The Best Business Loan And Financing Resources For Washington Small Businesses

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

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

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

The Best Online Business Lenders For Washington Businesses

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

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

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

Fundera

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

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LoanBuilder

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

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BlueVine

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

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Lending Point

Washington may be known for hosting innovative businesses, but financing your risky business venture can be extremely challenging. Lending Point offers traditional installment loans in small amounts to individuals with good credit. This is great if you need a little more money to get things off the ground.

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OnDeck

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

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Washington Banks & Credit Unions

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

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

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

Chase Bank

America’s biggest bank has a healthy presence in Washington State. Despite their size and market share, they’re still pretty traditional when it comes to business loans, so you’ll have to seek out a branch in your area.

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

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

Wells Fargo

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

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

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

 

US Bank

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

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

 

Credit Unions

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

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

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

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

Bad Credit? Your Best Options

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

If your credit is bad, consider:

  • Online Lenders: The online lending industry grew in the ashes of the 2008 market crash, with many specializing in lending to businesses with good fundamentals but bad credit. Some of the lenders use predatory practices and should be avoided at all costs, but there are many that have established transparent and reasonable lending practices.
  • Non-traditional Products: Loan products like invoice factoring aren’t very concerned about your credit history. If you’re in real estate, hard money is also an option, but keep the risks in mind.
  • Credit Cards: This is not a loan per se, but one of the easier ways to build your credit back up is to get a credit card and pay it off every month. Even if you don’t qualify for the sexiest business credit cards out there, many companies are willing to extend small credit lines to risky customers. In the worst case scenario, there’re still secured credit cards.

What To Consider When Choosing A Lender

buying a pos system

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

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

  • Your Industry: Some lenders specialize in lending to specific industry. Others can’t or won’t lend to certain industries. If they can’t write you a loan, cross them off your list.
  • Borrowing Amount: If you need $5,000, you’ll be looking at different lenders than if you need $5 million. Choose the right tool for the job.
  • Rates & Fees: How much is it going to cost you? Are the lender’s rates in line with the industry standard? Do they tell you what additional fees they charge, or do they hide them?
  • Time To Funding: Do you need the money right away or next quarter? Choose a lender that can work with your timetable.
  • Term Lengths: You’ll want to know how quickly you have to pay the money you’re borrowing back. Make sure you can afford the loan over the long-term.
  • The Type Of Expense Being Financed: Some financial products are limited in what they can be used for. Do you need a lump sum of cash? Or do you need a line of credit that you can draw upon periodically?
  • Collateral: Secured loans and lines of credit require some form of collateral, usually in the form of an asset, real estate, or cash deposit. If you don’t have collateral to put it, you’ll want to look at unsecured loans.

Final Thoughts

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

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

Just starting out? Check out our resources for startups.

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

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

business loan reasons

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

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

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

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

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

1. Start A Business

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

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

2. Increase Working Capital

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

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

3. Purchase Inventory

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

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

4. Purchase Equipment

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

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

5. Hire New Talent

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

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

6. Expand Products/Services

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

7. Open A New Location

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

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

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

8. Pay Taxes

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

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

9. Create A Safety Net

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

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

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

10. Refinance Another Loan

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

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

11. Buy A Business

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

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

12. Buy Out A Partner

business loan vs personal loan

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

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

13. Cover Construction Costs

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

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

14. Cover Unpaid Invoices

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

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

15. Buy Insurance

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

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

16. Cover An Unexpected Expense

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

17. Advertise Your Business

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

18. Build Credit

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

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

19. Take Advantage Of A Business Opportunity

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

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

Types of Business Loans

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

Resource Description

Startup Loan

Financing for businesses 6 months old or younger.

Crowdfunded Loan

Funds sourced from a network of backers or investors. 

Small Business Grant

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

Working Capital Loan

Financing to cover daily operating expenses of running a business.

Business Line of Credit

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

Short-Term Loan

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

Business Credit Card

Credit card used for business expenses.

Equipment Financing

Self-securing loan to finance major equipment purchases.

Installment Loan

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

Long-Term Business Expansion Loan

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

Real Estate Crowdfunding

Crowdfunded capital to purchase real estate for a business.

Merchant Cash Advance

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

Business Acquisition Loan

Loan to purchase a business.

Franchise Loan

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

SBA 7(a) Loan

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

Commercial Real Estate Loan

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

Hard Money Loan

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

Invoice Factoring

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

Emergency Business Loan

Fast loans to cover business funding emergencies. 

Installment Loan

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

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

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

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

smartbiz logo

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

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

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

lending club logo

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

Short-Term Loan

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

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

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

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

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

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

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

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

Merchant Cash Advance

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

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

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

Lender Borrowing Amount Min Credit Score Time To Funding Next Steps

$5K – $500K 550 1-3 Days Apply Now

$2K – $5M 550 1-2 Days Apply Now

$5K – $500K 500 2-5 Days Apply Now

$5K – $250K 500 2-5 Days Apply Now

Business Credit Card

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

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

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

Business Line of Credit

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

Lender Borrowing Amount Draw Term Draw Fee APR Next Steps

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

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

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

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

Invoice Factoring

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

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

Equipment Financing

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

We recommend the following equipment financers:

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

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

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

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

Do You Need A Business Loan? Next Steps

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

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

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

3. Calculate how much you can afford to borrow.

4. Take a look at our favorite lenders.

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

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

Final Thoughts

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

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

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

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

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

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

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

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

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10 Strategies To Improve Cash Flow

10 Strategies To Increase Cash Flow

If you’re reading this blog, then you already know how important cash flow is. Cash flow is the mainstay of your business. Positive cash flow means you can successfully run and grow your business, and negative cash flow — well, that’s bad news.

But what do you do when you have negative cash flow? How do you increase your positive cash flow and get your business where it needs to be?

Cash flow is affected not just by bringing in more cash inflows, but also by limiting your cash outflows. This means you have to manage your expenses just as much as your sales. Read on for ten practical tips to help you improve your cash flow and get your business on the right track.

1. Send Invoices Right Away

Sales and invoices are the lifeblood of a small business. You can’t get paid if you don’t send invoices. Simple as that.

Make sure you stay on top of invoicing your customers. The quicker you send invoices out, the faster the cash comes in. If your current invoicing process is tedious, consider switching to a cloud-based accounting software with attractive, easy to create invoices. Software like QuickBooks Online and Zoho Books both offer great invoicing capabilities which can help you speed up your invoicing process and increase your cash flow.

Our comprehensive accounting software reviews cover QuickBooks products, Xero, Freshbooks, Sage, and more of the top cloud-based and locally-installed accounting solutions on the market today. If you want a quick peek at the top contenders, check out our accounting software comparison chart.

Using an old version of QuickBooks Pro? Save $100 when you upgrade to QuickBooks Desktop 2018.

Purchase QuickBooks Desktop Pro 2018 Now

2. Get Customers To Pay Invoices On Time

Another key to increasing your cash flow is getting your customer to pay their invoices on time. We know this is easier said than done, but there are plenty of practical strategies to increase the likelihood of getting paid faster. Here are some of our top invoicing tips:

Follow Up With Invoice Reminders

Make sure you remind your customers when their invoices are due. Send email reminders a few days before the invoice is due, the day the invoice is due, and a few days after. If they still haven’t paid, give them a call and continue sending reminders. Many accounting programs have built-in invoice reminders that you can automatically send to late paying customers.

Give Your Customers Incentives

Consider offering a discount to customers who pay their invoices before a certain time. If your invoice terms are Net 30 (due 30 days after the invoice is sent), but you really want your customers to pay their invoices in the first week they receive the invoice, offer a small discount. Customers looking for a deal will be more likely to pay their invoices faster, which means you get cash faster.

Charge A Late Payment Penalty

Another key to successful invoicing is having a strong invoicing policy. Choose a consistent time when invoices are due (ex. due upon receipt, Net-15, Net-30, etc) and stick to it. Have a late payment penalty in place for customers who exceed the due date. Not only will this help increase your chances of getting your money, it will also set you apart as a professional.

When it comes to late payment penalties, be upfront about the penalty, when it will be charged, and how much will be charged. You can often include this in your terms and conditions section on your invoice. Do some research on what a normal late penalty policy looks like for your industry before implementing.

Consider Invoice Factoring

If the above strategies don’t work or you need cash right away, another option is invoice factoring. Invoicing factoring is the process of selling your unpaid invoices to a company in exchange for immediate cash. The factoring company takes a small cut of the money you earn, but the payoff is that you aren’t stuck waiting on customers.

Invoice factoring can be a great cash flow solution, as can invoice financing. Check out one of our favorite invoice factors, BlueVine, to learn more. Or take a look at Fundbox, an invoice financer, for an alternative solution.

3. Increase Prices

If you are hurting for cash flow, it may be time to consider increasing the prices for your products or services. Ask yourself:

  • What are my competitors charging?
  • Have the prices for equipment or inventory increased?
  • How much manpower does my inventory assembly or services require?
  • Do my prices outweigh the time put into my creating my products?
  • Are my prices too low? Do my products come off as cheap or valuable?

You want to strike a balance between keeping your prices competitive and fairly compensating the hard work you and your employees do. At the end of the day, you want to make sales, but you also want to make a profit. If your prices are too low, you may be selling yourself short. In some cases, lower prices can also make your company seem less qualified.

4. Expand Sales Market

Another solution to increasing positive cash flow is to brainstorm new sources of income. Get the dream team together, sit down with some coffee, and consider new ways to expand your sales market. Here are a few new sales possibilities to get the ideas rolling.

Add New Services Or Products

Think about the current items or services you offer and consider if there are other items or services you think would be a good addition to your business. Think outside of the box and consider alternate ways to earn income as well.

Maybe your coffee shop starts offering homemade lemonade for the summer; maybe your event planning service adds a cleaning service to maximize on business; maybe your office rents out its large outdoor space for parties and events on the weekends when it’s not in use. Whatever it is, get creative about new ways your business can generate income, which will in turn and increase cash flow.

Create A New Marketing Strategy

Maybe the products you offer are spot on, but your marketing could be expanded. Think of new ways to get the word out about your business. Consider if there are any other groups of people that could benefit from what your business offers. Bringing in more customers is a great way to bring in more cash flow.

Encourage Customers To Buy More

Another great way of improving cash flow is getting your existing customers to spend more. There are two great ways to do this:

  • Bundle Items: Sell similar items together to encourage increased spending.
  • Advertise Related Products: If you use an eCommerce platform, advertise additional products that the buyer “may be interested in” or that “others also purchased.”

Both of these can be great ways to expand your existing sales (rather than having to expand a whole sales market). If you want to start advertising related products or selling your products online, check out our top eCommerce recommendations.

Don’t Forget Your Loyal Customers

Another great way to expand your market is by letting happy customers do it for you. Encourage loyal customers by offering discounts to loyal customers or implementing rewards programs, like stamp cards, for multiple purchases. Also, consider implementing a referral program. This way you can encourage your loyal customers to grow your business for you through word of mouth.

5. Reevaluate Operating Expenses

Managing cash flow isn’t just about getting more cash to come into your business. It’s also important to reduce the cash going out of your business as much as possible. Here are five tips for reducing your business’s operating expenses, so you have more cash to spare.

Cut Out Unnecessary Expenses

Take a careful look at your cash flow statement and analyze your company’s business expenses. Ask yourself these two questions:

  • Are these expenses necessary?
  • If they are necessary, is there a cheaper alternative?

Carefully consider your current expenses. Cut out any that are unnecessary and try to minimize the necessary expenses as much as you can. It may seem difficult to do, but you (and your wallet) will feel much better knowing that you’re managing your cash flow and expenses effectively.

