The Best Business Loan And Financing Resources For Texas Small Businesses

We’ve all heard the saying, “Everything’s bigger in Texas.” From ranches to buildings to cowboy hats, this adage applies to many aspects of Texas living. It even applies to opportunities. For small business owners that need capital or other resources, the state of Texas has many great opportunities. Whether you want a quick and easy online loan, a state grant that puts free money into your business, or training and mentorships, there are plenty of opportunities if you know where to look.

We’ve taken the guesswork out of getting a loan in Texas and have done the research for you, compiling a list of loan and financing resources for your small business. New business? No problem! Low personal credit score? We’ve got you covered. From startups to established businesses, these resources can help any Texan achieve your business goals. Read on to learn more.

Online Business Lenders For Texas Businesses

It wasn’t that long ago that one of the only ways to get a business loan was to head to your local bank. Today, you don’t have to step foot into a bank to get the capital you need for your business — thanks to the internet.

Online business lenders are popping up everywhere, offering competitive rates and terms to draw in your business. Not only is working with one of these online lenders quicker than going to the bank and sitting on the phone with your loan officer, but many have more relaxed borrower requirements, making it easier than ever to get the capital you need.

With an online lender, you’re able to apply for a loan online. Most lenders offer up their rates, terms, and borrower requirements right on their website. You can communicate with your lender through email or secure web forms. Some lenders allow you to complete the entire process from application to funding all from the comfort of your home or office — no telephone calls or in-person visits required.

Funding is faster than ever, too. No longer do you have to wait weeks or months for approval. Instead, many online lenders offer instant approvals and funding in as little as 24 hours.

An online search for a small business lender leads to thousands of results, so how do you know which one to choose? Start your funding search with these recommendations.

Fundera

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Who has time to fill out application after application with multiple lenders? Why spend hours trying to connect with the lender that’s right for your business when you can do it all with just one simple application?

With Fundera, you can connect with multiple lenders with just one application. Once you fill out your application, you’ll be connected with a lending specialist who will learn more about your business. Then, your funding specialist will go to work for you to find the best financing options for your business.

You may receive one or even multiple offers. Your lending specialist will work with you to go over the details of your offers, helping you find the best, most affordable financing option. The best part? You receive all of this for no cost!

Fundera has multiple loan options available for your small business, including:

  • SBA Loans: Up to $5 million with rates starting at 6.75%.
  • Term Loans: Up to $500,000 with rates at 7% to 30%
  • Lines Of Credit: Starting at $10,000 with interest rates at 7% to 25%
  • Invoice Financing: Up to 100% of invoice value with rates at 8% to 30%
  • Startup Loans: Up to $150,000 with rates at 7.9% to 19.9%.
  • Equipment Financing: Up to 100% of equipment value with rates at 8% to 30%
  • Short-Term Loans: Up to $250,000 with rates starting at 10%
  • Merchant Cash Advances: Up to $250,000 with factor rates of 1.14 to 1.18
  • Personal Loans For Business: Up to $35,000 with rates at 5.99% to 36%

Borrower requirements vary based on the financial product you select. For example, most borrowers that qualified for a term loan had annual revenue of at least $300,000, a credit score of 680, and a time in business of over 3 years. Borrowers who have qualified for short-term loans had annual revenue of at least $150,000, a credit score of at least 600, and a time in business of over 2 years.

Fundera’s loan specialists will evaluate your business, personal credit history, and other factors to help you select the best product for your situation.

Fundation

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Whether you’re ready to expand your business or you have short-term cash needs, Fundation has a financial solution for you. Through Fundation, you can apply for a term loan or line of credit.

With a term loan, you can pay for an expansion, purchase equipment, or fund capital improvements. You may qualify for up to $500,000 with repayment terms up to 4 years. APRs range from 8.99% and 29.99% and payments are made twice per month.

Fundation’s lines of credit are available in amounts up to $150,000 with terms up to 18 months. APRs range from 8.99% and 29.99% and are based on the creditworthiness of the borrower. Payments are made once per month.

To qualify for a Fundation financial product, you must meet the following requirements:

  • Time in business of at least 3 years
  • Annual revenue of at least $100,000
  • Good personal credit

SmartBiz

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Qualifying for a traditional bank loan is tough. Luckily, the Small Business Administration has lending programs that make it easier for startups and small businesses to qualify for low-interest, long-term loans. Because the SBA guarantees a portion of loans distributed through its programs, lenders feel more confident in lending to small business owners, even those with less-than-perfect credit scores or who have just launched their businesses. The SBA is not a direct lender. Instead, small business owners turn to intermediary lenders to get the funds they need – lenders like SmartBiz.

SmartBiz simplifies the SBA loan process, helping small business owners in Texas move quickly and easily through the process. Through SmartBiz, you have two SBA loan options: SBA working capital and debt financing loans or SBA 7(a) commercial real estate loans.

SBA working capital and debt refinancing loans are available in amounts from $30,000 to $350,000. Funds can be used to purchase equipment or inventory, refinance existing debt, pay for a marketing campaign, or just for working capital purposes. Interest rates are between 8.25% and 9.25% with maximum repayment terms of 10 years.

To qualify for this SBA loan, you must:

  • Have a time in business of at least 2 years
  • Be a U.S. citizen or legal resident
  • Have a personal credit score of 640 or higher
  • Have sufficient cash flow to pay your loan
  • Have no bankruptcies or foreclosures within the last 3 years
  • Have no outstanding tax liens
  • Have no previous defaults on government-backed loans

If you want to purchase commercial real estate or refinance your existing commercial mortgage, you could qualify for $500,000 to $5 million through the SBA 7(a) program. Interest rates are 7% to 8.25% through SmartBiz with repayment terms up to 25 years.

To qualify, you must meet these requirements:

  • Use funds for a property that is at least 51% owner occupied
  • Time in business of at least 3 years
  • U.S. citizen or legal resident
  • Personal credit score of 675 or higher
  • Have sufficient cash flow to pay your loan
  • Estimated purchase price must be higher than $500,000
  • No bankruptcies or foreclosures within the last 3 years
  • No previous defaults on government-backed loans
  • No outstanding tax liens

Funds through this loan program can’t be used to purchase investment properties or fund the costs of new construction.

If you’re not ready to apply for a loan through SmartBiz’s SBA programs, the company has also teamed with lender partners to offer affordable, long-term bank loans up to $350,000 for qualified borrowers.

LoanBuilder

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Haven’t been in business for long or have a low credit score? Don’t worry – there are options available for you. One of those options is LoanBuilder. Through this online lender, you can “build” your own loan, personalizing your loan using the LoanBuilder Configurator.

With LoanBuilder, you can receive $5,000 up to $500,000 to build your business. Repayment terms are 13 to 52 weeks, with weekly payments debited directly from your business bank account. LoanBuilder makes it easy to understand the cost of borrowing by charging a one-time fee. This fee is 2.9% to 18.72% of the borrowing amount and is added into your loan. There are no additional fees for receiving a LoanBuilder loan.

To qualify for a LoanBuilder loan, you must have:

  • A time in business of at least 9 months
  • At least $42,000 in annual revenue
  • No active bankruptcies
  • A U.S.-based business
  • Personal credit score of 550 or above

You must also be in an eligible industry to qualify. Most industries will qualify, but some that are excluded include attorneys, collection agencies, schools, gambling businesses, auto dealers, and non-profit organizations.

OnDeck

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If you don’t qualify for a loan through a bank or other traditional lender, OnDeck is another lender with minimum requirements that can give you the capital you need. Through OnDeck, you have two financial products to choose from: term loans and lines of credit.

With OnDeck’s term loans, you can receive up to $500,000. The lender offers two loan options: short term loans and long term loans. Short term loans have repayment terms of 3 to 12 months and can be used for purchases that have immediate returns, such as launching a new marketing campaign, hiring new employees, or purchasing inventory.

OnDeck’s short term loans have a simple interest rate as low as 9%. This means that the interest rate is a percentage of your borrowing amount. For example, if you have a $10,000 loan with a 9% simple interest rate, you’ll repay $10,900. Additional fees may apply.

OnDeck’s long term loans have terms of 15 to 36 months and can be used to expand your business, purchase equipment, or develop new products. These loans come with an annual interest rate starting at 9.99%.

All term loans have an origination fee of 0% to 4% of the loan amount. Payments are made daily or weekly and are automatically deducted from your business bank account.

To qualify for term loans through OnDeck, you must have:

  • Time in business of at least 1 year
  • At least $100,000 in annual revenue
  • Personal credit score of 500 or above

OnDeck also provides lines of credit up to $100,000 for qualified borrowers. The APR starts at 13.99%. Repayments are made weekly and are automatically deducted from your business bank account. OnDeck’s lines of credits do not have draw fees. However, there is a $20 monthly maintenance fee. This fee can be waived by drawing at least $5,000 within 5 days of opening your account.

To receive an OnDeck line of credit, you must meet these requirements:

  • Time in business of at least 1 year
  • At least $100,000 in annual revenue
  • Personal credit score of 600 or above

Kabbage

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If a flexible line of credit would work best for your financial needs, consider applying with Kabbage. Through Kabbage, you can get up to $250,000 as a line of credit to use for your business. Funds can be used for any business purpose, from expansion to hiring new employees to filling gaps in revenue during a slow season.

Kabbage lines of credit come with terms of 6 or 12 months. Kabbage charges monthly fees of 1.5% to 10%, and your rate is based on the performance of your business. If you pay off your balance early, remaining fees will be waived so you can save money on your loan. Repayments are made monthly and are automatically debited from your business checking account.

Kabbage bases its approval decisions on the performance of your business, not just your personal credit score. To qualify, you must meet the following minimum requirements:

  • Time in business of at least 1 year
  • At least $50,000 in annual revenue OR at least $4,200 per month for the last 3 months

One thing that makes Kabbage stand out from other lenders offering lines of credit is the Kabbage Card. You can make a regular draw from your line of credit, which you receive in your bank account within 1 to 3 business days. Or you can get instant access to funds with the Kabbage Card. Simply use the card anywhere credit cards are accepted to make an immediate purchase. Once you’ve used your card, Kabbage will create a new loan with the same rates and terms as traditional draws.

LendingPoint

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Some of the options already discussed work for more established businesses, but what if you haven’t yet opened your doors? As a new business owner, meeting the requirements for a business loan can be a challenge, even through alternative lenders. If you have at least a fair credit score, one option to consider is a personal loan for business through a lender like LendingPoint.

With LendingPoint, you can receive a loan up to $25,000. Repayment terms for LendingPoint loans are 24 to 48 months. Interest rates start at 15.49%.

Because this is a personal loan, time in business, business credit history, and annual revenues are not requirements for approval. Instead, you must meet these requirements:

  • Be at least 18 years old
  • Have a valid social security number
  • Have at least $20,000 in annual income
  • Have a verifiable bank account
  • Have a credit score of at least 585

Banks, Credit Unions, & Nonprofit Lenders In Texas

If you’d rather work with a more traditional lender for your small business loan, Texas has plenty of banks, credit unions, and nonprofit lenders to choose from, including these picks.

Security Service Federal Credit Union

Security Service Federal Credit Union is one of the largest credit unions in Texas with nearly 70 locations across the state. Branches are located in cities including San Antonio, Corpus Christi, Portland, and New Braunfels.
There are multiple small business financing options available through this credit union. Your options include:

  • Commercial Mortgages
  • Commercial Construction Loans
  • Capital Improvement Loans
  • Vehicle & Equipment Financing
  • Term Loans
  • Lines Of Credit
  • Business Credit Cards

The rates, terms, borrowing limits, and borrower requirements are based on the product you select. This institution also offers merchant services, payroll services, and business checking and savings accounts.

To become a member of Security Service, you must meet one of the following requirements:

  • You live, work, worship, attend school, volunteer, or own a business located in the state of Texas
  • You’re a member of the military or are employed by the Department of Defense living in the service area
  • A family member or someone in your household is a member of the credit union

Wells Fargo

If you want to stick with a traditional lending institution, Wells Fargo is one of the largest banks in Texas. Wells Fargo branches are located all throughout the state in cities including Wichita Falls, Fort Worth, Austin, and Houston.

Wells Fargo offers a variety of small business products and services to its customers. This includes:

  • Secured & Unsecured Business Credit Cards
  • Unsecured Business Loans: $10,000 to $100,000 with rates starting at 8.25% and terms up to 5 years
  • Equipment Loans: $10,000 to $100,000 with rates starting at 7% and terms up to 5 years
  • Term Loans: $100,000 to $500,000 with terms up to 1 year
  • Lines Of Credit: Up to $500,000
  • Commercial Real Estate Loans: Up to $1 million
  • Commercial Real Estate Refinancing: Up to $1 million
  • Commercial Real Estate Equity Loans: Up to $500,000
  • Commercial Equity Lines Of Credit: Up to $500,000
  • SBA 7(a) Loans: Up to $5 million
  • SBA 504 Loans: Up to $6.5 million

Borrower requirements vary based on the financial product you select. Additional business products and services include business bank accounts, merchant services, and payroll services. To learn more about opening an account, you can sign up online or visit your local Wells Fargo branch.

LiftFund

LiftFund specializes in providing small business loans to businesses that don’t qualify for traditional bank financing. Through LiftFund, you may be eligible to borrow $500 up to $1 million. LiftFund also is a Certified Development Company that administers SBA 504 loans. Borrowers may also qualify for up to $250,000 through the SBA 7(a) program.

To qualify for a loan, LiftFund considers the following:

  • Ability to repay
  • Personal character
  • Commitment to improving business and personal credit
  • Good payment history with other creditors
  • Collateral
  • Alternate sources of income
  • No Chapter 7 bankruptcies within 2 years
  • No Chapter 12 bankruptcies within 1 year

The average borrower has a personal credit score of 575. The lender works hard to match business owners with a loan regardless of credit history, time in business, or annual revenues.

BCL Of Texas

Through BCL of Texas, you can receive up to $50,000 with the Texas Small & Diverse Growth Fund. This loan program is open to minority and women-owned businesses. To apply, you must have a one-on-one consultation with a BCL specialist and complete a Financial Readiness Assessment. Once these two steps are complete, you can apply for loans between $5,000 and $50,000. Through this program, you can also receive business coaching for the life of your loan at no additional cost.

BCL also offers new business loans of $20,000 to $50,000. Loan funds can be used for working capital, real estate purchases, equipment purchases, or as a line of credit. A loan inquiry can be submitted through the BCL website to learn more.

As your business grows, BCL offers additional loan options. The Business Growth Fund provides up to $300,000 for the purchase of real estate or machinery, working capital, or to refinance existing debt. Rural business loans up to $250,000 are also available through BCL. SBA 504 loans are also available through this lender.

Small Business Grants In Texas

If you don’t want to be stuck repaying a loan plus interest and fees, a small business grant could be what you need for your business. A small business grant is money that doesn’t have to be repaid. Unfortunately, competition for these grants is stiff. Plus, many small business grants have very specific requirements that your business might not meet. However, it never hurts to apply for grants that you are qualified to receive. In the state of Texas, there are several grants available to small businesses. Read on for some of the top options to consider.

Texas Workforce Commission Skills For Small Business Program

The Texas Workforce Commission (TWC) Skills for Small Business Program provides grants for training new employees. With these funds, small business owners can pay for employee training at their local community college, tech college, or Texas A&M Engineering Extension Service.

Through the program, businesses can receive up to $1,800 per year for each new employee that receives training. Existing employees can receive up to $900 per year for training.

To qualify, businesses must have fewer than 100 employees. Only full-time employees are eligible to receive training. All wages for employees must meet or exceed the prevailing wage in the area where the business is located.

To apply, you must complete and submit the TWC application by fax or through email.

Texas Enterprise Fund

The Texas Enterprise Fund awards “deal-closing” grants to businesses that are competing with out-of-state sites for a project. Projects may include opening or expanding a business.

In addition to having at least one out-of-state competitor, qualifying businesses must also plan to create more than 75 full-time jobs in urban areas or more than 25 in rural areas. The average wage for new jobs must meet or exceed the average county wage. Qualifying businesses must also show significant planned capital investment and must be financially sound.

All businesses must submit an application packet and then undergo an 11-step screening process. Once completed, the Governor, Lieutenant Governor, and Speaker of the House review applications and must unanimously agree in order for the grant to be awarded.

Texas Department Of Agriculture

The Texas Department of Agriculture has several loan and grant programs for businesses in and outside of the agriculture industry. Programs include the Agricultural Loan Guarantee Program, Specialty Crop Block Grant Program, and Capital for Texas. Requirements and deadlines vary based on the program you select. All information and applications can be found on the Texas Department of Agriculture website.

Loans & Resources For Startups In Texas

Many startup businesses seek outside financing and resources in order to increase their chances for success. In the state of Texas, there are multiple resources to consider that provide financing opportunities, mentorships, and much more to help you more effectively start and build a business.

SCORE

SCORE, a resource partner through the Small Business Administration, offers free business mentors to small business owners across the nation. Through SCORE, not only will you connect with an experienced business mentor, but you can also take advantage of other resources including workshops, webinars, and business courses.

There are multiple SCORE offices throughout the state of Texas in cities including Austin, Dallas, Houston, and San Antonio. You can contact your local SCORE office to find out more about the resources available to you, or you can visit the SCORE website to connect with a mentor, check out webinars, and more.

The Governor’s Small Business Workshops

Through the Office of the Governor, small business owners can participate in Small Business Workshops held throughout the year all throughout the state of Texas. These workshops cover a variety of business topics including startup essentials, access to capital, and business opportunities for women, minorities, and veterans.

America’s Small Business Development Centers

New and existing business owners can take advantage of the resources offered through Small Business Development Centers (SBDC). Through SBDC, you can receive free business consulting and low-cost training across multiple business topics including accessing capital, tech development, marketing, and more.

There are over 60 business centers located throughout Texas. You can locate your local office through the SBDC website to learn more about the opportunities available

What To Consider When Choosing A Lender

5 C's of Credit: What Lenders Look For

Still on the fence about which lender to choose? Doing your homework and weighing out your options is a smart move. However, if you’ve done your research and you still can’t seem to nail down a lender, ask yourself the following questions:

How Much Money Do I Need?

Your financing application will require you to request an amount of money to borrow, so make sure you know how much capital your business needs. Knowing how much money you need can also help you narrow down your selection of lenders. Let’s say you need $200,000 for an overhaul of your business. Lenders that have lower maximum limits can be immediately marked off your list.

