APR VS Interest Rate: Know The Difference

When you’re searching for your business’s next credit card—or looking for loans—you’ll often come across the terms APR and interest rate. These pesky concepts represent extra money you’ll have to repay on top of your initial loan amount, but are necessary pieces in the world of lending.

While APR and interest rates share similar roles and can sometimes be used interchangeably, they ultimately mean different things. Understanding these differences will help you make informed decisions and can save you money the next time you take out a loan.

So what is the difference between APR and interest rate? Read on! We’ll break it down below.

What Does Interest Rate Mean?

The interest rate on a loan is effectively a way for lenders to make money when you borrow.

In most cases, when you borrow money and take time to pay off what you borrowed, your lender will charge you an extra amount. This extra amount is called interest. In other words, the interest rate is a percentage charged by your lender that you must pay in addition to the lump sum of money you have borrowed.

Depending on the type of loan you take out, you may pay a fixed or variable interest rate. Fixed rates stay the same for the life of the loan. Variable rates, on the other hand, can change based on the market rate. Most lenders will calculate a variable rate based on the prime rate, a metric published by the Wall Street Journal. If your interest rate goes up, then you’ll wind up paying more interest charges.

In many cases, your credit history will affect your rate. As such, you’ll want to aim to have a high credit score.

What Does APR Mean?

APR stands for Annual Percentage Rate. It incorporates a loan’s interest rate as well as various other charges, like points and fees. Broken down, the APR represents the total cost of borrowing on an annual basis. You’ll frequently see APR mentioned in relation to credit cards, although it still comes into play with traditional loans.

As an example, if you have a four-year loan with an interest rate of 15% and an origination fee of 4%, your APR will be 17.26%. This rate is higher because it accounts for the extra cost of the origination fee. Because it’s inclusive of all fees, the APR provides the true cost of borrowing annually.

With credit cards, the APR is affected by the prime rate as published by The Wall Street Journal. It is usually 3% higher than the federal funds rate, set by the Federal Reserve. In most cases, card issuers will determine a card’s APR based on the prime rate, plus a variable percentage rate calculated on your creditworthiness. Credit card APRs typically range from about 10% to 25%.

To get the lowest APR possible, you’ll want to have a solid credit history. If you struggle with a low score, there are numerous cards that can help boost your credit.

The Difference Between APR & Interest Rate

When it comes to credit cards, there is essentially no difference between APR and interest rate. Credit card issuers are required to state a card’s interest rate as APR (according to the Truth in Lending Act, a federal law enacted in 1968). This makes it easier for consumers to accurately estimate the credit card interest they might owe because APR shows the actual annual rate, whereas an interest rate alone does not account for additional upfront charges.

Note that even though issuers state APR, credit cards may carry extra fees that aren’t included in the official APR. You can often expect fees such as an annual fee, a balance transfer fee, a cash advance fee, and/or a foreign transaction fee.

Depending on the card you choose, however, you may manage to bypass one extraneous fee or more. For instance, many of the best travel cards forgo foreign transaction fees, while numerous other cards feature no annual fees.

When looking at more traditional business loans, however, the APR and interest rate will tell different tales. The interest rate is simply the amount of interest you’ll owe every period. The APR, meanwhile, is inclusive of the interest rate and other fees. These fees could include origination fees, closing costs, maintenance fees, or others.

You’ll want to keep this in mind because lenders aren’t required to advertise APRs upfront. Of course, most decent companies clearly and easily share their APR, interest rates, and other fees so you’ll have the full picture before borrowing.

APR & Credit Cards

You’ll want to consider APR carefully if you don’t intend to fully pay off your monthly credit card balance. This could be because you’ve made a large purchase or many purchases you can’t immediately pay off in full.

You may also need to consider multiple APRs since most credit cards come bundled with a few different rates. The most publicized APR (and the one that affects most people) is the card’s purchase APR. On top of this, there are usually additional APRs for balance transfers and cash advances. You may also see a penalty APR if you fail to make your payments on time.

However, by completely paying off your credit card balance every month, you probably won’t need to bother about APR. This is because most credit cards provide a sizable grace period between purchase date and payment due date. During this grace period, APR isn’t applied to your balance.

