Starting And Financing A Vending Machine Business

Often, when people think of starting a successful business, they envision high-profile clients signing big checks. But other aspiring entrepreneurs know it makes more sense to think in dollars and cents…and we’re not talking about chump change, here. What we’re talking about is starting a lucrative vending machine business.

Vending machines are everywhere: hospitals, schools, office buildings, malls, and shopping centers. And each year, the vending machine industry brings in billions of dollars in revenue. The great news is you can get in on this profitable venture, whether you have previous business experience or you’re new to the game. All it takes is a little know-how, the right strategy, and one of the most critical pieces of the puzzle: financing.

In this post, we’ll explore starting and financing your vending machine business. We’ll review the ins and outs of the industry, discuss two ways you can start your business, cover the benefits and drawbacks to vending machine businesses, and, of course, talk about how to get the financing you need. Read on to learn more and take the first steps toward launching your successful vending business.

How Vending Machine Businesses Work

We all know how vending machines work from the consumer end of thing — if you’re hungry or thirsty, insert a dollar, some change, or even a credit or debit card to get an instant snack or beverage. Easy!

But, once the machine has your money, where does it go? Most of the money goes directly to the vending machine owner.

The vending machine owner enters into contracts with other businesses. These contracts include details like the commission that will be paid to the business owners in exchange for providing space for the machine.

Vending machines can be used almost anywhere, including but not limited to:

  • Hospitals
  • Shopping Centers & Malls
  • Apartment Complexes
  • Laundromats
  • Hotels
  • Schools
  • Airports

After the machines have been installed, it is the responsibility of the vending machine owner to keep each machine stocked and in working order. Money made from the machines is used to purchase additional inventory, cover maintenance costs, expand the business, and pay business owners per the agreed-upon rate in the contract. After all those expenses are covered, the remaining funds are profits for the vending machine owner.

Pros & Cons Of Vending Machine Businesses

While owning a vending machine business certainly has its benefits, there are some drawbacks to note as well. Let’s fully explore the pros and cons of owning your own vending machine business to help you evaluate whether it’s the right endeavor for you.

Pros

Flexibility

One of the best things about owning a vending machine business is the flexibility it provides. You don’t have to always be on the clock making sure things are getting done. Simply monitor your machines (even easier when you have the ability to do so remotely) and refill stock or perform maintenance as needed. You don’t have to worry about monitoring employees, keeping a watchful eye on your business 24/7, or devoting your entire life to your business. A vending machine business lets you bring in income while still allowing you to focus on family, hobbies, and other business ventures.

Lower Cost Than Other Businesses

Typically, when you start a new business, there are many expenses to consider. You have to find commercial space to rent, lease, or purchase. You have to hire employees. The list goes on. With a vending machine business, you can bypass many of these costs. Sure, you have to purchase your vending machines, keep inventory on hand, pay maintenance costs, and possibly hire an employee to restock your machines. But compared to other businesses, the vending machine business model has extremely low overhead.

Tried-and-True Business Model

In this business, you’re not bringing a risky new product to market that could possibly fail. You’re not operating an overly complicated business that requires expertise and a business degree. You’re using a tried-and-true business model that has been proven to work over decades. Of course, you do have to have a strategy, and you do have to sell yourself and your business to proprietors, but anyone can get started, no matter your previous experience.

Cons

Waiting For Profits

Even though the vending industry rakes in billions of dollars each year, you’re not going to become an overnight millionaire. In some cases, it could take a year or longer to begin seeing profit from your machines. It’s important to go into the business with realistic expectations, a solid strategy, and plenty of patience.

Some Expenses Involved

Even though it’s less expensive to get into the vending machine market than other industries, there are some costs involved. To get started, you have to invest in at least one vending machine. An older, used machine may cost as low as $1,200. A new machine with all the bells and whistles might run you $10,000 or more. The more machines you plan to have, the more expensive it will be to get started.

You’ll also have operating costs, primarily inventory. You can save money by working with a vendor or even buying goods in bulk from big box stores, but this is an ongoing expense that requires capital.

If you plan to expand your business, you face additional costs. This includes hiring an employee or two to keep your machines stocked, purchasing a company vehicle to use for restocking, and upgrading or adding new machines.
While it is possible to start slowly using out-of-pocket funds, most new business owners will need a financial helping hand. This is where loans and other financial products come into play — something we will discuss in more detail a little later.

Two Ways To Start A Vending Machine Business

Does the idea of owning your own vending machine business still appeal to you? If so, it’s important to understand the two ways you can start your business: starting from scratch or buying a pre-existing business.

Option #1: Start From Scratch

The first option for starting your vending machine business is to start from scratch. This requires a little more work in the beginning because you have to scout locations and enter into contracts with other business owners.

Begin by traveling around your area to scout out the best locations for your machines. Strategic vending machine placement is critical to making your business a success. Vending machines should be placed in high-traffic areas where they will be most useful — for example, a coffee vending machine in an office building or a vending machine that dispenses detergent and fabric softener at the local laundromat.

Once locations have been scouted, you’ll work out a contract with the business owner. This allows you to place your vending machines in their place of business at a cost — usually 10% to 20% of your gross sales.

After your locations are mapped out, it’s time to purchase your machines. Only take this step after you figure out locations and what type of machines best fulfill your needs.

Many vending machine business owners invest in machines equipped with credit card readers. Although this equipment is more expensive, these machines have advantages over traditional machines that only accept cash. One of the primary advantages, of course, is that you’ll have access to more customers. Fewer people are carrying cash, so these systems allow them to purchase your merchandise with credit cards, debit cards, or their smartphones. According to Vending Market Watch, consumers spend 32% more when paying with a card versus paying with cash.

Not only is your potential for profits much higher, but these advanced machines come equipped with remote monitoring systems that allow you to keep track of sales, check your inventory, and monitor maintenance needs. This saves you the hassle of having to frequently visit each location in person and helps you ensure your machines are fully stocked and in working order from the comfort of your home or office.

The final step is to make sure that you always keep your machines stocked and well-maintained. If your machine is out of order or out of items, you won’t make money. Evaluate what products are selling well and what items are flopping to maximize your profits.

One last thing to note is that you should always understand the rules and regulations in your area. Laws surrounding vending machines vary by state, so do your research online or contact your local chamber of commerce to learn more about local regulations before diving headfirst into your business.

Option #2: Buy A Pre-Existing Business

The second option is to buy a pre-existing business. Instead of doing the initial setup work yourself, you take over an existing business that already has equipment and, in most cases, locations secured with contracts.

The obvious advantage is that this automatically gives you a more turn-key operation. A major drawback is that this is often the most expensive option. After all, you aren’t just buying the equipment and inventory — you’re also taking over existing contracts.

If you choose this option, it’s best to have some business experience under your belt since you need to hit the ground running. You’ll also need to ensure you can secure the capital needed to purchase the business.

How To Finance Your Vending Machine Business

Whether you’re starting from the ground up or you’re in talks to purchase an existing business, there’s one thing you need before you take the leap into entrepreneurship: money. Even if your business is already off the ground, you’re going to need additional capital to expand and boost your profits — capital that you can receive with a small business loan.

Starting A Vending Machine Business

Starting a vending machine business can be surprisingly low-cost. After all, you don’t have to worry about paying for commercial space or utility bills. However, there are still startup costs associated with this type of business.
Some of the costs you may incur when starting your business include:

  • Equipment
  • Inventory
  • Vending Management System
  • Commercial vehicle used for restocking machines

Unfortunately, qualifying for traditional business financing options is difficult for startups. Many business loans, including those from banks, credit unions, and the Small Business Administration, have time in business and annual revenue requirements that you just won’t meet.

This doesn’t mean you’re out of financing options. Instead, you can use a personal loan for business to cover startup costs.

With a personal loan for business, you’ll use your personal credit score, income, and other information to prove your creditworthiness. Since this isn’t a business loan, you don’t have to worry about annual revenue, business credit score, or other requirements.

Recommended Option: LendingPoint Personal Loan

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Through LendingPoint, you can receive up to $25,000 as quickly as the next business day. Interest rates are between 15.49% and 30%. Your loan is repaid twice a month over terms of 24 to 48 months.

One of the advantages of LendingPoint is that you don’t need a perfect credit score to qualify. These personal loans are designed for fair-credit borrowers. To qualify, you must:

  • Be at least 18 years old
  • Have annual income of at least $20,000
  • Have a verifiable bank account
  • Have a personal credit score of at least 600
  • Live in one of the 34 states where LendingPoint operates

Unsure if you qualify? Check out our list of the best free credit score sites to review your credit score. Then, head over to our LendingPoint review to learn more about receiving a personal loan.

Purchasing A Vending Machine Business

If you’ve decided that purchasing an existing vending machine business is right for you, the next step is getting the capital you need to acquire the business. Unfortunately, if you don’t already have an existing business, qualifying for a business loan can be difficult.

As a startup, you may qualify for startup loans or other types of business financing. Learn more about how to get a business acquisition loan.

However, personal loans used for business expenses are also an option. Just as we discussed above, you can use your personal information to qualify for financing to acquire an existing business.

Our previous recommendation, LendingPoint, can only provide up to $25,000. If you need more capital, consider Lending Club personal loans.

Recommended Option: Lending Club Personal Loans

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Lending Club issues personal loans up to $40,000 to qualified borrowers. APRs range from 6.95% and 35.89% and are based on your credit score and history and the amount and term of your loan. There are no prepayment penalties. Repayment terms of up to 60 months are available.

To qualify for a Lending Club personal loan, you must:

  • Be at least 18 years old
  • Have a verifiable bank account
  • Be a U.S. citizen, permanent resident, or live in the U.S. on a long-term visa
  • Have a credit score of 600 or above

Ready to learn more? Check out our Lending Club personal loans review for more information.

Equipment Purchasing

As your business grows, you’ll want to add more vending machines to your lineup. You may also have to replace broken or outdated machines to maximize revenues. Unfortunately, vending machines don’t come cheap. While a used, basic model may cost just over $1,000, newer machines run several thousand dollars apiece. Though this seems like a big investment, you could easily increase your profits and see a big return with more expensive specialty machines or equipment that comes with credit card readers.

Another piece of equipment that may be critical to your business is a commercial vehicle. A van, car, or truck that is used to drive to your locations and restock or manage your machines may be something you consider purchasing as your business grows.

When it comes to buying equipment, there’s one option that stands out from the rest: equipment financing. Just as the name suggests, this type of small business loan is used to purchase equipment, breaking down huge price tags into smaller, more manageable payments.

With equipment financing, you have two options: equipment loans and equipment leases. With a loan, you’ll pay a down payment that is typically 10% to 20% of the cost of the equipment. You’ll take immediate possession of the equipment, and you’ll pay your lender on a weekly or monthly basis over a set period of time. Once you’ve fully repaid the loan (plus interest), the equipment belongs to you.

With a lease, you’ll also pay a down payment and take possession of the equipment. However, your lease period will be for a shorter period of time — usually 2 to 3 years. Similar to loans, you’ll make regularly scheduled payments to the lender. Once your lease is over, you can sign another lease for new equipment. Some lenders even allow you to pay the remaining balance at the end of your lease to take ownership of the equipment. Leasing may be a good option if you plan to upgrade equipment frequently. However, this could be the more expensive option over the long term.

Recommended Option: Lendio

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If you need equipment financing, Lendio has options. This isn’t a direct lender. Rather, it is a loan aggregator that connects you with its network of over 75 lenders. What’s great about Lendio is that you can compare offers from multiple lenders with just one application.

Lendio offers $5,000 to $5 million for the purchase of equipment. Terms are between 1 to 5 years with rates starting at 7.5%.

To qualify for equipment financing through Lendio’s network, you must have the following:

  • A time in business of at least 12 months
  • A credit score of 650 or above
  • At least $50,000 in annual revenue

Credit scores below 650 may be accepted with proof of solid cash flow and revenue from the last 3 to 6 months.

Through Lendio, you can also apply for other types of financing including Small Business Administration loans, business credit cards, short-term loans, and lines of credit. Check out our Lendio review to learn more.

Inventory Purchasing

One of the few ongoing expenses you’ll have in your vending machine business is inventory. It’s your responsibility to keep your machines well-stocked at all times, so you’ll need to have inventory on-hand to keep your machines full.
Sometimes, incoming cash flow has slowed or you may need more inventory than usual due to an increase in sales. It’s not uncommon to fall a little short financially from time to time, but when this occurs, you can be prepared with a business credit card or a line of credit.

Business Credit Card

A business credit card works just like a personal credit card. The issuer of the card sets a limit. You can make multiple purchases up to and including the credit limit online, at retail stores or with vendors that accept credit cards. Each month, you’ll make a payment that is applied toward your balance plus the interest charged by the lender. As you pay down your balance, funds will become available for you to use again.

