How Does Customer Financing With Square Installments Work?

Square is best known by online sellers and brick-and-mortar shops for its secure credit card processing solutions. With a free mobile point of sale app — and free credit card reader–, Square has made it easier for the everyday small business owner to start taking credit cards. Card readers like Square’s also make it more convenient for shoppers to buy without carrying cash. That can be a win-win for everyone involved with the sale.

Because a business owner no longer has to purchase an expensive POS system to process credit card payments, it’s no wonder that the use of Square has rapidly grown over the last few years. In fact, a surprising number of businesses still did not accept credit cards at the time Square was launched. For a solo entrepreneur or a smaller shop, it used to be a lot more expensive and time-consuming to get started (not to mention more than a little intimidating, given PCI compliance and other regulations). Nowadays, you can find these portable credit card readers everywhere — from your favorite ice cream place to high-end boutiques, salons, and even consulting agencies. If you’re buying at a local shop, there is a good chance that Square is the company processing your payment.

In typical Square fashion, Square Installments provides a more accessible option for businesses that want to offer financing to their clients. If your company sells higher ticket items — from $250 to $10,000 — and you’d like to offer on-the-spot approval and financing to your customers, read on to find out more about Square Installments. But first — a little primer on customer financing.

What Is Customer Financing?

Before we dig too deep into Square Installments, let’s cover the basics of customer financing. By financing a purchase, customers can take home a product or use a service right away without paying for it in full at the time of purchase.

A common example of customer financing would be heading to the dealership and leaving with a new-to-you car — and a payment plan for the next three years to pay it off. Getting the newest version of your phone and rolling payments into your mobile phone bill is also another (more painless) way to finance an upgrade for your phone with less sticker shock.

Financing makes things a little easier on your customer, but it shouldn’t require you to wait for the cash. When you offer to finance through a third-party like Square Installments, you sell your product or service and permit payment to be settled directly between the lender (in this case Square Capital) and your customer. Square pays you in full at the time of purchase.

Financing customers is all about convenience and accessibility. For your customers, financing can make large ticket items easier to purchase with predictable monthly payments spread out over time. Instead of shelling out the entire lump sum, they have more time to pay. This makes for an easier sell for your salesperson and a more comfortable decision for your customer.

When a purchaser thinks about what they are buying in terms of monthly vs. the total amount of dollars, financing can significantly lower the “sticker shock.” Giving purchasing flexibility to your customers will make buying from you a more attractive and accessible option — and of course, that’s good for your business, too.

Companies that invoice monthly payments for ongoing services are also offering a financing option to their clients, in a way. Yet anyone who has a business model based on retainers or monthly agreements knows that sometimes when the bill comes due, it doesn’t always get paid — possibly because the person you invoiced has bad credit or is in financial trouble. These issues can be virtually nonexistent when you let Square Installments pre-screen and approve your clients — and take on the financial risk.

Read on to find out how Square Installments works and how much it costs so you can decide if Square Installments services are right for you.

How Does Square Installments Work?

There are two ways you can use Square Installments for your business: at the point of sale or via Square Invoices. Once you sign up for Square Installments, your business will get a custom URL. This web address is just for your business and is the link you’ll send to every customer who wants to apply for financing.

The Square Installments Process For In-Store Sales

Once you share the link with your customer, they’ll follow the instructions from their smartphone and fill out a short online application. In almost all scenarios, customer approval happens in real time, right when they’re ready to purchase at your shop.

If approved, they can accept one of the financing options on offer and will receive a one-time-use number for a digital card they use to pay you for their purchase. The number is valid for seven days, and your customer can only redeem it at your business.

When your customer is ready to buy, they’ll present you with the digital card number given to them by Square Installments; you will key that number directly into your Square Point of Sale app, online through Square API, or through your virtual terminal.

Square pays you in full for the amount at the time you process the approved application.

Square Invoices From Square Installments

Square Invoices allows you to send your customers invoices through Square as well. After you are approved and set up, the option for installment payments will appear on your invoice automatically. Once your customers receive your invoice, the process is similar to the one above — they fill out an online application, can pick a plan, and once approved, you get paid upfront and in full.

To spread the word, Square will also send you some free marketing material — both in print and in the form of a banner for your website so your customers won’t miss this new option for buying with you.

You Don’t Need To Be A Financing Expert

Worried about the fine print and fielding financing questions? Don’t be. If your customers have questions about Square Installments, they’ll contact Square directly. In fact, because this is considered a “highly regulated financial product,” it’s essential to pass any questions or concerns off to Square’s own customer service folks. And of course, this arrangement means you’re not burdened with the nitty-gritty details of financing or payment collection.