Oh, and don’t worry about timely payments negatively affecting your credit score — that is an urban legend. You’ll still be able to take advantage of the credit-building bonuses that come with having a credit card. In fact, paying off your monthly bills is one of the best things you can do to increase that all-important credit score.

Some cards also offer 0% introductory APR for a set number of months after you open your account. This means it might be beneficial to apply for such a card if you’re planning to make a large purchase that you won’t be able to pay off right away.

How To Find A Credit Card’s APR

By United States law, card issuers are required to easily and legibly share important details about the cards they offer. Most details you’ll ever need can be found in a card’s Schumer box, a legally-mandated text document named after U.S. congressman Charles Schumer, who paved the way for the box’s legislation. You’ll usually be able to find all of a card’s APR’s at the top of its Schumer box under a section titled “Interest Rates and Interest Charges”.

If you’re reading about credit cards on Merchant Maverick, we’ve made it quick and easy to spot a card’s APR. In every card info box, we’ve placed the APR under the annual fee on the right side. You can also see if a card has an introductory rate for both purchases and balance transfers by clicking “More card details” beneath the box.

APR & Interest Rate For Business Loans

While a credit card’s APR and interest rate are one and the same, APR and interest rates are more complex in the context of business loans.

As mentioned above, the APR communicates the total cost of a loan over the period of one year. It accounts for the interest rate plus other fees and costs, including origination fees, closing costs, and maintenance fees. In some cases, you may see these fees called “points”.

This means that a loan’s interest rate alone doesn’t tell the full story. You’ll want to double-check to find out if there are additional charges you might have to pay alongside the interest rate. Luckily, most decent lenders will state their APR upfront, meaning you won’t have to do the legwork yourself.

Want to get into the nitty-gritty of APR? Read up on the subject with our Beginner’s Guide to APR.

How To Calculate APR

Need to calculate APR on a loan? Determine it below with our handy calculator:

Want to calculate something else, like estimated APR or payments on cash advances or short-term business loans? Check out the rest of our small business calculators.

Final Thoughts

APR is an important tool, whether you’re looking at credit cards or business loans. While it shouldn’t be the only factor you consider, understanding how APR works can help you make informed decisions and potentially save you money. Knowing the difference (or lack of difference when it comes to credit cards) between APR and interest rate is also key, especially when you’re trying to get a holistic view of a potential loan or credit card.

Now that you have a grasp on the essentials, take a peek at the best low-interest small business loans. Or you can keep learning by perusing our guide to variable APR. New to business credit cards? Check out the basic dos and don’ts of business credit cards.

The post APR VS Interest Rate: Know The Difference 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.

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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.

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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.

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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.

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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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Capital One Spark Miles VS Chase Ink Preferred

spark miles vs ink preferred

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

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

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

Capital One Spark Miles Chase Ink Business Preferred

$95 (waived the first year)

Annual Fee

$95

18.74%, Variable

Purchase APR

17.99% – 22.99%, Variable

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

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

N/A

Purchase Intro APR

N/A

N/A

Balance Transfer Intro APR

N/A

None

Foreign Transaction Fee

None

2 miles per dollar spent on all purchases

Rewards

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

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

Compare

Apply Now

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

Image

Eligibility Requirements

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

Fees & Interest Rates

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

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

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

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

Bonus Offer

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

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

Image

Earning Rewards

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

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

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

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

Redeeming Rewards

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

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

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

Benefits & Other Perks

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

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

Which Is Best For Your Business?

