Shopify is defined by a quality core feature set that works well for a wide variety of sellers. Moreover, Shopify has a very large app marketplace (of around 2500 apps) that will provide virtually any additional feature you might need. If there is one disadvantage to this system, it is that these integrations can add to your monthly operating costs. Meanwhile, merchants appreciate how many of Shopify’s third-party apps are fully-fledged software platforms that are commonly used to support ecommerce, rather than just simple extensions that add a small feature or two (the app store does have those as well, though!)

Here are a few Shopify features we like:

  • Abandoned cart recovery
  • Built-in shipping software (Shopify Shipping)
  • Real-time shipping calculations
  • Manual order creation (virtual terminal)
  • Automatic tax calculation
  • Shopify POS & other POS integrations
  • Extensive order fulfillment & dropshipping integrations
  • Coupons, discounts & gift cards

Ease Of Use

Shopify has one of the easiest learning curves in the ecommerce software market. Simplicity is the name of the game for Shopify — it’s clear they’d rather offer the ability to expand the platform’s capability with optional add-ons than to overwhelm the newbie with a complicated dashboard or intricate customization options from the get-go.

The Shopify dashboard is clear and well-organized, and any built-in feature can be manipulated easily with zero coding knowledge.

Web Design

Shopify offers 10 free themes (made by Shopify), as well as 67 paid themes (made by third-parties) that range in price from $140-$180. Technically, the total theme count is a bit higher, because each theme has multiple style variations that swap out colors and whatnot. Shopify themes are some of the more elegant and functional options we’ve seen. As a nice bonus, the theme marketplace can be searched by desired theme features.

While the Shopify theme editor may not be as flexible as that of a top-notch website builder (like Wix), the drag-and-drop editor makes it easy to stack and rearrange page elements, called “Sections.” (Perhaps don’t go quite as far as I did with awkward colors and fonts — just showing you what can be changed):

Beyond the theme editor, you also have the opportunity for more customization with a combination of HTML, CSS, and Shopify’s own theme templating language (called Liquid). Most novices won’t open that coding can of worms straight away, but it’s good to know it’s there.

Customer Support

Shopify offers 24/7 phone, email, and live chat support at all subscription levels. Although no customer support system is perfect, we’ve found Shopify’s responses helpful and timely in the grand scheme. On top of this, the strong community of users and developers currently working with Shopify makes finding resources, reviews, and feedback a breeze. The library of self-help articles, tutorials, courses, and videos produced by Shopify is also impressive.

Who Is Shopify Best For?

If this were a little kids’ recreational sports league, Shopify would receive the “Most Well-Rounded Player” award, if not the full MVP as well. Shopify is suited to the widest variety of store types and sizes. When Shopify works for merchants, it works really well. Store owners who benefit the most from Shopify will most likely be based in one of the 10 countries in which Shopify Payments is available, because that’s the only way Shopify’s extra commission per sale is avoided. However, the quality of Shopify’s platform is strong enough overall that many merchants are willing to accept those extra transaction fees, even if they can’t (or won’t) use Shopify Payments.

Of course, we can’t mention Shopify without also mentioning one type of merchant in particular: dropshippers. Shopify is definitely the dropshipper’s go-to platform.

2. BigCommerce

If you asked most experts at large, they’d probably tell you that BigCommerce is Shopify’s most direct ecommerce SaaS competitor. BigCommerce also has an enterprise solution (BigCommerce Enterprise) that’s comparable with Shopify Plus.

Pricing

Subscription levels with BigCommerce are organized by added features at each level, but also annual revenue caps. This means you’re automatically bumped to a higher subscription once you reach a cap. Here are the plans and their associated sales limits:

  • Standard: $29.95/month (sell up to $50K/yr.)
  • Plus: $79.95/month (sell up to $150K/yr.)
  • Pro: $249.95/month (sell up to $400K/yr.)
    • add $150/mo. for every additional $200K/yr. in sales, up to $3M
  • Enterprise: Custom pricing

Unlike Shopify, BigCommerce never charges an additional commission per sale. For payment processing gateways, you have about 60 options. One of these is Braintree (a division of PayPal), which gives access to discounted processing rates as you move up the BigCommerce subscription ladder.

Features & Add-Ons

BigCommerce has a particularly strong set of native features, while also maintaining a sizable app marketplace for optional add-ons (ballpark 600 in total). The balance of out-of-the-box features versus add-on apps leans more toward the former, especially when compared to Shopify. Offered features include:

  • Faceted (filtered) search
  • Single-page checkout
  • Customer groups & segmentation
  • Abandoned cart recovery
  • Real-time shipping calculations
  • Product ratings & reviews
  • Up to 600 product options/variants
  • Coupons, discounts, & gift certificates
  • Square POS integration

Ease Of Use

Some may argue that the balance toward more features included from the get-go can make BigCommerce harder to use at first. Personally, I wouldn’t let fears about user-friendliness stop a beginner from using this software. Extensive out-of-the-box features don’t complicate BigCommerce dashboard beyond reason, and the included features are intuitively configurable without any coding knowledge.

Web Design

BigCommerce offers around 125 themes, along with close to 500 total variations (or “styles”) of those themes. Seven of these themes (25 styles) are free; the rest are available for $145–$235. Quality of design is always subjective, but BigCommerce definitely has a wide variety of elegant templates from which to choose.

It’s a good thing this variety and quality of templates pre-exists, because customization options without coding knowledge or adding a separate integration are somewhat limited with BigCommerce. The theme editor lacks a drag-and-drop element, and you’ll be stuck with the theme’s fonts and colors for the most part.

