SBA Loans For Women: What You Need To Know

Being an entrepreneur is never easy. However, if you’re a female entrepreneur, you may face even more challenges when owning and operating your own business. After all, until the passage of H.R. 5050: Women’s Business Ownership Act in 1988, women in many states couldn’t even receive a business loan without having a male cosigner. Thanks to this legislation, more resources are available for women business owners. Unfortunately, though, women still face challenges when applying for business loans and financing.

If you’re a female business owner or you’re ready to start your own business, don’t lose hope. There are resources available to fund the launch or expansion of your business. One of the best resources? The Small Business Administration.

The Small Business Administration — or SBA — provides a variety of resources, including affordable loan programs, to female entrepreneurs. Ready to learn more? Read on to find out more about the SBA, growing your business with SBA loans, and additional resources available for women-owned businesses.

What Is The SBA?

The SBA was founded in 1953 to provide assistance to small business owners. The SBA provides various resources to help small business owners become successful entrepreneurs. This includes in-person and online counseling, low-cost training, and advocacy for small businesses. One of the SBA’s most significant resources is its low-interest loan programs.

Securing a traditional loan from a bank or credit union can be tough for any business owner. These financial institutions view small businesses as a risk, even when the business has established a track record of success. Because traditional lenders tend to avoid risky borrowers, many business owners have the door shut in their face.

At this point, there are a few options to consider. Alternative lenders have fewer requirements but much higher rates and less favorable terms. Low borrowing limits through these lenders may also prove to be a problem.

Instead of simply accepting a loan with less-than-desirable terms, many business owners look to the SBA to receive loans with competitive rates and terms, even when they’ve been turned down for other loans.

Overview Of SBA Loan Programs

Loan Program Description More

7(a) Loans

Small business loans that can be used for many many business purchases, such as working capital, business expansion, and equipment, inventory, and real estate purchasing.

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Microloans

Small loans, with a maximum of $50,000, which can be used for working capital, inventory, equipment, or other business projects.

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CDC/504 Loans

Large loans used to acquire fixed assets such as real estate or equipment. 504 Loans are offered in partnership with Community Development Companies (CDCs) and banks.

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Disaster Loans

Loans used to rebuild or maintain business following a disaster. 

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How The SBA Helps Women-Owned Businesses

The SBA’s Office of Women Business Ownership was created to enable and empower female entrepreneurs. Training and counseling are available to all women through Women’s Business Centers, with over 100 educational centers open nationwide.

The Office of Women’s Business Ownership collaborates with other organizations to provide additional resources to women entrepreneurs. We’ll explore some of these resources a little later in this post.

The SBA also provides federal contracting opportunities for women through the Women-Owned Small Business Federal Contracting program. Through this program, certified women-owned businesses can compete for federal contracts.

The SBA does not discriminate when it comes to funding and resources. Women-owned businesses can take advantage of everything that the SBA has to offer. Female entrepreneurs can apply for all SBA loans provided they have a “small business” as defined by the SBA and meet all other requirements. These loans open up funding opportunities for women to launch or grow their small businesses.

One important thing to note here is that the SBA is not a lender. Instead, this organization has created guidelines that keep interest rates low and repayment terms flexible. Money is loaned through lenders known as intermediaries. An intermediary can be a bank, credit union, nonprofit organization, or another lender. The SBA takes the risk off of lenders by guaranteeing large percentages of most loans. This makes it easier for lenders to loan to small businesses, which can then take advantage of these affordable financing opportunities when other options aren’t available.

How To Qualify For An SBA Loan

One of the most valuable resources available through the SBA is access to low-cost loans. Female entrepreneurs that don’t qualify for traditional loans can receive competitive rates and terms through SBA programs.

Starting or expanding your small business takes capital … and sometimes, lots of it. Purchasing or leasing a commercial building, buying equipment, and even having working capital for daily expenses can be a financial burden that most entrepreneurs can’t handle alone. This is when an SBA loan can really be beneficial.

Women can apply for any SBA loan product, provided they meet the requirements. The first requirement is that the business must meet the SBA’s size standards for a small business. The SBA limits the number of employees, annual revenues, and net worth of the business.

To receive an SBA loan, your business must be based in the United States. Most loans are only available to for-profit businesses, although SBA Microloans are also open to nonprofit childcare centers. Businesses in certain industries are also ineligible to receive SBA loans. These industries include, but are not limited to:

  • Multi-Level Marketing Schemes
  • Real Estate Investment Firms
  • Religious Institutions
  • Lending Firms
  • Businesses In Illegal Industries
  • Government-Owned Businesses
  • Gambling Businesses

When applying for SBA loans, your personal credit score will be a factor for approval. Though credit requirements vary by lender, most SBA intermediaries require a solid credit score at least in the mid-600s. Of course, the higher your score, the higher your chances are to receive a loan. Your credit report must also be free of:

  • Recent Bankruptcies
  • Tax Liens
  • Defaults On Government Loans

Other negative items on your credit report will need to be explained to your lender, and depending on the severity, may disqualify you from receiving a loan.

You must also show sufficient revenue to cover your monthly loan payment. Your lender will evaluate your revenue and your current debts during the underwriting process to determine if you can afford the new loan.

Depending on the loan you apply for and the total borrowing amount, you may also be required to pay a down payment and/or put up collateral to secure the loan. You may also be required to pay fees to receive your loan including but not limited to:

  • Guarantee Fees
  • Origination Fees
  • Packaging Fees
  • Loan Service Fees
  • Closing Costs

To qualify for an SBA loan, you must have invested your own time and money into your business. You also must have exhausted all other financing options before applying.

Can I Get An SBA Loan If I Have Bad Credit?

To qualify for an SBA loan, a solid credit score is required. Credit score requirements are not set by the SBA, but this doesn’t mean that your score isn’t important. Your personal credit score is, in fact, an important factor considered by intermediary lenders.

Most lenders want to see a credit score of at least 620, while scores over 700 are preferred. If your credit score falls below 620 or your credit report has negative items such as bankruptcies, foreclosures, or collections, the chances of receiving an SBA loan are slim to none.

If your credit prevents you from receiving an SBA loan, there are a few options. The first is to work on your credit, build your score, and apply when you meet all requirements. Start by receiving your free credit score online, reviewing your credit report, disputing any errors, and paying your current debt obligations as agreed. Although this can be a lengthy process, building your credit score will open up many affordable financing opportunities for you, including SBA loans.

If your financing need is more urgent, you can apply for loans and other financing for bad credit borrowers. Be aware, however, that these loans have less favorable terms, higher interest rates, and are more expensive than SBA loans.

Types Of SBA Loans For Women-Owned Businesses

Now that you have a general understanding of SBA loans, which loans are best for women-owned businesses? While all SBA loans are available to female entrepreneurs, three loans stand out the most: SBA 7(a) loans, Microloans, and CDC/504 loans. Let’s delve into the details of each type of loan to help you determine which is best for your business.

SBA 7(a) Loans

The SBA 7(a) loan is one of the most popular loan options for small business owners. Through the 7(a) program, borrowers are eligible to receive up to $5 million that be used for nearly any business purpose, including the purchase or expansion of an existing business, refinancing existing debt, or to pay startup costs.

Repayment terms are based on the borrower’s ability to repay and are up to 10 years for loans used as working capital or up to 25 years for loans used for commercial real estate. Interest rates are based on the amount borrowed and the repayment terms. The maximum interest rates for a 7(a) loan is the prime rate plus a markup between 2.25% and 4.75%. Check out the current rates for SBA loans.

SBA 7(a) Loan Base Rates + Markups

Loan Amount Less Than Seven Years More Than 7 Years

Up to $25,000

Base rate + 4.25%

Base rate + 4.75%

$25,000 – $50,000

Base rate + 3.25%

Base rate + 3.75%

$50,000 or More

Base rate + 2.25%

Base rate + 2.75%

SBA 7(a) loans of $25,000 or less do not require collateral. Loans of more than $25,000 up to $350,000 may require collateral based on the lender’s policies. All loans that exceed $350,000 must be secured with collateral. Fixed assets of the business are used to collateralize the loan, although trading assets and personal real estate may be used as collateral if needed. A guarantee fee must be paid by the borrower for 7(a) loans over $150,000.

Women-owned businesses may also qualify to receive the SBA’s Community Advantage loan. Through this program, business owners can receive up to $250,000. Loan proceeds can be used for nearly any business purpose, just like with the 7(a) loan. Repayment terms are the same as the 7(a) program, and the maximum interest rate is the prime rate plus 6%.

What makes this loan different from the traditional 7(a) loan? The Community Advantage program is designed for small businesses in underserved markets. Women-owned businesses, businesses located in low-to-moderate income areas, businesses in rural areas, and businesses that are less than 2 years old qualify for funding through this program.

SBA Microloans

If you have smaller capital needs, the SBA Microloan program may be the right financing solution for your business. Women-owned businesses can apply for up to $50,000 through this program. The average loan amount distributed through this program is $13,000. These loans are distributed through nonprofit lenders.

SBA Microloan proceeds can be used as working capital, to purchase equipment or fixtures, or to cover improvements. Microloans can’t be used to repay existing debt.

Maximum repayment terms are set at 6 years. The interest rate is based on the lender’s cost of funds. The lender can add a maximum of 8.5% to its cost of funds when distributing loans. There is no guarantee fee required with these loans. Collateral and/or a personal guarantee may be required by the lender as a condition of receiving the loan.

SBA Microloan Rates & Terms

SBA 504 Loans

Borrowing Amount

$500 – $50,000

Term Lengths

Up to 6 years

Interest Rates

6.5% – 13%

Borrowing Fees

Possible fees from the loan issuer

Personal Guarantee

Guarantee required from anybody who owns at least 20% of the business

Collateral

Collateral normally required, but depends on the lender

Down Payment

  • No down payment for most businesses
  • Possible 20% down payment for startups
  • Possible 10% down payment for business acquisition loan

SBA CDC / 504 Loans

If you need to purchase commercial real estate or update your existing facilities, consider applying for an SBA CDC/504 loan. This program is a little bit different from other SBA programs because you work with two different lenders.

Proceeds from an SBA CDC/504 loan can be used to purchase buildings, land, or long-term equipment, to improve land or update facilities, to pay costs for new construction, or to refinance debt connected to purchasing or updating facilities or equipment.

This is how the SBA CDC/504 program works: a Certified Development Company that is licensed through the SBA provides 40% of your project costs up to $5 million. A private lender provides 50% of the project costs. You are responsible for paying the remaining 10%. If you’re a new business or purchase a special-use property, you may have to pay up to 10% more.

Your CDC loan comes with repayment terms of 10 or 20 years. Interest rates for the portion of the project funded by the CDC are based on the 5-year and 10-year U.S. Treasury issues. Interest rates and repayment terms funded by the private lender vary.

SBA 504 Loan Rates & Terms

SBA 504 Loans

Borrowing Amount

No maximum, but the SBA will only fund up to $5 million

Term Lengths

10 or 20 years

Interest Rates

Fixed rate based on US Treasury rates

Borrowing Fees

  • CDC servicing fee, CSA fee, guarantee fee, third party fees (however, most of these fees are rolled into the interest rate or cost of the loan)
  • Possible prepayment penalty

Personal Guarantee

Guarantee required from anybody who owns at least 20% of the business

Collateral

Collateral required; usually the real estate/equipment financed

Down Payment

10% – 30%

For these loans, additional collateral is not typically required. The assets being purchased act as the collateral. All owners of 20% or more of the business are required to sign personal guarantees to receive this loan.

How To Apply For An SBA Loan

If your business needs financing and you meet the requirements of the SBA, you can apply for an SBA loan. The steps that you take next are determined by the type of loan you select.

To apply for an SBA 7(a) loan, the first step is to find an intermediary lender. You can do this through the SBA’s Lender Match service, which connects you with a lender in your area. You can also get referrals through your existing financial institution.

If you’re applying for an SBA Microloan, you’ll need to find a nonprofit lender in your area. If you’re applying for an SBA CDC/504 loan, you will need to find a CDC that is licensed with the SBA, as well as a private lender that will loan money to cover 50% of your project costs.

Once you’ve found a lender, you’ll fill out an application for the loan of your choosing. In addition to providing details about your business, you may also be required to provide a breakdown of ownership, a summary of how loan proceeds will be used, and details surrounding how you plan to pay back your loan.

Documentation will also be submitted with your application. This documentation will be used to determine if your business qualifies for funding. While requirements may vary by lender, expect to present the following items:

  • Business & Personal Credit Scores/Reports
  • Business Licenses
  • Articles Of Incorporation
  • Business & Personal Income Tax Returns
  • Cash Flow Statement
  • Balance Sheet
  • Profit & Loss Statement
  • Business Plan
  • Financial Projections

Depending on the loan product you select, additional documentation may be required. For example, a letter of intent from a private lender is needed when applying for an SBA CDC/504 loan.

As you move through the application process, be prepared to provide information on the collateral being used to secure the loan (if required) and all owners should be ready to sign a personal guarantee.

Once all documentation and information are gathered, the lender will evaluate your application, taking into consideration factors including credit score, credit history, time in business, and your ability to repay the loan. Don’t be surprised if the lender has questions or requests more information throughout the process. Make sure that your contact information is up to date and you make yourself available to keep the process moving forward.

The underwriters may take several weeks to review your full loan application. With banks and traditional lenders, you may wait 2 to 3 months (or longer) from the application stage to funding. Some lenders offer expedited services to help you get the money you need fast, so if time is an issue, shop around for intermediary lenders that offer fast approvals and funding, like SmartBiz or Lendio.

SmartBiz

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Through SmartBiz, you can apply to receive anything from $30,000 to $5 million to finance your small business. If you want to expand your business, refinance debt, hire employees, purchase inventory or equipment, launch a marketing campaign, or just have funds to use as working capital, consider applying for SmartBiz’s SBA 7(a) Working Capital and Debt Refinancing Loans.

Qualified borrowers can receive up to $350,000 through this program and can be funded in as quickly as 7 days. To qualify, you must have a minimum credit score of 650, a time in business of at least 2 years, and a credit history free of bankruptcies, foreclosures, charge-offs, and settlements. Your credit report should also be free of defaults on government-backed loans and tax liens.

You can also apply for up to $5 million for a 7(a) Commercial Real Estate Loan through SmartBiz. You must have a credit score of at least 675, a time in business of at least 2 years, and no delinquencies or defaults on government loans. The property being financed with loan proceeds should be at least 51% owner-occupied. You must also show proof of sufficient income to cover your loan payment.

Lendio

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Through Lendio, you can apply for the SBA 7(a) loan, the SBA 504 loan, and the SBA Express loan. Loans are available for $50,000 up to $5 million.

To qualify, you must meet all the requirements for receiving an SBA loan. Documentation can be uploaded securely to Lendio’s platform, and if you encounter any trouble along the way, you can work with your personal funding manager.

The average time for funding SBA loans through Lendio’s platform is 30 to 90 days.

Other Business Resources For Women

As mentioned earlier in this article, the SBA offers more than just loans for women-owned small businesses. One program offered through the SBA is the Women-Owned Small Business Federal Contracting program.

Through this program, women-owned businesses can bid on federal contracts with less competition. Only businesses that are certified WOSBs are eligible to compete for these contracts. To qualify, a business must be a small business as defined by the SBA, be at least 51% owned and controlled by U.S. citizens that are female, and have women in charge of day-to-day operations and long-term decisions.

Women that operate economically disadvantaged businesses can bid on federal contracts with even less competition, provided they meet all requirements of the SBA.

Even though legislation has been leveling the playing field for female entrepreneurs, the Center for Women’s Business Research found that almost half of women business owners don’t seek outside sources of funding for their business. The SBA believes that one reason women may not seek financing is that they don’t understand the process and may be unsure of who to ask for more information. The SBA has online resources, Women’s Business Centers, and local SBA offices that provide counseling, training, and loan information to women business owners.

There are plenty of other resources for female entrepreneurs outside of the SBA. The National Women’s Business Council offers nearly 200 resources through the Grow Her Business initiative, including accelerators and incubators, business competitions, conferences, crowdfunding, and alternative lender programs.

The National Association of Women Business Owners also provides resources to help empower women business owners. This organization offers training, education, and virtual networking to female entrepreneurs.

Entrepreneurs can also take advantage of many funding opportunities outside of SBA loans. Learn more about grants and small business loans available for women-owned businesses.

Final Thoughts

Women have come a long way in recent years, especially when it comes to entrepreneurship. The great news is that there are plenty of resources available to female entrepreneurs — you simply need to know where to look. By taking advantage of resources like SBA small business loans, you’ll be able to start, build, or grow your business, taking it to new levels you never thought possible.

The post SBA Loans For Women: What You Need To Know appeared first on Merchant Maverick.

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How To Advertise on Quora Effectively

Quora Ads

Quora Ads are one of the myriad options for advertising online. Like eBay, Reddit, and LinkedIn, Quora is one of those Web 2.0 properties that feels like it should be dated, but remains surprisingly relevant.

In fact, while Quora is itself has been around since 2009, Quora’s self-serve Ad Platform only rolled out in 2016.

Quora has 300 million active users and some interesting reasons to advertise.

Why Use Quora Ads

First, you have access to both social data and search intent.

Like Pinterest and Reddit, you can reach people based on demographic and psychographic data AND you can reach people who are actively searching for answers OR you can layer both to run hyper-targeted campaigns to people who are both your target customer and actively researching.

Second, you have access to lots of qualified organic traffic. Quora has plenty of internal usage. But their organic search traffic is their secret weapon.

