The Best Business Loan And Financing Resources For Michigan Small Businesses

The state of Michigan has one of the fastest growing economies in the nation, a welcome relief to residents following the fallout from the 2009 recession. Cities like Detroit are bouncing back from this bleak period, unemployment is lower than it was in the early 2000s, and more people are opening or moving their companies to Michigan.

Michigan is ranked top in the nation for auto manufacturing, and other industries are emerging throughout the state. This includes cybersecurity, defense, aerospace, and agribusiness. Michigan is earning a reputation as one of the most business-friendly states in the nation.

It isn’t just large companies that are headquartered in the state, either. More residents are opening their own small businesses to pave the path for a successful future. If you’re reading this, you’re one of those entrepreneurs … or the thought of business ownership has at least crossed your mind. One of the most important factors in owning and operating a successful business is having access to capital and resources. Fortunately, the state of Michigan has many opportunities for business owners — whether you’re just getting started or you own an established business.

In this post, we’ll take a look at the funding opportunities open to Michiganders. From national online lenders to local credit unions, nonprofit lenders, and startup resources, we’ll cover it all to help you get the capital you need to start or grow your small business.

Online Business Lenders For Michigan Businesses

The internet has made our personal and business lives easier than ever, so it should come as no surprise that you can get capital for your business straight from your computer. Online lenders make it quicker and easier to receive business financing.

Not only is the lending process so much more convenient, but online lenders typically have less stringent requirements for qualifying. For example, getting a bank loan is difficult, even for established businesses owned by people with high credit scores. But many online lenders will approve borrowers with less-than-perfect credit scores and histories, newer businesses, and businesses that aren’t bringing in high revenues just yet.

Many online lenders provide capital to small business owners in Michigan, but you can start your search for capital with these options:

Lendio

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The loan aggregator Lendio lets you shop your financing options without spending hours filling out applications. Lendio has over 75 lending partners in its network – lenders you can reach with just one application.

Through Lendio, you can apply for the financing you need for your business, including:

  • Small Business Administration (SBA) Loans: $50,000 to $5 million
  • Term Loans: $5,000 to $2 million
  • Short-Term Loans: $5,000 to $200,000
  • Lines Of Credit: $1,000 to $500,000
  • Credit Cards: $1,000 to $500,000
  • Equipment Financing: $5,000 to $5 million
  • Commercial Mortgages: $250,000 to $5 million
  • Accounts Receivable Financing: Up to 80% of receivables
  • Startup Loans: $500 to $750,000
  • Merchant Cash Advances: $5,000 to $200,000

Borrower requirements, rates, and terms are based on a number of factors, including the type of financing you receive, the lender you work with, and your creditworthiness and/or business performance. Turnaround times also vary, but you may be able to receive funding in as little as 24 hours. Filling out an application to receive offers through Lendio’s network has no impact on your credit score. However, a hard pull on your credit may be performed once you select a lender offer to pursue.

OnDeck

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OnDeck offers small business owners two financing options: term loans and lines of credit.

With an OnDeck term loan, you may apply for up to $500,000. With the short-term loan option, you have 3 to 12 months to repay your loan. This option is best for funding marketing campaigns, purchasing inventory, or hiring new employees. Short-term loans from OnDeck come with a simple interest rate that starts at 9%.

Long-term loan options are also available. These loans have repayment terms of 15 to 36 months. Long-term loans are best for larger projects, such as business expansion, opening a new location, or purchasing equipment. The annual interest rate for long-term loans starts at 9.99%.

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

To qualify, you must meet these requirements:

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

The other financing option available through OnDeck is a line of credit. You may qualify for up to $100,000 to use for any business purpose, including paying for unexpected expenses and managing gaps in revenue. The APR for OnDeck lines of credit starts at 13.99%. Payments are made weekly and are automatically deducted from your business bank account.

OnDeck lines of credit come with no draw fees. However, there is a $20 maintenance fee charged each month. This fee will be waived for 6 months if you make a draw of at least $5,000 within 5 days of opening your account.

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

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

IOU Financial

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If you need up to $500,000 to fund your small business, try applying for a loan from IOU Financial. With IOU Financial, you can prequalify in just minutes. In fact, 85% of all applicants are pre-approved for funding, according to the lender. You can receive funding in as little as 24 hours through IOU Financial.

With this loan option, you can receive $10,000 to $500,000 with terms between 6 and 12 months. Fixed daily or weekly payments are automatically debited from your business bank account.

Once you’ve paid off 40% of your loan, you may qualify for a loan renewal for additional capital for your business. There are no prepayment penalties, and you can save money on interest by paying your loan off early.

To qualify for funding through IOU financial, you must meet these requirements:

  • Own at least 80% of your business
  • Time in business of at least 1 year
  • At least 10 monthly deposits in your business bank account
  • Annual revenue of at least $100,000
  • Average ending balance of at least $3,000 per day in your business bank account

Credibly

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Credibly is an online lender that offers three financing options for small business owners. You may qualify to receive a working capital loan, a business expansion loan, or a merchant cash advance (MCA).

Credibly’s working capital loans are available up to $400,000 with repayment terms of 6 to 18 months. Instead of your traditional interest rate, Credibly uses a factor rate to determine the cost of borrowing. Learn more about factor rates and how they affect the cost of your loan.

Daily or weekly payments are automatically deducted from your bank account to repay your loan. Despite its name, these loans don’t have to be used for just working capital and can be used for other business purposes.

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

  • Time in business of at least 6 months
  • Personal credit score of 500 or above
  • An average of $15,000 or more in monthly deposits

If you’re ready to grow your business, consider applying for Credibly’s business expansion loan. This loan program provides up to $250,000 with terms of 18 or 24 months and interest rates starting at just 9.99%. Weekly payments are automatically deducted to repay your loan.

To qualify for this financial product, you must have:

  • Time in business of at least 3 years
  • Personal credit score of 600 or above
  • Average of $15,000 or more in monthly deposits
  • Average daily balance of at least $3,000

Finally, you may qualify for a merchant cash advance. This is a little different from a loan because the lender agrees to purchase a percentage of future receivables. Daily repayments are made from your bank account based on a percentage of your sales.

With this financing option, you can receive up to $400,000. Terms are typically 3 to 18 months and factor rates start at 1.15.

To qualify for an MCA, you must have:

  • Time in business of at least 6 months
  • Personal credit score of 500 or above
  • Average of $15,000 or more in monthly deposits

Kabbage

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If flexibility is the most important factor for your small business financing, consider applying for a Kabbage line of credit. Instead of one lump sum, you’ll have access to a revolving account you can draw from whenever you need capital. You can use your line of credit for emergency expenses, revenue gaps, working capital, or for any other business purpose.

Kabbage’s lines of credit are available up to $250,000 for qualified borrowers. Repayment terms are 6 months for draws under $10,000. For loans of $10,000 or above, you can choose from 6- or 12-month terms. Kabbage charges a monthly fee between 1.5% and 10% of your principal loan amount. If you pay your loan off early, you can save money on fees. If you haven’t made a draw on your line of credit, you won’t be required to pay any fees.

Kabbage bases its approval decisions on the performance of your business, so even business owners with credit challenges may be approved. You can be approved in just minutes for up to $100,000. Lines of credit exceeding $100,000 require manual approval by the lender.

To receive a line of credit from Kabbage, you must meet these minimum requirements:

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

LendingPoint

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Sometimes, you have to get a little creative with your small business funding. One option to consider is taking out a personal loan to use for business expenses.

Why choose a personal loan instead of a business loan? For starters, your time in business, business credit score and history, and annual revenues will not be a requirement to qualify. This is great if you’re a new business, have low revenues, or haven’t yet established business credit. Instead, lenders like LendingPoint will evaluate your personal credit history, income, and other factors when determining whether you qualify for funding.

LendingPoint has personal loans from $2,000 to $25,000 for qualified borrowers. You’ll have 24 to 48 months to repay your loan, with payments due twice per month. APRs start at 15.49%.

To qualify for a personal loan through LendingPoint, you must meet these requirements:

  • Be at least 18 years old
  • Have a U.S. ID and SSN
  • Have at least $20,000 in annual income
  • Have a verifiable personal bank account
  • Have a personal credit score of at least 585

Banks, Credit Unions, & Nonprofit Lenders In Michigan

Prefer to go the more traditional route? Banks, credit unions, and nonprofit lenders throughout the state of Michigan offer financial solutions for your small business. If you don’t have a relationship with a financial institution or you just want to shop around your options, try these lenders first.

Comerica Bank

Comerica Bank has provided financial services since 1849. Today, Comerica has over 400 banking centers nationwide. In the state of Michigan, banking centers can be found in cities including Dearborn, Detroit, and Battle Creek.

For small businesses, Comerica offers financial services including:

  • Lines Of Credit: $10,000 to $500,000
  • Term Loans: Up to $500,000
  • Commercial Real Estate Loans: Bridge loans, land acquisition loans, development loans, commercial construction loans
  • Equipment Leases: Up to 100% financing
  • SBA Loans: Up to 90% financing
  • Letters Of Credit

Comerica also offers corporate lending services for public and private companies, including working capital loans, asset-based loans, and acquisition financing.