How’s My Credit Score?

Got bad credit? The bad news is that you may not qualify for certain types of financing, such as a traditional bank loan. The good news is that there are alternative loan options available to borrowers with poor scores or no credit. However, be aware that these products often come with higher fees and interest and shorter terms than options available to more creditworthy borrowers.

If you’re unsure of where you stand in terms of credit, pull your free credit score before applying for financing. Then, apply only to lenders with credit score requirements you can meet. If your score is low and your funding need isn’t urgent, consider evaluating your credit report to determine your weak points. Then, take steps to boost your score, which will open up new financing options with improved rates and terms.

Do I Meet All Other Requirements?

Most lenders look at more than just your credit score. Some lenders consider factors such as time in business, annual revenues, debt-to-income ratios, and even the size of your business and the number of employees you have. Make sure you meet all borrower requirements before submitting your application. Remember, if you don’t meet all of one lender’s requirements, there are plenty of other lenders willing to work with your business.

How Will I Use My Funds?

How do you plan to use the capital you receive from a lender? Some lenders impose restrictions on how funds are used. For example, an equipment loan must be used to purchase equipment or fixtures. You can’t use these funds to hire employees or cover payroll. Choose a lender that offers a financial product that works for your business needs. Then, ensure that there are no restrictions that would prevent you from using your capital in a way that’s best for your business.

Final Thoughts

Whether you have an established business or you’re gearing up for your grand opening, there are plenty of resources in the state of Texas to help your small business. Do your research, calculate the affordability of any loan you pursue, and make sure your next steps will only better your business.

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

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The Best Business Loan And Financing Resources For Florida Small Businesses

Does finding capital for your small business seem like an insurmountable task? While it may seem impossible on the surface, the secret is that there are lots of lenders willing to finance your business. The key is knowing where to look.

If you’re a small business owner in Florida, you’re in luck. There are many options to consider when it’s time to apply for small business financing. Whether you’re new to the game and need money for startup costs or you’re an established small business looking to expand, we’ve got you covered.

In this guide, we’ll explore the financing options available to you. We’ll cover national lenders that offer easy online applications and take a look at local banks and credit unions. We’ll explore small business grants which give you free (yes, free!) money for your business. Finally, we’ll take a look at the options available to startups. Ready to get your financing? Let’s go!

Online Business Lenders For Florida Businesses

The internet has made our lives more convenient than ever. From online banking to communicating with family and friends to watching our favorite funny cat videos on YouTube, the internet has changed the way we interact with the world.

For small business owners, the internet has also opened up new opportunities in lending. Just a few decades ago, getting a business loan meant heading to your local bank, presenting your pitch, and waiting for that phone call approving your loan … or, more likely, turning you down. Today, you can apply for loans, lines of credit, credit cards, and other financial products from the comfort of your home or office.

Not only is the application process easier, but now, small business owners that wouldn’t qualify for bank loans have options as well. No matter your industry, time in business, annual revenue, or personal credit score, there’s an online lender that can help you get the financing you need.

Lendio

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Want to shop options without filling out a million applications? Give Lendio a try. Lendio isn’t a direct lender. Instead, it’s a loan aggregator, connecting you with more than 75 financing partners with just one application.

Through Lendio, you can apply for all types of small business financing. If you need a large amount of capital to fund your expansion, apply for a low-interest, long-term Small Business Administration loan. Looking for a flexible form of financing? See if you qualify for a line of credit or business credit card. Need new equipment for your business? Try equipment financing.

Some of the financial products offered through Lendio’s network include:

  • Small Business Administration Loans: $50,000 to $5 million with terms up to 25 years
  • Lines Of Credit: $1,000 to $500,000 with terms up to 2 years
  • Equipment Financing: $5,000 to $5 million with terms up to 5 years
  • Term Loans: $5,000 to $2 million with terms up to 5 years
  • Short Term Loans: $2,500 to $500,000 with terms up to 3 years
  • Merchant Cash Advances: $5,000 to $200,000 with terms up to 2 years
  • Commercial Mortgages: $250,000 to $5 million with terms up to 25 years

Borrower requirements, rates, and terms vary based on the type of loan you select, the lender you work with, your borrowing amount, and your creditworthiness. Applying with Lendio to receive offers does not affect your credit score. However, if you move forward with a lender’s offer, a hard credit pull may be required.

SmartBiz

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Have you tried to receive a bank loan, but your application was rejected? You’re certainly not alone. Most small business owners find that receiving a low-cost, long-term loan from a bank is difficult. This is because banks take a hard look at risk. Banks and credit unions want to work with low-risk borrowers — established businesses with solid business and personal credit profiles and high annual revenues.

For many new and growing businesses, meeting these requirements is impossible. But this doesn’t mean that you’re stuck with only high-interest, short-term loan options. You can receive affordable financing with great terms by applying for a Small Business Administration loan.

These loans are backed by the SBA, so banks, credit unions, and nonprofit lenders feel more comfortable loaning to small businesses – even those with less-than-perfect credit or low revenues. The SBA takes on some of the risk for lenders, while small business owners get to enjoy flexible, affordable loan options.

You can apply for an SBA loan through your bank or credit union. Or you can do what many busy entrepreneurs do and apply through SmartBiz.

With SmartBiz, you can pre-qualify for an SBA loan in just minutes with no effect on your credit score. You may be eligible to receive funding as quickly as 7 days after completing your application — much faster than the weeks it may take through your bank.

SmartBiz offers two types of SBA loans. Working capital and debt refinancing loans are available in amounts of $30,000 to $350,000. These funds can be used for a variety of purposes including:

  • Refinancing Debt
  • Equipment Or Inventory Purchases
  • Hiring Employees
  • Business Expansions
  • Marketing Costs

To qualify for a working capital and debt refinancing loan, you must meet the following requirements:

  • At least 2 years in business
  • Personal credit score of 640 or above
  • Sufficient cash flow to support loan payments
  • No outstanding tax liens
  • No bankruptcies or forecloses within the last 3 years
  • No previous defaults on government-backed loans

Working capital and debt refinancing loans have interest rates between 8.25% and 9.25% with repayment terms of 10 years.

You can also apply for an SBA 7(a) commercial real estate loan. These loans start at $500,000 and can go up to $5 million; they can be used to purchase commercial real estate or refinance your existing property loan. Funds can’t be used to purchase investment properties or to fund the construction of a new commercial building.

To qualify for an SBA 7(a) commercial real estate loan, you must meet the following borrower requirements:

  • The property must be at least 51% owner-occupied
  • At least 3 years in business
  • Personal credit score of 675 or above
  • Sufficient cash flow to support loan payments
  • Property purchase price must be higher than $500,000
  • No outstanding tax liens
  • No previous defaults on government-backed loans

SBA 7(a) commercial real estate loans have interest rates of 7% to 8.25% with repayment terms of 25 years.

If you don’t want to apply for an SBA loan or need funding quickly, SmartBiz has also partnered with banks to offer competitive term loans. These loans are available in amounts from $30,000 to $350,000 with terms of 2 to 5 years. Fixed interest rates range from 6.99% to 26.9%.

OnDeck

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If you don’t qualify for an SBA loan or you need money fast, you could get the capital you need with an alternative online lender like OnDeck. OnDeck offers two financial products for small businesses: term loans and lines of credit.

With an OnDeck term loan, you could qualify to receive up to $500,000. OnDeck offers short-term loan options with terms of 3 to 12 months. These loans are best for purchasing inventory, paying marketing expenses, or seasonal hiring or inventory needs. Short-term loan options have a simple interest rate starting at 9%.

Long-term loan options are also available with terms of 15 to 36 months. These loans are best for larger projects including purchasing equipment or business expansion. Annual interest rates for long-term loans start at 9.99%.

For both loan options, fixed daily or weekly payments are automatically deducted from your business bank account. To qualify for OnDeck loans, you must:

  • Have a time in business of at least 12 months
  • Have at least $100,000 in annual revenue
  • Have a personal credit score of 500 or above

If you want a more flexible financing option, you can apply for a line of credit up to $100,000. You can use your line of credit whenever you need it, including when you have unexpected expenses or gaps in cash flow.

The APR for an OnDeck line of credit starts at 13.99%. Fixed weekly payments are automatically taken from your business bank account. There are no draw fees, but a monthly maintenance fee of $20 is required. This fee is waived for 6 months if you draw at least $5,000 within 5 days of opening your account.

To qualify for an OnDeck line of credit, you must meet the following requirements:

  • Time in business of at least 1 year
  • At least $100,000 in annual revenue
  • A personal credit score of 600 or above

Fundbox

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If a flexible line of credit seems like the best option for your business, consider giving Fundbox a shot. Fundbox is unique in that the performance of your business — not your personal or business credit score — is the most important qualifying factor.

With Fundbox, you can receive a line of credit up to $100,000. Your line of credit can be used for nearly any business purpose, from buying inventory and supplies to covering payroll or an unexpected emergency. You can make multiple draws from your line of credit, and funds can be transferred to your account as quickly as the next business day.

Fundbox fees start at 4.66% of the draw amount. You can choose from 12- or 24-week terms, and repayments are automatically deducted from your business bank account each week. If you repay your balance early, remaining fees are waived. No fees are charged if you don’t use your line of credit.

To qualify for a Fundbox line of credit, you must have:

  • A business checking account
  • At least $50,000 in annual revenue
  • A U.S.-based business
  • At least 3 months of transactions in a business bank account OR at least 2 months of activity in supported accounting software

A soft credit inquiry is performed during the application process, so your credit will not be affected just by applying. After you’re approved and draw funds for the first time, a hard credit inquiry will be performed.

BlueVine

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BlueVine is another lender that offers flexible lines of credit. However, this lender also offers an additional option for qualified borrowers: invoice factoring.

With a BlueVine line of credit, you could qualify to receive up to $250,000. Rates start at 4.8%, and you only pay for the used portion of funds. Your line of credit can be used for any business purpose. Weekly repayments are automatically taken from your business bank account.

To qualify for a line of credit, you must have the following:

  • A personal credit score of 600 or above
  • A time in business of at least 6 months
  • At least $100,000 in annual revenue

If you have unpaid invoices, you may qualify for BlueVine’s invoice factoring service. Factoring lines of up to $5 million are available for qualified borrowers. Rates start at just 0.25% per week.

With invoice factoring, you’ll submit an application to BlueVine. Once approved, you can automatically sync your invoices from a supported accounting software. You can also upload your invoices to the BlueVine dashboard.

Once your invoices are received, BlueVine pays you 85% to 90% of the invoice amount up front. Once the invoice has been paid, you’ll receive the remaining funds, less fees charged by BlueVine.

To qualify for BlueVine’s invoice factoring, you need:

  • A B2B business
  • A personal credit score of 530 or above
  • A time in business of at least 3 months
  • At least $100,000 in annual revenue

Amex Business Loans

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If you’re an American Express business cardholder, you may qualify for an AmEx business loan. The great thing about these loans is that no credit check is required since American Express already has your information on file.

With an Amex business loan, you can receive $3,500 to $50,000 for any business purpose. The only restrictions are that funds can’t be used to pay for personal expenses or to repay debts to American Express. Repayment terms of 12, 24, or 36 months are available. Fixed interest rates are 6.98% to 19.97%.

To qualify, you must meet the following requirements:

  • Be at least 18 years old
  • Be a U.S. citizen or permanent resident
  • Have an American Express Business Card and be in good standing

Upstart

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If you’re a new business, meeting the time in business or annual revenue requirements of business loans may be difficult. However, if you have at least a fair credit score, you have a financing option: using a personal loan for business expenses.

With a personal loan, your personal information, including your credit score and annual income, are used to determine if you qualify. Since this isn’t a business loan, annual revenue, business credit score, and time in business requirements won’t be a consideration for approval.

Upstart offers a personal loan option that may work for you. When you apply for a personal loan, you may qualify to receive $1,000 to $50,000. Rates with Upstart begin at just 8.09% for the most creditworthy borrowers. Maximum APRs are 35.99%. Payments are made monthly over a period of 3 to 5 years.

Unlike other lenders, Upstart looks at more than just your credit score. While this is still a factor in qualifying for a personal loan, your credit history, education, and job history are also considered for approval.

To qualify for an Upstart loan, you must have:

  • A credit score of at least 620
  • A solid debt-to-income ratio
  • No bankruptcies or public records
  • No delinquent accounts
  • No public records
  • Less than 6 credit inquiries over the last 6 months
  • At least $12,000 in annual income

Banks, Credit Unions, & Nonprofit Lenders In Florida

If you want loan options with extremely competitive rates and terms, consider applying for financing through a bank, credit union, or nonprofit lender. We’ve compiled some of the top options in the state of Florida that offer everything from traditional business loans to commercial mortgages and SBA loans.

Florida First Capital Finance Corporation

Florida First Capital Finance Corporation has been licensed by the SBA since 1984. Since that time, this nonprofit Certified Development Company has helped small businesses through the SBA 504 loan program.

Funds through the 504 program can be used to purchase commercial real estate, machinery, or equipment. Funds may also be used to refinance qualifying debt. Through the 504 loan program, Florida First Capital Finance Corporation provides up to 40% of loan funds. A traditional commercial lender provides up to 50% of loan funds. The remaining project balance is paid by the borrower as a down payment.

To qualify for a 504 loan, you must meet the following criteria:

  • Own a small business that meets the size standards set by the SBA
  • Be a U.S. citizen or registered alien
  • Operate a for-profit business
  • The net worth of the business must be $15 million or less
  • Average net income of the business must be $5 million or less
  • Business can’t be engaged in rental real estate investment

Suncoast Credit Union

Suncoast Credit Union is the largest credit union in the state of Florida. Branches are located in and around the Tampa area, and online services are available to members.

Through Suncoast Credit Union, you can apply for multiple financial products for your small business. In addition to business checking and savings accounts, payroll services, and employee benefits, Suncoast Credit Union also offers:

  • Business Lines Of Credit
  • Commercial Real Estate Loans
  • Vehicle & Equipment Loans
  • SBA Loans
  • Business Credit Cards

Rates, terms, and borrowing amounts vary by product selected and your creditworthiness.

To become a member of Suncoast Credit Union and be eligible to apply for business financing, you must have an immediate family member that has joined, live in a qualifying county in Florida, or be a Florida College alumnus.

Chase Bank

Chase Bank is one of the largest banks in Florida, with over 300 branches located across the state. Chase offers a variety of financial products targeted at small business owners. Not only does the lender offer business checking and savings accounts, payroll services, and merchant services accounts, small business owners can also apply to receive:

  • Business Lines Of Credit: Up to $500,000
  • Commercial Lines Of Credit: At least $500,000
  • Commercial Real Estate Loans: Conventional or SBA loans starting at $50,000
  • Small Business Loans: Starting at $5,000 with terms up to 84 months
  • SBA Loans: 7(a), Express, and 504 loans
  • Equipment Financing
  • Business Credit Cards

Rates, terms, and maximum borrowing limits are based on the product selected and the creditworthiness of the borrower.

Small Business Grants In Florida

With most small business financing, you get the capital your business needs and repay your borrowing amount, interest, and fees over time. With grants, you receive capital without having to pay back the funds. Sounds like a dream, doesn’t it?

Unfortunately, the one drawback is that grants are very difficult to receive. Competition is high for small business grants. Many grants also have very specific requirements and may be awarded only to businesses owned by a minority or businesses in a specific industry. If you don’t meet all requirements, you won’t be eligible to receive a grant.

However, this doesn’t mean that you shouldn’t apply. There are several small business grants available to business owners in the state of Florida that you may qualify to receive.

Enterprise Florida Inc.

Enterprise Florida Inc. (EFI) offers training, development, and financing opportunities to small businesses, minority-owned businesses, and entrepreneurs.

There are multiple funding opportunities available through EFI. This includes:

  • State Small Business Credit Initiative: This program reduces the risk taken by lenders by purchasing up to 50% of loan funds, making it easier for small businesses to qualify for affordable loans.
  • Microfinance Guarantee Program: This program provides a guarantee on loans, similar to the SSBCI program. This helps lenders feel more secure in lending money to small businesses.
  • Florida Opportunity Fund: EFI is a sponsor of the Florida Opportunity Fund, which offers funding to businesses through programs including the Fund of Funds Program, the Clean Energy Investment Program, and Florida’s Venture Capital Program.

EFI has also partnered with other organizations to provide additional resources and funding opportunities to small businesses.

WomensNet Amber Grant

Women-owned businesses in Florida and across the nation can apply for a small business grant through WomensNet’s Amber Grant Program. Each month, a $1,000 small business grant is awarded to a woman-owned business. At the end of the year, all 12 monthly winners will be entered to win a grant of $10,000.

One of the best things about this grant is that the application process is simple. There are no lengthy applications to fill out and no extensive documentation to submit. Instead, all women business owners can apply by answering a few short questions about their business. There is a $15 application fee to enter. Deadlines for applications are the last day of each month.

Palm Beach County Job Growth Incentive Grant

Businesses that are relocating or establishing a business in Palm Beach County, Florida, may qualify for the Job Growth Incentive Grant Program. This award is given through the Economic Development Office and is available to startups and established businesses that will create jobs in Palm Beach County.

Interested businesses can contact the Palm Beach County Department of Housing and Economic Sustainability or the Business Development Board of Palm Beach County to learn more about applying for this grant.

VISIT FLORIDA Targeted Marketing Assistance Program Grant

If your business is in the tourism industry, you may qualify for VISIT FLORIDA’s Targeted Marketing Assistance Program Grant. Through this program, marketing costs up to $5,000 are matched with a grant.

To qualify, a business must be an approved TMAP business and a partner with VISIT FLORIDA. Applications must include a marketing project overview, a marketing strategy and media plan, anticipated results, and a marketing budget.

All independently owned and operated businesses with gross revenues of $1.25 million or less that are in the tourism industry may apply to become a TMAP business. Some nonprofit organizations may also qualify.

Loans & Financial Resources For Startups In Florida

Even established businesses may encounter challenges when applying for business financing. So, it should come as no surprise that startup businesses — businesses that haven’t yet established a credit profile or aren’t bringing in revenue — may have a more difficult time getting needed funding and resources.

Luckily, though, there are resources available to new businesses and startups. In the state of Florida, there are a few good options to consider.

SCORE

SCORE has 300 chapters throughout the nation, with chapters located in the state of Florida. Through SCORE, you can tune in to live and recorded webinars and take courses on small business topics. You also have access to e-guides, articles, blogs, and online workshops.