Recommended Option: Chase Ink Unlimited

Chase Ink Business Unlimited


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Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

If you want to go with a business credit card, Chase Ink Unlimited is available for borrowers with excellent credit.
The Chase Ink Unlimited card comes with a 0% introductory APR for 12 months. After the introductory period, the card has a variable interest rate of 15.24% to 21.24%. This card does not have an annual fee.

As a new Chase Ink Unlimited cardholder, you’ll receive $500 cash back if you spend $3,000 within the first 3 months of opening your account. But the rewards don’t stop there. You’ll receive unlimited 1.5% cash back for every business purchase.

To qualify, the recommended credit score is 740 to 850. Learn more by reading our Chase Ink Unlimited review.

Business Line Of Credit

A business line of credit is very similar to a credit card and can be a great option for purchasing inventory. A lender will set a credit limit based on your creditworthiness or the performance of your business. Instead of using a card, however, you’ll initiate draws from your line of credit. Funds will then be transferred to your business bank account, usually within 1 to 3 business days. Lenders charge fees and/or interest on the portion of funds you’ve borrowed. As you pay down your outstanding balance, funds become available to withdraw again.

Both credit cards and lines of credit provide you with on-demand funding, ideal for those times when you need to purchase inventory but come up a little short financially.

Recommended Option: Fundbox

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Through Fundbox, you can receive a line of credit up to $100,000 to cover inventory and other business expenses.
Fundbox offers pricing that’s easy to understand. With each draw, you’ll pay a one-time fee. Fees start at just 4.66% of the amount drawn. If you repay early, all remaining fees are waived. Payments are made weekly and are spread out over 12 or 24 weeks.

Fundbox looks beyond your personal credit score during its approval process. The lender evaluates the performance of your business to determine whether you qualify for a line of credit.

Requirements to qualify for a Fundbox line of credit are minimal. You only need:

  • A business based in the United States
  • A business checking account
  • At least $50,000 in annual revenue
  • 2 months of activity in supported accounting software OR 3 months of business bank statements

To learn more and determine if this product is right for your business, check out our Fundbox review.

Final Thoughts

Starting your own vending machine business can be a very lucrative venture with the right strategy in place. This includes calculating the cost of owning and operating your business, doing your research, and getting the right financing.

Understand the potential expenses you’ll encounter, read up on your local laws, then check out our Beginner’s Guide to Small Business Loans to explore more financing options available to you.

The post Starting And Financing A Vending Machine Business appeared first on Merchant Maverick.

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APR VS Interest Rate: Know The Difference

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

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

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

What Does Interest Rate Mean?

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

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

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

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

What Does APR Mean?

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

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

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

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

The Difference Between APR & Interest Rate

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

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

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

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

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

APR & Credit Cards

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

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

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

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

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

How To Find A Credit Card’s APR

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

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

APR & Interest Rate For Business Loans

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

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

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

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

How To Calculate APR

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

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

Final Thoughts

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

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

The post APR VS Interest Rate: Know The Difference appeared first on Merchant Maverick.

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What Is Chase Pay And How Does It Work?

The Chase Pay app is a digital wallet developed by Chase Bank. Instead of having to take out your wallet, find your credit card, swipe, and wait, a digital wallet like Chase Pay works by scanning a QR code on a smartphone or with a tap using near-field communication (NFC) technology at a credit card terminal.

Through this post, we are going to explore why accepting digital wallet payments can be a good move for business owners and why the digital wallet offered by Chase Pay is a great option for customers and merchants alike.

The Evolving World Of Digital Wallets

It is no secret that the world of payment processing is evolving quickly. Non-cash payments are becoming commonplace, but that doesn’t mean that we’re diving into a cashless system quite yet. The reality is that half of payments made are still paper-based or manual, according to JPMorgan Chase. Despite their continued use, these manual types of processing transactions represent a more expensive way to do business, cost more working capital from businesses, and take more time to settle the payment between the seller and buyer.

In other words, digital wallets can be a cost-saving option. However, with any new technology, it takes time for users to adapt. Businesses must figure out what will work best for them and consumers are often set in their ways, so all of this momentum to digital wallets will take a few years to build. Currently, most people are exploring their options, but the digital wallet trend is on the rise.  

Chase Pay provides new opportunities to settle things faster electronically (and less expensively) and it can also make life easier for the people who use it, offering faster ordering and pick-up times, a quicker check-out process, and built-in reward and discount programs.

Read on to find out more about Chase Pay and how it can help you improve engagement and offer a better incentive for customers.

Chase Pay For Customers

Chase Pay offers digital wallet and online payment options. Through the Chase Pay app, customers can pay with only their phone by tapping (if linked to Samsung Pay) or scanning a QR code.

You can combine all your Chase-eligible cards, wallets, loyalty programs, and rewards so you can apply what you need quickly at checkout. No more fumbling for the loyalty card on your keychain while also digging your card out of your wallet. Not only that, Chase often runs promotional deals to encourage first-time users to shop in more places.

To sweeten the deal even more in this competitive digital wallet space, Chase Pay also recently introduced Chase Offers. Once you are in your app, you will see any offers available to you and can click on an offer to activate it. The offer appears as a statement credit after 7-14 business days. You don’t need to register, use any vouchers, or apply any codes. Once you activate an offer you like, it is applied whenever you make a purchase with Chase Pay.

These offers are not the same as (and don’t replace) your rewards. You continue to earn any rewards on your purchases through Ultimate Rewards points, your miles, or any other reward program you’re enrolled in.

Where To Shop With Chase Pay

The selection of shops, big-box stores, and restaurants that accept Chase Pay is somewhat limited at this point. However, there is still a decent list of merchants that accept Chase Pay, including big names like Starbucks, Shell gas stations, and Walmart. Within the app, you can also search for places near you that accept Chase Pay, so you will likely never have a shortage of shopping options.

Samsung Pay + Chase Pay:

Since your Samsung Pay account can be linked with your Chase Pay account, this option opens up literally millions of shopping options for you (Samsung Pay has a much larger footprint). Linking these accounts also makes life easier because you can check-out with a tap rather than a QR scan.

Chase Pay For Business Owners

It’s important to note that Chase Pay doesn’t work when it comes to purchasing with your business accounts or under your business profile. But it may be worth your while to consider setting up Chase Pay to process in-store or online orders for your customers! Now, more than ever, customers are making more inquiries into the types of payments accepted.

According to a recent Forrester estimate, mobile payment transactions continue to skyrocket and will triple to $282.9 billion in only a few short years. That means that the expectations from customers are only going to get stronger when it comes to check-out options. It is also important to make sure you are giving your customers a choice when it comes to cashless payments.

Most of your customers don’t have just one line of credit, so why limit the way they can pay you? Offering several types of payments options, including Chase Pay, for both in-store and online shopping can make things easier and more accessible for your customers. 

Engage More Customers

Retailers are spending increasingly more time vying for customer loyalty and seeking engagement ROI through mobile, cashless payment. Here at Merchant Maverick, we like Chase Pay because it can provide some extra exposure for your business while giving customers more incentive to buy.

Depending on your industry, you may be able to take advantage of partnerships Chase has formed. For the food industry, for example, Chase has partnerships with LevelUp® and TouchBistro® for order-ahead, loyalty programs, and additional special offers to apply for your customers.

Grocery and retail stores can let their customers take advantage of contactless or QR payment options. Setting Chase Pay up at your store shouldn’t be a hassle, because it likely works with your existing terminal. If your current credit card terminal accepts chip cards (EMV) the odds are good it’s also configured to accept NFC/contactless payments.

 

All of these options let you give your customers more convenience through pre-ordering or faster checkout. People are driven by convenience and saving time, and customer expectations are only going to increase these next few years.

Getting Started With Chase Pay

Ready to check out the Chase Pay app for yourself? Head to the Apple or Google Play app store and download the app. You’ll need to log in with your Chase account username and password. If you have more than one card through Chase, you’ll also be able to select your default payment card. You will also be able to select the card you want to use when it is time to pay.

If you want to explore more payment processing options for your business, check out our post, Payment Processing Companies and Services for Small Business. 

The post What Is Chase Pay And How Does It Work? appeared first on Merchant Maverick.

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How To Secure A $10,000 Loan Online For Your Business

Even the most prepared business owners will face a financial shortage from time to time, whether it takes the form of a holiday uptick in your retail business, a slow season for your construction business, or unpaid invoices that have brought your incoming cash flow to a screeching halt. Unexpected or emergency expenses can arise out of nowhere in any industry, and they have the potential to have a devastating financial impact your business.

If your cash flow begins to suffer from seasonal slumps, late-paying customers, or emergency expenses, know that there are options available to you. Online small business loans and financing products can help you overcome any financial hurdle.

On the other hand, maybe things are going well for your business, and you just need a little boost to help expand your facility, hire new employees, and take your business to the next level. Online business loans can help with that, too.

If you need $10,000 for your business — for whatever reason–, you’re in luck. There are many loan products available to you, from traditional installment loans to short-term loans, invoice financing, or lines of credit. Best of all, you don’t have to have a perfect credit score or high annual revenues to qualify. With some online lenders, you can be approved in just minutes, and in some cases, you may even receive the financing you need within 24 hours.

Many online lenders can fund your loan or financial product without the delays or heavy paperwork requirements imposed by banks or traditional lenders. You’ll pay higher rates and fees for this convenience, but if you need cash fast, an online loan is the way to go. Depending on the lender you select, you may get approved and funded simply by supplying basic information about yourself and your business and a few recent bank statements.

Ready to secure a $10,000 online business loan? Read on for our top lender picks.

1. BlueVine

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One lender that makes it easy to get $10,000 for your business is BlueVine. With two different financing options, you can receive up to $5 million to cover your business expenses.

The first financial product offered through BlueVine is a revolving line of credit. You can receive between $5,000 and $250,000 with simple interest rates starting at just 4.8%. Through BlueVine, the application process is simple, and you can be approved for an unsecured line of credit in just minutes. You’ll be able to make draws from your account as needed up to the credit limit assigned by the lender. Repayments are made weekly or monthly over 6 or 12 months. Interest is only charged on the borrowed amount, and your funds will be replenished as you make your payments.

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

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

The application requires you to supply information about yourself and your business, as well as business bank statements from the last 3 months.

If unpaid invoices are dragging your business down, BlueVine also offers invoice factoring. You can receive up to $5 million for your qualifying invoices with rates starting at just 0.25% per week. You’ll receive up to 90% of the total balance of your invoices upfront and the remainder once the invoices are paid, minus fees charged by the lender.

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

  • Operate a B2B business
  • Have a personal credit score of at least 530
  • Have a time in business of at least 3 months
  • Earn at least $100,000 in annual revenue

2. Credibly

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Credibly offers three financing options for business owners seeking $10,000 in capital. If you need a loan to cover daily operating expenses, Credibly offers a working capital loan. With this product, you can apply for up to $250,000. Instead of interest rates, these loans come with a factor rate. The most qualified borrowers can receive factor rates as low as 1.15. Working capital loans are repaid daily or weekly over a period of 6 to 17 months. An origination fee of 2.5% of the loan amount is deducted from your loan.

To qualify for a working capital loan from Credibly, you must have:

  • A credit score of at least 500
  • A time in business of at least 6 months
  • An average of at least $15,000 per month in deposits to your business bank account.

If you need $10,000 to expand your business, consider a business expansion loan from Credibly. You can apply for up to $250,000 to be repaid weekly over 18 or 24 months. Interest rates for the most qualified borrowers start at 9.99%. An origination fee of 2.5% of the total loan amount will be deducted from your loan proceeds.

To qualify for a business expansion loan from Credibly, you must have:

  • A credit score of at least 600
  • A time in business of at least 3 years
  • Average monthly bank deposits of at least $15,000
  • An average daily balance of $3,000

If you don’t meet the revenue or credit score requirements of Credibly’s other financial products, consider applying for a merchant cash advance. With this type of financing, you sell a percentage of your future receivables. Credibly will take a set percentage of your sales each day until your loan plus any fees are repaid. Factor rates start at just 1.15 and repayment schedules are available up to 14 months. Through this type of financing, you can apply for up to $150,000. A one-time 2.5% origination fee is added to your loan balance, and Credibly also charges a $50 monthly admin fee.

To receive a merchant cash advance, you must have a credit score of at least 500 and at least $15,000 in average monthly bank deposits. Your business must also be in operations for at least 6 months to qualify. You can be approved for your loan in as quickly as 24 hours.

3. Fora Financial

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For quick working capital loans, consider applying for financing through Fora Financial. If you want a flexible working capital loan with no restrictions, this lender offers small business loans in amounts from $5,000 to $500,000. Repayment terms are available up to 15 months.

