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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Pros And Cons Of Debt VS Equity Financing

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

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

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

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

Let’s get started.

What Is Debt Financing?

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

How Debt Financing Works

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

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

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

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

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

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

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

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

Types Of Debt Financing

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

Loans

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

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

Lines Of Credit

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

Business Credit Cards

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

Accounts Receivables Financing & Invoice Factoring

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

Debt Financing Pros & Cons

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

Pros

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

Cons

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

What Is Equity Financing?

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

How Equity Financing Works

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

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

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

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

Types Of Equity Financing

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

Venture Capitalists

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

Angel Investors

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

Mezzanine Financing

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

Crowdfunding

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

Equity Financing Pros & Cons

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

Pros

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

Cons

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

Debt VS Equity Financing

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

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

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

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

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

Which Type Of Financing Is Best For Your Business?

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

Choose Equity Financing If…

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

Choose Debt Financing If…

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

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

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

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

Final Thoughts

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

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

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Why A Credit Card Cash Advance May Be Your Worst Nightmare

If your business is strapped for cash and in a financial emergency, taking out a cash advance with your credit card may seem like an appealing option. Cash advances are quick and easy: they let you withdraw money using your credit card while only requiring a trip to the nearest ATM or bank. This makes them seem like an obvious choice.

However, cash advances are rarely your friend. In fact, they’re often wolves in lambs’ clothing, imposing costly fees and high interest rates while also limiting the amount you can request. In most scenarios, passing up a cash advance in favor of alternative measures may ultimately make more sense to help your business through a rough financial patch.

Unsure if a cash advance is right for your situation? Keep reading to find out!

How Credit Card Cash Advances Work

If your credit card has a pin number, a cash advance allows you to use your card at an ATM to withdraw money. If you don’t have a pin, you can take your card to a bank that provides advances inside your card’s payment network. Note that you may have to pay an ATM or bank fee.

With cash advances, you won’t usually be able to access your entire credit line. Instead, the available amount for a cash advance will likely cap out at several hundred dollars.

Frequently, this withdrawal will come with its own initial fee. This fee is commonly either a percentage (such as 3%) or a dollar amount (such as $10). You’ll almost always have to pay whichever amount is greater.

On top of this fee, your cash advance accumulates interest. In many cases, this rate is much higher than the card’s rate for purchases. Additionally, cash advances don’t offer grace periods—that means the interest will start accruing from the day you receive the cash advance.

Why You Shouldn’t Get A Cash Advance

Put simply: cash advances will lose you a lot of money, quickly. In almost all situations, using your credit card to charge purchases as normal will be much cheaper.

For starters, taking out a cash advance will subject you to upfront fees that aren’t present when buying directly with a card. Between ATM, bank, and issuer fees, you could be paying $10 or more on fees alone.

Besides this, interest rates for cash advances are usually higher than the credit card’s interest rate for purchases. Most credit cards offer purchase APRs between 10% and 25%. Cash advances, meanwhile, often have APRs above 25%.

Finally, normal credit card purchases offer grace periods. This allows you several weeks to repay without accruing interest. Coupled with high interest rates and no grace periods, a cash advance will likely cost you more, even if you repay a credit card purchase after its grace period is over.

Here’s an example:

Say you want to make a purchase for $300 and you have a Chase Ink Business Preferred card. If you take out a cash advance, this is what you’ll wind up paying:

  • $300 for the purchase.
  • $2.50 for the ATM fee (assuming you use an out-of-network ATM).
  • $15 for the minimum cash advance fee.
  • $4.68 for interest at 26.99% APR, assuming you repay 21 days later.
  • $322.38 total.

If you make the same purchase directly on the card, here’s the cost:

  • $300 for the purchase.
  • $0 for additional fees.
  • $0 for interest, assuming you repay by the end of the card’s 21-day grace period.
  • $300 total.

As basic math tells us, the cash advance is automatically more expensive than just putting the purchase on the card. In the above example, a $300 purchase will cost over $20 more via a cash advance when compared to just buying on the card.

Thankfully, most purchases these days can be made directly on a credit card, so it’s unlikely you’ll ever actually need to do a cash advance.

Is It Ever A Good Idea To Get A Cash Advance?

