SmartBiz VS National Business Capital

Smartbiz vs National Business Capital

SmartBiz National Business Capital

$30,000 – $5,000,000

Borrowing Amount

$10,000 – $5,000,000

Up to 25 years

Term Length

Up to 25 years

Up to 4%

Borrowing Fee

Unknown

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

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

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

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

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

SmartBiz National Business Capital

2 years

Time In Business

6 months

N/A

Minimum Sales

$15K per month

650 (personal)
150 (business)

Minimum Credit Score

N/A

Qualifying

Winner: National Business Capital

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

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

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

Fees

Winner: SmartBiz

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

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

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

Loan Terms

Winner: Tie

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

Application Process

Winner: SmartBiz

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

Time To Funding

Winner: National Business Capital

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

Transparency

Winner: SmartBiz

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

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

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

Customer Service

Winner: SmartBiz

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

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

Negative Reviews & Complaints

Winner: Tie

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

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

Positive Reviews & Testimonials

Winner: Tie

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

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

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

And The Overall Winner Is…

smartbiz logo

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

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

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

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

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

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

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

Ready to learn more? Let’s dive in!

1. LoanBuilder

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

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

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

2. Accion

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

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

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

3. Credibly

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

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

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

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

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

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

4. QuarterSpot

quarterspot logo

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

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

5. Fora Financial

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

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

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

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

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

6. IOU Financial

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

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

7. BlueVine

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

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

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

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

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

8. Kabbage

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

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

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

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

9. Fundbox

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

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

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

10. OnDeck

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

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

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

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

11. Kiva US

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

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

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

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

How Fast Can I Get A Business Loan?

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

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

What To Do If You Have Bad Credit

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

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

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

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

Final Thoughts

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

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

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

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The Best Business Loan And Financing Resources For Washington Small Businesses

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

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

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

The Best Online Business Lenders For Washington Businesses

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

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

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

Fundera

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

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LoanBuilder

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

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BlueVine

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

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Lending Point

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

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OnDeck

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

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Washington Banks & Credit Unions

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

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

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

Chase Bank

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

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

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

Wells Fargo

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

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

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

 

US Bank

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

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

 

Credit Unions

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

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

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

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

Bad Credit? Your Best Options

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

If your credit is bad, consider:

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

What To Consider When Choosing A Lender

buying a pos system

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

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

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

Final Thoughts

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

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

Just starting out? Check out our resources for startups.

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

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The Best Business 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

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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

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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

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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

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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

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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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How To Finance A Medical Marijuana Dispensary

Financing any small business is a headache, but acquiring funding for a medical marijuana dispensary can be even more of a challenge. Medical — and recreational — marijuana is legalized in states across the nation, but it is still illegal under federal law. These laws make it more difficult for owners of medical marijuana dispensaries to apply for loans, open merchant accounts, or receive other types of financing to cover operating expenses or to scale their businesses.

However, even though financing may be limited, there are options out there. To fund your business, you have to know where to look and even get a little creative when other options don’t pan out. Whether you need money to expand your business or you’re seeking funding for your startup, we’ll review the financing options available to you and how to qualify. Read on to learn more and to move toward financing your medical marijuana dispensary.

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Medical Marijuana Dispensary Funding Challenges

Obtaining funding for any business is no easy task. You have to find a lender that offers the best rates and terms to receive the most affordable loan. Once you’ve identified your lender, you go through the underwriting process, making sure you have all of your paperwork in order to prove that your business is qualified to receive financing. Challenges may pop up throughout the process. Depending on the lender you work with, it may take weeks or even months to receive financing, from start to finish.

With a medical marijuana dispensary, there are even more hurdles you have to clear on the race to financing. Even though more states are legalizing medical marijuana, it remains illegal under federal law. Most lenders want to avoid the potential legal repercussions of working with businesses in the cannabis industry, as these businesses are considered high-risk. Even opening a checking, savings, or merchant account for most medical marijuana dispensaries is a hassle, while receiving financing through traditional lenders is nearly impossible.

And if you do find a financial institution that will allow you to open accounts, there are many associated costs, including fees for background checks and for regular reports to the Treasury Department’s Financial Crimes Enforcement Network. Businesses that don’t have merchant accounts and work with cash have additional business expenses to protect their earnings — think high-tech video surveillance systems and reinforced windows and doors.

In other words, medical marijuana dispensaries have the same expenses as regular businesses (utility bills, property leases, etc.) as well as additional expenses to keep their business protected. These expenses pile up quickly, but due to legal issues, traditional financing is often not an option. Therefore, medical marijuana dispensaries either have to make enough capital on their own to keep the business moving forward, or these business owners have to seek out other means of financing.

See our guide on best practices for using personal credit cards for business expenses

Can I Get A Dispensary Loan From A Bank?

Banks are insured by the Federal Deposit Insurance Corporation. A bank that works with companies that violate federal law will not be insured by the FDIC. This includes medical marijuana dispensaries. Instead of taking on this risk, most banks opt to simply avoid working with businesses in the cannabis industry.

There are also legal issues that a bank could potentially face when working with businesses in the cannabis industry. For example, a bank could be charged with money laundering for accepting deposits from a medical marijuana dispensary. Although the odds of this law being enforced are slim, lenders simply don’t want to take that risk.

For those reasons, most banks will not loan money to medical marijuana dispensaries or other businesses in the cannabis industry. While a FinCEN report showed that over 400 banks in the U.S. operated accounts with marijuana businesses in early 2018 — up 20% from early 2017 — marijuana businesses still do not have access to a full range of banking and financial services offered to other businesses, such as loans, credit cards, and merchant accounts.

When most business owners can’t receive funding from banks, they turn to another great resource: the Small Business Administration. The SBA provides educational materials, training, and low-interest, long-term loan options when small businesses can’t receive traditional loans. Do medical marijuana dispensaries receive access to these same loans?

Unfortunately, the SBA does not work with medical marijuana dispensaries. A policy went into effect on April 3, 2018, that prohibits SBA intermediary lenders from providing loans to businesses in the marijuana and hemp industries.

Though this news may be understandably frustrating if you’re seeking an affordable loan, there are financing options available to you. You just won’t find them at a bank or through the SBA.

Equity Financing For Medical Marijuana Dispensaries

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One option that you may consider to fund your medical marijuana dispensary is equity financing. With equity financing, an investor or group of investors will provide you with the capital your company needs in exchange for ownership interest in your business.

Debt refinancing — traditional loans, lines of credit, and other financial products — requires you to make regular payments along with interest and fees. With equity financing, you’ll receive the money you need without having to make these regular payments. However, the tradeoff is that your investor will own a stake in your company. Once your business becomes profitable and successful, your investor will be able to take a percentage of your profits for the life of your business, unless you buy them out.

The benefit of equity financing is that you won’t have to worry about paying interest or regular payments right away. The drawback is that you are giving up ownership, and in some cases, the investor may be able to have a say in the operations of your business. For example, if later down the road you decide to make a large purchase to expand your business, the equity investor may disagree. With equity financing, you no longer have full control over your business.

The Best Loans For Marijuana Businesses

If equity financing isn’t for you and traditional bank financing and SBA loans are off the table, how do you get financing for your medical marijuana business? Alternative lenders have made it easier than ever to receive funding. While rates and terms may not be as favorable as traditional financing, solid revenues and a high credit score can help you score affordable loans to fund operations or expansion of your business.

While you may find alternative lenders are more willing to work with your business, just know ahead of time that some lenders may have restrictions on financing businesses in the cannabis industry. Before applying, do your research to find lenders that work with medical marijuana dispensaries and other high-risk businesses.

You also need to consider what type of financing you need for your business. Whether you need a flexible line of credit or financing to purchase new equipment, alternative lenders have options available for you.

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Short-Term Loans

When you receive a short-term loan, you’ll receive one lump sum that can be used for any business purpose. A short-term loan can be used as working capital, to purchase equipment, for hiring new employees, or for other business expenses.

Although some short-term loans are true to their name and have shorter terms of 12 months or less, some lenders have repayment terms up to 3 years. Depending on the lender you choose, you may have daily, weekly, or monthly payments.