Streamline Your Business Processes

Another important aspect of managing your cash flow is making sure your business is running as efficiently as possible. Focus on cutting time, not just costs. Analyze all of your current business processes and judge how efficient the current process is, and if there’s any way to speed up that process.

Maybe that means implementing accounting software to send invoices faster or rethinking your employees’ inventory assembly process. By using time efficiently, you can get more done, spend less on wages, and avoid excessive overtime pay (which can put a huge dent in your business’s cash)

Purchase More Efficient Equipment

One way to increase your company’s speed and efficiency is to purchase better, updated technology and equipment. While it may cost a bit to purchase the equipment initially, you will save time which cuts back on wage expenses. This may also lead to increased production or the ability to take on extra projects, which leads to more incoming cash.

Looking for equipment financing? Check out our comparison of the top equipment financers for small business.

Ask Suppliers For Bulk Inventory Rates

Some vendors, especially those with whom you have a good relationship, may offer discounts for buying inventory in bulk. These can definitely be worth taking advantage of, so don’t be afraid to ask your suppliers if they have any deals.

Consider Leasing Equipment

If you don’t have the cash to flat out buy equipment or you don’t qualify for a working capital loan, it might be worth considering leasing equipment. You lose the advantage of having the equipment as a fixed asset for your business, but you gain lower monthly payments, which may be what you need to keep your cash flow in check.

6. Liquidate Old Inventory

Inventory is one of the largest business expenses you might encounter. You need inventory to make a profit, but you want to make sure the inventory you’re buying is actually selling. Carefully consider which products sell well and which you have a hard time turning over. Take a look at your sales patterns to see when your busy and non-busy sales times are and order inventory accordingly.

If you have any old inventory that you’re having a hard time getting rid of, consider liquidating the items. Any money coming in is better than no money.

7. Pay Vendors At The Right Time

Be strategic about when you pay your vendors. If your vendor offers a discount for paying early, be sure to pay in the time required time to save some money. If the vendor doesn’t offer a discount, pay when is most favorable for your business.

Say your bill is due on the June 1st. Your cash flow statement records show that May is a slow month for your business, but June has a history of higher sales. Pay your bill the last day it’s due so that you can report a positive cash flow for May.

If you need even more time to pay off bills, you can also consider paying with a business credit card. This way you can pay off the expenses over a period of time rather than all at once. Take a look at our business credit card reviews to find the right card for you.

8. Open A Business Savings Account

If you don’t have one already, open a business savings account where you can earn money on interest. This is a simple way to generate a bit of extra cash and it’s a smart way to ensure you always have a cash flow cushion for your business.

9. Consider A Cash-Back Business Credit Card

Using a cash back business credit card can be a strategic way to earn cash on your expenses. As long as you use the card wisely and can afford to make regular (if not full) payments each month, a cash back credit card is easy money. There are several great cash back rewards cards out there. Here are some of the best cash back business cards for small businesses.

10. Take Out A Small Business Loan

Another option to increase cash flow is to take out a short-term loan or line of credit. With a short-term loan, a lender gives you a lump sum of money that is paid back in regular installments over a short period of time. With a line of credit, a lender grants you a max borrowing amount that you draw from any time you need cash; payments are made only on the money used.

While the prospect of owing money may make you squeamish, there are several great reasons to take out a cash flow loan:

  • To expand your business
  • Purchase inventory
  • Take on a new, profitable project
  • Purchase new equipment
  • Unexpected expenses
  • To cover off-season slumps

If a loan sounds like a good cash flow solution for your business, check out our top small business lenders to find the right loan for you.

All of these tips can help you manage and increase your cash flow. Whether you decide to focus on increasing your sales, decreasing your expenses, gaining capital — or a mix of them all — you’re well on your way to increasing your cash flow and running a more successful business.

The post 10 Strategies To Improve Cash Flow appeared first on Merchant Maverick.

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The Best Free Credit Score Services

free credit score monitoring service

Having a good credit score is integral to getting goods and services at a reasonable rate. Most creditors will look pull up at least one of your scores, whether you are looking for a loan, housing, a credit card, or some other product or service.

It’s important to have at least a rough idea of your current credit score, whether that’s so you’re prepared for what creditors are going to see when they pull up your history, because you are trying to improve your score, or something else.

There are a number of different services that can help you get a good overall picture of your credit health. But which ones are the best? And what do their scores really tell you? Below, we explain exactly what credit scores are and list some of our favorite places to access your scores for free.

Read on for the details!

What Are Credit Scores?

In short, credit scores are numbers that represent your creditworthiness. Lenders, credit card issuers, and other services that expect payment, like utility companies, cell phone providers, and more, look at your credit score to see how creditworthy you’ve been in the past, which indicates how likely you are to pay on-time in the future. Personal credit scores range anywhere from 300 to 850; the higher the better.

Each creditor has their own ideas about what’s considered “good” credit, but typically if you have a score above 600, you won’t have a terribly difficult time finding creditors willing to work with you. However, the higher your credit, the more services you’ll qualify for, and the better rates you’ll receive.

Contrary to popular belief, you don’t have just one credit score; in fact, you have many. Credit scores are derived from your credit report — a history of your past debts, payments, and other information gathered by credit reporting agencies. The big three credit reporting agencies are Experian, Equifax, and TransUnion. While all three agencies gather similar information about you, they might not all have the same information.

A scoring algorithm, usually either VantageScore or FICO, is applied to your credit report to come up with your score. As such, consumers have many different credit scores, depending on the scoring system and the credit report your information was derived from.

VantageScore VS FICO

Credit scores are derived from your credit report using a scoring model, either VantageScore or FICO. Both have scales of 300 to 850, but they might return different scores because they place importance on different factors.

Most free credit score services get their data from VantageScore. However, many creditors will look at your FICO score. If a potential lender pulls your TransUnion FICO score, for example, they will get a different number than what you’re seeing from your free credit score service.

That said, the difference in scores doesn’t tend to be large; if you have a high FICO score, you will also have a high score from VantageScore. Conversely, if you have a poor (or inaccurate) marks on your report, they will be reflected by both VantageScore and FICO as a lower score. For general credit score monitoring, either VantageScore or FICO will suit most consumer’s purposes.

If you need to know your FICO score, for whatever reason, you have a few different options:

  • Some of your FICO scores can be accessed for free via Discover Credit Scorecard (see below). This score is derived from your Experian data.
  • Scores derived from all three credit reporting agencies can be purchased directly from FICO via myFICO. Currently, one-time access to scores from all three agencies can be purchased for $59.85 ($19.95 for scores from one agency).
  • Some credit card issuers, or other places that extend credit, will provide your scores if you are a customer.

Be aware, however, that even if you check your FICO score from the same agency that your lender does, you still might be looking at a different score. FICO offers a number of different credit scores, some of which are not available to consumers.

The Best Free Credit Score Services

The following are our favorite credit score services. These services derive scores from at least one of the three major credit reporting agencies. All offer services for free and are available to all consumers.

Credit Karma

Credit Karma was one of the first online services to offer your credit scores for free. This service offers scores and reports from two agencies: Equifax and TransUnion (both VantageScore). Scores and reports are updated weekly. They also offer free daily credit monitoring, but only for TransUnion.

Credit Karma is the only service we know of that offers free scores from two different agencies; it is also the only one that pulls data from Equifax. Additionally, it offers a number of other useful financial tools for consumers, including personalized credit card and loan recommendations, financial calculators, informative financial blog posts, and even help filing your taxes.

Discover Credit Scorecard

Discover has recently started offering free credit scores to all consumers, regardless of whether or not you are a Discover customer. This is one of the only services to offer a free FICO score; most free credit score services provide your VantageScore. Discover’s FICO score is derived from Experian, and it’s updated on a monthly basis.

Be aware, however, that because FICO offers a number of scores, the score shown on your Discover Credit Scorecard might not be the same score that your creditors are using. However, it might still be worth a look for educational and general credit monitoring purposes.

WalletHub

WalletHub offers a free score and report from TransUnion (VantageScore). This is the only free credit score service that updates on a daily basis.

In addition to your credit score, WalletHub offers other useful services to improve your credit and financials. Customers receive free monitoring of their TransUnion account, as well as services such as customized advice to improve your credit, credit card recommendations, and savings alerts.

Credit Journey from Chase

Chase offers TransUnion scores and reports via Credit Journey. This service is free and available to all consumers (not just Chase customers). Your score is updated on a weekly basis.

Chase also tracks your score over time and has a credit score simulator that shows how your score might change if you take certain actions.

Free Annual Credit Reports

You should know that, by law, Experian, TransUnion, and Equifax are required to issue a free copy of your credit report every 12 months. Consumers who request a free copy of their report will receive a full copy, whereas many free services only offer a limited report. You can use your free annual reports to review the information included and contest any mistakes that you find.

Unfortunately, your annual free credit report does not include any actual credit scores. To access this information, you’ll have to sign up for a free credit score service or pay for your scores.

Annual credit reports can be requested at AnnualCreditReport.com.

Final Thoughts

Because free score services only offer scores derived from one or two agencies and don’t always offer a full credit report, it’s a good idea to also request free copies of your credit reports from AnnualCreditReport.com on a yearly basis and contest any mistakes that you have found.

That said, free credit score services are useful for educational purposes and general credit monitoring — just remember that the specific score shown is unlikely to be the same score that your creditors see. However, a free score service can give you the tools you need to improve and maintain your credit score. All the services listed above are free, easy to use, and offer useful services in addition to your credit score.

Do you need to improve your credit? Read about five ways to improve your score.

The post The Best Free Credit Score Services appeared first on Merchant Maverick.

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Loans For Freelance Businesses: Your 13 Best Options

loans for freelancers

Freelancer. The very word evokes freedom (and lances). If you’re a self-employed freelancer, I’m sure I don’t have to lecture you about the perks and drawbacks of running a freelance business. You probably enjoy the independence — the feeling of freedom that comes from choosing your own work assignments and making your own financial choices without a boss looking over your shoulder.

However, you’re probably less than thrilled with the difficulty of getting a small business loan. It’s not easy for any business to qualify for a loan from a big bank these days, but it’s all the more difficult for a freelance business. Most banks see sole proprietors as a lending risk, as you are personally liable for all losses and debts your freelance business incurs. Plus, your entire business is dependent on your good health and ability to work.

For these and other reasons, many freelancers would benefit from exploring alternate means of financing. Thankfully, many different types of financing are available from online lenders. When compared with the big banks, online lenders tend to be somewhat more relaxed in their eligibility requirements. But while you may face fewer hurdles regarding your credit score, annual revenue, and time in business, online lenders usually charge higher interest rates than bank loans. That’s the trade-off you accept in exchange for the convenience and less stringent eligibility barriers of online lenders.

Let’s explore the main categories of financing available to freelance businesses and the top reputable lenders that offer loans within each category. Note that many online lenders offer more than one type of loan, so if I list a lender under a particular loan category, that doesn’t mean they don’t offer other loan products!

Personal Loans

Freelancers will find it difficult to get a business loan, whether from a bank or an online lender. In fact, this goes for most young businesses, freelance or not. Lenders of business loans closely examine your business’s revenue, net income, debt-to-asset ratio, business credit, and collateral, and only the most profitable and well-established businesses tend to qualify.

Personal loans are different. With a personal loan, the lender assesses your credit-worthiness, not that of your freelance business, though you will have to disclose the fact that the loan will go towards supporting your freelance business. However, whether or not you qualify for a personal loan will mainly depend on your personal credit score, credit history, source of income, and debt-to-income ratio. Borrowing amounts are also less than with business loans. Typically, the maximum borrowing amount for personal loans is $35K to $50K.