Due to their brand and enormous amount of content, they rank well in Google & Bing for highly qualified search terms. I’ve written how you can use Quora for “barnacle” SEO and content.

But – that approach requires work. With Quora Ads, you can pay to jump to the front of the line. Advertise on pages that rank well for target keywords.

Quora Ad Alternative

Third, you get to define best practices & deal with lower competition.

Every big brand and agency is on Google & Facebook. Best practices and budgets are well-defined. Quora requires more work and thought to succeed.

I’ll share my experience in this post, but my main takeaway is that there is no “right” answer. Quora is still wide-open and open for testing & experimentation. If you have more time / skills than budget, Quora is a great place to go.

How To Setup Quora Ads

Quora has done an excellent job with self-service. The platform is straightforward and comes with a surprisingly useful email course.

To get started, all you need is some basic business information.

Within your Ads Manager Dashboard, you can Manage Ads, setup a Quora Pixel, manage your retargeting audiences, and setup email reports.

Whether you setup an ad campaign or not, I highly suggest that you immediately implement your Pixel, dabble with Audiences and setup a couple curated Email Reports.

Quora has a the familiar menu of retargeting audiences. Standard setup is for Website Traffic.

In the next step, you’ll setup your Quora Pixel to tag visitors. You can pre-segment your Website Traffic to make retargeting a bit easier.

3 Quora Remarketing

If you have a lot of educational content on your site, I would start with that segment. Quora is a common research tool, especially with high-consideration purchases. If you can reach users doing intensive research across platforms, you’ll be less likely to lose them.

Additionally, once you’ve built an audience, you can create a Lookalike Audience.

This feature is huge because you can reasonably expand your reach across Quora to reach someone who you *know* is familiar with your brand.

Remember how I mentioned that Quora is hybrid social / search? This is where that power comes in.

For example, imagine you are recruiting entry-level engineers out of college.

You have the ability to tag visitors to your site, and then reach them throughout Quora whenever they are asking career related questions.

Plus – you’ll get insight into the types of questions that you your audience asks. This feeds back into a successful content strategy based on data that *only* you have access to.

Lastly, if you have permission, you can upload a list of current contacts to rebuild your existing customers within Quora.

It’s a lot of work, but for high consideration campaigns, it’s worthwhile.

Like any & all retargeting strategies – Audiences can be creepy, invasive, and sometimes illegal in the European Union without explicit consent.

Most people either consent or live in jurisdictions that do not require explicit consent. These tools do exist and are worthwhile for many businesses. Retargeting is here to stay. The key is to keep it classy. Time, thoughtfulness, and testing creates the best outcome for advertisers, publishers, and customers.

Email Reporting is straightforward. But I would set the settings you like so that you actually view the reports rather than automatically deleting them.

4 Quora Email Reports

Now you’ll need to set your Quora Pixel, which is the snippet that “fires” on your webpage to track website visitors.

The setup depends on your website, but you’ll need to place it wherever you have your Google Analytics tag.

5 Quora Pixel

Now you can get started on a campaign! Head to Manage Ads and select your objective.

6 Quora Ads Create Campaign

If you select Conversions, you’ll need to select a conversion type to pass to your Quora Pixel. You’ll also have to manually tag any actions (like Add to Cart).

Conversion Tracking is accurate and can be worthwhile. But unless you are running large campaigns, some of this Conversion Tracking might not be worth the effort.

8 Quora Ads Conversions

For my campaigns (and most advertisers), I use the Traffic objective. But I also tag all of my ads so that I can track conversions within my existing Google Analytics setup.

9 Quora Ads Objective

Once you’ve created your Campaign objectives, you’ll need to set up a new Ad Set.

Ad Sets each have their own targeting and bids. After setting up an Ad Set, you’ll write individual Ads for each ad set.

But Ad Sets are where the fun really happens.

You have 4 primary targeting methods. I’ll cover each below. But the short version is that you can do –

  • Topic Targeting – Target content that falls within a category regardless of user interest.
  • Question Targeting – Target specific questions on Quora regardless of topic or user.
  • Audience Targeting – Target your audiences everywhere on Quora (see above).
  • Interest Targeting – Target people who are interested in a topic regardless of content.

After that, you can choose several secondary targeting methods. You can focus your ads by Location or Device. You can also exclude specific questions or audiences (ie, people who have successfully purchased from your site).

10 Quora Ads Targeting

Topic and Question Targeting are my favorite options. They both target based on content not the user.

When you are looking to expand reach or target based on intent – this is the option that you should use. Topic Targeting lets you quickly target a bunch of questions quickly.

The key to Topic Targeting is to provide Quora with a relevant but broad set of keywords. There’s a bit of an art to it, but be sure to play around with different combinations before committing to a set of Topics.

Additionally, make sure you go and manually explore those Topics to vet the questions, the likely audience, and and related Topics that you are missing.

11 Quora Ads Topic Targeting

But if you have time, the best targeting option is Suggested Questions.

With this option, you can advertise with specific ads on specific questions.

From a purely data perspective, this targeting option is the only place to get Weekly Views stats for Quora questions, which can help your content marketing efforts separate from any paid campaigns.

13 Quora Question Ad Suggestions

Interest Targeting targets the user rather than the content that they are looking at. This option is great for casting a wide-net to reach your audience everywhere on Quora.

However, note that you’ll reach them even when they are looking at irrelevant questions. This option is great to layer with other options (like exclude questions). Be careful using it alone though.

12 Quora Ads Interest Targeting

There are also options for targeting an existing audience and also a Broad Topic option.

After selecting your targeting with exclusions and bids set, you’ll need to create your actual ads.

Quora provides lots of space and encourages “content-like” ads. They want complete sentences that are relevant to your targeting. They are not great for hard-sells, but pair *very* well with custom landing pages or educational content.

Be sure to add UTM parameters to your landing page URL to effectively track visits throughout Google Analytics.

 

14 Quora Ad CreationThat’s how you setup Quora ads. But keep in mind that the magic is in customized ads, landing pages, targeting and constantly improving each metric.

That said – how do Quora ads perform “out in the wild”? I’ve run a few campaigns for myself and for clients. Here’s the results of my most recent campaign.

My Experience with Quora Ads

Now – I almost exclusively use Question Targeting for my Quora ads. I also commit to spending probably too much time on research for my small campaigns (although some of that research gets re-used for content campaigns).

The campaign highlighted below was a fairly small content promotion campaign. I had a new piece of content that I wanted to promote without traditional, manual outreach.

I found several questions that aligned with the content. I devoted around $100 to promotion.

Quora Campaign Results

This campaign aligned with the common takeaways from my Quora campaigns.

  • The impressions were high for such a niche topic – and surprisingly consistent day to day.
  • The CTR was uncommonly high for online ads.
  • Conversions were solid.
  • Cost per click was a bit higher than expected, but nowhere near Google Ads territory.

Additionally, I did not have to filter or account for a lot of spam (I’m looking at you, Google Display and Facebook…).

My numbers in Google Analytics lined up perfectly with Quora. Engagement was high and as I’d hoped.

Quora Ads Experiment

All in all, this (and all my campaigns) go back to the same general takeaways for Quora Ads.

  • Quora Ads are hard to roll out “at scale” but are very effective with the right amount of time devoted to set up & research.
  • They are great for high consideration ads and great to reach new, smart audiences.
  • You have to have the right website content to provide good, engaging landing pages.
  • Often small campaigns are worthwhile simply for the data.

In many ways, they remind me of both Pinterest and Reddit Ads. They aren’t for everyone, but certainly a solid opportunity for the right advertisers.

Next Steps

Quora Ads are not for everyone. There’s not a ton of inventory. To do it well, you really need to spend some time on your research and ad setup.

However, in an increasingly crowded and expensive online ad market, the market represents a solid opportunity.

At the very least, you should go set up an account and grab the Quora Pixel to build an audience.

From there, you can reach you existing users on yet another platform. You can expand your reach based on small tests and the time you have to research interests.

If you found this article useful, please link, share or bookmark. Happy advertising!

The post How To Advertise on Quora Effectively appeared first on ShivarWeb.

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The Best eCommerce Platforms For Your Small Business

Selecting the best ecommerce platform for building your online store can be tough. I find it helpful to keep in mind that shopping for this type of software is similar to shopping for any other product (you just happen to be shopping for shopping cart software, which I’ll grant is slightly strange). You ultimately need your ecommerce software to do two primary things: to serve your particular online selling needs, and to accomplish this for an affordable price.

If you’ve heard of any ecommerce software up to this point, you’ve probably heard of a platform called Shopify. Shopify often receives top billing in this category, and with good reason. Still, it’s by no means the perfect solution for everyone. Along with Shopify, we’ve compiled a few other great options worth considering in your search for an online home for your store.

Shopify BigCommerce 3dcart Ecwid Wix

3dcart

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Monthly Cost

$9 – $299

$29.95 – $249.95

$19 – $229

Free – $99

$25 – $40

Core Features

Great

Excellent

Excellent

Good

Good

App Store

Very Large

Large

Moderate

Moderate

Small/Moderate

Ease Of Use

Very Easy

Easy

Moderate

Very Easy

Easy

Web Design

Great

Good

Good

OK

Excellent

Customer Support

Great

Great

Good

Good

Good

From a bird’s-eye view, our main reasons for recommending these platforms are user-friendliness, a solid feature set, and an accessible price. Notice that they’re also all SaaS (Software as a Service) platforms, meaning you are not responsible for downloading, installing, and hosting the shopping cart on your own server. Instead, you subscribe to the service (most often for a monthly fee), and all the hosting and software updates that underpin your online store are automatically handled for you. Easy! eCommerce software has been trending in this direction over the past several years, and the available SaaS options have only become more robust and customizable over time.

What To Look For In An Ecommerce Platform

Before we discuss the individual recommendations further, here’s a quick overview of the key factors we consider when evaluating ecommerce software:

  • Pricing: How does the monthly subscription system work (what factors determine the different pricing levels), and what are the options/costs associated with accepting payments from shoppers?
  • Features & Add-ons: How strong is the core feature set of the software, and how well can these features be expanded upon using the platform’s associated app marketplace?
  • Ease Of Use: How steep is the learning curve for ecommerce beginners (particularly those without any coding experience)? What is the balance between user-friendliness and the capability of the platform to accomplish both basic and advanced tasks?
  • Web Design: How attractive, modern, and functional are the available theme templates for designing storefronts? What customization options are available, and how robust/flexible are these tools?
  • Customer Support: What is the availability and quality of email, live chat, and phone support for the software, along with any other self-help resources provided by the company and user community?

And, of course…

  • User Reviews: What are real store owners (like you!) saying about the software, both good and bad?

That’s our basic guideline. Now, we’ll take a closer look at each platform, highlighting the main benefits and drawbacks of each one, along with the types of online sellers we think the software typically suits best. We’d definitely recommend reading our full review of each platform before making your final choice. We’ve also posted one-on-one comparisons for several of the platforms if you’d like to check out those in-depth articles as well.

1. Shopify

As mentioned, Shopify is our most commonly recommended ecommerce platform. The combination of strong core features, an exhaustive app marketplace, and high ease-of-use put Shopify at or near the top of most SaaS ecommerce platform rankings.

Pricing

There are technically five Shopify plans, but the three subscription levels in the middle are considered the standard options for most SMB owners needing an online store. The price jumps between the three middle plans are based primarily on additional features and the ability to set up more staff accounts. Here are all five levels:

  • Shopify Lite: $9/mo. Embeddable cart, but no standalone store website.
  • Basic Shopify: $29/mo.
  • Shopify: $79/mo.
  • Advanced Shopify: 299/mo.
  • Shopify Plus: Custom pricing. Reserved for enterprise-level customers.

When it comes to accepting payment from your customers, you should note that this is the only platform on our list that charges an extra commission per sale. This goes above and beyond the normal processing fees you’ll need to pay to your credit card processor. Shopify’s commission decreases incrementally as you climb the subscription ladder: 2% on Basic, 1% on Shopify, 0.5% on Advanced.

You can avoid these extra Shopify transaction fees if you sign up for the in-house payment processor — Shopify Payments (powered by Stripe) — but this gateway is only available in 10 countries. In addition to eliminating the extra transaction fee, Shopify struck a deal with Stripe to offer lower payment processing fees with Shopify Payments than if you were to use Stripe (or a similar processor) by itself. These discounts apply to your processing if you’re on the Shopify Plan or the Advanced Shopify Plan.

Shopify does provide over 100 alternative gateway options. You’ll just be saddled with that extra percentage Shopify charges per sale when you stray from Shopify Payments.

Features & Add-Ons

Shopify is defined by a quality core feature set that works well for a wide variety of sellers. Moreover, Shopify has a very large app marketplace (of around 2500 apps) that will provide virtually any additional feature you might need. If there is one disadvantage to this system, it is that these integrations can add to your monthly operating costs. Meanwhile, merchants appreciate how many of Shopify’s third-party apps are fully-fledged software platforms that are commonly used to support ecommerce, rather than just simple extensions that add a small feature or two (the app store does have those as well, though!)

Here are a few Shopify features we like:

  • Abandoned cart recovery
  • Built-in shipping software (Shopify Shipping)
  • Real-time shipping calculations
  • Manual order creation (virtual terminal)
  • Automatic tax calculation
  • Shopify POS & other POS integrations
  • Extensive order fulfillment & dropshipping integrations
  • Coupons, discounts & gift cards

Ease Of Use

Shopify has one of the easiest learning curves in the ecommerce software market. Simplicity is the name of the game for Shopify — it’s clear they’d rather offer the ability to expand the platform’s capability with optional add-ons than to overwhelm the newbie with a complicated dashboard or intricate customization options from the get-go.

The Shopify dashboard is clear and well-organized, and any built-in feature can be manipulated easily with zero coding knowledge.

Web Design

Shopify offers 10 free themes (made by Shopify), as well as 67 paid themes (made by third-parties) that range in price from $140-$180. Technically, the total theme count is a bit higher, because each theme has multiple style variations that swap out colors and whatnot. Shopify themes are some of the more elegant and functional options we’ve seen. As a nice bonus, the theme marketplace can be searched by desired theme features.

While the Shopify theme editor may not be as flexible as that of a top-notch website builder (like Wix), the drag-and-drop editor makes it easy to stack and rearrange page elements, called “Sections.” (Perhaps don’t go quite as far as I did with awkward colors and fonts — just showing you what can be changed):

Beyond the theme editor, you also have the opportunity for more customization with a combination of HTML, CSS, and Shopify’s own theme templating language (called Liquid). Most novices won’t open that coding can of worms straight away, but it’s good to know it’s there.

Customer Support

Shopify offers 24/7 phone, email, and live chat support at all subscription levels. Although no customer support system is perfect, we’ve found Shopify’s responses helpful and timely in the grand scheme. On top of this, the strong community of users and developers currently working with Shopify makes finding resources, reviews, and feedback a breeze. The library of self-help articles, tutorials, courses, and videos produced by Shopify is also impressive.

Who Is Shopify Best For?

If this were a little kids’ recreational sports league, Shopify would receive the “Most Well-Rounded Player” award, if not the full MVP as well. Shopify is suited to the widest variety of store types and sizes. When Shopify works for merchants, it works really well. Store owners who benefit the most from Shopify will most likely be based in one of the 10 countries in which Shopify Payments is available, because that’s the only way Shopify’s extra commission per sale is avoided. However, the quality of Shopify’s platform is strong enough overall that many merchants are willing to accept those extra transaction fees, even if they can’t (or won’t) use Shopify Payments.

Of course, we can’t mention Shopify without also mentioning one type of merchant in particular: dropshippers. Shopify is definitely the dropshipper’s go-to platform.

2. BigCommerce

If you asked most experts at large, they’d probably tell you that BigCommerce is Shopify’s most direct ecommerce SaaS competitor. BigCommerce also has an enterprise solution (BigCommerce Enterprise) that’s comparable with Shopify Plus.

Pricing

Subscription levels with BigCommerce are organized by added features at each level, but also annual revenue caps. This means you’re automatically bumped to a higher subscription once you reach a cap. Here are the plans and their associated sales limits:

  • Standard: $29.95/month (sell up to $50K/yr.)
  • Plus: $79.95/month (sell up to $150K/yr.)
  • Pro: $249.95/month (sell up to $400K/yr.)
    • add $150/mo. for every additional $200K/yr. in sales, up to $3M
  • Enterprise: Custom pricing

Unlike Shopify, BigCommerce never charges an additional commission per sale. For payment processing gateways, you have about 60 options. One of these is Braintree (a division of PayPal), which gives access to discounted processing rates as you move up the BigCommerce subscription ladder.

Features & Add-Ons

BigCommerce has a particularly strong set of native features, while also maintaining a sizable app marketplace for optional add-ons (ballpark 600 in total). The balance of out-of-the-box features versus add-on apps leans more toward the former, especially when compared to Shopify. Offered features include:

  • Faceted (filtered) search
  • Single-page checkout
  • Customer groups & segmentation
  • Abandoned cart recovery
  • Real-time shipping calculations
  • Product ratings & reviews
  • Up to 600 product options/variants
  • Coupons, discounts, & gift certificates
  • Square POS integration

Ease Of Use

Some may argue that the balance toward more features included from the get-go can make BigCommerce harder to use at first. Personally, I wouldn’t let fears about user-friendliness stop a beginner from using this software. Extensive out-of-the-box features don’t complicate BigCommerce dashboard beyond reason, and the included features are intuitively configurable without any coding knowledge.