To qualify for a working capital loan through Fora Financial, you must have:

  • A time in business for at least 6 months
  • At least $12,000 in gross sales
  • No open bankruptcies on your credit report

You can also apply for a merchant cash advance of up to $500,000 through Fora Financial. There are no set terms and no restrictions. Payment amounts are based on the revenue of your business.

To qualify, you must be in business for at least 6 months and have no open bankruptcies. You also must have at least $5,000 in credit card sales to be eligible.

4. Fundbox

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Another flexible line of credit comes from Fundbox, where you can receive up to $100,000. You’ll make equal weekly payments for 12 or 24 weeks to pay off the loan, plus the flat fee charged by the lender. Fees start at just 4.66% of the draw amount.

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

  • A business checking account
  • At least $50,000 in annual revenue
  • A connected business bank account

There are no minimum credit score requirements.

Fundbox Credit is another option to explore if you have unpaid invoices. This is an invoice financing product that provides you with up to $100,000 for qualifying invoices. Advance fees start at 4.66% with repayment terms up to 24 months.

To qualify, there are no minimum credit score or time in business requirements. You must also connect your accounting software that shows activity from at least the last 2 months.

5. IOU Financial

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With IOU Financial’s core small business loan, you can receive between $5,000 and $150,000 in extra capital for your business. These loans come with terms of 6, 9, or 12 months, and fixed payments are made daily.

To qualify for a small business loan from IOU Financial, you must:

  • Be in business for at least 1 year
  • Own at least 80% of your business (this requirement drops to 50% if you own your business with your spouse)
  • Make at least 10 deposits per month into your business bank account
  • Bring in annual revenue of $100,000

If you need more capital at a later time, IOU Financial also offers a mid-market loan of $70,000 to $300,000. Terms for these loans are 12, 15, or 18 months, and payments are made on a daily or weekly schedule.

6. Kabbage

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Kabbage offers flexible lines of credit that can be used to cover any business expense. If you’d like access to money on-demand, Kabbage’s lines of credit allow you to make draws as needed up to your credit limit.

Through Kabbage, you can be approved for a line of credit up to $250,000. With each draw, you’ll receive terms of 6 or 12 months, with payments made monthly. Kabbage charges fee rates between 1.5% and 10% based on the performance of your business.

If you have a low personal credit score but your business is doing well, Kabbage may be the right option for you. There are no minimum credit score requirements to receive a Kabbage line of credit.

However, to get a line of credit from Kabbage, you must:

  • Be in business for at least 1 year
  • Bring in annual revenue of at least $50,000

If you don’t meet this revenue requirement, you must show that you’ve brought in at least $4,200 per month for the last 3 months.

What makes Kabbage stand out from other lenders is that it offers the Kabbage Card. Typically, with a line of credit, you initiate the draw and receive your funds in your business bank account as quickly as the next business day. With the Kabbage Card, however, you have instant access to your funds. Use this card wherever Visa is accepted without having to wait for funds. Kabbage will then create a new loan with the same rates and terms as its traditional draws.

7. LoanBuilder

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If you want a business loan with one fixed fee and terms that are easy to understand, consider Paypal’s LoanBuilder. Through this lender, you can customize your loan to get the payments that are right for you. You can apply for anywhere from $5,000 to $500,000 and receive your funds as quickly as the next business day. Repayment terms of up to 52 weeks are available and are based on the amount of the loan. Payments are made weekly until your loan plus the lender’s fee are repaid. Fees range from 2.9% to 18.72% of the borrowing amount.

To qualify for a LoanBuilder loan, you must have:

  • A personal credit score of at least 550
  • A time in business of at least 9 months
  • At least $42,000 in annual revenue
  • No active bankruptcies on your credit report

8. OnDeck

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OnDeck offers several financing options if you need $10,000 for your business. With a short-term loan, you can receive up to $500,000 with repayment terms of 3 to 12 months. The lender charges a simple interest rate starting at just 9% for the most qualified borrowers. Long-term loans are also available with repayment terms of 15 to 36 months with annual interest rates starting at 9.99%. Daily or weekly payments are automatically deducted from your bank account with both loan options.

To qualify for a term loan from OnDeck, you must:

  • Be in business for at least 1 year
  • Have a minimum of $100,000 in annual revenue
  • Have a credit score of at least 500

An origination fee up to 4% of the borrowing amount will be charged to service and process your loan.

If you want a more flexible financing option, OnDeck provides lines of credit to qualified borrowers. Lines of credit from $5,000 to $100,000 are available, with APRs starting at 13.99%. Automatic payments are deducted weekly from your business bank account.

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

  • A time in business of at least 1 year
  • $100,000 or more in gross annual revenue
  • A personal credit score of at least 600

You must also be the majority owner of your business.

9. QuarterSpot

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Through Quarterspot, you can receive up to $250,000 in funding for your business in as quickly as 24 hours. Repayment terms of 9, 12, and 18 months are available with factor fees starting at 12.5 cents per dollar borrowed. With a Quarterspot loan, you can repay early to save on interest and fees.

To qualify for a loan from Quarterspot, you must have:

  • A credit score of at least 550
  • A time in business of at least 1 year
  • Monthly revenue of $16,000 or more
  • At least 10 sales every month
  • An average daily bank account balance of $2,000

You must also live in the United States, although applicants located in the states of North Dakota, Rhode Island, South Dakota, and Vermont are ineligible to receive funding through QuarterSpot.

Online Loans For Business Startups

You’ve reviewed all of your options, and there’s one major problem standing in your way: you’re running a brand-new business or startup. Most online lenders require your business to be in operations for at least one to two years in order to qualify for a business loan. While getting the capital you need for a new business may be more challenging, it certainly isn’t impossible. In some cases, you may even have to get a little creative with your financing options.

One option to consider is a personal loan for business. If your personal credit score is solid and you meet income requirements, you can receive a personal loan to use for business expenses. The lenders below offer personal loans for business with reasonable rates and fee:

Lender Borrowing Amount Term Min. Credit Score Next Steps

$2K – $25K 2 – 4 years 15.49% to 30% 600 Apply Now

$1K – $50K 3 or 5 years 8.16% – 27.99% 620 Apply Now

$2K – $35K 3 or 5 years 6.95% – 35.99% APR 640 Apply Now

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$1K – $40K 3 or 5 years 5.32% – 30.99% 640 Check Rate

Another way to get $10,000 online to grow your new business is with crowdfunding. Through crowdfunding, you have a platform to pitch your business in front of multiple investors. Whether you want to expand your business or bring a new product to market, you can launch a campaign to raise the capital you need. One such platform to consider is Kiva US.

Kiva US

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Through Kiva US, you can receive up to $10,000 for your business. The best part is that you’ll be charged 0% interest on your loan. However, financing through Kiva doesn’t work like a traditional loan. With a traditional loan, you submit your application, the lender considers your business history and credit profile, and if you’re approved you’ll receive your payment.

With Kiva US, you’ll fill out an application once you’re pre-qualified. Then, for 15 days, you use the platform to get friends and family members to lend money to you. Once you’ve raised money from people you know, your campaign will go public to over 1.6 million people for 30 days. After you’ve raised the funds you need, you have up to 36 months to pay back your interest-free loan.

Unlike other loans, there are no credit score, time in business, or annual revenue requirements. To qualify, you must live in the United States, be at least 18 years old, and use the loan for business purposes.

What To Do If You Have Bad Credit

Let’s be honest: securing a loan with bad credit can be a challenge. Traditional options like bank loans and SBA loans are typically completely off the table with a poor credit score, even if your business is successful.

Before you apply for a business loan, it’s always important to know where you stand credit-wise, even if you know you have a great score. The internet makes this easier than ever, and there are multiple sites that allow you to view your credit score at no cost. If you have credit challenges, review your report for any errors that can be disputed with the credit bureaus.

Once you know your score, you’ll be able to better gauge what types of loans and which lenders you can work with. If you have a score that is in the low 600s or even lower, know that your financing options may be more limited.

Before you apply, also understand the cost of borrowing. A low credit score shows lenders that you’re a risky borrower, so not only are your financing options limited, but you’ll face higher fees and interest rates than more creditworthy borrowers. When you do apply for a loan or other financing, make sure to evaluate the full cost of the loan to ensure it makes sense for your business. Your loan should help your business — not drag you into uncontrollable debt.

The wisest financial move is to take steps to boost your score before applying. However, if you need a loan immediately, improving your score over months (or even years) may not make sense for your business. If this is the case, short-term loans, business credit cards, invoice financing, and lines of credit may be your best options. Some of the lenders on this list, such as OnDeck and Kabbage, work with borrowers with all credit types. Crowdfunding is a low-interest option you can also explore if you’re facing credit challenges.

Final Thoughts

Getting $10,000 for your business is easy when you know where to look, even if you have past credit challenges, operate a new business, or have annual revenue that falls below traditional lending requirements. However, having access to quick loans also makes it easier to push your business further into debt.

Be smart. Shop around with lenders, evaluate all of your options, and calculate the return-on-investment to ensure you’re making a sound, responsible financial decision for your business.

The post How To Secure A $10,000 Loan Online For Your Business appeared first on Merchant Maverick.

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Why We Like Square’s Online Dashboard and Analytics App

Many business owners know and love Square for its free mobile point of sale app and free credit card readers, but some don’t realize that Square automatically provides some pretty powerful reporting and analytics features with their processing service.

Even if you’re primarily using Square to accept payments. Square dashboard feature is worth a closer look. Now more than ever, understanding data is critical to making smart business decisions every day, no matter what industry you’re in.

Read on for a look at some of the most notable features and benefits of the Square dashboard.

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Square’s Online Dashboard Features

The Square Dashboard makes it easy to understand both simple and complex aspects of your business. Best of all, it’s completely free with all Square accounts, and you can check it out from your favorite browser with no issues. (Note: Square’s Dashboard app is currently only available for iPhones; an Android version is coming soon. We’ll take a more in-depth look into the mobile app’s capabilities later in this post.)

The Square Dashboard boasts a simple, easy-to-use interface, and its intuitive design allows you to find what you want quickly. You can play around with your Home screen until it displays the sections in the order you think makes the most sense. This dashboard is so user-friendly that data geeks and amateurs alike can find something to love. Let’s dig in a little deeper.

Manage Settings

The Settings area acts as a control center where you can manage all kinds of permissions and security settings, including setting up 2-step verification for sign-in for you and your employees. Here, you can also edit your business name as it appears on your receipts and statements and change your bank account if needed.

Settings is also the place to manage multiple business locations (if applicable) and get device codes set up for each of your devices rather than simply relying on your email and password.

Get Paid From Your Dashboard 

One of the most important functions of the dashboard is getting paid!

If you are using your Virtual Terminal, you can access it directly from your dashboard to accept payment. Payments here are 3.5% + 15¢ per keyed-in transaction — or, if you have your Square Reader for magstripe, you’ll pay 2.75% per transaction. (A quick note, you need to have a Chromebook or Mac computer to take advantage of this.)

Square’s Virtual Terminal

If you invoice your customers, you can send a one-off invoice or set up recurring invoices from your dashboard, too. Invoices are free to send out, and you will pay 2.9% + 30¢ per invoice when your customers pay with credit or debit online. Square has beefed up its features in this regard, with the option to let customers pay in installments as well as the ability to request a downpayment.

Transferring Funds To Your Account

The Settings area also allows you to play around with your deposit schedule. By default, your account is set to deposit funds accrued by 8:00 pm EST to your account the next business day.

Need them even sooner? If you are in need of your funds right away, you can opt to use instant deposit. Instant deposit transfers your sales balance to your linked debit card whether it’s a business day or a weekend (for an additional 1% of the balance). Check out How Does Square’s Instant Deposit Work? for a more detailed look at this feature.

 

Now that we have covered the basics of some of the features under Settings, let’s discover more about the reporting features, found in the Square Reports tab (under Sales).

Reporting

Within the Sales section of the Square Dashboard, you’ll discover important insights into how your business (and your employees) operate. For instance, in the Reports tab, you have multiple subsections that give you visual data about nearly every part of your business.

The Square Reports tab is broken down by sections:

  • Sales Summary: The summary shows all of your gross sales, net sales, discounts, and more. You can change the time period of the report to display an overview of the whole year or see what your sales are doing today, in real time.