One way that short-term loans differ from other loan options is that most do not have an interest rate. Instead, a multiplier known as a factor rate (or factor fee) is used by the lender. This factor rate is a one-time fee that is added to the cost of the loan and replaces traditional interest. Like interest rates, your factor rate is typically determined by a combination of factors such as the performance of your business and your personal and business credit histories.

One of the benefits of short-term loans is that you often receive money quickly. Some lenders provide funding in as little as 24 hours, while others may approve and fund your loan in 3 to 5 days.

Equipment Financing

If you need capital to purchase new equipment, equipment financing is an option that’s available to you. With equipment financing, you can purchase nearly any type of equipment for your business, from vehicles to point-of-sale systems to furniture and fixtures.

There are two types of equipment financing. The first is an equipment loan. When you receive an equipment loan, you’ll pay 10% to 20% of the total cost of the equipment. The lender will pay the rest of the costs so that you can take possession and put the equipment into use immediately. If you have good credit, you may qualify for $0 down financing. However, putting at least a small percentage down, even when it’s not required, helps lower the cost of borrowing and your payment amounts.

After you’ve received your equipment, you’ll pay the borrower on a scheduled basis — typically weekly or monthly. Your payments will go toward the balance of the loan as well as the interest charged by the lender. Once you have made all payments as scheduled, you take full ownership of the equipment.

The second type of equipment financing is an equipment lease. With an equipment lease, you may also have to pay a down payment. Once you make the down payment, you can use the equipment through your lease period. Once the lease period ends, you return the equipment and sign a new lease for updated equipment.

With an equipment lease, you never own the equipment unless you pay the remaining balance at the end of your lease. A lease may be a good idea if you plan to upgrade any of your equipment regularly. Equipment leases may also come with lower down payment requirements and lower monthly payments. However, you’re essentially renting the equipment and you may end up spending much more over the long term with leasing.

Lines Of Credit

If you need a flexible form of financing, a line of credit is an option to consider. With a line of credit, you don’t receive just one lump sum. Instead, the lender will set a credit limit for your account. You can make multiple draws from your line of credit up to and including the credit limit.

With a line of credit, interest or a fixed fee will only be charged on the borrowed amount. Fees and interest vary by lender and are usually based on your creditworthiness or business performance.

Even if you have credit challenges, you may qualify for a line of credit. Some lenders base their approvals solely on cash flow and other performance factors.

A line of credit is good for any small business because it is so flexible. Funds can be used for any business purpose, and you won’t have to wait for approval. Once you initiate the draw, the lender typically transfers the funds to your banking account immediately, and you can access your funds as soon as the next business day.

Lines of credit are also flexible in how they’re used. You can use funds to cover operating expenses, hire new employees, handle an emergency situation, or for any other business purpose.

Merchant Cash Advances

If you haven’t been in business long, have a low credit score, or don’t qualify for other loan options, you may consider applying for a merchant cash advance.

Even though you can receive funding quickly through a merchant cash advance, these loans often have high interest rates and short repayment terms. This is why it’s more important than ever to do your homework to find a lender with the best rates and terms.

When you take a merchant cash advance, you agree to sell future revenue to the lender. The lender pays you a lump sum amount, and a factoring fee is added to the amount of the loan. Other fees may also be added.

The lender will then withdraw money from your account on a regular basis. Most lenders take payments daily, while others may have weekly or monthly schedules. These withdrawals will be made until the loan balance and all fees have been repaid.

Some merchant cash advances have fixed payments. Others deduct a specific percentage of your sales. When sales are up, your payment is higher. When sales are down, your payments are lower.

The funds from merchant cash advances can be used for any business purpose, including the purchase of supplies, inventory, and equipment or for use as working capital.

Crowdfunding Your Medical Marijuana Dispensary

go fund me for business start up

Another option for financing your medical marijuana dispensary is crowdfunding. With the rapid growth of the internet, crowdfunding has become a popular option for many small businesses, even those in controversial industries.

Crowdfunding is a way to raise money from multiple investors in exchange for equity or rewards. With crowdfunding, you’ll promote your campaign online by sharing with friends and family and posting links to social media. Anyone can donate to help you reach your fundraising goal.

There are two types of crowdfunding campaigns. The first is equity crowdfunding, which is when you give up equity in your business in exchange for investments. The second is non-equity crowdfunding. With this type of campaign, you won’t give up ownership of your company but will instead offer a reward or benefit to investors.

The tricky part of crowdfunding is that medical marijuana dispensaries are prohibited from posting on many of the most popular crowdfunding platforms. However, there are a few platforms that allow businesses in the marijuana industry to launch and promote campaigns.

One crowdfunding platform to consider is Fundable. Through Fundable, you have the option of launching a rewards campaign, an equity campaign, or both. It’s important to note that equity campaigns on Fundable can take years to complete. There is no limitation on the length of your equity campaign. However, you must pay a hosting fee of $179 per month through the duration of your campaign.

The Best Financing Options For Startups

As we’ve already established, finding financing for your medical marijuana dispensary can be a challenge. While there are options available for established businesses, what if you’re brand new to the industry or haven’t even opened your doors yet?

If you need financing to get your business off the ground, there are funding options for startups. The first step is to determine what expenses you’ll have and how much money you’ll need before exploring your financing options.

The Costs Of Starting A Medical Marijuana Dispensary

A medical marijuana dispensary has many of the same expenses as any other startup business, with a few added expenses since this is still such a new and controversial industry.

Before you even get your business started, you will have to apply for licenses and permits. Application and licensing fees range from a few hundred dollars to several thousand. In the state of Colorado, for example, licensing fees are $20,000. One of the first things you should do before starting your business is to learn about the laws, requirements, and fees specific to your state.

Because you’ll operate a storefront, you’ll need to rent, lease, or purchase commercial space. If utilities aren’t included in your monthly rent, these additional expenses will add to your total startup costs. You may have to do some remodeling to make the space suitable for your business, which will add in more costs.

Even if you plan to run a very small dispensary, you’ll still need staff. Whether you’re hiring one person or ten, you’ll need to consider the costs of hiring and training staff members and managers.

Additional purchases for your dispensary include a POS system, furniture, fixtures, and a high-tech security system. One of the most important expenses is your inventory, which is a recurring cost you should consider when calculating your total business expenses.

When planning how to fund these expenses, there are a few financing options to explore. One option may work well to best fit your needs, or you may consider combining a few options to fully fund your startup business.

Crowdfunding

Crowdfunding is a way to raise funding for your startup business. For a medical marijuana dispensary, an equity-based campaign is typically the best option. Even so, it may take several months or longer to raise the money you need to start your business.

Unlike other businesses, you can’t just go to any crowdfunding site. Marijuana dispensaries are prohibited from using some of the most popular crowdfunding platforms. However, as I mentioned above, Fundable is one option to consider. You can also explore options that are centered solely on the cannabis industry, such as Fundanna and CannaFundr. These are relatively new options, so it’s important to do your research, explore all associated fees, and know what you’re getting into before signing up.

Alternative Lenders

Alternative online lenders could help you receive the money you need to fund your medical marijuana dispensary. These lenders are typically more flexible to work with than traditional lenders, although interest rates and fees may be higher and terms not as favorable. Alternative lenders provide a variety of financing options for you, including short-term loans and lines of credit.

Before applying, make sure that you choose a lender that works with businesses in the cannabis industry and other high-risk businesses. Some lenders have restrictions on lending to medical marijuana dispensaries, so make sure to choose a lender that is willing to work with you. There are even online lenders that specialize in financing businesses in the cannabis industry.

Personal Loans For Business

If you have a solid credit score and steady income, you may qualify for a personal loan that you can use to finance startup expenses.

This is an option that many startups choose because the revenue, time in business, and business credit score aren’t taken into consideration for loan approval. However, you do have to disclose how the funds will be used. Some lenders may not loan money due to the industry you’re in, so you may have to shop around for a lender willing to work with your situation.