Customer Support

Like Shopify, BigCommerce offers 24/7 phone, email, and live chat support at all plan levels. We’ve had mixed experiences with BigCommerce’s support, but find that more users praise the service than knock it. You can definitely make the argument (and we have) that BigCommerce support is just as good or better than Shopify’s. There are also active community forums and plenty of BigCommerce-produced support materials available online.

Who Is BigCommerce Best For?

The target market for BigCommerce overlaps significantly with Shopify’s. Much of your decision will come down to the appeal and specific fit-to-business of the extra features that come built-in with BigCommerce at your targeted subscription level. For example, I think B2B and wholesale merchants would do well to take close look at BigCommerce’s feature set. Support for more product variants or discount types will be interesting to other sellers. If you’re confident you’ll actually use most of the native features BigCommerce offers, you could definitely end up saving money and headaches. You’ll just need to be prepared for the automatic subscription bumps as your revenue grows.

Perhaps the most obvious appeal for BigCommerce is the freedom to choose your payment processor with no penalty of an extra transaction fee. That extra cut Shopify takes from your sales feels especially unfair if you’re not even based in one of the 10 countries where Shopify Payments is supported.

By the same token, maybe you already have a merchant account and/or payment processor that you like, or are looking for a specialized payment processor for your particular sales volume and/or risk profile. We often recommend merchants processing over around $100K per year look into credit card processors that offer your own dedicated merchant account with interchange-plus pricing. These accounts can provide more transparency and account stability (and often cost savings) than a standard flat-rate processor like Shopify Payments, PayPal or Square. With BigCommerce, your payment acceptance options are quite open.

3. 3dcart

3dcart

This platform has been around longer than any other on our list, and I’d actually heard of it before I’d even heard of Shopify. Over the years, 3dcart has developed a substantial and nuanced core feature set and continues to add and improve features at a steady clip. The software’s low monthly cost, extensive features, and plentiful payment gateway options make it worth a look when opening an online store.

Pricing

Subscription packages with 3dcart are delineated mainly by annual online revenue, number of staff accounts, and available features. You can sell up to 100 products on the Startup plan, while the other plans allow you to list unlimited items.

  • Startup: $19/month (sell up to $50K/yr.)
  • Basic: $29/month (sell up to $100K/yr.)
  • Plus: $79/month (sell up to $200K/yr.)
  • Pro: $229/month (sell up to $400K/yr.)
  • Enterprise: Custom

3dcart comes in at a lower starting price than BigCommerce or Shopify (if you exclude the Shopify Lite plan that doesn’t let you build a standalone store website). At the same time, the $29 plan level with 3dcart accommodates twice the annual store revenue of the $29.95 plan on BigCommerce.

On top of this, 3dcart never charges its own fee per sale, regardless which of the over 160 compatible payment gateways you select. For US merchants, there also are several “preferred” processor options (e.g., Square, Stripe, PayPal, and FattMerchant) that may give you access to discounted processing rates at the Plus and Pro subscription level.

Features & Add-Ons

3dcart prides itself on a rich supply of native, built-in features. We can vouch that the feature set is robust, especially for the price. And, while it’s true that 3dcart has managed to avoid some of the excessive “app creep” from which Shopify suffers, you can still connect with lots of useful third-party software via the app store.

We’ve mentioned that packed-in features can result in sacrificed user-friendliness. 3dcart keeps some of its complexity at bay by offering advanced features and modules that can simply be turned on and off depending on whether you need them.

Here are just a few of 3dcart’s noteworthy features:

  • Unlimited product options/variants
  • Single-page checkout
  • Robust discount/coupon engine
  • Real-time shipping calculations
  • Create/print shipping labels in-dashboard
  • Gift certificates on all plans
  • Wish lists & gift registries
  • Customer reviews & product Q&A
  • Abandoned cart recovery
  • Waiting list & pre-orders

Ease Of Use

When it comes to actually working with all of 3dcart’s plentiful features, we’re still looking at a user-friendly platform overall. You should just be aware that the learning curve you encounter may be slightly steeper than it is for Shopify (and perhaps BigCommerce as well) depending on your experience.

Like many worthwhile endeavors, 3dcart simply requires you put in a bit more effort in order to get more out of it in the end. The menus go a little deeper, the dashboard screens are more complex, and some advanced functions can be a little tricky to locate and use at first. Still, the basic setup and navigation are comparable to the ecommerce platforms we’ve discussed so far. You won’t need coding knowledge to operate your store.

Web Design

3dcart recently streamlined its entire theme marketplace, resulting in less quantity and more quality. The revamp brought 3dcart into better stylistic alignment with the ecommerce competitors we’ve discussed so far, but we’re still missing a bit of variety and uniqueness amongst the remaining options.

Of the 45 total themes available, about half are free, and more than half were created by 3dcart. Premium themes range from $149-$249.

With 3dcart, you get a very basic theme editor to change out photos and font colors, but you can’t rearrange any page elements:

Beyond these simple changes, you must use HTML and CSS inside the template editor:

Customer Support

Another key reason 3dcart makes our “best” list is the availability of 24/7 phone, live chat, email support. The only subscription that doesn’t offer phone support is the $19/month plan, but you still have the ability to talk to someone in real time with live chat. Support quality and responsiveness receive mixed reviews, but this is typical of all the software apps on our list. No ecommerce solution has cracked the code for keeping 100% of customers satisfied, but we’ll let you know if any of them do!

You’ll also have access to plenty of online resources produced by 3dcart, as well as an active community forum. Just note that while the knowledgebase articles are helpful, they’re sometimes low on screenshots and high on text.

Who Is 3dcart Best For?