One of the most beneficial features of SCORE is that you can be matched with an expert business mentor. You can get advice at no charge with your mentor either face-to-face or online.

Small Business Development Center

The Small Business Development Center (SBDC) offers multiple resources to business owners in Florida. The SBDC has online and offline resources, including videos, in-person workshops, and low-cost training.

The SBDC also offers consulting at no cost. New business owners can work with a Capital Access Specialist to find, prepare, and receive business financing.

There are several locations throughout the state of Florida in cities including Cape Coral, Daytona Beach, Jacksonville, Boca Raton, Miami, and Pensacola.

The Florida Virtual Entrepreneur Center

A good online resource for business owners in Florida is the Florida Virtual Entrepreneur Center. Through this website, you can find business resources by city. This includes links to your local Chamber of Commerce, Economic Development Councils, forums, and more.

If you want to take advantage of offline resources, the website has a list of events taking place all over the state. These events are centered on topics such as business and personal credit, SBA loans, business planning, and cybersecurity for small businesses.

Find An Investor

If you need capital for your startup, where do you turn? One option is to find an investor. While you can certainly find these investors on your own — think a friend, family member, or colleague — you can also hop online and give crowdfunding a shot.

With crowdfunding, you’ll use an online platform to pitch your business to potential investors. In exchange for their investment, you can offer up a reward (such as a new product for free or a reduced cost) or equity in your business.

One of the best things about crowdfunding is that there are no credit score, time in business, or revenue requirements, which is ideal for businesses that are just getting started. However, you do have to perfect your pitch, share your campaign online, and work harder to bring in investors that are willing to back your company.

What To Consider When Choosing A Lender

5 C's of Credit: What Lenders Look For

Now that you’re aware of the loan options available to you, the next step is to choose your lender. Unfortunately, this is when having so many choices has its drawbacks. If you don’t know where to begin when it comes to selecting a lender, ask yourself the following questions:

How Will I Use The Money?

You want to select a lender that offers financial products that best fit your needs. Let’s say you need working capital for your business. A loan used to purchase commercial property won’t be a good fit, so you could scratch this lender off the list. Plan how you intend to use your funds, then choose lenders that don’t have restrictions that would prevent you from effectively using your capital.

How Much Money Do I Need?

Knowing how much money you need is a critical step before you even start filling out an application. This not only helps you plan and budget for your own business, but most lenders want to know how much you need to borrow. Having a number in mind can also help you decide which lenders work best for your specific needs. If you need $250,000, a line of credit that maxes out at $100,000 just won’t work for your business.

Do I Meet The Lender’s Requirements?

Save yourself the trouble of unnecessary rejections by understanding the borrower requirements of every lender that interests you. If a lender requires a time in business of 2 years and you’re just opening your doors, you won’t qualify. If you need a personal credit score of 700 but yours is just 620, it’s time to search for another lender. Start your search by checking your free credit score online, then make sure you meet all borrower requirements before applying. Also, keep in mind that meeting the minimum requirements is not a guarantee of a loan offer.

Do I Want A Lump Sum Or Flexible Financing?

If you have a specific financial need in mind — purchasing new equipment or buying a commercial property, for instance — work with lenders that offer lump-sum loans. If you’d rather have a more flexible financing option — making payroll or covering revenue gaps — find a lender that offers a flexible form of financing such as a line of credit or business credit card.

Can I Afford It?

Sure, you may want a million dollars to build your business, but can your business afford it? Consider your outstanding debts and obligations, your current and project revenues, and shop around your options. Understand the fees and terms of your loan to determine if it’s something you can handle … or if it could drag your business deep into debt. Learn more about calculating the affordability of your small business loan.

Final Thoughts

In the state of Florida, there are plenty of lenders and small business resources at your disposal. The only thing you have to do is find the right resources for your business and leverage them to successfully start and build your business.

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

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How To Start A Lawn Care Business

Can you picture making a profit by keeping the lawns of homes and businesses in your area looking their best? You’re not alone. For many aspiring entrepreneurs, starting a lawn care business sounds like a practical and achievable way to make money and be their own boss — a dream come true, in other words. If you’re reading this, you’re ready to take the next step toward making that dream a reality.

Starting a lawn care business seems easy. Just grab up some lawn equipment, find a couple of guys willing to do physical labor, and get started, right? Not exactly.

Like any other small business, building a successful lawn care business takes careful planning and hard work. You have to be willing to put in the time, effort, and money required to start and grow your business. A lawn care business may have low overhead and lower initial risk than other types of businesses, but it isn’t a cake walk. However, over time, you’ll begin to see the fruits of your labor through the beautiful lawns in your city or town and the profits sitting in your bank account.

In this guide, we’ll break down the steps for starting your own lawn care business. We’ll start off with the importance of your business plan and what it should include. We’ll go over what you need to get started — and it’s more than just lawn equipment. We’ll talk about the costs you’ll encounter and how to get the financing to cover those costs. We’ll also discuss ways to bring in customers … and profits.

Let’s get started!

Create A Business Plan

Every business is different, but all businesses need one thing to be successful: a business plan. Your future lawn care business is no exception. Even if your business concept seems simple, having a solid business plan in place is a necessity.

Think of your business plan as a roadmap of your business. You wouldn’t go on a long trip without a map or GPS, or put together a complicated piece of furniture without instructions, right? View your business in the same light.

Your business plan outlines your goals for the future. In other words, how will you get from where you are now — a startup business — to your goal? Every entrepreneur has a different goal. Maybe yours is to make $1 million in revenue within five years. Maybe it’s to expand throughout your state. Maybe you want to build a franchise that will go nationwide. No matter what your goals are, they need to be outlined in a solid business plan.

All business plans are different, but there are a few key sections that should be included in all plans. Those include:

  • Executive Summary: A short summary of your business plan and the value proposition of your business
  • Business Description: What does your business do? Include your mission statement and when your business was formed.
  • Organization: Who are your team members and what do they do within the organization?
  • Market Analysis: Include information about the market and your competition
  • Marketing Strategies: How do you plan to market your business to draw in customers and bring in profits?
  • Financial Projections: Use revenue growth and market trends to project the financial outlook of your business

Not only is your business plan critical to the growth of your company, but it’s also an absolute necessity if you plan to seek funding from outside sources — such as investors or banks — in the future.

Determine What Equipment You Need

Selecting equipment

To operate a lawn care business, you need to have the right tools and equipment for the job. While you may start off small and add to your inventory as your business grows, there are a few critical pieces of equipment you need to get started. For most lawn care businesses, major equipment includes:

  • Riding Lawnmower
  • Push Lawnmower
  • Edger
  • Hedge Trimmer
  • Leaf Blower
  • Truck
  • Equipment Trailer

For your business, you’ll also need equipment that’s less expensive but just as critical to operations. This includes:

  • Lawn Tools
  • Hand Tools
  • Lawn Bags
  • Eye/Ear Protection
  • Gloves
  • Gas Cans
  • Oil
  • Garden Hoses

You should expect to spend approximately $30,000 to $40,000 for the equipment you need to start your business. As your business grows, of course, you’ll need additional capital for the purchase of more equipment. For example, you may have just one truck, trailer, and mower for now, but if you have additional crews taking on jobs all over the area, you’ll need more equipment.

You may even opt to offer additional services — installing sod, laying mulch, or planting flowers — all of which require additional equipment and supplies. For now, however, focus on the equipment listed above. Those items will be most critical to getting your business off the ground.

Calculate Startup Costs

With an idea of the type of equipment you need to launch your business, you can now begin calculating startup costs. This will include the cost of your equipment, plus other necessary expenses to keep your business operating smoothly.

Your equipment will make up the bulk of your costs, and you should budget approximately $30,000 to $40,000 for these purchases. You may be able to get started with a smaller investment by purchasing used equipment. However, purchasing used does come with its risks. Older trucks can break down and previously-owned lawn equipment may immediately require servicing or repairs. While you can save money in the short term by buying used equipment, you may rack up additional expenses over the long term, so consider your purchases carefully.

When purchasing your equipment, shop around. Look online and visit local retailers to get estimates of costs. Determine what equipment you really need now and what you could add as your business grows. You may even consider starting with basic equipment (do you actually need that fully-loaded riding mower right this minute?) and upgrading your equipment when your business starts bringing in revenue.

Beyond the equipment we’ve already discussed, you’ll need additional supplies for your business. This may include chemical weed killers, pesticides, fertilizer, and other supplies. You may purchase these supplies upfront, or you may purchase them when needed. If you plan to keep inventory, you may incur additional costs if you rent storage for your supplies and equipment.

Another big startup cost to consider is the cost of insurance. You will need to have auto insurance on your truck. You will also be required to carry liability insurance. If you hire employees now, additional costs may include workman’s comp insurance and payroll taxes. Other startup costs include fees for permits and licenses. We’ll discuss obtaining licenses and permits a little more in the next section.

If you’re starting small as a one-person operation, your primary startup costs will be your equipment, supplies, insurance, and marketing costs. Just remember to take your time to do your research, plan, and budget to keep startup costs under control.

Register Your Business

Before you begin operating, you’ll need to register your business. There are several steps required to register a new business:

Choose & Register Your Business Name

While you may choose to operate your business under your own name, most small business owners choose a trade name. This name will need to be registered in the state where you will operate.

When choosing your name, you want to select one that is a reflection of your brand. You will also need to make sure that you select a name that is not registered by someone else in your state. You can find your state’s registration database with a quick online search.

Choose Your Legal Structure

One of the first steps in setting up your business is determining your legal structure. Your legal structure determines how much you pay in taxes and your personal liability for your business. Legal structures include:

  • Sole Proprietorship: This gives you full control over your business. You do not have to register this type of entity, so you skip over all the paperwork. However, this structure does not separate your personal assets and liabilities from those of your business. This means that you can be held personally liable for all debts and obligations of your business.
  • Partnership: This structure is the simplest structure for businesses that have two or more owners. A limited partnership (LP) gives one partner unlimited liability, while other owners have limited liability and limited control over the company. A limited liability partnership (LLP) gives limited liability to all owners, protecting each against the debts of the business and the actions of other partners.
  • Limited Liability Company: A limited liability company (LLC) protects you from personal liability from business debts and obligations. For example, your house, vehicle, or savings accounts will be untouchable if your business faces a lawsuit or files for bankruptcy.
  • Corporation: Corporations pay higher taxes and are more expensive to form. However, corporations can also raise money through the sale of stock. This structure is best for businesses that need to raise high amounts of capital or want to go public in the future.

Most lawn care business owners will register as a sole proprietorship or LLC, but consider the number of owners you have, protecting yourself from personal liability, and the future goals of your business before you make your decision.

Register With The IRS & State Revenue Agency

If you plan to have employees now or in the future, you will need to register for an Employer Identification Number. You’ll also request estimated tax vouchers from both the IRS and your state revenue office to file with your quarterly tax payments.

Obtain Licenses & Permits

The licenses and permits that you need for your business are based upon the laws of your municipality and what your business will do. For example, simply mowing lawns only requires a standard business license in most areas. However, if you plan to spray chemical herbicides, an additional license may be required. You can find out more about license and permit requirements by contacting your state’s Department of Commerce.

Seek Funding

We’ve already discussed the potential expenses you’ll encounter when opening your own lawn care business. Now, the big question is: how do you pay for it all? Like most aspiring entrepreneurs, your personal bank account likely isn’t bursting at the seams with more money than you know what to do with.

If you’re scratching your head trying to figure out finances, you’re certainly not alone. Most small business owners don’t have the funds needed to start and operate a new business. This is where small business funding plays a role.
There are more lenders than ever that are ready to give you the money you need to get your business off the ground. The trick is knowing what type of funding is best for your business and exactly where to find it.

Personal Savings

If you’ve socked away money in personal savings through the years, this money could be used to fund your new business venture. The best thing about using your own money is that you aren’t indebted to anyone. You don’t have to worry about loan payments, fees, and high interest rates. On the downside, if your business fails, it takes your savings with it.

Friends & Family

If you have a friend, family member, or colleague with money to invest, consider pitching your idea to them. Present them with your business plan and give a presentation just as you would give to a banker or other lender.

There are a few ways you can go about getting capital from someone you know. The first is a loan. Agree to rates, terms, and the borrowing amount and get it all in writing. Then, you’ll repay the borrowed funds plus interest over a set period of time, just as you would any other loan.

Another option is equity financing. You’d receive capital for your business and in exchange, your investor would own part of your company. You wouldn’t pay back the money immediately like you would a loan, but the investor would be able to take a share of your profits at a later time. Learn more about debt financing vs. equity financing.

No matter which way you go, keep everything professional and make sure everything is in writing. One thing that can sour a good relationship fast is a business deal gone bad.

Personal Loans

As a new business owner, walking into your bank to get a business loan is pretty tough … if not impossible. Banks look at your business and personal credit score, annual revenues, and your time in business. These lenders want to work with small businesses that are established and have the lowest risk. If you’re new to the game, many lenders won’t give you a second look.

This doesn’t mean that you’re only stuck with high-interest, short-term loan options. If you want a long-term loan with low rates, consider a personal loan for business. With these loans, you can qualify based on your personal income and credit score – no business information required.

You can apply for a personal loan for business through your bank, credit union, or an online lender. The most creditworthy borrowers will qualify for the best rates and terms and highest borrowing limits. A personal loan for business is a great option for larger purchases that you’d like to pay off over a longer period of time, like expensive equipment.

Recommended Option: Upstart

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Through Upstart, you can receive a personal loan of $1,000 up to $50,000 to use for your startup costs. APRs range from 8.09% to 35.99%. Your loan will be repaid over a period of 3 to 5 years.

Upstart is different from other lenders in that they look at more than just your credit score. While the lender does consider your credit score, education, years of credit, and job history are also factors used to determine if you qualify for a personal loan.

To qualify for an Upstart loan, you must:

  • Have a personal credit score of at least 620
  • Live in a state serviced by the lender
  • Have a regular source of income
  • Have a bank account 

Equipment Financing

Equipment financing is a type of funding used to purchase equipment. Instead of paying the full cost of your equipment up front, you’ll make a smaller down payment. A lender will cover the rest of the cost, which you’ll pay back over time along with fees and interest.

There are two different types of equipment financing: equipment loans and equipment leases. If you take out an equipment loan, you’ll typically pay 10% to 20% of the total purchase price as a down payment. Borrowers with high credit scores may qualify for 0% down financing. Once the down payment is paid and the loan is in place, you’ll be able to immediately take possession of your equipment. You’ll pay for the total purchase price of the equipment plus interest over a set period of time — typically around 5 years. Once you’ve made all payments as agreed, the equipment is yours to keep, trade in, or sell.

An equipment lease is more like renting. You’ll pay a down payment and take immediate possession of the equipment. You’ll make payments to your lender over a shorter period of time, usually 2 years. Once your lease period ends, you’ll return the equipment and sign another lease for newer equipment. Some lenders may allow you to pay off your balance if you want to keep the equipment you’ve been using.

Learn more about equipment loans and leases and which is right for you.

One of the best things about equipment financing is that you don’t have to put up collateral to secure your loan. Instead, the equipment itself serves as the collateral and can be repossessed if you default on your loan or lease.

With equipment financing, you can purchase any type of equipment you need for your business, including lawnmowers, edgers, trimmers, or even a commercial vehicle.

Recommended Option: Lendio

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Lendio is a loan aggregator that connects you with multiple lenders with just one application. Through Lendio, you can apply for equipment financing from $5,000 to $5 million with repayment terms of 1 to 5 years. Interest rates start at 7.5%.

To qualify for equipment financing, you must meet the following requirements:

  • Annual revenue of at least $50,000
  • Personal credit score of 650 or higher
  • Time in business of at least 12 months

If your credit score falls below the 650 minimum, you may be able to qualify with proof of solid cash flow and revenue for the last 3 to 6 months.

Even if you don’t meet these requirements, you could still qualify with certain lenders. Simply fill out Lendio’s free application or contact a personal funding manager. If you don’t qualify for equipment financing or have other financial needs, you can also apply for Small Business Administration loans, short-term loans, startup loans, and Lendio’s other financial products.

Lines Of Credit

If you want a flexible form of financing, a line of credit might be right up your alley. You’ll be able to initiate draws from your line of credit, and the lender sends the funds immediately to your bank account. You can make one or more draws from your line of credit up to and including your set credit limit.

Since a line of credit is revolving, your funds will become available to use again as you pay down your balance. Interest and/or fees are charged on the borrowed portion of funds. If you don’t use your line of credit, you won’t pay interest to the lender. Many lenders also won’t charge any fees if you haven’t used your funds.

A line of credit is a good option when you need immediate access to cash, such as to purchase supplies or to pay for an unexpected expense, like repairs to your vehicle or equipment.

Recommended Option: Fundbox

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You can qualify for up to $100,000 when you apply for a Fundbox line of credit. Fundbox fees start at 4.66% of the borrowing amount. You only pay when you use your funds, and you can save by repaying early. Payments are made weekly over a period of 12 or 24 weeks. You may receive a line of credit based on the performance of your business or for your unpaid invoices.

To qualify for a Fundbox line of credit, you must meet the following minimum requirements:

  • Be a U.S.-based business
  • Own a business checking account
  • Have at least $50,000 in annual revenue
  • Have a bank account with transactions for at least 3 months OR at least 2 months of activity in supported accounting software

Qualifying through Fundbox takes just minutes. If approved, you’ll be able to initiate draws on your line of credit immediately for deposit in your account as quickly as the next business day.

Rollovers As Business Startups (ROBS)

Do you have a retirement account? If so, you may qualify for a unique type of funding known as Rollovers as Business Startups (ROBS). You probably already know that early withdrawal from your retirement account results in penalties. But there is a way to access these funds without being penalized, and yes, it’s completely legal.

A ROBS plan allows you to roll over your qualifying retirement funds into capital for your new business. Here’s how it works:

  • A new C-corporation is created
  • A new retirement plan is created for the C-corp
  • Funds are rolled over from your existing retirement plan to the new retirement plan
  • These funds are used to purchase stock in the C-corp, giving you the capital you need to start or grow your business

Even though it’s just four steps, there are some legal issues to be aware of. This is why entrepreneurs that leverage their retirement funds in this way turn to a ROBS provider. A ROBS provider will handle everything for you, from setting up the new C-corp to maintaining compliance. In exchange, you pay a setup fee and a monthly maintenance fee.