Investors

One way to finance your startup is to find an investor. Seek out private equity firms, venture capitalists, or angel investors that will provide the funds you need in exchange for a stake in your company.

Credit Cards

A business credit card is a good option for any business. A credit card can be used to pay recurring expenses, cover an emergency, or pay for startup expenses. There are plenty of great credit card options for good and fair credit borrowers. If you have bad credit, you may also qualify for unsecured or secured credit cards, although your credit limit will be lower and interest rates higher.

What You Need To Qualify For Medical Marijuana Dispensary Business Financing

The requirements needed to qualify for medical marijuana dispensary financing are similar to requirements for any other type of business.

Your requirements will vary based on the lender you select, as well as the type of financing you seek. For example, applying for a business credit card may require basic information, such as your name, the name of your business, contact information, and annual revenue. Applying for a loan or line of credit may require additional information and documentation.

Before you gather your documents, though, there is some prep work that can be done on your end. Calculate how much money you need for your business. Then, figure out if your business is able to afford the loan.

Next, pull your free credit score online. If you have credit challenges, working to build your credit may help you qualify for more options at better rates. If you’re in a time crunch to receive your financing, there are bad credit loan options available, but you should expect higher fees and interest and a more expensive overall cost of borrowing.

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Once you’ve established how much money you need (and can afford) and where you stand in terms of credit, it’s time to start shopping for lenders. After you’ve narrowed down your selection, understand the requirements of each lender. Again, this varies but you should generally expect to present the following:

  • Personal Information: Name, Social Security Number, and contact information
  • Business Information: Business name, address, and Federal Tax ID
  • Business & Personal Credit Score
  • Personal Background Check
  • Business Licenses & Permits
  • Business & Personal Bank Statements
  • Profit & Loss Statement
  • Income Statement
  • Balance Sheet
  • Detailed Business Plan

Final Thoughts

Operating or opening a medical marijuana dispensary comes with its challenges. While many options available to other businesses aren’t open to you, this doesn’t mean that you won’t be able to find financing. With a little research and creativity, you can find a lender that is willing to work with you to help make your business a success.

Want to get started with a loan for your medical marijuana business right away? Try LoanBuilder.

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The post How To Finance A Medical Marijuana Dispensary appeared first on Merchant Maverick.

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What Is A Confession of Judgment? Should I Sign One?

As you might expect, any financial agreement will be a trek into the frightening realm of legalese. If you aren’t up on your jargon–and even if you are–you’re likely to run into some unfamiliar terms. One of the more ominous ones you may encounter in the alternative lending world is the confession of judgment.

Is it as bad as it sounds? At the risk of spoiling the big reveal of this blog post, “yes.” While this post is no substitute for legal advice, we can provide some basic information about what a confession of judgment is, where you’re likely to encounter one, and whether it’s usually a good idea to sign one. Read on and we’ll try to break it down for you.

Collateral & Personal Guarantees

When you apply for a loan or cash advance, your funder needs to prepare for the possibility that you will be unable or unwilling to pay back your balance in full. Usually, they will require some form of collateral. With traditional secured loans, this usually means putting up an asset you own, ranging from real estate to heavy equipment to a cash deposit. If you default on your loan or advance, your funder can then recoup some of their loss by keeping your collateral.

A confession of judgment isn’t collateral, per se. In fact, it’s usually paired with a form of unsecured “collateral” called a personal guarantee. A personal guarantee is essentially a promise to pay back your loan or MCA with personal assets should your business be unable to. If that gives you pause, it should; putting your personal assets at risk raises the stakes for you as a borrower since it’s removing the distinction between yourself and your business. Sounds like a pretty good deal for your funder, though, right?

On paper, it looks like a solid win, but enforcing a personal guarantee can be an ordeal for lenders. In many cases, they’ll need to bring a lawsuit against the guarantor to recoup their losses. That’s where the confession of judgment comes in.

Confession Of What?

So let’s say a funder is taking on a high-risk borrower for an unsecured loan or MCA. They think there’s a reasonable chance the borrower will default, but they don’t want to sink the money and time into a lawsuit to enforce the personal guarantee. As a condition for the loan or MCA, the borrower may have to sign a confession of judgment.

A confession of judgment allows the funder to go after the borrower’s personal assets as though they’d successfully received a judgment against them in court. That means the funder bypasses most of the due process the borrower normally be afforded: no trial, no hearing, no opportunity for the borrower to defend himself or herself. The funder simply needs to file the confession of judgment with their county clerk or appropriate agency. The courts will then inform the borrower that a judgment has been made against them.

As you can imagine, confessions of judgment are controversial. Not every state uses them (they’re more prevalent in the Mid-Atlantic states) and even among those states they may not be applicable to all financial contracts in your jurisdiction (most of those state only allow them for commercial transactions). They may be valid only for specific types of debt and for a specific amount of time. A confession of judgment can apply to debts currently outstanding or those that will become due in the future. Be sure to speak to a lawyer about any specific questions you have about how your jurisdiction adjudicates confessions of judgment.

Should You Sign A Confession Of Judgement?

No. Not if you can help it. You should always think long and hard before signing any of your legal rights away, and a confession of judgment is no different. Depending on your jurisdiction, it can severely impede your ability to protect yourself from collection efforts.

On the other hand, if you’re able to pay off your loan or MCA without any issues, the confession of judgment won’t ever really come into play. It’s only filed if your funder is unable to collect on your debt. If there’s no need to start a collection action against you, it’s simply another piece of paper you signed.

But again, you should really avoid signing one if you can possibly help it.

What If I’ve Already Signed One?

Don’t panic! If you’re making your payments on time, it’s unlikely that you’ll even need to think about your confession of judgment again. A confession of judgment has specific triggers that need to be met before it’s valid. In most cases, this trigger will be missing payments.

If your funder has actually filed a confession of judgment against you, the picture isn’t as rosy. In most states, however, you’re not completely out of options even if you reach this stage. You may still be able to negotiate a settlement with your funder, for example, or even have your confession of judgment vacated. The latter may require proving that the terms required to trigger the confession of judgment were never meant. It’s also possible for the borrower to be negligent in making it clear that you’re signing important rights away when they initially presented the confession of judgment to you. Be sure to speak with a lawyer to find out what solutions are possible in your case and your state.

How Do I Avoid Signing A Confession Of Judgement?

While personal guarantees are pretty common in the alternative lending market, confessions of judgment are significantly less so. It’s generally funders that deal with high-risk borrowers who will employ them, and even then they may not require them for every borrower. If your funder tries to get you to sign one, make sure you’ve exhausted all your other options before waiving your legal rights and putting your personal assets at risk.

Even if your credit rating or the age of your business has limited your options to merchant cash advances, you can still take your business to a funder who won’t lock you into quite so punishing terms.

Need some other options? We can get you started.

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 – $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

$20K – $500K 1 – 4 years 7.99% – 29.99% APR 2 years 660 Apply Now

The post What Is A Confession of Judgment? Should I Sign One? appeared first on Merchant Maverick.

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Understanding Variable APR

Whether you need extra money to pay an emergency expense, expand your business, or to use as working capital, it’s not uncommon to seek financing in the form of a loan, line of credit, or credit card. Before signing a contract with a lender, though, it’s important to fully understand the cost of your loan.

While shopping around for financing, you’ll likely find financial products that feature a variable APR. If you’re scratching your head in confusion, this post is for you. Before entering into a loan agreement, read on to learn more about variable APR, how it’s different from fixed APR, and the benefits and drawbacks to consider.

What Is APR?

Before we jump into the specifics of variable APR, what is APR in general?

APR is the annual percentage rate of your loan, credit card, or other financial product. In simpler terms, APR is the total cost of borrowing for a period of one year. The APR includes the interest you pay to the lender as well as any additional fees, such as origination fees or packaging fees.

As you’re shopping for a loan, it’s vital to look at the APR in order to find the most affordable financing option. Let’s say you’re considering one loan that has a low interest rate but comes with additional fees. Another loan option has a slightly higher interest rate but no fees are charged. In this example, the APR for the first loan — the one with the lower interest rate — may actually be higher than the APR for the second loan. Even though the first loan has a lower interest rate, the added fees give it a higher APR  — which means a higher overall cost.