We think 3dcart is a solid option for small-to-midsize businesses owners on a budget who still appreciate lots of built-in features. If you’ve experimented with Shopify or BigCommerce and felt a little boxed in when it came to flexibility and customization, and as long as you’re not intimidated by a relatively detail-oriented system, 3dcart opens up options for you. Or, if you’re skeptical of jumping on the Shopify bandwagon just because “everybody’s doing it,” and you balk at feeling hemmed into Shopify Payments lest you pay a penalty, 3dcart may be just the alternative you seek. Not to mention, we appreciate your Maverick spirit!

3dcart has a tried-and-true and even somewhat old school vibe, but without feeling clunky or inflexible. It has managed to stick around amongst an onslaught of newer competitors by quietly improving the quantity and quality of its core offerings over time. Meanwhile, you can still add on plenty of extra features via the app market, or do a bit of template tinkering on your own with basic coding knowledge.

4. Ecwid

Ecwid diverges the most from the software options we’ve discussed so far. At its core, Ecwid is an ecommerce shopping cart plugin (or “widget,” as the name implies) you can embed into an existing website. In this way, Ecwid is similar to WordPress’ WooCommerce, except you can add Ecwid to any website, not just WordPress sites. Ecwid also allows you to create a very basic standalone website and sell up to 10 products — for free! The company claims over 1.5 million users, which is significantly more than Shopify’s 600,ooo. The availability of a free plan likely has a lot to do with that!

Pricing

Subscription levels are organized by several aspects: available features, number of listed products, file storage, customer service access, and number of staff accounts. We’ve described the details of each level in our main Ecwid review, but here’s a quick summary:

  • Free: $0/mo. (10 Products)
  • Venture: $15/mo. (100 Products)
  • Business: $35/mo. (2500 Products)
  • Unlimited: $99/mo. (Unlimited products)

Happily, Ecwid does not charge an additional commission per sale. Along with offering around 50 payment gateway options for your store, Ecwid also has a special partnership with a payments provider called WePay. Together, they created Ecwid Payments, which offers discounted payment processing rates for merchants in the US, UK, and Canada. And, if you accept ACH or direct bank payments at your store (which is cheaper than accepting credit cards), you also qualify for discounted rates on those transactions with Ecwid Payments.

Features & Add-Ons

With Ecwid’s freemium pricing model, you can expect several new features unlocked at each subscription level. The free plan will definitely get you started with a small online store, but we don’t see most serious sellers staying on this plan for long. Fairly basic features such as inventory management, discounts, SEO tools, and access to the Ecwid app store require a paid plan. The Ecwid app store is on the smaller side, but you’ll still find several ecommerce staples in the shipping, tax, and accounting categories. And, don’t forget that if you’re embedding the Ecwid shop widget into another website, you’ll have access to that sitebuilder’s integrations as well.

Noteworthy Ecwid features include:

  • Create & edit orders
  • Several POS integration options, including mobile POS
  • Abandoned cart recovery
  • Branded shopping app for your store
  • Automatic tax calculations
  • Wholesale pricing groups
  • Mobile store management app

Ease Of Use

Intuitive dashboard navigation and foolproof feature manipulation make Ecwid an extremely user-friendly platform. Ecwid’s ease of use closely rivals Shopify’s. The Ecwid backend was clearly designed with the ecommerce beginner in mind.

Web Design

Remember that Ecwid’s main purpose is to act as a shopping cart plugin for an existing website that already has an established look and feel. That said, Ecwid does provide one theme template for a standalone online store. Here’s my in-progress edit of the starter template:

There aren’t a lot of customizations you can make to this starter website besides adding your own main image, your store name, and your 10 products. If your store is embedded into an existing website, you can purchase a third-party theme that helps your shop tie in with the rest of the site. Basically, unless you’re using the Ecwid Starter Site, web design for your storefront is largely dependent upon whatever existing sitebuilder you’re using.

Customer Support

Availability of customer support with Ecwid depends on which plan you have:

  • Free: Email only
  • Venture: Email & live chat
  • Business: Email, live chat, & phone; 2 hours of custom development (annual plan)
  • Unlimited: Email, live chat, & priority phone support; 12 hours of custom development (annual plan)

Also, note that email and live chat are not open on the weekends, and phone support is on a callback system. Despite these limitations, most users rate the actual quality of Ecwid’s support quite highly. Knowledgebase articles and video tutorials are also good quality.

Who Is Ecwid Best For?

Generally, we think Ecwid is a great option for small-to-midsize sellers. We highly recommend Ecwid for newcomers to online selling — particularly those with an established online presence who simply need to add a store component. If you love the platform your current website is built upon, and you’re already nailing your brand’s image and following, there may be no need to rush off and migrate to an all-in-one “website + ecommerce” system like the ones we’ve covered so far.

If you don’t have a website but would like to dabble in selling a few products online, you could also get an Ecwid starter site going for free while you develop a full-blown website on the side. It’s hard to argue with free! If you’re really on a shoestring budget or you’re just starting out with ecommerce, I’d encourage you to compare Ecwid’s free plan to Shopify Lite (at $9/mo.) to see which system might work best for your needs.

5. Wix

So, Ecwid built an ecommerce shopping cart widget that goes inside other website builders, but Wix is a website builder that actually built its own ecommerce widget (called Wix Stores) to go inside itself. I know, it’s a bit confusing! The point is that Wix began as a traditional sitebuilder, but now has ecommerce capability built in as well. Combining new ecommerce tools with its existing popularity in the no-coding-required-website-design niche, Wix presents quite an attractive (both figuratively and literally) option for online sellers.