Web Design

BigCommerce offers around 125 themes, along with close to 500 total variations (or “styles”) of those themes. Seven of these themes (25 styles) are free; the rest are available for $145–$235. Quality of design is always subjective, but BigCommerce definitely has a wide variety of elegant templates from which to choose.

It’s a good thing this variety and quality of templates pre-exists, because customization options without coding knowledge or adding a separate integration are somewhat limited with BigCommerce. The theme editor lacks a drag-and-drop element, and you’ll be stuck with the theme’s fonts and colors for the most part.

Customer Support

Like Shopify, BigCommerce offers 24/7 phone, email, and live chat support at all plan levels. We’ve had mixed experiences with BigCommerce’s support, but find that more users praise the service than knock it. You can definitely make the argument (and we have) that BigCommerce support is just as good or better than Shopify’s. There are also active community forums and plenty of BigCommerce-produced support materials available online.

Who Is BigCommerce Best For?

The target market for BigCommerce overlaps significantly with Shopify’s. Much of your decision will come down to the appeal and specific fit-to-business of the extra features that come built-in with BigCommerce at your targeted subscription level. For example, I think B2B and wholesale merchants would do well to take close look at BigCommerce’s feature set. Support for more product variants or discount types will be interesting to other sellers. If you’re confident you’ll actually use most of the native features BigCommerce offers, you could definitely end up saving money and headaches. You’ll just need to be prepared for the automatic subscription bumps as your revenue grows.

Perhaps the most obvious appeal for BigCommerce is the freedom to choose your payment processor with no penalty of an extra transaction fee. That extra cut Shopify takes from your sales feels especially unfair if you’re not even based in one of the 10 countries where Shopify Payments is supported.

By the same token, maybe you already have a merchant account and/or payment processor that you like, or are looking for a specialized payment processor for your particular sales volume and/or risk profile. We often recommend merchants processing over around $100K per year look into credit card processors that offer your own dedicated merchant account with interchange-plus pricing. These accounts can provide more transparency and account stability (and often cost savings) than a standard flat-rate processor like Shopify Payments, PayPal or Square. With BigCommerce, your payment acceptance options are quite open.

3. 3dcart

3dcart

This platform has been around longer than any other on our list, and I’d actually heard of it before I’d even heard of Shopify. Over the years, 3dcart has developed a substantial and nuanced core feature set and continues to add and improve features at a steady clip. The software’s low monthly cost, extensive features, and plentiful payment gateway options make it worth a look when opening an online store.

Pricing

Subscription packages with 3dcart are delineated mainly by annual online revenue, number of staff accounts, and available features. You can sell up to 100 products on the Startup plan, while the other plans allow you to list unlimited items.

  • Startup: $19/month (sell up to $50K/yr.)
  • Basic: $29/month (sell up to $100K/yr.)
  • Plus: $79/month (sell up to $200K/yr.)
  • Pro: $229/month (sell up to $400K/yr.)
  • Enterprise: Custom

3dcart comes in at a lower starting price than BigCommerce or Shopify (if you exclude the Shopify Lite plan that doesn’t let you build a standalone store website). At the same time, the $29 plan level with 3dcart accommodates twice the annual store revenue of the $29.95 plan on BigCommerce.

On top of this, 3dcart never charges its own fee per sale, regardless which of the over 160 compatible payment gateways you select. For US merchants, there also are several “preferred” processor options (e.g., Square, Stripe, PayPal, and FattMerchant) that may give you access to discounted processing rates at the Plus and Pro subscription level.

Features & Add-Ons

3dcart prides itself on a rich supply of native, built-in features. We can vouch that the feature set is robust, especially for the price. And, while it’s true that 3dcart has managed to avoid some of the excessive “app creep” from which Shopify suffers, you can still connect with lots of useful third-party software via the app store.

We’ve mentioned that packed-in features can result in sacrificed user-friendliness. 3dcart keeps some of its complexity at bay by offering advanced features and modules that can simply be turned on and off depending on whether you need them.

Here are just a few of 3dcart’s noteworthy features:

  • Unlimited product options/variants
  • Single-page checkout
  • Robust discount/coupon engine
  • Real-time shipping calculations
  • Create/print shipping labels in-dashboard
  • Gift certificates on all plans
  • Wish lists & gift registries
  • Customer reviews & product Q&A
  • Abandoned cart recovery
  • Waiting list & pre-orders

Ease Of Use

When it comes to actually working with all of 3dcart’s plentiful features, we’re still looking at a user-friendly platform overall. You should just be aware that the learning curve you encounter may be slightly steeper than it is for Shopify (and perhaps BigCommerce as well) depending on your experience.

Like many worthwhile endeavors, 3dcart simply requires you put in a bit more effort in order to get more out of it in the end. The menus go a little deeper, the dashboard screens are more complex, and some advanced functions can be a little tricky to locate and use at first. Still, the basic setup and navigation are comparable to the ecommerce platforms we’ve discussed so far. You won’t need coding knowledge to operate your store.

Web Design

3dcart recently streamlined its entire theme marketplace, resulting in less quantity and more quality. The revamp brought 3dcart into better stylistic alignment with the ecommerce competitors we’ve discussed so far, but we’re still missing a bit of variety and uniqueness amongst the remaining options.

Of the 45 total themes available, about half are free, and more than half were created by 3dcart. Premium themes range from $149-$249.

With 3dcart, you get a very basic theme editor to change out photos and font colors, but you can’t rearrange any page elements:

Beyond these simple changes, you must use HTML and CSS inside the template editor:

Customer Support

Another key reason 3dcart makes our “best” list is the availability of 24/7 phone, live chat, email support. The only subscription that doesn’t offer phone support is the $19/month plan, but you still have the ability to talk to someone in real time with live chat. Support quality and responsiveness receive mixed reviews, but this is typical of all the software apps on our list. No ecommerce solution has cracked the code for keeping 100% of customers satisfied, but we’ll let you know if any of them do!

You’ll also have access to plenty of online resources produced by 3dcart, as well as an active community forum. Just note that while the knowledgebase articles are helpful, they’re sometimes low on screenshots and high on text.

Who Is 3dcart Best For?

We think 3dcart is a solid option for small-to-midsize businesses owners on a budget who still appreciate lots of built-in features. If you’ve experimented with Shopify or BigCommerce and felt a little boxed in when it came to flexibility and customization, and as long as you’re not intimidated by a relatively detail-oriented system, 3dcart opens up options for you. Or, if you’re skeptical of jumping on the Shopify bandwagon just because “everybody’s doing it,” and you balk at feeling hemmed into Shopify Payments lest you pay a penalty, 3dcart may be just the alternative you seek. Not to mention, we appreciate your Maverick spirit!

3dcart has a tried-and-true and even somewhat old school vibe, but without feeling clunky or inflexible. It has managed to stick around amongst an onslaught of newer competitors by quietly improving the quantity and quality of its core offerings over time. Meanwhile, you can still add on plenty of extra features via the app market, or do a bit of template tinkering on your own with basic coding knowledge.

4. Ecwid

Ecwid diverges the most from the software options we’ve discussed so far. At its core, Ecwid is an ecommerce shopping cart plugin (or “widget,” as the name implies) you can embed into an existing website. In this way, Ecwid is similar to WordPress’ WooCommerce, except you can add Ecwid to any website, not just WordPress sites. Ecwid also allows you to create a very basic standalone website and sell up to 10 products — for free! The company claims over 1.5 million users, which is significantly more than Shopify’s 600,ooo. The availability of a free plan likely has a lot to do with that!

Pricing

Subscription levels are organized by several aspects: available features, number of listed products, file storage, customer service access, and number of staff accounts. We’ve described the details of each level in our main Ecwid review, but here’s a quick summary:

  • Free: $0/mo. (10 Products)
  • Venture: $15/mo. (100 Products)
  • Business: $35/mo. (2500 Products)
  • Unlimited: $99/mo. (Unlimited products)

Happily, Ecwid does not charge an additional commission per sale. Along with offering around 50 payment gateway options for your store, Ecwid also has a special partnership with a payments provider called WePay. Together, they created Ecwid Payments, which offers discounted payment processing rates for merchants in the US, UK, and Canada. And, if you accept ACH or direct bank payments at your store (which is cheaper than accepting credit cards), you also qualify for discounted rates on those transactions with Ecwid Payments.

Features & Add-Ons

With Ecwid’s freemium pricing model, you can expect several new features unlocked at each subscription level. The free plan will definitely get you started with a small online store, but we don’t see most serious sellers staying on this plan for long. Fairly basic features such as inventory management, discounts, SEO tools, and access to the Ecwid app store require a paid plan. The Ecwid app store is on the smaller side, but you’ll still find several ecommerce staples in the shipping, tax, and accounting categories. And, don’t forget that if you’re embedding the Ecwid shop widget into another website, you’ll have access to that sitebuilder’s integrations as well.

Noteworthy Ecwid features include:

  • Create & edit orders
  • Several POS integration options, including mobile POS
  • Abandoned cart recovery
  • Branded shopping app for your store
  • Automatic tax calculations
  • Wholesale pricing groups
  • Mobile store management app

Ease Of Use

Intuitive dashboard navigation and foolproof feature manipulation make Ecwid an extremely user-friendly platform. Ecwid’s ease of use closely rivals Shopify’s. The Ecwid backend was clearly designed with the ecommerce beginner in mind.

Web Design

Remember that Ecwid’s main purpose is to act as a shopping cart plugin for an existing website that already has an established look and feel. That said, Ecwid does provide one theme template for a standalone online store. Here’s my in-progress edit of the starter template:

There aren’t a lot of customizations you can make to this starter website besides adding your own main image, your store name, and your 10 products. If your store is embedded into an existing website, you can purchase a third-party theme that helps your shop tie in with the rest of the site. Basically, unless you’re using the Ecwid Starter Site, web design for your storefront is largely dependent upon whatever existing sitebuilder you’re using.

Customer Support

Availability of customer support with Ecwid depends on which plan you have:

  • Free: Email only
  • Venture: Email & live chat
  • Business: Email, live chat, & phone; 2 hours of custom development (annual plan)
  • Unlimited: Email, live chat, & priority phone support; 12 hours of custom development (annual plan)

Also, note that email and live chat are not open on the weekends, and phone support is on a callback system. Despite these limitations, most users rate the actual quality of Ecwid’s support quite highly. Knowledgebase articles and video tutorials are also good quality.

Who Is Ecwid Best For?

Generally, we think Ecwid is a great option for small-to-midsize sellers. We highly recommend Ecwid for newcomers to online selling — particularly those with an established online presence who simply need to add a store component. If you love the platform your current website is built upon, and you’re already nailing your brand’s image and following, there may be no need to rush off and migrate to an all-in-one “website + ecommerce” system like the ones we’ve covered so far.

If you don’t have a website but would like to dabble in selling a few products online, you could also get an Ecwid starter site going for free while you develop a full-blown website on the side. It’s hard to argue with free! If you’re really on a shoestring budget or you’re just starting out with ecommerce, I’d encourage you to compare Ecwid’s free plan to Shopify Lite (at $9/mo.) to see which system might work best for your needs.

5. Wix

So, Ecwid built an ecommerce shopping cart widget that goes inside other website builders, but Wix is a website builder that actually built its own ecommerce widget (called Wix Stores) to go inside itself. I know, it’s a bit confusing! The point is that Wix began as a traditional sitebuilder, but now has ecommerce capability built in as well. Combining new ecommerce tools with its existing popularity in the no-coding-required-website-design niche, Wix presents quite an attractive (both figuratively and literally) option for online sellers.

Pricing

You may have heard that Wix lets you create a website for free. While this is true, you need a paid plan to use Wix’s ecommerce features. Below are your ecommerce subscription options, defined by file storage, customer support, and whether or not email marketing campaigns are included:

  • Business Basic: $25/month (20GB storage)
  • Business Unlimited: $30/month (35GB storage)
  • Business VIP: $40/month (50GB storage)

We’ve listed the true month-to-month price here, even though Wix advertises its monthly price if you pay for a full year. This drops the prices to $20, $30, and $35, respectively. All of the other platforms we’ve highlighted also offer discounts when paying annually — Wix just leads with these discounted figures in its advertising.

Regardless of which payment processor you choose (there are currently close to 20 options), Wix never charges an extra commission per sale.

Features & Add-Ons

If you choose to build an ecommerce website with Wix from scratch, the core of your site will be built upon the Wix Stores app. If, however, you already have a different type of Wix website (e.g., restaurant, hotel, photography site, etc.) and want to add an online shop, you simply switch to a Business subscription plan and add the Wix Stores app to your dashboard.

Wix is still working on adding some features that are becoming more standard amongst ecommerce platforms (like abandoned cart recovery), but we like a lot of what it has on offer so far:

  • Email marketing
  • Integrate with Square POS
  • Mobile app for store management
  • Send & manage invoices
  • Checkout on your own domain
  • SEO Tools
  • Create discounts & coupons
  • Inventory & order management
  • Library of stock photos for your site

The Wix app marketplace includes hundreds of apps, but not all are ecommerce-specific. You may also notice limited pre-built connections to third-party integrations (shipping and accounting software, for example). These sorts of apps become more indispensable as a store grows, but are not as critical for a store that manages fewer products and orders.

Ease Of Use

Wix Stores integrates seamlessly with the rest of the Wix dashboard. eCommerce features and settings are simply added to the left sidebar menu, like in any other ecommerce platform. Further dashboards open as you explore each individual feature (like adding a product or creating a coupon). Wix is defined in the DIY web design market by its ease-of-use, and this extends to its ecommerce functionality as well.

Web Design

There are actually two ways to design an ecommerce storefront in Wix. The first begins in a familiar fashion — selecting a template.

Wix offers over 500 templates to choose from, with over 70 of these already built upon the Wix Stores app (although you can easily add the app to any template). A nice perk of Wix’s template system is that all are included free with a Business subscription to Wix. The only tricky part is that you can’t switch templates once get your store up and running!

Wix provides the most flexible no-coding-required theme editor of any ecommerce platform we’ve covered here. Rather than simply dragging and dropping elements up and down your pages, you can adjust and place page elements virtually anywhere.

The second (and even easier) method of creating an ecommerce website with Wix is via Wix ADI (Artificial Design Intelligence). If you choose this option, you’ll be asked a series of detailed questions about your business, and Wix will use this information to draft a storefront for you.

Sites created with Wix ADI also have a theme editor available, but this editor’s flexibility is more limited than the standard WIX editor. Nevertheless, it’s comparable to Shopify’s drag-and-drop editor. You can stack and arrange elements up and down your pages.

If you decide you’d like to micromanage your design a bit more after creating your Wix ADI site, you’re welcome to switch over to the more advanced theme editor. You just can’t switch back to Wix ADI without losing your changes.

Customer Support

Here’s a quick rundown of Wix’s customer support channels:

  • Phone: Callback service open Monday-Friday, 5AM-5PM Pacific
  • Email: 24/7
  • Live Chat: None

As you can see, the phone channel is somewhat limited, but we like that you have access to this channel of support on all plans. The Business VIP plan also offers priority support, meaning your emails and callback requests jump to the front of the queue. Wix doesn’t have as thorough a set of self-help resources specifically for ecommerce as some of the other platforms, but the resources it does maintain are well done and useful.

Who is Wix Best For?

Wix may differ from the other ecommerce platforms we’ve discussed, but we see this variety as a very good thing. This platform is a great option for merchants who need a multifunctional (but still user-friendly) website — not just an online store. The way native apps like Wix Stores, Wix Bookings, Wix Restaurants, Wix Hotels, and others weave together to form a seamless dashboard on the backend, plus an elegant web presence on the front end, is really slick.

Speaking of elegance, the other (sometimes overlapping) group of store owners Wix works nicely for are those with a smaller number of visually-detailed products. You’re probably not going to want to run a massive fulfillment and shipping operation with Wix, but small shops with aesthetic priorities are perfect for Wix.

Quick Pricing Comparison

We’ve covered a lot of ground in our comparison of these five good options for building an online store. Before we wrap this baby up, let’s recap the subscription plans for each one, along with the main ways the levels are distinguished from one another. As you’ve clearly seen, pricing is just one component of your final choice, but it’s usually where people start.

eCommerce Platforms Pricing Summary

Pricing Levels Differences Btwn. Levels

Shopify

Lite: $9/mo.

Basic: $29/mo.

Shopify: $79/mo.

Advanced $299/mo.

Plus: Custom

  • Available features
  • Number of staff accounts
  • Payment processing discounts
  • Shopify’s commission per sale

BigCommerce

Standard: $29.95/mo.

Plus: $79.95/mo.

Pro: 249.95/mo.

Enterprise: Custom

  • Available features
  • Annual store revenue

3dcart

Startup: $19/mo.

Basic: $29/mo.

Plus: $79/mo.

Pro: $229/mo.

Enterprise: Custom

  • Available features
  • Annual store revenue
  • Number of products
  • Number of staff accounts

Ecwid

Free: $0/mo.

Venture: $15/mo.

Business: $35/mo.

Unlimited: $99/mo.

  • Available features
  • Number of products
  • Storage
  • Number of staff accounts
  • Customer service

Wix

Business Basic: $25/mo.

Business Unlimited: $30/mo.

Business VIP: $40/mo.

  • Storage
  • Customer service
  • Available features

Final Thoughts

Did you find your ecommerce match? We know it’s a lot to take in at once. The great news is that all of these platforms allow you to test the software before you buy. We’d suggest narrowing down our five suggestions to a couple that look like strong candidates for your store and starting a free trial of each. Test drive all the features you possibly can, work on customizing your storefront, and pepper customer support with questions at all hours. That’s the only way you’ll know which is the best fit, even with our attempts to simplify the decision-making process for you.