It is very rarely a good idea to request a cash advance. And because simply paying with a credit card is cheaper and more efficient, you should almost never need a cash advance.

However, if you have an emergency and are unable to pay with a credit card, can’t access your bank account, or don’t have enough money in your checking account, a cash advance could make sense. Potential scenarios might include your bank perceiving a trip abroad as fraudulent activity and locking your account or your office facing a serious plumbing issue with a plumber that only accepts cash.

In those situations, when time is short and a lot is on the line, a cash advance might make sense. But you should only use a cash advance if you know you will be able to repay it within a short time frame.

Credit Card Cash Advance Best Practices

Should you decide to get a cash advance, there are a couple of rules of thumb to follow.

To start, only take out an amount you know you can pay off. If you withdraw too much money and can’t afford to pay it off in a timely manner, the amount you owe after interest could become expensive.

In a similar vein, pay off the balance as fast as possible. Because cash advances carry high interest rates, you’ll want to be quick when it comes to paying off your balance. If you put a cash advance’s balance on the back burner, your repayment amount can pile up fast.

The Best Alternatives To Credit Card Cash Advances For Businesses

Short-Term Business Loans

If you are looking for emergency funds, but don’t need cash on hand immediately, a short-term loan may work for your business. These usually take the form of single, lump sum loans, intended to be repaid within a relatively short period of time.

You may also find success with these short-term loans if you struggle with bad credit. Besides being more friendly towards weak-credit businesses, short-term loans can help boost that ever-important credit score.

Want the full breakdown? Read up on the Merchant Maverick guide to short-term business loans. Here are a couple of our favorite options to get you started:

OnDeck

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LoanBuilder

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Business Lines Of Credit

If your business struggles with consistent emergency fund problems, you may want to look at getting a business line of credit. This option lets you access to a certain sum from which can withdraw money at any time.

With a revolving line of credit, the available amount of money replenishes every time you repay. Note that each withdrawal acts like a small loan—that means you’ll owe interest and will likely repay on fixed time intervals.

To learn more, check out our full guide to getting a business line of credit. We’ve included a couple of the best options below:

BlueVine

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Fundbox

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Personal Loans

You also have the option to take out a personal loan. This might work well for new businesses that lack credit history and struggle to qualify for more traditional methods.

Of course, you’ll be relying on your own, personal credit history. That means to get the best rates and loans, you’ll want to maintain a solid credit score. If you don’t know your credit score, check out one of our favorite (and free!) credit-checking websites.

Ready to get a personal loan for business? Here are some of the better options to get started:

Lending Club

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Prosper

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Final Thoughts

Requesting a cash advance via your credit card is rarely ever a good idea. With numerous extraneous fees and high interest rates, cash advances can be quite costly. Unless you are in need of cash for a true emergency, there are many better avenues when it comes to getting a loan for your business.

If you want to delve further into loan alternatives, Merchant Maverick has you covered. Check out our guide to different types of business loans. We’ve also broken down how to know if you can afford a small business loan.

The post Why A Credit Card Cash Advance May Be Your Worst Nightmare appeared first on Merchant Maverick.

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

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

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

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

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

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

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

1. BlueVine

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

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

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

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

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

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

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

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

2. Credibly

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

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

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

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

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

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

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

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

3. Fora Financial

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

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

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

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

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

4. Fundbox

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

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

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

There are no minimum credit score requirements.

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

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

5. IOU Financial

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

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

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

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

6. Kabbage

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

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

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

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

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

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

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

7. LoanBuilder

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

To qualify for a LoanBuilder loan, you must have:

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

8. OnDeck

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

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

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

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

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

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

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

You must also be the majority owner of your business.

9. QuarterSpot

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

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

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

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

Online Loans For Business Startups

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

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

Lender Borrowing Amount Term Min. Credit Score Next Steps

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

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

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

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

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

Kiva US

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

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

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

What To Do If You Have Bad Credit

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

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

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

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

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

Final Thoughts

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

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

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

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Best Factoring Companies For Small Business

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

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

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

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

What Is Invoice Factoring?

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

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

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

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

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

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

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

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

What Type Of Businesses Is Invoice Factoring Right For?