Lake Michigan Credit Union

Lake Michigan Credit Union is one of the largest credit unions in the state with branches located in areas including Grand Rapids, Kent County, Kalamazoo County, and Saginaw County.

In addition to business checking and savings accounts, you can apply for financing options through LMCU, including:

  • SBA Loans
  • Lines Of Credit
  • Business Credit Cards
  • Commercial Real Estate Loans
  • Secured Term Loans
  • Letters Of Credit

To apply for financing, you must be an LMCU member. Members must meet one of the following requirements:

  • Live, work, or worship in the Lower Peninsula
  • An immediate family member is a member of LMCU

Opportunity Resource Fund

Opportunity Resource Fund is a nonprofit community development financial institution (CDFI) that provides financial support to small businesses throughout the entire state of Michigan.

Through Opportunity Resource Fund, qualified borrowers may receive funding for starting or growing a small business. Business loans are available in amounts from $10,000 to $250,000 with flexible terms and competitive interest rates.

This nonprofit lender considers several factors when approving loan applications. The first is collateral. All loans must be secured with collateral including real estate, inventory, accounts receivables, equipment, or a personal guarantee. Loans also require an equity investment of 10% to 15%.

Opportunity Resource Fund also requires borrowers to meet certain social criteria. This includes aspects such as demonstrating alternative business practices, providing employment to low-income individuals, and empowering woman- and minority-owned businesses.

Applications are available to download on the Opportunity Resource Fund website. If you’re interested, you can also fill out the online form to learn more about the application process and timelines for submissions and approvals.

Small Business Grants In Michigan

Reaching out to an online or local lender isn’t your only option when you need capital to start or expand your business. You can also look to small business grants to get the funding that you need.

Grants differ from small business loans and other types of financing because grant funds do not have to be repaid. Why, then, isn’t every small business owner leaning on grants?

The problem is that grants are few and far between. While you can search online and find multiple lenders in your area, finding grants is a bit more difficult. Even when you do come across grants, you’ll often find that you won’t qualify. Grants typically have very specific requirements, and many are only open to certain industries or women- or minority-owned businesses. There is also a lot of competition from other small businesses pursuing the same grants.

This isn’t meant to be discouraging. It’s simply a warning not to rely solely on receiving grants to fund your business. However, there’s no harm in applying for grants that you do qualify to receive. To kick off your search for a grant, check out these options that are open to small business owners in Michigan.

Community Ventures

The Community Ventures initiative is led by the Michigan Economic Development Corporation. Through this program, employers can receive wage reimbursements of up to $5,000 for each eligible “structurally unemployed” employee that is hired. A structurally unemployed employee is defined as:

  • Someone with a lack of education or functional literacy
  • Someone with a long-term disconnection from employment
  • Low income hires
  • Ex-offenders
  • At-risk youth

Reimbursements are given in monthly installments until the $5,000 per employee limit is reached. These funds are used to offset costs for training and hiring participants in the CV program. Businesses are required to report each month on hired and retained talent for up to one year. If you’re interested in learning more, you can contact the MEDC Customer Assistance Center by phone or email.

NEIdeas

If you live in Detroit, Hamtramck, or Highland Park, you could receive $10,000 for your small business through the NEIdeas $10k Challenge. A total of 26 winners are each awarded $10,000 for coming up with the best ideas for growth.

To qualify, businesses must meet the following requirements:

  • Be an existing, for-profit business
  • Majority owner must be a legal U.S. resident at least 18 years old
  • Business must be in good standing with the IRS
  • Businesses must be based in Detroit, Hamtramck, or Highland Park
  • Gross annual revenues should not exceed $750,000

Home-based businesses and regional businesses based in Southeast Michigan can also apply. Franchises are ineligible to enter.

Program guidelines can be found on the NEIdeas website. Applications can be submitted online, mailed, or turned in to an NEIdeas Ambassador.

SCIP/TCA

Michigan Corporate Relations Network’s Small Company Innovation Program Technology and Commercialization Assistance (SCIP/TCA) program is designed to help businesses grow through collaborations with local universities. Through this program, small businesses can receive matching grants up to $40,000 to fund the cost of research projects at any public university in Michigan.

Any existing, LARA-registered business in Michigan that plans to remain in the state is eligible to apply. Getting accepted into the program is not a guarantee of funding. All guidelines for the program can be found on the Michigan Corporate Relations Network website. Applications for the program are also available online.

Loans & Resources For Startups In Michigan

Taking the leap into entrepreneurship is an exciting time, but it can also be intimidating, especially if you have no prior experience running a business. Fortunately, there are many resources available to Michiganders, including educational materials, workshops, mentorships, and funding opportunities.

SCORE

SCORE, a resource partner of the SBA, is one of the leading resources for small business owners. There are hundreds of SCORE chapters across the nation that provide essential resources to small business owners for free or for a low fee. SCORE chapters are located throughout Michigan in cities including Kalamazoo, Grand Rapids, and Detroit.

Through your local SCORE chapter, you can receive free business mentoring from an expert. You can meet with your mentor face-to-face or connect through email or video chat. You can also pick up business tips through SCORE’s webinars that are held every week. If you miss a webinar, don’t worry — SCORE offers an on-demand library of recorded webinars. You can also educate yourself on a variety of business topics through SCORE’s on-demand online courses. Workshops, events, and educational materials are also offered through this organization.

Michigan Small Business Development Center

The Michigan Small Business Development Center offers great resources for startups and established businesses. There are multiple business resource centers, regional centers, and satellite offices throughout the state in cities including Hastings, Kalamazoo, Lansing, Dearborn, and Detroit.

All resources through the Michigan SBDC are free or low-cost. Services include business consultations, workshops, training sessions, templates, and educational materials.

Michigan Women’s Foundation

The Michigan Women’s Foundation provides capital and resources to women-owned businesses in the state of Michigan. Women that own startups or established businesses are eligible for the programs available through MWF.
Programs offered include business consulting, training and educational sessions, and portfolio management. The Michigan Women’s Microloan Fund also provides loans of $2,500 to $50,000 with 5-year terms and an 8% interest rate to qualified business owners.

What To Consider When Choosing A Lender

The good news is there are many lenders both online and in the state of Michigan that are ready to give your business the capital it needs. The bad news? You have to narrow your selection down to one, preferably the lender that offers the best, most affordable financing for your small business.

Sorting through your options to choose the right lender doesn’t have to be too difficult or time-consuming, though. When searching for your lender, keep the following points in mind.

Application Process

The application process varies across lenders. With some lenders, a little bit of business and personal information and a few bank statements are all it takes to get approved. Other lenders, however, may have more extensive documentation requirements and a lengthier, more complicated application process.

If time is of the essence and you don’t want to go through a difficult application process, choose an online lender with a more simplified process.

Speed Of Approval

You have an emergency that needs to be taken care of immediately. In this scenario, waiting weeks to get the capital you need could be damaging to your business. Or maybe your situation looks a little different. You don’t have an immediate need for funding, and you have time to shop around for the best rates and terms available to your business, so time to funding may not be as important.

Evaluate your situation to determine if time to funding is an important factor for you. If so, work with a lender that approves applications quickly. Some lenders can even have the funds in your bank account in as little as 24 hours.

Loan Restrictions

How do you plan to use your funds? This could be a determining factor in what lender you select. Let’s say you need capital to hire new employees. Lenders that offer equipment financing for fixed asset purchases could be crossed off your list.

Borrowing Limits

The type of financing and the lender you choose may be based on how much capital you need. For instance, if you need $500,000 to fund your new expansion or a new location, lenders that have $250,000 borrowing limits won’t be a good fit.

Rates & Terms

It’s always important to make sure you’re getting the best rates and terms for your situation. If you have credit challenges or you’re a new business, your options may be more limited. However, if you have a solid credit score, an established business, and a steady flow of revenue, you’ll have more lending options available to you.

No matter what options are available, always make sure you’re getting the best rates and terms. Think of the long term and not just the short term. Sure, you could have funds in your account in just one day with one lender, but high fees and interest rates and shorter repayment terms could spell trouble in just a few months.

Unsure if you’re able to afford a small business loan? Learn how to know if you’re ready to take on this financial responsibility.

Borrower Requirements

You may think a lender is right for you, but are you right for the lender? Every lender has different requirements for its borrowers, and you need to meet all of these to get approved for financing.

Before you start shopping lenders, start by getting your free credit score online and reviewing your credit history. Negative items like unpaid tax liens and recent bankruptcies may prohibit you from working with some lenders and qualifying for certain types of loans.

You’ll also need to know your time in business and annual revenues and have proof to present to the lender if needed. Also, be aware of documentation requirements and make sure that you have everything you need to be approved for a loan.

One last thing to remember is that meeting a lender’s minimum requirements does not guarantee that your application will be approved.