How Much Does Square Installments Cost?

If you’re a business owner considering whether or not the cost is worth the convenience of the service, here are some figures to help you crunch the math.

Square Installments for Square Invoices costs 2.9% of the purchase price plus $0.30 per transaction. Square Installments at your Point of Sale costs 3.5% of the purchase price plus $0.15 per transaction. If a custom rate applies to your business for keyed-in Square Invoices transactions, this rate also applies to any Square Installments transactions.

The good news is that there are no recurring monthly usage fees or long-term commitments. You can cancel the service any you time want with no fees or contracts for your business to worry about.

For a customer who is considering using Square Installments to pay for a purchase, the annual percentage rate will vary depending on a few different factors. However, every customer will have more three options when it comes to repaying the loan. Square makes things upfront and easy to understand for the borrower, with ease of use in mind.

Should You Use Square Installments?

Small Business Owner Using Square Customer Service

The main benefit of Square Installments is that customers can pay over time — making them more likely to buy and making your business more likely to sell more inventory. Whether to break up payments for a big purchase that a customer normally couldn’t afford, or simply to offer a convenient option other than cash or checks, financing through Square Installments can be a valuable tool for your sales team to leverage.

When the average business owner thinks about customer financing, one of the biggest concerns is that the customer gets possession of the product or service without paying in full. While that may be a concern if you offer in-store financing and manage it yourself, in this case, Square takes on the financial risk entirely. You get paid right away and let Square manage the installments.

There are some important things to keep in mind when you consider whether Square Installments services are right for your business, however. As noted above, Square Installments isn’t free. Also, keep in mind that Square Installments is only applicable for purchases between $250 and $10,000 — so businesses that deal with higher ticket products or services will need to consider other options for financing.

When you make the final decision to use Square Installments, consider the benefits vs. the costs. Here are a few questions to ask:

  • Would your target market and current customers likely make the purchase anyway? (In other words: How “warm” or “cold” are the people who come to your online sales page or place of business?)
  • Does opening up financing options also open up the possibility of a new target customer or a larger final sale?
  • If you send out invoices, will Square Installments give you a more convenient or secure option to take secure payments and prescreen users, despite the cost?

For any business owner, the benefits and conveniences should outweigh the cost of Square Installments per sale. Because you don’t need to sign any long-term contracts to use Square Installments, it might be worth it to try the service for a bit, see what you think, and compare sales over the next few sales cycles to be sure either way.

Learn More About Square

While you consider whether or not you want to jump in and offer Square Installments as an option for your customers, check out some of the other reviews for Square services. Find out how much Square charges for their primary services and get armed with more information about Square processing to see if these payment options are right for your business. If you want to see the service for yourself, sign up for a free Square account today and check it out!

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

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Accounts Receivable Financing: What You Need To Know

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

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

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

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

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

BlueVine Fundbox P2Bi InterNex Capital Riviera Finance American Receivable

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

What Is Accounts Receivable Financing?

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

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

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

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

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

A/R Financing VS Invoice Factoring

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

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

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

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

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

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

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

Who Qualifies For A/R Financing?

project management software

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

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

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

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

How Accounts Receivable Financing Works

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

1. Apply For Financing

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

2. Submit Your Invoices

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

3. Get Approved

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

4. Use Your Line Of Credit

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

5. Collect Payments & Repay Your Lender

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

Typical A/R Financing Rates & Fees

Credit card surcharge fees illustration

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

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

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

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

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

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

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

Recommended A/R Financers

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

BlueVine Fundbox P2Bi InterNex Capital Riviera Finance American Receivable

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

BlueVine

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

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

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

Fundbox

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

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

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

P2Bi

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

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

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

InterNex Capital

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

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

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

Riviera Finance

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

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

American Receivable

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

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

Final Thoughts

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

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

BlueVine Fundbox P2Bi InterNex Capital Riviera Finance American Receivable

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

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

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The Best Business Grants For Veterans

Many veterans that have spent their lives protecting our nation and our freedom also own and operate small businesses. According to a Small Business Administration study, there are 2.4 million veteran-owned businesses in the U.S. These veteran business owners continue to give back to the nation by providing jobs to 5.8 million employees.

Like any other small business owners, veterans face financial hardships on the path to entrepreneurship. Emergency expenses, cash flow shortages, and expansion are just a few situations where a business might need extra capital. Veteran-owned businesses may face even more financial challenges – for example, if a reservist that also owns a small business is suddenly deployed, money, time, and resources may become scarce quickly. While your incoming revenue should cover most of your expenses in theory, there will always be times when the current cash flow situation just isn’t enough.