Funds from your ROBS plan can be used for any business purpose. One of the best things about a ROBS plan is that you won’t be making payments with interest to a lender. You also don’t have to worry about traditional borrower requirements like personal credit score or annual revenues. As long as you have a qualifying retirement plan, you can set up a ROBS plan. The main drawback, however, is that if your business fails, you lose your retirement funds, so be aware of this risk before setting up your plan.

Recommended Option: Benetrends

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Benetrends is the creator of the innovative Rainmaker Plan, the original ROBS plan. Benetrends can get the funding you need for your business in as little as 10 days. You will have access to your retirement funds with no penalties with Benetrends’ easy four-step process.

There are no credit score, time in business, or revenue requirements. Most retirement plans with at least $50,000 qualify.

A setup fee of $4,995 is required to start your ROBS plan. After paying this initial cost, you must pay a service fee of $130 per month. This fee covers compliance, audit protection, and other services.

Purchase Financing

When you start your lawn care business, you’ll likely develop relationships with vendors. You can pay these vendors out of pocket when you receive your invoice, or you can break your purchase down into smaller, more manageable payments with purchase financing.

With purchase financing, a lender will pay your vendor up front. You’ll repay the lender the borrowed amount plus fees and/or interest through smaller payments made over a longer period of time. This is an excellent way to purchase supplies and other items critical for the success of your business when you’re facing cash flow issues or just need a little extra time to pay.

Recommended Option: Behalf

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Behalf offers purchase financing, allowing you to pay any merchant with terms up to 6 months. With Behalf, you can borrow between $300 and $50,000. Monthly fees start at just 1%, and there are no origination fees, membership fees, prepayment fees, or maintenance fees.

There are no minimum time in business, revenue, or personal credit score requirements. However, a hard pull of your credit is performed by the lender and will be used to determine if you’re eligible to receive funding, as well as your monthly fee.

Business Credit Cards

A business credit card is a great way to cover expenses or make purchases without waiting for approval from a lender. Once you’re approved for a credit card, you’ll be able to spend up to and including your credit limit anywhere credit cards are accepted.

Once you’ve made a purchase using your credit card, you’ll be required to make a monthly payment until you repay your balance, plus interest charged by the credit card issuer. This is a type of revolving credit, so as you repay, funds will be available to use again. Once you’re approved for a credit card, you don’t have to wait for approval to make a purchase. You can make one or multiple purchases up to and including the credit limit set by the lender.

You can cover an emergency expense or purchase supplies using a business credit card. You can also use credit cards for recurring expenses, such as gas for your truck and machines. With a rewards card, you can even get cash back or perks just for using your card.

If you don’t qualify for a business credit card, consider applying for a personal credit card to use for business expenses.

Recommended Option: Spark Cash For Business

Capital One Spark Cash For Business


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Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


18.74%, Variable

The Spark Cash card from Capital One offers unlimited 2% cash back that you can redeem anytime. New cardholders can earn a $500 cash bonus just for spending $4,500 within the first 3 months of opening their accounts. This business credit card has a 19.24% variable APR. There is no annual fee for one year, and the fee is $95 after the first year. Employee cards are available at no additional cost.

To qualify for this credit card, you must meet these requirements:

  • Excellent personal credit score
  • No bankruptcies
  • No defaults on loans
  • No payments over 60 days late on a credit card, loan, or medical bill for the last year
  • A loan or credit card for at least 3 years with a credit limit above $5,000

Recommended Option: Chase Ink Preferred

Chase Ink Business Preferred



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Annual Fee:


$95

 

Purchase APR:


18.24% – 23.24%, Variable

Another business credit card to consider is the Chase Ink Business Preferred card. With this card, you’ll be able to rack up points just by making purchases for your business. All travel, shipping, advertising, internet, cable, and phone purchases yield three points for every dollar spent for the first $150,000 spent annually. You’ll receive one point for every dollar spent on all other business purchases with no limitations.

You’ll also be eligible to receive a bonus offer of 80,000 bonus points if you spend $5,000 within 3 months of opening your account. Points can be redeemed toward cash, gift cards, or other products and services.

Chase Ink Business Preferred has a variable interest rate of 18.24% to 23.24%. The card has an annual fee of $95. Other benefits are also provided for cardholders, including cell phone protection and free employee cards.

To qualify for this card, you must have good to excellent credit.

Bolster Your Web Presence

web builder template

The internet has made life easier than ever for small business owners. After all, you can do your accounting online, shop for supplies and equipment, and communicate with customers. Perhaps most importantly, you can market your business online. Bolstering your web presence is a quick and easy way to reach your target market, helping you bring in new customers and boost your profit potential.

Set Up Social Media Profiles

Social media has morphed into something much bigger than just chatting with family and friends. These days, people are using social media to find and connect with new brands and businesses. Shouldn’t your new business be included?

One of the best things about social media is that it’s free to set up your profiles. Add your business to Facebook, Twitter, Google+, Instagram, LinkedIn, Yelp, and/or Pinterest. With these social media profiles, you can share information about your business such as operating hours and services provided, post photos of completed jobs, promote specials, or share news about your business. On sites like Facebook, satisfied customers can even post reviews and ratings.

Want to learn how to get the most out of your social media pages? Take a look at our Guide to Social Media Marketing.

Build Your Website

Most people turn to the internet when they’re looking for a service provider, which is why it’s so important to have a website. No experience with web design? Don’t worry — there are a variety of web builders that do the hard work for you. Check out some of our top picks.

Your website doesn’t have to be complicated. Make sure that your design fits your brand and provides the most relevant information that customers need, including a list of services provided, your service area, and your contact information. You can even take it a few steps further by adding photos of jobs you’ve successfully completed, price lists, special promotions, and news and updates.

One last thing to note is that when you choose a domain name, make sure that it reflects your brand and includes your business name. However, you also want to make sure that it’s short and easy to remember. Avoid using symbols and numbers to make it easier for current and future customers to find you online.

Check out more tips and tricks for creating and maintaining your web presence.

Choose Business Software

Small Business Online Accounting Software

Every business — including your new lawn care business — needs business software to keep operations running smoothly. You can use business software to keep track of appointments, store customer data, process payments, create invoices, and keep up with your financials. Let’s explore a few types that would be useful for your lawn care business.

Accounting Software

Managing your finances is one of the most important aspects of running a business. Accounting software makes it easier than ever to track your finances. With this type of software, you’ll be able to keep up-to-date on the money that you receive, what is owed to you, and what you owe. In addition, using accounting software also makes it easier for you to run important financial statements and file your taxes.

Today’s accounting software comes with more features than ever, including cloud-based storage, online invoicing, automatic payment reminders, and mobile apps for tracking on the go. Unsure of which software is best for you? Check out some of our recommendations. If you’re new to accounting or need a refresher, make sure to download our eBook, The Beginner’s Guide to Accounting.

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A great choice for freelancers needing some extra help managing their business

Payment Processing Apps

Very few businesses today are “cash only.” This is because credit cards, debit cards, and even mobile devices make it easier than ever for consumers to pay for their purchases. To make payments more convenient for your customers, consider using a payment processing app.

Payment processing software transmits data between you, your bank, and your customer’s bank, allowing you to accept credit cards, debit cards, and other forms of payment. Many payment processors also include the hardware needed to accept these methods of payments. This hardware may be included in your subscription cost or for an additional fee.

Worried about bulky hardware? Don’t be. There are devices that easily affix to a mobile phone or tablet, so you can take payments anywhere — from your own office to your customer’s front yard.

Best Overall Mobile POS


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Highlights

  • No contract or monthly fee
  • Instant account setup
  • Retail upgrade available
  • Restaurant upgrade available
  • For iOS and Android mobile devices
  • 2.75% per in-person card swipe

Retail POS: Free trial ($60/mo value)

 

Restaurant POS: Free trial ($60/mo value)

 

Square POS: Always free

Field Service Management Software

Another type of software to consider purchasing for your business is field service management software. This software allows you to keep up with everything from your customers to your employees. There are even programs that are specific to lawn care companies.

With this type of software, you can keep up-to-date records on your customers, from their contact information to their history of appointments. With this software, you can easily schedule new appointments and dispatch employees. Other features may include automatic invoicing, route optimization, easy estimates, and GPS tracking.

Advertise Your Business

business loans for HVAC

In order to make your business successful and profitable, you have to have customers. And you have to reach customers by spreading the word about your business.

While bolstering your web presence is a good first step, don’t stop there. Consider purchasing paid ad space on social media platforms or search engines to reach a broader audience. Yelp for Business is an excellent way to advertise yourself while gaining street cred with potential clients.

You can also utilize free online sites like Craigslist to advertise your business. Just remember to follow the rules before posting and avoid spamming the website.

Moving beyond the web, never underestimate the power of “old school” marketing techniques like flyers and door hangers. Post flyers in areas that get a lot of foot traffic, such as retail shopping centers, and put door hangers around your neighborhood and surrounding areas. You can design and print these yourself, or you can pay an additional fee to a professional printer. Either way you go, this is a very affordable way to market your lawn care business. Before you use this method of advertising, contact your city government office to learn about any restrictions and always make sure to get the permission of the property owner before distributing flyers on private property.

You can also use your work truck to advertise your business. Make sure that your business name, telephone number, and/or URL are prominently displayed and easy to read. Online printers can create custom vinyl decals featuring your logo, name, and contact information at a very affordable price.

Finally, word-of-mouth advertising is one of the most effective methods of advertising in this industry. If your customer likes your service, they’ll tell their friends, family members, neighbors, and colleagues about your service when recommendations are needed. They may give you a glowing review on your website or social media page, which could lure in additional customers. Always make sure to provide the best service to your customers so they’ll refer you to new customers in the future.

Final Thoughts

Your new lawn care business won’t be up and running overnight, but taking the time to go through each step ensures a better chance for success. Every business is different, and you may need to tweak some of these steps to better fit the vision for your lawn care business. Maybe taking the steps in a different order makes more sense for your business, or maybe there’s a step that isn’t relevant to your future goals.

No matter how you picture your future, you’re now armed with the knowledge of what it takes to start your own lawn care business. Now, it’s up to you to determine what steps you’ll take next to become a successful entrepreneur.

The post How To Start A Lawn Care Business appeared first on Merchant Maverick.

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Pros And Cons Of Debt VS Equity Financing

No matter what type of small business you operate or how long you’ve been in business, there comes a point when all business owners need extra capital. From paying startup costs before you open your doors to growing your business and boosting your profits with an expansion, you need capital.

Most small business owners don’t have pockets deep enough to cover all expenses themselves. Instead, these entrepreneurs seek financing from outside parties to fund their startup, pay for expansion, or even cover day-to-day operating costs when money is tight.

If you’re a small business owner who needs extra capital, there are two main types of financing to consider: debt financing and equity financing. Both types of financing provide funding for your small business, but which is right for you?

In this post, we’ll break down the differences between debt financing and equity financing. We’ll look at how each type of financing works, discuss the benefits and drawbacks, and talk about which is the best choice for your business. By understanding how debt and equity financing differ, you’ll be able to make the most informed financial decision for your business.

Let’s get started.

What Is Debt Financing?

Debt financing is pretty much what most people think about when they hear the word “financing.” With debt financing, a lender provides you with the capital you need for your business. Over time, you’ll repay the lender the money you’ve borrowed, plus interest.

How Debt Financing Works

How does debt financing work? It’s quite simple to understand, actually. As we mentioned above, debt financing occurs when a lender charges interest and/or fees to give you the capital you need. The money you borrow, plus these additional charges, are paid back over a set period of time, which could be weeks or even years.

But now let’s take a more detailed look at debt financing. You’ll apply to receive money from a lender. This could be your bank, credit union, a non-profit organization, an alternative lender, or other individual or company that provides your business with capital. You may receive a lump sum, or you may have a more flexible revolving form of credit, which we’ll cover in more detail a little later.

Your lender will consider a few factors to determine if you qualify for financing. These factors vary by lender but could include:

  • Personal Credit Report & Score
  • Business Credit Report & Score
  • Annual Revenue
  • Time In Business

Your lender may use a combination of these factors and/or additional factors to figure out whether you qualify for financing at all, and if so, determine your total borrowing amount and the rates and terms of the loan.

Over time, you will pay back the amount of money borrowed, in addition to any fees or interest charged as agreed upon between you and the lender. Once you have paid back the principal (your borrowing amount) plus the lender’s fees and interest, there are no additional steps to take. You can certainly apply for additional financing, but you are not obligated to do so.

One thing to be aware of is that some types of debt financing are secured with collateral. For most lenders, business assets are acceptable forms of collateral, although personal property and assets may also be used. If you default on your agreement — that is, you do not pay back the borrowed amount plus interest and/or fees within the agreed-upon time frame — the lender has the right to seize this collateral to pay off the debt.

However, even if you’ve put up collateral for a loan, the lender does not hold a stake in your business. This is what sets debt financing apart from equity financing, which we’ll cover a little later.

Types Of Debt Financing

There are multiple types of debt financing to consider if you opt to go this route. The type of financing you select will depend on your specific circumstances. Let’s take a look at a few of the most common types of debt financing.

Loans

Loans are what most people think of when discussing debt financing. A loan is a lump sum of money given to you that is repaid over a set period of time. A long-term loan is paid back over several years; this is the type of traditional funding you would receive from your bank or through a Small Business Administration program. These loans are best for larger business purchases, such as equipment or commercial real estate and are typically only available to those with good credit and established businesses.

Short-term loans offer quick cash to borrowers with less ideal credit and time in business qualifications and (as the name would suggest) are repaid over a shorter period of time. These products are best for smaller purchases, such as supplies and inventory, or to cover an emergency expense.

Lines Of Credit

Lines of credit offer a more flexible financing option. With a revolving line of credit, you’ll be able to make multiple draws against a credit limit set by your lender. As you repay your principal, interest, and fees, funds will become available to use again. You can withdraw up to and including the credit limit through one or multiple draws. Once you initiate a draw on your line of credit, the funds are sent to your bank account, where you can access them in as little as one business day. Lines of credit are particularly useful for emergency expenses or working capital.

Business Credit Cards

A business credit card works just like a personal credit card. Your lender sets a credit limit, and you can make purchases with the swipe of a card anywhere credit cards are accepted. You’ll repay any funds used, in addition to any interest charged by the lender. Interest is applied only to the borrowed portion of funds. Business credit cards can be used to purchase supplies or inventory, pay for unexpected expenses, or to set up recurring payments (utility bills, etc.).

Accounts Receivables Financing & Invoice Factoring

Accounts receivables financing — or invoice financing — uses your unpaid accounts receivables as collateral for a line of credit. Invoice factoring is also an option. This is when you receive a lump sum of money up front for your unpaid invoices. Once the invoices are paid, you receive the remaining amount owed to you, minus any fees charged by the lender. Both are good options to improve cash flow that has slowed due to unpaid invoices.

Debt Financing Pros & Cons

Debt financing certainly has its benefits, but there are drawbacks you must consider as well. Let’s take a closer look at the pros and cons of this type of financing:

Pros

  • You Retain Business Ownership: With debt financing, your ownership interest is not diluted. This means that you won’t have to share your profits over the long term.
  • Multiple Options Available: From flexible lines of credit to long-term loans that give you a lump sum of cash, you can find debt financing for any situation.
  • Planning Ahead: With debt refinancing, you know exactly when to pay, how long you’ll be paying, and the amount of each payment.
  • Tax Benefits: Interest for your financing can be used as a deduction on your income tax return.
  • Availability: Debt financing options are available to almost all businesses, regardless of factors such as size, industry, time in business, or business or personal credit history.

Cons

  • Interest & Fees: Even borrowers with the highest credit scores and most profitable business have to pay interest and/or fees for borrowing. Borrowers that are seen as “risky” by lenders face even higher costs.
  • Taking On Debt: True to its name, debt financing means you are taking on debt. This raises your DTI ratio, making your business look like a bigger risk to investors and lenders.
  • Risk Of Default: Even the well-intentioned borrower can fall upon hard times and miss a payment. Months of hardships can lead to default, which puts your collateral and credit score at risk.
  • Difficult Borrowing Requirements: Even though there are many debt financing options, you may not qualify for the product you need. For example, if you have a low credit score, short time in business, or low annual revenues, you may only qualify for smaller short-term loans or lines of credit. This could pose a problem if you’re looking to borrow a larger sum of money for a longer period of time.
  • Potential Restrictions: Some lenders impose restrictions on how funds are used. If you want more flexibility than what one lender is offering, you have to find another lender … or consider equity financing.

What Is Equity Financing?

With equity financing, you can also receive the capital you need for your business. However, instead of borrowing money that you repay with interest, an investor provides the capital in exchange for ownership interest in your business.

How Equity Financing Works

Equity financing is significantly different from debt financing. Instead of seeking a lender, you’ll look for an outside investor. That outside investor will provide you with capital in exchange for shares in your company. The investor then has an ownership stake in your company.

You will not have to make regularly scheduled payments to your investor as you would with a lender. Instead, the investor will take a share of your profits as your business becomes successful. The investor will also have some control within your company, including the power to make decisions.

Let’s look at an example of how equity financing works:

You invest $700,000 in your new business. An investor is willing to invest $300,000. You agree to a price of $1 per share. Your business now has $1 million in capital. You control 70% of the shares, but the investor has purchased 30% of your business.

Types Of Equity Financing

Does equity financing seem like a smart financial move for your business? Before you get started, there are several different types of equity financing to consider.

Venture Capitalists

Venture capitalists (VCs) are willing to invest millions of dollars in companies that have the potential for high returns. Therefore, most small businesses would not be of interest to VCs. However, promising tech and innovation startups could benefit from the equity financing offered by VCs. VCs use money that is pooled from sources, including investment companies, corporations, or pensions. It is rare for a VC to use their own money for investment.

Angel Investors

Angel investors, like VCs, are willing to invest money in promising businesses and startups. However, angel investors are a little different because these are accredited investors who use their own money for investments. An angel investor may be someone you don’t know, or it could even be a friend, family member, or colleague who has a high net worth and annual income.

Mezzanine Financing

Mezzanine financing combines traits of both debt and equity financing. Your business takes a loan and agrees to repayment terms. If you are profitable, you retain ownership of your business. If your business is not successful, the lender is able to convert the loan into equity interest, giving claim to future profits.

Crowdfunding

The internet has made it easier than ever for small businesses to raise capital. With crowdfunding, you can make your pitch to the public to raise capital for your business through an online platform. While some businesses promise rewards in exchange for investments, such as a new product for free or at a reduced price, others use equity to bring in investors. Learn more about the best equity crowdfunding sites.