Final Thoughts

While no one is ever guaranteed success, having access to capital and the right resources can boost your chances of owning and operating a successful, profitable business. As you’ve read, there are plenty of opportunities available for Michiganders. Whether you’re in the planning stages of your startup or you want to take your small business to the next level, know and understand your financing options, evaluate the needs of your business, do your research, and move forward when you know that the return-on-investment will outweigh the risk of taking on debt.

If you didn’t find what you’re looking for in this post, check out some of our additional resources to help you find the right financial solution for your small business.

  • Minority Business Loans
  • Best Small Business Loans For Veterans
  • The Best Small Business Loans For Women
  • The 7 Best Business Loans For Bad Credit

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

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The Step-By-Step Guide To Starting And Funding A Cleaning Business

Entropy is a powerful force. If there’s one thing you can rely on, it’s that everything gets dirty sooner or later. If it doesn’t get dirty, it gets cluttered. Add in the increasing prevalence of two-income households, the pace of modern work, and long commutes and it’s not surprising that more and more people are letting their chores slide. And that’s not even taking into consideration the huge messes businesses make. The fields are ripe for the harvest — why not cut yourself a piece of the action and start a cleaning business?

Luckily, the overhead costs of starting a cleaning business are fairly low (at least up until you start adding staff). Still, you’ll want to have a good sense of what you’re getting into before you dive into the cleaning industry. It’s vital to have a plan to tackle the expenses and challenges you’ll encounter along the way.

Not sure where to start? We’ll break starting and funding a cleaning business into a step-by-step process below.

Make A Business Plan

What separates a business from a side gig? Well, a lot of stuff, but one of the bigger points of delineation is whether or not you have a business plan and a clear strategy.

Creating a business plan can be an intimidating prospect, but you don’t need to have a business degree to write one. You don’t even need to have taken a class.

A business plan is, essentially, an outline documenting what your business is, what it does, how it’s organized, its financial means, and a strategy for how you intend to grow.

There are a lot of resources online that can give you an idea of what a business plan looks like, as well as templates to help you get organized, but a typical business plan has the following parts:

  • Executive Summary
  • Company Description
  • Market Overview
  • Sales & Marketing Strategy
  • Operating Plan
  • Organizations & Management Team
  • Financials

Calculate Startup Costs

The good news about launching a cleaning business is that it’s possible to start one with relatively little overhead.

At a bare minimum, you’ll need cleaning supplies. This assumes you’ll be doing the cleaning yourself and aren’t taking on any additional employees right away. If you’re cleaning residential homes, these supplies will more or less be the same ones you use to clean your own home. If you’re getting into commercial cleaning right away, you’ll likely have to invest in equipment (and possibly personnel) that can handle larger volume messes and expansive spaces.

If you plan on cleaning as more than a side gig, you’ll also need to pay fees to register your business. This isn’t a very big expense if you’re content with running a sole proprietorship (or partnership, if you’re starting it with someone else) –usually less than $50. You can also file a DBA, which allows you to legally do business under another name (the name of your company). We’ll get a bit deeper into it in the next section.

Additionally, you should factor in any initial advertising costs, as well as transportation costs for getting yourself or your employees to the work sites.

Register Your Business

Registering your business may sound intimidating, but it can actually be one of the easiest parts of starting a business.

Why should you register your business? At minimum, it protects the name you’re using to do business so that no one else in your area can (legally) use it. It can also help you qualify for business-to-business services and services that require an EIN number.

Incorporating, on the other hand, is a more complicated and expensive process that comes with its own advantages and disadvantages.

Here are the most common types of businesses you can register as:

  • Sole Proprietorship: By default, this is the type of business you’re running when you initially create one. You and your business are, for tax and liability purposes, considered the same entity. In fact, if you want to do business under a name other than your own, you’ll need to file a DBA (doing business as) with your local county clerk.
  • Partnership: Essentially the same as a sole proprietorship, except you started it with one or more other people. By default, you’re each considered to own an equal share of the business for tax and liability purposes.
  • Limited Liability Corporations (LLCs): If you’ve seen LLC after a corporation’s name, you’re dealing with this type of company. LLCs offer limited liability protection for their owners without the full complexity of a corporation. Each state has its own rules for how to start and maintain an LLC, and you don’t necessarily have to register your LLC in the state where you’re doing business (although you’ll generally want to). LLC owners report their business earnings and losses on their personal taxes.
  • C-Corp: This is the “basic,” default form of incorporation. Shareholders are considered the owner(s) of the company and receive limited liability protection; however, the business decisions are made by corporate officers who may or may not be shareholders. The corporation is taxed separately and shareholders pay income tax on dividends. To form a C-corp, you’ll file articles of incorporation with your state.
  • S-Corp: S-corps are similar to C-corps in most ways, but come with a few additional restrictions: you must have fewer than 100 shareholders and they have to all be U.S. citizens or residents. Unlike C-corps, profits and losses are reported on personal taxes, not unlike an LLC. In addition to filing articles of incorporation, you’ll also need to file IRS Form 2553.

Get Business Insurance

Depending on your local and state laws, business insurance may or may not be optional. However, given that cleaning involves a lot of physical contact with valuable items (not to mention the fact that you will be in the profession of making floors slippery), you may want to consider getting insurance even if you’re not required to have it.

General liability insurance can protect you in the case of lawsuits or accidents, including property damage and personal injury claims against your business. It can also make your business seem more professional to prospective clients.

Your own equipment is also subject to wear and tear, as well as accidents, so you may want to consider property insurance for any items that aren’t easily replaced.

While those are the big two worth considering, you may also want to consider other types of business insurance to help cover anything from worker’s comp claims to vehicle damage.

Seek Business Funding

Now that you have a sense of what your expenses will be, it’s time to see if you can cover them out of pocket and still pay your rent. If you can’t, and are unable to tighten your belt without sacrificing the tenets of your business plan, you may need to seek some source of external funding.

Where should you look?

Personal Savings

If you’ve saved up for a rainy day, the weather might start looking pretty stormy right about the time you’re starting a business. The nice thing about dipping into your savings is that you’re not taking on debt and all the expenses that go with it.

On the other hand, you are risking your own money, along with the lost-opportunity costs of not being able to invest that money in something else.

And, of course, you may not have been able to save enough to cover your expenses anyway.

Tap Your Support Network

If you don’t have the money handy, another option is to ask your family or friends for a small loan. Generally speaking, your support network will give you a better deal than even the most competitive bank will.

Asking your friends and family for money can be tacky and awkward if you don’t put their concerns at ease. You also may damage your relationships if you aren’t able to pay the money back within the expected period of time. It’s important to take a professional and organized approach.

If you do go this route, strongly consider formalizing any agreements you make so that all parties are fully aware of what they’re risking and stand to gain from the arrangement. Create and sign a contract, just as you would do with a traditional lender.

Credit Cards

For purchases you can pay off quickly, it’s hard to beat the convenience and incentives of credit cards.

Credit cards come in both personal and business varieties. You don’t actually have to own a business to get a business credit card, but their rewards programs are generally more geared towards business expenses.

If you’re going to use credit cards, be sure to use them wisely. That means paying them off within the interest-free grace period offered by your card’s provider. For personal credit cards, this is legally at least 21 days from the time you receive your bill. For business credit cards, there is no legal minimum, but most extend a similar one as a courtesy.

Just remember, if you fail to pay your card off with that window, carrying a balance on a credit card is an extremely expensive way to finance your business. And avoid taking out cash advances on your cards unless absolutely necessary.

Recommended Option: Capital One Spark Cash Select For Business

Capital One Spark Cash Select For Business


capital one spark cash select
Compare

Annual Fee:


$0

 

Purchase APR:


14.74% – 22.74%, Variable

Spark Cash Select for Business is great for businesses that don’t have their expenses concentrated in a single area, or that don’t want to worry about complex reward programs. You’ll simply earn 1.5% cash back on every purchase you make. There’s also no limit on the reward, so you don’t have to worry about exceeding a maximum threshold: whether you spend $20 or $500,000 in a year on your card, you’ll still get 1.5% back.

You will need to have excellent credit to qualify, however.

Recommended Option: Capital One Spark Classic

Capital One Spark Classic For Business


Compare

Annual Fee:


$0

 

Purchase APR:


24.74%, Variable

If you don’t qualify for Spark Cash Select for Business, Capital One offers an equally versatile card that’s much easier to qualify for. Spark Classic offers a similar cashback reward program, but the rate of return is 1% rather than 1.5%.

While not the most exciting card, it’s a good one for repairing your credit.

Loans

Business loans are frequently out of reach for brand new businesses–even the more risk-taking lenders generally want to see that you can keep your business together for at least six months before they’ll lend to you. That said, there are exceptions to the rule, with some lenders focusing on new businesses.

And remember, when you’re starting out you don’t necessarily need a “business” loan; personal loans can leverage your personal credit for an early cash infusion even you need it. If you’re buying a specific piece of equipment, you should also consider equipment financing.