  • Sales Trends: Trends gives you a visual representation of all of your sales in the form of a line graph to quickly see how your sales perform day to day, week to week, and year to year.
  • Payment Methods: The payment methods feature gives you a snapshot of how customers are paying, how many transactions they have with you, and the fees associated with each type. Whether your customers are paying with cash, card, or gift card —it is all right there.
  • Item Sales: This section breaks down sales totals by item. Get an exact count on what products and services are selling the best — and which are selling the least.
  • Category Sales: Not only can you see an itemized list of everything you’re selling in the item sales section, but Square’s reporting feature also breaks things down by category.
  • Mobile Staff Sales: Keep track of who your best mobile sellers are with a quick view that shows you when they sell through the day. Finding out when sales peak can help you schedule and better manage your entire remote staff — and help you spot your best sellers for the day.
  • Employee Sales: Similar to the mobile staff sales section, the employee sales section helps you keep track of who is selling what. This section shows you sales per hour, tips, hours worked, and when sales peaked for the day. To be able to use this, you’ll have to have an Employee Management subscription, which costs $5/employee per month.
  • Discounts: The discount sections shows a list for the amount and frequency of your discounts that are applied to anything your customers buy.
  • Taxes: This section breaks the sales tax information down for you by the type of tax, how much it is, and any non-taxable sales you have.
  • Gift Cards: Find out what you need to know about any gift cards you sell. This section overviews any gift cards you load, how much was put on them, how many were redeemed, and how many existing gift cards you have floating around at any time.
  • Comps: Comps keep track of changes to orders that may affect your bottom line. If a change will cause a loss to your business, or if you want to place a discount on an order and eat the cost, you will utilize the comp function.
  • Voids: For a change to an order that doesn’t affect inventory or costs (i.e., a customer changes an order before it’s made), you will use the void function.

Worried about keeping accurate books? You can also export your data from nearly any accounting software. The best part is that because the dashboard is so easy to navigate, you don’t have to wade through a lot of Excel sheets to get to your data. Keeping things in one central location can mean less hassle, as you have created a streamlined workflow from data to decisions. And that can make for smart business decisions at every level. 

Customer Care

Square has some excellent — and entirely free — built-in features that can help you understand and take control of customer satisfaction. The foundation of this is the Square Directory, a free tool you can use to build customer profiles, including their names, contact information, and purchase history. You can also keep notes on each customer! A detailed transaction and activity history can help you understand how your customers interact with you through time.

Square offers insights that show you how often your customers visit and how often they return to you. The insights can help you track retention patterns, and if you have multiple locations, help you understand which of your locations is doing better. You can create segments of your “regulars” or identify customers who have lapsed in visits and (if you opt to use Square’s Marketing suite) reach out to them with promotions.

The other tool worth mentioning is Square Feedback. Here, you can encourage any customers who have negative issues to leave you private feedback where you can offer resolution directly. Your customers can send private feedback from their receipt so you can keep track of any repeated issues or isolated issues quickly. It’s possible to respond to the feedback, issue refunds, or send coupons — all through the Square dashboard.

Square’s Customer Feedback Features

Inventory

While you can create items from within the Square Point of Sale app, the Square Dashboard offers much more comprehensive tools to manage your inventory. You can create items manually, one by one, or do a bulk upload with a CSV file. In the dashboard, you can also manage quantities of items and set low-stock alerts, so you know when it’s time to re-order something. Square’s inventory supports barcodes (though it can’t print labels), as well as variants and modifiers. You can even sort your inventory by category.

Square gives you access to reports that will break the sales data down into beautiful graphs for you to keep track of what inventory items are selling the best. By using the inventory tools, you can quickly see what inventory is moving the fastest and can make better decisions about what to do next.  This real-time data reporting feature means you always have the most up-to-date, accurate information when it comes to re-ordering, managing promotions, and distribution (if you have more than one location). 

How Square Dashboard Insights Lead To Smart Promotions

Sure, the capability to easily keep up with your inventory, sales, and customer management are all benefits, but the dashboard can also give you powerful insights when it comes to making decisions about marketing your business.

For example, you may have a great product that hasn’t quite caught on with customers yet. This app shows you who is buying that lesser-known service or item, allowing you to then run a referral campaign as an incentive for those people to tell their family and friends.

And when it’s time to run a promotion, or you have ongoing discounts to offer, you can track the success of those promotional pushes as well. You’ll find this handy feature in the reporting feature under the Discounts section.

Don’t forget: Square’s Loyalty Program (which starts at $25/month) can be managed from within the dashboard. It syncs with the Directory and allows you to customize your loyalty program perks, right down to the branding of the program. Square really does offer you a centralized way to manage your interactions with your customers and make smart decisions on how to drive sales.

The Square Dashboard App

The Square Dashboard App allows you to take some of the Dashboard’s analytic and real-time updating power with you on the go — if you have an iPhone with the latest version of iOS running. (For those of you with an Android phone, Square is working on developing a compatible app, so stay tuned.)

After you download the app, you can sign into your account. You’ll see right away that it is a bit more simplified than the full online Square Dashboard.

That said, the Square Dashboard App still gives you quite a bit of control on the go. You can view live sales data from more than one location, add customers to your directory, and take a peek at activity through the day. What you can’t do is send an invoice from your app; you will have to log in to your online Square Dashboard to update and submit invoices and send them from within Square Point of Sale.

Make Smarter Business Decisions For A Low Cost & High Value

Ready to get started and dig into the reporting and analytics features? You don’t have to do anything if you are already using Square. It’s all in your Dashboard. You will find every section we highlighted above — from sales summaries and trends to employee sales activity through the day — and it’s all accessible in real time, completely free with your account. 

For any business owner, the ability to quickly track pending invoices and handle customer feedback concerns privately can mean the difference between success and failure. And when it comes to comparing location performance, employee activities, and sales trends over the long term, the dashboard can help you make smarter, more informed decisions for your business.

With everything that Square offers in terms of free features and reporting options, the cost-to-value ratio is a no-brainer. You get a lot of benefit out of this robust product that keeps delivering real-time data to you all year.

Remember, though: While Square doesn’t cost anything to use, you will be responsible for paying credit card processing costs! But unless you opt for a monthly subscription product such as Loyalty, Marketing, or Employee Management, transaction fees will be your only consistent costs with Square.

With Square, fees for each type of transaction can vary, but you’ll pay the same for any type of card. Here is a quick break-down of the most common transaction costs:

  • Square Point of Sale with a mobile card reader: 2.75% per swiped, dipped, or tapped transaction.
  • Square Register: 2.5% + $0.10 per swiped, dipped, or tapped transaction
  • Square Terminal: 2.6% + $0.10 per swiped, dipped, or tapped transaction

For more on Square’s transaction pricing, check out How Much Does Square Charge?

If you are interested in learning more about all of Square’s hardware options, check out our Guide to Square Credit Card Readers And POS Bundles.

Try the Square Online Dashboard For Free

If you are already a Square user, the next step is simple: head over to your dashboard and start checking things out. If you haven’t gotten started with Square yet, you can sign up for a free account with Square and test it out for yourself. There are no credit checks for this, and a free mag-stripe reader comes to your mailbox after you sign up.

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Highlights

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

Retail POS: Free trial ($60/mo value)

 

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

 

Square POS: Always free

Get things set up, keep doing what you do best, and then watch Square build reports for your business in real time.

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$0/month $0/month $60/month $60/month
Always Free Always Free Free Trial Free Trial

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Best Factoring Companies For Small Business

As a B2B or B2G business, having outstanding invoices is typically a good sign. After all, this shows that you actually have customers and your business is technically bringing in money. Depending on your invoicing policy, however, these outstanding invoices can lead to cash flow issues. For example, if your company policy is to bill with net-60 terms, your customers have up to 60 days to pay. If you have invoiced multiple customers, all of whom wait 60 days to pay, your incoming cash flow could take a big hit in the meantime — not ideal for your business.

If you need extra capital for your business as a result of unpaid invoices, there’s a solution: invoice factoring. This type of small business financing leverages your unpaid invoices and helps you get the money you need in just days. Best of all, traditional qualifying factors, like credit score and annual revenue, may not be a factor for approval.

Sounds intriguing, doesn’t it? But before you move forward with invoice factoring, read on to learn more about exactly what it is, whether your business qualifies, and our recommendations for invoice factors.

Best for Recommended Option
Fast Funding BlueVine
Startups Breakout Capital
Borrowers With Low Credit Scores Fundbox
Comparing Factors Lendio
Large B2B Businesses P2Binvestor
Contract Factoring Riviera Finance

What Is Invoice Factoring?

Invoice factoring isn’t the same as a loan. Instead, you sell your qualifying unpaid invoices to a factor for instant cash. Let’s break down exactly how it works.

Normally, you’d send out your invoices, wait for the customer to pay, and receive cash only when the customer pays. In this case, you’re responsible for collecting the payment.

With invoice factoring, you sell your unpaid invoices to a factor. You’ll receive an upfront payment of typically 85% to 95% of the invoice total. Then, the factor collects payment from your customers. Once the customers pay, the factor remits the remaining funds to you — minus any fees charged for the service.

The fees you’ll pay will depend on the factor you select. Most factors have a set daily or weekly factoring fee that is charged until customers pay their invoices. On average, you should expect to pay between 1% and 6% per month.

Let’s look at an example to make invoice factoring easier to understand.

  1. You sell an invoice worth $20,000 to a factor.
  2. The factor pays 90% of the invoice value immediately — $18,000 goes directly to you.
  3. The remaining $2,000 is held in reserve by the factoring company.
  4. The weekly factoring fee is 0.5% — or $100 per week.
  5. The customer repays the invoice in three weeks, so the factoring fee adds up to $300.
  6. This amount is deducted from the cash in reserve — $2,000 — so you receive $1,700.
  7. In total, you receive $19,700 on the $20,000 invoice.

In this example, $300 was paid for the invoice factoring service. We get it: no business owner likes to just give up money. However, trading such a small amount for instant payment could offer the relief your business needs when you’re in a cash crunch.

Of course, this is also just an example. You may have to pay higher or lower fees based on the factoring company you select, which is why it’s important to shop around. In some cases, you may even find that an alternative financial route makes more sense for your business.

What Type Of Businesses Is Invoice Factoring Right For?

Invoicing Versus Accounting

Invoice factoring is best for B2B and B2G businesses that want to resolve cash flow issues due to slow-paying customers.

One of the most important requirements for approval — and with some lenders, the only requirement — is having qualifying invoices. Factoring companies will consider the quality and quantity of your invoices when determining whether to approve your business for invoice factoring. The factoring company will evaluate the value of your invoices and the creditworthiness of your customers. In other words, are your customers likely to pay? If so, you’re a good candidate for invoice factoring.

If you have low annual revenue, a poor credit score, a lack of business credit, or other challenges, you may still be approved for factoring as long as you have qualifying invoices. Be aware, however, that some factoring companies do take into consideration your personal credit score, business profile, and other factors to approve your financing and determine the fees you pay.

Invoice Factoring VS Invoice Financing

Sometimes, the terms “invoice factoring” and “invoice financing” are used interchangeably. However, invoice financing — also known as accounts receivable financing — is slightly different from factoring.

Invoice Financing Invoice Factoring

Uses invoices as collateral for a line of credit

Sell invoices for immediate cash

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

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

You are responsible for collecting invoice payments

Factor is responsible for collecting invoice payments

With invoice factoring, you receive a lump sum for selling your invoices to an invoice factoring company. With invoice financing, you don’t sell your invoices. Instead, your accounts receivables are used as collateral to secure a flexible line of credit.

That’s not the only difference, though. Because you sell your invoices through invoice factoring, collecting payment from customers becomes the responsibility of the factoring company. With invoice financing, you still own the invoices and collecting from customers remains your responsibility.

Unsure of which option is best for your business? Learn more about invoice factoring and financing to make the best financial decision for your business. Then, read on to check out our top picks for invoice factoring and invoice financing.

BlueVine

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Best for…

Small businesses that need capital fast

BlueVine offers invoice factoring lines up to $5 million with rates starting at 0.25% per week. After filling out a short application, you can be approved for funding in just 24 hours. Once approved, you can upload your invoices or connect your accounting software on BlueVine’s dashboard. You’ll receive up to 90% of funds upfront and receive the remainder — minus fees — after the invoice is paid.

To qualify, you must have a personal credit score of at least 530. You must also own a B2B business that has been in operation for at least 3 months and have at least $100,000 in annual revenue to receive funding through BlueVine.
If you’re looking for a different type of financing for your business, you can apply to receive a line of credit of up to $250,000 with rates starting at just 4.8% through BlueVine.

Breakout Capital

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Best for…

Startups seeking working capital

One of Breakout Capital’s financial products is FactorAdvantage. Through this program, you can receive up to $500,000 for your unpaid invoices. Repayment terms up to 24 months are available, and fees start at just 1.25% per month. A one-time origination fee of 2.5% is charged by the lender. One thing to note is that Breakout Capital partners with third-party invoice factoring companies to offer this product.

One of the best things about FactorAdvantage is the loan criteria. There are no time in business, personal credit score, or monthly revenue requirements to qualify. Startups are welcome to apply.

Breakout Capital also offers additional financial solutions for your business, including but not limited to equipment leases, Small Business Administration 7(a) loans, and lines of credit.