Pricing

You may have heard that Wix lets you create a website for free. While this is true, you need a paid plan to use Wix’s ecommerce features. Below are your ecommerce subscription options, defined by file storage, customer support, and whether or not email marketing campaigns are included:

  • Business Basic: $25/month (20GB storage)
  • Business Unlimited: $30/month (35GB storage)
  • Business VIP: $40/month (50GB storage)

We’ve listed the true month-to-month price here, even though Wix advertises its monthly price if you pay for a full year. This drops the prices to $20, $30, and $35, respectively. All of the other platforms we’ve highlighted also offer discounts when paying annually — Wix just leads with these discounted figures in its advertising.

Regardless of which payment processor you choose (there are currently close to 20 options), Wix never charges an extra commission per sale.

Features & Add-Ons

If you choose to build an ecommerce website with Wix from scratch, the core of your site will be built upon the Wix Stores app. If, however, you already have a different type of Wix website (e.g., restaurant, hotel, photography site, etc.) and want to add an online shop, you simply switch to a Business subscription plan and add the Wix Stores app to your dashboard.

Wix is still working on adding some features that are becoming more standard amongst ecommerce platforms (like abandoned cart recovery), but we like a lot of what it has on offer so far:

  • Email marketing
  • Integrate with Square POS
  • Mobile app for store management
  • Send & manage invoices
  • Checkout on your own domain
  • SEO Tools
  • Create discounts & coupons
  • Inventory & order management
  • Library of stock photos for your site

The Wix app marketplace includes hundreds of apps, but not all are ecommerce-specific. You may also notice limited pre-built connections to third-party integrations (shipping and accounting software, for example). These sorts of apps become more indispensable as a store grows, but are not as critical for a store that manages fewer products and orders.

Ease Of Use

Wix Stores integrates seamlessly with the rest of the Wix dashboard. eCommerce features and settings are simply added to the left sidebar menu, like in any other ecommerce platform. Further dashboards open as you explore each individual feature (like adding a product or creating a coupon). Wix is defined in the DIY web design market by its ease-of-use, and this extends to its ecommerce functionality as well.

Web Design

There are actually two ways to design an ecommerce storefront in Wix. The first begins in a familiar fashion — selecting a template.

Wix offers over 500 templates to choose from, with over 70 of these already built upon the Wix Stores app (although you can easily add the app to any template). A nice perk of Wix’s template system is that all are included free with a Business subscription to Wix. The only tricky part is that you can’t switch templates once get your store up and running!

Wix provides the most flexible no-coding-required theme editor of any ecommerce platform we’ve covered here. Rather than simply dragging and dropping elements up and down your pages, you can adjust and place page elements virtually anywhere.

The second (and even easier) method of creating an ecommerce website with Wix is via Wix ADI (Artificial Design Intelligence). If you choose this option, you’ll be asked a series of detailed questions about your business, and Wix will use this information to draft a storefront for you.

Sites created with Wix ADI also have a theme editor available, but this editor’s flexibility is more limited than the standard WIX editor. Nevertheless, it’s comparable to Shopify’s drag-and-drop editor. You can stack and arrange elements up and down your pages.

If you decide you’d like to micromanage your design a bit more after creating your Wix ADI site, you’re welcome to switch over to the more advanced theme editor. You just can’t switch back to Wix ADI without losing your changes.

Customer Support

Here’s a quick rundown of Wix’s customer support channels:

  • Phone: Callback service open Monday-Friday, 5AM-5PM Pacific
  • Email: 24/7
  • Live Chat: None

As you can see, the phone channel is somewhat limited, but we like that you have access to this channel of support on all plans. The Business VIP plan also offers priority support, meaning your emails and callback requests jump to the front of the queue. Wix doesn’t have as thorough a set of self-help resources specifically for ecommerce as some of the other platforms, but the resources it does maintain are well done and useful.

Who is Wix Best For?

Wix may differ from the other ecommerce platforms we’ve discussed, but we see this variety as a very good thing. This platform is a great option for merchants who need a multifunctional (but still user-friendly) website — not just an online store. The way native apps like Wix Stores, Wix Bookings, Wix Restaurants, Wix Hotels, and others weave together to form a seamless dashboard on the backend, plus an elegant web presence on the front end, is really slick.

Speaking of elegance, the other (sometimes overlapping) group of store owners Wix works nicely for are those with a smaller number of visually-detailed products. You’re probably not going to want to run a massive fulfillment and shipping operation with Wix, but small shops with aesthetic priorities are perfect for Wix.

Quick Pricing Comparison

We’ve covered a lot of ground in our comparison of these five good options for building an online store. Before we wrap this baby up, let’s recap the subscription plans for each one, along with the main ways the levels are distinguished from one another. As you’ve clearly seen, pricing is just one component of your final choice, but it’s usually where people start.

eCommerce Platforms Pricing Summary

Pricing Levels Differences Btwn. Levels

Shopify

Lite: $9/mo.

Basic: $29/mo.

Shopify: $79/mo.

Advanced $299/mo.

Plus: Custom

  • Available features
  • Number of staff accounts
  • Payment processing discounts
  • Shopify’s commission per sale

BigCommerce

Standard: $29.95/mo.

Plus: $79.95/mo.

Pro: 249.95/mo.

Enterprise: Custom

  • Available features
  • Annual store revenue

3dcart

Startup: $19/mo.

Basic: $29/mo.

Plus: $79/mo.

Pro: $229/mo.

Enterprise: Custom

  • Available features
  • Annual store revenue
  • Number of products
  • Number of staff accounts

Ecwid

Free: $0/mo.

Venture: $15/mo.

Business: $35/mo.