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

Choose Chase Ink Business Preferred If…

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

Chase Ink Business Preferred



Apply Now 

Annual Fee:


$95

 

Purchase APR:


17.99% – 22.99%, Variable

Choose Capital One Spark Miles If…

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

Capital One Spark Miles For Business


Compare

Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


18.74%, Variable

Final Thoughts

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

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

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

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

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The Best Business Loan And Financing Resources For California Small Businesses

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

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

The Best Online Business Lenders For California Businesses

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

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

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

Some of the better online lenders operating within California include:

LoanBuilder

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

Review

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Lendio

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

Review

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Lending Point

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

Review

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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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California Banks & Credit Unions

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

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

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

Chase Bank

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

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

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

US Bank

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

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

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

Bank Of America

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

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

Credit Unions

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

Some of the more accessible credit unions in California include:

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

The California Small Business Loan Guarantee Program (SBLGP)

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

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

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

Bad Credit? Your Best Options

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

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

What To Consider When Choosing A Lender

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

Consider:

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

Final Thoughts

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

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

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

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Fast Approval Business Credit Cards For Small Business Owners

instant approval business credit cards

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

What Are Fast Approval Credit Cards?

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

Are Instant Approval Credit Cards Really Instant?

In a word: No.

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

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

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

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

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

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

Who Qualifies For Fast Approval Credit Cards?

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

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

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

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

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

Timeline For A Typical Business Credit Card Application

instant approval business credit cards

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

How To Increase Application Speed

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

Check Your Credit Score

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

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

Gather Your Business & Financial Information

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

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

Head To The Internet

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

Best Overall Fast Approval Business Credit Card

Capital One Spark Classic For Business


Compare

Annual Fee:


$0

 

Purchase APR:


24.74%, Variable

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

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

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

Best Fast Approval Credit Card With 0% Intro Rate

Chase Ink Business Unlimited


chase ink business unlimited
Apply Now 

Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

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

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

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

Best Fast Approval Credit Card For Cash Back

Capital One Spark Cash Select For Business


capital one spark cash select
Compare

Annual Fee:


$0

 

Purchase APR:


14.74% – 22.74%, Variable

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

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

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

Capital One Spark Cash For Business


capital one spark cash select
Compare

Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


18.74%, Variable

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

Best Fast Approval Credit Card For Travel Rewards

Blue Business Plus Credit Card from American Express



Compare

Annual Fee:


$0

 

Purchase APR:


12.99% – 20.99%, Variable

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

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

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

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

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

Kabbage

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

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

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

Fundbox

Review

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

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

Final Thoughts

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

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

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

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

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The Best Airline Credit Cards For Businesses

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

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

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

How Airline Credit Cards Work

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

How Much Are Airline Miles Worth?

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

How Can I Redeem Airline Miles?

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

Benefits & Drawbacks Of Airline Credit Cards

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

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

Best Credit Cards By Airline

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

American Airlines: Barclays AAdvantage Aviator Business Mastercard

Barclays AAdvantage Aviator Business Mastercard



Compare

Annual Fee:


$95

 

Purchase APR:


17.99% or 26.99%, Variable

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

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

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

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

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

Delta Reserve Credit Card for Business from American Express



Compare

Annual Fee:


$450

 

Purchase APR:


17.74% – 26.74%, Variable

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

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

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

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

Southwest Airlines: Southwest Rapid Rewards Premier Business Credit Card

Southwest Rapid Rewards Premier Business Credit Card


southwest point value

Compare

Annual Fee:


$99

 

Purchase APR:


17.99% – 24.99%, Variable

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

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

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

United Airlines: United MileagePlus Explorer Business Card

United MileagePlus Explorer Business Card


Compare

Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


17.99% – 24.99%, Variable

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

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

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

Alaska Airlines Visa Business Credit Card from Bank of America



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Annual Fee:


$50

 

Purchase APR:


16.99% – 24.99%, Variable

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

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

JetBlue Airways: JetBlue Business Card from Barclays

JetBlue Business Card from Barclays



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Annual Fee:


$99

 

Purchase APR:


17.99% to 26.99%, Variable

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

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

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

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

Capital One Spark Miles Select For Business


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Annual Fee:


$0

 

Purchase APR:


14.74% – 22.74%, Variable

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

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

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

Best Bonus Offer: Capital One Spark Miles For Business

Capital One Spark Miles For Business


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Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


18.74%, Variable

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

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

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

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

Bank of America Business Advantage Travel Rewards World Mastercard


bofa business advantage travel rewards
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Annual Fee:


$0

 

Purchase APR:


13.24% – 23.24%, Variable

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

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

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

Best Rewards Program: Chase Ink Business Preferred

Chase Ink Business Preferred



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Annual Fee:


$95

 

Purchase APR:


17.99% – 22.99%, Variable

For the best overall rewards program, our pick goes to Chase’s Ink Business Preferred. This card, which works as a general travel card, doles out three points per dollar spent (up to $150,000) on travel, shipping purchases, Internet, cable and phone services, and on advertising purchases made with social media sites and search engines each account anniversary year. You then get one point per dollar spent on everything else.