I’m going to walk you through some of the top online vendors of personal loans. But first, here are some links to articles we’ve done on using personal loans for business expenses.

  • The Merchant’s Guide To Personal Loans For Business
  • Top Personal Loans For Business Compared

Upstart

Borrower requirements:
• Must have a personal credit score of 620 or higher.
• No time in business or revenue requirements.
Visit the Upstart website
Read our Upstart review

Upstart is a great personal lender for the freelancer whose credit might not be stellar. In contrast to the personal lenders who scrutinize your credit score/history and finances to the exclusion of all else, Upstart takes a broader view of your earning potential by considering factors such as your employment history and education. You’ll likely still need decent credit to qualify — your credit score must be 620 or higher — but it’s good to see a lender whose conception of credit-worthiness isn’t quite so exclusionary.

You can borrow a maximum of $50K (in most states) from Upstart — more than with many competitors. As far as Upstart’s terms and fees go, the APR ranges from 7.73% to 29.99%, term lengths are for three or five years, and there’s an origination fee of up to 8%.

Overall, Upstart is a top-rated personal lender with a relatively progressive lending ethos. Check out our full Upstart review and Upstart’s website using the links above.

Lending Club

lending club logo
Borrower requirements:
• Must have a personal credit score of 600 or higher.
• No time in business or revenue requirements.
Visit the Lending Club website
Read our Lending Club review

Founded in 2006, Lending Club was one of the first non-bank online lenders to come upon the scene. They remain one of the most popular online lenders out there, as their rates are competitive and their loans are relatively easy to qualify for. What’s not to like?

For personal loans, Lending Club’s maximum borrowing amount is $40K. The APR ranges from 5.98% to 35.89%, term lengths are for three or five years, and there is an origination fee of 1-6%.

Lending Club has lent money to countless people in its decade-plus in business. To learn more about Lending Club, links to the company’s website and our Lending Club review are posted above.

Prosper

Borrower requirements:
• Must have a personal credit score of 640 or above.
• No time in business or revenue requirements.
Visit the Prosper website
Read our Prosper review

Another pioneer in the online lending industry is Prosper, founded in 2005. As with the previous lenders listed, Prosper offers personal loans you can put towards your freelance business.

Prosper offers fixed-term loans with lengths of three or five years. The company’s APRs range from 5.99% to 35.99%, which includes a closing fee of 0.5% to 4.95%, and the maximum borrowing amount is $35K. You will need a credit score of at least 640, however.

Check out our Prosper review at the link above if you’re intrigued. Afterward, visit Prosper’s website and see what kind of rates you can get compared to the other personal lenders I’ve mentioned.

SoFi

sofi logo
Borrower requirements:
• Must have a personal credit score of 660 or above.
• No time in business or revenue requirements.
Visit the SoFi website
Read our SoFi review

SoFi describes itself as “a new kind of finance company.” Short for “social finance,” SoFi offers free career coaching and financial advising to all members. SoFi’s loans are quite flexible in comparison to the other personal lenders listed here.

SoFi’s maximum borrowing amount of $100K is remarkably high for a personal loan vendor, and term lengths run from three, five, or even seven years. With fixed APRs from 5.49% to 13.49% and no origination fees, SoFi’s flexible personal loans are quite competitively priced indeed. On the other hand, SoFi’s borrower requirements are a bit more stringent than those of the other personal lenders listed here, plus the loans are slower in coming — after you’re approved, it can take up to 30 days for you to get your funds.

Visit the above links to read our SoFi review and check out their website to see what they can offer you. Remember, with lenders, as with life, it pays to comparison shop!

Lines Of Credit

Many online lenders include lines of credit as part of their product offerings. If you own a credit card, you’ll understand the concept of a line of credit loan. You’ll get access to a certain amount of funds, and you can draw upon these funds at any time while paying interest only on what you actually borrow.

Lines of credit actually tend to be less expensive than credit cards. Moreover, the repayment terms usually differ.

I’m going to list some lenders offering business lines of credit, but first, here’s further information about this common loan type.

  • The Merchant’s Guide To Line Of Credit Loans

StreetShares

Borrower requirements:
• Must be in business at least 12 months with a revenue of $25,000 per year (sometimes StreetShares will make exceptions for high-earning businesses at least 6 months old).
• Must have a personal credit score of 620 or above.
Visit the StreetShares website
Read our StreetShares review

StreetShares is an online lender offering lines of credit along with traditional installment loans and contract financing. While StreetShares was founded by veterans and takes pride in catering to the particular needs of veteran-owned business, any business owner can use StreetShares to take out a loan — including freelancers!

Take note of the requirements listed above, as there are revenue/time-in-business requirements to be met. As for the lines of credit themselves, the maximum amount you can borrow is $100K, but the amount of the line of credit you can actually get will depend on your revenue. The more you earn, the more you can borrow. All things considered, StreetShares’s borrower requirements for a business line of credit are not terribly onerous.

The draw term length for a StreetShares line of credit is 3 to 36 months, the APR range is 7% – 39.99%, and there is a draw fee of 2.95% each time you draw from your line.

BlueVine

bluevine logo
Line of credit borrower requirements:
• Must be in business at least 6 months with a revenue of $10,000 per month.
• Must have a personal credit score of 600 or above.
• Lines of credit are not available in all states. See full review for details.
Visit the BlueVine website
Read our BlueVine review

Founded in 2013, BlueVine is an online lender that offers both business lines of credit and invoice factoring (more on that later). Let’s examine their lines of credit.

While the amount you can borrow will depend on your revenue, BlueVine’s maximum borrowing amount is $200K. Term lengths are for 6 or 12 months. APRs range from 15% to 78%, and there is a draw fee of 1.5%.

Along with the borrower requirements listed above, note that BlueVine lines of credit are not available in all 50 states.

Invoice Factoring

Invoice factoring is a way for B2B businesses to maintain a consistent cash flow by selling their invoices, at a discount, to factoring companies in exchange for cash upfront. It’s a way to even out your cash flow when you have clients who take their sweet time paying their invoices.

Invoice factoring has some complexities to it, so if you’re thinking it makes sense for your freelance business, I highly recommend reading our explainer article on the subject.

  • A Basic Introduction To Invoice Factoring

Fundbox

Invoice financing borrower requirements:
• No specific time in business, revenue, or credit score requirements.
Visit the Fundbox website
Read our Fundbox review

Founded in 2013, FundBox offers an invoice financing product called FundBox Credit. Invoice financing is very similar to invoice factoring — the difference to the borrower is that you must make payments on your loan on a weekly basis, not whenever your customer pays their invoice.

Fundbox Credit will hold great appeal to many freelancers due to its relaxed eligibility requirements — you don’t have to meet any time in business, revenue, or credit score threshold! However, you are required to have been using compatible accounting or invoicing software for at least three months, or a compatible bank account for at least six. See our Fundbox review for details.

Fundbox Credit lines are offered up to $100K, the term lengths are 12 or 24 weeks, and there is an advance fee of 0.4% to 0.7% per week when you make your weekly payments.

Riviera Finance

Invoice factoring borrower requirements:
• No specific time in business, revenue, or credit score requirements.
• Best for B2B and B2G businesses.
Visit the Riviera Finance website
Read our Riviera Finance review

Founded all the way back in 1969, Riviera Finance is no newcomer when it comes to invoice factoring. Riviera Finance offers non-recourse factoring, which means you won’t have to repurchase an invoice if a customer goes bankrupt.

While Riviera Finance is a real-world meatspace lender with 20 offices throughout the U.S. and Canada, you can nonetheless apply online to use their services.

Riviera Finance offers contracts that run anywhere from month-to-month to 12 months long, and the credit faculty size runs from $5K a month to a whopping $2 million per month! Check out the links above to learn more about Riviera Finance.

P2P Loans

P2P (peer-to-peer) lending is a lending model employed by many online lenders. Instead of borrowing from a central banking entity, your loan application is instead approved by a banking platform to go live for online bidding, where everyday investors who like the cut of your business’s jib can invest in your business.

Small-time investors can be risk-averse, so freelance businesses with bad credit may have difficulty securing the needed financing. Nonetheless, you’re still more likely to be approved for a P2P loan than a bank loan.

Many online lenders of personal loans and other kinds of loans are P2P lenders. In fact, of the lenders I’ve mentioned thus far, Upstart, Lending Club, Prosper, and StreetShares are all P2P lenders!

Microloans

Microloans are small loans — under $35K but typically in the range of $5K to $10K — offered at low interest rates. Microlenders typically focus on marginalized groups that face difficulties getting a loan elsewhere. As such, they are a solid option for women and minority freelancers seeking smaller loans, though any freelancer can take advantage of the generous terms offered by microlenders.

Kiva U.S.

kiva logo
Borrower requirements:
• No specific time in business, revenue, or credit score requirements.
Visit the Kiva U.S. website
Read our Kiva U.S. review

Kiva U.S. is a remarkable microlender in that not only are there no revenue, credit score, or time-in-business requirements to meet in order to qualify, but Kiva U.S. loans carry no interest or fees whatsoever! Pretty cool, eh?

With Kiva U.S., the only requirement to get a loan is that you run a business and that you put your funding towards your business. You can take out a Kiva U.S. loan for as much as $10K or as little as $25. Yes, that’s 25 dollars. Your APR will be a big fat 0%. Term lengths are for 6 to 36 months.

Does this sound too good to be true? Well, keep in mind that Kiva’s application process is significantly longer than that of other online lenders. The process can take up to two months. For more information, check out our Kiva U.S. review and Kiva U.S.’s website at the links above.

Accion

Borrower requirements:
• Requirements vary based on location — see full review for details.
Visit the Accion website
Read our Accion review

Accion is a nonprofit microlender that also happens to be one of our highest-rated lenders, period. Their reputation, customer service, and financial education programs are all top-notch. While Accion’s loans aren’t “free” like those of Kiva U.S., Accion is an excellent funding option for the freelance business owner.

Borrower requirements vary by location, so you’ll need to visit Accion’s site at the link above to see just what is required of you to get an Accion loan. Credit score requirements vary from 550 to 575, and you must demonstrate that you have sufficient cash flow to repay the loan.

While Accion’s loan offerings vary by U.S. state, you can borrow as little as $300 to as much as $1 million (and yes, it would be a stretch to call that a microloan!). APRs generally range from 7% to 34%, and you may need to put up specific collateral in some situations. Check out our full Accion review above for more details, then head to Accion’s website to see what specific offerings are available in your area.

Crowdfunding

Crowdfunding is an excellent way for freelancers in the creative industries to get funded by those who enjoy their work. Note that while P2P lending is sometimes referred to as debt crowdfunding, the kind of crowdfunding I’m talking about is rewards crowdfunding in which backers support you financially and get exclusive access to your work in return. It’s not technically lending, as you don’t have to pay back your backers!

Of course, running a crowdfunding campaign will require much more of your time and energy than a loan application, so know what you’re getting into. Below is a basic primer on running a crowdfunding campaign. (Note that I mention debt and equity crowdfunding in that article — I’m not focusing on those here.)

  • Crowdfunding For Startups: 8 Tips You Should Know Before Launching

Kickstarter

Campaign requirements:
• Must offer rewards to your backers.
Visit the Kickstarter website
Read our Kickstarter review

Founded in 2009, Kickstarter has become synonymous with crowdfunding. With over $3.6 billion in funding sent to creators and entrepreneurs, Kickstarter is the largest commercially-focused crowdfunding site in existence. If your freelance business is devoted to making creative works, Kickstarter is a great way to raise money for a big project.