Equity Financing Pros & Cons

Similar to debt financing, equity financing has benefits and drawbacks to consider. Take a look at these pros and cons to determine if equity financing would be the smartest financial move for your business.

Pros

  • Investors Take On Risk: With equity financing, the risk falls primarily on the investor. Investors only see their returns if your business is a success.
  • Good For New Businesses: If you’re a brand new business with no revenue, equity financing could be the best option for you. While you may qualify for debt financing, you’ll likely be stuck with low borrowing limits and less-than-desirable rates and terms.
  • No Interest Or Fees: With equity financing, you won’t have to worry about paying interest and/or fees on a loan or other financial product. This gives you more money to invest in your business.
  • Investors Bring More To The Table: The right investor brings more than just capital to the table. You can gain industry knowledge, meet new connections, and gain experience that you wouldn’t receive by working with a lender.

Cons

  • Giving Away Ownership: With this type of financing, you’re giving away ownership in your business. Not only does this reduce your share of profits, but it also gives outside parties the power to make decisions surrounding the operations of your business.
  • Finding Investors Is Difficult: Finding one or more people willing to invest in your business can be a difficult and time-consuming process. If you need money quickly or with little effort, equity financing is likely not the right option for you.

Debt VS Equity Financing

As you can see, there are very clear differences between debt and equity financing. With debt financing, you simply have to meet the criteria of a lender in order to receive money. Depending on the type of financing you seek, you could have the capital you need in as little as 24 hours. In exchange for this capital, you pay the lender back as agreed. You take on all the risk, so if your business fails, you may lose your assets or face legal action.

Additionally, with debt financing, you don’t have to worry about drawing up legal paperwork. Apply for your loan, submit the required information and documentation, and the lender will provide you with money if you qualify. You retain full ownership of your business.

On the flip side, equity financing could take some time. It is up to you to find the right investors willing to work with your business. Drawing up legal paperwork will be part of the process as well.

While you don’t have to pay your investor back over the short-term, the lender will recoup their money if your business is successful. Because they will own part of the company, they will be able to take their share of the profits and make important decisions about your business along the way.

The risk is on the lender. If your business is successful, the lender gets their capital plus a return. If your business is unsuccessful, you will not be indebted as you would with debt financing.

Which Type Of Financing Is Best For Your Business?

The type of financing you select depends upon the specific financial needs of your business. If you’re still on the fence, consider why you need capital, how you envision your business in the future, and these additional factors to determine whether to choose debt financing or equity financing:

Choose Equity Financing If…

  • You picture your business growing to a global or national scale
  • You have larger capital needs that wouldn’t be satisfied through debt financing
  • You’re willing to give up some control over your business in exchange for equity
  • You’re looking for more than just money, i.e. industry connections and experience
  • You’re willing to put in the work to pitch to investors
  • Your capital needs aren’t urgent

Choose Debt Financing If…

  • You have smaller capital needs
  • You need capital but don’t want to give up ownership interest in your business
  • You’re willing to take on risk, including losing assets if you fail to repay your lender
  • You need financing quickly

If debt financing seems like the right option for you, give Lendio a try.

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Lendio is a loan aggregator that has over 75 financing partners ready to serve small businesses just like yours. Through Lendio, you can reach these lenders and receive multiple offers with just one application.

No matter what your financial needs, Lendio has a financial product for you. Through Lendio, you can apply for Small Business Administration loans, short-term loans, equipment financing, commercial mortgages, startup loans, and more. Total borrowing limits, interest rates, and repayment terms vary by lender and financial product.

Final Thoughts

There are many ways to get capital for your business through debt financing or equity financing. However, it’s very important that you weigh out the pros and cons and consider the specific needs of your business before moving forward. While your capital needs may be urgent, it’s critical to look at the long-term picture to determine what type of financing will most benefit your business.

The post Pros And Cons Of Debt VS Equity Financing appeared first on Merchant Maverick.

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How To Choose An Equipment Leasing Company

Selecting equipment
One of the most common expenses a business can encounter is the need to purchase or upgrade equipment, but choosing an equipment leasing company can be a challenge. Choosing one that will give you a good deal that fits the specific needs of your company can be downright daunting.

Don’t know a TRAC lease from a leaseback? A tax lease from a synthetic lease? Not sure where to start looking? The equipment leasing industry’s websites are notoriously full of opaque, specialized terms … and that’s when specific terms are offered at all.

We’ll try to demystify the process below, and hopefully put you on the right track.

Financing Need Best Product Type Recommended Lender
Financing Platform Any Currency Capital
Equipment Purchasing Loan Lendio
Renting Operating Lease Crest Capital
Big Ticket Items Any TCF Equipment Financing
Purchasing w/Lease Capital Lease CIT Direct Capital

Find A Lessor Who Will Work With You

The easiest way to rule out a potential lessor (the company that finances the lease) is to see if they serve your industry. Most lessors, particularly those that work with resales, specialize in specific industries. Even the least transparent lessors tend to be upfront about the industries they’re able to finance, so it’s not a bad place to start. If possible, you’ll also want to see if they finance the specific type of item you’re looking for.

Next, you’ll want to take stock of your own profile as an applicant. How good is your credit? How long have you been in business? What’s your revenue? How much debt have you taken on?

Lessors don’t always advertise their minimum qualifications. Since your time is limited and valuable, if you have reasonable doubts about your ability to qualify with a particular lender, I would recommend prioritizing more transparent lenders. You don’t want to waste time filling out a long application only to be rejected. To save yourself some headache, take advantage of online screening/pre-qualifying tools the lessor might offer.

Choose The Right Leasing Arrangement

This is where it gets a little complicated.

Because you’re dealing with a tangible asset, when making a deal with a lessor, you’ll need to be prepared to work through an enormous number of lease variations covering different possible ownership arrangements.

The simplest leases function as loan replacements. That is to say, the lessor finances your equipment, which you are considered to have ownership of either immediately or by the end of the lease. You’ll make regular payments, typically monthly, for the length of your lease, at the end of which you’ll pay a small residual fee to close it out. These are called capital leases.

Why would you want a capital lease instead of a straightforward loan? While the interest rate is usually higher than it would be with a comparable loan, a capital lease covers the full cost of the equipment you’re buying and, very often, associated transportation and installation costs as well. These leases also tend to be easier to get than traditional loans.

But what if you don’t want to own the equipment long-term?

In that case, you may want to look for an operating lease. Operating leases are more like rentals with the option to buy. The lessor will retain official ownership of the asset, but you’ll have possession of it for the length of the lease. At the end of the term, you’ll have the option to return the equipment to the lessor or purchase it for a residual — typically fair market value (FMV).

There are a huge number of variations on both operating and capital leases, as well as tax advantages and disadvantages to both which you should discuss with an accountant. But generally:

  • If the equipment you’re considering will not become obsolete quickly and you’d like to own it, choose some form of capital lease.
  • If the equipment you’re considering depreciates quickly or becomes obsolete within a couple years, you probably want an operating lease.

Once you know what type of lease you want, you can narrow down your list of eligible lessors.

What About Equipment Loans?

Nothing wrong with them! If you’re looking at capital leases, you should also consider getting an equipment loan.

Equipment loans usually cover around 85 percent of the cost of the item, so be prepared to make a downpayment unless your lender specifies that they cover the full price.

One nice thing about equipment loans is that the purchase itself can serve as collateral (or security) for the loan, which means you’ll generally see lower interest rates than you would with an equivalent unsecured loan.

Check out our equipment financing resources if that sounds interesting.

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

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While the ability to get financing is great, you don’t want to pay more than you have to for the pleasure. This is much easier when you’re dealing with transparent lenders who lay all their cards on the table.

What terms and fees should you be aware of when looking into an equipment lease?

  • Interest Rates: The biggest cost you’ll run into with financing should be the interest rate. Generally, lower is better, but make sure you know how often and in what way the interest rate is applied.
  • Origination Fee: Common with loans, but unusual with leases, this is a fee that’s applied upfront. In most cases, it is deducted from the amount of money you receive when you get your capital.
  • Administrative Fee: This can be rationalized in any number of ways by your equipment financer, but it is a fee charged for servicing your account. It may be charged once, or at specific intervals.
  • Downpayment: The percentage you’re expected to pay out of pocket towards the equipment you’re buying. Common with equipment loans. With leases, there generally isn’t a downpayment, but you may be expected to pony up the first and last month’s payment up front.
  • Monthly Payment: The amount of money you’re expected to pay each billing cycle, usually monthly. In the case of leases, the higher your payment, the lower your residual will be.
  • Residual: An amount leftover at the end of your lease that you pay if you decide you want own your equipment. The lower your residual, the higher your payments will be.

The Best Equipment Leasing Companies

Not ready to build a spreadsheet comparing every equipment leasing company on the market? No worries. We can get you started.

Note that you’ll also want to consider leasing from banks or credit unions with which you’ve already built a relationship, as many times they can offer you the best rates (assuming you make the credit cut). If you’re dealing with a major brand, you may also want to consider working with a captive lessor.

Lendio

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One of the most efficient ways to seek equipment financing is through an aggregator service like Lendio. With one application, you’ll effectively have access to Lendio’s 75+ affiliates.  One nice thing about this service is that it’s free on the borrower’s end, so you’ll only have to worry about fees charged by the company Lendio ultimately connects you with.

Be aware that, although Lendio can work with customers with credit as low as 550, for equipment financing you’ll usually need to have a credit rating over 650.

For those who successfully apply, Lendio’s partners will finance the full cost of your equipment.

Currency Capital

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Another aggregator option for equipment financing is Currency Capital.

While online lenders have taken great pains to streamline application processes for working capital loans, equipment financing tends to be more traditional. Currency set out to change that, developing an API they compare to Amazon’s 1-click shopping experience.

Getting setup with Currency is a bit more laborious than, say, working with Lendio, but if you’re thinking ahead to future purchases, it may be worth the investment.

Crest Capital

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Want to skip the middle men? Check out Crest Capital.

Crest deals in just about every kind of lease you could think of, whether you want to own your equipment or just operate it for a little while. Additionally, they’re able to work with a wide variety of industries including agriculture, manufacturing, automative, and medical, as well as office equipment and software.

You will need to have been in business for at least two years, however, and have a credit rating of 650 or better.

TCF Equipment Finance

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TCF Equipment Finance, as the name implies, is the equipment financing and resale wing of TCF Bank. As a bank, their lending practices are as conservative as their pockets are deep. That means TCF is a good solution for mature businesses with excellent credit.

TCF offers many variations on capital and operating leases and works with most industries.

CIT Direct Capital

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Another good option for those with solid credit ratings is CIT Direct Capital. Their equipment financing division doesn’t have quite as broad a variety of lease types of some of the other options here, but it’s easier to meet their qualifications than those of many banks.

Both capital and operating leases are offered.

Final Thoughts

Between the hundreds of equipment leasing companies out there and the often strict qualifications needed to get financing, it can be a challenge to find a lessor who meets your needs. Hopefully you now have a better sense of what to look for when choosing an equipment leasing company.

Having trouble meeting the high lending standards for equipment financing? Don’t panic! Many other types of financing can be used to purchase equipment. For smaller items you can pay off quickly, you may want to consider a business credit card. For larger items, check out installment loans.

The post How To Choose An Equipment Leasing Company appeared first on Merchant Maverick.

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Want To Open Your Own Bar? Top Tips To Get You Started

Have you ever looked around your local bar and thought, “I could run a place like this”? For many, it’s easy to get caught up in the excitement of potentially opening a bar, but for a select few, this is more than just a fleeting idea. These aspiring entrepreneurs want to make this dream a reality.

Opening your own bar or sports pub seems like a fun and exciting experience. After all, who doesn’t love gathering with friends and family to watch the big game with a cold drink in hand and appetizing snacks on the table? Behind-the-scenes, though, it’s a little different. While it may seem exciting to become a small business owner and call the shots, there’s also a lot of planning and work involved in starting a profitable business.

If opening a little corner pub sounds like a dream come true but you don’t know quite where to begin, you’re in the right place. In this article, we’ll share our top tips for starting the exhilarating and lucrative path to owning your own bar. We’ll go over what you need to legally open a bar, expenses to start and maintain your business, and the importance of a business plan. We’ll also help you decode one of the biggest pieces of the small business puzzle: getting financing for your new business.

If you’re ready to stop dreaming and start doing, keep reading!

Begin With Branding

bar nightclub pos systems

One of the first things you need to do before you take off running is to visualize a name, a theme, and an overarching concept for your bar. Do you picture yourself running a neighborhood pub where all of the locals gather? Or maybe you’d rather open a thriving nightclub where young club hoppers from around your city come to dance the night away?

Evaluate your different options, considering the type of patrons you’d like to attract as well as where you plan to open your bar. For example, if you want a younger crowd, a nightclub in a trendy part of town makes sense. If you want to attract an older, more sophisticated crowd, consider opening a wine bar, martini bar, or cigar bar in a thriving downtown area. You could also target sports fans by opening a sports bar or draw in foodies with a new gastropub.

Knowing what type of bar you want to open helps you plan out additional details. For example, if you’re opening a hot nightclub spinning the latest top 40 hits, country-western décor won’t fit your theme. If you want to draw in a sports crowd, loud music and fog machines probably won’t be on your list of supplies. Choosing the type of bar you want to open and nailing down your target audience first will help you accurately plan everything from the design and layout of your establishment to your name and logo.

Speaking of your bar’s name, it goes without saying that you’ll need one. Because it’s your bar, you’re free to name it anything you want. However, you want to make sure that you choose a name that reflects your concept. “John’s Neighborhood Bar” may incorporate your name, but it doesn’t stand out. When brainstorming ideas, think about the audience you want to bring in and pick a moniker that’s attention-grabbing — a name that lets customers know what to expect when walking through the doors of your bar.

Find A Location

One of the most important first steps in opening your own bar is choosing a location. There are a few options you have at this stage of the game:

  • Purchase an existing bar
  • Start from scratch
  • Buy a franchise

There are advantages and disadvantages for each option. If you purchase an existing bar, you inherit the existing clientele and may see immediate income. However, you could pay a steep premium if the bar is extremely successful at the time of sale. You may also rack up high costs if the bar doesn’t mesh with your vision and you have to pay for renovations.

If you start from scratch, you’ll be able to see your vision through from start to finish. However, it may take many months (or even a year or longer) to open your doors, and the costs can really rack up if you have to completely renovate a space or build a new bar from the ground up. With this option, careful planning, budgeting, and at least some knowledge of the bar and restaurant industry are needed for the highest chance of success.

Finally, you could purchase a franchise. This option could shield you from some of the mistakes you’d almost certainly encounter if you attempted to go it alone. However, you won’t be able to fully showcase your creativity with a franchise.

Finding a location takes planning and a dedicated eye on financials. Sure, putting your bar in a trendy and popular neighborhood could help your business become your city’s next hotspot, but real estate costs may be prohibitively high. Before you put down money on a location, make sure to do your market research and understand the costs.

Create A Business Plan

Every successful business starts with a solid business plan, and a bar is no exception. Not only will your business plan act as a blueprint for starting, operating, and growing your business, but it’s also a necessity if you plan to apply for business loans from a bank or other lender.

No two business plans are exactly alike, but there are some standard sections you should have in yours. This includes:

  • Executive Summary: Basic information about your business and why it will be a success
  • Company Details: Specific details about your business
  • Organizational Chart: Outline of your company structure
  • Marketing Strategy: How will you market your business?
  • Financial Projections: Show the financial outlook of your business

Your business plan should showcase the goals of your company and serve as a map for you to follow, keeping your business on the right path. Lenders will want to see a business plan that demonstrates thought, intelligence, research, and reasonable plans for success in the future.

Register Your Business

Before you open your bar and begin serving customers, you have to register your business. First things first: register the business’s name with your state. This can be completed via the county clerk’s office in the state where you’ll operate.

Next, you’ll need to determine your formal legal structure. Do you plan to be a limited liability company or a corporation? Your business structure will determine how much you pay in taxes, what paperwork needs to be filed with the government, and your personal liability. If you’re unsure of which structure is right for your new business, consult with an attorney, accountant, or business counselor.

Your business will also need to be registered with the state revenue office and the Internal Revenue Service. Because your business will have employees, you’ll be required to apply for an Employer Identification Number. You’ll also need a sales tax permit.

Finally, you’ll be required to obtain the proper licenses and permits to legally operate your business. Because your bar will serve alcohol, a liquor license is required. If your bar serves food, you’ll need a license from the health department. You can find out more about the requirements in your area by contacting your state Department of Commerce.

Obtain A Liquor License

In the previous section, we touched on acquiring the right permits and licenses. One of the most important things you need to open a bar — if not the most important thing — is a liquor license. This license makes it legal for you to sell alcohol in your business. This should be a top priority, as getting approval from your state’s Alcohol Beverage Control agency typically takes at least one month. In some cases, it may take up to six months to get approved.

The steps required to obtain your liquor license vary by state. In all states, though, you will be required to fill out an application. You may be required to submit additional documentation with your application, such as a certificate of incorporation, your proposed menu, and the certificate of title for your bar. You may also be required to pay a processing fee.

Once your application is reviewed and approved, you’ll have to pay for your license. Fees vary by state and range from a few hundred dollars to several thousand dollars. Your license will last for at least one year, and you must pay a fee when it’s time to renew.

Even though getting your liquor license is a hassle and can get very expensive depending on your state, this is a critical step that can’t be overlooked. To learn more about the process, fees, and type of license required for your business, contact your state ABC agency.

Seek Funding

Business licenses. A construction loan or lease. Renovations. You haven’t even stocked your bar, and the expenses are already piling up. Unless you’re already a successful entrepreneur with plenty of money in the bank, these expenses may seem completely overwhelming.

Very few small business owners have the resources to launch a business on their own. Instead, they turn to lenders for money to fund startup costs. Even after you launch your business, there will always be a need for more capital, whether an emergency has popped up, you need to expand, or a slow period has affected your day-to-day operations.

Even if your credit history is blemished, you’re a startup with no business history, or you face other challenges, there’s funding out there if you know where to look. Start with these options.

Personal Savings

Many new business owners have at least a little bit of money put away in their savings accounts. If you’ve been socking away pennies for a rainy day, now may be the opportunity to put these savings to use. By using your own money, you won’t be indebted to a lender (or at least not as much). You won’t have to worry about making scheduled payments, and there won’t be interest or fees to worry about. On the downside, if your business is unsuccessful, you lose part — or all — of your savings.