If this scenario is confusing, don’t worry. Most lenders perform APR calculations for you before you sign your loan agreement. If they don’t, or you want to see the numbers for yourself, check out our calculators for term loans, short-term loans, and merchant cash advances.

One thing to remember is that APR doesn’t always tell the full story surrounding the cost of your loan, particularly if you’re dealing with a non-traditional loan product, like a merchant cash advance or a short-term loan. Term lengths may also be a factor in determining the overall cost of borrowing. Refinancing or prepaying your loan can also have an impact on what you pay each year. Still have questions about APR? Learn more about the basics before applying for financing.

What Is Variable APR?

By now, you should have an understanding of APR at the most basic level and how it affects the cost of borrowing. Maybe you’ve even started shopping around for financing. But in your quest to find a loan, you may be faced with a new term: variable APR.

If your loan or credit card has a variable APR, it means that the interest rate will fluctuate over time. These fluctuations are based on an interest rate index that serves as a benchmark for the interest rates charged by lenders. Many lenders use the Wall Street Journal Prime Rate, which uses the base rates on corporate loans posted by at least 70% of the nation’s top 10 banks.

Interest rates are always based on the prime rate, but the number of percentage points a lender adds is based on the risk of the borrower. Low-risk borrowers, such as established businesses with high revenue and solid credit histories, will have a lower number of percentage points added to the prime rate. A higher number of percentage points will be added to borrowers with low credit scores or revenues or a short time in business, making the overall cost of the loan higher over time for riskier borrowers.

With variable APR, both low- and high-risk borrowers may see fluctuations in their APRs based on changes to the interest rate index. When the prime rate increases, so does the APR. When the prime rate drops, the APR is lower.

Variable APR VS Fixed APR

Loans, credit cards, and lines of credit come with either variable or fixed APR. Unlike products with variable APRs, financing options with fixed-rate APRs never change. This means that if your APR is 5%, it is 5% for the life of the loan; the rate will not change if the prime rate increases or decreases. However, there are some instances where an APR can change even on a fixed-rate product.

If the APR on fixed-rate financing alters from its original terms, the lender must notify the borrower in writing. Most lenders provide a grace period that allows the borrower to pay off the debt and close the account or transfer the balance before the new terms are applied.

With a variable APR, the lender does not have to notify the borrower of changes to APR based on changes to the prime rate.

Is A Variable APR Good Or Bad?

A variable APR can be good for short-term use. For example, if you use your credit card and pay it off each month, you’ll save money when rates are low.

However, if you plan to use your financing over the long term, there is a risk that rates could rise. This could result in a higher cost of borrowing.

This doesn’t mean that if you need a long-term financing option, you should write off variable APRs. Long-term loans like Small Business Administration 7(a) loans have variable interest rates. Interest rates are based on the prime rate plus a markup between 2.25% and 4.75%. SBA loans are some of the most competitively-priced and affordable long-term loan options for small business owners.

When applying for a credit card, one thing to be aware of is that many card issuers offer introductory rates. These introductory rates are fixed and are lower than usual for a set period of time, such as 6 or 12 months. After the introductory period, the interest rate increases. A fixed rate may also revert to a variable rate after the introductory period. This is why it’s so important to carefully read all disclosures and agreements before opening an account.

Looking for a business credit card? Compare rates side-by-side to find the best option for your business.

Final Thoughts

APR is incredibly important to consider before applying for financing, but you need to consider all other factors before choosing your lender. The goal of your financing is to get rates and terms that work for you and your business. Shop around, do your research, and read everything before signing on the dotted line to find financing that best fits your financial needs.

The post Understanding Variable APR appeared first on Merchant Maverick.

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Small Business Loans For Beauty And Nail Salons

Whether you’re the owner of an established beauty salon or it’s your dream to open your own nail spa, one thing is clear: your business needs money. As the old saying goes, it takes money to make money, but what happens when the money’s just not there?

If you’re the owner of a beauty or nail salon and you need money to grow your business (or you’re ready to get your business off the ground), consider a small business loan as one of your best resources. With a small business loan, you can pay your business expenses, tackle that unexpected emergency, or expand your customer base with a new marketing campaign.

No matter what your needs, a small business loan has you covered. Before diving into the application process, know what to expect, the kinds of loans you’ll encounter, and which type of loan works best for your business. Read on to learn more about the options available to you to start or expand your beauty or nail salon.

Financing Need Best Loan Type Recommended Lender
Equipment Purchasing Equipment Financing Lendio
Business Expansion SBA 7(a) Loans SmartBiz
Supplies & Inventory Line Of Credit Fundbox
Emergency Funding Business Credit Cards Chase Ink Business Cash
Marketing & Advertising Short Term Loans Credibly
Cash Flow Cash Flow Loans StreetShares
Starting A Salon Startup Loans BlueVine

Equipment Purchasing

Your beauty salon equipment is outdated and desperately needs to be upgraded. Your nail salon is booming, and you need to purchase more stations and equipment to better serve your customers.

This equipment comes at a cost — a cost that your business may not be able to afford.

If you need to purchase equipment but don’t have the money to buy it outright, there’s a financing option. Instead of draining your bank account, consider equipment financing.

Equipment Financing

Equipment financing is a simple concept. A lender provides you with the money you need to purchase equipment. This allows you to take possession and put the equipment into use immediately. Because the lender provided the funds, you don’t have to pay the full equipment costs out-of-pocket. Instead, you’ll be able to pay back the loan through affordable scheduled payments.

Equipment financing can only be used toward the purchase of equipment for your business. For beauty and nail salons, this could include hair dryers, stylist chairs, or a point-of-sale system. Rates, terms, down payments, and loan amounts are based on creditworthiness. Most lenders look for credit scores in the high 600s, although some will accept lower credit scores. High-risk borrowers may be required to put more money down or pay higher interest rates.

Recommended Option: Lendio

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Lendio is a loan-matching service that connects you to over 75 business lenders. Through Lendio, you can receive offers from multiple lenders with just one application. This cuts down on the amount of time you’ll spend shopping for a loan while ensuring you receive the best offers.

Lendio offers equipment financing for business owners. Other loan products offered through Lendio’s network include term loans, SBA loans, lines of credit, and business credit cards.

For Lendio’s equipment financing programs, all borrowers must be in business for at least 12 months, bring in at least $10,000 per month in revenue, and have a credit score of 650.

Equipment loans of up to $5 million are available, with repayment terms between 1 and 5 years. Interest rates start at 7.5% for the most qualified borrowers. Fees vary by lender, and the equipment being financed typically serves as the collateral.

Business Expansion

Your business and customer base are growing so much, it’s time for your salon to expand. Maybe you want to build an addition to your existing salon, or you want to purchase commercial real estate to open a new location. While business expansion means that your business is growing, it also means additional expenses.

Most business owners don’t have the means to fund expansion expenses out-of-pocket. Even if they do, tying up such a large amount of their capital isn’t always the wisest move. Luckily, you don’t have to worry about taking on this burden by yourself. With a Small Business Administration loan, you’ll be able to break large expenses into smaller, more manageable monthly payments.

SBA 7(a) Loans

The Small Business Administration offers multiple loan programs, but the 7(a) loan is one of the most popular. With high loan limits, flexible repayment terms, and low interest rates, it’s easy to see why this is a top choice for qualified business owners.

The SBA 7(a) loan can be used for almost any business purpose, including business expansion. You can update your existing salon, purchase commercial real estate, or fund any other business expense with this loan.

SBA 7(a) loans are available in amounts up to $5 million. Repayment terms are 10 years for most purposes and maximum terms of 25 years are available for commercial real estate purchases. Interest rates are set at the prime rate plus a maximum of 4.75% based on the amount of your loan and repayment terms.

SBA 7(a) loans are typically reserved for the most qualified borrowers. To qualify for SBA loans, you must have a credit score in the high 600s and meet the SBA’s definition of a small business. Your credit report must be free of liens, collections, recent bankruptcies, and foreclosures. If you’ve previously defaulted on a government loan, you will not be eligible. Your business must be in an approved industry, based in the U.S., and have a time in business of at least 2 years.