Kickstarter requires all crowdfunding campaigns to create something that can be shared with others. There’s no limit to the amount of money you can raise on the platform. Your funding campaign can last for up to 60 days (though Kickstarter recommends 30-day campaigns), and Kickstarter will take 5% of what you raise as a platform fee. An additional 3% + $0.20 per pledge goes to the payment processor.

One thing to keep in mind with Kickstarter is that in order to collect the funds at the end of your campaign period, you must reach or surpass your funding goal. Fail to reach your funding goal, and you get nothing — no soup for you.

Check out our Kickstarter review at the link above if you’re interested, then cruise on over to Kickstarter’s website.

Indiegogo

indiegogo
Campaign requirements:
• Offering rewards to your backers is strongly recommended.
Visit the Indiegogo website
Read our Indiegogo review

Indiegogo is a crowdfunding platform that caters to a similar audience as Kickstarter — creative and tech projects and the backers who love them. Initially founded as a funding engine for independent films, Indiegogo soon expanded their mission, offering crowdfunding for a wide variety of commercial purposes. However, Indiegogo differs from Kickstarter in a few key ways.

While Kickstarter pre-screens campaigns for suitability before letting them campaign, Indiegogo serves all comers — just sign up and get started (though this doesn’t mean there are no rules to abide by). Another difference is that you’re not actually required to offer rewards to your backers. However, as you can imagine, you’re probably not going to raise much money if you offer people nothing, so I don’t recommend doing that!

Another difference with Kickstarter is that when you run an Indiegogo campaign, you can choose to employ the keep-what-you-raise crowdfunding model in which you keep whatever you raise at the conclusion of your campaign regardless of whether you’ve met your funding goal. Indiegogo is more flexible in its terms than Kickstarter.

Fees are largely the same as those of Kickstarter — there’s a 5% platform fee and a 3-5% per pledge payment processing fee. Check out the links above if you’re interested in Indiegogo’s crowdfunding model.

Patreon

patreon
Campaign requirements:
• Must offer rewards to your backers.
• Funding is ongoing on a per-month or per-creation basis.
Visit the Patreon website
Read our Patreon review

Patreon differs fundamentally from Kickstarter and Indiegogo. Instead of campaigning for a fixed period of time for a single project, Patreon lets you crowdfund on an ongoing basis. You can just keep creating on your own time schedule. Your patrons (assuming you attract some!) sign up to support you either on a monthly or per-creation basis. It’s a great way for freelancers to monetize their creative output indefinitely, not just for one specific project.

Patreon is generally more relaxed in the sort of campaigns it allows than Kickstarter or Indiegogo — you can probably get away with producing “edgier” content than with the other two. As for fees, Patreon takes 5% off the top, with payment processing fees coming to approximately 5% as well.

Final Thoughts

Life’s not easy for the freelancer. With all the other challenges you face, securing the funding you need can seem like an insurmountable hurdle. Thankfully, there are many viable funding options out there for the freelance business owner determined to make it work.

Be sure to explore multiple options in your funding quest so you can weigh each option on its relative merits. Now go forth and let your freelance flag fly!

The post Loans For Freelance Businesses: Your 13 Best Options appeared first on Merchant Maverick.

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Top 10 QuickBooks Capital Alternatives

Top Alternatives To QuickBooks Capital

QuickBooks Capital (see our review) is a brand new lending feature designed for QuickBooks Online (see our review) users that offers installment loans at competitive rates. QuickBooks Capital uses your accounting information to determine whether you’re eligible for a loan, making the application process incredibly simple.

However, if you need fast capital, you may not have the time to wait for QuickBooks to contact you. Or maybe you’re looking for a loan with a higher borrowing amounts and longer term lengths. It’s important to explore all of your options before making a decision, so you’ve come to the right place.

In this post, we’ve picked the top 10 alternatives to QuickBooks Capital. These lending options vary in loan type, borrowing amount, and borrower requirements, so that no matter what kind of business you run, you can find the best option that works for your business’s needs.

Read on to discover more about QuickBooks Capital and see which, if any, QuickBooks Capital alternative is right for you.

Getting A Loan Through The QuickBooks Capital Marketplace

If you don’t receive a notification saying you’re eligible for QuickBooks Capital, or if you want to explore all of your options, you can access the QuickBooks Capital Marketplace. The Quickbooks Capital Marketplace is where you’ll find seven additional lenders with which QuickBooks Capital directly partners: OnDeck, CelticBank, Fundbox, LoanBuilder, Funding Circle, BlueVine, and Direct Capital.

The QuickBooks Capital team says:

The 7 partners on our platform meet our guiding principles for transparency, privacy, security, consumer protection, and overall cost of capital including rates and fees.

The best part about applying for a loan using the QuickBooks Capital Marketplace is that the application is simple. Instead of going directly to one of these individual lenders, you’ll apply directly through the QuickBooks Capital website. QuickBooks Capital will use your existing QuickBooks Online data to fill in your application. Then you will be able to view offers from the lenders you are eligible for.

Several of the lenders on this list are QuickBooks Capital partners. Read on to learn which of the seven are our favorites.

1. Fundation

Top Alternatives To QuickBooks Capital

Best For…

Established small businesses looking for a loan or line of credit for working capital or business expansion needs.

Products Offered

  • Installment loans
  • Lines of credit

Founded in 2011, Fundation (see our review) has quickly become one of the top choices for business lending. With competitive rates, excellent customer service, and almost no negative reviews, it’s easy to see why. Fundation offers installment loans (also commonly referred to as term loans) and lines of credit.

The qualifications for Fundation are a bit more stringent than those of the other alternatives in this post. To qualify, you must have a credit score of 660 or higher, have been in business for at least a year, and have $100K/year in revenue. You must also have three full-time employees.

Here are the rates for Fundation’s installment loans:

Borrowing amount: $20K – $500K
Term length: 1 – 4 years
Origination fee: Up to 5%
APR: 7.99% – 29.99%
Collateral:  Personal guarantee, UCC-1 blanket lien

Here are the rates for Fundation’s lines of credit:

Borrowing amount: $20K – $100K
Term length: 18 months
Additional fees: $500 closing fee
2% draw fee
APR: 7.99% – 29.99%
Collateral:  Personal guarantee, UCC-1 blanket lien

How To Apply For A Fundation Loan

You can fill out an application online. As you’re applying, Fundation will tell you if the business characteristics you’re entering are good or bad, so you’ll have a better idea of whether your application will be approved. You will need to provide some documentation as well. It takes between two to seven days to complete the application process and receive funding.

Takeaway

Fundation is a great option for established businesses with good credit who are looking for a loan that offers the competitive rates of bank and credit card lenders, without the long, complicated application process. Read our complete Fundation review to learn more.

Visit the Fundation Site

2. SmartBiz

Top Alternatives To QuickBooks Capital

Best For…

Established businesses in good standing looking for an SBA loan to be used for working capital, debt refinancing, or commercial real estate.

Products Offered

  • Working capital
  • Debt refinancing
  • Commercial real estate purchasing

SmartBiz (see our review) has been simplifying the SBA loan process since 2009. SmartBiz does not issue loans themselves; instead, they help pair eligible applicants with an SBA lender. SmartBiz specializes in the General 7(a) Small Business Loan, which can be used for working capital, debt refinancing, or commercial real estate purchasing.

Because SBA loans are government-backed, it is harder to qualify for these loans than some of the other alternatives in this post. You must have at least fair credit, have been in business for two years, and have enough cash flow to support repayments. You also cannot have any tax liens, current charge-offs or settlements, or any bankruptcies in the last three years. You must be a US citizen or permanent resident. If you’re using your SBA loan for commercial real estate, the real estate in question must be at least 51% owner-occupied, and you can’t have any previous defaults on government-backed loans.

Here are the rates for working capital and debt refinancing loans:

Borrowing amount: $30K – $350K
Term length: 10 years
Interest rate: Prime rate + 3.75% (loans of $30K – $49K)
Prime rate + 2.75% (loans of $50K – $350K)
Other fees: Referral fee: 2%
Packaging fee: 2%
Guarantee fee: 0% – 2.25%
Bank closing costs: ~$450
APR: 5.85% – 8.95%
Collateral: Personal guarantee
Lien on business assets

Here are the rates for SmartBiz’s commercial real estate purchasing loans:

Borrowing amount: $500K – $5M
Term length: 25 years
Interest rate: Prime rate + 1.5% – 2.75%
Other fees: Referral fee: 0.5%
Packaging fee: 0.5%
Guarantee fee: 2.25% – 2.75%
Bank closing costs: ~$5K
APR: 5.85% – 8.95%
Collateral: Personal guarantee
Lien on the real estate

How To Apply For a SmartBiz Loan

The good news is, SmartBiz can determine whether you have a good chance of qualifying for an SBA loan in minutes. If you pass their questionnaire, you’ll be assigned a SmartBiz representative who will help you fill out your application. Depending on the number of documents you need to provide, this step can take a few weeks. Once you’re approved, you can receive funds right away (unless you’re using the funds for commercial real estate, in which case there are several extra steps required before you receive funding). Overall, the application can take anywhere from one week to three months depending on the type of loan you are applying for and the size of the loan.

Takeaway

If you’re an established business looking for an SBA loan, SmartBiz loans are much easier to apply for than most SBA loans. This option is not suited for startups. If you’re interested in learning more about SmartBiz, read our full SmartBiz review.

Visit the SmartBiz Site

3. StreetShares

Top Alternatives To QuickBooks Capital
Best For…

Small- to medium-sized businesses looking for a loan or line of credit to be used for working capital or business expansion needs.

Products Offered

  • Installment loans
  • Lines of credit
  • Contract financing

StreetShares (see our review) is a peer-to-peer lender that started back in 2013. The company was founded by veterans, for veterans, but you don’t have to be a veteran to use this small business loan service. StreetShares has competitive rates and low borrower qualifications making it a good option for merchants looking for installment loans, lines of credit, or contract financing. For installment loans, the maximum you’ll be approved for is 20% of your annual revenue.

To qualify for a StreetShares’ loan, you must have a credit score of 620 or higher, have been in business for a year, and have 25K in annual revenue (if you have $100K in revenue, you can qualify after being in business for only six months). If you’re interested in contract financing, the qualifications are even laxer; you just have to be a B2B or B2G business that sends invoices to your customers.

Here are the rates for StreetShare’s Installments loans:

Borrowing amount: $2K – $100K
Term length: 3 – 36 months
Interest rate: About 6% – 14%
Closing fee: 3.95% or 4.95%
APR range: 7% –  39.99%

Here are the rates for StreetShare’s lines of credit:

Borrowing amount: $5K – $100K
Draw term length: 3 – 36 months
Interest rate: About 6% – 14%
Draw fee: 2.95%
APR range: 7% –  39.99%

Here are the rates for StreetShare’s  contract financing:

Credit facility size: Max $500K per invoice
Advance rate: Up to 90%
Discount rate: Varies
Max overdue account: 180 days
Additional fees: None
Contract length: N/A
Monthly minimums/maximums: None
Factor all invoices: No
Recourse or non-recourse: Non-recourse
Notification or non-notification: Notification

How To Apply For A StreetShares Loan

To apply for a StreetShares’ loan, you simply fill out an online application. If approved, you’ll have to provide additional documentation. The whole process usually takes less than a week, so you can expect fast funding.

Takeaway

StreetShares is one of our top-rated small business lenders for a reason. This lender offers fast, affordable funding for small to medium-sized businesses and boasts some of the best rates on the market. Check out our complete StreeShares review for more details.

Visit the StreetShares Site

4. OnDeck

Top Alternatives To QuickBooks Capital

Best For…

Small- to medium-sized businesses looking for a loan or line of credit with a fast application process.