Generally speaking, the first three platforms we mentioned (Shopify, BigCommerce, and 3dcart) are quite similar and will work for a lot of the same types and sizes of stores. 3dcart is probably the most complicated and detailed of the three out-of-the-box, and typically requires a bit more out of the user. This is not necessarily bad, though. BigCommerce may be a good middle ground between 3dcart and Shopify, combining ease-of-use with a dense set of out-of-the-box features. And, even with Shopify’s super annoying transaction fees (if you don’t use Shopify Payments), Shopify is still a very solid recommendation — it’s just good software.

Ecwid and Wix each have their own advantages as well, especially for smaller stores. Both are well-designed and user-friendly. Ecwid has an enticing free plan and can be embedded in any existing website, while Wix allows you to develop a particularly elegant and multifunctional storefront using your choice of not one, but two different methods.

We think most small business owners will find a good solution from among these five options. And, we’ll let you in on a rather little-known secret: it’s not the end of the world if you end up needing to migrate platforms. That goes for right now if you’re looking to make a switch, or later if you decide your software isn’t working for you anymore. Nevertheless, you can still head into your decision with the confidence that you’ve done your research and tested the software thoroughly before handing over your credit card. (You’re going to test them first, right? Promise? Good.)

Do you have experience with one or more of these ecommerce platforms? Let us know how you think they compare in the comments. We love feedback from real users like you!

Shopify BigCommerce 3dcart Ecwid Wix

3dcart

Review Visit Site

Review Visit Site

Review Visit Site

Review Visit Site

Review Visit Site

Monthly Cost

$9 – $299

$29.95 – $249.95

$19 – $229

Free – $99

$25 – $40

Core Features

Great

Excellent

Excellent

Good

Good

App Store

Very Large

Large

Moderate

Moderate

Small/Moderate

Ease Of Use

Very Easy

Easy

Moderate

Very Easy

Easy

Web Design

Great

Good

Good

OK

Excellent

Customer Support

Great

Great

Good

Good

Good

The post The Best eCommerce Platforms For Your Small Business 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

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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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The Best Business Loans For Good Credit

As a business owner with good credit, you’re in a great position when it comes to loans and other financing options. A good credit score is one of the most important factors lenders consider when assessing risk. In fact, a solid credit score is one factor that puts you in the “low risk” category. That means you’re more likely to qualify for loan and financing options with lower rates and better terms.

However, having good credit isn’t the only piece to the financing puzzle. Before applying for a business loan, it’s important to go into the process knowing more about lender requirements, types of loans available, and what you need to apply for a loan. Read on to learn more about the business loans available for borrowers with good credit and which options are best for your financial situation.

What Is Good Credit?

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If you’ve ever applied for a personal or business loan or any kind of financing, you know how important credit scores are to lenders. Your credit score is a measure of your risk. A good credit score shows that you’re low risk. You pay your debts on time each month, your credit history is free of major blemishes like bankruptcies, charge-offs, and defaults, and you’re a reliable borrower. Because of that, more creditors are willing to work with you.

So, what makes a good credit score? Generally, a score of 700 or above is considered “good” on a scale of 300 to 850, although some lenders may view a score in the high 600s as a good score.

Having a high credit score helps you qualify for more financing options with lower rates, improved terms, and a lower overall cost of borrowing. As a business owner, having a good credit score is extremely important. Whether you want to hire more employees, acquire a business, build new facilities, or receive cash for an unexpected emergency, you’ll have more options with a good credit score.

In this article, we’ll focus on the best loan options for business owners with good credit scores. If your score is holding you back from receiving these loans, however, you still have options. Check out loan options for bad credit to find financing that’s the right fit for you.

Best Loans For Purchasing Equipment

equipment financing

No matter what type of industry you’re in, there typically comes a time when you need equipment. Whether you need tools to manufacture your products, require a delivery or company vehicle, need new appliances, or must purchase a point-of-sale system, all equipment has one thing in common: it costs money. If you need to purchase equipment to expand your business or to replace outdated or broken equipment, and you don’t have the cash up front, there’s a funding option for you: equipment financing.

If you apply for an equipment loan, a lender provides you with the cash needed to purchase equipment. All you have to pay is a reasonable down payment. With good credit, you may even qualify for $0 down financing. After receiving your loan and making your purchase, you can put the equipment into use for your business immediately. Then, you simply pay your lender back through fixed installments that are applied toward the loan principal and the lender’s interest and fees. Once you make all payments as scheduled, the equipment belongs to you.

If you need to upgrade equipment frequently, you may consider another type of equipment financing. With an equipment lease, you sign a lease for a period of time — on average about two years. You agree to make scheduled payments to the lender through the duration of the lease. Once the lease period ends, you can return the equipment and choose a new model. You’ll then sign another lease. You’ll never take ownership of the equipment unless you pay a lump sum at the end of your lease.

Recommended Lender: Lendio

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Lendio is a loan aggregator that connects borrowers with equipment loans from $5,000 to $5 million. Repayment terms for equipment loans are from 1 to 5 years, and interest rates for the most creditworthy borrowers start as low as 7.5%.

Equipment financing can be used to purchase any type of equipment, including software, furniture and fixtures, commercial vehicles, and even solar panels for your facilities. To qualify for equipment financing, you must be in business for at least 1 year, have a credit score of at least 650, and have at least $50,000 in annual revenue.

Best Loans For Business Expansion

Expansion is a huge milestone for your business. Expansion means that you’re growing bigger and getting better at what you do. Unfortunately, opening another office, upgrading your existing facilities, or purchasing a new commercial building doesn’t come cheap. Instead of cleaning out your bank account, fund your expansion with a Small Business Administration loan.

The Small Business Administration has made it easier for businesses to get affordable loans. Even if you’ve been turned down for a traditional loan, you may be eligible to receive a loan through an SBA intermediary lender. Portions of SBA loans are backed by the government, taking some of the risk off of lenders and opening up more low-interest financing options for small businesses.

Recommended Lender: SmartBiz

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Through SmartBiz, you can receive SBA 7(a) commercial real estate loans from $500,000 to $5 million. Your loan can be used to purchase a commercial property or refinance your existing property.

If you’re expanding your business in other ways, SmartBiz also offers working capital and debt refinancing loans from $30,000 to $350,000. These funds can be used for hiring employees, purchasing inventory or equipment, marketing, and other business expansion plans. Interest rates for SmartBiz’s SBA loans are between 6.75% and 9% with repayment terms from 10 to 25 years.

To qualify, you must be an eligible business based in the US and must meet the requirements of a small business as defined by the SBA. You must be in business for at least 2 years. To qualify for a 7(a) commercial real estate loan, your credit score must be at least 675. For working capital and debt refinancing loans, a minimum credit score of 650 is required. Your credit report must be free of recent bankruptcies, foreclosures, settlements, charge-offs, and defaults on government loans. For commercial real estate loans, the real estate that’s purchased must be at least 51% owner-occupied.

Recommended Lender: Fundera

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You can also apply for SBA loans through Fundera. With Fundera, you can receive between $5,000 and $5 million with repayment terms between 5 and 25 years. Interest rates begin at 6.75%, and you can receive funding as fast as 3 weeks after applying.

Most borrowers that are approved for an SBA loan through Fundera have a credit score of 680, annual revenue of at least $180,000, and a time in business of over 4 years. When applying for an SBA loan through Fundera, the lender will walk you through the process and help you select the SBA program that’s right for you, including 7(a) loans, CDC/504 loans, or Microloans.

Best Loans For Working Capital

merchant cash advance industry

You can’t operate a successful business without working capital. While your incoming cash flow should cover daily expenses in theory, sometimes you may fall a little short. This is when a working capital loan can help.

A working capital loan gives you the money you need to cover your operating expenses, from payroll to debt payments. These short-term loans give you access to the money you need right away and are paid back through regularly scheduled payments.

Recommended Lender: BlueVine

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BlueVine offers two financing options for business owners. The first is a line of credit from $5,000 to $250,000. Proceeds from your line of credit can be used as working capital or to fund any business expense. Repayment terms are set at 6 months or 12 months with rates as low as 4.8%. Monthly or weekly payment options are available.

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

Another financing option available through BlueVine is invoice factoring. If your working capital has been affected by unpaid invoices, invoice factoring offers a solution. BlueVine has factoring lines up to $5 million with rates starting at 0.25% per week. The lender provides 85% to 90% of the total of your unpaid invoice up front. Once the invoice is paid, you receive the remaining amount, minus the lender’s fees.

To qualify, you must be a B2B business with a minimum credit score of 530 and $100,000 in annual revenue. You must also be in business for at least 3 months to qualify.

Recommended Lender: Breakout Capital

breakout capital

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Another financing option to boost your working capital is a business loan from Breakout Capital. This lender issues loans up to $250,000 with repayment terms up to 24 months. Rates start at 1.25% per month, and you can select from daily, weekly, or monthly repayment schedules. A one-time origination fee of 2.5% of the total loan is charged by the lender. Prepayment rebates are also available if you choose to pay off your loan early.

To qualify, you must be in business for at least 1 year and have a personal credit score of at least 600. Monthly revenue of at least $10,000 is required to receive a Breakout Capital loan.

Breakout Capital also offers FactorAdvantage, an invoice factoring service. Through this service, you can receive up to $500,000 for your unpaid invoices. There are no time in business, personal credit score, or monthly revenue requirements to qualify.

Best Loans For Marketing & Advertising

You have an existing client base, but in order to scale your business and boost your profits, you need more customers. The best way to draw in new customers and clients is with a marketing and advertising campaign.

Unfortunately, effective marketing and advertising cost money — money that may not be in your budget. Instead of putting off marketing your business, consider a term loan to help you fund your marketing and advertising expenses.

A term loan is a loan that provides you with a set amount of money up front which is later paid back through regular installments. Repayment terms are typically spread out over a few years, and payments are made daily, weekly, or monthly toward the principal loan amount and fees and interest charged by the lender.

Since a term loan is for a specific amount of money, it’s important that you know exactly how much you need before applying. Take the time to calculate your marketing and advertising costs to ensure you receive the money you need for your campaign.

Recommended Lender: OnDeck

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OnDeck offers several financing options for your marketing and advertising needs. This lender has short-term and long-term loans available up to $500,000. Short-term loans are repaid within 3 to 12 months and have simple interest rates as low as 9%. Long-term options are available with repayment terms from 15 to 36 months with annual interest rates as low as 9.99%.

To qualify for OnDeck term loans, you must be in business for at least 1 year. A personal credit score of 500 and $100,000 in annual revenue are also needed to qualify. Origination fees of up to 4% are added to your loan, and you can sign up for fixed daily or weekly payments.

If you want a more flexible financing option, OnDeck also has lines of credit up to $100,000 with APRs starting at 13.99%. To qualify for a line of credit, you must be in business for at least 1 year, bring in $100,000 in annual revenue, and have a personal credit score of at least 600.

Best Loans For Cash Flow Problems

No business is immune to cash flow problems. Maybe it’s a slow season or an emergency expense affected your incoming cash flow. Regardless of your financial challenges, you need cash flow to keep your business operating as it should.

If temporary cash flow issues are impacting your operations, consider a financing option such as a merchant cash advance (MCA) a short-term loan to receive the money you need quickly. Merchant cash advances have a reputation for being one of the most expensive forms of financing. However, a financial product like American Express Merchant Financing can provide the benefits of MCAs without the notoriously high fees.

Recommended Lender: American Express Merchant Financing

American Express OptBlue

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Through American Express Merchant Financing, you can receive between $5,000 and $2 million that is repaid over 6, 12, or 24 months. A fixed fee between 1.75% and 20% is charged based on your creditworthiness and other factors, including term length. Your loan is repaid through daily debits or through your receivables, including American Express transactions.

To qualify for American Express Merchant Financing, you must have at least $50,000 in annual revenue and at least $12,000 in annual credit and debit receivables. Your business must accept American Express cards, and you must be in business for at least 2 years.

Recommended Lender: IOU Financial

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If you don’t qualify for American Express Merchant Financing, another short-term option to consider for resolving cash flow problems is a small business loan from IOU Financial. You can apply for $5,000 to $300,000 with repayment terms between 6 and 18 months. A factor rate of 1.15 to 1.31 is charged by the lender.

To qualify, you must sign a personal guarantee. You also need at least 10 deposits each month in your business checking account. A personal credit score of 600, a time in business of at least 12 months, and annual revenue of $120,000 are requirements to qualify for IOU Financial’s short-term business funding.

Best Loans For Cash Shortages

You need to make payroll, but your business banking account is running low. You have upcoming expenses, but the cash just isn’t there. If you’re facing cash shortages in your business, a line of credit can fill in the gaps.

A line of credit is a flexible form of revolving credit. Once approved, your lender will set a credit limit. You can make multiple draws up to and including your credit limit. Most lenders initiate transfers immediately, so you’ll receive the cash you need in your account as quickly as the next business day. You won’t have to wait for approval with each draw, so you’ll quickly and easily receive the money your business needs.

Fees and interest are only charged on the used portion of your credit line. As you make payments, funds will become available to withdraw again as needed.

Recommended Lender: Kabbage

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Kabbage issues lines of credit up to $250,000. Repayment terms are 6 months or 12 months, and your payment is automatically withdrawn each month. Kabbage charges fee rates between 1.5% to 10% for each month you carry a balance.

To qualify for a Kabbage line of credit, you must be in business for at least 1 year. Revenue requirements are: $50,000 annually or $4,200 per month for the last 3 months. There is no minimum credit score required to qualify. Loan approval and your credit limit are based on the performance of your business.

One standout feature of this lender is the Kabbage Card. In addition to taking traditional draws, you can use your Kabbage Card for instant access to capital. Once you use your Kabbage Card, a new loan will be added to your account with the same rates and terms as traditional draws.

Best Loans For Supplies & Inventory

Supplies and inventory are critical for the success of your business. Without your required supplies, your business won’t run efficiently. Without inventory, you won’t be able to service your customers. Your operations may slow down … or even come to a screeching halt.

While your incoming cash flow will often cover the costs of supplies and inventory, there may be times when this just isn’t enough. An emergency expense that comes at the wrong time or a seasonal uptick in sales are just two scenarios where it becomes difficult to handle the burden of purchasing supplies and inventory alone. When this occurs, consider the benefits of inventory financing.

Inventory financing is a loan or line of credit that is used to purchase supplies or inventory to keep your business operating as it should. You’ll receive the upfront cash you need to make your purchase, then repay the loan through regularly scheduled payments. This is an affordable way to purchase your supplies and inventory when your bank account is running low or you don’t want to tie up all your funds.

Recommended Lender: StreetShares

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StreetShares offers several financing solutions for the purchase of supplies and inventory. Through StreetShares, you can receive a Patriot Express line of credit between $5,000 and $250,000 with repayment terms of 3 to 36 months. Interest rates are between 6% and 14%, with a draw fee of 2.95%. Your line of credit is repaid weekly.

Installment loans between $2,000 and $250,000 are also available through StreetShares. You can borrow up to 20% of your annual revenue. These loans come with terms of 3 to 36 months. Interest rates are between 6% and 15% with closing fees up to 4.95%.

To qualify for a StreetShares installment loan or line of credit, you must be in business for at least 1 year and have annual revenue of at least $25,000. A personal credit score of at least 620 is required to receive a StreetShares line of credit.

Best Loans For Emergency Funds

Chart of Accounts

An emergency always strikes when we least expect it and brings with it expenses that just aren’t in our budgets. Emergency funding needs can put a dent in your bank account and temporarily derail your operations.

If you’re stuck without an emergency fund and shuffling around your finances isn’t a viable option, it’s time to consider a business loan. There are multiple financing options that will work for you  — such as credit cards, lines of credit, and short-term loans — but regardless of what you choose, you need financing and you need it fast.

Recommended Lender: American Express Business Loans

American Express OptBlue

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With an American Express business loan, you can receive $3,500 up to $50,000 with repayment terms of 12, 24, or 36 months. Amex loans come with fixed interest rates starting at 6.98% up to 19.97%. Amex loans can be approved within seconds and funds sent within 3 to 5 business days.

To qualify, you must be the cardholder on an eligible American Express Business Card and be a US citizen that’s at least 18 years old. You must also be pre-approved in order to apply.

Recommended Lender: FundBox

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If you don’t qualify for an American Express business loan, another fast financing option for small business owners is Fundbox. You’ll receive a credit decision for a Fundbox line of credit in just minutes. Once approved, you can make your first draw instantly and receive a deposit as soon as the next business day.

Through Fundbox, you can apply for flexible lines of credit up to $100,000. The lender charges fees starting at 4.66% of the draw amount. Repayment terms are set at 12 or 24 weeks.

To qualify, you must have an active business checking account and at least two months of activity in Fundbox-supported accounting software. If you don’t work with accounting software, you can supply bank statements from the last three months. You should also have a minimum annual revenue of $50,000, and your business must be based in the US.

Best Loans For Starting A Business

All of these financing solutions work well for established businesses, but what if you need money to get your business up and running? Time in business and annual revenue requirements could hold you back from receiving a loan, even if you have a high credit score.

Put your good credit to use by applying for a personal loan to use for business. Because it’s a personal loan, factors such as your time in business or revenues won’t be a factor for approval. Instead, the lender will consider your own personal credit history and income when approving your loan. If you have good credit and enough income to support a loan payment, you can receive a very affordable loan that can be used to launch your business or cover startup costs.