Recommended Option: Lending Club Personal Loans

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Lending Club is a good option for individuals who may not have the strongest credit, but have a good debt-to-income ratio. The borrowing range is fairly narrow at $1k to $40k, but when you’re just starting out you don’t want to go too deeply into debt anyway. You’ll have three-to-five years to pay it off, which makes it fairly manageable while you’re building up your business.

Recommended Option: Lendio

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Lendio takes some of the frustration out of applying for a loan by allowing you to apply to their entire network of lenders all at once. If you’re thinking about tapping the alternative lending market for the first time, it’s a pretty good place to start.

They can’t necessarily help every business, but a shotgun approach can sometimes be easier than finding that one special lender.

Recommended Option: Upstart

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If you’re having trouble finding a lender who will work with you, take a look at Upstart. You’ll need to have at least fair credit and a regular source of income, but otherwise, Upstart’s way of evaluating potential borrowers is pretty unconventional (good news if you’re starting a business).

Better yet, Upstart’s rates are pretty reasonable and you’ll have three or five years (one or the other, not between) to pay your balance off. Unfortunately, they don’t currently lend within West Virginia or Iowa.

Need more options? Check out our feature on startup loans. Need a vehicle for the business? Read our auto loans guide.

Choose The Right Software

As your business grows and becomes more complex, managing the logistics of your company can become quite labor-intensive. If you don’t want to sink too many man-hours into keeping track of all that stuff, you’ll want to delegate it to a software program.

This doesn’t necessarily mean you have to enroll in a bunch of expensive SaaS platforms if it’s just you cleaning for a handful of clients, but it doesn’t hurt to know what kinds of options are available.

Types of software you may want to consider include:

Field Service Management 

This type of software centralizes processes and workflows for businesses that have employees who are dispatched to external sites for work. They often include features like scheduling, dispatching, and booking. Some also come with invoicing, payment processing, and customer notifications, so it’s quite possible to find an all-in-one service that meets your needs.

Scheduling Software

If field management software sounds like overkill, you can try scheduling software to manage your appointments and those of your employees.

Inventory Tracking

If your business is growing, and you no longer have time to run out to buy supplies every time you need them or use your clients’ stash, you may find it helpful to formally keep track of your inventory.

Accounting Software

It’s always a good idea to keep track of your expenses, accounts receivable, payroll and related issues, especially as your business grows and becomes more complex.

Data QuickBooks Online Xero Wave Zoho Books FreshBooks

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Best Cloud Accounting Software

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Pricing

$20 – 150/month

$9 – 60/month

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Bolster Your Web Presence

A cleaning business can get pretty far on word-of-mouth and savvy networking, but expanding your reach in the digital age usually means you’ll want to bolster your web presence.

A website is still a very important way for potential clients to find out information about your business and what services you offer. Happily, for a cleaning service, it doesn’t have to be all that complicated. If you don’t want to contract the job out, there are plenty of services online that make it easy to build your own decent-looking website.

A spiffy website is only one aspect of an online strategy, however. You still need to get people to visit it. You’ll want to consider factors like search engine optimization (SEO) so that, for example, the phrase “kitchen cleaning Rochester” will return your website in the top results.

You may also want to use social media to build brand recognition, steer traffic to your site, and announce specials or changes to your services.

Delegate Work

If it’s just you and a cart full of cleaning supplies, you can skip this part. However, if you’re planning to grow beyond what one mere mortal can clean in a day, you may be taking on more people.

Employees

Taking on additional people as employees come with many advantages: you’ll be able to get significantly more work done, have a larger pool of expertise to draw from, and be more flexible with scheduling. This does come with some additional costs, as you’ll be paying some of the taxes on their salary as well as offering benefits (at least in theory), so be sure to grow your staff wisely and at a pace that fits the amount of business your generating.

In exchange, you’re allowed greater control over the parameters of how your employee works, where, and at what time. Setting a wage that’s fair and not abusing this relationship will generally improve morale and help you avoid the costly process of employee turnover.

Contractors

If you aren’t quite ready to take on employees but need additional help, you can hire contractors. Contractors are free agents who work for themselves even though they may be regularly and continuously used by a particular client (that’s you). Since they’re self-employed, you don’t have to worry about additional expenses beyond paying their fee.

Beware that many businesses make the mistake of treating 1099 contractors as employees, which can get you into pretty serious trouble. If you want to have employees, you have to hire them. As a general rule, you have no say over what jobs a contractor decides to take, the methods they use to complete the job, or the precise time they choose to do it.

Advertise Your Business

A strong web presence and social media campaign can get help get your name out, but we aren’t quite at the point where advertising is obsolete.

Since a cleaning business is constrained by geography, you have to physically send someone out to do the job. That means you can use your modest advertising budget to buy ads in your local market, which is usually cheaper than trying to grab eyeballs from several states away. Ideally, you’ll want to seek ad platforms utilized by the types of people who are likely to buy your services. Cash-strapped kids at the local state college campus probably don’t have a budget for cleaning services, for example (although some fraternities or sororities may), while busy soccer moms might.

Once you know who you’re advertising to, you can select a medium that fits your target demographic. Once you start getting new customers, ask them where they heard about your business so you can get a sense of which ads are working and which aren’t.

Even if you don’t have money to spend on advertising right away, put the word out to your own social network that you’re offering cleaning services. Word can spread fast, especially if you have a reputation as a trustworthy person.

Final Thoughts

We still haven’t invented self-cleaning spaces, so you have a potentially bottomless demand for your services. With relatively low overhead, a housekeeping or cleaning business is one of the more accessible industries to jump into, so if you have the skills and the inclination, why not give it a try?

The post The Step-By-Step Guide To Starting And Funding A Cleaning Business appeared first on Merchant Maverick.

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How To Start And Fund A Catering Business: The Step-By-Step Guide

Does serving delicious food to a crowd of partygoers sound like a dream? Do you want to take your love of desserts to weddings and other special events? If so, becoming a professional caterer could be the right career path for you.

Sure, you could search your local job listings to find a catering position, but wouldn’t it be great to be your own boss? If creating your own menu and serving up delicious food and beverages at events interests you, why not start your own catering business?

Maybe it’s been a lifelong dream to operate your own catering business. Or maybe you just love to cook and want to turn it into a career. Whether you’ve already taken steps to launch your own business or you don’t know quite where to start, this post is for you.

In this article, we’re going to explore exactly what it takes to start and fund your own catering business. We’ll start by discussing how to create a business plan and why a plan is a necessity for a successful business. Then, we’ll delve into the expenses you’ll encounter and how you can cover those costs. We’ll also talk about choosing your business structure, building your web presence, and advertising methods that can bring in new customers.

Ready to go? Let’s get started on your path to entrepreneurship!

Create Your Business Plan

What Information to Bring Accountant for Small Business Taxes

Starting a business without a detailed business plan is similar to taking a cross-country trip without a GPS or a map. In short, it’s not a wise move. Your business plan should not only include details about your business in the present — your management team and your mission statement, for example– but it should also serve as an outline for how your business will hit future targets.

Your business plan acts as a blueprint, outlining how your company will become successful and profitable. For that reason, your business plan won’t look exactly like the plan of another business — even one within the same industry. However, even though details may vary, there are a few common sections that can be found in all business plans. Those include:

  • Executive Summary: Describes the content of the business plan
  • Overview: Includes background of the business, legal structure, and other key details
  • Industry Analysis: Overview of the industry, including the size, nature, and any current trends
  • Competitive Analysis: Overview of your competition
  • Marketing: An outline of your marketing strategy and how you’ll reach customers
  • Operations Plan: Description of the operations of your business
  • Management: Bios and skills of your management team
  • Financials: An overview of current and future revenues

Your business plan not only helps you hit your goals, but it’s also critical when it’s time to obtain financing. Banks, nonprofit lenders, and even some alternative lenders may require a business plan as part of a loan application, especially for startup loans.

Pick Your Niche

While it may be tempting to try to cater for every event in your area, you’re going to stretch yourself thin … and likely set yourself up for failure. Instead of trying to offer services to everyone, pick a niche.

You may already have an idea in mind. For example, maybe it’s always been your dream to be a wedding caterer. Be sure to also consider the type of food you like to make. If you prefer to make salads, sandwiches, and other lighter fare, consider catering for business or school functions, luncheons, and other daytime events. If you prefer to serve fancier entrees, consider catering for weddings and special events.

Another step to take before selecting your niche is to do some market research in your local area. Where are there gaps in catering availability? What niche is overcrowded with the competition? You may find that there a large number of wedding caterers already in your area. Unless you can bring something new to the table (being the only caterer to serve Southern-style barbecue, for example), you might want to consider filling a different customer need.

There are a wide variety of catering niches to consider, including:

  • Weddings
  • Corporate Events
  • Adult Parties
  • School Events
  • Children’s Parties
  • Festivals
  • Sports Events

With an idea of your niche and the type of food you need to prepare, you can move into the next step: planning your menu.

Create Your Menu

KDS Kitchen Display System

Once you have a niche in mind, you’ll be able to narrow down your menu choices. Let’s face it — if you’re planning to focus on children’s parties or school functions, you won’t exactly need filet mignon on the menu.