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

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

Final Thoughts

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

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

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Business Loans For HVAC Companies

business loans for hvac companies

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

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

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

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

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

Loans For Marketing & Advertising

business loans for HVAC

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

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

Medium-Term Loans

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

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

Recommended Option: Fundation

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

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

Loans For Equipment Purchasing

business loans for hvac companies

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

Equipment Loans

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

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

Equipment Leases

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

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

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

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

Recommended Option: Lendio

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

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

Loans For Business Expansion

business loans for hvac companies

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

SBA Loans

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

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

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

Loan Program Description More

7(a) Loans

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

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Microloans

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

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CDC/504 Loans

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

Review

Disaster Loans

Loans used to rebuild or maintain business following a disaster. 

Review

Recommended Option: SmartBiz

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

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

Loans For Emergency Funds

business loans for hvac

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

Business Credit Cards

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

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

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

Recommended Option: Chase Ink Business Unlimited

Chase Ink Business Unlimited


chase ink business unlimited
Apply Now 

Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

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

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

Loans For Working Capital

loans for hvac businesses

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

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

Short-Term Loans

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

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

Recommended Option: PayPal LoanBuilder

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Check Eligibility

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

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

Loans For Covering Payroll

 

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

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

Lines Of Credit

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

Recommended Option: OnDeck

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

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

What To Consider When Choosing A Lender

business loans for hvac businesses

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

Why Do I Need A Loan?

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

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

Am I Qualified?

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

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

Do The Rates & Terms Meet My Needs?

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

What You Need To Apply For HVAC Business Loans

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

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

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

Final Thoughts

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

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

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

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

business loan reasons

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

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

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

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

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

1. Start A Business

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

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

2. Increase Working Capital

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

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

3. Purchase Inventory

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

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

4. Purchase Equipment

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

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

5. Hire New Talent

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

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

6. Expand Products/Services

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

7. Open A New Location

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

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

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

8. Pay Taxes

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

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

9. Create A Safety Net

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

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

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

10. Refinance Another Loan

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

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

11. Buy A Business

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

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

12. Buy Out A Partner

business loan vs personal loan

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

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

13. Cover Construction Costs

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

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

14. Cover Unpaid Invoices

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

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

15. Buy Insurance

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

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

16. Cover An Unexpected Expense

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

17. Advertise Your Business

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

18. Build Credit

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

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

19. Take Advantage Of A Business Opportunity

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

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

Types of Business Loans

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

Resource Description

Startup Loan

Financing for businesses 6 months old or younger.

Crowdfunded Loan

Funds sourced from a network of backers or investors. 

Small Business Grant

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

Working Capital Loan

Financing to cover daily operating expenses of running a business.

Business Line of Credit

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

Short-Term Loan

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

Business Credit Card

Credit card used for business expenses.

Equipment Financing

Self-securing loan to finance major equipment purchases.

Installment Loan

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

Long-Term Business Expansion Loan

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

Real Estate Crowdfunding

Crowdfunded capital to purchase real estate for a business.

Merchant Cash Advance

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

Business Acquisition Loan

Loan to purchase a business.

Franchise Loan

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

SBA 7(a) Loan

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

Commercial Real Estate Loan

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

Hard Money Loan

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

Invoice Factoring

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

Emergency Business Loan

Fast loans to cover business funding emergencies. 