Unlimited: $99/mo.

  • Available features
  • Number of products
  • Storage
  • Number of staff accounts
  • Customer service

Wix

Business Basic: $25/mo.

Business Unlimited: $30/mo.

Business VIP: $40/mo.

  • Storage
  • Customer service
  • Available features

Final Thoughts

Did you find your ecommerce match? We know it’s a lot to take in at once. The great news is that all of these platforms allow you to test the software before you buy. We’d suggest narrowing down our five suggestions to a couple that look like strong candidates for your store and starting a free trial of each. Test drive all the features you possibly can, work on customizing your storefront, and pepper customer support with questions at all hours. That’s the only way you’ll know which is the best fit, even with our attempts to simplify the decision-making process for you.

Generally speaking, the first three platforms we mentioned (Shopify, BigCommerce, and 3dcart) are quite similar and will work for a lot of the same types and sizes of stores. 3dcart is probably the most complicated and detailed of the three out-of-the-box, and typically requires a bit more out of the user. This is not necessarily bad, though. BigCommerce may be a good middle ground between 3dcart and Shopify, combining ease-of-use with a dense set of out-of-the-box features. And, even with Shopify’s super annoying transaction fees (if you don’t use Shopify Payments), Shopify is still a very solid recommendation — it’s just good software.

Ecwid and Wix each have their own advantages as well, especially for smaller stores. Both are well-designed and user-friendly. Ecwid has an enticing free plan and can be embedded in any existing website, while Wix allows you to develop a particularly elegant and multifunctional storefront using your choice of not one, but two different methods.

We think most small business owners will find a good solution from among these five options. And, we’ll let you in on a rather little-known secret: it’s not the end of the world if you end up needing to migrate platforms. That goes for right now if you’re looking to make a switch, or later if you decide your software isn’t working for you anymore. Nevertheless, you can still head into your decision with the confidence that you’ve done your research and tested the software thoroughly before handing over your credit card. (You’re going to test them first, right? Promise? Good.)

Do you have experience with one or more of these ecommerce platforms? Let us know how you think they compare in the comments. We love feedback from real users like you!

Shopify BigCommerce 3dcart Ecwid Wix

3dcart

Review Visit Site

Review Visit Site

Review Visit Site

Review Visit Site

Review Visit Site

Monthly Cost

$9 – $299

$29.95 – $249.95

$19 – $229

Free – $99

$25 – $40

Core Features

Great

Excellent

Excellent

Good

Good

App Store

Very Large

Large

Moderate

Moderate

Small/Moderate

Ease Of Use

Very Easy

Easy

Moderate

Very Easy

Easy

Web Design

Great

Good

Good

OK

Excellent

Customer Support

Great

Great

Good

Good

Good

The post The Best eCommerce Platforms For Your Small Business appeared first on Merchant Maverick.

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Differences Between Invoice Financing And Invoice Factoring

Unpaid invoices can be a burden for any business. While you know that the money from the invoices will come eventually, slow-paying customers or long repayment terms could have a negative impact on your incoming cash flow — and this could be a problem for your business.

Instead of waiting for weeks (or months) to receive the money owed to your business, how can you get the funding your business needs immediately? What if you could put your unpaid invoices to work for you? What if you could sell your unpaid invoices or use those invoices as collateral to receive the money you need to cover an emergency or to use as working capital?

If outstanding invoices are creating cash flow problems for your business, there are lending options available for you. In this post, we’ll explore invoice financing, invoice factoring, and invoice discounting. We’ll discuss the differences, how they can benefit your business, associated costs, and most importantly, how to make the right choice for your business. Read on to learn more.

What Is Invoice Factoring?

With invoice factoring — also known as accounts receivable factoring — a business owner sells unpaid invoices to a lender. This lender is known as a factoring company or simply a “factor.” When you sell your invoice, the factor gives you an upfront payment that is typically 85% to 95% of the invoice total.

The factor will then proceed with collecting payment from the customer. Once the customer has paid the invoice, the factor will pay the remaining balance to you, less an agreed-upon factoring fee. Factor fees vary by lender but typically add up to between 1% and 6% per month. Factors charge daily, weekly, or monthly fees, so the longer it takes for the invoice to be paid, the higher your fee will be.

Obviously, the factoring fee reduces the amount that you receive from the invoice. This is why it’s important to always weigh out the return on investment before agreeing to sell your invoices. If there isn’t an immediate financial need, waiting for your customer to pay the invoice is the wisest decision, but if an unpaid invoice is causing financial challenges in your business, receiving immediate cash may be worth the cost.

Invoice factoring offers a financial solution for businesses that need funds quickly but may not qualify for other loan options. Most business loans require a certain time in business and minimum annual revenues, and many lenders also take personal credit scores into account. But even if your annual revenues are low, your business is new, or you have personal credit challenges, you may qualify for invoice factoring — provided you have qualifying invoices.

Think invoice factoring is right for you? Learn more about how to determine if invoice factoring is a smart financial choice for your business. Once you’ve decided to move forward, check out our comparisons of top invoice factoring companies.

Financing VS Factoring: What’s The Difference?

Invoice Financing Invoice Factoring

Uses invoices as collateral for a line of credit

Sell invoices for immediate cash

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

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

You are responsible for collecting invoice payments

Factor is responsible for collecting invoice payments

Two terms that are often used interchangeably are invoice financing and invoice factoring. Invoice factoring is a type of invoice financing. However, when most people use the term “invoice financing,” they are referring to accounts receivable financing.

Accounts receivable financing — or invoice financing — is similar to invoice factoring. However, with this type of loan, your unpaid invoices act as the collateral to secure a line of credit. The amount of your line of credit is determined by the value of your invoices.