Invoicing Versus Accounting

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

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

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

Invoice Factoring VS Invoice Financing

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

Invoice Financing Invoice Factoring

Uses invoices as collateral for a line of credit

Sell invoices for immediate cash

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

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

You are responsible for collecting invoice payments

Factor is responsible for collecting invoice payments

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

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

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

BlueVine

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Best for…

Small businesses that need capital fast

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

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

Breakout Capital

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Best for…

Startups seeking working capital

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

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

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

Fundbox

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Best for…

Business owners with low credit scores

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

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

Lendio

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Comparing options

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

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

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

P2Binvestor

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Best for…

Large B2B businesses

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

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

Riviera Finance

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Best for…

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

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

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

How To Choose A Factoring Company

negotiating credit card processing fees

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

Factoring Fees

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

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

Additional Fees

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

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

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

Spot Factoring VS Contract Factoring

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

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

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

Recourse VS Non-Recourse

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

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

Final Thoughts

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

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

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

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

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

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

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

Ready to learn more? Let’s dive in!

1. LoanBuilder

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

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

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

2. Accion

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

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

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

3. Credibly

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

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

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

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

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

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

4. QuarterSpot

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

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

5. Fora Financial

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

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

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

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

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

6. IOU Financial

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

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

7. BlueVine

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

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

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

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

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

8. Kabbage

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

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

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

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

9. Fundbox

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

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

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

10. OnDeck

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

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

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

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

11. Kiva US

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

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

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

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

How Fast Can I Get A Business Loan?

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

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

What To Do If You Have Bad Credit

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

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

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

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

Final Thoughts

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

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

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

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Accounts Receivable Financing: What You Need To Know

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

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

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

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

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

BlueVine Fundbox P2Bi InterNex Capital Riviera Finance American Receivable

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

What Is Accounts Receivable Financing?

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

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

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

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

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

A/R Financing VS Invoice Factoring

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

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

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

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

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

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

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

Who Qualifies For A/R Financing?

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

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

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

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

How Accounts Receivable Financing Works

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

1. Apply For Financing

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

2. Submit Your Invoices

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

3. Get Approved

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

4. Use Your Line Of Credit

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

5. Collect Payments & Repay Your Lender

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

Typical A/R Financing Rates & Fees

Credit card surcharge fees illustration

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

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

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

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

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

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

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

Recommended A/R Financers

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

BlueVine Fundbox P2Bi InterNex Capital Riviera Finance American Receivable

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

BlueVine

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

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

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

Fundbox

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

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

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

P2Bi

P2Binvestor P2Bi logo

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

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

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

InterNex Capital

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

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

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

Riviera Finance

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

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

American Receivable

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

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

Final Thoughts

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

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

BlueVine Fundbox P2Bi InterNex Capital Riviera Finance American Receivable

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

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

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Differences Between Invoice Financing And Invoice Factoring

Unpaid invoices can be a burden for any business. While you know that the money from the invoices will come eventually, slow-paying customers or long repayment terms could have a negative impact on your incoming cash flow — and this could be a problem for your business.

Instead of waiting for weeks (or months) to receive the money owed to your business, how can you get the funding your business needs immediately? What if you could put your unpaid invoices to work for you? What if you could sell your unpaid invoices or use those invoices as collateral to receive the money you need to cover an emergency or to use as working capital?

If outstanding invoices are creating cash flow problems for your business, there are lending options available for you. In this post, we’ll explore invoice financing, invoice factoring, and invoice discounting. We’ll discuss the differences, how they can benefit your business, associated costs, and most importantly, how to make the right choice for your business. Read on to learn more.

What Is Invoice Factoring?

With invoice factoring — also known as accounts receivable factoring — a business owner sells unpaid invoices to a lender. This lender is known as a factoring company or simply a “factor.” When you sell your invoice, the factor gives you an upfront payment that is typically 85% to 95% of the invoice total.

The factor will then proceed with collecting payment from the customer. Once the customer has paid the invoice, the factor will pay the remaining balance to you, less an agreed-upon factoring fee. Factor fees vary by lender but typically add up to between 1% and 6% per month. Factors charge daily, weekly, or monthly fees, so the longer it takes for the invoice to be paid, the higher your fee will be.