Products Offered

  • Short-term loans
  • Lines of credit

OnDeck (see our review) is an incredibly popular online lender that was one of the first to use technology for lending decisions — making approval fast. OnDeck also has relaxed borrower qualifications, although the loans can get expensive. OnDeck offers both short-term loans and lines of credits, and payments are made daily or weekly.

To qualify for an OnDeck loan, you must have been in business for twelve months, have a credit score of 500 or higher, and have an annual revenue of $100K.

Here are the rates for OnDeck’s short-term loans:

Borrowing amount: $5K – $500K
Term length: 3 – 36 months
Factor rate: x1.003 – x1.04 per month
Origination fee: 2.5% – 4%
Effective APR: Learn more
Collateral: UCC-1 blanket lien, personal guarantee

Here are the rates for OnDeck’s lines of credit.

Borrowing amount: $6K – $100K
Draw term length: 6 months
Draw fee: None
Maintenance fee: Typically $20/month
APR range: Starts at 13.99%
Collateral: Personal guarantee

How To Apply For A OnDeck Loan

OnDeck is one of QuickBooks Capital’s partners, so you can go fill out an application in the QuickBooks Capital Marketplace and QuickBooks will let you know if you qualify for an OnDeck loan. Or, you can apply with OnDeck directly.

Simply fill out the application on their website. OnDeck may ask for some documentation. Approval usually takes less than 24 hours, and if you accept an OnDeck loan, you can expect to receive your funds in one to two days.

Takeaway

While OnDeck can get expensive, its relaxed borrowing requirements make it a good option for merchants looking for fast funding who may not be approved elsewhere, or who need a little extra capital to hold them over until they qualify for better financing. Read our full OnDeck review to learn more.

Visit the OnDeck Site

5. Breakout Capital

Top Alternatives To QuickBooks Capital

Best for…

Small businesses in need of short-term loans to be used for working capital, inventory purchasing, or other short-term needs.

Products Offered

  • Short-term loans

Breakout Capital is one of our top-rated lenders and specializes in offering short-term loans to small businesses. These loans are more flexible than those of many of the other alternatives in this post. Depending on the strength of your business, you may be able to choose from multiple payment schedule options.

To qualify for a Breakout Capital loan, you must be in business for a year, have a credit score of 600, and have at least $10K/mo in revenue.

Here are the rates for Breakout Capital’s business loans:

Borrowing Amount: Up to $250,000
Term Length: Up to 24 months
Factor Rate: 1.25% to 3.5% per month
Origination Fee: 2.5%
Effective APR: Learn more
Collateral: Blanket lien and personal guarantee

How To Apply For Breakout Capital 

To apply for a Breakout Capital loan, you’ll need to fill out a pre-qualification form first, either online or by calling a Breakout Capital rep. You’ll then have to provide some basic information and a few documents. Breakout Capital will let you know if you qualify for one of their loans. The cool thing about Breakout Capital is that they will also let you know if one of their lending partners has a better offer for you.

Takeaway

Breakout Capital can be good option for small businesses looking for short-term financing. Read our full Breakout Capital review to see if this QuickBooks Capital alternative is right for you.

Visit the Breakout Capital Site

6. BlueVine

Top Alternatives To QuickBooks Capital

Best For…

Small businesses looking for invoice factoring or a line of credit for consistent cash flow.

Products Offered

  • Invoice factoring
  • Lines of credit

BlueVine was founded in 2013, and this online lender has been revolutionizing invoice factoring ever since. In addition to invoice factoring, BlueVine also offers lines of credit. The lender is known for positive customer reviews and plenty of customer support options.

BlueVine has relaxed borrower requirements. To qualify for invoice factoring, you must be a B2B business that’s been operating for three months, have a credit score of 530, and have a monthly revenue of $10K. To qualify for a line of credit, you’ll need to be in business for six months, have a credit score of 600, and have a monthly revenue of $10K (some states are not supported).

Here are the rates for BlueVine’s invoice factoring:

Credit facility size: $20K – $5M
Advance rate: 85% – 90%
Discount rate: 0.3% – 1% per week
Max overdue account: 13 weeks (91 days)
Additional fees: $15 wire transfer fee (no charge for ACH transfers)
Contract length: N/A
Monthly minimums: No
Factor all invoices: No
Recourse or non-recourse: Recourse
Notification or non-notification: Both (see below)

Here are the rates for BlueVine’s lines of credit:

Credit facility size: $6K – $200K
Term length: 6 or 12 months
Interest rate: 0.3% – 1.5% per week
Draw fee: 1.5% per draw
APR: 15% – 78%
Personal guarantee: Yes

How To Apply For BlueVine

BlueVine is one of QuickBooks Capital’s partners, so you can go fill out a QuickBooks Capital Marketplace application and QuickBooks will let you know if you qualify for a BlueVine loan. Or, you can apply with BlueVine directly.

Simply create an account, answer a few basic questions,  and provide three months of bank statements or connect to your bank account (you can also connect to your accounting software if you’d like). Approvals usually take a day. Once approved, you can start drawing from your credit line right away; transfers normally take one to three business days.

Takeaway

While BlueVine may not have the cheapest rates, it does have some of the lowest borrowing requirements. If you’re interested in learning more about this financing option, read our full BlueVine review.

Visit the BlueVine Site

7. Fundbox

Top Alternatives To QuickBooks Capital

Best For… 

Microbusinesses looking for invoice financing or a line of credit for consistent cash flow.

Products Offered

  • Invoice financing
  • Lines of credit

Fundbox (see our review) started out in 2013 as an invoice financing provider. Today, Fundbox also offers lines of credits and is known for good customer support and positive customer reviews.

To qualify for Fundbox’s invoice financing, you’ll need to have been using a compatible accounting or invoicing software for at least three months. To qualify for Fundbox’s lines of credit, you’ll need to have had a compatible bank account for at least six months.

Here are the rates for Fundbox’s invoicing financing (called Fundbox Credit):

Credit facility size: Up to $100K
Advance rate: 100%
Advance fee: 0.4% – 0.7% per week
Term length: 12 or 24 weeks
Additional fees: None
Contract length: N/A
Monthly minimums: No
Factor all invoices: No
Recourse or non-recourse: Recourse
Notification or non-notification: Non-notification

Here are the rates for Fundbox’s lines of credits (called Direct Draw):

Borrowing Amount: $1K – $100K
Term Length: 12 weeks
Borrowing Fee: 0.5% – 0.7% per week
Draw Fee: None
Effective APR: 12% – 54%

How To Apply For Fundbox

Fundbox is one of QuickBooks Capital’s partners, so you can apply to the QuickBooks Capital Marketplace and QuickBooks will let you know if you qualify for a Fundbox loan. Or, you can fill out an application with Fundbox directly.

Simply make an account and hook up your accounting or invoicing software to apply for invoice factoring, or hook up your bank account to apply for a line of credit. You’ll usually hear back in one to two hours. If approved, you can start requesting funds right away.

Takeaway

Fundbox is a great option for startups and small businesses looking for an invoice factoring solution or a line of credit. Read our complete Fundbox review for more details.

Visit the Fundbox Site

8. PayPal Working Capital

Best For…

PayPal users looking for a loan for working capital, inventory, or other short-term needs.

Products Offered

  • Short-term business loans

PayPal Working Capital (see our review) is incredibly similar to QuickBooks Capital. This lending service is available for PayPal users only, but since many QuickBooks lovers also use PayPal, we kept it on this list. PayPal Working Capital offers short-term business loans that operate like merchant cash advances (meaning payments are deducted from your daily PayPal sales).

To qualify, you must have been in business for three months and have $15K – $20K/year in revenue, depending on your PayPal account type.

Here are the rates for PayPal Working Capital’s loans:

Borrowing amount: $1K – $97K (first loan)
$1K – $125K (subsequent loans)
Term length:  Max. 18 months
Factor rate: Approx. x1.01 – x1.58
Origination fee: None
Effective APR: Learn more
Collateral: None

How To Apply For A PayPal Working Capital Loan

Applying for a PayPal Working Capital loan is easy. PayPal autofills an application for you. All you have to do is verify the information. If you are approved, the loan amount you accept will automatically be deposited into your bank account. If you aren’t approved, there are some steps you can take to try again.

Takeaway

While the factor rates can be potentially high and loan approval is inconsistent, PayPal Working Capital can still be a good option for PayPal merchants looking for short-term financing. Read our full PayPal Working Capital review for more details.

Visit the PayPal Working Capital Site

9. Funding Circle

Top Alternatives To QuickBooks Capital

Best For…

Established, large businesses in good standing looking for a medium-term loan.

Products Offered

  • Installment loans

Founded in 2010, Funding Circle is an online lender that specializes in offering loans to large businesses and franchises. Because of this, Funding Circle’s borrower qualifications are more stringent than those of some of the other lenders on this list.

To qualify, you must be in business for two years and have a credit score of 620. You also cannot have had any bankruptcies for the last seven years or any tax liens for the last 10 years.

Here are the rates for Funding Circle’s installment loans:

Borrowing amount: $25K – $500K
Term length: 6 months – 5 years
Interest rate: 4.99% – 26.99%
Origination fee: 0.99% – 6.99%
APR: 7.4% – 36%
Collateral: Personal guarantee, lien on business assets

How To Apply For A Funding Circle Loan

Funding Circle is one of QuickBooks Capital’s partners, so you can apply to the QuickBooks Capital Marketplace and QuickBooks will let you know if you qualify for a Funding Circle loan. Or, you can fill out an application for Funding Circle directly.

The Funding Circle application is fairly long, but it is still much faster than applying through a bank or credit union. Multiple documents are required. The complete application process usually takes around 10 days.

Takeaway

Funding Circle is a good fit for large business or enterprises that are established. Startups and small businesses will be better off with any other lender from this list. To learn more about Funding Circle, read our complete Funding Circle review.

Visit the Funding Circle Site

10. Lending Club

Top Alternatives To QuickBooks Capital

Best For…

Businesses of nearly any size with fair credit looking for a medium-term loan.

Products Offered

  • Installment loans
  • Personal loans
  • Auto refinancing

Founded in 2006, Lending Club (see our review) is one of the oldest lenders to offer loans online. Lending Club has competitive rates and good customer service. This lender offers personal loans, auto refinancing, and business installment loans (which are what we will be focusing on).

To qualify for a Lending Club business loan, you’ll need to be in business for 12 months, be 18 years old, be a US citizen or long-term resident, and have $50K in annual revenue. You also have to own 20% of the business and cannot have had any bankruptcies of tax liens.

Here are the rates for Lending Club’s installment loans:

Borrowing amount: $5,000 – $300,000
Term length: 1 – 5 years
Interest rate: 5.9% – 25.9%
Origination fee: 0.99% – 6.99%
APR range: 9.77% – 35.71%
Collateral: Personal guarantee
Blanket lien on loans above $100,000

How To Apply For A Lending Club Loan

To apply for a Lending Club loan, you’ll need to fill out an online application. You’ll receive a quote, and if you’d like to continue, Lending Club will ask you for more information and several documents. Approval usually takes one to two weeks.

Takeaway

Lending Club can be a great option for businesses of many sizes. Learn more about Lending Club and it competitive terms in our complete Lending Club review.

Visit the Lending Club Site

What Type Of Loan Is Right For Me?

You may have noticed that the lending options above all offer a large variety of products, like installment loans, lines of credit, SBA loans, invoice factoring, and short-term loans. To decide which loan is best for you business, ask yourself:

  • Which loans am I eligible for?
  • What do I want to use this loan for?

It’s also important to know the differences between each type of loan.

For installment loans, short-term loans, and merchant cash advances, you’ll receive your funds in one lump sum. Once these funds are gone, you’ll have to apply for a new loan, which makes these loan types ideal for working capital, inventory purchasing, and business growth projects.