If you’re a veteran who runs your own business and are facing a financial challenge, there are options available to you. One of the best options? Grants for veteran-owned businesses. With a grant, you can receive money to fund startup costs, pay for the research and development of new products, or support your established business. Best of all, grants don’t have to be repaid.

What’s the catch? Obtaining a grant is difficult for many business owners. You may not know where to even begin to find these grants. Once you find them, the application process can be confusing, and you’ll find the competition extremely stiff. Not only do you have to be a veteran to qualify for these grants, but you may also have to meet additional requirements, including the location of your business, the industry you’re in, and your time in business. Grants are available through the federal government, nonprofit organizations, and even corporations.

However, just because it’s difficult to receive a grant doesn’t mean it’s impossible. The first step is to understand what grants are available to you, learn the requirements, and move through the application process. In this article, we’ll explore the best grant options available to veterans, how to find your own grants, and other financial options available for your business. Ready to move one step closer to getting the business funding you need? Let’s get started!

StreetShares Foundation Veteran Small Business Award

StreetShares is an online lender that specializes in lending to veterans. In addition to financing products like loans and lines of credit (which we’ll discuss later in this post), small business grants are also available through the StreetShares Foundation.

As of 2018, the StreetShares Foundation awards grants to three winners. First place receives $15,000, second place receives $6,000, and third place wins $4,000.

The StreetShares Foundation Veteran Small Business Award is open to any military veteran, reserve or active duty member of the Armed Forces, or a qualifying spouse. Applicants must live in the U.S., be at least 21 years old, and own at least 50% of the business. All businesses must be legal entities and must have an impact on the veteran community to qualify. Award amounts and additional requirements may change from year to year.

To be eligible for the grant, all applicants must view educational content through StreetShares. Once qualifying content has been downloaded or viewed, the application is available. Applicants must write a summary of their business and submit a video. The Foundation will choose up to 10 finalists based on the business idea, how the award will be used, the history of the business, the product-market fit, and the social impact on the military and veteran community. Once the finalists are selected, their businesses will be presented to the public and put to a vote to determine the winners.

National Association For The Self-Employed Growth Grants

For businesses with smaller capital needs, the National Association for the Self-Employed Growth Grant provides small grants up to $4,000. Like other grants, the funds must be used for a specific purpose, such as purchasing equipment or hiring new employees.

Applications are reviewed quarterly and awards up to $4,000 are distributed monthly. To qualify, you must submit an application outlining your business need and providing details of how you will use the grant to fund this need.

You must also be a member of the NASE to qualify. Annual fees are $120, but veterans only have to pay $99 for an annual membership. Once you’ve joined, you are eligible to apply, and your application will be reviewed based on the association’s quarterly review schedule.

FedEx Small Business Grant Program

The FedEx Small Business Grant program has awarded over $500,000 in grants since its launch in 2013. In 2018, FedEx awarded $120,500 to 10 U.S.-based small businesses. The top prize for the contest is a $25,000 grant and $7,500 worth of FedEx Office services. Other winners bring home smaller grants and money to be used toward printing and businesses services.

To qualify, all businesses must be for-profit and based in the U.S. All small businesses must have fewer than 99 employees and must have a time in business of at least 6 months. Participants must fill out an application, write a short profile for their business, and upload four photos. Participants may also submit a 90-second video for voting, although this isn’t required. Participants do not have to be military veterans to apply.

The annual program usually opens its entry period at the end of February, and interested small businesses can apply through the FedEx website.

USDA Rural Business Enterprise Grant Program

Through the United States Department of Agriculture, eligible small businesses can receive grants from $10,000 to $500,000. To qualify, you don’t have to be in the agriculture industry, but your business must be located in an eligible rural area.

Other requirements include operating a business that has no more than 50 employees and less than $1 million in annual revenues. Grant proceeds can be used to purchase or develop commercial real estate, to cover expenses related to business planning, and for purchasing equipment.

All applicants can apply for the grant through their USDA Rural Development state office.

How To Find & Apply For VA Small Business Grants

small business loans for veterans

If you’ve missed the deadline for applying for the grants discussed in this article, don’t qualify, or are looking for more grant opportunities, there are additional resources you can use to find your own grants.

To find federal grant opportunities, check out Grants.gov. This searchable database of federal grants is easy to use. Through this website, you can search and apply for grants, use their educational resources to learn more about grants, and even track your submissions. A mobile app is now available for Android and iPhone, making it easy for you to search for grants on the go.