Loans From Friends & Family

If you have a friend or family member with extra money to invest, pitch them your business idea to see if they’re interested. But be careful! Even though you have a more personal relationship with this person, don’t just have a casual conversation asking to borrow funds. Instead, give them your business plan and present your pitch just as you would with a bank or other lender. Show them why you think your business will be a success, and give them a good reason to invest in you.

If you come to a loan agreement, get everything in writing, including the total borrowing amount, rates, and terms of the loan. Put your personal relationship aside and make sure you follow all terms of the loans just as a responsible borrower should.

Personal Loans For Business

Getting a startup loan from a bank or other lender can be tough. Sure, there are options, such as Small Business Administration loans, but these loans can be very difficult to receive — especially if you have a short time in business or low annual revenue. However, if you have a solid personal credit profile, more low-cost loan options are available to you.

Instead of going directly for a business loan, try applying for a personal loan for business. With a business loan, lenders consider your time in business, personal and business credit histories, and annual revenues. But with a personal loan, your personal credit score and income are used to determine if you qualify.

By going this route, you may be able to avoid many of the high fees and interest rates of alternative business loans. Depending on your credit history and the lender you select, your cost of borrowing could be much lower with a long-term, low-interest personal loan.

Recommended Option: Upstart

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You may qualify to receive a personal loan of between $1,000 and $50,000 through Upstart. These loans have competitive interest rates starting at 7.74% and going up to 35.99% based on your creditworthiness. Repayment terms of 36 or 60 months are available. The application process is quick, easy, and completely online.

To qualify for an Upstart personal loan, you must meet a few basic requirements, including having a valid email address, verifiable personal information, a source of income, and a U.S. checking account. You also have to meet the lender’s credit requirements, which include:

  • A credit score of 620 or above OR 580 or above for California residents
  • A solid debt-to-income ratio
  • No bankruptcies or public records
  • No delinquent accounts or accounts in collections
  • 6 or fewer inquiries on your credit report over the last 6 months

Lines Of Credit

A more traditional financing option is a flexible line of credit. The one drawback with a line of credit is that business performance is typically a qualifying factor. If you haven’t made any sales, you won’t qualify, so this isn’t a good financial option if you’re not in business yet.

As you build your business, though, a line of credit can be very useful. It can be used to purchase supplies, inventory, or cover that emergency that pops up when you least expect it. You can also use your line of credit to cover payroll or daily operational expenses.

When you receive a line of credit, a lender provides you with a credit limit. You can make as many draws as you need against the line of credit up to and including the credit limit. Once you initiate a draw, the lender will transfer the money directly to your bank account, giving you access to the money you need. Over time, you’ll make payments that are applied to the principal (the amount you’ve borrowed) and any fees and/or interest charged by the lender.

A line of credit is a revolving account, so as you repay the lender, money becomes available to draw again.

Recommended Option: Fundbox

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You may qualify to receive a line of credit of up to $100,000 through Fundbox. Fundbox lines of credit have no restrictions and can be used to cover any business expense. Once approved, you’ll be eligible to make draws immediately and receive funds as quickly as the next business day.

The Fundbox application process takes just minutes, and it’s easy to qualify. The lender focuses on the performance of your business — not your business or personal credit history — so even borrowers with credit challenges can qualify. You do, however, have to meet the following requirements:

  • Own a U.S.-based business
  • Have a business checking account
  • At least 3 months of transactions in your business bank account or at least 2 months of activity in a supported accounting software
  • At least $50,000 in annual revenue

Once you make a draw on your line of credit, automatic drafts are made weekly from your linked business checking account. If you do not use your funds, you do not pay. Repayment terms are 12 or 24 weeks and fees start at 4.66% of the total borrowing amount.

Business Credit Cards

Business credit cards work just like the personal credit cards in your wallet, only they’re used to pay business expenses. Business credit cards are great for emergency expenses or any time your cash flow is a little short. You can also make recurring payments, such as your utility bills, using a business credit card. This is especially beneficial if you have a rewards card that gives you cash back or other rewards simply for making qualified purchases.

When you apply for a credit card, your lender will set a credit limit if you’re approved. You may spend up to and including this credit limit with one or multiple transactions anywhere credit cards are accepted. Each month, you’ll make a payment that is applied to the principal, interest, and fees charged by the lender. As you pay down your balance, funds will become available to use again. If you don’t have a balance, you won’t pay any interest, although you may have to pay annual fees depending on the card you select.

Recommended Option: Chase Ink Business Unlimited

Chase Ink Business Unlimited


chase ink business unlimited
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Annual Fee:


$0

 

Purchase APR:


15.49% – 21.49%, Variable

If you have an excellent credit score of at least 740, you may qualify for the Chase Ink Business Unlimited credit card. This is a rewards card that provides you with unlimited 1.5% cash back on all purchases made for your business. As a new cardholder, you will also be eligible to receive a $500 cash back bonus if you spend $3,000 within 3 months of opening your account.

The Chase Ink Business Unlimited card comes with a 0% introductory APR for purchases and balance transfers for the first 12 months. After the introductory period, the card has a variable APR of 15.49% to 21.49%. This card comes with no annual fee. You can also receive additional cards for employees at no extra cost.

Rollover For Business Startups (ROBS)

Do you have a retirement account? If so, you can legally leverage these funds to pay your startup costs without facing tax or early withdrawal penalties. With a Rollover for Business Startups (ROBS) plan, you can put your retirement account to work for your new business.

It’s possible to access your retirement account funds with no penalties in just a few easy steps. First, create a new C-corporation. Next, create a qualified retirement plan for the corporation. Then, the funds from your qualified retirement account are rolled over into the new retirement plan. Finally, the funds that were rolled over can be used to purchase stock in the corporation, giving you access to the capital you need to start or grow your business.

Throughout the process, you do have to remain compliant and follow legal guidelines. For most new business owners, the process can get confusing, which is why ROBS providers are available to help. A ROBS provider will set up your ROBS plan to ensure everything is by the book. To get started, you’ll need to pay a setup fee, then pay a monthly maintenance fee for maintaining your account.

The great thing about ROBS plans is that you are using your own money, so you won’t have to pay interest on a loan. You will, however, have to pay a monthly fee to maintain your account. You also risk losing your retirement funds if your business is unsuccessful.

Recommended Option: Benetrends

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Benetrends is a pioneer of ROBS, launching its Rainmaker Plan in the 1980s. This visionary-plan is the longest-running ROBS plan, and Benetrends offers many benefits that outshine its competitors.

With just four easy steps, Benetrends can get the capital you need from your qualified retirement plan. With the Rainmaker Plan, you can have your funding is as little as 10 days.

To qualify, you must have an eligible retirement plan with at least $50,000. Most retirement plans are eligible, with the exception of Roth IRAs, 457 plans for non-governmental agencies, and distribution of death benefits from an IRA other than to the spouse. There are no time in business, annual revenue, or personal credit score requirements.

To get started with Benetrends, you’ll be required to pay a setup fee of $4,995. After paying this fee, your C-corporation and ROBS plan will be set up. After your plan is set up, you’ll be required to pay a monthly maintenance fee of $130. This fee covers ongoing support and services including legal support, audit protection, and compliance.

Purchase Financing

Paying your vendors will be an ongoing expense for your business. You have multiple options available to pay your vendors. You can pay out-of-pocket, you can use a credit card or line of credit, or you can take advantage of purchase financing.

With this type of financing, your vendors are paid immediately, while you get more time to pay. A lender pays your vendors up front, then you repay the lender over a set period of time. The lender will add fees and/or interest to your loan balance for paying your expenses upfront.

By using purchase financing, you’re able to pay your vendors immediately to receive the supplies, inventory, or services you need for your bar. Then, you can spread out your payments over time to make these purchases more affordable for your business.

Recommended Option: Behalf

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Behalf offers purchase financing of up to $50,000 for qualified borrowers. Repayment terms of up to 180 days are available. Behalf charges fees of 1% to 3% of the borrowed amount per month for using this service. There are no additional fees. You can repay on a weekly or monthly schedule.

Behalf’s financing can be used to pay merchants for inventory or services. However, there are some restrictions. You can’t pay bills, cover payroll, or pay other existing debt through Behalf.

Behalf analyzes the performance of your business when making its approval decisions. There are no time in business or business revenue requirements. Behalf does not have a minimum personal credit score for approval, although your credit history will be considered during the application process.

Create Your Menu

Before you open your bar, you need to know what food and drinks you plan to serve and what equipment is needed to properly prepare each menu item.

When planning your menu, think about your theme and the type of customers you plan to attract while also keeping your budget in mind.

Decide what type of drinks you’ll serve. Most bars serve a variety of wines, beers, liquors, and mixed drinks, but what you serve may be different based on the theme of your bar. For example, in a sports bar, your drink menu may feature a wide selection of beers. If you open a nightclub, you want to have a variety of liquors and mixers on hand to create many different types of drinks. If you have a cigar bar, wines and craft beers may make up the bulk of your menu. Again, the type of bar you want, the theme, and your target audience can help you determine what you serve.

If your bar will serve food, think about the types of food you’ll serve. In a neighborhood bar, appetizers like fried cheese sticks or nachos may be enough to keep your customers happy. If you have a gastropub, meals made with high-quality ingredients should make up your menu. Remember, creating the perfect menu takes careful planning, so take the time to brainstorm your ideas.

It’s also wise to start off small and add new items as your business grows. If you have a huge menu that features every type of food and beverage you could think of, your bar will require more equipment. More equipment equals more expenses. Working with a smaller menu can also ensure that your bartenders and kitchen staff aren’t overwhelmed and can focus on creating high-quality food and drinks. As you draw in customers to your bar, you can tweak your menu based on what customers are ordering, what gets rave reviews, and what falls flat.

Once you’ve determined what your bar will be serving, you’ll need to talk with suppliers to get estimates of costs. As you approach opening day, you’ll place your order with your selected suppliers.

Still stuck on your menu? Check out our tips for creating a great menu.

Purchase Your Equipment

Once you’ve secured a location and have moved further into the process of building your bar, it’s time to think about the equipment and fixtures that you need. What your bar needs depends on the theme you’ve selected and what you’ll be serving, but some items you may consider include:

  • Bar & barstools
  • Benches
  • Tables & chairs
  • Industrial ovens & other kitchen equipment
  • Coolers, refrigerators & ice bins
  • Blenders & other bar equipment
  • Big-screen TVs
  • Sound system
  • Microphones & other audio equipment
  • Beer taps

After you’ve leased, purchased, or built your building, it’s important to create a detailed layout of your business. You want to ensure that you have enough room for everything required to run your bar, while also leaving enough space for seating, a dance floor, and other features that will be important to your customers. As you grow your business and need to add or update equipment, consider equipment financing to make these expenses more manageable.

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

Select Your POS System

ipad POS

Gone are the days when most businesses just needed a cash register or two for their customers. With the rising use of credit cards, debit cards, and mobile payments, businesses — especially bars — need a more advanced system for accepting payments.

A point of sale (POS) system is one of the most important pieces of equipment you’ll need for your new bar. A POS system combines software and hardware to create a centralized point for business operations. Through this system, you’ll be able to take orders and accept payments, but that’s not all.

Some of the most advanced POS systems come with features beneficial to bars. This includes built-in tipping systems, inventory management that allows you to track your stock levels, and an open ticket system for creating bar tabs.

Your POS system plays an important role in your business, so it’s important that you know what to look for before making your purchase. Check out our top picks for POS systems for bars and nightclubs.

Lightspeed Restaurant ShopKeep Toast

Lightspeed Restaurant

ShopKeep

Toast

TouchBistro

Breadcrumb POS by Upserve

ShopKeep alternatives for restaurants

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Review

Monthly fee

$69+

Get a quote

$79+

$69+

$99+

Cloud-based or Locally Installed

Cloud-based

Hybrid

Cloud-based

Locally installed

Cloud-based

Compatible credit card processors

Cayan or Mercury in US; iZettle in Europe

Shopkeep Payments & some others; contact your processor to see if they are supported

Toast only

TouchBistro Payments, Square, PayPal, Moneris, Cayan, Chase Paymentech & more

Upserve Payments only

Business size

Small to medium

Small to medium

Small to large

Small to medium

Small to large

Hire Employees

To make sure your bar is a success, you need to have the right employees working for you. If you haven’t done so already, you need to apply for an Employer Identification Number for tax purposes. Next, you need to determine how many employees you need and what their roles will be in your business.

You’ll need at least one bartender that prepares and serves drinks in your bar. You will need to add additional bartenders based on the number of bar areas you have in your business, as well as the number of customers you have to serve.

If your bar will serve any type of food, you will also need a kitchen staff. This includes at least one cook, but you may also need prep cooks, dishwashers, and other staff as your business grows.

You’ll also need servers to distribute food or pass out drinks to customers not seated at the bar. The number of servers you have is based on the size of your bar and how busy it gets.

While your servers may be able to handle cleaning tables at first, as your business grows, you may want to add a busser or two, who are responsible for cleaning off tables for new customers.

You may also require additional staff. For example, you may hire a doorman that checks IDs before customers enter the door. A security guard may also be a staff member you hire to handle tempers that flare from customers who’ve had one too many.

You also need at least one manager to oversee the staff. A manager’s role may include hiring employees, firing employees, training, making schedules, and making sure that all staff members are doing their jobs properly.

Before you start seeking job applicants, make sure to create an in-house organizational chart to know exactly who you need to hire. You also need to do your research to figure out what salaries you will offer, as well as any benefits.

Unsure of where to hire new employees? You have a few options. First, post a job ad on online job boards or classified ads to find potential employees. This is an inexpensive (or even free) way to find candidates.

You can also ask for referrals. If you know someone in the industry, ask if they have any new hires to recommend. Don’t know anyone in the industry? Ask other colleagues, family, and friends for recommendations.

Bolster Your Web Presence

After completing all of these steps, you’ll be that much closer to opening your bar. However, you want to make sure to spread the word about your business, and there’s no better way to do that than with the internet.

One of the easiest ways to get the word out about your business is through social media. Facebook, Instagram, and Twitter are just a few of the ways you can reach your target audience, and Yelp For Business is a must. Best of all, these accounts are free to use. As you grow, you may consider moving past the free advertising you get through your posts and pictures and invest in advertising on these social platforms.

You also need a good website. Keep your bar’s theme in mind when you design your site. Make sure that your website reflects the image you want to project. There are many small business website builders you can look into if you want to create your website yourself. These make it easy for you to create a professional website with no prior web design experience required.

Service Pricing Hosted or Licensed Templates & Themes Compatible Credit Card Processors Next Steps

$14 – $179/month Hosted Excellent Many

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Free – $29.90/month Web-Hosted Excellent Many

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Free – $25/month Web-Hosted Average Many

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$0/month Hosted Good Square Payments

Go to Site

Make sure that you include your address and phone number on your website. Information about your bar including dress code and hours of operation are also extremely useful for customers. You can also include your menu, photos of your establishment and patrons, and news and updates on your website.

Also, remember that word-of-mouth is one of the best forms of advertising for a bar. If your customers love your drinks, food, service, and atmosphere, they’ll tell others. If they dislike your bar, they’ll also tell others … who will make sure to avoid your establishment. Whether your bar is brand new on the block or you’ve been in business for some time, keep customer satisfaction high so that customers online and off will have nothing but positive reviews for your business.

Final Thoughts

As you can see, creating a bar where everyone gathers to have a great time takes a lot of hard work. But just as Theodore Roosevelt said, “Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty.” Running your own bar means planning, budgeting, and always being ready for growth. While your bar won’t make you an overnight millionaire, you can become a successful entrepreneur with this potentially-lucrative venture if you put in the work.

The post Want To Open Your Own Bar? Top Tips To Get You Started appeared first on Merchant Maverick.

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LoanBuilder VS Kabbage: Which Lender Is Best For Your Business?

We all know that running a small business requires capital. While it would be great to cover all of our expenses out-of-pocket, for most small business owners, this just isn’t a reality. For times when money is tight, a small business loan makes expansions or simply covering day-to-day operations possible.

But what happens when your revenues are too low, your time in business too short, or your credit score doesn’t meet bank requirements for a traditional loan? Instead of giving up, turn to an alternative lender like LoanBuilder or Kabbage.

LoanBuilder and Kabbage have emerged as frontrunners among small business lenders. Online applications eliminate the need for face-to-face visits with your local banker, to begin with. Borrower requirements are also more relaxed, and you can get the money you need in days — no more waiting weeks for approval.

You want to make the best financial decision for your business, so which lender do you choose? In this post, we’ll compare these two lenders to help you make the right choice. We’ll take an in-depth look at the application process, break down terms and fees, and help guide you on your path to small business financing.

Ready to get started? Let’s dive in.

Services Offered

Winner: Kabbage

LoanBuilder provides capital to small business owners through short-term loans. When you apply for a LoanBuilder loan, you can receive between $5,000 and $500,000 for your business. Once approved, you’ll receive one lump sum of cash that can be used as working capital, for an emergency, to expand your business, or for any other business purpose.

One of the benefits of a LoanBuilder loan is that you can “build” your own loan. With the LoanBuilder Configurator, it’s possible to check out different options to find the financing solution that’s best for your business. You can easily adjust the borrowing amount and terms to compare your options. For example, if you want low monthly payments, select a longer repayment term and lower borrowing amount. If you’d rather reduce your fixed fee, opt for a shorter term.

If you want more flexible financing, Kabbage is the better choice for your business. Through Kabbage, you can receive a line of credit with a limit of $2,000 to $250,000.

A Kabbage line of credit is significantly different from a traditional loan. Loans — like the ones available through LoanBuilder — are sent to your bank account in one lump sum. Once you’ve paid off the loan, you’ll have to reapply to receive more money. With Kabbage’s line of credit, you’ll be assigned a credit limit, and you can make one or more draws up to and including that credit limit. Each payment is applied to your balance plus fees. As you repay borrowed funds, they’ll become available for you to use again — no additional approvals needed.

One of the best things about a Kabbage line of credit is that you don’t have to use it immediately. With a traditional loan, you are still required to make regular payments, even if the funds sit untouched in your bank account. With a line of credit, though, you won’t have to make payments until you request a transfer of funds. This makes it a much better option for those “what if” scenarios you can’t predict. It is this flexibility that gives Kabbage a slight advantage over LoanBuilder.