Obviously, the factoring fee reduces the amount that you receive from the invoice. This is why it’s important to always weigh out the return on investment before agreeing to sell your invoices. If there isn’t an immediate financial need, waiting for your customer to pay the invoice is the wisest decision, but if an unpaid invoice is causing financial challenges in your business, receiving immediate cash may be worth the cost.

Invoice factoring offers a financial solution for businesses that need funds quickly but may not qualify for other loan options. Most business loans require a certain time in business and minimum annual revenues, and many lenders also take personal credit scores into account. But even if your annual revenues are low, your business is new, or you have personal credit challenges, you may qualify for invoice factoring — provided you have qualifying invoices.

Think invoice factoring is right for you? Learn more about how to determine if invoice factoring is a smart financial choice for your business. Once you’ve decided to move forward, check out our comparisons of top invoice factoring companies.

Financing VS Factoring: What’s The Difference?

Invoice Financing Invoice Factoring

Uses invoices as collateral for a line of credit

Sell invoices for immediate cash

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

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

You are responsible for collecting invoice payments

Factor is responsible for collecting invoice payments

Two terms that are often used interchangeably are invoice financing and invoice factoring. Invoice factoring is a type of invoice financing. However, when most people use the term “invoice financing,” they are referring to accounts receivable financing.

Accounts receivable financing — or invoice financing — is similar to invoice factoring. However, with this type of loan, your unpaid invoices act as the collateral to secure a line of credit. The amount of your line of credit is determined by the value of your invoices.

With invoice factoring, you receive a lump sum payment from the factor based on the value of the invoice. In other words, the factor purchases your invoices. Therefore, the factor is responsible for collecting payments from your customers. With invoice financing, the invoices still belong to you and are only being used as collateral. This means that collecting payments from customers is your responsibility.

What About Invoice Discounting?

Another form of lending based on unpaid invoices is invoice discounting. Like invoice factoring and invoice financing, this is an option for qualifying B2B and B2G businesses that need extra capital. Let’s explore what invoice discounting is and how it differs from invoice factoring.

Invoice Factoring VS Discounting

Invoice discounting is similar to invoice factoring in that you use your unpaid accounts receivable as collateral. As with invoice factoring, new companies and startups, business owners with low credit scores, and businesses with low annual revenues that do not qualify for traditional financing may also qualify for invoice discounting.

What makes invoice discounting distinct from invoice financing different is who collects the payment. With invoice factoring, the factor collects payment from the customer. With invoice discounting, your business is responsible for collecting the payment. After submitting qualified invoices, you will receive a lump sum payment of up to 95% of the invoice value. You will collect payment from your customer as usual and pass the money onto the lender, plus fees charged for the service.

How To Choose An Invoice Financing Solution

Even though invoice factoring, invoice financing, and invoice discounting have similarities, there are situations when you should select one option over the others. Before you submit your invoices, keep the following considerations in mind:

Notification VS Non-Notification

If a third-party lender purchases your invoices through invoice factoring, your customers will be notified since the factor will be collecting payment.

With invoice financing and invoice discounting, you are collecting payment as usual, so your customers will be unaware of a lender’s involvement.

If you don’t want your customers to be notified by a third-party, choose invoice financing or invoice discounting.

Collecting Payments

If you’re a smaller company, you may not have the manpower to chase down customers for unpaid invoices. If you would rather the lender collect payment, invoice factoring is the option that would work best for you.

It is important to note that invoice factoring often has higher fees. However, the additional costs may be worth it if you do not have the time or resources to track down customers and collect payment.

If you use invoice factoring and the factor collects payments, remember that your customers will be notified of third-party involvement. If this is something you wish to avoid, consider your other financing options.

Asset-Backed Line Of Credit VS Lump Sum

If you want to receive a lump sum payment for your invoices, choose invoice factoring or invoice discounting. With these options, you can receive up to 95% of your invoice value upfront.

If you prefer a more flexible option, consider applying for invoice financing. You’ll receive a line of credit that is backed by your unpaid invoices.

Final Thoughts

If unpaid invoices are dragging your business down, put your accounts receivable to work for you. With invoice factoring, financing, and discounting, you can receive the money you need even when you don’t qualify for a traditional loan. Consider what type of financing would work best for you, shop around for the most affordable fees, and select a lender based on the financial needs of your business.