For lines of credit, you’ll be able to draw however much you’d like up to your maximum borrowing amount as you need the funds. Most lines of credit revolve, meaning once you pay back the money, you can draw from the line of credit again. For this reason, lines of credits are good for consistent cash flow, unexpected expenses, and time-sensitive business opportunities.

To learn more about financing option, check out these articles:

  • Installment loans
  • Short-term loans
  • Merchant cash advances
  • Lines of credit
  • Invoice factoring

No matter which you choose, these lenders vary in one distinct way from QuickBooks Capital: You get to take the initiative in finding capital, instead of waiting for QuickBooks Capital to reach out. While QuickBooks Capital offers competitive rates, these 10 alternatives are more than worth looking into if you need fast capital, a higher borrowing limit, or a different type of loan.

Looking for even more options? Check out a comparison of our favorite small business lenders, or our full list of reviews.

The post Top 10 QuickBooks Capital Alternatives appeared first on Merchant Maverick.

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Is Invoice Factoring Right For Your Small Business?

invoice factoring small businesses

Invoice factoring — selling unpaid invoices to a factoring company in exchange for immediate cash — is a useful financing tool for certain businesses. If your business, like many others, has slow-paying customers that affect your cash flow, invoice factoring might help you manage your finances. But how, exactly, does invoice factoring work? And should your business use factoring services? Keep reading to find out!

Invoice Factoring Basics

Invoice factoring is essentially a sales transaction in which a business sells their unpaid invoices to a factoring company, at a discount, in exchange for immediate cash. Typically, the factoring company will hold a percentage of the invoice value in reserve; when the customer pays, the company will send you that money, less the factoring fee.

Factoring is generally used to solve cash flow problems caused by slow-paying customers. Instead of waiting 60, 90, or even 180 days for a customer to pay, the business can sell the invoice to a factoring company to get the cash needed to maintain business operations or take on new projects.

A factoring arrangement might look like this: You sell an invoice valued at $5,000 to a factoring company. The factoring company sends you $4,500 (90% of the invoice value) and keeps $500 on reserve. Your factoring fee is 0.06% per week. Your customer pays after 35 days, or 5 weeks, so your fee is $180 ($30 per week). The factor deducts their fee, and sends the remaining reserve, totaling $320, to you.

Invoice Factoring Eligibility

If you run a B2B business and you invoice your customers, chances are you’re a good candidate for invoice factoring.

Unlike with many other types of business financing, your business’s revenue and creditworthiness are not especially large considerations when determining eligibility; invoice factors are more concerned with the creditworthiness of your customers because your customers are the ones paying the bills. So, even if you own a young business without a financial track record, or you don’t make very much money, or you have poor personal credit, you might still be eligible for invoice factoring.

Is Invoice Factoring Right For My Business?

You may be eligible for invoice factoring, but should you use a factoring service? There are a lot of pros to factoring your invoices, but it’s not a perfect fit for all businesses. To determine whether factoring is right for your situation, ask yourself these questions:

Are my finances suffering due to slow-paying customers?

Slow-paying customers can affect many areas of your business. If you aren’t paid for your work until months after you have completed the job, you might have trouble meeting business expenses, purchasing inventory and supplies, paying employees, or paying for overhead costs. If this is the case, invoice factoring can be a simple way to ensure that you have the working capital you need.

However, invoice factoring is not always cheap, which is why you need to consider this next question:

Can I afford invoice factoring?

In general, factoring fees (called discount rates) range from about 1% – 6% of the invoice value per month, depending on the particulars of your factoring arrangement and how high-risk your client is. If you sell an invoice from a particularly slow-paying client, and you have a high factoring rate, you could wind up paying around 18% of the invoice value in fees for the opportunity to get your money sooner.

Many invoice factors also charge additional fees for factoring services. You might be charged money transfer fees, servicing fees, monthly minimums, or other expenses, which can add up over time. Head over to our explanation of factoring rates and fees to learn about discount rates and other commonly charged fees.

All that said, your fees will depend on a number of components, including the factoring company you are working with, the creditworthiness of your customers, the number and size of the invoices you want to sell, the industry your business is in, and other considerations. You will have to look at your options and decide whether the cost is worth it to your business.

Even if you decide that you need a financial solution, invoice factors most likely aren’t your only option.

Would an alternative financing solution work better?

Now, more than ever, businesses have a plethora of financial solutions available. While invoice factoring might seem like the perfect solution to your cash flow problems, the following might be a better fit:

  • Asset-Backed Lines Of Credit: These credit lines can be backed by unpaid invoices or (occasionally) assets like inventory or other receivables. The amount you are able to borrow depends on the value of your collateral. Asset-backed lines of credit work similarly to invoice factoring, but might offer more flexibility in some ways. These credit lines also tend to have lower rates than financing that isn’t backed by anything, so you might qualify for low rates and fees in comparison to other options.
  • Revolving Lines Of Credit: With a revolving line of credit, the amount you are able to borrow replenishes as you repay your debts. While some revolving lines of credit are backed by collateral, some simply require you to sign a personal guarantee and/or pledge general business assets via a blanket lien. With this type of financing, you’ll always have money available when you need it. And because you repay weekly or monthly, you don’t have to worry about getting fined because your customers forgot to pay their bills. Head over to our article on business lines of credit to learn more about this type of financing, or scan this list of our favorite lines of credit if you’re interested in learning about your options.
  • Business Credit Cards: Business credit cards can be useful if you need cash short-term for business expenses. You can put many purchases on credit cards and repay them on a timetable that works for you. However — especially if you tend to carry a balance — you might want to consider other options, because credit cards have notoriously high rates and fees. If you’re looking for a business credit card, check out some of our favorites.
  • Small Business Loans: If you only need funds one time, or if you need a large sum of money, a small business loan might be a good bet. Some lenders have long application processes, but many, including PayPal Working Capital and OnDeck, can let you know if you’re eligible within a very short time period. Most small business loans come in the form of installment loans or short-term loans. Small business loans can be used for a number of purposes, such as working capital, payroll, inventory purchasing, and other uses.

Final Thoughts

If you’ve decided that invoice factoring is a potential solution for your business, good for you! Invoice factoring can be a very viable way to maintain cash flow for your business, especially if you tend to get bogged down by slow-paying customers.

Interested in learning more? The following resources provide additional information about invoice factoring and may assist you to find the right factor for your business:

  • A Basic Introduction To Invoice Factoring: Invoice factoring basics, including what to look out for, a basic explanation of fees, and alternative services to factoring
  • Understanding Invoice Factoring Rates & Fees: An in-depth look at factoring rates and fees, including the variables that affect your rates, the three most common fee structures and their differences, and other fees you might have to look out for.
  • Spot Factoring vs. Invoice Factoring: A guide to help you determine whether your business should choose a spot factoring service, a high-volume factoring service, or some other alternative service.
  • Merchant Maverick’s comprehensive reviews of invoice factoring services provide honest and thorough assessments of some of the most popular invoice factoring services available.

The post Is Invoice Factoring Right For Your Small Business? appeared first on Merchant Maverick.

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8 Ways To Finance Your Small Business

Business financing is often a necessary part of growing a business, but when it comes to finding capital, it can be difficult to know where to start. Should you get a credit card? What about a loan from your local bank? Is there useful financing out there that you haven’t even heard of?

Read on, and we’ll point you in the right direction. This article discusses the most common (and some less common) ways of getting financing for your business. And, if you find the right type of financing for your business, we’ll give you the next steps to continue your search.

Want help finding a business loan? Apply now to Merchant Maverick’s Community of Lenders. We’ve partnered with banks, credit unions, and other financiers across the country to bring you fast and easy business financing.

1. Business Loans

As you might expect, business loans are one of the most popular and versatile ways of financing your business. Most businesses will qualify for a business loan of one sort or another, and they can be used for many business purposes, from working capital to business expansion to refinancing.

Business loans come from many different places. While everybody knows that you can get a business loan from a bank, you might not be aware that other financial institutions offer business loans. Many offer loans that are easier to qualify for and have faster applications than bank loans. Here are places that commonly offer business loans:

  • Banks and credit unions offer business loans and other types of financing.
  • Nonprofits, not-for-profit institutions, and microlenders offer small business loans and other types of financing to create jobs and fuel community growth.
  • The Small Business Administration partners with financial institutions to offer business loans. Read more about SBA loans in our guide to their programs.
  • Online lenders, also called “alternative lenders,” offer business loans and other types of financing with fast, semi- or fully-automated application processes.

Loans come in many different forms. The most common are installment loans, in which the money is granted to the business in one lump sum and then repaid via incremental, fixed, payments. However, some loans might have special fee and repayment structures — you might find loans with fixed fees (like short-term loans), loans that have repayment rates based on the percentage of money you make every day or month, or other arrangements. In other words, with a little looking, most merchants will be able to find something that is suited to the needs of their business.

For more information on small business loans, check out our free Beginner’s Guide to Small Business Loans. Or, to read reviews of individual lenders, head over to our small business loans review category.

2. Business Lines Of Credit

Business lines of credit are a sort of hybrid between business loans and credit cards. Like business loans, with a line of credit, you can borrow a sum of money which is (normally) repaid along with interest in installments over a set period of time. Like credit cards, you can request funds at any time, up to your available credit limit.

If you occasionally need funds to make ends meet or grow your business, or you simply want a safety net in case of emergencies, a line of credit is an excellent tool at your disposal.

Credit lines can be especially useful to businesses on a timeline because you don’t need to apply every time you need to borrow funds. When you are approved for a credit line, you’re granted access to a certain amount of money from which you can draw at any time. If you have a revolving line of credit, the amount you can borrow will replenish as you repay outstanding debts.

Some credit lines, such as asset-backed lines of credit, can work a little differently. If you have access to a credit line secured by unpaid invoices, inventory, or other assets, the amount you can draw at any given time will depend on the value of the assets you have outstanding. These credit lines are normally best for B2B businesses.

Credit lines carry a few drawbacks — most credit lines have variable interest rates, which mean that your rates might change without notice. And, if you aren’t very good at managing money, you might find that you don’t have emergency funds when you need them. However, lines of credit are useful tools for many businesses.

In the past, it was difficult for all but the most well-established and prosperous businesses to get credit lines. With the advent of online loans, it’s becoming easier for businesses of all sizes to access this useful financing tool. Check out our guide to business lines of credit for more information, or, if you’re interested in procuring one, take a look at our favorite line of credit services.

3. Business Credit Cards

There are many reasons to get a business credit card for your business.

For starters, most credit card issuers offer rewards and benefits to merchants who have signed on with their services. By using the card, you could be earning savings in the form of cash back points (that can be redeemed for travel or other expenses). These rewards add up in the long run, and you might be able to save your business quite a bit of money. Additionally, many credit card issuers offer benefits to cardholders, such as extended warranty, price protection, roadside assistance, and other perks.

Credit cards are also convenient ways to keep track of expenses and smooth out cash flow. If you put all your purchases on your credit card, you can easily see what you’ve been spending money on and where you might be able to cut costs. Because the money isn’t coming out of your own account right away, you can defer payments until a more convenient date. You don’t have to struggle to come up with money for expenses if you don’t have it at the moment, or it would be more convenient to pay later.

Of course, credit cards do have some downsides: the APRs can be expensive, so if you don’t pay your bills in time you could wind up with hefty fees that can be difficult to pay off. Additionally, some credit cards carry extra fees, like annual fees and balance transfer fees, which could eat into the money you save by using the card in the first place. However, if you are good at managing money, and spend time choosing a card that will maximize your savings based on how much you plan to utilize the card, credit cards can be excellent tools for many businesses.