Installment Loan

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

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

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

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

smartbiz logo

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

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

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

lending club logo

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

Short-Term Loan

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

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

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

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

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

$5K – $300K 6, 9, 12, 15, or 18 months x1.15 – x1.31 1 year 600 Apply Now

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

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

Merchant Cash Advance

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

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

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

Lender Borrowing Amount Min Credit Score Time To Funding Next Steps

$5K – $500K 550 1-3 Days Apply Now

$2K – $5M 550 1-2 Days Apply Now

$5K – $500K 500 2-5 Days Apply Now

$5K – $250K 500 2-5 Days Apply Now

Business Credit Card

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

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

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

Business Line of Credit

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

Lender Borrowing Amount Draw Term Draw Fee APR Next Steps

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

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

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

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

Invoice Factoring

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

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

Equipment Financing

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

We recommend the following equipment financers:

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

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

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

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

Do You Need A Business Loan? Next Steps

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

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

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

3. Calculate how much you can afford to borrow.

4. Take a look at our favorite lenders.

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

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

Final Thoughts

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

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

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

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

$5K – $300K 6, 9, 12, 15, or 18 months x1.15 – x1.31 1 year 600 Apply Now

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

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

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

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Business Loans For Auto Repair Shops

Cars may be starting to look more like computers, but they still won’t stay on the road long without the help of a trusty local auto repair shop.

If you’re in the auto repair business, you know that the volume of work — as well as the types of problems you’ll encounter — can vary greatly by the day. Even the most prepared shop may run into emergencies where funds aren’t readily available. When that happens, you may need a quick loan to keep things running smoothly. Or you may just need a traditional loan for a large, planned expense.

No matter your need, navigating through the vast market of traditional and alternative lenders can be daunting. Read on and we’ll walk you through how to get business loans for auto repair shops.

Financing Need Best Loan Type Recommended Lender
Purchasing Equipment Equipment Financing Lendio
Supplies and Inventory Short-term Loans PayPal LoanBuilder
Working Capital Lines of Credit OnDeck
Marketing and Advertising Business Credit Card Chase Ink Business Preferred
Business Startup/Expansion/Remodeling SBA Loan SmartBiz

Loan For Equipment Purchasing

We’re not talking parts for your customers’ vehicles. A loan of this type can help you buy the bigger stuff you’ll be keeping in-house and using regularly — things like air compressors, vehicles lifts, brake lathes, and engine hoists.

In most cases, you won’t be purchasing heavy equipment on the fly; you’ll purchase it when you’re first opening your shop, or you’ll have a general idea of when an old piece of equipment needs to be replaced. In these cases, you’re probably less concerned about speed than you are about getting a good deal that fits the needs of your shop.

Equipment Loans

If you prefer to own your equipment, you may want to look into equipment loans. These resemble traditional installment loans in many ways: they’ll accrue interest over time, you’ll make monthly payments, etc. But these loans have a built-in advantage; the equipment you’re purchasing with them can serve as collateral. Collateral is an asset the borrower puts up as security when they take on debt. Secured loans generally have better rates and terms than comparable unsecured loans.

Traditionally, equipment loans cover around 85 percent of the equipment’s costs, but some lenders may cover the entire cost. In most cases, this does not include transportation costs.

Equipment Leases

These are not loans strictly speaking, but they are a popular way to finance heavy equipment. (Read more about equipment loans vs equipment leases.) Leases fall into two broad categories.

Capital leases are essentially an alternative way to buy your equipment. In most cases, you are considered the owner of the equipment under this type of lease. You’ll make monthly payments for the length of the lease, at the end of which you’ll pay a small residual (sometimes as low as $1) to close your account.

Operating leases are closer to the traditional definition of a lease. In this case, you’ll effectively “rent” the equipment over the course of the lease, making monthly payments. At the end, however, you’ll have the option to return the equipment or buy it at fair market value. This type of lease is useful for equipment that becomes obsolete quickly.

Recommended Option: Lendio

If you’re not working with a captive lessor or your preferred bank, it’s nice to be able to hit a bunch of potential equipment financers with one easy application. Lendio is a great way to do just that. Within 72 hours of your application, you should have multiple equipment financing offers on your screen. Funds are typically dispensed within a week of accepting an offer.

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Loans For Supplies & Inventory

You never want to be in a position where your auto body shop is suffering from too much business. Whether you’re facing a very high volume of customers, or an unusual number of customers all presenting with similar car problems, you may find your supplies depleted more quickly than you can collect on your invoices.