You also want to consider what type of food you’re experienced at making. While you can certainly test out new ideas in the future, you want to put your best foot forward when starting out. You also want to offer a variety of options while keeping your menu at a manageable size. Having a menu with too many items or items that contain ingredients that are difficult to source could cause unnecessary stress for you and your clients.

It’s also important to remember those with dietary restrictions. Consider adding a few options to your menu that are vegetarian, vegan, gluten-free, or dairy-free to help expand your customer base.

Performing a test run or two can help you further improve your menu. Once you have your menu in place, test it out on a few friends and family members. Get their honest feedback on where you excel, as well as where you fall flat. Tweak recipes as needed, change techniques to become more efficient, and be honest with yourself about what works and what doesn’t. Then, alter your menu accordingly.

Source Your Ingredients

After you create your menu, you’ll have a better idea of the ingredients needed to prepare your food. When you first get your business off the ground, you may be able to get the ingredients you need by purchasing from a wholesale club in your area. However, as your business grows larger and you have more events to cater, you’ll want to purchase your ingredients from other sources.

You can get fresh produce from local farmers. Start building these relationships by visiting your local farmers’ market. You can also build relationships with restaurant suppliers and food service vendors to purchase bulk ingredients at reduced prices.

Calculate Startup Costs

In many states, you will be unable to use a residential kitchen to prepare your food. If you plan to cater from home, you must contact the health department in your area to find out more about the regulations of home-based catering businesses, including inspection and permit requirements.

In most cases, you’ll need to rent space for your kitchen. There are two ways to go about this.

The first is renting your own commercial space. This is the more expensive option but is a necessity if you plan to cater full time.

If you only plan to cater events occasionally or on weekends, you may be able to rent a commercial kitchen for a few hours on the days when you need it. This is a more affordable option since you won’t have to invest in equipment, but it’s not ideal for full-time caterers.

If you aren’t renting space in a kitchen that’s already stocked, you’ll also need industrial equipment that is used to prepare your food. Some of the items you’ll need include:

  • Commercial Ovens
  • Stoves
  • Deep Fryers
  • Sinks
  • Refrigerators
  • Walk-In Freezers
  • Mixers & Blenders
  • Pots & Pans
  • Knives
  • Cooking Utensils & Tools
  • Storage Containers
  • Dishwasher

You’ll also need equipment that you’ll bring on-site for serving and keeping food at the optimum temperature, including:

  • Serving Dishes & Trays
  • Serving Utensils
  • Chafing Dishes
  • Carving Stations
  • Grills
  • Heat Lamps
  • Soup Kettles
  • Beverage Dispensers
  • Coffee Station

An additional cost to add to your list is a catering van. This van will be used to transport your food and equipment to venues. You may save money initially by purchasing a used vehicle. However, you need to ensure that you know the complete history of the vehicle. You may also incur additional costs if your used vehicle needs repairs soon after purchasing it.

Some caterers also provide table settings, glassware, and utensils, but this adds to your initial investment. You may also provide additional items for your events, including chairs and/or chair covers, tablecloths, and centerpieces, but again, this will add to your startup costs.

Before starting your business, sit down and make a list of your total expenses. You can tailor the list to your own business. For example, if you don’t serve fried food, you won’t have to invest in deep fryers. If you specialize in only desserts, you may have pastry tools, cake displays and stands, and bakeware sets on your list.

Once you’ve made your list, start shopping around to get an idea of costs. Check out prices online or visit local commercial kitchen equipment and supply stores. Once you have an idea of how much funding you need, it’s a smart idea to add about 30% to those costs to prepare for the unexpected. For example, if you’ve priced everything at $100,000, apply for a loan of $130,000 to make sure all of your bases are covered.

Register Your Business

Before you begin catering to clients, you need to register your business with federal, state, and local agencies.

First, you need to think of a business name. Brainstorm ideas to find a name that’s catchy and is a reflection of your brand. When you’ve come up with a great name, check your Secretary of State’s website to ensure that this name is not already being used by another business.

Next, you will need to select your business structure. This is an important step because your business structure determines how your business is taxed and your personal liability for debts incurred by the business. The types of business structures include:

Sole Proprietorship

This business is owned and operated by one person. This is the easiest business structure and does not require registration. Setting up a sole proprietorship is easy. However, this structure does not provide you with any protection against the debts and liabilities of your business.

General Partnership

This type of legal structure is made for businesses with two or more owners. These are the easiest to create, have a low cost of operation, and the fewest requirements. No state filing is required for a general partnership.

Limited Partnership

This is another type of structure for businesses with more than one owner. General partners in a limited partnership have unlimited liability. The remaining partners – limited partners – have limited liability. In most cases, the personal assets of limited partners are protected from being used to satisfy the liabilities and debts of the business.

Limited Liability Partnership

This type of structure is designed for professional service businesses. Personal assets of any partner can’t be used to cover the debts and liabilities of the business. However, all partners in an LLP are liable for their own acts, such as medical malpractice.

Limited Liability Company

An LLC is separate from its owners. This type of legal structure protects owners from personal liability without the higher tax rates and stricter requirements of corporations.

Corporation

Owners in a corporation are protected from personal liability for the debts of the business. Corporations are the most difficult to set up. However, it is necessary to choose this business structure if you plan to sell stock or raise large amounts of capital in the future.

The type of business structure you choose for your catering business will vary based on the number of owners and your plans for the future. Consult with an accountant or attorney to learn more about your options and which is best for you.

After you choose your business structure, you will need to register with the state where you will operate. You can register through your state’s Secretary of State website. Application and fee requirements vary by state. If you plan to offer services in more than one state, you will need to register with each state.

Another important step in registering your business is obtaining an Employer Identification Number (EIN) from the IRS. This is a necessary step if your business will have employees now or in the future.

Get Permits & Licenses

After registering your business, it’s time to apply for the permits that you need to legally operate your business. It’s necessary to do this early in the game, as it may take weeks or even months to receive your required permits.

State and local laws surrounding permit and license requirements vary. Some of the permits and licenses you may need to legally operate your business include:

  • Business Licenses
  • Health Permits
  • Food-Handling Licenses
  • Liquor Licenses

You can contact the local health department, the state Alcoholic Beverage Control board, and other state and local agencies to learn more about the licenses required in your area, how to apply, and any applicable fees.

When working with food, you also face inspections from your local health department. The temperature of prepared and stored food, waste disposal, and the safety and condition of your cooking equipment are just a few of the things that will be inspected periodically.

Get Business Insurance

Protecting your catering business is important, and there’s no better way to protect yourself and your business than with business insurance. As a caterer, there are multiple insurance options to consider.

General liability insurance protects you from lawsuits that occur during events. This type of insurance covers physical injuries, property damage, and even damage to your reputation.

Another type of insurance to consider is errors and omission insurance, also known as E&O insurance. This insurance protects you from lawsuits that may be filed if a mistake is made. For example, if a client warns of an allergen and you include an ingredient that triggers an allergic reaction, this insurance would protect you from a potential lawsuit.

Property insurance should also be a consideration. This insurance protects your equipment, fixtures, and other property from damage or theft.

If you have employees, you will also need worker’s compensation insurance. This covers medical costs and lost wages from employees when they are injured or become sick. This also protects your business from lawsuits as a result of injuries.

If your business serves alcohol, you may also be required to carry liquor liability insurance, which protects your company from alcohol-related lawsuits.

Insurance requirements vary by state. Talk to your local insurance agent to find out more about the laws in your state and to create a personalized insurance policy for your new catering business.

Seek Business Funding

We’ve already reviewed many of the costs you’ll encounter when opening your own catering business. Now, it’s time to determine how to pay for those costs. Whether you have money in the bank or your bank account is looking a little slim, there are financing options available for you. Start your search with these options.

Personal Savings

If you’ve been putting away money into a savings account, now may be the perfect time to withdraw your funds. The great thing about personal savings is that you won’t take on debt with a lender. This means no payments, fees, or interest. The downside, though, is that if your business goes downhill, it may take your savings with it.

Friends & Family

Consider taking a loan from a friend or family member that’s willing to invest in a potentially lucrative new opportunity. Prepare your presentation, have your business plan in hand, and explain why your opportunity is worth investing in.

If you come to a mutual agreement, make sure to get everything in writing. It also goes without saying that this friend or family member should be treated like any other lender. That means paying back your loan as scheduled.

Instead of a loan, you may consider equity financing. In this scenario, your friend or family member would own part of your business. The major benefit is that you wouldn’t have to immediately start making loan payments. However, you would give over some ownership (and a slice of your future profits) and control over your business if you go this route. Undecided? Learn more about the pros and cons of debt vs. equity financing.

ROBS

If you have a retirement account, you may be able to leverage these funds for your new venture. Normally, if you withdraw before you reach a certain age, an early withdrawal penalty and income tax penalties apply. However, you can avoid these costs through a rollover as business startups (ROBS) plan.