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The Best Business Loan And Financing Resources For Washington Small Businesses

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

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

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

The Best Online Business Lenders For Washington Businesses

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

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

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

Fundera

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

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LoanBuilder

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

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BlueVine

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

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Lending Point

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

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OnDeck

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

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Washington Banks & Credit Unions

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

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

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

Chase Bank

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

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

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

Wells Fargo

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

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

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

 

US Bank

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

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

 

Credit Unions

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

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

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

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

Bad Credit? Your Best Options

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

If your credit is bad, consider:

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

What To Consider When Choosing A Lender

buying a pos system

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

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

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

Final Thoughts

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

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

Just starting out? Check out our resources for startups.

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

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The Best Business Loan And Financing Resources For Utah Small Businesses

You’re a business owner in Utah, and you need extra cash for your business. Whether you need capital to get a new business off the ground or you need a financial boost for your established business, there are financing options out there — you just have to know where to look.

If you’ve done some online research and you keep getting the same generic list of lenders, you’re in luck. We’ve compiled a list of the best lenders that serve businesses in Utah. Read on to learn more about the best loan and financing resources for small businesses in your state.

The Best Online Business Lenders For Utah Businesses

Technology has made life easier than ever. Our smartphones keep us connected anywhere in the world, our TVs are smarter, and even our businesses can benefit from technology. The internet allows us to do more than ever when growing our businesses, from employing new advertising techniques to applying for an online loan.

An online business loan is a loan that you apply for and receive online. Online loans eliminate the need for face-to-face meetings at a financial institution. Instead, you can compare, research, and even apply for and receive a loan from the comfort of your home or office.

With an online business loan, you submit your application securely online. For underwriting purposes, you also submit your documentation such as bank statements and tax returns through email or a secure online portal. Your lender can prequalify you, approve your loan, and even disperse loans online.

Even though online lending has opened up new financing opportunities for business owners, it does raise the question: which lender do I choose? Having so many options can be overwhelming, but you can start your research with one of these top picks.

Lendio

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When you’re shopping for loans online, make Lendio one of your first stops. Lendio itself isn’t a lender. Instead, this is a loan aggregation site that connects you with a network of over 75 lenders. With one application, you’ll receive multiple offers from lenders including Bank of America, American Express, and BlueVine. The service is free to use and applying does not affect your credit score.

No matter what type of business loan you need, you can find it on Lendio. Some of the loan options available include:

  • Business Line Of Credit: Up to $500,000 with 1 – 2-year terms
  • Small Business Administration Loans: Up to $5 million with 10 – 25-year terms
  • Equipment Financing: Up to $5 million with 1 – 5-year terms
  • Merchant Cash Advances: Up to $200,000 with terms up to 2 years
  • Term Loans: Up to $2 million with 1 – 5-year terms
  • Business Credit Cards

Through Lendio, you can also apply for invoice financing, acquisition loans, startup loans, and commercial mortgages.

Rates, terms, and fees are determined by each lender that makes an offer and may be based upon your time in business, annual revenue, personal and/or business credit score, and other factors.

SmartBiz

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If you have solid credit and revenue, a Small Business Administration loan is an affordable financing option to consider. However, the application process for an SBA loan is notoriously long and difficult … that is until SmartBiz changed the financing game.

SmartBiz is an online marketplace that specializes in SBA loans. Through SmartBiz, you can apply for 7(a) commercial real estate loans up to $5 million. Rates are between 6.75% and 8%, with repayment terms up to 25 years. Loan proceeds can be used to purchase commercial space or refinance an existing commercial mortgage.

To qualify, the property must be at least 51% owner-occupied. You must be in business for at least 2 years and have a personal credit score of at least 675. You must also be able to show sufficient cash flow to make your monthly loan payment.

SmartBiz also provides SBA debt refinancing and working capital loans with rates of 8% to 9%. With these loans, you can borrow up to $350,000. There are 10-year repayment terms associated with these loans. Funds from your loan can be used to purchase equipment, pay for marketing and advertising costs, cover operating expenses, buy inventory, hire and train employees, or refinance existing debt.

To qualify, you must be in business for at least 2 years and have a minimum credit score of 640. You must also demonstrate sufficient cash flow to cover the monthly payment of your loan.