With invoice factoring, you receive a lump sum payment from the factor based on the value of the invoice. In other words, the factor purchases your invoices. Therefore, the factor is responsible for collecting payments from your customers. With invoice financing, the invoices still belong to you and are only being used as collateral. This means that collecting payments from customers is your responsibility.

What About Invoice Discounting?

Another form of lending based on unpaid invoices is invoice discounting. Like invoice factoring and invoice financing, this is an option for qualifying B2B and B2G businesses that need extra capital. Let’s explore what invoice discounting is and how it differs from invoice factoring.

Invoice Factoring VS Discounting

Invoice discounting is similar to invoice factoring in that you use your unpaid accounts receivable as collateral. As with invoice factoring, new companies and startups, business owners with low credit scores, and businesses with low annual revenues that do not qualify for traditional financing may also qualify for invoice discounting.

What makes invoice discounting distinct from invoice financing different is who collects the payment. With invoice factoring, the factor collects payment from the customer. With invoice discounting, your business is responsible for collecting the payment. After submitting qualified invoices, you will receive a lump sum payment of up to 95% of the invoice value. You will collect payment from your customer as usual and pass the money onto the lender, plus fees charged for the service.

How To Choose An Invoice Financing Solution

Even though invoice factoring, invoice financing, and invoice discounting have similarities, there are situations when you should select one option over the others. Before you submit your invoices, keep the following considerations in mind:

Notification VS Non-Notification

If a third-party lender purchases your invoices through invoice factoring, your customers will be notified since the factor will be collecting payment.

With invoice financing and invoice discounting, you are collecting payment as usual, so your customers will be unaware of a lender’s involvement.

If you don’t want your customers to be notified by a third-party, choose invoice financing or invoice discounting.

Collecting Payments

If you’re a smaller company, you may not have the manpower to chase down customers for unpaid invoices. If you would rather the lender collect payment, invoice factoring is the option that would work best for you.

It is important to note that invoice factoring often has higher fees. However, the additional costs may be worth it if you do not have the time or resources to track down customers and collect payment.

If you use invoice factoring and the factor collects payments, remember that your customers will be notified of third-party involvement. If this is something you wish to avoid, consider your other financing options.

Asset-Backed Line Of Credit VS Lump Sum

If you want to receive a lump sum payment for your invoices, choose invoice factoring or invoice discounting. With these options, you can receive up to 95% of your invoice value upfront.

If you prefer a more flexible option, consider applying for invoice financing. You’ll receive a line of credit that is backed by your unpaid invoices.

Final Thoughts

If unpaid invoices are dragging your business down, put your accounts receivable to work for you. With invoice factoring, financing, and discounting, you can receive the money you need even when you don’t qualify for a traditional loan. Consider what type of financing would work best for you, shop around for the most affordable fees, and select a lender based on the financial needs of your business.

The post Differences Between Invoice Financing And Invoice Factoring appeared first on Merchant Maverick.

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The Best Business Loan And Financing Resources For Washington Small Businesses

Washington State is known both for its breathtaking typography and for being one of the biggest tech hubs in the nation (outside of Silicon Valley). With the Seattle metro area experiencing explosive growth, it’s a great time to be doing business in the Evergreen State. Of course, keeping a business running smoothly requires money — sometimes money that you don’t immediately have in hand.

Luckily, Washington is one of the easier states in which to get small business funding. It is well-served by lenders ranging from banks, to credit unions, to alternative online lenders.

We’ll take a look at some of the types of lending available to you in Washington state, as well as some specific lenders you may want to consider.

The Best Online Business Lenders For Washington Businesses

Most online lenders operate nationwide, making them an option for the vast majority of businesses in the United States. Whether or not they’re the right option for you is another matter.

What online lenders offer is speed, convenience, and more lax lending standards than their traditional counterparts. As you might expect, online lending has a somewhat controversial reputation. The truth is there are online lenders with transparent processes and reasonable rates and there are predatory ones who will hide their fee structure and charge usurious rates. Weeding out the bad ones and honing in on the funders who can give you a good deal can be time-consuming.

Washington does regulate the maximum interest that can be charged on a “loan.” What this means for online lending is that lenders who depend on charging very high-interest rates may not offer some (or any) of their products within the Evergreen State. Note that regulations governing loans usually only apply specifically to loans and not to loan-like products like merchant cash advances.

Fundera

If you’re new to the world of online lending, you may have a hard time narrowing down your options. Matchmaking services like Fundera can do that labor for you. You simply fill out one application and Fundera will try to pair you with one of their lending partners. Fundera isn’t the only matchmaking service out there, but there are a couple factors that help them stand out. The first is that there’s no direct fee for using the service (it’s paid by the partner you’re matched with). The second is that they carefully curate their lending partners.

Review

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LoanBuilder

LoanBuilder is a loan service offered by PayPal. With reasonable rates, customizable term lengths, and weekly payments, LoanBuilder is one of the better options in Washington state when you’re in the market for a short-term loan or similar product.

Review

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BlueVine

If you’re looking for something a little less traditional, it might be worth taking a look at BlueVine. BlueVine offers funding in the form of short-term lines of credit and invoice factoring. Invoice factoring lets you sell your invoices in advance for a small fee.

Review

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Lending Point

Washington may be known for hosting innovative businesses, but financing your risky business venture can be extremely challenging. Lending Point offers traditional installment loans in small amounts to individuals with good credit. This is 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.

Review

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Washington Banks & Credit Unions

Online lending might be shiny and new, but that doesn’t necessarily mean it’s your best option. Banks and credit unions still offer the best rates, provided you can meet their more stringent qualifications.