Recommended Lender: LendingPoint

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You can receive up to $25,000 with a LendingPoint personal loan. Repayment terms are 24 to 48 months. APRs for LendingPoint personal loans range from 15.49% to 35.99%. Lending Point charges origination fees between 0% and 6% of the total loan amount.

To qualify for a loan, you must reside in one of the 43 states where LendingPoint operates. Applicants in Washington D.C. are also eligible to apply. Additional requirements include a minimum income of $20,000, a verifiable bank account in your name, and a credit score in the 600s.

Recommended Lender: Prosper

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Prosper personal loans are available in amounts from $2,000 to $40,000. APRs range from 6.95% to 35.99%. Repayment terms are 3 years or 5 years.

To qualify for a Prosper loan, you must have a credit score of at least 640. You must also have a debt-to-income ratio below 50%. You must have a source of income, although there are no minimum income requirements. Your credit report must have less than five credit bureau inquiries within the last 5 months, no bankruptcies within the last 12 months, and at least three open trades.

Recommended Lender: Upstart

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Upstart personal loans are available from $1,000 to $50,000. Repayment terms are 3 years or 5 years with fixed rates between 8.89% and 35.99%.

To apply for an Upstart loan, you must be at least 18 years old. Applicants in Iowa or West Virginia are ineligible to apply. You must have a personal bank account with an institution located in the US, and you must have a full-time job, a job offer within the next 6 months, a part-time job, or another source of income. A minimum personal credit score of 620 is required to qualify.

Further credit requirements include no delinquent accounts, bankruptcies, or public reports. You must have less than 6 credit inquiries from the last 6 months, although student loans, mortgages, and vehicle loans are excluded. Upstart will also consider your DTI when approving your loan.

What To Consider When Choosing A Lender

Now that you have an idea of the types of loans available for your business, the next step — if you choose to move forward — is to find your lender. Maybe you’re torn between a few lenders, or you want to do your own research to find the most affordable loan option. When you’re searching for a lender, ask yourself the following questions.

How Much Money Do I Need?

This simple question will help you narrow down the playing field. If you need $100,000 but a lender has maximum loan amounts of $10,000, move on to the next option. Before you apply, know the amount that you need — and make sure it coincides with the amount that you can afford.

Do I Meet All Requirements?

Even if you meet the credit score requirements of the lender, make sure you meet all other requirements as well. Get the most up-to-date view of your credit score by receiving your free credit score online. Most lenders have basic requirement for age and citizenship. However, others have minimum requirements for your annual income and revenues, time in business, and DTI ratio.

How Will I Use The Loan?

Some lenders have restrictions on how loan proceeds are used. For example, an equipment loan can’t be used as working capital. It can only be used to purchase equipment. Plan how you will use the loan to determine which type of loan best fits your financial needs. Then, find a lender that offers this type of loan.

What You Need To Apply For A Business Loan

Improve Business Loan Application

By this point, you should know the amount of money you need (and can afford) and the type of loan that’s best for your business. You may even have a list of lenders that you’re considering. Before you apply, know what to expect before heading into the application process.

For all loans, you’ll need basic information about yourself and your business. This includes:

  • Business Name
  • Legal Name
  • Contact Information: Email address, phone numbers, address
  • Annual Income
  • Annual Revenue
  • Federal Tax ID
  • Social Security Number

Depending on the type of loan and the amount you’re seeking, you may have to provide additional information and documentation, including:

  • Business & Personal Income Tax Returns
  • Profit & Loss Statements
  • Balance Sheets
  • Debt Schedules
  • Voided Check
  • Business Plan
  • Driver’s License

Requirements vary by lender, so make sure to review and submit all documentation requested during the application process. Also, be sure to keep in contact with your lender to provide additional information and documentation as needed until your loan is approved and funded.

Final Thoughts

Having a high credit score will help you obtain a business loan, but don’t lean solely on your solid credit. Research your lenders, know your options, and find products suitable for your financial needs to ensure you get the low-interest, affordable loan your business deserves.

The post The Best Business Loans For Good Credit appeared first on Merchant Maverick.

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Fast Approval Business Credit Cards For Small Business Owners

instant approval business credit cards

When you run a small business, funding needs can arise out of nowhere, leaving you scrambling for the fastest cash possible. This is clearly shown by the frequency with which people search for terms like “instant approval credit cards.” So, how quickly can you really get a new business credit card in your hands, and what can you do to ensure the process goes as rapidly as possible?

What Are Fast Approval Credit Cards?

The terms “fast approval credit cards” and “instant approval credit cards” are used interchangeably to refer to the same kinds of credit cards. Of course, “instant” is an appealing word to use from a marketing perspective. Just remember: if it sounds too good to be true, it most likely is.

Are Instant Approval Credit Cards Really Instant?

In a word: No.

You’ve probably received credit card mailers marked as “preapproved offers,” or, similarly, as offers with “preliminary approval.” Does this mean that if you accept the offer, you get a card to use immediately? Sadly, no, it does not.

When you get that “preapproved” credit card offer, all that means is that the credit card issuer has done a soft pull of your credit score and found that you’re likely to be in the card’s target demographic. However, if you respond favorably to the offer, the card issuer will continue with the underwriting process. Only after the successful completion of this process will you be sent a card — a process which is, of course, not instant, as snail mail is not instant!

Now, there are certain instances where you can get instant (or near-instant) approval for a business credit card and get issued an instant card number after approval. However, keep in mind that most credit card issuers either won’t do this or will only do this with particular cards. American Express is one of the few big players in the industry offering instant card numbers for all its credit cards, yet some consumers still report being unable to get an instant card number after getting approved.

While it may be possible for you to get an instant card number with your fast approval credit card, don’t count on being able to do so. It’s one of the more opaque aspects of the credit card industry, and you might not get an instant number despite getting instant approval for a card that putatively offers this feature. Plus, the instant card number is of limited utility anyway — you won’t be able to use it for in-person purchases.

If My Application Is Approved Instantly, Can I Start Using My Card Immediately?

No matter how quickly you’re approved for a business credit card, you’ll still have to wait for your card to arrive in the mail. Just as there is no such thing as a free lunch, there is no such thing as a truly “instant” business credit card, unless you’re able to obtain an instant card number.

Who Qualifies For Fast Approval Credit Cards?

Fast approval credit cards don’t work similarly for all applicants. The truth is, whether the card you apply for is a “fast approval” card or not, you’re going to be approved more quickly if you have good-to-excellent credit. It’s quite the catch-22, as those most likely to require a credit card in as little time as possible are largely not those with the best credit.

With good or excellent credit, you may well be approved nearly instantly upon meeting the card issuer’s credit and income requirements. When an applicant has less impressive credit, a credit card issuer has more work to do to determine the applicant’s financial worthiness. This results in a process that is less instant than many business applicants would prefer.

To see how credit card approval typically plays out, have a look at the following (taken from Capital One’s application FAQ):

Capital One will attempt to provide a decision in 60 seconds or less. Sometimes system availability affects our ability to make a credit decision or, in some cases, we need to collect additional information. If so, you will receive further details either via email or letter within 7-10 business days.

If your credit isn’t so hot, card issuers are more likely to require “additional information” of you.

Timeline For A Typical Business Credit Card Application

instant approval business credit cards

When you’re seeking to get a business credit card in as little time as possible, there are some simple things you can do to ensure that you don’t end up waiting any longer than is absolutely necessary.

How To Increase Application Speed

If everything goes right, you can often be approved for a new business credit card in less than a minute. Let’s go through what you can do to make this happen.

Check Your Credit Score

When you know your credit score, you can apply for the business credit cards you know you’ll be likely to qualify for. Remember, the more your credit score exceeds the card issuer’s minimum requirements, the more likely it is that you’ll be approved quickly.

Not sure what your credit score is? Don’t pay the credit bureaus just to learn your own credit status! Instead, read our piece on the best free credit score sites and check your credit score without giving a dime to anybody.

Gather Your Business & Financial Information

Be sure to have the following information ready before you apply for a business credit card.

  • Business Name (if you’re a sole proprietor, use your name)
  • Business Address
  • Type Of Business (corporation, partnership, LLC, etc.)
  • Your Business Role
  • Tax ID Number (use your Social Security number if you’re a sole proprietor; use your Employer Identification Number (EIN) for other business types)
  • Years In Business
  • Number Of Employees
  • Annual Business Revenue
  • Estimated Monthly Spending

Head To The Internet

Getting approved for a credit card online is quicker than getting approved via phone or snail mail. Take advantage of that big beautiful Information Superhighway when applying for that business credit card.

Best Overall Fast Approval Business Credit Card

Capital One Spark Classic For Business


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Annual Fee:


$0

 

Purchase APR:


24.74%, Variable

The Capital One Spark Classic For Business is a very solid business credit card — one that offers fast approval to business owners with at least fair (or average) credit.

Spark Classic is the most egalitarian of Captial One’s triumvirate of business credit cards. The card’s minimum credit score is 580, making Spark Classic the only Capital One business card available to entrepreneurs with fair credit. Meet the credit requirements, and you’re likely to get that elusive Instant Approval.

The card’s APR is relatively high and the rewards program is rather modest (you get 1% cash back on all purchases), but the card’s true value lies in its ability to build your credit. Capital One will report your credit activity to multiple credit bureaus (not all issuers of business credit cards do this), which means that with every monthly payment you make on time, you improve your credit score. With enough use, the Spark Classic can help boost your credit score to the point where you’ll be eligible for business cards with lower APRs and better rewards programs.

Best Fast Approval Credit Card With 0% Intro Rate

Chase Ink Business Unlimited


chase ink business unlimited
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Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

Chase Ink Business Unlimited — Chase’s newest business credit card — may have a higher standard for instant approval than the Spark Classic (the Ink Business Unlimited requires an applicant to have good or excellent credit), but if you meet this threshold and are able to get instant approval, the Ink Business Unlimited is an excellent choice for business use, particularly if you have some large purchases to make within a year.

Chase Ink Business Unlimted offers a 0% introductory APR for the first 12 months. This means that if you need to make a large emergency purchase, you can do so without the added pressure of having to pay off your entire balance right away to avoid being hit with interest charges.

The Ink Business Unlimited also offers 1.5% cash back on all purchases, as well as a $500 cash back bonus after you spend $3,000 within the first three months.

Best Fast Approval Credit Card For Cash Back

Capital One Spark Cash Select For Business


capital one spark cash select
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Annual Fee:


$0

 

Purchase APR:


14.74% – 22.74%, Variable

Capital One Spark Cash Select For Business is a business credit card offering instant approval only to those with excellent credit. But if you make the grade, you stand to be handsomely rewarded with a generous cash back program.

Spark Cash Select offers a flat 2% cash back on all purchases. It’s a higher cash back earning rate than you’ll find with most competitors offering a flat cash back rate, and as such is an excellent choice for entrepreneurs with excellent credit looking for a fast approval card with great cash back earning potential. You won’t have to bother tracking spending categories — just earn 2% cash back on all purchases.

As nice as that unlimited 2% cash back is, the card does carry a $95 annual fee after the first year. If you’re dead-set against paying an annual fee, consider Capital One’s Spark Cash card instead.

Capital One Spark Cash For Business


capital one spark cash select
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Annual Fee:


$95 ($0 the first year)

 

Purchase APR:


18.74%, Variable

You’ll earn unlimited 1.5% cash back instead of 2% and your card won’t have Select in the name, but on the plus side, the Spark Cash carries no annual fee.

Best Fast Approval Credit Card For Travel Rewards

Blue Business Plus Credit Card from American Express



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Annual Fee:


$0

 

Purchase APR:


12.99% – 20.99%, Variable

The Amex Blue Business Plus card is a great business card for those looking for travel rewards value. Furthermore, as I mentioned, American Express is one of the few card issuers that will, in many cases, issue you an instant card number after you get approved.

With the Blue Business Plus, you’ll earn 2x rewards on all purchases up to $50,000 each calendar year. Your points can be used to book travel via American Express Travel, a well-regarded travel rewards program. Your points can even be spent on taxi fare in New York City!

An Alternative To Fast Approval Credit Cards: Online Business Lines Of Credit

If you need funding for your business ASAP but are not enthused about the fast approval business credit cards currently available, consider a business line of credit. Lines of credit work more like credit cards than term loans. You borrow funds up to a certain limit and you only pay interest on what you borrow.

Some lenders offer instant approval, in which case the only waiting you’ll need to do will be for the funds to arrive in your account. Let’s take a look at a few business lines of credit offering instant approval.

Kabbage

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Kabbage is well-known for its remarkably quick application process. With Kabbage’s streamlined approval process, you may well be able to start drawing funds within a few minutes of getting approved. Want fast money? Kabbage can deliver.

However, that doesn’t mean Kabbage is all sweetness and light. The costs associated with a Kabbage line of credit are relatively high. You may end up paying 10% of your borrowing amount each month in fees. Your effective APR ranges from 24% to a whopping 99%.

With rapid approval and a maximum borrowing amount of $250,000, Kabbage’s lines of credit hold significant appeal for the entrepreneur in need of fast cash, despite the drawbacks. Now, let’s check out another online lender offering business lines of credit.

Fundbox

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Fundbox’s business lines of credit are easier to qualify for than those of Kabbage — you only need to have a compatible business bank account for at least six months or compatible accounting/invoicing software for at least three months. There are no time-in-business requirements and there’s no strict credit score requirement to meet.

You can establish a maximum credit line of $100,000 with Fundbox, so larger businesses might find Kabbage’s lines of credit more fitting of their needs.

Final Thoughts

It always helps to be aware of your full range of options when looking for expedited business funding. If your poor credit score and/or lack of business track record puts you out of the range of most of the products listed here, you can always consider a secured business card. They don’t typically offer instant approval, but secured business cards are among the easiest business cards to obtain due to the requirement that you post collateral. The arrangement means you’re essentially borrowing from yourself. Read our piece on secured business credit cards for more information.

Want to learn even more about business funding? Check out the following resources.

  • How To Get A Small Business Line Of Credit
  • Business Credit Cards For People With Bad Credit
  • Merchant Maverick’s Small Business Loan Comparison Chart

The post Fast Approval Business Credit Cards For Small Business Owners appeared first on Merchant Maverick.

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Business Loans For HVAC Companies

business loans for hvac companies

It’s hard to imagine modern life without the benefit of the work done by the HVAC industry. HVAC companies (HVAC refers to heating, ventilation and air conditioning) are tasked with keeping us warm in the winter, cool in the summer, and breathing safely as we live our lives in the archipelago of enclosed spaces that comprises our indoor universe.

With the economy in a period of expansion, demand for new construction has risen, and where the construction industry goes, so goes HVAC work. After all, these new offices, homes, and transportation systems aren’t going to keep themselves ventilated and comfortable.

As with any industry, HVAC companies have their own particular financing needs. There’s no shortage of loan products out there, offered by banks, online lenders, credit card issuers, and even the federal government. But you probably knew that already. The question most relevant to you is: Which types of loans best fit the specific financing needs you’re going to have in the course of operating your HVAC business?

That’s where Merchant Maverick comes in. We’ll help make sense of the lending market for you and direct you to the loan products that best fit your specific needs. Let’s get down to the nitty-gritty and delve into how to get a business loan for an HVAC company.

Financing Need Best Loan Type Recommended Lender
Marketing & Advertising Medium-Term Loan Fundation
Equipment Purchasing Equipment Loan Lendio
Business Expansion SBA Loan SmartBiz
Emergency Funds Business Credit Card Chase Ink Business Unlimited
Working Capital Short-Term Loan PayPal LoanBuilder
Covering Payroll Line Of Credit OnDeck

Loans For Marketing & Advertising

business loans for HVAC

Whether your HVAC company is just finding its legs and seeking to generate new leads or is established but working to expand, marketing and advertising are integral to an HVAC business’s success. Of course, such a campaign costs money, and the funds need to come from somewhere.

While we’re not here to tell you how to run your marketing campaign, here’s a quick tip: Reach out to people just before summer and winter begin. It’s when your services will be most in demand — for obvious reasons!

Medium-Term Loans

A medium-term loan is an installment loan (a loan that is repaid periodically over a defined period of time with interest) with a term length of between two and five years. You can typically borrow more with a medium-term loan, but if your anticipated marketing campaign won’t cost that much, a short-term loan would be appropriate.

A medium-term loan can obviously be used for any business purpose. However, since you should be able to more accurately estimate the cost of your marketing campaign than many other types of business expenses, a loan in which you borrow a specific amount of money is particularly appropriate here.

Recommended Option: Fundation

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Founded in 2011, Fundation has since become one of the leading “alternative” lenders, boasting competitive rates, a solid reputation, and fixed-rate pricing (the interest rate will not increase over the life of the loan). Fundation’s term loans max out at $500K; accordingly, Fundation’s borrower qualifications are stricter than those of many online lenders. Fundation also offers lines of credit of up to $100K.

Fundation’s installment loans are offered with terms of one to four years and are fixed-rate, meaning the assigned interest rate will remain unchanged over the life of the loan. Additionally, Fundation sports a rapid time-to-funding, typically between two and seven days.

Loans For Equipment Purchasing

business loans for hvac companies

The HVAC industry relies on heavy equipment — the bigger the building, the heavier the equipment. Of course, these heating and cooling systems don’t come cheap. While any loan products can be used to cover the cost of purchasing HVAC equipment, there’s one type of loan tailored for this purpose: Equipment loans.

Equipment Loans

In many ways, an equipment loan resembles a traditional installment loan — you’ll be paying down the principal plus interest with monthly payments. The advantage of the equipment loan is that the equipment you purchase with the funds serves as collateral. Equipment loans are therefore secured loans, and secured loans typically have better rates and terms than their unsecured counterparts.