Another great resource is the SCORE Association. This nonprofit agency has counselors and mentors located nationwide. These volunteers can not only point you toward national and local grants, but also provide free business advice for starting or building your business. You can participate in online workshops as well, and take advantage of the other free resources available to small business owners.

Try using resources at your local library to find small business grants. Many library branches offer specialized tools, including search engines and databases, that provide information on available small business grants for startups and established businesses in all industries.

Once you’ve found grants, the next step is to begin the application process. Because grants are to be used for very specific purposes and are extremely competitive, take the time to adequately prepare.

Before getting started, make sure that you meet all requirements of the grants that interest you. Once you’re sure that you qualify for a startup grant, complete all required registrations. This may include registering on a website to fill out an application and/or applying for an Employer Identification Number or DUNS number.

The next steps vary based on the specific grant program. Some grant programs require you to create a short business profile or a short video giving information on your business and why you need a grant. Other grants have more extensive requirements, including writing a detailed business plan and in-depth summary of how you plan to use grant proceeds. Work through these steps very carefully. You don’t want to overlook a minor detail that could render you ineligible to receive the grant.

Your grant proposal should sound professional and include details. Your proposal should be well-organized, and you should do your research on details such as potential costs. Include supporting documentation and citation to back up your claims as needed.

If you’re new to the application process, consider hiring a grant writer. If this simply isn’t in your budget, there are free resources online that can help you through the process.

Other Financial Resources For Veteran-Owned Businesses

Whether you don’t qualify for a grant program or have greater financial needs than a grant can cover, there are more financing options available for your business. The Small Business Administration and StreetShares stand out by offering low-cost loan options to veteran-owned businesses just like yours.

VA SBA Loans

SBA loans have developed a reputation among small business owners for their low interest rates and great terms. Rates and terms are comparable to bank and credit union loans. The best part, though, is that even if you don’t qualify for traditional loan options, you may still receive an SBA loan. This is because these loans are backed by the government in amounts up to 85%, taking some of the risk away from the intermediary lender. What does this mean for you? Your small business can still be approved for an affordable loan, even if you’ve been turned down by other lenders.

One of the most popular loan options is the SBA 7(a) program. Through this program, you can receive up to $5 million for nearly any business purpose. The SBA sets the interest rates at the prime rate plus a maximum markup of 4.75%, so these loans are extremely affordable.

For military veterans, the SBA Veterans Advantage program is available. Through this program, you’ll receive the same high borrowing limits and low rates and terms of the 7(a) loan, with the added advantage of reduced guarantee fees.

To qualify for the SBA Veterans Advantage loan, your business must be a veteran-owned business that is considered a small business based on the SBA’s definition. You must demonstrate the ability to repay the loan and meet all criteria for receiving an SBA loan, including personal credit score requirements.

If you’re a military reservist or are in the National Guard, a deployment can throw your business off track. You shouldn’t have to worry about a pile of expenses that pose a threat to your business when you go on active duty. Luckily, the SBA has a financial solution.

The Military Reservist Economic Injury Disaster Loan Program provides loans up to $2 million for military reservists or National Guard members during or immediately following deployment. Under this program, you can receive a loan with interest rates set at 4% and repayment terms up to 30 years. Loan proceeds can be used to cover operating costs but can’t be used to refinance debt, expand a business, or cover lost income or profits.

You may also qualify for other SBA loan options not specific to veterans. For example, if you need capital for your startup costs, you can apply for SBA microloans up to $50,000 through an SBA-approved nonprofit lender. Interested in learning more about SBA loans? Check out our post on SBA loans for veterans.

StreetShares

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We already touched on StreetShares earlier when discussing grants. However, if you missed the deadline to apply, don’t want to go through the hassle of applying for the program, or don’t qualify, StreetShares has traditional financing options for your business.

StreetShares was founded by veterans and was originally targeted only toward veterans. Today, however, any qualifying business owner can apply for StreetShares financing. There are some special concessions made for veteran-owned businesses, which we’ll discuss in detail a bit later.

You can apply for a StreetShares installment loan of up to $250,000 to be repaid over 3 to 36 months. The interest rates for these loans are around 6% to 14%.

If a flexible line of credit better fits your financial needs, StreetShares offers those, too. You can apply for a line of credit of up to $250,000 with repayment terms of 3 to 36 months. Interest rates are around 6% to 14% for a StreetShares line of credit.