Interested in getting a business credit card? Check out a list of our favorite business credit cards. Or, if you are starting a business, you might be interested in our favorite personal credit cards that can be used for business.

4. Merchant Cash Advances

If you need a one-time amount of funds, it might be worth considering a merchant cash advance. This type of financing can be useful for B2C businesses with strong daily sales.

In practice, merchant cash advances are similar to business loans, with the exception of how they’re repaid. Cash advances are repaid by deducting a small percentage of your daily sales; the amount you are repaying each day will vary along with your cash flow. These financial products don’t have a set repayment date, but are normally repaid in a year or less.

Merchant cash advances are an excellent tool for B2C businesses that need a small infusion of cash for working capital, business growth, or other reasons. Know, however, that cash advances have a few downsides: they can be very expensive, and the cost might not be immediately apparent because the fee structure is different than a traditional loan. Instead of interest, cash advance fees are calculated using a factor rate, which can obscure the true cost of the advance.

Head over to our comprehensive article on merchant cash advances for more information, or take a look at our reviews of merchant cash advance providers if you’re interested in finding an advance.

5. Personal Loans

While business loans are based on the credibility and strength of your business, personal loans are based on your personal creditworthiness and financial health. For this reason, these loans can be useful for entrepreneurs, startups, and other businesses that don’t yet have a credit history. You’ll want to give this option a pass if you have separated your business and personal finances, but if you’re not there yet, a personal loan can help you get your business up and going.

Personal loans are normally available from banks, credit unions, and online lenders. You’ll have to have a steady source of income, a solid debt-to-income ratio, and fair credit to qualify for reasonable rates.

Take a look at our guide to personal loans for business for more information, or check out our startup business loan reviews for reviews on personal lenders.

6. Crowdfunding

Rising to prominence due to the internet and some changes in legislature, crowdfunding allows you to finance your business via a network of your peers.

Crowdfunding is normally used by entrepreneurs to get a startup off the ground, or by creators who need money to fund a product. In a crowdfunding arrangement, the entrepreneur creates a campaign, which usually includes a description of their business or product, information about the founders and their partners, a rough timeline, potential problems, and other frequently asked questions.

Perhaps the most well-known type of crowdfunding, popularized by services such as Kickstarter (read our review) and Indiegogo (read our review), is rewards crowdfunding. You may not be aware that there are actually quite a few different type of crowdfunding available:

  • Rewards crowdfunding, from services like Kickstarter and Indiegogo, allows contributors to receive products in exchange for backing the business or project.
  • Donation crowdfunding, on sites like Razoo (read our review), involves funds that are donated to your cause. This type of crowdfunding is typically only used for nonprofits or other charitable projects.
  • Debt crowdfunding, from services such as Kiva U.S. (read our review), works similarly to a business loan — backers contribute money with the expectation that it will be paid back, normally with interest.
  • Equity crowdfunding, from company’s like Fundable (read our review), works when backers contribute money in exchange for equity in your business.

Between all the different types available, most entrepreneurs should be able to find a type of crowdfunding that will suit their business or project. Some less-than-sexy businesses, however, might find that they have trouble appealing to casual investors. While debt and equity crowdfunding — which tends to attract more serious backers — might solve that problem, some businesses might still need to look at other financing options.

Crowdfunding also tends to take a long time. Typically, the entrepreneur has to create a campaign and enter into a one- to three-month funding period. The funding period might require a fair amount of marketing, networking, communicating with current and potential backers, and other work to get your project funded.

Interested in crowdfunding? Head over to our startup business loans review category to read reviews of crowdfunding services.

7. Invoice Factoring

Invoice factoring is a financial solution for B2B businesses that invoice their customers. If you have cash flow struggles due to slow-paying customers, invoice factoring is a potential solution. Factoring is commonly used in industries such as construction, manufacturing, printing, and other B2B businesses.

Invoice factors purchase your unpaid invoices at a discount. While you’ll have to take a bit of a loss, invoice factoring can get you the money you need, when you need it, to keep your business going.

When you sell an invoice to a factoring company, you will receive most of the money up-front, and the factor will place a small amount on reserve. Then, when your customer pays the invoice, the funds are diverted to the factoring company, and you will receive the rest of the money in the reserve, minus the invoice factor’s fee.

There are many invoice factoring arrangements, depending on the factoring company and the needs of your business. You can find factors that require you to sell a lot of invoices or ones that let you pick and choose more carefully. Some factors require that your customers know about the arrangement, while others will keep it a secret, and so on.

Invoice factoring has gotten a bad rap in the past because some factoring companies employed poor practices, such as failing to disclose extra fees, requiring long-term contracts and monthly minimums, and other reasons. However, if you do your due diligence, you will be able to find an invoice factor that suits your business’s needs without employing poor tactics. Check out our Basic Introduction To Invoice Factoring to learn what to look for, and take a look at our comprehensive invoice factoring reviews to learn about individual factors.

8. Equipment Financing

If you run a business that relies on computers, manufacturing equipment, restaurant equipment, vehicles, or other equipment that might be difficult to pay for out of your business’s own pocket, equipment financing might be right for you.

Equipment financing covers two types of financing: equipment loans and equipment leases.

Equipment loans are similar to traditional business loans, but the equipment is generally used as collateral. In a typical equipment loan arrangement, the lender will cover 80% to 90% of the equipment, and you will be responsible for paying the other 10% to 20%.

Equipment leases are arrangements in which you rent the equipment for a certain period of time. In practice, some lease arrangements are similar to loans, because you have the opportunity to buy the equipment at the end of the leading period, but other arrangements are designed so that you can return or trade in the equipment after a certain period of time. Because you don’t have to purchase the equipment, leases can be a good option for businesses that only need equipment for a short time, or frequently need to upgrade expensive equipment (like computers) due to changes in technology.

Equipment financing, especially equipment loans, will most likely be more expensive in the long run than purchasing the equipment outright. However, if you can’t afford what you need, an equipment loan or lease is an excellent way to get financing.

Head over to What Is Equipment Financing? to learn more about this type of financing, or our equipment financing review category to learn about individual financiers.

Final Thoughts

Business owners have many financing tools at their disposal, but finding the right tool for the job can take some work. The above resources will point you in the right direction.

Need some more help? Merchant Maverick’s Community of Lenders is there for you. We’ve teamed up with banks, credit unions, and other financiers across the country to provide our readers with fast and easy business financing. With one short application, you can check your eligibility for all participating financial institutions. Read more about the service, including a step-by-step guide through the application process, in Mirador Finance & Merchant Maverick: Making Small Business Loans Easier.

The post 8 Ways To Finance Your Small Business appeared first on Merchant Maverick.

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10 Kinds of Alternative Financing for Small Companies

alternative small business financing

Small company financing is notoriously hard to procure. Most loans from banks require the applicant have stellar credit and a pair of+ years running a business – as well as then, there isn’t any guarantee you’ll obtain a loan. Based on Biz2Credit, big banks approved under 25% of small company loan demands in March 2016, while smaller sized banks approved under 1 / 2 of applicants.

More and more, small companies are embracing alternative financing options the web makes it simpler to obtain business funding using their company channels. With many of these options, you are able to apply on the internet and get funding a lot more rapidly and simply than you’d having a financial loan. Continue reading to learn all you need to know of the realm of alternative small company financing.

Table of Contents

1. Online Loans

Online lenders generally offer products much like loans from banks (quick installment loans, for instance) – however these loans vary from loans from banks inside a couple of important ways. Generally, they’ve less stringent needs regarding your credit rating, amount of time in business, and annual revenue. They’re also simpler to try to get and take a shorter period to become funded. The only real caveat is the fact that in return for this convenience and ease of access, online loans usually carry greater rates of interest than loans from banks.

Online lenders who offer short-term loans, particularly, have especially poor needs – however they have especially high rates of interest too.

A couple of online lenders we actually like for small company loans include:

2. Credit lines

A type of credit (LOC) is yet another product you may either receive from a financial institution or perhaps an online loan provider — but because with quick installment loans, business LOC’s are usually simpler to obtain online than from the bank. In situation you’re unfamiliar with the word, a credit line is a kind of financial safety internet for any business essentially, you’re granted an amount of cash from which you’ll draw anytime – kind of just like a charge card. Typically, you’re billed interest only on which you borrow.

A company credit line is a great alternative financing option for a company that does not require a quantity of cash but really wants to shore up additional funding to pay for expenses for example payroll during skinny occasions.

A couple of credit line providers for small companies are:

3. Unsecured Loans

Should you haven’t been around very lengthy, it’s tough to obtain a traditional business loan. Fortunately, many unsecured loans may also be used for business purposes. Using these loans, typically structured as regular quick installment loans, eligibility and rate of interest are based on your individual creditworthiness.

Using this type of financing, you will probably get access to a smaller sized amount of cash — most personal lenders cap their borrowing amounts at $35K or $50K. If you want a lot more capital than this, an unsecured loan isn’t for you personally.

Here are a few good providers of private loans for business:

4. P2P loans

Peer-to-peer lending is really a newer lending model whereby you borrow funds out of your peers instead of from one banking entity. Usually, a banking platform approves the loan to visit love online putting in a bid, however the funds ultimately originate from anyone else who wish to fund your business.

P2P lending isn’t the smartest choice for companies with poor credit, as small-time investors are usually very risk-adverse. However, the rules for approval continue to be less stringent than individuals for loans from banks.

Some P2P lenders we love to are:

4. Microloans

Microloans are small loans of under $35K (typically nearer to $5K–$10K), offered by low interest rate. Typically, microloans receive to startups or newer companies looking for capital. They frequently serve under-symbolized or disadvantaged groups (for example lady-owned companies and minority-owned companies) even including individuals with poor credit. Banks in the past haven’t been thinking about lending such small quantities of money, but alternative lenders, including some not-for-profit lenders, have joined the microloan space recently.

Certain areas to obtain microloans include:

6. Crowdfunding

Crowdfunding is a superb method for some kinds of companies to boost funds using their peers online. In this manner, crowdfunding is much like P2P lending.

You will find four kinds of crowdfunding: debt, rewards, equity, and charitable organization. With rewards crowdfunding, it’s not necessary to pay back the money rather, you accept provide your backers something to acquire their donation. With equity-based crowdfunding, someone invests inside your business in return for a share of the business/product. You may even need to pay a charge towards the crowdfunding platform itself. This short article adopts the variations between the different sorts of crowdfunding.

Crowdfunding is just suitable for some kinds of companies. Popular crowdfunding sites Kickstarter and Indiegogo are aimed toward people who are creating some kind of media (just like a movie or music album) or perhaps an innovative, consumer product (like a new tech gadget). Several others, including GoFundMe, tend to be more aimed toward charitable projects. Still, there are several sites like Fundable that offer crowdfunding to an array of business types.

Take a look at a few of these trustworthy crowdfunders pointed out above:

7. Small business administration Loans

Government-backed Sba (Small business administration) loans make the perfect option to obtaining a loan from a financial institution should you not have greatly collateral. The Small business administration doesn’t technically offer loans rather, it guarantees some of the loan issued by a bank, lending institution, nonprofit, or any other loan provider. The guarantee implies that, should you default around the loan, the Small business administration will pay back part of the remaining debt. The Small business administration provides a couple of different home loan programs, but typically the most popular is the general 7(a) small company loan.

There’s also several online lenders which use technology to hurry up and simplify the entire process of trying to get an Small business administration loan, which means that you can find the loan several days faster.

Some online services that provide Small business administration loans include:

8. Factoring Invoices

Factoring invoices is a kind of financing that releases cash from outstanding invoices. Factoring invoices companies get your delinquent invoices for a cheap price.