With an equipment loan, the lender usually covers most of the cost of purchasing the equipment, leaving around 10% to 20% to be covered by you. On occasion, however, the lender might be willing to cover the entire cost.

Equipment Leases

An equipment lease is another means of equipment financing. Such leases fall into one of two categories: Capital leases and operating leases.

With a capital lease, you are considered to be the owner of the equipment in question, so the arrangement resembles a loan in many ways. You make your monthly payments throughout the course of the lease. Afterward, you pay a small residual to close your account.

An operating lease lets you essentially rent the equipment during the lease, making monthly payments. When the lease ends, you can either return the equipment or buy it at fair market value, giving you a nice degree of flexibility.

See our article on equipment loans vs equipment leases for more information.

Recommended Option: Lendio

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Lendio isn’t your typical lender. In fact, Lendio isn’t a direct lender at all. Lendio is a loan aggregator, which means that you submit a single loan application which Lendio then passes on to multiple lenders, saving you time and effort. Within about three days of submitting your application, you should be fielding multiple equipment financing offers.

Through Lendio, you can find an equipment loan as large as $5 million, with loan terms ranging from one to five years and interest rates as low as 7.5% for highly qualified borrowers.

Loans For Business Expansion

business loans for hvac companies

Let’s say your HVAC company has been thriving and is ready to expand to meet the challenges of our glorious future of relentless climate extremes. Without an infusion of cash, however, your expansion plans may not be feasible. If you’re looking for a sizable loan at a reasonable interest rate, consider an SBA loan.

SBA Loans

The Small Business Administration (SBA) is an agency of the federal government meant to assist small businesses in obtaining funding. For the most part, the SBA does not lend directly to businesses. Rather, it guarantees up to 85% of loans offered by SBA-approved lenders. These lenders are known as intermediaries.

While SBA loans feature competitive rates and terms, be warned that borrower requirements tend to be rather stringent.

Here’s a rundown of four of the main SBA loan programs with links to articles describing the programs in greater detail.

Loan Program Description More

7(a) Loans

Small business loans that can be used for many many business purchases, such as working capital, business expansion, and equipment, inventory, and real estate purchasing.

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Microloans

Small loans, with a maximum of $50,000, which can be used for working capital, inventory, equipment, or other business projects.

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CDC/504 Loans

Large loans used to acquire fixed assets such as real estate or equipment. 504 Loans are offered in partnership with Community Development Companies (CDCs) and banks.

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Disaster Loans

Loans used to rebuild or maintain business following a disaster. 

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Recommended Option: SmartBiz

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There is no shortage of SBA-approved lenders out there. However, if you’re looking to grow your HVAC business with an SBA loan, you might find the complex SBA application process to be intimidating and fraught with peril. The beauty of SmartBiz is that the company helps simplify and streamline the application process for you so that you can make sense of it all.

SmartBiz is not a lender. Describing themselves as the “white knight in small business lending,” SmartBiz will match you with an SBA-approved lender after helping you through the onerous application process. You’ll need to have at least two years of business history behind you and a personal credit score of at least 650, but if you meet these and other requirements, you can get an SBA-backed loan of up to $350,000 with interest rates between 8% and 9%. Not too shabby!

Loans For Emergency Funds

business loans for hvac

Let’s say the construction industry takes a downturn, leaving you with less business. You still have employees to pay and expenses to cover. How should a company in your position deal with unexpected cash flow problems? When you need a flexible funding solution you can draw from on an as-needed basis, consider a business credit card.

Business Credit Cards

As business credit cards tend to feature higher interest rates than business loans, they aren’t an ideal funding mechanism in many instances. But when unexpected situations arise and you need a stop-gap measure to temporarily plug some funding holes, there’s nothing like the ease and convenience of a business credit card. With the right card, you can cover emergencies while earning rewards and/or cash back along the way.

A good credit history will help you get lower interest rates and a higher credit limit. However, even with a less-than-stellar credit history, there are options available to you, including secured credit cards, which require a security deposit.

If you’re unsure of your credit score, whatever you do, don’t pay for a credit check. Here are some websites that let you check your credit score for free.

Recommended Option: Chase Ink Business Unlimited

Chase Ink Business Unlimited


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Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

The Chase Ink Business Unlimited card is a great way to cover those unexpected expenses while earning 1.5% cash back to boot. If you’re using a credit card to cover emergencies, you’re probably not looking for a card with rotating cash back spending categories or lavish travel benefits. The Ink Business Unlimited comes without these extraneous distractions so you can focus on getting your HVAC business out of a jam while earning cash back on everything you buy.

Keep in mind that you’ll need good to excellent credit to qualify for the Ink Business Unlimited. If your credit doesn’t fit that description, check out these options for business owners with poor credit.

Loans For Working Capital

loans for hvac businesses

Working capital refers to the money you use to keep your business running on a day-to-day basis. When times are good, your cash flow should be sufficient to keep your company running smoothly. The problem is that without extraordinary luck, times will not always be good, particularly in a field prone to seasonal slow-downs like the HVAC industry.

When seeking a loan for this purpose, you’ll want something that affords you a high degree of flexibility in terms of what you can spend your funds on. For this reason, a short-term loan may be worth your consideration.

Short-Term Loans

A short-term loan is an installment loan that must be repaid within 12 months or less. Payments must be made on a weekly or even daily basis and are normally deducted automatically from your business account. If approved, you can usually get your funds within a few days. Short-term loans are all about fast money, both in terms of getting the money and paying it back.

Instead of charging interest on what you borrow, short-term lenders charge you a flat fee known as a factor rate. This factor rate is a multiplier that determines the lender’s fee. I’ll give an example: Take out a $50,000 loan at a 1.2 factor rate, and you’ll be paying $60K for the loan over the agreed-upon term length.

Recommended Option: PayPal LoanBuilder

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Check Eligibility

PayPal’s LoanBuilder is what the name suggests. You essentially build your own loan by customizing its elements to fit your particular situation. The loans offered range from $5K to $500K and term lengths run from 13 to 52 weeks.

LoanBuilder’s lender requirements aren’t terribly strict. Your business must have been running for at least 9 months. Your annual revenue must be at least $42,000 and your personal credit score must be at least 550. As ever, your credit history and your company’s overall health will determine your maximum borrowing amount and your rates.

Loans For Covering Payroll

 

Heating and cooling systems don’t install themselves. To ensure that our apartments, workplaces, and shopping centers don’t become unlivable nasty hellscapes, an HVAC business needs workers. Workers need to be hired, trained, and paid, all of which costs money.

If you need help hiring new employees (or paying the ones you already have), consider a line of credit.

Lines Of Credit

A line of credit operates on the same principle as a credit card. Instead of receiving a lump sum of dinero all at once, you’re given a credit line you can draw from whenever you feel the need. As with a credit card, you’ll have a credit limit to contend with, and you pay fees and interest only on the funds you use, not the total amount of the line of credit.

Recommended Option: OnDeck

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If you need funding quickly, consider a line of credit from OnDeck. Approval should come in a matter of days, and the credit requirements are not particularly strict. Your credit line can run anywhere from $6K to $100K.

One thing to keep in mind about OnDeck’s lines of credit is that they are a short-term funding mechanism, lasting only about 6 months.

What To Consider When Choosing A Lender

business loans for hvac businesses

For business owners seeking a loan, there has never been a wider array of funding options. To help narrow down your search, consider the following questions.

Why Do I Need A Loan?

Before you can even start looking at particular options, you need to be certain of the purpose of your loan. Whether you’re looking to expand your business or purchase new equipment, only by defining your precise need can you select a loan product that fits what you seek to accomplish. Otherwise, you’re flying blind without any point of reference.

No one lender or loan makes sense for every business need under the sun. Know what it is that you need and shop accordingly!

Am I Qualified?

There’s no need to examine a lender in detail if you won’t qualify for its loans in the first place. Try to find and examine a lender’s minimum qualifications before going through the terms and fees with a fine-toothed comb.

Vendors of business loans nearly always inquire about your time in business, credit rating, and revenue. On each of these measures, the lender may have a strict cutoff point where, if you don’t meet the benchmark, you don’t qualify. Alternately, they may just use this information to determine your rates. Either way, it’s information you’ll need to provide.

Do The Rates & Terms Meet My Needs?

It’s obviously important to consider a lender’s rates and terms when deciding on what loan to pursue. Make sure you can afford the funding; nothing will give you nightmares like taking out a loan you can’t repay. However, a lender’s reputation and business practices are equally important. To get a sense of just how a lender treats its customers, try to find user feedback on the company in question wherever you can. Read enough reviews (we do business loan reviews, you know!) and borrower feedback and you’ll get a pretty good idea as to whether the lender is an honest broker or a predator fixing to bleed you dry.

What You Need To Apply For HVAC Business Loans

The number of documents you’ll have to round up depends on the lender. Naturally, you’ll need the basics — name, business name, address, telephone number, email address, social security number, and federal tax ID number. Many lenders will require much more, however. Here are some documents you should be prepared to submit, depending on the lender:

  • Business & Personal Credit Reports/Score
  • Business & Personal Bank Statements
  • Business & Personal Tax Returns
  • Profit & Loss Statements
  • Balance Sheets
  • Income Statements
  • Business Licenses
  • Business Owner Resumes
  • A Business Plan

For a more thorough look at how to apply for a business loan, read our in-depth take on business loan requirements.

Final Thoughts

Now more than ever, we need the HVAC industry at the top of its game. As I write this, wind-driven fires have spread dangerously smoky air over large parts of my tinder-dry home state of California, and proper indoor ventilation is literally the last line of defense for many in the affected areas.

When seeking a loan for your HVAC company, do your due diligence, explore all your options, and get your documents in order. This should set you up nicely for getting the loan that paves the way for your success.

The post Business Loans For HVAC Companies appeared first on Merchant Maverick.

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

business loan reasons

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

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

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

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

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

1. Start A Business

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

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

2. Increase Working Capital

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

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

3. Purchase Inventory

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

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

4. Purchase Equipment

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

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

5. Hire New Talent

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

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

6. Expand Products/Services

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

7. Open A New Location

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

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

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

8. Pay Taxes

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

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

9. Create A Safety Net

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

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

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

10. Refinance Another Loan

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

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

11. Buy A Business

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

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

12. Buy Out A Partner

business loan vs personal loan

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

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

13. Cover Construction Costs

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

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

14. Cover Unpaid Invoices

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

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

15. Buy Insurance

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

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

16. Cover An Unexpected Expense

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

17. Advertise Your Business

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

18. Build Credit

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

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

19. Take Advantage Of A Business Opportunity

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

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

Types of Business Loans

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

Resource Description

Startup Loan

Financing for businesses 6 months old or younger.

Crowdfunded Loan

Funds sourced from a network of backers or investors. 

Small Business Grant

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

Working Capital Loan

Financing to cover daily operating expenses of running a business.

Business Line of Credit

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

Short-Term Loan

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

Business Credit Card

Credit card used for business expenses.

Equipment Financing

Self-securing loan to finance major equipment purchases.

Installment Loan

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

Long-Term Business Expansion Loan

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

Real Estate Crowdfunding

Crowdfunded capital to purchase real estate for a business.

Merchant Cash Advance

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

Business Acquisition Loan

Loan to purchase a business.

Franchise Loan

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

SBA 7(a) Loan

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

Commercial Real Estate Loan

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

Hard Money Loan

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

Invoice Factoring

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

Emergency Business Loan

Fast loans to cover business funding emergencies. 

Installment Loan

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

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

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

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

smartbiz logo

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

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

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

lending club logo

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

Short-Term Loan

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

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

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

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

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

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

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

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

Merchant Cash Advance

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

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

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

Lender Borrowing Amount Min Credit Score Time To Funding Next Steps

$5K – $500K 550 1-3 Days Apply Now

$2K – $5M 550 1-2 Days Apply Now

$5K – $500K 500 2-5 Days Apply Now

$5K – $250K 500 2-5 Days Apply Now

Business Credit Card

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

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

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

Business Line of Credit

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

Lender Borrowing Amount Draw Term Draw Fee APR Next Steps

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

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

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

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

Invoice Factoring

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

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

Equipment Financing

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

We recommend the following equipment financers:

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

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

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

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

Do You Need A Business Loan? Next Steps

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

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

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

3. Calculate how much you can afford to borrow.

4. Take a look at our favorite lenders.

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

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

Final Thoughts

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

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

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

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

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

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

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

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

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Financing And Loan Options For Manufacturing Companies

Operating a manufacturing business is extremely rewarding. Whether you’re creating products that ship directly to retailers or you’re working with other manufacturers, the potential for profits is great. However, as you’ve likely already seen in your business, owning a manufacturing company isn’t all smooth sailing. In order to make those big profits, you have to invest in your business.

Once you have steady cash flow, it’s easy to cover day-to-day operating expenses. But what happens when your bank account is running a little low or a major expense poses a threat to your operations? From emergencies to expansions to cash flow shortages, there are multiple scenarios where you fall a little short financially.

Instead of worrying, take action. When your manufacturing business has an expense you can’t handle on your own, there are loan and financing options for any situation. Don’t panic if you’re unsure of where to start. In this post, we’ll cover the types of loans available for your business, how to choose the right lender, and what to expect when it’s time to apply.

Read on to learn more and take the next step to fund your manufacturing business.

Financing Need Best Loan Type Recommended Lender
Purchasing Equipment Equipment Financing Lendio
Purchasing Materials Line Of Credit FundBox
Business Expansion SBA Loan SmartBiz
Cash Shortages Invoice Factoring BlueVine
Hiring, Training & Covering Payroll Term Loan OnDeck
Marketing & Advertising Business Credit Card Chase Ink Preferred

How To Finance A Manufacturing Company

Your business is unique, and so are its financial needs. The type of loan or financial product you select is primarily centered on how you plan to use your funds. For example, if you want to purchase real estate, you should seek out long-term, low-interest options instead of a short-term loan. If you need to cover this month’s payroll, an equipment loan won’t help you out. The key is to identify why you need the money and select the right financial solution for your situation.

Purchasing Equipment

No matter what type of manufacturing business you operate, you need equipment to keep operations running efficiently. If you manufacture clothing or garments, sewing machines and pressing machines are essential equipment. If you operate a furniture manufacturing business, your business needs saws, planers, sanders, and other expensive tools and equipment.

Over time, your equipment may become old and outdated. Or maybe your equipment is still in good working order but you need to add more as part of an expansion. Either way, buying equipment doesn’t come cheap, and funding these expenses out-of-pocket can be tough, if not impossible. Instead of breaking the bank, you have a more affordable option: equipment financing.

Equipment Financing

When you receive an equipment loan, your lender will fund the full purchase price of your equipment. After paying a small down payment of 10% to 20%, you can take possession of the equipment and put it into use immediately. Then, you’ll simply make scheduled payments to your lender, which are applied to the balance of your loan (and toward any additional fees and interest charged for taking the loan).

With a high credit score, you may be able to qualify for $0 down financing. However, if at all possible, you should make a down payment to lower your scheduled payments and reduce the overall cost of borrowing.

Equipment loans can only be used to purchase equipment, including machinery, tools, furniture, fixtures, and vehicles. When you receive equipment financing, additional collateral is typically not required. Instead, the equipment being financed serves as the collateral and can be repossessed if payments are not made as agreed. Once your loan has been paid off, the equipment is yours to keep, sell, or trade.

Equipment leases are another option to consider. When you take out an equipment lease, you can use the equipment for a set period of time, such as 2 years. At the end of your lease, you have two options: pay a lump sum to purchase the equipment or return the equipment and sign another lease for new equipment. Unless you pay the remaining balance at the end of the lease, you will never take ownership of the equipment. This may be a good option for you if you update your equipment frequently or if you desire a lower down payment and lower monthly payments.

Recommended Option: Lendio

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Lendio isn’t a lender; rather, it is a loan aggregator that matches you with a lender that best fits your needs. One of the financial products offered through Lendio’s service is equipment loans.

Through Lendio, you can apply for $5,000 to $5 million to finance your equipment purchase. Repayment terms are available from 1 year to 5 years, with interest rates as low as 7.5%.

To qualify with a lender through Lendio’s network, a time in business of at least 12 months is required. You must also have at least $50,000 in annual revenue and a personal credit score of 650. If your credit score falls below this threshold, solid cash flow and revenue could still help you qualify for financing.

Purchasing Materials

Image of hands holding credit card and pressing a keys of keyboard

As a manufacturer, you need materials to manufacture your goods to sell to other manufacturers or retailers. When you don’t have the right materials, you can’t produce your goods, which negatively affects your revenue. If financial troubles prevent you from buying the materials you need, keep your business operating without a hitch by using a line of credit for your purchases.

Lines Of Credit

A line of credit is a flexible form of revolving credit. Instead of receiving a lump sum payment, your lender will assign a credit limit. You can make draws from your credit line as often as you need for any amount within your set limit. This is ideal when you need to make multiple purchases over a period of time or you’re unsure of the exact amount of money you need.

You can use your line of credit for any business expense, including purchasing supplies, materials, and inventory. Once you make a draw from your line of credit, the funds are typically transferred immediately and will be deposited in your business bank account as soon as the next business day. Interest or fees are charged only on the used portion of the credit line. As you pay down your balance, the funds will become available for you to use again.

It’s easy for most business owners to qualify for a line of credit. However, the best rates and terms and the highest credit limits are given to the most established, creditworthy businesses.