Fundbox

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Best for…

Business owners with low credit scores

Fundbox Credit is an invoice financing option that provides a business line of credit of up to $100,000. You won’t repay funds when the customer pays back the invoice; instead, you’ll make weekly payments to pay off the borrowed amount. Repayment terms of 12 to 24 months are available with advance fees starting at 4.66%.

To qualify, you must sync your supported accounting software to Fundbox. Your software should reflect activity from at least the last 2 months. Additional requirements include being a business based in the United States with annual revenues of at least $50,000. There are no time in business or personal credit score requirements to qualify.

Lendio

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Best for…

Comparing options

Lendio is unique from the other lenders in this list because it is not a direct lender. Instead, it is a loan aggregator that connects you with more than 75 of the nation’s top lenders. This is a great option if you want to shop around for the best rates.

Through Lendio’s network of lenders, you can receive accounts receivable financing in amounts up to 80% of your receivables. Terms up to 1 year are available with factor rates starting at 5% for the most qualified borrowers. There are no credit score requirements, and you can receive multiple offers in just minutes with one application.

If accounts receivable financing doesn’t seem like the best choice for your business, you can also apply for other financial products through Lendio, including short-term loans, SBA loans, and equipment financing.

P2Binvestor

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Best for…

Large B2B businesses

Through P2Binvestor, you can apply for asset-backed lines of credit from $250,000 up to $10 million. These lines of credit come with 1-year revolving terms. There are no specific rates listed by the lender, but rates in the “high teens” should be expected.

P2Bi’s lines of credit are secured using accounts receivables and/or inventory. A personal guarantee is also required. This financial product is best for larger B2B businesses, and requirements include minimum annual revenue of $500,000 and at least 6 months in business. According to P2Bi, the ideal borrower owns a business with at least 10 employees, at least 10% annual revenue growth, and at least $2 million in annual revenue.

Riviera Finance

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Best for…

Businesses that want to enter into a long-term factoring agreement

Through Riviera Finance, you can receive up to $2 million for your unpaid invoices. The factor will pay up to 95% of your invoice value upfront, putting more of your own money in your pocket sooner. Riviera Finance works with companies of all sizes, and there are no time in business, credit score, or revenue requirements. Rates start at 2%, and a 6-month contract is typically required.

Through this company, invoices for pre-approved debtors are funded within 24 hours of receipt. Even if the debtor hasn’t been pre-approved, Riviera Finance will work to get the invoice funded in the same timeframe.

How To Choose A Factoring Company

negotiating credit card processing fees

Whether you’re choosing between a few of our recommended lenders or you’re comparing options on your own, it’s important to know what to look for when choosing a factoring company. Before signing your agreements, consider the following:

Factoring Fees

When you need money quickly, it’s easy to lose sight of the big picture and think only in the short term. Fast approvals and quick funding can be alluring, but these conveniences may come at a cost. Shop around to ensure you receive the most affordable factoring fees for your situation.

Even if the factoring fees are very low, also keep an eye out for additional fees, which can drive up the cost of your financing. Check out our side-by-side comparisons to find the most affordable option for your business.

Additional Fees

In addition to factoring fees, some factoring companies charge additional fees for their services. These include but are not limited to:

  • Origination Fees
  • Servicing Fees
  • Monthly Minimums
  • Renewal Fees
  • Money Transfer Fees
  • Early Termination Fees

Over time, these fees can really pile up, so it’s important that you understand all costs associated with the product before signing a contract or opening an account.

Spot Factoring VS Contract Factoring

Before you choose your factoring company, consider the volume of invoices you plan to submit for factoring. Will this be a one-time deal to get you over a financial hump, or do you need a more long-term solution to help with incoming cash flow?

If you only need funds to clear a temporary financial hurdle, spot factoring may be the right choice for you. With spot factoring, you get to choose the invoices that are factored and you aren’t locked into a contract. However, this often comes with higher factoring fees.

If you have multiple invoices that you’ll use to secure capital over a longer period of time, consider contract factoring. In this case, you’ll sign a long-term contract — typically 6 months or longer — that will require you to sell all or most of your invoices to the factor. With contract factoring, fees are often lower but you must meet certain volume requirements each month with most factors. There may be additional fees if you don’t meet this volume or if you end your contract early.

Recourse VS Non-Recourse

From time to time, a customer may not pay their invoice. You may have your own policies in place when this happens to your business, but what happens if you’ve sold the invoice to a factor? The process depends on the arrangement of your agreement.

If you have a recourse agreement, the responsibility falls back on you to purchase the unpaid invoice. If you have a non-recourse agreement, the responsibility of handling the unpaid invoice falls on the factoring company. It is important to note, however, that a disputed invoice may still be your responsibility, even under a non-recourse agreement. Learn more about the benefits and drawbacks of non-recourse agreements.

Final Thoughts

If unpaid invoices are throwing a wrench in your incoming cash flows, invoice factoring can certainly help. However, as with any other financial product, it’s important to fully weigh the benefits and drawbacks, consider short- and long-term costs, and explore other options for getting the capital you need, including business credit cards and unsecured lines of credit.

Consider the long-term effects of financing, then determine if invoice factoring is the right choice for your business.

The post Best Factoring Companies For Small Business appeared first on Merchant Maverick.

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Why Square Is A Great Free POS For Markets And Grocery Stores

As a small business owner who is launching a new shop or exploring your payment processing options, finding the right POS to accept payments is not a decision to be made lightly. You probably already know that the grocery industry has its own unique rewards and challenges. Keeping up with supply and demand, getting your name out there, competing with the bigger brands, and strengthening your own brand recognition takes time, energy, and a lot of know-how. Fortunately, Square offers a fantastic POS option for markets and grocery stores that goes way beyond just the swipe.

Read on to find out how Square payment processing tools can benefit your business whether you are opening a pop-up shop, have a brick-and-mortar store, or take your culinary delights on the go to farmer’s markets and trade shows.

Square’s Free Point-Of-Sale Reader & App

Square is best known for the free Square Point of Sale app and the free Square Reader. Square’s iconic white reader plugs into a smartphone or tablet to make mobile payments possible. The Square Point of Sale app allows you to “swipe, dip, or tap payments” whether or not you have an internet signal. If you run into a spotty WiFi connection or have a service interruption, you don’t have to worry about a line bottleneck because the app can securely save data offline.

For the smaller to mid-size shop, the Square Point of Sale app has everything you will need and then some. We dive into all of these features below, so keep reading for a closer look at how Square gives you better control over more parts of your business, from inventory management to sales, employees, and even more.

We’ll also take a look at how Square can also help you completely run or supplement your marketing campaigns with an all-in-one solution that can integrate a loyalty program and private customer feedback. Most of these perks (except for the loyalty program option) are all “in-the-box” features that you won’t pay anything more to use with your free POS Square reader.  Let’s dig in!

Reader eCommerce Retail Food Service
Free App & Reader Square eCommerce Square for Retail Square for Restaurants
Get Started Get Started Get Started Get Started
Free, general-purpose POS software and reader for iOS and Android Easy integration with popular platforms plus API for customization Specialized software for more complex retail stores Specialized software for full-service restaurants
$0/month $0/month $60/month $60/month
Always Free Always Free Free Trial Free Trial

Track Inventory

One thing will never change — people love to eat. However, keeping your supply up-to-date can be a challenge when it comes to balancing the ebb and flow of demand. Your customers come in for a specific product or ingredient; making sure it’s always there for them builds loyalty and trust. Managing inventory can be tricky if you don’t have the right tools.

Thankfully, Square builds inventory management right into their product, so you don’t ever have to think twice about shopping around for a suite of tools. It’s easy to set up your inventory — you can bulk import all of your products with a CSV spreadsheet and make any adjustments to name, prices, or quantities as needed. Once your inventory is saved, you can also set low-stock alerts so that Square will let you know if you’re running low on a product. The best part is that you can determine what constitutes “low stock,” whether that’s six of an item, or 100! You’ll also always be able to take a peek in real time at what — and how much — of your products are selling.

Square’s inventory also supports variants and modifiers. Variants are helpful if you carry a product that comes in different flavors or sizes — you can keep the item listing centralized, but still track quantities of each flavor or size and see which ones are most popular. You can even set different pricing for each variant, as appropriate. Modifiers are more applicable to restaurants and cafes, but if you run a small boutique store and want to upsell customers on special bundles or extra discounted products, you could add them as modifiers.

Square’s inventory system allows you to upload photos for each product, and on a tablet you can configure the layout of products. However, if you don’t like browsing for the right item, you can also attach a barcode scanner. While the free Point of Sale App doesn’t have native label printing, you can find several viable workarounds.

Also, if you sell products in bulk, it’s important to know that Square doesn’t currently support tracking partial increments of a product, or selling by weight. Again, you can find workarounds for this, one of them being the variable price point feature. With the variable price point, you can create an item and track sales, but the POS app will prompt you to enter an amount for the sale when you select the item.

Finally, if you have more than one shop, you can take advantage of the free multi-location inventory management tools. Square allows you to set up individual preferences for each location, including taxes. You can build your inventory from Square’s centralized item catalog and adjust pricing and availability as appropriate. Plus, you can run reports to see sales by location, POS device, or even by individual employee (you’ll need an Employee Management subscription for that last report.) 

The best part is that you can control all of this — every location, all of your inventory, all of your devices — from your Square Dashboard, which is a free web portal. Below we also cover a little bit more about the dashboard — including how it helps you keep track of employee sales, tips, peak sales times, and more.

Square Dashboard

The Square dashboard gives you an integrated look at many aspects of your store — and these reporting and analytics features are all free. You can view your stats in real time and see what is going on in your store — or stores — simply by visiting the Sales tab in the dashboard. Whether you want to dig into the data or you just want a quick visual representation of sales, you can find what you need, fast. You can access reports, view all types of transactions, and keep track of deposits all by quickly scanning the three tabs at the top of your dashboard.

The reports tab breaks all of your data down into simple graphs and data to view aspects of your shop, including:

  • Sales Summary: Your sales summary report is updated in real time and can be viewed by day, month, or year.
  • Sales Trends: See your sales performance in daily, weekly, or yearly views.
  • Payments Methods: This report displays how your customers pay and any fees associated with the transaction.
  • Item Sales: Allows you to find out how well any individual product is selling.
  • Category Sales: Get a quick pie-chart view of which categories are bringing in the most sales such as appetizers, side dishes, or drinks, for example.
  • Employee Sales: This report breaks down tips, hours worked, and when an employee’s sales peaked for the day. (Note: You need to subscribe to Square’s Employee Management to access these features)
  • Discounts: Running a promotion? This report tells you how often your customers use a discount, coupon, or another offer when they buy. (More about loyalty programs through Square later in the post.)
  • Taxes: This report breaks all of your tax information down by the type, amount, and records any non-taxable sales in one spot.

Square also allows you to create your own custom reports, so if you want to see certain pieces of information together, you can tell Square to compile that report for you, and even how often to send it.

Don’t forget that the Dashboard is also the centralized management hub for all of your other Square services, including invoicing, employee management or payroll, and any other tools you might be using.

Built-In Marketing Engagement

One of the interesting aspects of Square’s platform is its customer engagement tools, the foundation of which is the customer directory. With Square POS, you can keep a record of all your customers, with their name, phone number, email, purchase history, and even card details, if you prefer (and your customers agree to store the card on file). You don’t need to have Square’s loyalty program to activate this feature, and it comes at no charge. It’s a great way to keep notes on regular customers and their preferences, to see who your most loyal customers are and who spends the most money in your store. 

If you’d like to build marketing campaigns to reach out to your regulars, your new customers, or even lapsed customers, Square has the tools built right in, plus all of the data right at your fingertips. Square’s marketing services start at $15/month, which is a pretty reasonable price. The price will scale with your use of the marketing services.

With the marketing tools, you can segment your customer list and target people automatically with offers to get them in the door. So whether you are welcoming a new customer or re-engaging a customer you haven’t seen in a while with a with a special discount, Square lets you tailor your marketing message to people at different spots in the buying journey.

The email tools are simple — you don’t have to understand how to set up multiple campaigns because Square streamlines the creation process for you through prompts. They give you a lot of template designs to choose from and even have some holiday and special occasion suggestions. You can send out a one-time email for a birthday or set up recurring email campaigns that encourage more interaction and more opportunities to buy from you — it all depends on how you want to run your business. 

Finally, when it’s time to review the success of your email campaigns, Square reports show you how many opens and clicks you get, as well as how many people redeem your offer.

Receive & Manage Feedback Privately

The Feedback feature can be helpful if you want a way to take charge of the customer experience and try to eliminate the troubles they encounter. It allows you to personally engage your customers — while keeping everything private. When you enable feedback management, customers who receive digital receipts also receive an invite to provide private feedback about their experience.