When this happens, you may want to consider a short-term loan.

Short-term Loans

Fast, streamlined, and (relatively) expensive, short-term loans are handy when you need a loan fast and want to pay it back quickly.

Short-term loans can usually get money into your hands within a day or two, which makes them a good choice for unplanned emergency financing. Rather than charge interest, short-term loans use a flat fee formula, or factor rate, to calculate the amount of money you’ll owe. For example, if you take out $10,000 at a 1.2 factor rate, you’ll need to pay back $12,000.

Short-term loans usually have terms shorter than a year, so their repayment schedule is much faster than those of medium and long-term loans. If you take out a short-term loan, you’ll be making weekly or daily payments, which, in most cases, will be automatically deducted from your business account.

Recommended Options: PayPal LoanBuilder

Because short-term loans are so fast and volatile, you’ll want some flexibility over the terms of your loan. PayPal’s LoanBuilder product is built around the idea of customization. You’ll be able to customize many elements of your loan to fit your need. Better yet, their rates are reasonable (as short-term loans go).

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Loans For Working Capital

merchant cash advance industry

Working capital is a wonky term for the money you have on hand for daily operational expenses. If everything’s going well, you probably don’t have to give it a lot of thought. But if emergency expenses have tapped into your reserves, you may find yourself unable to pay some small, recurring expense.

Working capital loans tend to be some of the most flexible when it comes to what you can spend your money on.

Lines Of Credit

Since working capital expenses come in many different forms and amounts, it’s nice to have a flexible financial cushion to fall back on. Rather than giving you a lump sum, a business line of credit pre-approves you for a certain amount of money, called your credit limit. While your account is active, you can draw on your credit line as much or as little as you want so long as the total amount you’ve borrowed doesn’t exceed your credit limit.

In most cases, you’ll only pay interest on the amount of money you’ve borrowed, though some lenders do charge administrative and access fees. Revolving credit lines let you reuse credit after you pay off your balance, similar to a credit card. Non-revolving lines of credit don’t have this feature and tend to be extended for specific expenses where the final cost is uncertain.

OnDeck

OnDeck offers quick and easy access to lines of credit, even for businesses with fairly poor credit. Depending on your revenue and other qualifications, you can get a credit limit between $6K and $100K with no draw fee. Just be aware that these are short-term credit lines lasting only about 6 months, but considering the approval process only takes a few days, you don’t need to plan too far ahead. The major downside is the $20/mo administrative fee, but OnDeck will waive that if you withdraw at least $5,000 within the first five days of opening your account.

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Loans For Marketing & Advertising

Word of mouth may be the ideal form of advertising, but sometimes you need to reach outside of your normal sphere of influence to draw in new customers. Or maybe you’re a new business that needs to establish a customer base.

Designing and running an effective advertising campaign is outside of the purview of this article, but most of the good ones require spending some money.

Business Credit Cards

Surprised? Business credit cards are often suggested as a way to smooth out your business’s cash flow, but they also have some other features that make them ideal for certain types of expenses. Namely, rewards programs that allow you to get a return on specific expenses — expenses like advertising.

Just be sure to pay off your balance within your business credit card’s grace period, or the cost in interest will exceed your rewards savings.

Recommended Option: Chase Ink Business Preferred

Chase’s Ink Business Preferred credit card is at the top of most business credit card lists, and for a good reason. It offers one of the most lucrative rewards programs out there. Advertising expenses spent on social media sites and search engines earn triple points (as do travel, shipping, and telecom expenses). Those points can be redeemed on travel, on Amazon, as gift cards, statement credit, or cash back.

The card has an annual fee of $95 and an APR between 17.99% and 22.99%.

Chase Ink Business Preferred



Apply Now 

Annual Fee:


$95

 

Purchase APR:


17.99% – 22.99%, Variable

Loans For Business Startups, Remodeling, Or Expansion

Like equipment purchases, business remodeling and expansion (or starting your business up in the first place) falls under the category of “large, planned expenses.” One of the bigger and more daunting business expenses occurs when you’ve outgrown your space.