A ROBS plan allows you to use your retirement funds for starting or expanding your business. Four steps are required to access your funds. First, a C-corporation is created. The next step is to create a retirement plan for the new C-corp. Then, you can roll over funds from your existing retirement account into your newly created plan. Finally, you will use these funds to purchase stock in your C-corporation, giving you access to the capital you need for your new business.

The process isn’t complicated, but there are rules you have to follow to ensure you maintain compliance. To take the guesswork out of ROBS, many aspiring business owners work with a ROBS provider. For a fee, ROBS providers will set up your ROBS account for you and will maintain it to ensure everything is done by the book.

Using your ROBS is a great way to fund startup costs. Other than a setup fee and a monthly maintenance fee charged by your ROBS provider, you do not pay additional fees. After all, you’re using your own money. However, if your business fails, you put your retirement funds at risk.

Recommended Option: Guidant Financial

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Guidant Financial can help you roll over your retirement funds into capital you can use for your catering business. In about three weeks, you can have the funds you need to start or grow your business with Guidant Financial’s ROBS plans.

To qualify, you must have a retirement account worth at least $50,000. Most retirement plans qualify, including:

  • 401(k)
  • 403(b)
  • Traditional IRA
  • TSP
  • SEP
  • Keogh

There are no credit score, time in business, or annual revenue requirements to qualify. However, you must have a business to fund, and you also must be an employee of that business in order to set up your ROBS plan.

Since you’re using your own funds, you don’t have to worry about monthly loan payments. However, you will have to pay a one-time setup fee of $4,995 followed by a maintenance fee of $139 per month to maintain your account.

In addition to ROBS plans, Guidant Financial also offers additional small business loan options including Small Business Administration loans and unsecured business loans.

Equipment Financing

As we discussed earlier, there is a lot of expensive equipment needed to start your catering business, from a catering vehicle to commercial kitchen equipment. A financing option to consider when you need new equipment is equipment financing.

With equipment financing, you can take possession of the equipment you need without paying the full cost up front. Instead, you’ll pay a down payment (typically 10% to 20% of the purchase price), then repay a lender in smaller, more affordable payments over time.

There are two main types of equipment financing to consider: equipment loans and equipment leases. With a loan, you’ll make a small down payment, then put the equipment into use immediately. You’ll make regular payments to the lender that are applied to the principal balance as well as interest and fees. Once you’ve repaid the loan as agreed, the equipment is yours to keep, sell, or trade.

The other type of equipment financing is an equipment lease. You’ll also pay a down payment and regular payments. However, at the end of your lease, you return the equipment. At this time, you can sign another lease for new equipment. This is a better option if you plan to upgrade your equipment frequently, although this option can be more expensive over the long term.

With equipment financing, you typically do not have to put up collateral. Instead, the equipment being financed is the collateral and can be seized by the lender if you don’t make your payments as agreed.

Recommended Option: Lendio

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Lendio’s network of over 75 lenders can provide you with up to $5 million to finance your equipment. Loan terms are between 1 to 5 years with rates starting at 7.5% for the most qualified borrowers. With some lenders, you can get your funding in as little as 24 hours. Some applicants may even qualify for 0% down financing.

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

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

If you have credit challenges, you may still qualify provided you have proof of solid cash flow and revenue for at least 3 months.

The funds can be used to purchase the equipment you need for your catering business, including but not limited to commercial kitchen equipment, office furniture and fixtures, software, appliances, and commercial vehicles.

If you don’t qualify for equipment financing through Lendio’s network, you can shop around for other financing options. Through Lendio, you can apply for financial products including SBA loans, business credit cards, lines of credit, and startup loans.

Lines Of Credit

Running your own catering business comes with its challenges. Some challenges are expected — rushing around to cater a big wedding, for example — while others come when you least expect it. Whether it’s a slow season that has impacted your incoming cash flow, equipment that needs repairs, or an unforeseen emergency, even the most successful business face the unexpected.

For these times, it’s great to have a backup plan, like a flexible line of credit. A line of credit is different from a traditional loan because you don’t receive one lump sum that you immediately start repaying. Instead, a lender assigns you a credit limit — much like a credit card — and you can withdraw money from your line as needed.

Your line of credit is ready to use whenever you need it. You don’t have to immediately draw funds if there’s no need, and most lenders don’t charge fees if you don’t use your line of credit. When you do use your line of credit, you’ll repay your balance plus any fees and interest charged by the lender. Since this is a revolving form of credit, funds will be replenished and available to use again as you pay off your balance.

Recommended Option: Fundbox

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Fundbox offers lines of credit that can be used for any business purpose. One of the standout features of Fundbox is that the lender looks at the performance of your business — not just your credit score. Even if you’ve been turned down by other lenders in the past, you may still qualify for a Fundbox line of credit.

Through Fundbox, you may qualify for up to $100,000. Once approved, you can immediately make draws on your account. Repayment terms are 12 or 24 weeks, and rates start at just 4.66% of the draw amount. Weekly repayments are automatically deducted from your business checking account. There are no prepayment penalties, all remaining fees are waived if you pay off early, and there are never any fees if you don’t make a draw.

To qualify, you must meet the following minimum requirements:

  • At least $50,000 in annual revenue
  • Holder of a business checking account
  • At least 2 months of activity in accounting software OR at least 3 months of transactions in a business bank account

Business Credit Card

Another source of financing that’s great for covering unexpected expenses is a business credit card. A business credit card works just like your personal card. You can use your card online and in stores to make purchases anywhere credit cards are accepted. When you use your card, the lender charges interest on the borrowed portion of funds. If you don’t use your card, you aren’t required to pay interest. However, annual fees and other charges may apply.

Business credit cards are great for emergencies or for quickly resolving cash flow issues. You can also use your credit card for recurring expenses, such as gas for your catering van. If you go this route, apply for a low-interest rewards card that gives you cash back or other perks just for using your card.

Recommended Option: Chase Ink Business Cash

Chase Ink Business Cash



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Annual Fee:


$0

 

Purchase APR:


15.49% – 21.49%, Variable

With Chase Ink Business Cash, you can earn rewards just for using your card to pay for your business expenses. Using this card gets you 5% cash back on the first $25,000 spent at office supply stores and on internet, cable, and phone services. You can earn 2% cash back on the first $25,000 used at gas stations and restaurants. These offers renew each year on your account anniversary. For all other purchases, you can earn unlimited 1% cash back.

New cardmembers can take advantage of a $500 cash back bonus offer when $3,000 is spent within 3 months of opening an account. This card also comes with additional benefits including purchase protection, extended warranty protection, and free employee cards.

There is no annual fee for the Ink Business Cash credit card, and it comes with a 0% introductory APR for the first 12 months. After the introductory period, the card has a variable APR of 15.49% to 21.49%.

This card is recommended for borrowers with good to excellent credit scores.

Vendor Financing

As a caterer, you’ll establish relationships with vendors. You’ll purchase your ingredients, supplies, and other necessary items from these vendors. Many times, you’ll purchase these items up front. Other times, however, you may need a little help in the form of vendor financing.

With vendor financing, a lender will pay your vendors up front so you can get the supplies necessary for running your business. You’ll then be able to spread your purchase out over several smaller payments. Like other financial products, you’ll pay fees and/or interest for the convenience. While the cost of borrowing may be higher than making a purchase up front, the extra expense may be well worth the cost if you’re in a financial bind.

Recommended Option: Behalf

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You can pay your vendors immediately without putting up the money up front by working with Behalf. Through Behalf, you can get up to $50,000 to pay your vendors. Then, you have up to 6 months to repay the lender.

Monthly fees start at 1% of the borrowing amount and are based on your creditworthiness. There are no origination fees, membership fees, or other hidden costs to borrow from Behalf.

There are no time in business, annual revenue, or credit score requirements to qualify. However, Behalf will perform a hard pull on your credit once you submit your application.

Personal Loans For Business

You have a solid credit score, but small business lenders won’t even give you a second glance. What gives?

Many small business loans have time in business and annual revenue requirements. This is fine when your business is already operating, but what do you do when you need a loan before you even open your doors? Try applying for a personal loan for business.

As a startup, you may find it challenging to qualify for a small business loan. However, you can use your own personal credit score and income to qualify for a personal loan that is used for business expenses.

These loans don’t have time in business, annual revenue, or business credit score requirements, so you can qualify even if you’ve not yet catered a single event. Personal loans are available for a wide range of credit scores. However, having a high credit score can help you qualify for the best interest rates and terms.

Recommended Option: LendingPoint

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LendingPoint specializes in personal loans, offering qualified borrowers $2,000 to $25,000. Rates range from 9.99% to 35.99% with repayment terms of 24 to 48 months. An origination fee of 0% to 6% of the borrowing amount may apply. Payments are made twice per month.

You can quickly and easily qualify for a LendingPoint personal loan. To receive an offer in just minutes, you need:

  • Proof of employment & income
  • Bank statements
  • Voided check
  • Driver’s license or government-issued ID

To qualify for a loan, you must:

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

Choose The Right Software

pos with raw ingredient tracking

From keeping track of events to accepting credit cards, the right software can help you do it all. As a caterer, there are several types of software you should consider investing in to keep operations running efficiently.