To qualify for a loan or line of credit, you must be in business for at least 2 years. However, some businesses may qualify with a time in business as short as 6 months. You must also have a minimum personal credit score of 620. However, if you’re a veteran, this score requirement is lowered to 600. You must also have an annual business revenue of $100,000.

If you have federal, state, or commercial contracts, you could also qualify for contract financing. You can receive up to 90% of your contract in advance by paying a factor fee. You can apply for contract financing in addition to an installment loan or line of credit.

Final Thoughts

Grants for a veteran-owned small business are difficult to receive, but you can improve your odds by doing your research and taking your time throughout the application process. A grant is a great way to fund your business, and you don’t have to worry about repaying funds.

Even if you don’t qualify for grants, your veteran-owned business can take advantage of other affordable financing options to start or expand your business. Consider SBA loans or our picks for small business loans for veterans to give your business the financial boost it needs to be successful.

The post The Best Business Grants For Veterans appeared first on Merchant Maverick.

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The Best Business Grants For Minorities

business grants for minorities

Modern American capitalism is an ironic tableau of cruel contradictions. While cheap consumer goods are more accessible than ever and the price of large high-resolution TVs keeps going down, the things actually required for human beings to live and thrive — housing, health care, education, retirement security, etc — become ever less accessible to the exploited, over-policed masses by the day. This reality has all the more salience to minority groups whose access to these necessities was precarious at best to begin with.

Startup capital is another resource that has been made scarce to marginalized communities. 10 years after the financial crisis of 2008, banks still aren’t lending to those who could do the most good with the cash (never mind that all of us, both marginalized and privileged, were made to bail out these same banks after they ruined the world). For most minority small business owners, the prospect of getting free money to cover business expenses is going to sound rather far-fetched.

That’s where business grants come in. Small business grants are not easy to obtain, but they do exist and can be an invaluable source of funding for those who obtain them. We decided to compile a list of the best grants and grant-related resources for minority-owned businesses.

But first, here’s more information on getting funding for your small business:

  • Do I Qualify For A Startup Grant?
  • How To Find A Startup Grant
  • The Best Business Grants For Women
  • The Best Small Business Loans For Minorities With Bad Credit

Minority Business Development Agency

An agency of the U.S. Department of Commerce, the purpose of the Minority Business Development Agency, or MBDA, is to help connect minority business owners to federal contracts and other financial resources. The agency also periodically awards grants to minority-owned companies for specific purposes. In November, the federal government announced that the MBDA had awarded over $13 million in grants to 35 projects across the country.

From helping you find grants and loans to providing marketing and legal assistance, the MBDA’s physical business centers are set up to provide a range of assistance to minority business owners and entrepreneurs. Here’s a searchable directory of these MBDA business centers.

Grants.gov

Grants.gov doesn’t originate grants; rather, it’s a searchable database of every grant program from across all 26 grant-making agencies of the federal government. It’s a valuable resource, though the website is pretty clunky.

In order to apply for federal grants, you must do the following:

  • Get a DUNS number from Dun & Bradstreet
  • Register to do business with the federal government through its System Award Management website
  • Create an account at Grants.gov

National Association for the Self-Employed

The NASE is a nonprofit trade association that gives grants and provides educational resources for small businesses and entrepreneurs. Their Growth Grants Program lets small business owners apply for grant financing for a particular small business need.

These grants are worth up to $4,000 each, so while you won’t hit the funding motherlode with the NASE, it’s a great resource for minority business owners with a specific, defined funding need. You’ll need to join the NASE to apply for a grant, and you’ll need to explain in detail how you’ll use the funds and how this funding will bolster your business operations.

FedEx Small Business Grant Contest

The FedEx Small Business Grant Contest is a nationwide competition held annually to award grants in the form of cash and prizes (such as credits for FedEx services) to small business owners and entrepreneurs. The amount awarded to contest winners and the number of grant recipients varies year-to-year. The details of the 2019 competition have yet to be unveiled, but these specifics will be unveiled when the 2019 competition is announced early in the new year.

For reference, here is a series of features on the winners of the 2018 Grant Contest winners.

Dare To Dream Grant Program

The Eugene Applebaum Dare to Dream grant program is a prominent program based at the University of Michigan offering business development seminars and $500-$5,000 in grants to individuals and/or student teams. Prospective entrepreneurs in the upper midwest, take note!

USDA Rural Business Development Grant

For minorities in rural areas, this grant, issued by the United States Department of Agriculture, is an attractive prospect. In the words of the USDA:

This program is a competitive grant designed to support targeted technical assistance, training and other activities leading to the development or expansion of small and emerging private businesses in rural areas which will employ 50 or fewer new employees and has less than $1 million in gross revenue.