If you need additional bays, or even a larger overflow lot, you’ll want a loan that can offer you a large sum of money at a low interest rate. Your best bet is probably an SBA loan.

SBA Loans

The Small Business Administration (SBA) is a government agency tasked with advising and assisting small businesses. The SBA doesn’t usually directly lend to businesses. Instead, it guarantees a portion of an SBA-approved lender’s loan. This guarantee allows you to access better rates and terms than your credit rating or business size might otherwise allow.

The two most common forms of SBA loan are the SBA 7(a) and the SBA 504.

SBA 7(a) Loans SBA 504 Loans
  • Working capital
  • Commercial real estate purchasing
  • Equipment purchasing
  • Purchasing a pre-existing business
  • Refinancing debt
  • Purchase an existing building
  • Purchase land and land improvements
  • Construct new facilities
  • Renovate existing facilities
  • Purchase machinery and equipment for long-term use
  • Refinance debt in connection with renovating facilities or equipment

The 7(a) offers the most flexibility in terms of what it can be used for. This can include anything from equipment to non-investment real estate, leasehold improvements, business acquisition, or start-up costs. Depending on your needs, however, you may want to look into the SBA 504 loan, which has a higher maximum borrowing amount. These loans can be used to purchase land and buildings, buy long-term equipment, or make improvements to your lot.

Be prepared to play the long game with an SBA loan, though. They take far longer to close than the other financial products we’ve discussed.

Recommended Option: SmartBiz

You have a lot of choices when it comes to SBA-approved lenders, which likely includes your preferred local bank or credit union. You don’t need our advice for that, right?

But if you need help navigating the complexity of the SBA application process and don’t have a lender specifically in mind, you may want to give SmartBiz a look. SmartBiz can’t do a full end-run around the massive amounts of paperwork required to get an SBA loan, but what they can do is keep the process as organized and streamlined as possible on your behalf. Most importantly, they’ll match you with a lender that fits your needs.

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What To Consider When Choosing A Lender

If you didn’t see a lender you liked above, you can always hunt for one on your own. Though it can be a time-intensive task, there are some ways to strategically narrow your search.

Why Do I Need A Loan?

Lenders serve a variety of needs, but not every lender can serve yours. Even if you don’t like the lenders we recommended, the type of financial products discussed above can be a guide for finding a lender.

A slow, traditional lender may not be able to help you get emergency funds, while a fast, expensive alternative lender may be a poor choice for financing an expensive renovation.

Am I Qualified?

One of the easiest ways to rule out a lender is to figure out if they’ll rule you out.

Most lenders have minimum qualifications for borrowers. The most common ones are:

  • Time In business: Lenders want to know you’ll be around long enough to pay them back.
  • Credit Rating: Some lenders use credit rating as a line in the sand, while others use it mainly to help determine rates.
  • Revenue: Lenders want to make sure you can pay off your debt. Sometimes this number is an absolute minimum (like $100,000/yr); other times it’s relative to the amount of money you want to borrow ($1.50 for every $1).

Additional factors may include the number of other loans you currently have, the industry or state you’re in, and whether you’ve had any recent bankruptcies.

Do The Terms & Rates Meet My Needs?

While it might seem that lenders have the upper hand, remember that you are ultimately the one who gets to decide whether or not the transaction happens.

If a lender charges usurious rates, if they pile on unnecessary fees, or if they demand repayment on a schedule you can’t accommodate, you’ll probably want to keep looking.

Try to get a sense of whether your prospective lender will be a flexible partner or a predatory animal looking to cash-in on any small mistake you make. Do they offer early payment incentives? Incentives for repeat business? Is customer service available and helpful?

Final Thoughts

When it comes to keeping your auto repair shop’s engines purring, you have a ton of potential financial solutions at your disposal. With a little patience, you can find a deal that fits your needs.

Didn’t find a lender you were looking for above? Here are some overviews of our contenders for loans, lines of credit, credit cards, and startup financing.

The post Business Loans For Auto Repair Shops appeared first on Merchant Maverick.

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