If you don’t qualify for an SBA loan or you want to pursue another financing option, SmartBiz has bank partners for equipment financing, working capital, and debt refinancing. You can receive up to $200,000 with repayment terms between 2 and 5 years. Fixed interest rates on non-SBA loans are between 7.99% and 24.99%.

To qualify for a non-SBA loan, you must be in business for at least 2 years and have a credit score of at least 640. You must have sufficient cash flow to make your monthly loan payment.

StreetShares

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StreetShares is an online lender that has three financial products to choose from: the Patriot Express line of credit, term loans, and contract financing.

With a Patriot Express line of credit, you can receive up to $250,000 with terms between 3 and 36 months. Interest rates are between 6% and 14% with a draw fee of 2.95%.

StreetShares has installment loans up to $250,000 with terms between 3 and 36 months. The interest rate is between 6% and 14% with a closing fee of 3.95% to 4.95%. If you qualify, you’ll be able to borrow up to 20% of your annual revenue. If you have $100,000 in annual revenue, you’ll be able to borrow up to $20,000.

To qualify for either an installment loan or line of credit, your company must be in business for at least 1 year. Your personal credit score should be at least 620, and you must have a minimum annual revenue of $25,000.

Contract financing with StreetShares is similar to invoice financing. You submit an invoice to the lender for your unpaid contract and receive up to 90% of the invoice amount. Once the invoice is paid, you’ll receive the remaining balance, less lender fees. Rates start as low as 1% for 30-day invoice advances, and there are no limits to the invoices being financed. Federal, state, and commercial contracts are eligible for contract financing. There is no minimum credit score required to qualify.

Kabbage

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To qualify for many business loans and financial products, a minimum of 2 years in business and a good to excellent credit score is required, but what if you don’t meet these requirements? If this sounds familiar, lenders like Kabbage can help.

Borrowers may receive lines of credit with maximum limits up to $250,000 through Kabbage. Repayment terms are set at 6 months or 12 months based on the amount of the draw. A monthly fee is charged for every month you carry a balance, with fees ranging between 1.5% to 10% based on the performance of your business.

To qualify for a Kabbage line of credit, you must be in business for at least 1 year. Revenue requirements are either: $50,000 annually or $4,200 monthly for the last 3 months. There are no credit score requirements.

Kabbage looks at the performance of your business to determine your eligibility and your credit limit. Kabbage analyzes your business performance through your linked business accounts, including your business checking account, PayPal, Amazon, and accounting software.

Prosper

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If you’re a new business or you haven’t yet opened your doors, getting a business loan can be a major challenge. If you have a good personal credit score, why not consider a personal loan for business?

When you apply for a personal loan for business, the lender will only evaluate your personal credit score and income. Your time in business, business credit score, and business revenues won’t be factors in your approval.

One lender that offers personal loans for business in Utah is Prosper. Through Prosper, you can apply for loans from $2,000 to $40,000. Funds can be used for any business purpose, including purchasing equipment, paying operating costs, or covering an emergency expense. APRs for Prosper loans range from 6.95% for the most creditworthy borrowers to 35.99%. An origination fee of 2.41% to 5% of the total loan amount is added to your loan.

To qualify for a Prosper loan, you must have a personal credit score of at least 640 and a credit history of at least 2 years. Your debt-to-income ratio must be below 50% to be approved for a Prosper loan.

Banks & Credit Unions In Utah

A traditional loan from a bank or credit union is one of the most affordable options for your business. If you have a good credit score, high annual revenue, and a solid time in business, you may qualify for a bank or credit union loan with favorable terms and low interest rates.

Even if you face some challenges that disqualify you from receiving a traditional loan, banks and credit unions have other financing options, such as lines of credit, credit cards, and SBA loans. If you’re a business owner in Utah looking for a financial institution, consider one of these top options

Chase Bank

Chase Bank is one of the nation’s leading financial institutions. There are multiple Chase branch and ATM locations throughout the state of Utah in cities including but not limited to Salt Lake City, Providence, Saratoga Springs, and South Ogden.

Chase Bank offers multiple financial products for business owners. As a Chase Bank customer, you can apply for a business checking or savings account, term loans, equipment loans, and lines of credit. Chase Bank also provides commercial real estate financing and is an intermediary lender of Small Business Administration loans.