Recommended Option: SmartBiz

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The process for receiving an SBA loan is notoriously long. Some borrowers wait months just to get the funding they need. SmartBiz is a lender that simplifies the process.

SmartBiz offers SBA commercial real estate loans from $500,000 up to $5 million. Interest rates are 6.75% to 8% with repayment terms up to 25 years. Working capital loans up to $350,000 are available with fees between 8% and 9% and repayment terms of 10 years.

SmartBiz charges several fees for obtaining an SBA loan, including referral fees, packaging fees, guarantee fees, and closing costs. Collateral may be required to receive your loan. Loans can be funded in as quickly as seven days through SmartBiz.

Supplies & Inventory Purchasing

POS systems for spas

There are critical supplies you need for daily business operations, not to mention customer inventory — like shampoo, hair brushes, nail polish, etc. — that helps bring in additional revenue. When you don’t have the supplies you need, you’re unable to perform the services that customers seek. When your inventory is depleted, you’re missing out on this additional revenue stream.

Whether you’re running low on supplies and inventory or you forecast a seasonal increase in the near future, there comes a time when you need to replenish your stock. If you’re not in a financial position to pay cash for supplies and inventory, consider applying for a business line of credit.

Business Line Of Credit

A business line of credit is a type of revolving credit that can be accessed as needed. Once approved by a lender, you’ll be given a credit limit. You can make multiple draws on your account, so you can receive the money you need right when you need it.

With a business line of credit, interest or fees will be charged only on the used portion of funds. As you repay your loan through weekly or monthly payments, these funds will become available for you to use again.

Lines of credit are available for most salon owners, regardless of credit score. While some lenders have credit score requirements, others base their approval decision on the performance of the business. Most lenders have time in business limits typically between 6 and 12 months, but there are some lenders that do not have minimum requirements. Annual revenue requirements are between $50,000 and $100,000 to qualify for most business lines of credit, but again, certain lenders do not have requirements in place.

Recommended Option: Fundbox

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Fundbox is a lender that provides lines of credit up to $100,000. To qualify, a borrower must have at least two months of activity in an accounting software app supported by Fundbox. If the borrower is unable to meet this requirement, bank statements showing transactions over the last three months can be submitted.

There are no credit limit requirements to qualify for a Fundbox line of credit. The application process is quick and easy, and an approval can be given in just minutes. Once approved, funds are available for immediate withdrawal and are typically transferred as soon as the next business day.

Fees for using Fundbox begin at 4.66%. Repayment terms are set at 12 or 24 weeks, and there are no prepayment penalties.

Emergency Funding

It happens to the best of us: an unexpected expense. If an emergency arises, even the most financially responsible salon owner can be taken by surprise.

If you’re facing a financial emergency, don’t panic. Take a deep breath and know that there are options for getting over this financial hurdle. Read on to learn why a business credit card can be a critical resource in these stressful situations.

Business Credit Cards

A business credit card is just like a personal credit card, except it is used to cover business expenses. Once you’re approved for a credit card, the lender will set a credit limit. You can use the card as often as you wish anywhere credit cards are accepted, up to your assigned credit limit.

Credit card payments are due each month and will be applied toward the principal balance and the interest charged by the lender. As you pay back borrowed funds, they become available to use again.

A credit card is helpful during emergencies because you don’t have to wait for approval from the lender. If you’ve already received your card, you can use it as needed for any business expense, from covering operating costs to purchasing supplies. Credit cards can even be used for recurring expenses month after month.

With responsible use, a credit card can not only help you cover unexpected expenses but can also lead to great rewards. Many lenders offer rewards programs with their credit cards. Just by using your card, you can earn points with every qualified purchase that can be redeemed for cash or other perks.

Recommended Option: Chase Ink Business Cash

Chase Ink Business Cash



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Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

If you have good to excellent credit, you can qualify for the Chase Ink Business Cash card. This card comes with no annual fee, an introductory APR of 0% for the first year, and variable APRs of 15.24% to 21.24% after the introductory period.

With this card, you can receive 5% cash back on the first $25,000 spent toward internet, cable, and phone purchases, as well as office supply store purchases. You’ll receive 2% on the first $25,000 spent at restaurants and gas stations and 1% cash back for all other purchases.

When you sign up for this credit card, you can receive $500 cash back just by spending $3,000 or more within 3 months of opening your account.

Unsure if this is the right card for you? Learn more about other Chase Ink credit cards for your business.

Marketing & Advertising

Customers are critical to the success of your beauty or nail salon. Without customers, you don’t have a business. While you may already have clientele, a growing business always needs more customers. To bring in these customers, marketing and advertising is critical.

Sure, you could rely on your social media presence alone, but if you really want to expand your business, you’ll need to launch a marketing and advertising campaign. If the cost of marketing and advertising is holding you back from growing your business, consider applying for a short-term loan to make this expense more manageable.

Short-Term Loans

A short-term loan is a loan for a specific amount of money that is paid back through smaller scheduled payments over a set period of time. While most short-term loans have repayment terms of one year or less, some lenders offer terms up to three years.

Most short-term loans don’t have an interest rate. Instead, these loans have a fee known as a factor rate. This multiplier is used to determine a one-time cost that is added to your loan.

Because short-term loans are for a specific amount, it’s important that you plan out your expenses to make sure you receive enough money. Do your research, calculate pricing, and form a plan for your marketing and advertising campaign before applying for a short-term loan.

Short-term loan requirements for time in business and annual revenue vary by lender. Your personal credit score will be considered, but scores in the 500s are accepted by some lenders. Borrowers with the best credit scores will be approved for higher loan amounts with lower fees and rates and better terms.

Recommended Option: Credibly

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Credibly provides short-term loans of up to $250,000 for eligible borrowers. Repayment terms are available for 6 to 17 months. Factor rates for the most qualified borrowers are as low as 1.15. A one-time origination fee of 2.5% of the total loan amount is charged by the lender. Credibly payments are made daily or weekly.

To qualify, borrowers must have a minimum credit score of 500. All borrowers must have been in business for at least 6 months and have at least $15,000 per month deposited to their bank accounts.

In addition to its short-term working capital loans, Credibly also provides business expansion loans and merchant cash advances.

Cash Flow

As a salon owner, it’s not uncommon to experience periods where business is slower than usual. Even when your cash flow slows down, you still have expenses … and this can be a problem.

Fortunately, a cash flow loan can provide you with the money you need to fill in these gaps. Whether you need funds to meet payroll or money for daily operating expenses, a cash flow loan can provide you with the capital you need when business slows down.

Cash Flow Loans

A cash flow loan provides you with the money you need when your cash flow has slowed. These funds are used to pay your expenses to keep your business running as it should.

There are several types of cash flow loans available. If you know the specific amount of money that you need, a term loan is a good choice. With this type of financing, you receive a lump sum and repay the loan, plus interest, through regular installments.

A line of credit is another type of cash flow loan. These loans are best for businesses that may have recurring expenses that require multiple draws.

Qualifying for a cash flow loan requires a minimum credit score of 500. Time in business and annual revenue requirements vary by lender.

Recommended Option: StreetShares

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StreetShares is a lender that offers multiple loan options to small- and medium-sized businesses. Term loans and lines of credit are available in amounts up to $250,000 with repayment terms up to 36 months. Contract financing is also available.

To qualify for a StreetShares loan, a business must be in operations for at least one year with minimum revenue of $25,000 per year. A credit score of at least 620 is required for all borrowers.

Starting A Salon

While we’ve addressed common financial challenges you’ll face when expanding your salon, what if you aren’t yet at that point? What if you’re the new business on the block, and you need extra money to really get your endeavor off the ground?

If you’re looking for money to start your own beauty or nail salon, qualifying for business loans can be difficult. However, it’s not impossible to receive the money you need to open your own salon if you know where to look. The first place to start is with a startup loan.