You can then resolve any issues between just you and your customer and hopefully make them happier and engaged. The idea behind this is that it is much easier to respond to private feedback than having to keep track of and respond to negative public feedback. Most customers appreciate being acknowledged whether the experience was good or bad, and if you do have an unhappy customer, you can make it right with a full/partial refund or a coupon for a discount on their next purchase. You can check the customer database to see what their purchase history is like and make a determination of the best offer to send. 

Best of all, the feedback management feature is totally free to use!

Square Loyalty Program

Square encourages customer engagement and sales in yet another way — a loyalty program. The pricing structure of Square’s loyalty program is based on the number of loyalty visits, starting at $25/month. Costs automatically adjust with the participation of your customers, and you can always track the success of any program at your dashboard to see if you’re getting your money’s worth.

Square’s loyalty program is very flexible and allows you to tailor rewards to your business and your branding. You can opt for something as simple as a digital punch card, where customers earn a reward after so many purchases, or you can structure a more advanced reward system that allows your customers to collect points and cash in their rewards when they want. You can even let them choose from multiple tiers — they could opt for two lower-tier rewards, or spend all their points on a single higher-tiered reward. 

However you choose to structure your rewards program, you can track the performance on your dashboard. You can see how many customers enroll, how often customers redeem rewards, and how many subsequent repeat visits you’re getting. 

According to Square, customers who join their loyalty programs spend 37% more after they join it. Across the board, loyalty programs continue to work for businesses of every size to encourage repeat business, and we think that it’s definitely worth giving it a try for a while and seeing if it works for your business.

Fully PCI Compliant & Secure

When dealing with credit card processing companies, one of the biggest questions most business owners have has to do with safety and security. You want to know that your data is secure and your customer’s payment information isn’t going to be compromised, because when it all boils down, the burden is on you to make sure that you are PCI compliant. “PCI” is shorthand for the Payment Card Industry Data Security Standard (also sometimes called PCI DSS). No matter how big or small your business is, if you accept credit cards, you have to follow the best practices of the industry when it comes to security — and you can face penalties if you don’t.

To remain secure and compliant for each credit card you take, you have to follow the security guidelines when you swipe, key in, store, or transmit their card data. For starters, data must be encrypted properly at each stage of processing and storage, and each year the standards change.

The whole security and compliance issue can be expensive for the smaller to midsize business, and for some, the issue is intimidating enough that they avoid credit card payments altogether.

The great news is that when Square offers you their product or service, they are taking the burden of PCI compliance on themselves when it comes to their hardware and app. Square is an industry leader in security and compliance. Their team participates on the PCI board itself and has an inside view into the ever-changing world of data security. What that means for you is that when you use Square, you don’t have to jump through any other security hoops — Square maintains PCI compliance and does the work for you. You won’t even need to pay any PCI compliance fees. 

Cost Per Swipe & Getting Started With Square

Getting started with the Square POS app and the reader you will use to swipe your customer’s cards is entirely free. Square continues to remain a favorite among small business owners because they don’t charge sign-on or monthly fees for their free POS reader or app — and they don’t make you sign contracts and punish you with charges if you decide it’s not for you.

If you bring your own smartphone or tablet and combine it with one of Square’s mobile card readers, you’ll pay 2.75% for each swiped, dipped, or tapped transaction. If you opt for one of Square’s all-in-one hardware systems, such as Square Terminal or Square Register, you’ll pay slightly different rates. With Square Terminal, swiped, dipped, or tapped transactions process at 2.6% + $0.10 per transaction.  If you want to know more about all of Square’s different card readers and hardware, check out A Guide to Square’s Credit Card Readers and POS Bundles.

Considering that these are pretty low rates to begin with, and there are so many additional built-in features like dashboard analytics, invoicing, the customer database, and inventory management, we think that is a pretty sweet deal for any grocery store looking to expand.

If you are curious and want to dig even deeper, check out our Square review or visit the Square Point of Sale page and sign up for free to see how it all works for yourself!

Reader eCommerce Retail Food Service
Free App & Reader Square eCommerce Square for Retail Square for Restaurants
Get Started Get Started Get Started Get Started
Free, general-purpose POS software and reader for iOS and Android Easy integration with popular platforms plus API for customization Specialized software for more complex retail stores Specialized software for full-service restaurants
$0/month $0/month $60/month $60/month
Always Free Always Free Free Trial Free Trial

The post Why Square Is A Great Free POS For Markets And Grocery Stores appeared first on Merchant Maverick.

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Where To Find Fast $5,000 Loans For Your Business

When most people hear the term “business loan,” they immediately think about the large amounts of capital used to purchase real estate, buy bulk inventory, or hire a new team of employees. But even though business loans can be used to cover big expenses, sometimes all you need a small loan to assist with day-to-day cash flow, deal with an unexpected emergency, cover payroll for a few weeks, or help you get through a seasonal slow-down.

If you need $5,000 fast, a small business loan can help you clear your financial hurdles. The good news is that with a loan this small, you have your pick of online lenders that can get you funded as soon as the next business day. Paperwork requirements are also minimal for these smaller loans. With some lenders, a little basic information and a few bank statements are all you need to get approved.

However, not all online lenders issue $5,000 loans. Some lenders have much higher minimum borrowing amounts. Instead of spending hours weeding through search engine results, kick off the loan process with one of our picks. The following lenders offer loans, lines of credit, and other financial products that can help you get the $5,000 you need fast.

Ready to learn more? Let’s dive in!

1. LoanBuilder

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If you want to “build” a loan that’s customized to your business, consider applying with PayPal’s LoanBuilder. Thanks to the LoanBuilder Configurator, you can get a quick overview of your financing options and pick the borrowing amount, terms, and payments that work best for your business.

LoanBuilder small business loans are available in amounts from $5,000 to $500,000 and have a single fixed-fee structure, with fees starting at 2.9%. Weekly payments are made over 13 to 52 weeks depending on the amount borrowed. In some cases, you can receive your funding as quickly as the next business day.

To qualify, you must be in business for at least 9 months, have at least $42,000 in annual revenue, and operate in an eligible industry.

2. Accion

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Accion specializes in term loans in amounts from $300 to $1 million. Term lengths vary based on the loan products you are qualified to receive. Typical APRs are between 7% and 34%. An origination fee of 3% to 5% is required.

To qualify, you must have a credit score of at least 575. Depending on the state you’re in, credit score requirements may be as low as 550. There are no time in business requirements, but you must have sufficient cash flow to repay your loan. You must also be no more than 30 days overdue on any bill, have no bankruptcies within the last year, no late rent or mortgage payments within the last year, and no foreclosures within the last 2 years.

If your business is a startup, you must have less than $500 in debt that is past due, have a referral, and provide a business plan with future cash flow projections.

3. Credibly

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Credibly offers three business financing options: working capital loans, business expansion loans, and merchant cash advances (MCAs). With Credibly’s working capital loans, you can receive up to $250,000 that is repaid over 6 to 17 months. Instead of interest rates, Credibly uses factor rates that start at 1.15. Learn more about factor rates and how they affect the cost of borrowing. Payments on working capital loans are automatically deducted daily or weekly.

Requirements for Credibly’s working capital loans are at least 6 months in business, a credit score of at least 500, and at least $15,000 in monthly bank deposits.

If you need money to grow your business, consider Credibly’s business expansion loans. These loans are available in amounts up to $250,000 with term lengths of 18 or 24 months. Interest rates are as low as 9.99% and payments are made weekly.

Qualifying for a business expansion loan is a bit more difficult. To receive this product, you must have a time in business of at least 3 years and a personal credit score of at least 600. You must also have an average of $15,000 in monthly deposits to your bank, as well as an average daily balance of at least $3,000.

If you don’t qualify for Credibly’s working capital or business expansion loans, a merchant cash advance may help you get the extra capital you need for your business. You can receive up to $150,000 through the purchase of your future receivables. This means that Credibly will deduct a percentage of your sales daily from your credit card processor or bank account until the cash advance plus fees are paid off. With an MCA, repayment terms are set at 3 to 14 months and factor rates start at 1.15.

To qualify, you must have at least $15,000 in monthly bank deposits. Your business must be in operations for at least 6 months, and you must have a personal credit score of at least 500.

4. QuarterSpot

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Through QuarterSpot, you can receive small business loans up to $250,000. Repayment terms are 9, 12, or 18 months. With interest and fees, you may pay as little as 12.5 cents on the dollar to receive your loan. You can also save on interest and fees when you pay off your loan early.

To qualify for a QuarterSpot loan, you must meet several requirements. First, you must be in business for at least 1 year. You must also have a credit score of 550. Your business must make at least 10 sales per month and bring in monthly revenues of $16,000. Your average daily balance must be $2,000 to receive a QuarterSpot loan.

5. Fora Financial

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Like other lenders on our list, Fora Financial offers more than one way to get extra capital for your business. First, this lender offers small business loans from $5,000 to $500,000 with terms up to 15 months.

Fora Financial also offers MCAs for qualified borrowers. There are no set terms, and payments are remitted based on the revenue of your business. You can borrow between $5,000 and $500,000 with this product.

Fora Financial’s small business loans and MCAs both have factor rates between 1.1 and 1.3 and origination fees between 1% and 4%.

To qualify for a small business loan, you must have no open bankruptcies, a time in business of at least 6 months, and at least $12,000 in gross sales.

To qualify for Fora Financial’s MCAs, you must have no open bankruptcies, a time in business of at least 6 months, and at least $5,000 in credit card sales.

6. IOU Financial

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IOU Financial’s core small business loan allows you to receive anywhere from $5,000 up to $150,000 for any business expense. With this loan, you’ll have repayment terms of 6, 9, or 12 months. Repayments are fixed and are made on a daily schedule. For larger capital needs, IOU Financial also offers loans of $70,000 to $300,000 with repayment terms up to 18 months.

To receive an IOU Financial loan, you must own at least 80% of your business. If you co-own your business with your spouse, you must own 50% of the business. You must have a time in business of at least 1 year, at least 10 deposits per month in your business bank account, annual revenue of at least $100,000, and an average ending balance of $3,000 in your business bank account.

7. BlueVine

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If a flexible line of credit would better fit your business needs, BlueVine has an option for you. Through this lender, you can receive a line of credit of $5,000 up to $250,000 with rates starting at 4.8%. There are no prepayment penalties or monthly maintenance fees.

With your line of credit, you can make multiple draws up to your total credit limit. You only pay fees on the borrowed amount, and your account will be replenished as you repay. Payments are made weekly or monthly over a period of 6 to 12 months.

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

If unpaid invoices are affecting your incoming cash flow, consider applying for BlueVine’s invoice factoring service. You can receive a factoring line up to $5 million with rates starting at 0.25% per week.

To qualify, you must have unpaid invoices, a credit score of 530, and $100,000 in annual revenue. You must also have a B2B business that has been in operations for at least 3 months.

8. Kabbage

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Another option for flexible lines of credit is Kabbage, which offers up to $250,000 to qualified small business owners. With Kabbage, you can make draws (up to your credit limit) as needed to use as working capital for your business. You only pay for what you’ve used, and fees range from 1.5% to 10%. With Kabbage, you can select from 6-month and 12-month terms based on the amount you withdraw.

Kabbage looks at the performance of your business to determine if you qualify. There are no minimum personal credit score requirements. To qualify, however, you must be in business for at least a year and have at least $50,000 in annual revenue. (If you fail to meet this revenue requirement, you can still qualify if you’ve had $4,200 in revenue per month for the last three months.)

The application process with Kabbage is easy and requires you to provide some basic information about yourself and your business. You will also link your business accounts to get the maximum line of credit based on your business performance.

You can also use the Kabbage card. This works just like a credit card and can be used anywhere Visa is accepted. With this card, you can make instant purchases, and Kabbage will create a new loan with the same rates and terms as its traditional draws.

9. Fundbox

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Through Fundbox, you can receive a line of credit up to $100,000 based on the performance of your business. Payments are spread out over a 12- or 24-week schedule and include Fundbox’s flat fee. Fees start at just 4.66%.

To be approved for a Fundbox line of credit, you must have a business checking account, at least $50,000 in annual revenue, and a business based in the United States. You must also provide business bank account statements from the last 3 months.

In addition to its lines of credit, Fundbox also offers invoice financing to qualified businesses. You can receive up to $100,000 with your unpaid invoices with fees starting at 4.66%. You must have qualifying invoices to receive this product, and you also must link your accounting software with activity from the last 2 months.

10. OnDeck

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With OnDeck, you can receive a line of credit up to $100,000 to use for any business purpose. APRs start at 13.99% for the most qualified borrowers, and payments are automatically deducted each week. There’s a $20 monthly maintenance fee, but this fee is waived if you draw at least $5,000 within 5 days of opening your account.

To qualify for an OnDeck line of credit, you must be in business for at least 1 year, have at least $100,000 in annual revenue, and a personal credit score of 600.