You can also apply for business credit cards with some of the best rewards programs in the industry. Qualified borrowers can apply for products including the Chase Ink Business Unlimited card and the Chase Ink Business Preferred card.

Card Card Name Annual Fee Introductory Rate Rewards Next Steps

Chase Ink Business Preferred℠

$95 None
  • 3 points per $1 on travel, shipping, internet/cable/phone, and internet advertising (max $150,000 per year)
  • 1 point per $1 on all other purchases
Apply Now

Chase Ink Business Cash℠

$0 0% APR for the first 12 months
  • 5% cash back on internet/phone/cable and purchases at office supply stores (max $25,000 per year)
  • 2% cash back at restaurants and gas stations (max $25,000 per year)
  • 1% cash back on all other purchases
Apply Now

Chase Ink Business Unlimited℠

$0 0% APR for the first 12 months
  • 1.5% cash back on all purchases
Apply Now

Zions Bank

Zions First National Bank was originally founded in 1873 in Salt Lake City. Since its founding, the financial institution has expanded to 122 banking centers across the states of Utah, Wyoming, and Idaho.

Zions Bank is a one-stop financial shop for business owners in Utah. Zions Bank offers many services including business checking accounts and credit cards. Zions Bank also has lines of credit up to $50,000, business term loans up to $100,000, and equipment loans and leases. Commercial real estate loans, equity lines of credit, SBA 7(a) loans, and invoice factoring are also available to qualified borrowers.

America First Credit Union

If you’d rather be a credit union member than a bank customer (read about the reasons why a credit union loan may be better), one of the top credit unions in Utah is America First Credit Union. This financial institution was founded in 1939 and since that time has grown to 130 full-service branches. America First Credit Union is ranked as one of the top credit unions by assets and memberships in the United States.

Business owners in Utah can take advantage of the many financial products America First Credit Union has to offer. In addition to checking and savings accounts, members can apply for business credit cards, unsecured lines of credit up to $50,000, and secured lines of credit with 7-year repayment terms in amounts up to $100,000.

Additional products and services include commercial vehicle loans, equipment loans, term loans up to $15,000, business acquisition and franchise loans, commercial real estate loans, and SBA loans.

To be eligible for membership, you must live, work, attend school, or worship in one of the five counties in Utah that are served by the financial institution. You also qualify if you are an owner, employee, or supplier for the foodservice industry in Utah, are employed by Select Employer Group, are employed by America First Credit Union, or have an immediate family member or household member that meets eligibility requirements.

Utah Non-Profit Lenders

Best Nonprofit Integrations For QuickBooks Online

If you don’t qualify for traditional loans, you may find the financing you need through a non-profit lender. From startups to businesses in underserved communities, these non-profit lenders in Utah can help you get the money you need to start or expand your business.

Utah Microloan Fund

The Utah Microloan Fund — also known as the UMLF — has provided entrepreneurs and business owners with low-interest loans since 1991. The UMLF focuses on distributing funds to new businesses and startups, businesses that lack collateral for traditional loans, and businesses that have credit challenges.

The UMLF has several different loan programs available to business owners in Utah. The traditional UMLF loan has maximum borrowing limits of $50,000 with terms up to 72 months. Interest rates are set at the prime rate plus 4% to 7%. An origination fee of 3% to 6% is added to the cost of the loan.

There are two different options for UMLF’s Seed Funding Loan: an unsecured loan and a loan secured with collateral or a cosigner. When secured with collateral or a cosigner, the maximum borrowing amount is $10,000. With no collateral or cosigner, the maximum amount is $7,500. Both loans have terms up to 36 months and interest set at the prime rate plus 7.5% to 8.5%. Each loan has an origination fee of 3% of the loan amount.

To qualify for a loan, all interested business owners must complete loan orientation and the loan application packet. Once submitted, the borrower will be contacted if the application is approved. Once approved, borrowers will work with the organization to refine business plans and cash flow statements. Business plans and cash flow statements will be presented in front of the organization’s loan committee, who will determine if the loan is approved.

Kiva

Kiva is an online non-profit organization that helps entrepreneurs and businesses around the nation get the capital they need when traditional loans aren’t an option. Through Kiva, you can receive up to $10,000 with 0% interest.