Borrower Qualifications

Winner: Kabbage

LoanBuilder Kabbage

9 months

Time In Business

12 months

$42,000 per year

Minimum Sales

$50,000 per year

550

Minimum Credit Score

N/A

Even if you’ve been turned down for a small business loan in the past, you may still qualify for funding through LoanBuilder. Unlike traditional lenders, LoanBuilder has more flexible criteria for receiving one of its loans.

To qualify for a LoanBuilder loan, you must meet the following minimum requirements:

  • U.S.-based business in a qualifying industry
  • Time in business of at least 9 months
  • At least $42,000 in annual revenue
  • No active bankruptcies
  • Personal credit score of 550 or above

Please note that these are minimum requirements and that meeting these minimum requirements does not guarantee your approval.

During the application process, you can review your offers with no impact to your credit score. If you decide to move forward with applying for and accepting a loan, a hard credit pull will be initiated by LoanBuilder, which may have a small impact on your credit score.

While the requirements for a LoanBuilder loan are pretty simple, it’s even easier to qualify for a line of credit through Kabbage.

To qualify, the minimum requirements of Kabbage are:

  • In business for at least 1 year
  • At least $50,000 in annual revenue OR at least $4,200/month for the last 3 months

Kabbage looks at the performance of your business when determining whether to approve your line of credit. However, a hard pull will be performed to check your personal credit, although the lender has no credit score minimums to qualify.

Having no minimum credit score requirements really makes Kabbage stand out from other lenders. If you’ve had personal credit challenges, such as an active bankruptcy or a credit score that falls below 550, Kabbage is the better financial product for your business. However, if you have a shorter time in business or lower revenues but meet all credit requirements, you may want to consider giving LoanBuilder a shot.

Terms & Fees

Winner: LoanBuilder

LoanBuilder Kabbage

$5,000 – $500,000

Borrowing Amount

Up to $250,000

13 – 52 weeks

Term Length

6 or 12 months per draw

One-time fee of 2.9% – 18.72% of the borrowing amount

Borrowing Fee

1.5% – 10% of the borrowing amount per month

None

Other Fees

None

Now, it’s time to look at one of the most important factors to consider when borrowing money from any lender: how much is it going to cost? Before we break down the costs between LoanBuilder and Kabbage, note that these are alternative lenders that provide funds to borrowers with less-than-perfect credit. As such, these financial products have a higher cost of borrowing than traditional loans you’d receive from your bank or credit union.

A great feature about LoanBuilder loans is that just one fixed fee is charged, making it easy to understand the cost of borrowing. Fees range from 2.9% to 18.72% of the borrowing amount. The most creditworthy borrowers will be rewarded with the lowest fees. There are no origination fees or additional costs added to your loan.

LoanBuilder loans have terms between 13 to 52 weeks. Terms are based on the amount of your loan. Each week, payments are automatically withdrawn from your business bank account.

Kabbage’s fee structure is a little different. A fee is charged each month when there is a balance. Fees range from 1.5% to 10% and are based on the performance of your business. Your fees may change throughout your repayment period. For example, you may pay a 3% rate for the first 6 months, then pay just 1.25% for the remaining 6 months. This is just an example, and your actual fees may vary.

Kabbage has repayment terms of 6 or 12 months and are based on the amount you borrow. If you borrow less than $10,000, your repayment terms will be set at 6 months. If you borrow $10,000 or more, you can choose between terms of 6 or 12 months. Payments are withdrawn monthly through automatic drafts of your business bank account.

If you prefer to make weekly payments, LoanBuilder is the better choice between the two lenders. If you want a loan with a single fixed fee structure that’s easy to understand, LoanBuilder is also the better option. However, if you’d prefer to make one monthly payment, consider applying for a Kabbage line of credit.

The Application Process

Winner: Kabbage

Now that you know more about the features of LoanBuilder and Kabbage, you’re getting one step closer to choosing and applying for a financial product. Before you start filling out your personal information, though, let’s explore what to expect during the application process.

The first step to receiving a LoanBuilder loan is to fill out the online questionnaire. This questionnaire should only take about 5 to 10 minutes to complete. During this step, you will provide contact information, personal information, business details, and verify your identity.

Once you’ve completed the questionnaire, one of two things will occur: your application will be declined or you’ll receive an offer. If your application is turned down, LoanBuilder will provide you with further details and you’ll be eligible to reapply in 30 days. At this point, you’ll need to pursue other financing options. However, if you’ve received an offer, you’ll be able to adjust the duration of your loan and the borrowing amount to compare costs and select the terms that work best for your business.

At this point, your offer is just a pre-qualification. At any point in the process your application may be declined, and receiving an offer is not a guarantee of approval.

After you’ve selected your terms, you’ll be required to fill out a more comprehensive application. You’ll provide more information to the lender, and you’ll be required to submit documentation such as business bank statements. During this process, a hard check will be performed on your credit.

Once LoanBuilder has analyzed your business financials and personal credit history, your application will be approved or declined. If you’re approved, you’ll electronically sign a contract and the funds will typically be deposited into your business bank account the next business day.

You can also bypass the online system and contact a LoanBuilder Business Funding Expert through the lender’s toll-free number. This may be the best option if you have additional questions about LoanBuilder’s loans. However, the online process is typically much faster and easier for most business owners.

While it is possible to receive your funds just one business day after applying, most small business owners will receive funding within 2 to 7 days.

Kabbage’s application is also available online and can be completed in just minutes. When applying for a Kabbage line of credit, you’ll start by providing information about your business, such as your business name and phone number. During the first step, you’ll also input an email address and create a password. This information will serve as your login credentials for the Kabbage website and app.

Next, you’ll link your business accounts so Kabbage can evaluate your business revenue. You can connect your business bank account from institutions including PNC, TD Bank, Chase, and Bank of America, or you can link business services such as PayPal, Square, Etsy, or Amazon. After you’ve been approved, you can link multiple services and accounts to maximize your credit limit.

Finally, Kabbage will request personal information. This is very basic information including your legal name and home address. You’ll also provide your Social Security Number. At this stage, Kabbage will initiate a hard inquiry on your personal credit.

Once you’ve completed this step, you’ll receive an approval decision. If you’ve been approved, you’ll be taken to the Kabbage Dashboard. Through this dashboard, you can view your credit limit and immediately initiate your first transfer. You can withdraw your full credit limit, a portion of your credit limit, or wait until a later date to make a draw. On this dashboard, you’ll also be able to select your repayment terms and view your payment schedule.

After you make your first draw, funds will be sent to your business bank account immediately. You should then receive the funds within 1 to 3 business days.

Once you’re approved for a Kabbage line of credit, you can also request the Kabbage Card. You can use the Kabbage Card anywhere Visa cards are accepted. Simply swipe your card, and Kabbage will create a new loan with 6-month terms and the same fees as your other loans.

Both LoanBuilder and Kabbage simplify the loan application process. However, Kabbage is the clear winner in this round. Kabbage’s simple application process is hassle-free and has no documentation requirements. With Kabbage, you can receive an approval decision in just minutes and put your line of credit to work for your business immediately.

And The Winner Is …

LoanBuilder and Kabbage each offer benefits to small business owners. LoanBuilder loans provide short-term financing options for business owners that wouldn’t qualify for financing through traditional lenders. However, Kabbage stands out for a number of reasons.

The simple application process, flexibility, easy borrowing requirements, and lightning fast approvals are just a few of the benefits Kabbage offers to small business owners.

Which Is Best For Your Business?

LoanBuilder and Kabbage are similar in that they offer alternative financial solutions for business owners that may not qualify for other loans or financial products. However, there are distinct differences between the two. Determine how much you need to borrow, nail down how you plan to use the funds, and make your decision from there.

Choose LoanBuilder If…

  • You prefer to make smaller weekly payments rather than a larger monthly payment
  • You want one lump sum of money that can be repaid over time
  • You need to borrow more than $250,000

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Choose Kabbage If…

  • You’d rather make monthly payments
  • You want a flexible line of credit that you can use when you need it
  • You want an instant approval with no hassles or paperwork

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Final Thoughts

Kabbage and LoanBuilder both provide quick financial solutions for small business owners. However, don’t forget that this speed and convenience may come at a high cost. These are short-term options that may have higher fees than other financial products. Shop around with lenders, compare any offers you’ve received, consider other loans such as accounts receivable financing, and evaluate the cost of any loan you choose to accept.

By doing your homework, you can better ensure you’re making the most financially-savvy move for your small business.

If you’re still undecided, check out our other resources, including How To Get A Small Business Line Of Credit and The Business Owner’s Guide to Getting A Short-Term Loan.

The post LoanBuilder VS Kabbage: Which Lender Is Best For Your Business? appeared first on Merchant Maverick.

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What Is PayPal Credit & How Does It Work?

It can be a challenge to keep up with all the different payment services PayPal offers because there are so dang many, and new ones seem to come out all the time. PayPal services also frequently change names as they are rebranded or acquired from other companies.

One PayPal service you might be curious about, as it has generated some buzz lately, is PayPal Credit, formerly Bill Me Later. Read on to learn about this PayPal payment option.

What Is PayPal Credit?

paypal credit logo

PayPal Credit is a line of credit issued by Synchrony Bank. This virtual line of credit functions similarly to a credit card, letting you pay for online purchases in installments, rather than upfront in-full.  Approved PayPal users can use PayPal Credit as a payment option whenever they check out using PayPal, either from a website or at a brick-and-mortar store that accepts PayPal.

Note that PayPal Credit is not the same thing as a PayPal debit or credit card.

How PayPal Credit Works

Best PayPal Alternatives Image

PayPal Credit is easy to apply for and start using. But it’s important that you understand a little bit about how PayPal Credit works before you start using this service.

Applying For PayPal Credit

Any PayPal user can apply for PayPal Credit. If you don’t have a PayPal account already, you will be prompted to create one when applying for PayPal Credit. The application is quick and simple: you only have to supply your date of birth, your income after taxes, and the last 4 digits of your Social Security number. Be warned that PayPal will do a hard credit pull, which might ding your credit score a few points. Typically within seconds, you’ll have your approval answer.

PayPal doesn’t have any clearly stated applicant criteria, but applicants with poor credit or limited credit history may be declined.

Once you have been approved and accept the terms of use, PayPal will give you a credit limit of at least $250. PayPal will periodically review your account and may increase or decrease your credit limit.

Note that PayPal Credit is the new name for Bill Me Later, which has been around for more than 10 years. If you already had a Bill Me Later account, you now have a PayPal Credit account.

Using PayPal Credit

Once you have your PayPal Credit account set up, you can use PayPal Credit in conjunction with your PayPal account anywhere PayPal is accepted. You simply need to set up PayPal Credit as your default “preferred” payment option for PayPal, or select PayPal Credit as your payment option when checking out. Some merchants may also prompt you to pay using PayPal Credit instead of your regular PayPal preferred payment option (which is usually linked to a credit or debit card, or your bank account).

You can manage your PayPal Credit settings using a web browser or with the PayPal app. You can also make payments on your balance and see your current credit limit — just like you would for any credit card app you might already use.

As part of its “Cash Advance” feature, it’s possible to use PayPal Credit to send money to someone online using the Send Money tab, the same way you can with any other PayPal Wallet option. You cannot use this feature to send a cash advance to yourself. However, you can receive a cash advance directly from PayPal Credit if you are a furloughed federal government worker: in January 2019, PayPal announced a program whereby PayPal will extend a one-time 0%-interest cash advance of up to $500 to furloughed federal workers via PayPal Credit.

PayPal Credit Terms & Conditions

PayPal Credit requires monthly payments on your balance. You can make the minimum payment at the end of the month, make payments in any other amount whenever you like, or pay your balance in full at any time, similar to a credit card. For new accounts, PayPal Credit has a variable APR of 25.99% on standard purchases and cash advances (at the time of publishing). Being variable, the APR will fluctuate with the Prime interest rate.

PayPal Credit is currently promoting a 6-months special financing offer, in which you won’t have to pay any interest on purchases of $99 or higher for 6 months. You will be charged interest if you don’t pay the balance in full within 6 months.

To send money (Cash Advance) with PayPal Credit, PayPal will charge a flat fee of 2.9% + $.30 US dollars per transaction. This is the same fee you pay when you use a debit or credit card to send money through PayPal.

To qualify for the 0%-interest cash advance for federal government workers, you’ll need to be a U.S. federal government employee with a PayPal Credit account in good standing. This promotion will end once the government reopens and furloughed workers receive their first paycheck, or the $25 million PayPal has set aside for the program has been exhausted.

PayPal Credit Pros & Cons

Pros of PayPal Credit

  • Fast & Convenient: You can use PayPal Credit to make a purchase as soon as you’re approved (usually within seconds). In comparison, you might have to wait a week or longer for a credit card you’ve applied for to come in the mail.
  • Use Anywhere PayPal Is Accepted: This includes thousands of websites and a growing number of brick-and-mortar stores as well.
  • PayPal Purchase Protection: If your online purchase doesn’t match the description or doesn’t arrive, PayPal will refund the full purchase price plus original shipping costs.

Cons of PayPal Credit

  • Low Credit Limit: Unlike a traditional line of credit, PayPal Credit limits are comparable to or even lower than most credit card limits, with most users’ limits ranging from just $250 to a few thousand dollars.
  • Hard Credit Inquiry: The hard credit pull during the application process will likely ding your score several points.
  • Won’t Help You Build Credit: Unlike a credit card company, PayPal Credit does not report your payment activity (positive or negative) to credit agencies.
  • High APR: You can probably get a better APR with a credit card, especially if you have good credit.
  • Risk Of Overspending: You may be tempted to spend more with PayPal Credit than you would with regular PayPal.*

*Note that this pro/con list is from a PayPal Credit user’s point of view. From a merchant’s point of view, there are no major downsides to PayPal Credit, other than the downsides of using PayPal in general (namely, the high transaction fees). However, a potential upside of advertising promotional financing with PayPal Credit as a merchant that already offers PayPal as a checkout option is that PayPal users typically spend more and make larger purchases with PayPal Credit.

FAQ

Can Businesses Use PayPal Credit?

Short Answer:

Yes, your customers can pay using PayPal Credit as long as your business accepts PayPal payments. But when it comes to using PayPal Credit for business purchases, there are better options available.

Long answer:

Businesses that accept PayPal at checkout can offer customers the option to pay with PayPal Credit, either online or in-store. If you accept PayPal as a payment form, PayPal Credit is already available to customers who check out with PayPal at no additional cost to your business.

When a customer makes a purchase using PayPal Credit, PayPal deposits the full amount of the purchase into your account just as with any other PayPal transaction, so there is no added risk to you as a PayPal merchant; accepting a PayPal Credit payment is the same as accepting any other PayPal payment. However, if you make PayPal sales online, you can promote PayPal Credit financing options on your website, which might be of added benefit to businesses that sell large-ticket items online.

How Do You Get Paid With PayPal Credit?

There are multiple ways you can allow customers to pay with PayPal Credit:

  • PayPal Credit At POS: Some, but not all, point of sale systems allow you to accept in-person PayPal payments. Some examples of PayPal-friendly point of sales include Shopkeep, Vend, and of course PayPal’s own PayPal Here.
  • PayPal Credit On Your Website: If you allow customers to check out with PayPal on your website, PayPal will give you promotional banners that let you advertise financing options to your customers. You can also include a PayPal Credit button to prompt customers who don’t have PPC set up as their preferred PayPal payment method to pay using PayPal Credit.
  • PayPal Credit With Mobile Payments: If you accept Google Pay or Apple Pay at your point of sale, and the customer has PayPal with PayPal Credit set up as their default payment method, customers might pay using PayPal Credit using their smartphone.
  • PayPal Credit With PayPal Invoice: When you send a customer a PayPal Invoice, your customer may use PayPal Credit to pay that invoice.

Of course, only customers who have been approved by PayPal Credit may pay with PayPal Credit, and then only up to the amount of their credit limit. Customers who have set up PayPal Credit as their preferred PayPal payment option will automatically pay for all their PayPal purchases using Credit; customers can also choose PayPal Credit in their PayPal Wallet for individual transactions when presented with this option at checkout.

How Can You Use PayPal Credit For Business Purchases?

Businesses might also potentially use PayPal Credit to make business purchases from merchants or vendors that accept PayPal. However, because it is geared toward consumers, credit limits on this line of credit are on the low side and APRs are on the high side. Unless you have a very small enterprise, you are better off getting a traditional line of credit or business credit card to make business purchases.

As another alternative to making business purchases with PayPal Credit, PayPal also offers small business loans ranging from $5,000 to $500,000 with LoanBuilder: A PayPal Service.

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Final Thoughts

PayPal Credit can be a convenient option to have in your virtual wallet if you want to the ability to make purchases with PayPal even when you don’t yet have the funds to do so—for example, eBay businesses frequently make purchases using PayPal. Or, you might use PayPal Credit to finance a large one-time purchase such as a refrigerator.

You can also use PayPal Credit to send someone money, even if you don’t have that money in your account. If you own a business and already accept PayPal, promoting PayPal Credit as an online checkout option could result in higher purchases.

However, using PayPal Credit not an effective way to build credit, as PayPal doesn’t report your payments to credit agencies. Plus, you will be charged heavy fees if you don’t pay off your balance at the end of each month (or the end of the 6-month promotional financing period). If you are looking for a larger line of credit to use for your business, you might want to look at our top-rated business line of credit providers. Or if you’re looking for a more flexible credit option with a lower APR, check out this comparison of our favorite credit cards.

The post What Is PayPal Credit & How Does It Work? appeared first on Merchant Maverick.

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Kabbage VS Fundbox: Which Lender Is Best For Your Small Business?

In the past, getting a business loan was a hassle. Strict requirements, in-person visits to a bank or lending institution, and weeks of waiting could result in a low-cost, long-term loan option … or you could go through the process only to receive a big fat “NO.”

With the rise of the internet has come the emergence of alternative lenders – lenders with easy online application processes, fast approvals, and low requirements.

Kabbage and Fundbox are two leading alternative lenders, providing small business owners with the funding they need to operate or expand their businesses. While the two have similar product offerings, there are a few significant differences. In this post, we’ll compare the two side-by-side, breaking down the features of each to help you decide which is best for your business.

Services Offered

Winner: Fundbox

Through Kabbage, you can receive a flexible line of credit to cover business expenses. Kabbage has one of the highest borrowing limits among alternative lenders that offer lines of credit, providing qualified borrowers with $2,000 to $250,000. Your line is determined by the performance of your business.