Accounting Software

This software allows you to perform functions such as tracking expenses, sending invoices to clients, managing payroll, and keeping up with inventory. With accounting software, you can keep up with your financials and run reports, which is especially helpful when you’re seeking financing from a bank or traditional lender. Accounting software also makes it easier for your business when tax time rolls around.

New to accounting? Download our free eBook, The Beginner’s Guide to Accounting.

Catering Software

There are specific software programs designed to help caterers manage all aspects of their businesses. Features include invoicing, billing, employee scheduling, event bookings, and other tools to keep your catering business on track.

Payment Processing Software

Not all of your clients will have cash, especially when they’re paying off large bills for their catering expenses. To make payments easier for your clients, invest in payment processing software. This software acts as the communicator between your bank and your customer’s bank, allowing you to accept debit cards, credit cards, and other methods of payment. Most payment processing software comes with monthly subscription fees, and some companies even offer free hardware that makes it easier than ever to accept multiple forms of payment.

Hire Employees

When you first start your business, you may be a one-man operation until you start bringing in revenue. However, you will eventually need to hire employees if you want to grow and scale. If you’re like many caterers, you may opt to hire an employee or two right from the start.

Employees that you may hire for your business — either now or in the future — include:

  • Chef: Your chef will be in charge of preparing the food. For large events, consider hiring sou chefs for additional assistance.
  • Servers: Bring food and drinks to guests
  • Bartenders: Serve alcoholic beverages to guests
  • Busboys: Responsible for clearing off tables
  • Host/Hostess: Help guests find their seats
  • Event Planner: Meets with the client to discuss details about the event
  • Supervisor: Ensures that other staff members are doing their jobs efficiently

Until your business grows and brings in revenue, you may opt to hire just a few staff members, such as a chef and a server. As your business gains more customers and becomes profitable, you can add additional employees to your staff.

Do your research to get an idea of the average pay range in your area for each position. It’s also important to remember that other expenses come with hiring staff, including workman’s compensation insurance, training costs, and benefits.

To find employees for your business, ask friends, family members, and colleagues for referrals. You may also post a job advertisement on online job boards. You can even contact local temporary agencies to find the help you need.

Bolster Your Web Presence

Your plans for a catering business are coming together, so now it’s time to start thinking about how you’re going to bring in clients. There’s no better place to start than the internet.

Just think about it. If you’re looking for a local company to work with, where is one of the first places you look? The internet, of course.

You can quickly build your web presence with these easy steps.

Launch Your Social Media Profiles

Social media is a great way to reach new customers, and best of all, setting up your profiles is free! Create business pages on Facebook, Twitter, Instagram, and/or Pinterest. Make sure to include critical details such as your contact information, service areas, and types of events catered. You can build up your profiles to include information such as menus, pricing lists, and photos of your food and past events.

An added bonus on social media is that you can communicate with potential customers through comments or direct messaging.

As you begin to grow your business, you can later invest in social media ads, but in the beginning, focus on getting your profiles up and running.

Want to get the most out of your social media profiles? Check out our Guide to Social Media Marketing.

Build Your Website

In addition to your social media profiles, you also need to build a website. This doesn’t have to be overly complicated. In fact, there are lots of website builders that make it easy to choose a template, customize your font and colors, and drag and drop images, text boxes, and tools — no design experience required.

Make sure that the design of your website reflects your branding. You also want to include important details, including the name of your business and contact details. You can also add additional features and information, including a live chat option, photo galleries, and reviews and testimonials.

Advertise Your Business

Boosting your web presence is a great start to advertising your business, but make sure that you don’t stop there. There are several ways that you can advertise your business — both online and off.

Fliers

Pass out or hang flyers advertising your catering services throughout your area. Make sure that you understand the regulations in your area surrounding posting and/or distributing flyers.

Online Ads

Purchase ad space on Facebook, pay-per-click ads on search engines, or even post advertisements on local online forums and social media groups.

Newspaper Ads

This is an oldie but goodie: pay for ad space in your local newspaper.

Attend Wedding Shows

Many cities and towns have bridal shows where vendors can advertise their services. Research events in your area, rent booth space, and advertise your business in-person to newly engaged couples.

Wedding & Event Websites

Submit your business information to wedding and event websites to draw in new customers.

Word-Of-Mouth

Word-of-mouth advertising is the best form of advertising. Ask your past customers for testimonials and reviews, and always make sure to go above and beyond to provide exceptional service.

Final Thoughts

Starting your own catering business is exciting but venturing out on your own can also be a little scary, especially if you lack business experience. However, you can be on track to owning and operating a successful catering business with careful planning, preparation, and strategic borrowing. Good luck!

The post How To Start And Fund A Catering Business: The Step-By-Step Guide appeared first on Merchant Maverick.

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The Best Business Loan And Financing Resources For Florida Small Businesses

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

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

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

Online Business Lenders For Florida Businesses

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

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

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

Lendio

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

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

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

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

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

SmartBiz

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

OnDeck

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

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

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

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

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

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

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

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

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

Fundbox

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

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

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

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

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

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

BlueVine

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

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

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

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

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

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

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

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

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

Amex Business Loans

American Express OptBlue

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

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

To qualify, you must meet the following requirements:

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

Upstart

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

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

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

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

To qualify for an Upstart loan, you must have:

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

Banks, Credit Unions, & Nonprofit Lenders In Florida

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

Florida First Capital Finance Corporation

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

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

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

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

Suncoast Credit Union

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

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

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

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

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

Chase Bank

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

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

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

Small Business Grants In Florida

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

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

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

Enterprise Florida Inc.

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

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

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

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

WomensNet Amber Grant

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

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

Palm Beach County Job Growth Incentive Grant

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

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

VISIT FLORIDA Targeted Marketing Assistance Program Grant

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

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

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

Loans & Financial Resources For Startups In Florida

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

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

SCORE

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

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

Small Business Development Center

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

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

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

The Florida Virtual Entrepreneur Center

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

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

Find An Investor

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

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

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

What To Consider When Choosing A Lender

5 C's of Credit: What Lenders Look For

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

How Will I Use The Money?

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

How Much Money Do I Need?

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

Do I Meet The Lender’s Requirements?

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

Do I Want A Lump Sum Or Flexible Financing?

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

Can I Afford It?

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

Final Thoughts

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

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

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How To Start A Lawn Care Business

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

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

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

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

Let’s get started!

Create A Business Plan

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

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

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

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

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

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

Determine What Equipment You Need

Selecting equipment

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

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

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

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

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

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

Calculate Startup Costs

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

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

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

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

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

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

Register Your Business

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

Choose & Register Your Business Name

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

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

Choose Your Legal Structure

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

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

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

Register With The IRS & State Revenue Agency

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

Obtain Licenses & Permits

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

Seek Funding

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

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

Personal Savings

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

Friends & Family

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

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

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

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

Personal Loans

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

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

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

Recommended Option: Upstart

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

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

To qualify for an Upstart loan, you must:

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

Equipment Financing

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

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

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

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

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

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

Recommended Option: Lendio

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

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

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

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

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

Lines Of Credit

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

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

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

Recommended Option: Fundbox

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

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

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

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

Rollovers As Business Startups (ROBS)

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

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

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

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

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

Recommended Option: Benetrends

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

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

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

Purchase Financing

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

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

Recommended Option: Behalf

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

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

Business Credit Cards

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

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

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

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

Recommended Option: Spark Cash For Business

Capital One Spark Cash For Business


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Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


18.74%, Variable

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

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

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

Recommended Option: Chase Ink Preferred

Chase Ink Business Preferred



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Annual Fee:


$95

 

Purchase APR:


18.24% – 23.24%, Variable

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

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

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

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

Bolster Your Web Presence

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

Set Up Social Media Profiles

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

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

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

Build Your Website

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

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

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

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

Choose Business Software

Small Business Online Accounting Software

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

Accounting Software

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

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

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

Payment Processing Apps

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

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

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

Best Overall Mobile POS


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Highlights

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

Retail POS: Free trial ($60/mo value)

 

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

 

Square POS: Always free

Field Service Management Software

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

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

Advertise Your Business

business loans for HVAC

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

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

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

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

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

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

Final Thoughts

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

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

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

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Pros And Cons Of Debt VS Equity Financing

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

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

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

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

Let’s get started.

What Is Debt Financing?

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

How Debt Financing Works

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

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

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

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

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

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

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

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

Types Of Debt Financing

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

Loans

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

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

Lines Of Credit

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

Business Credit Cards

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

Accounts Receivables Financing & Invoice Factoring

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

Debt Financing Pros & Cons

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

Pros

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

Cons

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

What Is Equity Financing?

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

How Equity Financing Works

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

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

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

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

Types Of Equity Financing

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

Venture Capitalists

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

Angel Investors

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

Mezzanine Financing

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

Crowdfunding

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

Equity Financing Pros & Cons

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

Pros

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

Cons

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

Debt VS Equity Financing

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

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

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

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

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

Which Type Of Financing Is Best For Your Business?