Program applications vary by state, so you’ll need to find the specifics of what’s on offer in your state through the USDA’s RBDG website.

Native American Business Development Institute (NABDI) Grant

This grant program is funded by the U.S. Department of Indian Affairs and is intended to support Native American and Alaskan Native business owners. Currently, they don’t have a great deal of information posted on the grants being offered, but you can always contact the Office of Indian Energy and Economic Development to learn how the program stands to benefit your business.

Office of Minority Health Grant Programs

A division of the Department of Health and Human Services, the Office of Minority Health (OMH) offers grants to businesses whose mission is to eliminate health disparities among racial and ethnic minority populations. Keep an eye on the OMH website to learn about grant opportunities when they are announced.

How To Find & Apply For Small Business Grants For Minorities

startup grants

Finding the right grant program, applying for it, and actually getting the grant in question can be a daunting prospect. That’s why it may be a good idea to simultaneously look for alternate sources of funding, such as personal loans or lines of credit. We recommend the following reputable funder to minorities who are looking for business financing:

Personal Lenders For Business

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

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

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

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

lending club logo

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

Lenders That Specialize In Lines Of Credit

Lender Borrowing Amount Draw Term Draw Fee APR Next Steps

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

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

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

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

Remember that unlike with loans and the like, the money that comes with grant programs has strings attached. It must be used in precisely the way specified by the grant giver. That’s why it pays to know the details of the grant you’re applying for, as there’s no reason to apply for grants that would disburse money for a funding need you don’t even have.

I should reiterate that in order to qualify for any federal grants, you need to register at sam.gov. Unfortunately, the registration process isn’t as straightforward as it should be, as the government agencies in question seem to be in the middle of shifting their small business assistance materials between agencies and websites. As things stand, sam.gov lays out the steps required to register your small business here.

One organization that can get you pointed in the right direction in your quest for business funding is SCORE. It’s a partner of the Small Business Administration (SBA) and provides mentoring services to small business owners and entrepreneurs from over 300 chapters across the country. They also provide online webinars and business courses.

What To Do Before Applying For A Grant

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

Final Thoughts

Entrepreneurial talent can be found in every community across this land. Sadly, social and structural barriers to equality persist. Small business grants are but one means by which minority small business owners can get some ever-elusive funding. For other such means, check out our article on the various types of alternative financing available for small businesses, or look into one or more of the alternative funders below:

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

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

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

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

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

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SBA Loans For Women: What You Need To Know

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

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

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

What Is The SBA?

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

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

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

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

Overview Of SBA Loan Programs

Loan Program Description More

7(a) Loans

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

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Microloans

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

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CDC/504 Loans

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

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Disaster Loans

Loans used to rebuild or maintain business following a disaster. 

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How The SBA Helps Women-Owned Businesses

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

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

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

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

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

How To Qualify For An SBA Loan

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

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

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

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

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

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

  • Recent Bankruptcies
  • Tax Liens
  • Defaults On Government Loans

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

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

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

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

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

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

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

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

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

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

Types Of SBA Loans For Women-Owned Businesses

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

SBA 7(a) Loans

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

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

SBA 7(a) Loan Base Rates + Markups

Loan Amount Less Than Seven Years More Than 7 Years

Up to $25,000

Base rate + 4.25%

Base rate + 4.75%

$25,000 – $50,000

Base rate + 3.25%

Base rate + 3.75%

$50,000 or More

Base rate + 2.25%

Base rate + 2.75%

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

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

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

SBA Microloans

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

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

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

SBA Microloan Rates & Terms

SBA 504 Loans

Borrowing Amount

$500 – $50,000

Term Lengths

Up to 6 years

Interest Rates

6.5% – 13%

Borrowing Fees

Possible fees from the loan issuer

Personal Guarantee

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

Collateral

Collateral normally required, but depends on the lender

Down Payment

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

SBA CDC / 504 Loans

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

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

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

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

SBA 504 Loan Rates & Terms

SBA 504 Loans

Borrowing Amount

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

Term Lengths

10 or 20 years

Interest Rates

Fixed rate based on US Treasury rates

Borrowing Fees

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

Personal Guarantee

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

Collateral

Collateral required; usually the real estate/equipment financed

Down Payment

10% – 30%

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

How To Apply For An SBA Loan

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

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

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

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

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

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

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

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

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

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

SmartBiz

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

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

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

Lendio

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

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

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

Other Business Resources For Women

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

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

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

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

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

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

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

Final Thoughts

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

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

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Business Loans For Food Trucks: Best Financing Options

Food trucks are rolling out across cities and towns across the nation, bringing delicious dining options to businesses and events. These mobile businesses don’t just benefit hungry diners, though. Restaurants-on-wheels also open up new opportunities for entrepreneurs. With operating costs that are only a fraction of what it would be to open and maintain a traditional restaurant, food trucks are a more affordable way to bring your tasty food to the masses.