Startup Loans

A startup loan is a loan that is used to pay the expenses associated with starting a business, such as hiring employees, buying or leasing real estate, or purchasing equipment like POS systems and software.

For most startup loans from alternative lenders, a minimum credit score of around 600 is required. Interest rates are based on the borrower’s personal creditworthiness.

Some lenders require a minimum time in business. If this is a requirement, another option that can be considered is a personal loan. A personal loan can be used to fund startup costs and may come with a lower interest rate for borrowers with a solid credit profile.

Recommended Option: BlueVine

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BlueVine is an alternative lender that provides lines of credit up to $5 million for new businesses. Repayment terms of 6 months are available through BlueVine. The APR for receiving this financing is 15% to 78%.

To qualify, borrowers must be in business for at least 6 months. A minimum credit score of 600 and $120,000 in annual revenue is required to receive BlueVine’s line of credit. The application process is easy, there are no hidden fees, and lines of credit are funded quickly.

Bad Credit? Your Best Financing Options

The best business loans require high credit scores, so does that mean you’re left out in the cold if your credit history isn’t where it needs to be? Actually, there are financing options available for you if you have bad credit, but you should be aware that these loans come with higher interest rates, lower borrowing amounts, and a possible need for collateral.

Before applying for a loan, you should always know your credit score. You can obtain your free credit score quickly and easily online. Once you have your score, you can get a better idea of the types of loans available to you.

The best options for borrowers with bad credit are lines of credit, equipment financing, and short-term loans. These financing options typically have lower borrower requirements — including credit scores — than other loans.

Business credit cards are also a great choice for borrowers with poor credit. There are unsecured options available to borrowers with lower scores. Anyone that doesn’t qualify for an unsecured card can receive a secured card backed by a security deposit. After making several on-time payments, the borrower can build their credit and qualify for better financing options.

Bad credit limits your lending options and results in a higher overall cost for loans. If your funding need isn’t immediate, your best move is to take steps to raise your personal credit score. Although this option takes time, you’ll receive better loan offers that are more affordable for your business.

If you need financing urgently before you can build up your credit, consider applying for the Capital One Spark Classic business credit card. This credit card is available to borrowers with scores as low as 580.

Capital One Spark Classic For Business


Compare

Annual Fee:


$0

 

Purchase APR:


24.74%, Variable

With this credit card, you’ll be able to receive unlimited 1% cash back rewards on all purchases. Because this card is designed for borrowers with lower credit scores, the APR is fairly high at 24.74%. However, there is no annual fee, and Capital One reports to multiple credit agencies, allowing you to build your credit (provided you make your payment on time each month). As your credit score rises, you’ll be qualified to apply for business credit cards and other loan options with lower interest rates and better terms.

What You Need To Apply For Beauty & Nail Salon Business Loans

What you need to apply for a beauty or nail salon business loan varies based on the lender you work with and the type of loan you’re seeking. For example, a business credit card application typically requires some basic information, including your business name, federal tax ID number, annual revenue, social security number, and contact information.

For other financial products, such as SBA loans and startup loans, more extensive documentation is required. This includes but is not limited to:

  • Personal Financial Statements
  • Business & Personal Tax Returns
  • Balance Sheets
  • Income Statements
  • Profit & Loss Statements
  • Bank Statements
  • Future Financial Projections
  • Owner Resumes
  • Business Licenses

Requirements vary by lender, so once you’ve chosen a lender, make sure you discuss what documentation and information are required. Make yourself available throughout the lending process to provide more information as needed. Learn more about small business loan requirements before you apply.

Final Thoughts

It’s common to encounter financial hurdles while growing your salon, which is when taking out a loan just makes sense. By doing your research and becoming a responsible borrower, you’ll be able to boost and expand your business without clearing out your checking account. That’s the beauty of small business loans.

The post Small Business Loans For Beauty And Nail Salons appeared first on Merchant Maverick.

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Emergency Business Loans: 7 Ways To Get Business Funding Fast

No matter how good you are at planning, it’s impossible to prepare for every possible emergency that may affect your business. Acts of God like hurricanes, floods, and fires aside, invoice payments might be late. You may have experienced a fluke sales slump. Or maybe you just need to restock before a big event next week to maximize your sales.

You’ve already shaken out your pants for loose change, so now what do you do? Where do you look for an emergency business loan?

Read on and we’ll try to help you out. Here are seven ways to get business funding fast.

1. Get A Short-Term Loan

fast business loans

If it has been a while since you last looked for financing, you’re probably imagining long, drawn-out loan applications with high credit restrictions.

Those traditionally-structured loans still exist–and tend to have excellent rates–but they’re not much help when you need money fast. An easier way for most businesses to get a lump sum of cash quickly is to get a short-term loan.

Short-term loans usually last less than a year, feature simplified (and usually online) applications, and can get cash into your account within 24 to 72 hours. Most of them don’t even require collateral in the traditional sense.

So what’s the catch? Well, you’ll probably be going through an alternative lender. That means higher rates and fewer regulatory protections than you’d find with a bank.

Because the repayment schedule is accelerated, these loans charge a flat fee instead of instead of interest. This fee is a percentage of the amount you borrowed ($10,000 x 20% = $2,000, so you’ll be on the hook for $12,000). You’ll also be paying it back much more quickly. Repayment intervals are weekly or even daily, with fixed payments automatically withdrawn from your business bank account.

Think a short-term loan is right for you? Check out the following short-term lenders:

Lender Borrowing Amount Min Credit Score Time To Funding Next Steps

$2K – $5M 550 1-2 Days Apply Now

$5K – $500K 550 1-3 Days Apply Now

$5K – $500K 500 2-5 Days Apply Now

$5K – $250K 500 2-5 Days Apply Now

2. Get A Merchant Cash Advance

how to get a merchant cash advance

I know we’re technically talking about “loans,” but if you need money quickly, you’re probably not that concerned with semantics. For the pedantic, a merchant cash advance (MCA) is the purchase of your future credit/debit card sales. So you’re technically selling something, not taking on debt. Confusing, right?

An MCA fulfills a similar niche to a short-term loan and shares a few characteristics with it. MCAs also feature simplified applications and qualifications; they’re even less governed by financial regulations than short-term loans. You’ll also usually have your money in a day or two. MCAs and short-term loans even share a flat fee approach, where the amount you owe is the amount you “borrowed” plus a percentage of that amount ($10,000 x 20% = $2,000, for a total of $12,000).

But wait, didn’t I say the MCA company was actually buying a percentage of your future receivables? How does that work? Rather than making payments, the MCA company will collect a percentage of your daily credit- and debt-based sales until they’ve collected the lump sum they gave you, plus their flat fee. Because your sales may vary from day to day, MCAs don’t have exact term lengths. If your sales are good, you’ll pay the debt off more quickly; if they’re poor, it will take longer to pay off.

Be aware, however, that MCAs are one of the most expensive ways to borrow money.

Want to explore your options? Check out the following providers of merchant cash advances:

Lender Borrowing Amount Min Credit Score Time To Funding Next Steps

$2K – $5M 550 1-2 Days Apply Now

$5K – $500K 550 1-3 Days Apply Now

$5K – $500K 500 2-5 Days Apply Now

$5K – $250K 500 2-5 Days Apply Now

3. Get An Express Bank Loan

What’s an express loan? The definition varies by lender, but in general, this is an option offered by many traditional banks. Thanks, in part, to pressure from alternative lenders, banks have made efforts to speed up the application processes of some of their products. If you need a small amount of money relatively quickly, it may be the way to go.

These loans typically aren’t short-term loans, but medium-term installment loans. That means monthly payments and interest accruing over time.

Compared to short-term loans, express loans will often have better rates but aren’t as easy to qualify for. Depending on the bank, the speed with which you can get funding may be competitive with those of alternative lenders, while others might be a little bit slower. Note that SBA Express loans, while quicker than other SBA loans, probably aren’t going to be fast enough to cover an emergency expense. On the other hand, if your emergency is the result of a regional disaster, you may want to check out SBA disaster loans.