If you don’t meet the requirements for a line of credit, or you’re interested in another option, OnDeck also has fixed term business loans. You can receive up to $500,000 with annual interest rates starting at 9.99%. OnDeck has two different options for its loans: short-term loans with terms up to 12 months and long-term loans with terms up to 36 months. Repayments are made daily or weekly.

To qualify, you must be in business for at least 1 year and have $100,000 in annual revenue. Your credit score must be at least 500 to qualify for OnDeck’s term loans.

11. Kiva US

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If you want to bypass traditional and alternative lenders and avoid high interest rates, give Kiva US a try. This crowdfunding platform allows you to borrow up to $10,000 at a 0% interest rate.

Sounds great, doesn’t it? However, getting funded through Kiva US isn’t quite as easy as other loan options. But with a little extra work, you can receive an affordable loan for your business. Here’s how it works.

First, you fill out the application on the Kiva US website, just as you would any other loan application. Once you’ve submitted your application, you’ll prove that you’re creditworthy by getting your friends and family members to loan money to you through the platform over the next 15 days. Once you’ve passed this stage, you’ll be able to use the public Kiva platform to reach over 1.6 million people worldwide to raise your funds over the next 30 days. Once you’ve reached your goal, you’ll receive your money and up to 36 months to repay your loan.

To qualify, you must live in the United States and be at least 18 years old. You must also use your loan for business purposes. There are no time in business, personal credit score, or annual revenue requirements to qualify.

How Fast Can I Get A Business Loan?

The time it takes to receive your business loan varies by lender. For small loans of just $5,000, you could be approved in just minutes and receive your funds as quickly as the next business day. For lines of credit through lenders such as Kabbage and Fundbox, you can make draws immediately after being approved, with funds typically reaching your business bank account within 1 to 3 days.

The key to getting your business loan as quickly as possible is to make sure that you provide accurate information and upload all requested documentation. In some cases, your lender may require additional information or documentation to approve your loan. Make yourself available to answer any questions from the lender and provide the required documentation needed to approve and fund your loan.

What To Do If You Have Bad Credit

If you have bad credit, there are business loan options open to you. Some of the lenders previously mentioned, such as Kabbage and Fundbox, do not have minimum credit score requirements and consider the performance of the business when approving loans. Therefore, if you have steady revenue, you may still qualify for funding.

Business credit cards often have less stringent requirements, so these may be an option if you have a low credit score. Depending on your score, you may be able to qualify for an unsecured card. However, if your credit score is very low or you haven’t yet established credit, you may qualify for a secured card which is backed by a cash deposit. As you make on-time payments, you’ll build your credit score and qualify for unsecured cards and other financial products in the future.

Crowdfunding has also grown in popularity among small business owners. Sites such as Kiva US allow business owners to raise the capital they need without paying high interest rates. Crowdfunding is also a great resource for new businesses and startups that don’t meet time in business or annual revenue requirements of other lenders.

If you have bad credit, it’s inevitable that you’ll hit roadblocks on the path to funding. Not only will your options be more limited, but you’ll miss out on low-interest, long-term loans. To qualify for the best funding opportunities, you must have a solid credit score. Go online to pull your free score, review your credit report, and take steps to build your credit. Pay off all debt obligations as agreed, keep your credit utilization down, and dispute erroneous items on your credit report. Though this method takes time, boosting your credit score opens the door for more affordable loans and financial products in the future. Learn more about how you can raise your personal credit score.

Final Thoughts

Finding a $5,000 loan for your business shouldn’t be too difficult. However, you should go into the process knowing that smaller loans come with shorter repayment terms and may also be accompanied by high fees and interest rates.

Calculate the affordability of the loan to ensure that taking out a loan is a smart financial move. If you’re new to applying for small business loans, educate yourself before you start submitting applications to lenders. Finally, be sure to shop around to ensure you get the most affordable financing products that work best for your business.

The post Where To Find Fast $5,000 Loans For Your Business appeared first on Merchant Maverick.

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Small Business Grants: Resources For Free Money

small business grants

From business loans to credit cards, it’s assumed that funding a growing small business necessarily involves taking on debt. No pain, no gain, right? Well, in the event that your business doesn’t turn a profit, you’ll be taking on the pain without seeing any resulting gain. Wouldn’t it be nice if there existed a way to fund your small business that relied on your capabilities, not on your willingness to go into debt?

As it happens, there is one way to get funding that doesn’t rely on your willingness to take on debt: small business grants.

What Are Small Business Grants?

A small business grant is a sum of money — issued either by a government agency or a private organization — awarded to a growing business. While it’s tempting to think of a grant as “free money,” that doesn’t quite capture the essence of a small business grant. For one thing, when a business receives money in the form of a grant, that money always comes with strings attached. The terms of a grant are usually quite specific about how the money can be used. It isn’t like getting a loan, where you get to decide exactly how to invest your funds.

Additionally, getting approved for a grant will likely involve lots of work on your part. Grants are difficult to qualify for and applying for them involves lots of jumping through hoops. Since time is money, grants aren’t exactly free of cost. Then again, these “costs” aren’t going to imperil your credit score!

Small Business Grant Pros & Cons

Grant Pros Grant Cons
“Free” money Long application process
Can lend prestige to your small business Funds must be used in the manner specified by the grant

Getting one grant makes it more likely you’ll get others

Most applicants for a grant won’t get it
Grant information is always publicly available Business grants are not always renewed from year to year

The nice thing about receiving a grant is that, because grants are generally awarded based on a company’s contribution to the public good, they come with a certain degree of prestige. In turn, getting one grant will make your business more attractive to other grant issuers.

Of course, when you pursue grants, you need to be aware of the harsh realities. The vast majority of grant proposals are not accepted, and even if you are ultimately successful, the application process can be rigorous and time-consuming. What’s more, the money will likely be earmarked for a certain purpose. You can’t treat the money received via a grant like any other funding — you must use the money exactly as specified (or exactly as you laid out in your grant application).

The downsides of business grants don’t hold a candle to the downsides attached to other forms of business financing, however, so don’t let these challenges discourage you!

How To Find Business Grants

Business grants can be found by checking the online offerings of every level of government (federal, state, local) and by seeking out directories of private grants that allow you to search for a program that fits your mission and your business.

When searching for grant programs, narrow your search to those that pertain specifically to your business type. Since grants are often meant to incentivize social responsibility, certain businesses will be more likely to find a grant than others. A company working on a new type of water filtration system stands a better chance of scoring a grant than a vape juice maker, for example. Likewise, certain grants may be aimed at specific segments of the population. An organization might award grants specifically for women-owned businesses or veteran-owned businesses.

What To Do Before Applying For A Grant

  1. Define your exact funding need: be ready to define the precise objectives a grant would help you meet.
  2. Create a detailed business plan.
  3. Gather and assemble all the business records you can from at least the last three years.
  4. Have your plan and records reviewed by experts, whether they be SCORE mentors or others with experience in guiding business owners through the grant-hunting process.
  5. Consider hiring a professional grant writer if you can.

8 Places To Look For Small Business Grants

startup grants

Grants.gov

Grants.gov is the place you should go if you want to search every grant program administered by the federal government. There are 26 grant-making agencies in the federal government, and although the website feels clunky and dated, you’ll at least get to search for the sort of grant program that your particular business could qualify for.

I should warn you, however, that most of the grants offered by the federal government are medical research grants, and these are typically awarded to nonprofit organizations and, in some instances, local and state governments. This blog post from the Small Business Administration details the limited instances in which private businesses may be eligible for a grant from the federal government.

Your State & Local Governments

This may actually be a better place to start your grant search than the federal grant database. That’s because grant programs initiated by your state government — or perhaps your city government — stand a better chance of aligning with your business mission than a federal grant program.

Check out your local Chamber of Commerce for grant opportunities as well as any city, county, and state websites that might have information about grant programs. Depending on where you live, selection may be limited, but you may well find a grant program that aligns with your mission. Most of these programs only accept grant applications at certain times of the year, so it pays to be vigilant and check the relevant websites frequently.

National Association For The Self-Employed

If a smaller grant for your small business is worth pursuing, the NASE provides grants and educational resources for small businesses owners. Through their Growth Grants Program, grants of up to $4,000 are awarded to small business for specific purposes, such as hiring employees.

To apply for a grant, you’ll first have to join the NASE. You’ll then need to detail exactly how you’ll use the funds and how the funds will fit into your overall business plan.

Along with grants, the NASE offers the following services to small business owners:

  • 24/7 expert advice
  • UPS discounts up to 32%
  • $10K included term life insurance
  • Medical emergency help
  • Office Depot discounts
  • LifeLock ID theft protection

FedEx Small Business Grant Contest

The FedEx Small Business Grant Contest is a nationally prominent grant contest that has, since its inception in 2013, awarded over $500,000 in grant money to small businesses. Qualifying entities must be for-profit U.S.-based businesses with fewer than 99 employees and at least 6 months of time in business.

The contest is held annually, with applications typically accepted starting in late February. Keep a watch on FedEx’s website to find out when you can apply. Here is a closer look at the winners of the 2018 Grant Contest.

USDA Rural Business Enterprise Grant Program

An endeavor of the United States Department of Agriculture, this grant program offers grants of between $10,000 to $500,000 to rural small businesses. If your business has fewer than 50 employees, takes in less than $1 million in annual revenue, and is located in a rural part of the US, it is eligible to apply.

Rural small business owners looking to apply should do so through their USDA Rural Development state office.

Amber Grant Program

The Amber Grant program is a grant set up by WomensNet to support female-owned small businesses. This is how it works: the program awards $1,000 to a woman-owned business every month. At the end of the year, one of the 12 monthly grant winners wins another grant for $10,000. All female entrepreneurs in the U.S. and Canada are eligible to compete, and there are no restrictions on the type of business eligible to receive a grant.

The program accepts applications year-round, and unlike some other grant programs, the Amber Grant program makes applying as easy as possible. According to WomensNet:

Applying for the Amber Grant is easy. Don’t try to “sound corporate.” Past grant winners are women who have simply shared from the heart. Our judges are looking for passion as well as business smarts.

Visa Everywhere Initiative

The Visa Everywhere Initiative is a multi-national grant program offering grants to companies meeting the following description:

When evaluating submissions for VEI, we look for startups that have ideas relevant to Visa’s business, a product in market, traction with early customers, and early funding from external investors.

Submissions for the 2018 program were accepted from March 19th until April 23rd, so if you’d like to submit your proposal for the coming year, keep an eye on the VEI website around that time of year and look for information on how to apply.

StreetShares Foundation Veteran Small Business Award

StreetShares is an online lender specializing in lending to veterans and veteran-owned businesses. The lender also has a grant program called the StreetShares Foundation Veteran Small Business Award. The program is open to any military veteran, reserve or active duty member of the Armed Forces, or a qualifying spouse.

The StreetShares Foundation is currently accepting applications for the upcoming cycle of the Veteran Small Business Award, so if you’re interested, apply now. StreetShares gives out three grants at the end of each contest. 1st place gets $15,000, 2nd place gets $6,000, and 3rd place gets $4,000.

Don’t Qualify? The Best Alternatives To Small Business Grants

Grants are awesome because you don’t have to pay them back. Naturally, this makes them popular, but it also means the vast majority of grant applicants are rejected. If you’re not successful in securing a grant, don’t despair! You’re in good company. Of course, you’ll still need funding to launch and grow your business. Two of the primary ways entrepreneurs launch and build their small businesses are personal loans and lines of credit. Here are some of the top lenders in each field, vetted by the fine folks at Merchant Maverick.

Personal Lenders For Business

Lender Borrowing Amount Term Interest Rate Min. Credit Score Next Steps

$2K – $25K 2 – 4 years 15.49% to 30% 600 Apply Now

$1K – $50K 3 or 5 years 8.16% – 27.99% 620 Apply Now

$2K – $35K 3 or 5 years 6.95% – 35.99% APR 640 Apply Now

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$1K – $40K 3 or 5 years 5.32% – 30.99% 640 Check Rate

Lenders That Specialize In Lines Of 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

Final Thoughts

Great business ideas can come from absolutely anybody. Unfortunately, startup capital is not so equitably distributed. Grant programs can help small business owners — particularly those who make an identifiable contribution to the grant-giving organization’s conception of the public good — with much-needed cash. Just be persistent, be undaunted by rejection letters, and be prepared to accept the strings that come attached to grant money should you be successful.

The post Small Business Grants: Resources For Free Money appeared first on Merchant Maverick.

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Accounts Receivable Financing: What You Need To Know

Incoming cash flow is critical to your business. After all, if you don’t have money coming in, how are you going to pay for inventory, daily operating expenses, or other costs associated with running your business?