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

Choose Equity Financing If…

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

Choose Debt Financing If…

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

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

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

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

Final Thoughts

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

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How To Choose An Equipment Leasing Company

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

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

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

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

Find A Lessor Who Will Work With You

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

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

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

Choose The Right Leasing Arrangement

This is where it gets a little complicated.

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

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

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

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

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

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

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

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

What About Equipment Loans?

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

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

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

Check out our equipment financing resources if that sounds interesting.

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

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

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

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

Compare Rates & Fees

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

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

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

The Best Equipment Leasing Companies

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

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

Lendio

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

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

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

Currency Capital

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Another aggregator option for equipment financing is Currency Capital.

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

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

Crest Capital

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

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

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

TCF Equipment Finance

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

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

CIT Direct Capital

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

Both capital and operating leases are offered.

Final Thoughts

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

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

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

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

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

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

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

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

Begin With Branding

bar nightclub pos systems

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

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

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

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

Find A Location

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

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

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

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

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

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

Create A Business Plan

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

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

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

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

Register Your Business

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

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

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

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

Obtain A Liquor License

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

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

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

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

Seek Funding

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

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

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

Personal Savings

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

Loans From Friends & Family

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

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

Personal Loans For Business

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

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

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

Recommended Option: Upstart

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

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

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

Lines Of Credit

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

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

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

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

Recommended Option: Fundbox

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

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

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

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

Business Credit Cards

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

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

Recommended Option: Chase Ink Business Unlimited

Chase Ink Business Unlimited


chase ink business unlimited
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Annual Fee:


$0

 

Purchase APR:


15.49% – 21.49%, Variable

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

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

Rollover For Business Startups (ROBS)

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

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

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

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

Recommended Option: Benetrends

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

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

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

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

Purchase Financing

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

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

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

Recommended Option: Behalf

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

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

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

Create Your Menu

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

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

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

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

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

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

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

Purchase Your Equipment

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

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

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

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

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

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

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

Select Your POS System

ipad POS

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

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

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

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

Lightspeed Restaurant ShopKeep Toast

Lightspeed Restaurant

ShopKeep

Toast

TouchBistro

Breadcrumb POS by Upserve

ShopKeep alternatives for restaurants

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Review

Monthly fee

$69+

Get a quote

$79+

$69+

$99+

Cloud-based or Locally Installed

Cloud-based

Hybrid

Cloud-based

Locally installed

Cloud-based

Compatible credit card processors

Cayan or Mercury in US; iZettle in Europe

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

Toast only

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

Upserve Payments only

Business size

Small to medium

Small to medium

Small to large

Small to medium

Small to large

Hire Employees

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

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

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

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

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

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

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

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

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

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

Bolster Your Web Presence

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

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

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

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

$14 – $179/month Hosted Excellent Many

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Free – $29.90/month Web-Hosted Excellent Many

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Free – $25/month Web-Hosted Average Many

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$0/month Hosted Good Square Payments

Go to Site

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

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

Final Thoughts

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

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

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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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SmartBiz VS National Business Capital

Smartbiz vs National Business Capital

SmartBiz National Business Capital

$30,000 – $5,000,000

Borrowing Amount

$10,000 – $5,000,000

Up to 25 years

Term Length

Up to 25 years

Up to 4%

Borrowing Fee

Unknown

While it’s nice to have choices, sometimes it can be difficult to narrow your search down to a single, best option. It’s no different when you’re looking for business financing. SmartBiz and National Business Capital both promise to save time and headaches by allowing you to effectively apply to multiple lenders with a single application. Note that neither directly originates loans.

But while they’re both loan aggregator services, there are some notable differences between the two that may help you decide between them.

SmartBiz is heavily specialized toward SBA loans. If you aren’t familiar, the Small Business Administration has a number of programs wherein they’ll guarantee a portion of a business loan for qualified applicants. This can help you access better rates and terms than you may otherwise be able to get without the SBA guarantee. The tradeoff is a longer and more complex application, as well as a longer time to funding. SmartBiz helps you navigate through the red tape while also connecting you to SBA-approved lenders.

National Business Capital can also connect you with SBA loans, but they’re a bit less specialized, also offering unsecured small business loans, lines of credit, merchant cash advances, equipment financing, and startup business funding.

So in this battle of depth vs. breadth, which lender is the better middle man?

SmartBiz National Business Capital

2 years

Time In Business

6 months

N/A

Minimum Sales

$15K per month

650 (personal)
150 (business)

Minimum Credit Score

N/A

Qualifying

Winner: National Business Capital

To qualify for an SBA loan through SmartBiz, you’ll need to have been in business for two years, and have a personal credit score over 650 and a business credit score of 150. You must be a US citizen or legal permanent resident. You also can’t have defaulted on any government-backed loans, have any tax liens, or had a bankruptcy or foreclosure within the last three years.

Since they aren’t dealing exclusively with SBA loans, it’s a lot easier to qualify for National Business Capital’s loans. You’ll only need to have been in business for 6 months and take in at least $15,000 per month in revenue. There are no explicit credit requirements. Even if you don’t meet that benchmark, National Business Capital may still be able to work with you through one of their alternative programs. National Business Capital can work with businesses in all 50 states, Puerto Rico, Canada, and the U.K.

Overall, it’s a lot easier to meet the minimum qualifications of National Business Capital, but if you’re looking for an SBA loan you’ll have to meet guidelines similar to those of SmartBiz.

Fees

Winner: SmartBiz

Since we’re talking about third parties, you’re going to want to know what the convenience they offer will cost you.

SmartBiz charges two fees, beyond those charged by those normally associated with an SBA loan (0 – 3.75 percent guarantee fee and around a $450 fee from the lender): a one-time referral fee, and a one-time packaging fee. Each can cost up to 2 percent of the loan’s amount.

National Business Capital doesn’t divulge much information about their fees, and it’s difficult to get a straight answer from a rep when you ask about them.

Loan Terms

Winner: Tie

The SBA itself sets the acceptable terms for SBA loans, so you won’t find a ton of variation between lenders. Since SmartBiz deals exclusively in SBA loans, there’s not much to compare here. If you’re looking for a non-SBA loan or other financial product, National Business Capital can offer that.

Application Process

Winner: SmartBiz

Both SmartBiz and National Business Capital promise an easy, simplified application process, and both companies deliver. I’m giving SmartBiz the nod here for one reason: their screening process will let you know ahead of time whether or not you’re qualified for their service. This saves you the time of filling out an application only to be rejected down the road. Since National Business Capital is less specialized, they’re more likely to be able to help you, but in rare cases, customers may be well into the process before they discover that NBC can’t help them.

Time To Funding

Winner: National Business Capital

SBA loans can only be funded so quickly. If you need money immediately, SmartBiz won’t be able to do much for you. On the other hand, National Business Capital’s versatility allows them to offer faster products, often within the span of a couple days.

Transparency

Winner: SmartBiz

When it comes to online lenders–and let’s be honest, the financial sector in general–transparency is in short supply. Signing up for a loan is risky. Even submitting your basic information can lead to a future full of annoying cold calls. If possible, you’ll want to know what you’re getting into before you even make contact.

SmartBiz lays out most of what you need to know in a convenient FAQ on an easily searchable website.

National Business Capital, on the other hand, throws around lot of general information about financial products but comes up short on actual rates and fees. There are some calculators you can play with, but they’re not necessarily representative of the terms you’ll be offered.

Customer Service

Winner: SmartBiz

Customer service is usually one of the most divisive topics when it comes to alternative lenders. Satisfied customers will usually be very happy with the service they received, while angry customers will describe it in the most uncharitable terms.

While both companies seem to suffer from some communication issues, overall SmartBiz’s customers have fewer beefs with customer service.

Negative Reviews & Complaints

Winner: Tie

Both SmartBiz and National Business Capital receive generally positive reviews from customers and other review sites, usually within a point or two of each other. Complaints about both companies are typical for alternative lenders, including fees, rejections, and communication problems.

Complaints specific to SmartBiz include unhappiness with the amount of paperwork customers had to fill out. For National Business Capital, a common theme was aggressive marketing calls.

Positive Reviews & Testimonials

Winner: Tie

You’ll find no shortage of satisfied customers for both companies.

Fans of SmartBiz liked the personal touch offered by their representative, the relative speed (for SBA loans) of funding, and the company’s transparency.

Happy National Business Capital customers appreciated the wide variety of options offered, the customer service, and the quick turnaround time on their loans.

And The Overall Winner Is…

smartbiz logo

Specialization has its advantages. When it comes to a third party service for SBA loans, it’s hard to do better than SmartBiz. They take a long, complex process and make it a little less grueling for small businesses while offering a refreshing level of transparency.

Of course, if you’re looking for something other than SBA loans, National Business Capital can help you in ways SmartBiz simply can’t. This is especially relevant if time is a factor.

If you want a deeper look at SmartBiz or National Business Capital, check out our comprehensive reviews.

Review

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