4. Get An Installment Loan From An Alternative Lender

installment loans

Wait, aren’t installment loans–express loans notwithstanding–too slow to be much help in an emergency?

Alternative lenders don’t only deal in short-term loans and merchant cash advances. Some offer products that more closely resemble traditional installment loans. These loans feature longer-terms and regular monthly (sometimes weekly) payments.

Installment loans, even those from alternative lenders, don’t necessarily promise the 24-48 hour turnarounds that are common with short-term loans and merchant cash advances. Some do, however. And even the ones that don’t may still be fast enough to help resolve your emergency.

These alternative lenders offer loan products that might work for your situation:

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

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

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

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

$20K – $500K 1 – 4 years 7.99% – 29.99% APR 2 years 660 Apply Now

5. Use A Business Credit Card

Best merchant online credit card processing companies image

Another way to handle emergency expenses is to have lines of credit in place ahead of time. The easiest to use are probably business credit cards.

Business credit cards can be a convenient way to pay for emergencies, provided the emergency costs are on the smaller side and can be paid with plastic. A balance that sits on your card month after month will quickly become more expensive than a loan. On the other hand, if you’re able to pay your business credit card off in full within your grace period (usually 20-25 days after you make the purchase), you won’t owe any interest at all. Better yet, you can take advantage of the rewards programs most of these cards offered.

Avoid taking out a cash advance with your credit card, though, as the fees and interest rates on those transactions make them a very expensive way to bail your business out.

Looking for a business credit card? Chase Bank offers some of the best options for small business:

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

6. Set Up A Line Of Credit

Business credit cards aren’t the only way to set up an “insurance policy” against unplanned expenses. In fact, they may not even be the best way, especially if you encounter expenses you can’t easily pay for with a card.

Banks and some alternative lenders offer business lines of credit. A revolving line of credit is a lot like a credit card (technically a credit card is a revolving line of credit, but not all revolving lines of credit are credit cards. Make sense?). Your lender will approve your business for a certain amount of credit, for a certain period of time, typically a year. During that time, you can draw upon your line of credit in any increments you want so long as the total amount you’ve drawn doesn’t exceed your credit limit. You only make payments and owe interest on the amount of credit you’re using. As you pay off your balance, that credit becomes available to use again. A non-revolving line of credit works the same way, except that once you use your credit, it does not become available again after you pay it off.

Some lines of credit are easier to use than others. Depending on your lender, you may have to pay a draw fee each time you withdraw cash. Some lenders charge annual, or even monthly, fees to maintain your line of credit. It’s not uncommon for banks to link a line of credit to a Visa or Mastercard, allowing you to use it almost exactly like a credit card. Some lenders may let you write checks against your line, while others will necessitate a cash transfer from your line to, say, a checking account.

The following lenders offer lines of credit to businesses at reasonable rates:

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

7. Use Invoice Factoring

Do what now? A quick and unorthodox way to get emergency financing without putting yourself at too much risk is invoice factoring. Factoring companies will purchase your unpaid invoices for around 80 percent of their face value, minus a small fee. It’s essentially getting an advance on your invoices by signing them over to a third party.

What about the remaining 20 percent? The factoring company will pay you that balance when the invoice is paid by your customer.

The catch is that you’ll need to have unpaid invoices in hand for invoice factoring to be of any use to you.

If you think invoice factoring might be the right choice for your business emergency, we recommend starting with a reputable company like BlueVine.

Get Started With BlueVine

Final Thoughts

It’s easier than ever to get emergency funding for your business. The trick is making sure you get it on the schedule you need, at a rate you can afford.

Not sure where to start looking?

We can help you out.

Loan Type What Is It? Typical Time To Funding

Short-Term Business Loans

Loans disbursed in one lump sum and repaid in periodic, fixed installments. Fees for borrowing are determined by a factor rate.

2 – 5 days

Online Lines of Credit

Credit lines from which the business can draw funds at any time, without going through an application process.

2 – 7 days for the initial application; 1 – 2 days for funds when the credit line is secured

Invoice Financing

Financing in which the business’s unpaid invoices are leveraged to access business funds.

2 – 5 days

Bridge Loans

Fast business loans used to fulfill funding needs until slower financing comes in.

2 – 7 days

Traditional Installment Loans

Loans disbursed in one lump sum and repaid in periodic, fixed installments. Borrowing fees are determined by an interest rate.

1 – 3 weeks

Business Credit Cards

Credit lines for everyday business expenses.

About 7 days

SBA Disaster Loans

Loans offered by the SBA to businesses that have been affected by a disaster.

7 – 21 days

The post Emergency Business Loans: 7 Ways To Get Business Funding Fast appeared first on Merchant Maverick.

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Applying For Business Loans Online: Everything You Need To Know

The internet has changed the way we do business. Having access to the world wide web allows us to work remotely, communicate with our coworkers and colleagues, market to new customers, and send and receive payments. The internet has also opened up a major resource for business owners in the form of online loans.

Gone are the days when a business owner was forced to go to the local bank branch to receive a loan. Thanks to the magic of the ‘net, we now have more access than ever to affordable business financing. A plethora of lenders and loan options are available to us with just a quick online search and a click of the mouse.

If you’re considering applying for a business loan, an online loan may be exactly what you’re looking for. However, if you’ve never had experience with this type of loan, you probably have some big questions. Why should you work with an online lender instead of your local bank branch? What are the benefits of online loans…and the potential drawbacks?

Read on and we’ll cover all of these questions and more in this guide to applying for business loans online.

What Are Online Business Loans?

Online business loans are loans that you can apply for — and receive — via the internet. To apply for an online loan, you simply visit the lender’s website and input your information through a secure form. You may also be asked to submit documentation through secure web portals, and web applications can even link the lender to your bank account to access your bank statements directly.

Often, the entire process can be completed online, although some lenders may require a phone call to verify or request information. A direct deposit can be set up to receive loan funds, and many lenders offer the option to connect your bank account to make automatic payments.

How Are Online Business Loans Different From Bank Loans?

Online business loans are different from bank loans in a number of ways. Instead of having to drive to a local bank branch to apply for a loan, online loans allow you to apply at home, at the office, or anywhere you have an internet connection.

Online loans are also unique because the process is much shorter. In some cases, loans can be approved in just minutes and funded within days — or even within 24 hours.

There are typically not as many documentation requirements for online business loans as bank loans. Because there are so many different options, online lenders may offer loans for startups and businesses with low credit scores or revenues. Bank loans require high revenues, strong credit scores, and often have a minimum requirement for years in business.

Even though online lending offers more options and provides fast funding, the tradeoff is that these loans often come with higher APRs and terms that aren’t as favorable as bank loans.

How Are Online Business Loans Different From Alternative Business Loans?

The terms online business loans and alternative business loans are often used interchangeably. What are the differences between the two?

An alternative business loan is defined as a loan that is obtained from a source other than a bank. Many alternative lenders – but not all – offer online loan options.

For example, a loan from a credit union is an alternative loan. A loan from a microlender is also an alternative loan. While some credit unions and microlenders may have an online application process, in many cases, a borrower will have to pay an in-person visit or apply over the phone. In this example, these are alternative loans and not online loans.

Types Of Business Loans Offered Online

One of the biggest benefits of applying for an online loan is how many options are available to business owners. No matter what the money will be used for, how much is needed, or even if the borrower has some challenges that disqualify them from conventional loans, online lending offers something for everyone.

Installment Loans

An installment loan is what most people think of when they hear the word “loan.” With an installment loan, a borrower receives a specific lump sum amount of money, such as $10,000 or $25,000. The borrower then repays the loan, plus interest, in equal payments over a set period of time. Typically, this is once per month but payment schedules may vary by lender.

Installment loans are often used to fund larger purchases, such as a commercial vehicle or real estate. This allows a business to make its purchase without having to pay the total amount up front. Interest rates vary, with the lowest rates and best terms going to borrowers with the highest credit scores.

Small Business Administration (SBA) Loans

The Small Business Administration provides many useful resources to small business owners, and one of its most popular offerings is its affordable loans.