Where online lenders are largely unmoored from geography, banks and credit unions usually serve specific markets. Even large, national banks will typically require you to apply for business loans at a local branch. Many will also require you to be a checking/savings account customer as a condition of extending you credit.

If you have a good relationship with your local bank or credit union, be sure to inquire about their business products. National banks with branches in Washington include:

Chase Bank

America’s biggest bank has a healthy presence in Washington 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.

If you can meet 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

Wells Fargo

Widely considered one of the more small-business-friendly big banks, Wells Fargo also has one of the most modern application processes (as far as banks g0). If you need speed combined with traditional banking perks, or don’t have a branch nearby, take a look at what Wells Fargo can offer from a distance.

Just be aware that the bank has been plagued by scandals and poor earnings recently, so factor that into your risk calculations.

Borrower requirements:
• Must have $1.50 in cash flow for every dollar borrowed.
• Must have a personal credit score of 640 or above.
Read our Wells Fargo review

 

US Bank

US Bank is one of the smaller of the big national banks, with a reputation for being a bit more personable and flexible. Their branches are a little scarce in Washington once you get away from the I-5 corridor, however.

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

 

Credit Unions

If you’re looking for the absolute best rates on loans, it’s hard to beat credit unions. As non-profits, they can (at least in theory) offer perks to their members that wouldn’t be possible from an institution concerned about their bottom line. The downside of credit unions is that they tend to be extremely local, with limited branch presence. Though less common than in the past, some credit unions may have restrictions on who can join.

Credit unions offering business loans are uncommon, but many offer personal loans that can be used for smaller business expenses.

Some of the more accessible credit unions in Washington State include:

  • Alaska USA Federal Credit Union 
  • Boeing Employees Federal Credit Union (BECU)
  • First Technology Federal Credit Union
  • OnPoint Community Credit Union 
  • Wings Financial Credit Union

Bad Credit? Your Best Options

According to conventional wisdom, if you have poor credit, you’re out of luck when it comes to financing. These days, that’s not really the case. While good credit will definitely make it easier to find funding, there are numerous lenders and financial products that are more concerned with your cash flow and business fundamentals than they are an abstract number.

If your credit is bad, consider:

  • 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.
  • Non-traditional Products: Loan products like invoice factoring aren’t very concerned about your credit history. If you’re in real estate, hard money is also an option, but keep the risks in mind.
  • 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 out 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

buying a pos system

It’s easy to get into the mindset of having to make yourself look good to a potential lender. But make no mistake, you’re “buying” a product from them. It’s most important that they meet your needs and standards.

Here are some things to keep in mind when seeking a lender:

  • Your Industry: Some lenders specialize in lending to specific industry. Others can’t or won’t lend to certain industries. If they can’t write you a loan, cross them off your list.
  • Borrowing Amount: If you need $5,000, you’ll be looking at different lenders than if you need $5 million. Choose the right tool for the job.
  • Rates & Fees: How much is it going to cost you? Are the lender’s rates in line with the industry standard? Do they tell you what additional fees they charge, or do they hide them?
  • Time To Funding: Do you need the money right away or next quarter? Choose a lender that can work with your timetable.
  • Term Lengths: You’ll want to know how quickly you have to pay the money you’re borrowing back. Make sure you can afford the loan over the long-term.
  • The Type Of Expense Being Financed: Some financial products 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

Hopefully, we’ve helped you get a better sense of the funding options available to businesses in Washington State. Whether you’re just starting or expanding, there should be a lender out there who can fit your needs.

Didn’t find what you were looking for? Want to see more options? We can help you compare lenders and credit cards.

Just starting out? Check out our resources for startups.

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

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Capital One Spark Cash vs. Chase Ink Cash

spark cash vs ink cash

If you’re going to be charging business expenses to a credit card, you may as well be rewarded for that spending. Cash back business credit cards give your business the chance to recoup a portion of your business costs in the form of cash and other rewards.

Chase’s Ink Business Cash card and Capital One’s Spark Cash card are two of the leading business credit cards in the cash back space. So, which one is superior? That all depends on the kind of outfit you run and the sort of expenses you incur. First, we’ll show you our comparison table highlighting the similarities and differences between the two cards. Then, we’ll go through the ways in which these cards differ and what those differences mean to businesses with different spending profiles.

Capital One Spark Cash Chase Ink Business Cash

capital one spark cash select

$95 (waived the first year)

Annual Fee

$0

18.74%, Variable

Purchase APR

15.24% – 21.24%, Variable

  • $500 cash back if you spend $5,000 within the first 3 months of opening your account
  • Earn an additional $1,500 cash back if you spend $50,000 within 6 months of opening your account
Bonus Offer

$500 cash back if you spend at least $3,000 within the first 3 months of opening your account

N/A

Purchase Intro APR

0% APR for the first 12 months

N/A

Balance Transfer Intro APR

0% APR for the first 12 months

None

Foreign Transaction Fee

3%

  • Unlimited 2% cash back on all purchases
Rewards
  • 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable, and phone purchases each account anniversary year
  • 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year
  • 1% cash back on all other purchases

Compare

Apply Now

For a more complete look at the cash back business credit card scene, read our article on the current best cash back business credit cards.

Eligibility Requirements

Both the Spark Cash and the Ink Business Cash require a personal credit score of at least 690 in order to qualify.

Fees & Interest Rates

Capital One Spark Cash for Business offers a variable APR of 18.74% — a pretty good rate for a business credit card — but there is no introductory 0% APR period. By contrast, the Chase Ink Business Cash offers 0% APR on purchases and balance transfers for the first 12 months, and a variable APR of between 15.24% and 21.24% thereafter.