Even though your costs are cut, that doesn’t mean they’re nonexistent. You still have to consider the cost of supplies, equipment, POS software, and the truck itself. Whether you already own a food truck business and want to expand or you’re ready to launch your business, these expenses add up quickly … and if you’re like most business owners, you don’t have the funds just sitting in your checking account.

The good news is you don’t have to be a millionaire to start or expand your food truck business. There are plenty of financing options available for your business expenses, from purchasing a new food truck to upgrading equipment and hiring employees.

Ready to roll out your food truck business? Read on to learn more about the types of financing available to you, how to apply, and our recommended options.

Financing Need Best Loan Type Recommended Lender
Purchasing Or Renting A Food Truck Equipment Financing Lendio
Working Capital SBA Loan SmartBiz
Supplies & Inventory Line Of Credit Fundbox
Hiring & Covering Payroll Installment Loan StreetShares
Cash Flow Shortages Short-Term Loan OnDeck
Emergency Funds Business Credit Card Chase Ink Unlimited

Purchasing Or Renting A Food Truck

It’s no surprise that one of the most important pieces of your food truck business is the food truck itself. Your truck is your mobile restaurant, allowing you to peddle your tasty treats all over town. Without a food truck, you simply don’t have a business.

Unfortunately, the truck will also be one of your biggest expenses. A custom truck stocked with all of the equipment you need to make your edible creations could cost upwards of $200,000 — an expense that just isn’t financially feasible for most entrepreneurs.

Whether you’re investing in your first food truck or adding to your fleet, there are two options to consider: purchasing and renting/leasing. Let’s explore the differences between loans and leases to determine which option is best for your business.

Vehicle Loans VS Leasing

If you want to purchase a food truck, commercial auto loans or equipment loans are your best financing options. These loans can help you buy an expensive food truck without having to pay the full purchase price out of pocket.

When you receive an equipment or vehicle loan, you’ll be required to pay a percentage of the purchase price as a down payment. This is typically 10% to 20% of the total cost, although this can vary by lender. In most cases, the higher your credit score, the lower your down payment requirement will be. However, you may want to consider putting a larger amount of money down to reduce the amount of your loan and decrease your monthly payment.

After making the down payment, the lender will loan you the remaining balance so that you can take possession of the vehicle immediately. Then, you’ll repay the loan through monthly payments for a set period of time. Your monthly payment will be applied to the balance of your loan, as well as to interest charged by the lender. Once you’ve made all loan payments as agreed, you’re the owner of the food truck and can keep it, trade it in for a new truck, or sell it outright if you choose.

If you have an established food truck business, a loan may be the best option for you. Once you pay off your loan, you’ll own the vehicle free and clear and can use it in your business as long as you need.

If you don’t have collateral, it’s no problem. For most equipment and vehicle loans, the equipment being purchased — in this case, your food truck — will act as the collateral.

On the other side of the coin is food truck leasing. When you lease a food truck, you’re essentially renting it. A lease does have a few similarities to a vehicle or equipment loan. With a lease, you are required to pay a down payment. After paying your down payment, you can put the food truck into service.

When you sign a lease, you agree to make monthly payments over a period of time — usually 2 to 3 years. Once your lease ends, you can return the vehicle and sign a lease on a new truck. Some lenders may also give you the option to pay a lump sum at the end of your lease to purchase the truck.

When should you consider a lease over a loan? If you’re new to the industry, a lease may be the better option for you. If things go pear-shaped and you decide to not move forward with your business, you can simply return the truck at the end of your lease. A lease is a good option when you’re not yet sure if you’re in this business for the long haul.

If you’re short on funds for a down payment, a lease may also be the better choice. In many cases, leases have lower down payment requirements. You may also score lower monthly payments with a lease.

However, if you do plan to use your food truck for a longer period of time, purchasing your equipment with a loan is a wise move. While a lower down payment and lower monthly payments are more cost-efficient over the short-term, a lease is often more expensive over the long term.

Still stuck between a loan and a lease? Learn more about equipment loans and leases to make the right decision for your business.