Recommended Option: FundBox

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FundBox provides revolving lines of credit up to $100,000. When you make a draw, payments are made over a period of 12 or 24 weeks. Equal payments are made weekly and are withdrawn directly from your checking account.

Fees for drawing from your Fundbox line of credit start at 4.66% of the total draw amount. Your fee will be based on the health of your business. If you repay early, any remaining fees are waived, helping you save money.

To qualify for a Fundbox line of credit, you must have a business checking account and at least $50,000 in annual revenue. You must show two months of activity in Fundbox-supported accounting software. If you don’t have activity in accounting software, bank statements from the last three months are acceptable.

Business Expansion

Your business is growing, and it’s time to expand. There’s just one problem: expansion costs money that you don’t have. Purchasing commercial real estate, funding improvements for your facility, building an addition, or constructing a new building all come at a price that even the most successful manufacturing companies can’t pay up front. When it’s time to expand your business, move forward with confidence with the help of a Small Business Administration loan.

SBA Loans

The Small Business Administration provides a variety of resources to help small business owners succeed. One of the best resources is the organization’s low-cost, flexible loan options. SBA loans are available through lenders known as intermediaries. This could be banks, credit unions, or nonprofit organizations.

If you’ve applied for a business loan through a traditional lender like a bank, you may have been turned down. With an SBA loan, your chances for approval are higher because these loans are guaranteed by the government in amounts up to 85%, so there’s less risk for the lender.

One of the most popular types of loans for large expenses like business expansion is the 7(a) loan. With a 7(a) loan, up to $5 million is available to qualified businesses for nearly any business purchase, including commercial real estate, land development, improvements and upgrades, equipment, and more. Loan terms are set at 10 years for most purposes, although real estate purchases have terms up to 25 years.

The cost of borrowing varies based on the type of loan you select and the amount borrowed. The SBA has a set of standards used by its intermediary lenders to keep interest rates low, making loans more affordable for business owners.

Recommended Option: SmartBiz

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Applying for an SBA loan doesn’t have to be difficult or stressful when you work with a lender like SmartBiz. SmartBiz simplifies the SBA application process, helping you get the money you need as quickly as possible.
There are two types of SBA loans available through SmartBiz: working capital and debt refinancing loans and SBA 7(a) commercial real estate loans.

With working capital and debt refinancing loans, you can apply for $30,000 to $350,000 to use for business expansion, marketing, hiring employees, purchasing inventory, or refinancing existing debt. Interest rates are between 8% and 9% with repayment terms of 10 years. To qualify, you must be in business for at least 2 years and have a personal credit score of at least 650.

SmartBiz also offers SBA 7(a) commercial real estate loans from $500,000 to $5 million. You can use these funds to purchase a new commercial property or refinance your existing property. Rates are between 6.75% and 8% with repayment terms of 25 years. To qualify for this loan, you must be in business for at least 2 years with a credit score of at least 675. Any property funded with loan proceeds must be at least 51% owner-occupied.

Additional requirements for SBA loans include no outstanding tax liens, recent charge-offs, or defaults on government loans. You must not have any bankruptcies or foreclosures within the last 3 years. You must also qualify as a small business based on the SBA’s definition, which limits your company’s net worth, number of employees, and annual revenues.

Cash Shortages

Cash shortages happen to everyone. A seasonal drop in sales, an unexpected emergency expense, or another situation could leave your bank account running a little short. Sometimes, the real problem is your unpaid invoices. For times when money is tight, invoice factoring can help make up for these shortages.

Invoice Factoring

Unpaid invoices can leave you in a financial bind. Instead of waiting weeks or months to receive payment, consider invoice factoring. If you’re a B2B business and you have unpaid invoices, you may qualify for this type of financing. With invoice factoring, a lender pays a large portion of an unpaid invoice directly to you. Once the invoice is paid by the customer, the remaining amount of the invoice is paid to you after the lender takes any fees charged for the service.

With invoice factoring, the invoices are the collateral for the loan. A high credit score is typically not needed to qualify. Your invoices are the most important factor in this type of financing. A lender will ensure that your invoices are a sufficient amount to cover any fees. Lenders will also make sure that your invoices are for customers who are likely to pay.

Recommended Option: BlueVine

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BlueVine has invoice factoring lines up to $5 million. Rates may be as low as 0.25% per week. You can receive approval in as little as 24 hours when working with BlueVine.

To qualify, you must be in business for at least 3 months and have at least $100,000 in annual revenue. You must be a B2B business and have a personal credit score of at least 530.

Hiring, Training & Covering Payroll

It’s time to expand your business, which means hiring and training new employees, but your funding falls short. Maybe you’re not ready for expansion, and your business is struggling just to cover your current payroll. No matter the situation, a term loan can help.

Term Loans

When you apply for a term loan, you’ll receive a lump sum of money that can be used for any purpose, including hiring, training, covering payroll, or for use as working capital. The terms of these loans vary. While some lenders provide loans for up to 12 months, other lenders may offer repayment terms of several years.

If you’re applying for a short-term loan, one difference you may notice is that a factor rate is used to calculate how much you owe. This multiplier is used to determine the one-time fee that is added to the cost of your loan, replacing a traditional interest rate. The factor rate is based on the lender’s policies, as well as the creditworthiness of the borrower.

Other term loans have a traditional interest rate. Your interest rate and repayment terms will be based upon your creditworthiness and ability to pay back the loan.

One thing to note is that some term loans, such as short-term loans with low borrowing requirements, come at a very high cost. As with any other type of financing, shop around to find the best rates and terms for your business.

Recommended Option: OnDeck

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OnDeck has loan options up to $500,000 for qualified borrowers. There are two different loan options available. Short-term loans come with repayment terms between 3 and 12 months. These loans have simple interest starting at 9%.

Loan options with longer terms are also available. These loans come with terms of 15 to 36 months with annual interest rates starting at 9.99%.

For all loans, origination fees are charged by the lender. For the first loan, fees are between 2.5% and 4% of the total loan amount. Subsequent loans have reduced fees.

To qualify, you must be in business for at least one year and have a gross annual revenue of $100,000. You must have a personal credit score of at least 500 to qualify. Daily or weekly payments are automatically deducted from your checking account.

If you’re looking for other financing options, OnDeck also has lines of credit up to $100,000.

Marketing & Advertising

You want to get the word out about your business to bring in more customers and increase your revenue. Word-of-mouth and free social media advertising may bring more customers your way, but you’re not going to scale at a higher level until you launch a paid marketing and advertising campaign.

Marketing and advertising can get expensive very quickly, although the return on investment is often high enough to justify this expense. But what happens when you just don’t have the extra funds to market and advertise your business and services? A business credit card can help, and you can even be rewarded just for using it.

Business Credit Cards

One of the best things about a business credit card is that it can be used any time for any business purpose. When you have marketing and advertising expenses that need to be covered, you won’t have to wait days or weeks to get financing approval. Instead, you’ll be able to use your credit card immediately to cover the expense.

A business credit card is great for marketing and advertising campaigns because you won’t have to request a specific amount. You can use your card as needed to cover any expense, whether it’s marketing and advertising costs or an emergency expense.

When you’re approved for a business credit card, your lender will provide you with a credit limit. Your purchases can’t exceed the credit limit assigned to your card. You can make multiple purchases with different vendors as needed provided you don’t exceed your credit limit. Each month, you’ll pay at least a minimum payment that will be applied to the borrowed balance and the interest charged on used funds.

Business credit cards can be a very expensive form of financing if you only make the minimum payment each month. Cut down on the amount of interest you pay and the overall cost of borrowing by using your credit card responsibly and paying all or a significant portion of your balance each month.

Business credit cards are available for all types of credit situations. Borrowers with the highest scores will receive the lowest rates and highest credit limits, in addition to the best rewards cards, introductory rates, and bonus offers. There are options available for fair credit scores that come with higher rates and lower limits. For bad credit borrowers, a secured card requires a cash deposit but helps you rebuild your credit and qualify for additional cards and financial products with responsible use.

Recommended Option: Chase Ink Business Preferred

Chase Ink Business Preferred



Apply Now 

Annual Fee:


$95

 

Purchase APR:


17.99% – 22.99%, Variable

If you have good to excellent credit and need a business credit card, consider applying for the Chase Ink Business Preferred card. This card has a variable APR of 17.99% to 22.99%. There is a $95 annual fee associated with this card.

This credit card is great for marketing and advertising expenses. You’ll earn 3 points for every $1 spent on advertising purchases with search engines and social media platforms. You’ll also earn 3 points for every $1 for shipping purchases, travel, cable, internet, and phone purchases. It’s important to note that this offer is only valid for the first $150,000 spent in combined purchases.

For all other purchases, you’ll receive 1 point for every $1 spent. If you redeem your points for travel through Chase Ultimate Rewards, they’re worth 25% more, giving you the most bang for your buck.

The Chase Ink Business Preferred Card also has a bonus offer of 80,000 points when you spend at least $5,000 within three months of opening the account.

Does The Government Offer Loans For Manufacturing Companies?

There are so many options when it comes to financing your manufacturing company. You have traditional lenders like banks and credit unions. You have alternative lenders that you can seek out online. You even have government loan options available to you.

One of the most popular government loan options has already been discussed in this post: SBA loans. These loans are backed by the government, so lenders feel more comfortable approving them since there’s less risk. In addition to the 7(a) loan that is open to any qualified small business owner, the SBA has programs for veterans, startups, and businesses operating in underserved areas.

Another option to consider is the United States Department of Agriculture’s Business & Industry Loan Program. This government-backed loan program allows lenders to provide affordable loans to businesses that don’t qualify for traditional financing. Any business that saves or creates jobs in a rural area is eligible to apply. This includes manufacturing businesses.

These loans can be used for almost any purpose, including acquiring a business, updating or constructing facilities, purchasing equipment and supplies, paying startup costs, or for use as working capital. Loan proceeds can also be used to refinance certain types of debt. These loans come with terms between 7 and 30 years. Most loans distributed through this program are between $200,000 and $5 million.

The Best Loan Options For Starting A Manufacturing Business

The options previously discussed work well for established businesses, but what happens when you need financing for a manufacturing business that hasn’t even been started yet? You need capital to fund your venture, but it seems impossible to receive a loan … or is it?

If you need capital to start a manufacturing business, you have to know where to look. At times, you may even have to get a little creative. Since traditional lenders like banks prefer to work with low-risk borrowers, you won’t be able to receive a loan, right? Not exactly. If you have a high personal credit score, you can apply for a personal loan through your bank, credit union, or another lender for money to start your business. Since it’s a personal loan and not a business loan, your business information — or lack thereof — won’t be a consideration for approval. You will, however, need a solid credit score and income that is sufficient to pay back the loan.

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

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

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

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

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

If you don’t want to go that route, there are additional options. Microloans are perfect for startups and new businesses. The SBA Microloans program provides up to $50,000 for startups, new businesses, and established companies. These loans are available through nonprofit intermediary lenders. Other nonprofit organizations also provide microloans to eligible business and startup owners.

You can also look to private investors. Peer-to-peer loans have less stringent requirements than traditional loans and may be an option to explore. You can also spread the word about your business and appeal to investors with crowdfunding. If you have a family member or friend that believes in your business and has money to invest, a loan from that person is a possibility. Just remember, no matter who gives you the money, borrow responsibly, read and understand all contracts, and pay your loan as agreed to start your business off on the right foot.

What To Consider When Choosing A Lender

5 C's of Credit: What Lenders Look For

Now that you’re familiar with the types of loans available for your manufacturing business, you may be tempted to jump online and start an application. Before you apply, you still need to choose a lender. The internet gives us access to more lenders than ever, so you may be tempted to just pick and choose based on what your search engine pulls up. However, a smart business owner knows the importance of shopping around for the best rates and terms.

Before you choose a lender, consider these factors to help narrow down your choices so you can feel confident that you’ve selected the most affordable financing option for your situation.

What Is The Loan Used For?

This question should be easy to answer. Why do you need money? Once you know how you’re using the money, you can choose the type of loan that’s best for the situation. For example, if you need a more flexible option for making purchases or in case of an emergency, apply for a line of credit or credit card. If you want to make an expensive real estate purchase, you don’t want a high-cost, short-term option. Instead, an SBA loan would be the best choice.

Once you know which type of loan you need, you can narrow your search to include only those lenders offering these products. You won’t apply with a short-term lender for an SBA loan or a lender that specializes in equipment loans when you need a flexible line of credit. Choose your loan, then narrow down your pool of lenders based on your business needs.

How Much Money Do I Need?

This is another simple question. How much money do you need? If you want to purchase equipment that costs $150,000, a lender that has maximum loan amounts of $100,000 won’t be a match. Before you fill out an application, calculate how much you need, how much you can afford, and find a lender that offers that amount.

Do I Qualify?

Applying for loans you won’t qualify for is simply a waste of time. If a lender has annual revenue, time in business, or credit requirements you just don’t meet, move on to another option. If you have challenges in these areas, find a lender that works with your specific situation. For example, if your credit score is low, consider loan options that are based on the performance of your business. If you have a new business, apply for loan options that work for startups and new businesses, like microloans. Also, take collateral and down payment requirements into account when selecting your lender and applying for a loan.

One important step to take before you apply for a loan is to know your credit score. Pull your free credit score online and review your credit report for errors. If your financing need isn’t immediate, take steps to raise your score if it’s low. With an improved credit score, you’ll qualify for more financing options that are more affordable and come with more favorable terms.

Do The Rates & Terms Work For My Business?

A loan may help you out right now, but you have to consider whether it will benefit your business over the long term. You want to select a lender that offers loans with the lowest rates and best terms you are qualified to receive. A short-term loan may be funded fast, but daily payments and a high factor rate could become a burden. In this situation, you could save hundreds or even thousands of dollars by waiting for a long-term option with better rates and terms.

Of course, in some situations, getting a loan quickly is important. Even so, shop around to make sure that you get a loan that you’ll be able to afford that has payment terms that are best for your business.

What You’ll Need To Apply For A Loan

Some types of financing for your manufacturing business require very little information about yourself and your business. For example, your name, business name, federal tax ID, social security number, contact information, and annual revenue may be all that’s required to qualify for a business credit card. However, there are other loans that require much more information and documentation before you’re approved.

Before you apply, you can get the specific requirements from your lender. However, you may want to go ahead and gather a few documents, including:

  • Business & Personal Tax Returns
  • Business & Personal Credit Scores/Reports
  • Business & Personal Bank Statements
  • Profit & Loss Statements
  • Balance Sheets
  • Licenses & Articles Of Incorporation
  • Business Plan
  • Future Projections
  • Account Numbers & Balances If Refinancing Debt

Your requirements may vary based on the lender you select, the type of loan you’re applying to receive, and the amount of your loan. Sometimes, a lender may even require additional information after you’ve submitted your application and documentation. Be prepared to offer this additional information promptly to move one step closer to approval and funding.

Final Thoughts

You need money just to keep your manufacturing business operating each day. This amount increases even more when you face a challenging situation, from growth and expansion to emergency expenses.

When you need money, it’s important to not stress yourself out over the situation and remember that you have financial options. Take a deep breath, run some calculations, pick your lender, and apply for the financing you need. You’ll be out of your financial rut and heading toward success again in no time.

The post Financing And Loan Options For Manufacturing Companies appeared first on Merchant Maverick.

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Top Business Financing Options For Contractors

As a professional contractor, it takes the right resources to complete each job. From equipment to employees and insurance, careful planning, preparation, and the right tools for the job are always required. No matter what type of contractor you are, you have one thing in common with other contractors and business owners: the need for capital to operate and expand your business.

While it’s great to be able to pull the funds you need from your own bank account to cover your expenses, this isn’t always a possibility. For times when you need financial help, consider a business loan for contractors. A business loan can be used to expand your business, fund daily operating expenses, or fill in gaps during seasonal lulls.

Before you start your loan application, first understand the types of loans available to you and which is best for boosting your business. Whether you’re an electrician, carpenter, plumber, painter, or another type of contractor, you have financing options.

Read on to learn more about business loans for contractors, choosing your lender, and how to apply for the financing you need.

Financing Need Best Loan Type Recommended Lender
Purchasing Equipment Equipment Loan Lendio
Supplies & Inventory Line of Credit Kabbage
Working Capital SBA Loan SmartBiz
Marketing & Advertising Short-Term Loan LoanBuilder
Emergency Funds Business Credit Card Chase Ink Business Cash
Cash Shortages Invoice Financing BlueVine
Hiring, Training & Payroll Installment Loan OnDeck

Purchasing Equipment

No matter what industry you’re in, as a contractor, heavy equipment is a must for your business. If you specialize in land grading, a skid steer is necessary to complete each job. Maybe you need a work van or truck to move from job to job or even an equipment trailer to transport your equipment around town. Regardless of what type of equipment you need for your projects, one thing is certain: equipment can be expensive.

Even if your business is successful, tying up tens of thousands – or even hundreds of thousands – of dollars from your own pocket could be financially damaging to your company. Instead of shouldering this financial burden alone, consider applying for an equipment loan.

Equipment Loans

With an equipment loan, the lender provides funding to purchase equipment. You’ll pay just a small down payment — typically 10% to 20% of the purchase price — and can then put the equipment into use immediately. You’ll then repay the loan with interest through regularly scheduled payments that are typically made monthly or weekly.

Equipment loans can be used to purchase all types of equipment, from heavy equipment to vehicles. The equipment purchased with loan proceeds is used as the collateral. Repayment terms, interest rates, and down payment requirements are determined by the lender and are typically based on creditworthiness, annual revenue, and other factors.