Fundbox also offers lines of credit but with lower borrowing limits. With Fundbox Direct Draw, the lender’s traditional line of credit, you can be approved for a maximum of $100,000. Like Kabbage, Fundbox’s lines of credits are based on the performance of your business.

If you have unpaid invoices, you can take advantage of Fundbox Credit, the lender’s accounts receivables financing service. You can receive a line of credit up to $100,000 based on your unpaid invoices. You can only get one financial product through Fundbox, so you can qualify using either your unpaid invoices or your bank statements. We’ll go into borrower qualifications and the application process in more detail later in this article.

With both lenders, there are no restrictions on how you use your funds. You can use your lines of credit to purchase inventory or supplies, cover payroll, pay operational expenses, expand your business, or take care of an emergency.

While both lenders offer similar products, Fundbox comes out on top because you can also use your accounts receivables to qualify for a line of credit.

Borrower Qualifications

Winner: Fundbox

Kabbage Fundbox

12 months

Time In Business

N/A

$50,000 per year

Minimum Sales

$50,000 per year

N/A

Minimum Credit Score

N/A

N/A

Other

At least 2-3 months using compatible software/services

Qualifying for Kabbage is easy for most small business owners. To qualify, you must meet two minimum requirements:

  • At least 12 months in business
  • At least $50,000 in annual revenue OR at least $4,200/month for the last 3 months

Your personal credit score is not a consideration, as Kabbage bases approvals on business performance. However, a hard pull on your credit will be initiated during the application process.

Qualification for Fundbox is based on the product you select. For the Fundbox Direct Draw line of credit, you must meet the following requirements:

  • A business checking account
  • At least $50,000 in annual revenue
  • At least 3 months of transactions in a business bank account

To qualify for Fundbox Credit invoice financing, requirements are similar. You must have:

  • A business checking account
  • At least $50,000 in annual revenue
  • At least 2 months of activity in supported accounting software

With Fundbox’s invoice financing, you’ll link your accounting software to determine if you qualify. Fundbox currently supports 10 accounting software programs including QuickBooks Desktop, QuickBooks Online, Ebility, Harvest, InvoiceASAP, Jobber, Kashoo, FreshBooks, Zoho, and Xero.

It’s easy to see that both Kabbage and Fundbox have more lenient requirements than other lenders. However, Fundbox has the edge in this round because it doesn’t have time in business requirement. With Kabbage, you must be in business for at least a year. With Fundbox, newer businesses can qualify for funding provided they meet all other requirements.

Terms & Fees

Winner: Fundbox

Kabbage Fundbox

Up to $250,000

Borrowing Amount

Up to $100,000

6 or 12 months

Draw Term Length

12 or 24 weeks

1.5% – 10% of the borrowing amount per month

Borrowing Fee

Starts at 4.66%

None

Other Fees

None

Now, let’s explore one of the most important factors of small business financing: how much does it cost? One area where both Kabbage and Fundbox are similar is that both lenders offer transparent fee structures. However, when you break down the terms and fees of each, there are several notable differences.

Kabbage offers terms of 6 months for draws under $10,000. For draws of $10,000 or more, you can select from terms of 6 or 12 months. Through Kabbage, you make monthly payments that apply to your principal plus fees.

Kabbage charges a monthly fee each month you have a balance. Fees range from 1.5% to 10% of the total amount of the loan and are based on the performance of your business. Your fee rate may be lower as you pay off your loan. For example, if you have a 12-month loan, you may pay 3% for the first six months and 1.25% for the last six months. Of course, this is just an example, and you won’t know what rates you’ll receive until you apply for a line of credit.

If you pay your loan off early, there are no prepayment penalties and you will eliminate any remaining fees, so this is a good way to save money.

With each draw, you will receive a breakdown of your loan, including the total amount of fees and the amount of each monthly payment. Your loan documents will include the SmartBox Capital Comparison Tool that will provide information including the disbursement amount, repayment amount, terms, and APR.

Other than the monthly fee, there are no hidden fees or additional costs to make a draw from your line of credit. If you do not use your funds, you will not pay any fees.

Fundbox has repayment terms of 12 weeks or 24 weeks. Weekly payments are applied to your principal plus fees.

Fees and terms are the same for Fundbox Credit and Direct Draw. Fees start at 4.66% of the draw amount and are based on the performance of your business. If you pay your balance off early, all remaining fees are waived.

You will be able to view your fees and repayment schedule after you’re approved for a Fundbox line of credit and initiate a draw. Your borrowing amount plus fees are equally distributed, so you will pay the same amount each week.

Breaking down the APR of each lender makes it a little easier to compare. Fundbox APRs are between 13% to 60%, while Kabbage’s APRs are between 20% and 80%. Based on these numbers, Fundbox appears to be the less expensive option, but you may find Kabbage to be more affordable (your own personalized rates are based on the performance of your business).

The Application Process

Winner: Kabbage

Kabbage and Fundbox have similar application processes, but let’s break down each so you know exactly what to expect.

It’s possible to apply for and receive a Kabbage line of credit in just minutes with the lender’s easy online application. Once you’ve determined that you meet all minimum requirements, you can start the application. This requires basic information about your business including your business name, address, and phone number. At the beginning of the application process, you’ll also enter your email address and create a password that you’ll use to log into your account.

Next, you’ll connect your business accounts to determine 1) if you qualify for a line of credit and 2) your credit limit if you’re approved. You can securely link your bank account from institutions including US Bank, Citi, USAA, PNC, Chase, and Bank of America. You can also link to other business services with revenue transactions, such as PayPal, Square, eBay, Stripe, or Sage.

Finally, you will be required to provide Kabbage with personal information, including your Social Security Number. At this point in the process, a hard pull on your credit will be performed.

Once you’ve submitted your information, you’ll receive a notification of your approval status in just minutes. If approved, you’ll be taken to your Kabbage Dashboard, where you can view your available credit facility and initiate draws. You can make a draw up to and including your credit limit immediately, but there is no obligation to withdraw funds at this time.

After you’re approved, you can also link additional business bank accounts and services to qualify for a higher line of credit. Your linked business bank account will be used for automatic drafts once you have taken funds.

One final thing to note about Kabbage is that you can be approved for a line of credit of up to $150,000 on the spot. Qualifying for funding up to $250,000 requires a manual review.

After you’ve been approved for a Kabbage line of credit, you can request the Kabbage Card. If you request funds to be sent to your bank account, you’ll see the money in 1 to 3 business days. However, the Kabbage Card gives you immediate access to your line of credit.

The Kabbage Card can be used anywhere Visa cards are accepted. Simply swipe your card to make your purchase, and Kabbage will create a loan with the same rates and terms as a traditional line of credit draw. There are no additional fees, and anyone that qualifies for a line of credit can request a Kabbage Card at no cost.

Fundbox has a very similar application process. Start by signing up on the website with your name, business email, phone number, and a password. You will also be required to select the annual revenue of your business.

The next step involves linking an account so that the lender can analyze the performance of your business. If you have invoices, you can link your accounting software. If you do not invoice customers, you can qualify for a line of credit by linking your business bank account.

During the application process, a soft pull on your credit is performed. This will not affect your credit score. However, if you are approved for a line of credit and take funds, a hard pull may be performed.

Most borrowers will know within minutes if they are approved and the amount of the credit line. Once approved, you’ll be able to request funds immediately. Those funds will hit your bank account within 1 to 3 business days. Your linked bank account will be used for automatic drafts of your weekly payments.

Kabbage and Fundbox have similar application processes. Both are automated, easy, and can provide you with instant approvals. In this category, the win came down to the Kabbage Card. The ability to easily sign up for the Kabbage Card, which gives you access to your credit line anywhere Visa is accepted, gives Kabbage the edge.

And The Overall Winner Is …

Although Kabbage and Fundbox have similar product offerings, Fundbox comes out on top. Its relaxed borrower qualifications, invoice financing service, and competitive rates and terms make it a top choice for many small business owners.

However, you may find that Kabbage’s monthly payments, longer repayment terms, and access to fast cash with the Kabbage Card are more suitable for your small business.

Which Is Best For Your Business?

While Kabbage and Fundbox appear similar on the surface, there are a few clear differences that can help you make your choice between the two. The biggest differences to note include:

  • Kabbage payments are made monthly, while Fundbox has a weekly repayment schedule
  • Maximum borrowing limits
  • Time in business requirements
  • You can use your unpaid invoices to qualify for a line of credit through Fundbox

Choose Kabbage If…

  • You need a line of credit that exceeds $100,000
  • You feel more comfortable making monthly payments
  • You’ve been in business for at least one year
  • You want payment terms up to 12 months
  • You want to make instant purchases using the Kabbage Card

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Choose Fundbox If…

  • You’d prefer to make weekly payments instead of one larger monthly payment
  • You’ve been in business for less than one year
  • You want to use your unpaid invoices to receive a line of credit

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Final Thoughts

Kabbage and Fundbox both offer value to small business owners that may not qualify for traditional business financing options. Although the cost of borrowing may be higher than other financial products, the speed of approvals and transfers, the ease of application, and the low borrowing requirements may be worth the extra expense for the business owner seeking fast funding.

Still on the fence? Learn more about lines of credit and accounts receivable financing to determine which — if either — is the best financial option for your business.

The post Kabbage VS Fundbox: Which Lender Is Best For Your Small Business? appeared first on Merchant Maverick.

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How To Use Your Kabbage Line Of Credit

As a business owner, you always have to be prepared for the unexpected. An emergency arises, a bill needs to be paid, you’re running out of inventory … you get the picture.

Have you ever found yourself in a situation where you know you don’t have enough funds to comfortably cover the expense? Have you struggled to deal with that knot in your stomach and a constant feeling of dread wondering how you’ll get the capital you need? You’re not alone.

Or maybe you’re facing an entirely different challenge: business expansion. You’re ready to grow your business, but unfortunately, all of your funds are tied up in operational costs and other expenses. How can you expand your business and boost your revenue if you don’t have the capital you need?

Fortunately, there’s a solution when you need cash quickly: a small business line of credit. With a line of credit from an online lender like Kabbage, you don’t have to worry about waiting for days (or even weeks) to get an approval from a lender.

Kabbage specializes in small business lines of credit up to $250,000. You can use your line of credit for any business expense, from buying supplies and inventory to paying a utility bill or covering payroll expenses. Kabbage’s flexible lines of credit can be used for emergency expenses or to expand your business.

If you have credit challenges, it’s no problem — Kabbage looks at the performance of your business when issuing approvals. Once you’re approved, you can immediately make draws from your line of credit, getting the money you need as soon as the next business day.

In this article, we’ll do a deep-dive into Kabbage lines of credit. From the application process to withdrawing funds, we’ll cover it at all to help you determine if your business should explore this financial path.

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Apply For A Kabbage Line Of Credit

Requirement Minimum requirement
Time In Business: 12 months
Personal Credit Score: N/A
Revenue: $50,000 per year (or at least $4,200 for the last 3 months)

The first thing to do when applying for a Kabbage line of credit is determining whether you qualify. Most business owners will find that qualifying for Kabbage’s line of credit is much easier than qualifying for other financial products. To be eligible, you must meet two minimum requirements:

  • Be in business for at least 12 months
  • Have at least $50,000 in annual revenue or at least $4,200 per month over the last 3 months

Because Kabbage issues lines of credit based on the performance of a business, there are no minimum personal credit scores required to qualify. However, Kabbage does perform a hard pull on personal credit during the application process.

Step 1: Business Information

Once you’ve determined that you qualify, you can start the online application, which takes just minutes to complete. To get started, the application requests information about your business including:

  • Business Name
  • Business Address
  • Business Phone Number

You will also enter your email address and set a password in this first step. This will be your login information for accessing your account on Kabbage’s website or mobile app.

Next, you will provide more information about your business. This information includes:

  • Industry Type
  • Company Structure
  • Date Established
  • Tax ID Number
  • Annual Revenue

You will be asked if you own at least 75% of equity interest and have significant responsibility in managing the business.

Step 2: Connect Accounts

Next, you will connect to your bank account or business services so that Kabbage can review your transactions to see if you’re eligible for a line of credit. In this step, you add the bank or service with the most revenue transactions. You can add additional accounts and services later.

Kabbage can connect directly with multiple banks including Chase, Wells Fargo, Bank of America, BB&T, Capital One, and SunTrust, just to name a few. You can also connect business services including but not limited to PayPal, Stripe, Sage, Square, eBay, Amazon, and QuickBooks.

Step 3: Personal Information

Once you’ve connected your account, it’s time to provide personal information to Kabbage. This information includes:

  • Name
  • Address
  • Date Of Birth
  • Social Security Number
  • Phone Number

Once you input this information and hit “Submit,” Kabbage will perform a hard pull on your credit. Remember, though, Kabbage focuses on the performance of your business — not your credit score.

Once Kabbage’s system analyzes your credit history and your account transactions, an approval decision will be made. Within minutes, you’ll be able to see if you’ve been approved for a line of credit. Once approved, you’ll have access to the Kabbage Dashboard, which features your full credit limit and options for withdrawing funds. You can withdraw the full amount, or you can select the amount and terms that work for you.

One last thing to note is that Kabbage can automatically approve you for up to $150,000. Higher credit limits up to $250,000 require a manual review.

Review Your Rate & Borrowing Terms

Requirement Minimum requirement
Borrowing Amount: Up to $250,000
Draw Term Length: 6 or 12 months
Borrowing Fee: 1.5% – 10% of the borrowing amount per month
Draw Fee: None
Effective APR: 24% – 99%
Learn more

After you’ve been approved for a Kabbage line of credit, you can use the Dashboard to initiate draws, view information about previous loans, see account details, and view or add linked accounts. Account details show the percentage of funds utilized, your next statement date, your next due date, and the minimum amount due.

To review your rates and terms, select an amount to borrow as if you were initiating a draw. If you’re borrowing $10,000 or more, you can select from 12-month or 6-month terms. Loans less than $10,000 can only be taken with 6-month terms.

Once you’ve selected the amount and terms, Kabbage will provide a breakdown of your payment schedule. This schedule shows the date of each payment, the principal amount that will be paid, the rate charged for that payment, the fee amount, and the total amount due for each month. Below your monthly schedule you’ll find the new loan amount, the total amount of fees you will pay, and the total cost of the loan including principal plus fees.

Kabbage also has a loan calculator on its website if you haven’t yet applied. While you won’t know the specific fees, credit limit, and other details until you apply, this can give you an idea of whether or not this financial product is an option that will work for your business.

Kabbage provides you with a summary of your fees when you initiate a draw, but how is this calculated? The lender charges a monthly fee each month that you have a balance. Fees range from 1.5% to 10% and are based on the performance of your business. This monthly fee is added onto your principal balance, which is divided evenly across 6 or 12 months depending on the terms you selected.

As you pay down your balance, your fees will be reduced. For example, you may pay 3% for the first 6 months of your loan, then pay just 1.25% for the last 6 months. There are no prepayment penalties, so you can pay off early and save.
Kabbage is very transparent about its fees and your total cost of borrowing. On each loan agreement you make with Kabbage, you will find a SMART Box. The SMART Box provides important information including:

  • Disbursement Amount
  • Repayment Amount
  • Term
  • Total Cost Of Capital
  • Annual Percentage Rate (APR)
  • Average Monthly Payment

This gives you an overview of all of the details of your loan, so there’s never any question as to how much you are paying to draw from your Kabbage line of credit.

Optional: Request A Kabbage Card

One of the things that makes Kabbage stand out from other lenders is its Kabbage Card. When you make traditional draws using the Kabbage website or app, funds are transferred immediately to your bank account, but this process may take 1 to 3 business days. What happens if you need instant access to cash?

With most lines of credit, you’re stuck waiting it out until the funds hit your business bank account. But with the Kabbage Card, you can immediately access your line of credit anywhere Visa cards are accepted.

The Kabbage Card allows you to simply swipe to make your purchases. Once you’ve made a purchase with your card, a new 6-month loan will be created. This loan will have the same rates and terms as traditional draws from your line of credit. Kabbage does not charge additional fees to use the Kabbage Card, and your credit will not be affected.

All Kabbage account holders are eligible to receive the Kabbage Card and can receive it by simply logging into their account and requesting the card. Once received, the card is activated through the Kabbage Dashboard and can be put into use immediately to purchase inventory, supplies, pay a bill, or cover emergency expenses. You must apply for a Kabbage line of credit in order to be eligible to receive the Kabbage Card.

Withdraw Funds & Repay Your Loan

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Once you’ve opened your Kabbage line of credit, you’re eligible to take draws immediately. Through the Kabbage Dashboard, you can make a draw on your line of credit in just a few easy steps.

Select the amount you’d like to withdraw up to and including your total credit limit. If you select an amount of $10,000 or more, you’ll be able to choose between 6-month and 12-month terms. If the amount falls under $10,000, only 6-month terms are available.

Once you’ve selected your loan amount and terms, you’ll be able to view your repayment schedule. If you approve of the repayment schedule, you can continue to review the loan. The next step will include reviewing the details of your loan and the linked bank account information. If everything looks good, e-sign the agreement and submit. You should then expect to see the funds in your checking account within 1 to 3 business days.

Kabbage makes it easy to repay your loan by using your linked checking account for ACH withdrawals on your due date. You’ll receive a statement each month approximately two weeks before your due date. On your Kabbage dashboard, you’ll be able to view the date of your next statement, your next due date, and the minimum amount due. This amount will be automatically withdrawn from your business checking account on your due date.

You also have the option to make a manual payment to your account through the Dashboard. You can select the minimum monthly payment, the entire amount, or another amount. This is an option you can use if you would like to pay down your balance or pay your loan off early.

If you have more than one loan, you will still just have one monthly payment. You can learn more about each loan through the “Details by loan” tab in your Kabbage Dashboard. This provides you with an overview of each loan you’ve taken, including the date it was drawn, the original loan amount, and remaining balances.

Final Thoughts

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Kabbage lines of credit are ideal for business owners who want quick access to cash without a lengthy, difficult application process. However, it is important to note that these lines of credit do come at a cost. Monthly fees added onto your principal balance are steep when compared to low-interest, long-term financing options. However, if you need business capital quickly and without hassles, the return-on-investment may be worth the additional costs. Check out our full Kabbage review to learn more about this lender and its lines of credit.

The post How To Use Your Kabbage Line Of Credit appeared first on Merchant Maverick.

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