Sometimes, cash flow shortages are due to circumstances beyond your control. A slow season, for example, could leave your bank account a little short. But maybe you’re facing a different challenge. You have plenty of sales, but one big obstacle that’s obstructing your cash flow: unpaid invoices.

Depending on your company’s payment terms, you could be stuck waiting for weeks (or even months!) to receive payment from your customers. When these unpaid invoices stack up and your business is strapped for cash, this can quickly become a big problem.

You probably already know about more traditional methods of financing that can help you out of this bind, like lines of credit, credit cards, and small business loans. Sometimes, though, these options just don’t make sense. Maybe your personal credit score is low, you don’t meet a lender’s requirements, or you need funding fast.

What you may not know is that there’s a unique financing option that gives you control of your unpaid accounts. Accounts receivable financing is a way to use your unpaid invoices to get the funds you need in just days. If you have a stack of unpaid invoices sitting on your desk and a bank account that’s seen better days, read on to learn more about accounts receivable financing and how to put it to work for your business.

BlueVine Fundbox P2Bi InterNex Capital Riviera Finance American Receivable

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Credit Facility Size $5K – $5M Up to $100K $500K – $10M Up to $10M $5K – $2M Up to $3M
Average Approval Time 2 – 7 days 1 day 2 weeks 3 – 7 days 4 – 7 days 3 days
Minimum Credit Score 530 N/A N/A N/A N/A N/A
Minimum Annual Revenue $100K $50K $500K $1M N/A N/A
Required Time In Business 3 months N/A 6 months 2 years N/A N/A

What Is Accounts Receivable Financing?

With accounts receivable financing, you receive the capital you need using your outstanding receivables, typically in the form of unpaid invoices. This is why accounts receivable financing is also known as invoice financing.

There are two common definitions used when talking about accounts receivable financing. The general definition is simply financing based around receivables. Invoice discounting and invoice factoring (more on that a little later) both fall under this umbrella.

More specifically, though, this type of financing uses your accounts receivables as collateral for an asset-backed line of credit. A lender provides you with a line of credit based on the quality and quantity of your unpaid invoices.

For small business owners, this type of financing has many benefits. Since accounts receivable is the qualifying factor, other criteria — such as personal credit score, time in business, and the financial details of your business — are often less important to lenders. If you fail to qualify for other types of funding, accounts receivable financing could help you overcome your financial challenges.

You also won’t have to jump through hoops to get the capital you need (unlike with traditional loans and other types of financing). In most cases, all you need to provide to a lender is basic information about yourself and your business and information about your unpaid receivables. You won’t have to worry about pulling old tax returns or other documentation that’s required for traditional loans. If you have qualifying invoices, you can be approved for a line of credit with accounts receivable financing.

A/R Financing VS Invoice Factoring

Earlier, we mentioned invoice factoring. This is a type of financing that is slightly different from accounts receivable financing.

Accounts receivable financing provides you with a flexible line of credit that you can draw from as needed. Your invoices aren’t sold to the lender. Instead, they’re used as collateral to secure the line of credit.

With invoice factoring, you sell your unpaid invoices to a lender for immediate payment. You’ll receive a large portion of the invoice amount upfront — think anywhere from 80% to 95% of the invoice total. Once the customer pays the invoice, you’ll receive the remaining amount, minus any fees charged by the lender.

Another difference between the two is how payment is collected. When you choose accounts receivable financing, you collect payment from your customers as usual. Your customers will not be notified that you are working with a third party.

With invoice factoring, your lender — also known as a factor — will be responsible for collecting payments from your customers. In most cases, your customers will be notified that a third-party is collecting payments.

Invoice financing is usually best for larger companies with many invoices. Invoice factoring is usually the better choice for small companies that don’t have the time or resources to collect payments from customers.

Is invoice factoring best for your business? Learn more about invoice factoring, then compare rates, terms, and requirements of top factors.

Who Qualifies For A/R Financing?

project management software

One of the biggest advantages of accounts receivable financing is relaxed borrower requirements. You don’t have to worry about having a perfect credit score, a long time in business, or high annual revenues — hard and fast requirements for most other lenders.

Some lenders do have credit score requirements, though. In general, you’ll find that the minimum score needed to qualify for accounts receivable financing is much lower than the credit score requirements for loans, unsecured lines of credit, and other financial products.

For most lenders, the number of invoices you have and the creditworthiness of your customers are the most important qualifying factors. During the application process, you’ll provide your invoices to the lender to determine if you’re eligible for funding. Some lenders may also look at your business bank statements to assess cash flow.

Most lenders only work with B2B or B2G companies, although some lenders will approve B2C companies with qualifying invoices.

How Accounts Receivable Financing Works

At this point, you should have a better understanding of accounts receivable financing, but you may still be on the fence as to whether it’s right for your business. Let’s explore exactly how accounts receivable financing works so you can determine whether or not to take this financial leap

1. Apply For Financing

We’ll go into detail a little later about how to choose the right lender for your business. For now, though, let’s assume that you’ve already selected your lender. Begin by filling out the lender’s application. Usually, this is a fairly short process that requires some basic information about yourself and your business, such as your federal Employer Identification Number, your full legal name, and contact information.

2. Submit Your Invoices

Once you’ve filled out your application, some lenders require you to securely connect your accounting software. This allows the lender to determine if the quantity and quality of your invoices are enough to qualify for financing. Other lenders may require you to simply upload your invoices.

3. Get Approved

Once you’ve completed the application and have submitted your invoices, the lender will make an approval decision. The lender will issue a line of credit based on the value of your invoices. Approval decisions may be given the same day, or you may have to wait several days for a decision.

4. Use Your Line Of Credit

Once you’ve been approved, you can now make draws from your line of credit to pay for business expenses. Most lenders transfer funds to your banking account immediately after you initiate the draw. In most cases, you should have the funds in your account within 1 to 2 business days.

5. Collect Payments & Repay Your Lender

You’ll continue to collect payment from your customers as usual. As you collect payments on your invoices, you’ll repay any funds you’ve taken from your line of credit, as well as any fees charged by the lender.

Typical A/R Financing Rates & Fees

Credit card surcharge fees illustration

The rates and fees charged by a financer will vary based on a number of factors. You’ll qualify for lower rates if you’re in a low-risk industry, have multiple invoices with creditworthy customers, and bring in steady cash flow.

On average, expect to pay about 3% to 5% each month on the portion of used funds. Some lenders may offer rates as low as 1%, which is why it’s important to shop around for the best rate. This also highlights why it’s so important to get payments from customers as quickly as possible. The longer you have an outstanding balance with your financer, the more you end up paying.

You may also be required to pay additional fees based on the lender you select. Some of the most common fees that you may encounter include:

  • Servicing Fees
  • Application Fees
  • Setup Fees
  • Withdrawal Fees
  • Processing Fees

How To Choose The Right A/R Financer For Your Business

If you’ve decided to move forward with accounts receivable financing, the next step is to find the right financer for your business. What works for one business may not work for yours, so make sure to do your research and apply the following tips when making your selection.

  • Understand & Meet All Requirements: Know what the lender requires before you even apply. While accounts receivable financing may be easier to obtain than other types of funding, some lenders have stricter requirements. Make sure that you meet all of these requirements. If the lender requires a minimum credit score, check your score for free online to make sure you’re a good fit. Also pay attention to annual revenues, minimum time in business, excluded industries, and other requirements.
  • Review Total Cost Of Borrowing: Sure, one lender’s monthly rate is low, but add in fees and other costs and you may end up paying much more. Make sure to look at the numbers — all of them — to calculate the most affordable financial solution.
  • Consider Borrowing Limits: Assess the borrowing limits of each lender. For example, if a lender only issues lines of credit up to $50,000, but you’d prefer to have a higher line, you can immediately eliminate this lender from your list.

Recommended A/R Financers

With an idea of what to look for in an accounts receivable financer, you’re one step closer to scoring the funding you need for your business. Maybe you’ve even started your search, but thousands of search engine results have your head reeling. To cut through the clutter and get you started, check out our recommended options for accounts receivable financers.

BlueVine Fundbox P2Bi InterNex Capital Riviera Finance American Receivable

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Credit Facility Size $5K – $5M Up to $100K $500K – $10M Up to $10M $5K – $2M Up to $3M
Average Approval Time 2 – 7 days 1 day 2 weeks 3 – 7 days 4 – 7 days 3 days
Minimum Credit Score 530 N/A N/A N/A N/A N/A
Minimum Annual Revenue $100K $50K $500K $1M N/A N/A
Required Time In Business 3 months N/A 6 months 2 years N/A N/A

BlueVine

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Through BlueVine, you can apply for accounts receivable financing lines up to $5 million. Rates begin at just 0.25% per week, and you can be approved as quickly as 24 hours after applying.

The application process is easy. Filling out the application takes less than 10 minutes. Once your application is reviewed, you’ll receive a decision from BlueVine. If approved, you can sync invoices from your supported accounting software, or you can upload invoices right to your dashboard. You’ll receive up to 90% of the invoice amount up front, and you’ll receive the rest (minus fees) after the customer pays. You select the invoices to submit, and there are no long-term contracts.

To qualify, you must operate a B2B company. You must have a minimum FICO score of 530, have $100,000 in annual revenue, and be in business for at least 3 months. If you need additional funding options, BlueVine also offers business lines of credit.

Fundbox

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Through Fundbox, you can receive up to $100,000 with accounts receivable financing. Advance fees start at 4.66% and repayments are weekly. One thing that sets Fundbox apart is that you can get 100% of your invoice value deposited into your bank account.

Registering with Fundbox couldn’t be easier. There’s no credit check and no paperwork requirements. All you have to do is link your accounting software, and you can receive approval in just hours. Once you’ve been approved, funds can be transferred to your checking account as quickly as the next business day.

To qualify, you must use a Fundbox-supported accounting or invoicing software. Your business must be based in the U.S. and have annual revenue of at least $50,000.

P2Bi

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Through P2Binvestor, you can receive an asset-backed line of credit up to $10 million. Through this lender, you can draw up to 80% of the value of your receivables.

There are several fees associated with a P2Bi line of credit. This includes a one-time origination fee equal to 1.5% of your credit line, an annual renewal fee of 1.5% of your credit line, and a daily discount cost. Annual rates average 8% to 20%.

To qualify, you must be in business for at least 6 months and have annual revenue of $500,000. You must also run a B2B business based in the U.S. There are no minimum credit score requirements, although personal credit is evaluated during the underwriting process.

InterNex Capital

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InterNex Capital provides asset-backed lines of credit from $250,000 to $10 million for qualified borrowers. Rates are between 7.99% and 18.99%. All lines of credit come with 12-month terms with the option to renew.

After filling out the application, you’ll receive an approval decision within 3 business days. Once you’ve accepted your revolving line of credit, you can make your first draw immediately.

InterNex Capital is more suited for large businesses. To qualify, you must have annual revenue of at least $1 million. There are no minimum credit scores required to qualify, but you must be in business for at least 2 years. InterNex Capital charges fees including an origination fee, draw fee, unused line fee, and renewal fee.

Riviera Finance

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When you work with Riviera Finance, it’s possible to get up to $2 million for your outstanding receivables. You can receive up to 95% of your invoice value within 24 hours after products have been accepted by your customers. Rates start at 2%. Standard terms are 6 months, but the company works with borrowers if different terms are needed.

Riviera Finance works with businesses in all 50 states. There are no annual revenue, personal credit score, or time in business requirements to qualify.

American Receivable

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With American Receivable, you can receive funding up to $3 million for your unpaid invoices. This company will provide up to 90% of the value of your invoices within 24 hours after submission. Rates start at just 0.8% per month.

To qualify, you must have qualifying invoices to creditworthy customers. There are no time in business, credit score, or revenue requirements.

Final Thoughts

If you deal with a lot of accounts receivable and you don’t qualify for other types of business financing, accounts receivable financing could be a smart next step for your business. Of course, this financial solution isn’t for everyone.

Weigh out the total costs of accounts receivable financing and evaluate the needs of your business. You may find that this type of financing is right for you, or you may choose another source of funding such as a business line of credit or business credit card. Regardless of what path you take, make sure that any financing you accept is financially feasible and will be used to better your business.

BlueVine Fundbox P2Bi InterNex Capital Riviera Finance American Receivable

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Credit Facility Size $5K – $5M Up to $100K $500K – $10M Up to $10M $5K – $2M Up to $3M
Average Approval Time 2 – 7 days 1 day 2 weeks 3 – 7 days 4 – 7 days 3 days
Minimum Credit Score 530 N/A N/A N/A N/A N/A
Minimum Annual Revenue $100K $50K $500K $1M N/A N/A
Required Time In Business 3 months N/A 6 months 2 years N/A N/A

The post Accounts Receivable Financing: What You Need To Know appeared first on Merchant Maverick.

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