To receive a loan, start by filling out the 20-minute application with Kiva. Once approved, invite your friends and family to lend to you through the online platform to prove your creditworthiness. Then, your loan can be viewed by lenders for up to 30 days. Once you receive the money you need, you’ll have up to 36 months to repay your loan.

To qualify, you must live in the US, be at least 18 years old, and use the loan proceeds for business purposes. Your business must be based in the U.S. You must not have any active foreclosures, bankruptcies, or liens on your credit report. Businesses engaged in direct sales, MLM, illegal activities, and financial investing are disqualified. There are no minimum credit score requirements to apply.

Grants For Utah Businesses

startup grants

There are a few grants available for Utah businesses centered on research and development and technology. It’s important to note that there is a lot of competition for these grants, which are awarded to the most innovative small businesses.

Technology Commercialization & Innovation Program

One grant program is the Utah Governor’s Office of Economic Development’s Technology Commercialization & Innovation Program, or TCIP. Through this program, early-stage companies can receive grants to commercialize cutting-edge technology and bring it to the market.

Grants are awarded in amounts from $50,000 to $200,000 to qualifying small businesses. First-time recipients can request up to $100,000. Companies that have received a TCIP grant in the past can request the maximum $200,000. Past recipients have worked in industries including information technology, outdoor products, and energy and natural resources.

To qualify, businesses must submit an application along with documentation and information. All application packets must include a 10-page PowerPoint, a line item budget, financial projections for the next 5 years, a project overview video, a capitalization table, and current financials.

SBIR-STTR Federal Grants

Business owners in Utah can also consider federal grant programs, such as the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants. About $2.5 billion in grants are awarded annually to fund small business research and development. Small businesses that receive these grants can use funds to pay for salaries and benefits, overhead costs, supplies and materials, and consultants and subcontractors.

Money is distributed in phases. In Phase I, businesses receive an average of $150,000 to fund a 6-month project to prove the feasibility and technical merit of their ideas and technology. In Phase II, businesses must receive an average of $1 million to spend on a 24-month project to expand on the results from the previous phase and evaluate the commercial potential of the idea or technology. The third and final phase is not funded through grants, but some federal agencies may offer contracts to commercialize the product.

To qualify for these federal grants, all applicants must have 51% ownership in an American-owned business. All businesses must be for-profit and have no more than 500 employees.

A good resource for business owners in Utah is the Utah Science Technology and Research Initiative SBIR-STTR Assistance Center. This center provides training, workshops, seminars, and resources, as well as proposal evaluation and submission assistance.

What To Consider When Choosing A Lender

business loan reasons

You have an idea of the lenders out there and the loan options available to your business. Maybe you’ve even explored a few options on your own. Before you start sending out applications or head out to your local bank branch, ask yourself the following questions to find the best lender for your financial needs.

Why Do I Need A Loan?

This one is a no-brainer for most people, but the answer to this question could help you narrow down your list of potential lenders. Let’s say that you need a loan to purchase a new commercial property. A lender that specializes in short-term loans, lines of credit, or loans with low borrowing amounts can be crossed off your list. Once you determine how you plan to spend your loan proceeds, you can focus on the lenders that best match your needs.

How Much Money Do I Need?

You can narrow your list down further by calculating the total amount you want to borrow. Let’s say that you need $500,000. A lender that loans no more than $50,000 won’t be a match for you. Remember to also calculate how much you can afford. Not only will this help you avoid taking on too much debt, but this is also a factor lenders consider when deciding whether to approve your loan.

Do I Qualify?

Your credit score is 620, so it doesn’t make sense to apply with a lender that won’t even consider a score below 680. Understand a lender’s requirements and make sure that you meet all of them before applying. Do you have enough annual revenue? Does your time in business align with the lender’s requirements? Do you live in a state that is serviced by the lender? If you don’t meet the requirements of one lender, move on to the next.

Final Thoughts

If you’re a business owner in Utah, there are plenty of financing options for your small business. Determine what type of loan you need, how much money you need (and can afford) to borrow, and evaluate your lending options. Remember, the goal of your loan is to better your business — not add to your financial burden — so take the time to find the right loan to overcome your financial challenge.

What’s Next
    • Learn what you can write off as small business tax deductions
    • Business loan options that don’t require a credit check
    • See which business credit cards topped this year’s list

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

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