If you’re going to be making sizable business purchases soon after obtaining your card and/or plan to transfer a balance from another card to this one, the 0% APR period makes Ink Business Cash an ideal choice for a cash back business card. Likewise, if you have excellent credit, you may qualify for a lower ongoing APR with Ink Cash than with the Spark Cash card. On the other hand, if you don’t anticipate putting significant charges on your card within a year and your credit score is on the low end of what qualifies you for either card, the Spark Cash’s ongoing variable APR of 18.74% may beat the ongoing APR you’ll get with the Ink Cash.

Another factor to consider: The Spark Cash carries a $95 annual fee after the first year. The Ink Cash carries no annual fee. Advantage: Ink Cash.

Bonus Offer

The Captial One Spark Cash card currently carries a more impressive bonus offer than Chase Ink Business Cash, but you’ll have to spend more in order to earn it.

With the Spark Cash card, you can earn $500 in cash back by spending at least $5,000 within 3 months of opening your account and an additional $1,500 in cash back if you spend at least $50,000 within 6 months. As the math prodigies among you have already figured out, that’s $2,000 in cash back you stand to earn with the Spark Cash with the right spending profile. This is a limited-time offer, however.

The Ink Cash card’s bonus offer is less exciting but easier to get: earn $500 by spending at least $3,000 within the first 3 months of opening your account.

If you’re certain you’ll be spending more than $3,000 but less than $5,000 within 3 months, Ink Cash’s bonus offer may be more appealing to you, but otherwise, the choice is clear: the Capital One Spark Cash has the superior bonus offer.

Earning Rewards

Earning cash back with the Spark Cash card is as simple as can be. You’ll earn 2% cash back on all your purchases. There are no spending categories to be mindful of and there’s no limit to the amount of cash back you can earn. Nice and straightforward.

Earning cash back is more complex with the Ink Cash, but potentially more lucrative. You earn 5% cash back on the first $25,000 spent in combined purchases each account anniversary year at office supply stores and on internet, cable, and phone services. You’ll also earn 2% cash back on the first $25,000 spent per year at gas stations and restaurants, and then unlimited 1% cash back on everything else.

Which card offers superior rewards? Obviously, that’s going to depend on your business spending profile. If your spending jibes with Chase Ink Cash’s bonus categories, you stand to earn more cash back with the Ink Cash card. If it doesn’t, the flat unlimited 2% cash back of the Spark Cash will earn you more cash back.

Furthermore, the fact that there is no limit to the amount of cash back you can earn at the 2% rate with the Spark Cash is significant. If you spend more than $100,000 per year on combined purchases at office supply stores and on internet/cable/phone services, you’ll actually earn more cash back with the Spark Cash card due to Ink Cash’s $25,000 limit on the spending that will earn you 5% cash back in those categories.

Redeeming Rewards

Reward redemption works similarly with both cards. You can redeem your cash back in the form of a statement credit or check or you can redeem your cash back for other rewards, like gift cards or travel. Just keep in mind that when you redeem your cash back points for other rewards, it might not be as valuable as it would have been if you had just redeemed it for cash.

With both the Capital One Spark Cash and the Chase Ink Cash cards, your cash back will never expire and can be transferred to other Capital One or Chase cards (depending on which you have).

Benefits & Other Perks

Both cards offer a range of travel and shopping benefits, including extended warranty protection, an auto rental collision damage waiver, and travel/emergency assistance. Both cards also offer access to Visa SavingsEdge, a program that lets you save up to 15% off on some purchases from participating merchants.

One pertinent difference here: the Capital One Spark Cash card has no foreign transaction fees, whereas with the Ink Cash card, you’ll be paying a 3% foreign transaction fee on all transactions processed outside of the US. For the international business traveler, that’s a point in favor of the Spark Cash.

Which Is Best For Your Business?

The Spark Cash and the Ink Cash cards have their differences, but the most significant differences lie in the following:

  • The divergent cash back policies of the two cards
  • The fact that the Ink Cash offers an intro 0% APR on purchases and balance transfers for 12 months while the Spark Cash offers no 0% APR period
  • The fact that you can potentially earn a $2,000 cash back bonus with the Spark Cash (though this is a limited-time offer) while the Ink Cash’s bonus offer is for $500 in cash back

Choose Chase Ink Business Cash If…

  • You spend a lot (but less than $100,000/year) at office supply stores and/or on internet/cable/phone purchases
  • You plan to spend a lot within the first 12 months and don’t want to pay interest on those charges
  • You have excellent credit and plan to carry a balance from month to month, as the Ink Cash offers a lower potential APR even after the first 12 months
  • You really hate annual fees

Chase Ink Business Cash



Apply Now

Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

Choose Capital One Spark Cash If…

  • Your business spending isn’t concentrated on office supplies, internet/phone/cable purchases, gas stations or restaurants
  • You do a good amount of international business travel
  • You plan to spend significantly more than $100,000 per year, as the Spark Cash has no limit on the amount of 2% cash back you can earn

Capital One Spark Cash For Business


capital one spark cash select
Compare

Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


18.74%, Variable

Final Thoughts

Depending on the nature of your company and your business spending profile, either the Chase Ink Business Cash card or the Capital One Spark Cash card can be a valuable tool. Get rewarded for the business spending you were going to need to do anyway!

Not sure if you’ll qualify for either business card? Here are some helpful links!

  • Best Free Credit Score Sites
  • How To Improve Your Personal Credit Score

The post Capital One Spark Cash vs. Chase Ink Cash appeared first on Merchant Maverick.

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