The SBA has set the guidelines for multiple lending programs that are offered through intermediary lenders, which could include banks, credit unions, or non-profit organizations. These guidelines keep interest rates low and terms favorable for borrowers, while the SBA’s guarantee on loan proceeds protects intermediary lenders.

Available programs include 7(a) loans for a wide variety of uses (from working capital to purchase of inventory), 504 loans for commercial real estate purchases and improvements, and Microloans of up to $50,000.

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.

Review

Microloans

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

Review

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.

Review

Disaster Loans

Loans used to rebuild or maintain business following a disaster. 

Review

Some intermediary lenders provide online services for qualified borrowers. SBA loans are best for businesses with strong credit scores and who have time to devote to the lengthy loan process, which could take several weeks or longer.

Looking for an online loan facilitated through the SBA? SmartBiz has you covered.

Review

Visit Site

Streamlines SBA loan process for:

  • Debt refinancing
  • Working capital
  • Commercial real-estate

Highlights:

  • Suited for small and large businesses
  • Excellent terms and fees
  • No prepayment penalty

Business Lines of Credit

A business line of credit allows a business to make multiple draws up to and including a set credit limit. Interest is charged only on the portion of credit that has been used. A line of credit is very useful for businesses that need emergency funding or working capital.

Business lines of credit are available to borrowers with all types of credit scores, although lower scores may have higher interest rates, lower credit limits, and a need for collateral.

Many lenders offer business lines of credit online, and in most cases, applications are approved within days.

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

Short-Term Loans

A short-term loan is another popular online loan option. Short-term loans are similar to installment loans, but they are typically for much smaller amounts and will need to be paid back in a shorter period of time, which is typically one year or less.

Short-term loans often have much higher interest rates than other types of loans. Businesses with lower credit scores or revenues or a short time in business may turn to short-term loans when they are unable to qualify for other types of funding.

Merchant Cash Advances

A merchant cash advance is a type of loan that provides a lump sum amount to a borrower in exchange for a portion of the business’ future credit card sales. This can be done in two ways. The first way is by taking an agreed-upon percentage on a regularly scheduled basis. This is an option chosen by many businesses that may experience slow periods. When sales are down, the payment is lower. When business picks back up, the payment is higher.

The other way that businesses can pay back merchant cash advances is with a regularly scheduled payment that never changes. This could prove to be a burden for businesses that experience a slowdown in sales, as the payment remains unchanged.

With these loans, payments are made on a more frequent basis through ACH withdrawals. This payment schedule could be weekly or even daily. Merchant cash advances have very high rates and are one of the most expensive forms of credit. However, this may be an option to consider for businesses with very low credit scores or revenue, a lack of collateral, or that face other challenges when applying for other types of business loans.

Lender Borrowing Amount Min Credit Score Time To Funding Next Steps

$2K – $5M 550 1-2 Days Apply Now

$5K – $500K 550 1-3 Days Apply Now

$5K – $500K 500 2-5 Days Apply Now

$5K – $250K 500 2-5 Days Apply Now

Equipment Loans

Businesses that need to purchase new equipment may consider applying for an equipment loan. With this type of financing, businesses can purchase the equipment they need through affordable monthly payments instead of paying cash up front.

Equipment loans usually have fewer requirements than installment loans, including lower credit scores. No collateral is typically needed because the financed equipment acts as the collateral.

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

Invoice Financing

Businesses that have cash flow shortages due to unpaid invoices can receive invoice financing. With this type of funding, businesses receive money immediately for unpaid invoices without having to wait for customers to pay. The accounts receivables act as the collateral with invoice financing.

Invoice factoring is one type of invoice financing. A lender pays a percentage of the invoice as a lump sum to the borrower. The lender collects payment on the invoice, and once it is paid, the remaining amount is paid to the borrower, minus fees and interest charged by the lender.

With invoice discounting, as much as 95% of the invoice total is paid to the borrower. The borrower collects the invoice total from the customer. Once collected, payment is submitted to the lender to repay the loan and pay interest and fees.

Online Business Loan Pros & Cons

online loan companies

Online business loans may sound great to you so far, and they do have many benefits over other types of loans. However, they also come with their own set of drawbacks. Before diving into an online application, it’s important to understand these pros and cons to determine if an online loan is the financing route you want to take.

Pros

One of the biggest benefits of online loans is that the application process is fast. For some loans, approvals are instant and money can be in your bank account in just a few days. For businesses that need money immediately for an emergency, this is a much better option than waiting weeks for a conventional loan. Borrowers can go through the process on their own timetable without having to make a visit to a bank branch or other institution.

The online lending process is easy. With traditional loans, lots of paperwork has to be compiled and submitted with the application before the business even gets an approval. With online loans, documentation requirements are not as strict and all paperwork can be submitted quickly online.

There are also many different loan options available through online lenders. No matter the reason for needing the money, there’s an online lender that offers a business loan to fit that need, from equipment financing to installment loans and lines of credit.

Online loans provide options for almost any business owner, even ones that have trouble qualifying for conventional loans. Whether it’s a credit issue or cash flow challenges, business owners can overcome their financing hurdles with online loans.

Cons

While online loans offer many benefits over traditional options, they don’t come without their drawbacks. One of the main drawbacks is that these loans are often more expensive than other options like bank loans because of high APRs. However, borrowers with strong credit scores can find online loans with competitive interest rates.

Repayment terms may not be as long with online loans, resulting in higher monthly payments. There are some loans, however, that offer excellent repayment terms, such as SBA loans.

Online loans can also come with additional fees that banks and other traditional lenders may not charge. Some loans may have prepayment penalties, so it’s important to fully read through the loan contract and only work with online lenders that are transparent about their fees and terms.

How To Apply For Online Business Loans

While the application process varies by lender, there are a few main steps that a borrower must take when applying for an online business loan. The first step is to visit the lender’s website and begin the secure application process.

The applicant will be required to provide personal information including but not limited to:

  • Legal name and business name
  • Personal and business contact information
  • Business tax ID
  • Social Security number
  • Income/revenue information

Typically, the lender will require the applicant to submit documentation. Initial documents may include bank statements and financial statements. For larger loans, additional information and documentation may be required.

After submission, the application will go through the lender’s approval process. For certain types of loans, approval could be instant. With other loans, such as SBA loans, more time may be required. The lender may also require additional documentation or a phone call to verify information.

In order to obtain a loan, specific collateral (business or personal assets that are used to secure the loan) may be required. Other times, specific collateral is not required. However, a personal guarantee or blanket lien will typically be included within the contract. A personal guarantee will hold the borrower personally liable for the debt, meaning that the lender can take legal action or seize personal assets if the loan goes into default. A blanket lien gives the lender the legal claim to seize business assets in the event that the loan is not paid.

Once the loan has been approved, the next step will be based on the lender’s funding policies. Some online lenders provide funds within days or as soon as 24 hours. All applicants should fully read and understand a loan contract before signing. Once signed, online loans are deposited directly into the borrower’s bank account. At this time, the borrower may also be able to log into their account through the lender’s website to have access to the signed loan documents and features such as autopay.

How To Find Online Business Loans

Since online loans are found through the internet, a quick query on a search engine will yield thousands of results. However, wading through all of the different lenders can be overwhelming. Instead of sorting through the many lenders offering online loans, start your search with the most reputable lenders.

Begin by comparing lenders side-by-side to see which best fits your needs. Once you’ve found a lender (or a few) that have captured your interest, check out our in-depth reviews to learn more about rates, requirements, and navigating the application process.

A business loan should only be used to boost your business. You want to ensure your return on investment outweighs the full cost of the loan, including all fees and interest. It’s easy to fall for the idea of fast money, but you should take the time to do your research to find the most affordable loan option that meets your business needs.

Final Thoughts

Online business loans make it easier than ever to get the money you need for your business. While these loans are great for getting fast funding, it’s important that you take the time to understand the loan process and fully review any offers you’ve received. While it’s okay to take on extra debt to advance your business, taking on debt that you don’t need or can’t afford can hurt your business in the long run.

The post Applying For Business Loans Online: Everything You Need To Know appeared first on Merchant Maverick.

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