Recommended Option: Lendio

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When you’re shopping around for business loans, Lendio is an excellent resource. Lendio is a loan aggregator, which means that you’ll connect with multiple lenders with just one application. Once you’ve filled out the application, you’ll receive offers and can easily compare which are the best for your business.

Lendio connects contractors and other business owners with a variety of financial products, including equipment loans. Interest rates start at 7.5%. Borrowers can apply to receive between $5,000 and $5 million. Repayment terms of 1 to 5 years are available. Loan proceeds can be used for the purchase of any type of equipment, including heavy equipment, software, office furniture and fixtures, vehicles, appliances, and more.

To qualify, you must have $50,000 in annual revenue. You must be in business for at least 12 months, and a minimum credit score of 650 is required. If your credit score is lower than 650, you may be matched with a lender if you have solid cash flow and revenue.

Supplies & Inventory

In addition to equipment, supplies and inventory are also important to the operations of your business. No matter what type of supplies you need — lumber, hand tools, paint, ladders — these expenses can pile up quickly.

If you’re in need of inventory and supplies but your cash flow is a little short, you can receive a loan to cover this expense. A financial product that works well for supply and inventory purchases is a line of credit.

Lines Of Credit

A line of credit is a flexible financing option that can be used as needed. When you receive a line of credit, you can make multiple draws up to and including your assigned credit limit. Once a draw is initiated, most lenders transfer funds immediately, which are then available in your business checking account as soon as the next business day.

A line of credit can be used to purchase supplies and inventory and comes in handy when you’re unsure of exactly how much money you need. Interest is only charged on the borrowed amount. As you repay your line of credit, funds become available for you to use again as needed.

Credit score, time in business, and annual revenue requirements vary by lender. Some lenders put more weight on incoming cash flow over personal credit score, making it possible for business owners with credit challenges to receive a loan.

Recommended Option: Kabbage

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Kabbage is a lender that offers lines of credit up to $250,000 to qualified borrowers. Repayments are made on a monthly basis over a period of 6 or 12 months, which is determined by the amount borrowed. Fee rates vary from 1.5% to 10% based on business performance.

One of the benefits of working with Kabbage is access to the Kabbage card. This card gives you instant access to funding. Use your Kabbage card like a credit card for on-the-spot payments without waiting for a transfer. Once you’ve made a purchase, a new loan will be created under your account with the same rates and terms as traditional draws.

To qualify for a Kabbage line of credit, you must have either $50,000 in annual revenue or $4,200 in monthly revenue for the last 3 months. You must be in business for at least 1 year to qualify. During the application process, your business accounts — such as business checking, PayPal, Amazon, and Stripe — are connected to determine your maximum credit limit.

Working Capital

Every business needs working capital — money that’s used to pay day-to-day operating expenses. While your incoming cash flow should cover these regular expenses, it’s not uncommon to come up a little short from time to time. A slow season, unexpected expenses, and other issues could affect your incoming cash flow and your amount of working capital. When you don’t have adequate working capital, operations can slow … or come to a screeching halt.

If you need working capital and you have a solid credit score, one option to consider is a Small Business Administration loan.

SBA Loans

The Small Business Administration, or SBA, helps business owners succeed through its resources and programs, including small business loans. The SBA offers multiple loan options for small business owners. All loans are distributed through SBA-approved lenders known as intermediaries.

Loan Program Description More

7(a) Loans

Small business loans that can be used for many many business purchases, such as working capital, business expansion, and equipment, inventory, and real estate purchasing.

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Microloans

Small loans, with a maximum of $50,000, which can be used for working capital, inventory, equipment, or other business projects.

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CDC/504 Loans

Large loans used to acquire fixed assets such as real estate or equipment. 504 Loans are offered in partnership with Community Development Companies (CDCs) and banks.

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Disaster Loans

Loans used to rebuild or maintain business following a disaster. 

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The 7(a) loan program provides up to $5 million for any business purpose with repayment terms of 10 or 25 years. The Express loan is similar to the 7(a) loan but is available in amounts up to $350,000 and comes with an approval decision guaranteed within 36 hours. The SBA Microloans program provides up to $50,000 for smaller capital needs. There are also financing opportunities for veterans, service members, and businesses operating in underserved areas.

While SBA loans have more stringent borrower requirements than other loans, those who qualify will receive competitive interest rates and terms. Many SBA loans, including the ones previously mentioned, can be used for working capital needs.

Recommended Option: SmartBiz

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SmartBiz makes the SBA loan application process easier than ever. Through this lender, you can apply for loans between $30,000 and $350,000 to use for working capital or debt refinancing.

Interest rates are currently 8% to 9% — the prime rate plus 2.75% to 3.75%. Fees will need to be paid to receive a loan, including a packaging fee, referral fee, and guarantee fee. Specific collateral is not needed but a blanket lien is required.

To qualify for a SmartBiz SBA loan, you must be in business for at least 2 years. A minimum personal credit score of 650 is required. Other credit requirements include no bankruptcies or foreclosures in the last 3 years, no open tax liens, and no outstanding collections. Business owners that have past defaults or delinquencies on government loans are ineligible. You must meet the standards of a small business as defined by the SBA, which limits annual revenues, number of employees, and company net worth. You must also show that you have sufficient cash flow and can afford to pay the loan.

Marketing & Advertising

You can’t grow your contracting business without marketing and advertising. To gain new clients and increase your revenue, a marketing and advertising campaign is a must.

Unfortunately, this comes at a price. Of course, you could rely on free methods to get the word out about your business. However, to efficiently and effectively scale your business, a paid campaign is key. A short-term loan could provide you with the extra funds you need to launch your marketing and advertising campaign.

Short-Term Loans

A short-term loan is a loan for a specific amount of money that is paid back over time. While many short-term loans have repayment terms of 12 months or less, more lenders are loaning money with longer terms up to 3 years.

Short-term loans can be used for any business purpose, including funding a marketing and advertising campaign. Many short-term lenders have fewer requirements and can release funds quickly – sometimes even within 24 hours.

One difference with short-term loans, when compared to other financing options, is that a factor rate is used in place of an interest rate. This factor rate is a multiplier that determines the lender’s fee, which is added to the loan balance.

If you pursue a short-term loan for marketing and advertising, it’s necessary to plan out your campaign. Since your loan will be for a specific amount, you’ll need to know exactly how much you plan to spend. If you’re looking for a more flexible option, consider a line of credit to fund your next campaign.

Recommended Option: LoanBuilder

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LoanBuilder, by PayPal, offers short-term loans for $5,000 to $500,000. Repayment terms are between 13 to 52 weeks. Repayment terms are based on the amount of the loan. A one-time fee of 2.9% to 18.72% of the borrowed amount is added to the loan. A blanket lien is required to receive this loan. Once approved, funds can be transferred to your banking account as soon as the next business day.

To qualify for a LoanBuilder loan, your business must be in operations for at least 9 months. An annual revenue of $42,000 and a personal credit score of at least 550 is required. You can’t have any active bankruptcies in order to qualify. The lender will review your credit history and the health of your business to determine your maximum loan amount and rates.

Emergency Funds

An unexpected expense pops up, and you don’t have the money in your account to cover it. This is a scenario that can be stressful for the most level-headed and prepared business owner.

If you don’t have an emergency fund of your own and shuffling your finances to cover an emergency expense isn’t working out, take control of the situation by applying for a business credit card.

Business Credit Cards

If you’ve ever had a personal credit card, you already know how this works. After approval, the lender gives you a credit card that can be used anywhere credit cards are accepted. Your credit card comes with a credit limit. You can make multiple purchases up to and including this limit.

Each month, you make a payment toward the balance and the interest charged by the lender. As you pay down the balance, funds become available to use again. Interest is charged only on the borrowed portion of funds. A credit card can be used for any business expense, such as purchasing supplies or paying recurring expenses. A credit card is a good choice for emergency expenses because it’s available to use immediately. Once you’re approved by the lender and have received your card, you can use it whenever you want without having to wait.

Interest rates are based on your creditworthiness. Credit cards for fair credit scores are available. If your score is very low, you may qualify for a secured card, which requires a cash deposit. By using and paying your card off responsibly, you can increase your credit limit, improve your credit score, and qualify for additional cards or loans with better rates and terms.

Many credit cards even come with rewards programs, which reward you for using and paying off your card. You’ll rack up points to receive cash back, hotel stays, or other benefits with responsible use of your card.

Recommended Option: Chase Ink Business Cash

Chase Ink Business Cash



Apply Now

Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

The Chase Ink Business Cash credit card is a popular choice with business owners that have good to excellent personal credit. The Chase Ink Business Cash card comes with an introductory 0% APR for the first 12 months. After the introductory period, rates are 15.24% to 21.24%.

If you spend $3,000 or more within the first 3 months of opening your account, you’ll receive $500 cash back. The rewards continue with 5% cash back on the first $25,000 spent toward internet, cable, phone, and office supply store purchases every year. You’ll receive 2% cash back for the first $25,000 spent at restaurants and gas stations every year, and 1% cash back on every other purchase.

Cash Shortages

From time to time, cash shortages occur in your business. Even when cash flow slows, expenses still need to be paid. Cash flow shortages occur for a number of reasons, from winter slowdowns to slow-paying customers.

If your issue is the latter and you’re waiting to receive payment for completed jobs, cut down your waiting time by applying for invoice financing.

Invoice Financing

Invoice financing is a type of loan that is borrowed against unpaid invoices. There are two types of invoice financing: invoice factoring and invoice discounting.

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’ll receive a partial payment for your unpaid invoices. Once the lender collects the total invoice amount from your customer, you’ll be paid the remaining amount, minus fees and interest.

With invoice discounting, you’ll receive approximately 90% to 95% of the total invoice. Once you collect full payment from the customer, you’ll repay the lender for the loan, including interest and fees.

Personal credit often doesn’t play a significant role in qualifying for invoice financing. Instead, the quantity and quality of the invoices are most important. That is, are the invoice totals enough to cover fees and interest charged by the lender, and are your customers likely to pay? You also must be a B2B business in order to qualify for invoice financing.

Recommended Option: BlueVine

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BlueVine provides invoice factoring lines up to $5 million. Rates are as low as 0.25% per week, with funding approvals as fast as 24 hours.

With BlueVine’s invoice factoring, you’ll receive 80% to 85% of your invoice total immediately. Once the invoice is paid, you’ll receive the remaining amount after fees have been paid to the lender.

To qualify, you must have a personal credit score of at least 530 and a time in business of at least 3 months. You must also be a B2B business with at least $100,000 in annual revenue.

If you don’t qualify for invoice factoring from BlueVine, the lender also offers lines of credit up to $250,000 with rates starting at 4.8%.

Hiring, Training & Covering Payroll

Your business is growing, and you’re taking on new projects. This is what you’ve worked so hard to achieve, but what happens when you don’t have the manpower to complete all your jobs? The logical answer is to hire and train new employees, but what do you do when you don’t have the funds to bring on new hires?

Whether you’re stalling on hiring and training new employees due to financial issues or you’re struggling to cover your current payroll, an installment loan may be the solution.

Installment Loans

An installment loan is a loan that is paid in regularly scheduled installments. You’ll receive a lump sum of money, which is paid back over time along with interest.

Installment loans provide you with the money you need for any business expense. You’ll have money in your account to pay your expenses, such as covering payroll or hiring new employees, and can repay it through more manageable daily, weekly, or monthly payments. Rates, terms, and borrowing limits vary by lender and are typically based on creditworthiness and your ability to repay the loan.

Recommended Option: OnDeck

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OnDeck offers small business installment loans up to $500,000. Eligible borrowers can apply for short-term loans with repayment terms of 3 to 12 months or long-term options with repayment terms of 15 to 36 months. Daily or weekly repayment plans are available.

Short-term loans have simple interest rates starting at 9%, while long-term loans have annual rates as low as 9.99%. An origination fee between 2.5% and 4% of the total loan amount is required, and fees are reduced for repeat customers. Interest rates are based on business and personal credit scores, as well as the performance of your business.

To qualify, your business must be in operations for at least one year. You also need a personal credit score of at least 500 and $100,000 in annual revenue.

Best Financing Options For Contractor Startups

You have the skills, you have the drive, and you’re ready to start your contracting business. There’s just one problem: you don’t have the money to start your business and traditional lenders aren’t taking you seriously. Before you throw in the towel, know that there are financing options that will help you get your business off the ground.

Startup and new business owners can look into SBA Microloans, which provide up to $50,000 to cover startup expenses. The average loan amount given through this program is $13,000. SBA Microloans are available through SBA-approved nonprofit intermediary lenders.

SBA 504 Loans

Borrowing Amount

$500 – $50,000

Term Lengths

Up to 6 years

Interest Rates

6.5% – 13%

Borrowing Fees

Possible fees from the loan issuer

Personal Guarantee

Guarantee required from anybody who owns at least 20% of the business

Collateral

Collateral normally required, but depends on the lender

Down Payment

  • No down payment for most businesses
  • Possible 20% down payment for startups
  • Possible 10% down payment for business acquisition loan

If you don’t qualify for an SBA loan, you can also apply for microloans through nonprofit organizations and alternative lenders like those below:

Lender Max. Borrowing Amount Rates Req. Credit Score Next Steps

$500,000

2.9% – 18.72% factor rate

550

Apply Now

$250,000

9% – 36% factor rate

500

Apply Now

$500,000

9.4% – 99.7% APR

500

Apply Now

Another option to consider is taking out a personal loan to use for startup expenses. With this strategy, you can receive an affordable loan with favorable terms (if you have a solid credit score) from lenders like these:

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

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

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

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

lending club logo

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

Peer-to-peer, or P2P, loans may be another option for funding your new business venture. Crowdfunding and loans from friends and family are additional loan options available to cover startup costs.

What To Consider When Choosing A Lender

5 C's of Credit: What Lenders Look For

Before you begin the application process, you must choose the right lender. The internet gives you access to more lenders than ever. While this gives you more choices, it can also complicate the process of finding the right lender that offers the loan you need.

The goal of your loan is to advance your business. You want to ensure that your return on investment is worth the cost of the loan. You also want to make sure that you work with a lender that provides the best rates and terms for your financial situation.

To narrow down your choices, ask yourself a few key questions. Once you’ve answered these questions, you’ll be one step closer to selecting your lender and applying for your business loan.

Why Do I Need A Loan?

Before you apply for a loan, ask yourself why you need the money. Having a plan for loan proceeds is the first step in responsible borrowing. When you apply for a loan, you’ll need to communicate with your lender how you plan to use the funds.

Knowing how you will use the money will also help you choose a lender. Let’s say you’re seeking a line of credit. A lender that only offers short-term or installment loans won’t fit your needs, so you can scratch this lender off the list and keep shopping.

How Much Money Do I Need?

Calculating how much money you need before applying for a loan is just a financially responsible move. You never want to take money just because it’s offered to you.

For most loans, you need to request a specific amount from your lender during the application process. Before filling out an application, calculate how much money you need. For example, if you’re purchasing supplies or equipment, shop around and gather quotes and bids. While you’re making your calculations, also figure out how big of a loan you can afford.

By determining how much money you need, you’ll be able to immediately eliminate multiple lenders. If you need $150,000 but a lender has maximum borrowing limits of $100,000, you can simply move on to the next financing option.

Am I Qualified?

Every lender will review your personal information and documentation to determine if you are qualified to receive a loan. Applying to a lender with requirements that you simply don’t meet is a waste of time … and creates an unnecessary inquiry on your credit report.

For every lender you’re considering, evaluate all requirements. Is your personal credit score high enough? How about revenue? Does the lender have a time in business requirement, and if so, do you meet it? Can you provide all documentation that is required by the lender? Pull your free credit score, evaluate your finances, and search for a lender based on this information.

If you don’t qualify with one lender — or several — don’t worry. There are plenty of other options available for your specific financial situation.

Do The Rates & Terms Meet My Needs?

Taking out a loan that you can’t afford is a recipe for disaster. While the loan may be helpful over the short-term, the long-term effects can be damaging. This is why you need to make sure that the rates and terms best fit your needs.

Compare interest rates and repayment terms to make sure you’re receiving the most affordable loan for your situation. For example, a short-term loan that’s funded quickly may seem like a great option when you need quick cash. However, a loan with a high factor rate, short repayment terms, and weekly payments may quickly become too much for your business to handle. Be smart, be responsible, and shop around before signing on the dotted line.

What You Need To Apply For Contractor Business Loans

The process for applying for a contractor business loan differs based on your chosen loan product and the lender you select. For some loans — such as lines of credit and business credit cards – the application process is quick and easy, and you can be approved minutes after applying. For other financing options – such as SBA loans – the application, underwriting, and approval process may take several weeks or longer.

During the application process, you’ll submit information and documentation to the lender. At the most basic level, you’ll provide basic information including your name, business name, address, telephone number, email address, social security number, and federal tax ID number.

While this may be sufficient for some loans, other loans require more documentation. These requirements include:

  • Personal & Business Credit Reports/Scores
  • Personal & Business Bank Statements
  • Income Statements
  • Profit & Loss Statements
  • Balance Sheets
  • Business Licenses
  • Business Owner Resumes
  • Business Plan

Requirements vary by lender. During the underwriting process, your lender may require additional information. Make sure to make yourself available through email or over the phone to provide additional details and documentation as needed to expedite your loan request.

Final Thoughts

Being a contractor certainly has its advantages and can be a profitable venture. However, running your own business doesn’t come without its challenges — especially when it comes to finances. No matter what scenario you face, knowing your loan options, taking the time to find a lender that meets your needs, and borrowing responsibly can help you clear these financial hurdles.

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