As you may expect, factoring invoices is suitable for companies that often have delinquent invoices. Poor credit isn’t typically an issue, as factors tend to be more worried about your customer’s capability to pay, not your business’s. As a result, startups and newer companies are generally qualified with this alternative financing option.

Some highly regarded factoring invoices lenders include:

9. Equipment Financing

Equipment financing is … well, just what it seems like. That’s, it’s money you borrow to obtain the equipment you have to run your company, whether you’ll need a new computer or industry-specific machinery.

The word “equipment financing” encompasses both loans and leases. Equipment loans are perfect for firms that are able to afford a lower payment on equipment with lengthy-term utility. Leases tend to be more appropriate should you can’t afford a lower payment or maybe the gear must be replaced or upgraded frequently. If you are unsure which suits your requirements, take a look at our article on equipment loans versus. leases.

A couple of equipment financing options we love to include:

10. Grants

Ah, the elusive business grant, a.k.a., FREE MONEY. This really is most likely the most challenging kind of business financing to obtain, however if you simply think you may be qualified, you need to certainly consider your grant options. Some business grants are government-funded (on the federal, condition, or local level), though some NGOs as well as independently held companies offer small company grants.

StreetShares awards grants as high as $5,000 to veteran small company proprietors, and Lending Tree includes a $50,000 small company grant. Innovative tech startups may be qualified to get as much as $1.5 million in grant money in the federally funded Small Business Innovation Research (SBIR) program. This Fundera blog publish includes a comprehensive listing of organizations that provide small company grants.

Final Ideas

A couple of more items to note about alternative financing for your online business:

  • Should you choose would like to try to try to get a financial institution loan, think about a small bank or perhaps a lending institution where you’ll have a greater possibility of being recognized, based on Biz2Credit research.
  • A merchant cash loan is another kind of alternative financing, but we didn’t include it about this list because it must only be utilized for a final resort — the charges and terms commonly are not very merchant-friendly.
  • The greater your credit rating is, the greater financial loans you’ll have. It’s smart to make efforts to improve your credit score before you begin trying to get loans.

Require more help selecting an alternate lending option? Leave an issue within the comments and I’ll do my favorite to reply to it!

Shannon Vissers

Shannon is really a freelance author and editor located in North Park, CA. Shannon type of wants an apple iphone 7, but she’s not necessarily prepared to lose the headphone jack.

Shannon Vissers
Shannon Vissers

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Don’t Let Poor Credit Prevent You From Obtaining A Startup Loan

bad credit startup loansCouple of things in existence feel just like a brand new start. This really is especially true when you&#8217re launching a brand new business and are filled with enthusiasm to begin making the ideal a real possibility. However if you simply&#8217ve experienced some poverty which have left your credit rating battered and bruised, a brand new start could be tricky to find. How will you obtain the startup funds you’ll need when most banks won&#8217t touch you having a ten-feet pole?

This is when alternative financing &#8212 via microlenders, factoring invoices, and crowdfunding &#8212 comes in. Unlike popular thought, it’s totally possible to obtain a affordable startup loan, even though you possess a poor personal credit rating of 600 or perhaps lower. Below are seven highly regarded lending services that could possibly direct you toward that new beginning running a business you&#8217ve been dreaming about.

1. Accion Accion startup loans

Accion is really a nonprofit microlender offering medium-term quick installment loans to startups and existing companies. For those who have poor personal credit but require a small startup loan, Accion is among the couple of trustworthy online lenders to help you out without screwing you over.

Accion Terms and Prerequisites

  • Minimum credit rating: 575 (500 occasionally)
  • Needed amount of time in business: N/A however, if you’ve been running a business for less than six several weeks, you need to meet these needs:
    • Your company is home- or incubator-based
    • You’ve under $500 in past-due debt
  • Borrowing amount: As much as $10,000 for startups
  • Term: 6-60 several weeks
  • APR: Approximately. 9.5%-33%
  • Collateral: Personal guarantee specific collateral in certain situations

Accion lets borrowers pay back loans on the monthly as opposed to a weekly basis this differentiates the company (in a great way) from a lot of its competitors within the short- and medium-term lending space.

Why We Love To Accion

  • Startup and poor credit-friendly
  • Fantastic customer support
  • Low qualification needs
  • Fair terms and rates
  • Fast time-to-funding
  • Business education sources
  • Repayments

Learn more about Accion

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2. Kiva U.S. Kiva startup loans

Crowdfunding, also sometimes known as &#8220peer-to-peer lending,&#8221 is yet another viable way to obtain startup funding with poor credit Kiva U.S. (and most other crowdfunded lenders) don’t look at your credit whatsoever. And Kiva&#8217s short-term quick installment loans have the advantage of charging % interest – that&#8217s right, they&#8217re totally free.

Kiva U.S. Terms and Prerequisites

  • Minimum credit rating: N/A
  • Needed amount of time in business: N/A
  • Borrowing amount: As much as $10,000
  • Term: 6-36 several weeks
  • APR: %
  • Collateral: N/A
  • Additional needs: With respect to the size the loan and other factors, you ought to get the backing of 5 to 35 lenders from inside your personal personal network of buddies, family, business contacts, etc. Once you obtain the needed social backing out of your own network, the borrowed funds goes public.

Like Accion, Kiva is great for startups with poor credit (or no credit!) who require only a small loan to obtain began. However, you need to be comfortable requesting backing out of your own social networking. A couple other crowdfunded loan options you might like to take a look at are Kickstarter and Indiegogo.

Why We Love To Kiva U.S.

  • Startup and bad-credit-friendly
  • Great customer support
  • No interest
  • No credit assessment

Find out more about Kiva

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3. American Receivable american receivable startup friendly

American Receivable is a very rated invoice factor for Business to business companies. Factoring invoices is a kind of funding in which a business sells its a / r to a factoring company for a cheap price. Invoice factors such as AR typically do have no needs time running a business or credit rating.

American Receivable Terms and Prerequisites

  • Minimum credit rating: N/A
  • Needed amount of time in business: N/A
  • Advance rate: Typically 85% – 90%
  • Discount rate: .8% – 2%/mo
  • Contract length: 1-year commitment

Observe that invoice factoring is just an appropriate type of startup financing for several businesses – particularly, Business to business or B2G companies. Riviera Finance is another solid factoring invoices choice for poor-credit startups.

Why We Love To American Receivable

  • Startup and bad-credit friendly
  • Fast invoice funding
  • Useful customer support
  • Transparent and versatile terms
  • Non-option factoring provides retailers extra protection in situation customer declares personal bankruptcy

Find out more about American Receivable

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4. Avant avant startup loans

Unsecured loans are one other way brand-new companies will get startup funds, because these loans don&#8217t have time-in-business needs. Avant is really a reputable provider of personal quick installment loans you can use for business, plus they also accept credit ratings that many personal lenders would balk at.

Avant Terms and Prerequisites

  • Minimum credit rating: No hard-mentioned minimum however, they will loan to borrowers with scores as little as 600.
  • Needed amount of time in business: N/A
  • Borrowing amount: $1K–$35K
  • Term length: 2–5 years
  • APR: 9.95% – 36%

Observe that while Avant accepts poor-credit borrowers (though not very-poor-credit borrowers), you might be denied funding according to some other reasons, for example inadequate personal earnings to satisfy the incremental payments. They don’t have any company earnings needs, however.

Why We Love To Avant

  • Startup and bad-credit friendly
  • Responsive and useful customer support
  • Fast application
  • Fair rates and charges (especially when compared with other personal lenders for example pay day lenders)
  • No prepayment penalty
  • Lower-than-usual customer qualifications
  • Repayments

Look at your rate with Avant

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5. Credibly Credibly startup loans

Credibly originates short-term loans, including capital loans and business expansion loans. The corporation is startup-friendly (though you have to will be in business for six several weeks) and can love you even though you have inadequate credit. Woo-hoo!

Credibly Terms and Prerequisites

  • Minimum credit rating: 500
  • Needed amount of time in business: 6 several weeks
  • Revenue qualifications: $10K/month
  • Capital Loan Term: 6–17 several weeks
  • Business Expansion Loan Term: 18–24 several weeks
  • APR: Varies broadly (Find out more)
  • Collateral: UCC-1 blanket lien, personal guarantee

Credibly offers two separate loan products (capital loans and business expansion loans), which have different terms and charges Credibly&#8217s longer-term business expansion loans charge interest rather of the one-time fee. Like other short-term financers, Credibly&#8217s minute rates are around the high side however, the cash comes through fast. And should you choose the company expansion option, you can pay the loan back weekly rather of daily (in contrast to most short-term loans).

Why We Love To Credibly

  • Startup and poor credit-friendly
  • Easy application
  • Low customer prerequisites
  • Good customer support
  • Weekly repayments (on business expansion loan)

Get pre-qualified for any Credibly loan

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6. Bluevine bluevine startup funding

Bluevine is among the most popular lenders within the type of credit (LOC) lending space, partly because they also have several the laxest customer needs among LOC lenders. A credit line is definitely an appropriate type of financing for start up business owners who don&#8217t know just how much they&#8217ll require but want so that you can withdraw cash as they require it. Furthermore, BlueVine also provides factoring invoices services to Business to business startups.

BlueVine Terms and Prerequisites

  • Minimum credit rating: 600 for type of credit 530 for factoring invoices
  • Needed time in business: 6 several weeks for type of credit 3 several weeks for factoring invoices
  • Revenue qualifications: $10K/month
  • LOC borrowing amount: $5K–$100K
  • LOC term length: 6 several weeks
  • LOC APR: 21% – 65%

Why We Love To BlueVine

  • Startup and poor credit-friendly
  • Solutions for money-flow problems
  • Excellent customer service
  • Fast time for you to funding
  • Easy application
  • Transparent advertising
  • No maintenance charges or lockbox charges

Make an application for BlueVine funding

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7. PayPal Working Capital PayPal Working Capital loans for startups

PayPal Capital sells short-term loans that function much like merchant payday loans. These financing options have no credit needs and make the perfect choice to consider if you already conduct business on PayPal.

PayPal Capital Terms and Prerequisites

  • Minimum credit rating: N/A
  • Needed amount of time in business: 3 several weeks
  • Additional needs: Should have a PayPal Business or Premier account and process a minimum of $15K/year.
  • Borrowing amount: $1K – $97K (first loan)
  • Loan term: 18 several weeks max.
  • APR: Varies broadly (find out more)

Associated with pension transfer other short-term financial loans, PayPal&#8217s Capital doesn&#8217t charge interest rather, you are charged a 1-time upfront fee. You pay back the loan instantly like a daily deduction out of your PayPal sales.

Why We Love To PayPal Capital

  • Startup and poor credit-friendly
  • Fast application
  • Low charges
  • Easy repayments
  • Immediate access to cash &#8212 receives a commission in a few minutes of accepting financing offer

Obtain a PayPal Capital loan

Final Ideas

The truly amazing factor about many of these poor credit startup loans is that, having a couple of exceptions, the applying process is quick, painless, and fully online. Also, there&#8217s no recourse for you to get pre-approved, because this only requires a &#8220soft&#8221 credit assessment that doesn’t impact your credit rating. Which means you will get prequalified as many loans as you desire, after which compare your offers to find the right one.

Should you take a look at some loan options and therefore are not pleased using the provides you with&#8217re getting according to your present credit rating, you may consider attempting to enhance your score or searching into further alternative financing ideas. The following resources possess some information on how you can raise your credit score and a few other suggestions for funding your startup.

  • 5 Methods to Enhance Your Personal Credit Rating
  • 20 How to Finance a company Startup

The publish Don&#8217t Let Poor Credit Prevent You From Obtaining A Startup Loan made an appearance first on Merchant Maverick.

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