Recommended Option: Lendio

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Lendio is an online loan aggregator that connects you with a network of lenders that best fit your financial needs. One of the options that you can apply for through Lendio is equipment financing.

With equipment financing, you can receive between $5,000 and $5 million for the purchase of your food truck. Interest rates through Lendio’s network start at 7.5% for the most creditworthy borrowers. The proceeds from your loan can be used to purchase a new or used food truck. You can also use equipment loans to purchase other equipment for your business, such as a new grill or a point-of-sale system.

To qualify, you must have a credit score of at least 650. If your score is lower, you may still be able to receive equipment financing through Lendio provided you can show proof of solid cash flow and revenue over the last 6 months. You must also have a minimum of $50,000 in annual revenue and a time in business of at least 12 months.

Working Capital

You just can’t operate a successful business without working capital — money that is used to cover your daily operating expenses. Even though the average daily expenses of a food truck — think fuel for your vehicle, payroll, and other operating expenses — are far less than the operating costs of running a restaurant, they can still pile up.

The money you make from selling your food should cover your daily operating costs and add to your profits, but what happens when you fall a little short? Unexpected expenses, a slow season, or other hurdles can pose a challenge to your business and leave you short of the working capital you need.

If you need working capital, there are a variety of financing options to consider, but one of the most affordable is a loan from the Small Business Administration.

SBA Loans

SBA loans come with low interest rates and favorable, flexible terms for small business owners. Even if you’ve been turned down for a traditional bank loan in the past, you may qualify for an SBA loan. The SBA guarantees portions of each loan. This takes the risk off SBA lenders — known as intermediaries — and opens up affordable business loan options for entrepreneurs.

SBA loans are a preferred choice for many small business owners because they have low interest rates, long repayment terms, high borrowing limits, and can be used for nearly any business purpose, including working capital.

Recommended Option: SmartBiz

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One of the drawbacks of applying for an SBA loan is how lengthy and difficult the process can be. Finding the right lender, gathering the required documentation, and waiting for approval can take weeks — or in some cases months.
If the challenge of receiving an SBA loan has held you back from applying, there’s an easier option to consider: SmartBiz. This online lender specializes in simplifying SBA loans from the prequalification stage to approval and funding.

Through SmartBiz, you can apply for SBA working capital loans from $30,000 up to $350,000. These loans have a variable interest rate — the base rate plus 2.75% to 3.75% –, making the total interest rate between 8% and 9%.
Your working capital loan can be used in many ways, whether you need to purchase inventory or equipment, hire staff, cover operating costs, or even refinance existing debt.

To qualify, you must be a U.S. citizen or permanent resident. You must also have a time in business of at least 2 years and show proof that you have sufficient cash flow to cover your monthly loan payment. All borrowers applying through SmartBiz must also have a credit score of at least 640. Your credit report should be free of bankruptcies or foreclosures within the last 3 years, defaults on government loans, and outstanding tax liens.

SmartBiz offers a prequalification tool that makes it easy to see if you’re eligible for an SBA loan. The form takes just 5 minutes and will automatically tell you if you qualify to apply. If you do, you can proceed with the application and receive funds as quickly as 7 days after completing your application. If you don’t qualify, SmartBiz can connect you with lenders that offer non-SBA loans that could help with your working capital challenges.

Supplies & Inventory

KDS Kitchen Display System

Running a food truck requires keeping supplies and inventory on-hand at all times. From paper products to food, there are a number of supplies that you need to keep your business operating smoothly. These expenses are recurring, and while your profits should be enough to pay for supplies and inventory, this isn’t always the case.

Whether you have a seasonal increase in sales that require more supplies and inventory or you have cash flow issues that have left your bank account lower than usual, sometimes you need a financial boost. If you need financing to cover the costs of supplies and inventory, a line of credit can help.

Lines Of Credit

A line of credit is a flexible financing option to cover business expenses. When you receive a line of credit, a lender will provide you with a credit limit — the maximum amount you can borrow. You can make multiple draws up to and including this credit limit. Once you initiate a draw from your line of credit, the funds are transferred to your bank account. Most lenders transfer funds immediately, and you can access them as soon as the next business day. Some lenders even have options that give you access to your funds within just minutes.

Once you’ve made a draw on your line of credit, you will make regularly scheduled payments to the lender, which will be used to pay off the balance as well as fees and/or interest charged by the lender. As you pay off your balance, funds will become available for you to use again.

You can use a line of credit to purchase your inventory and supplies as needed. Whether you’re facing a planned expense or a completely unexpected emergency, a line of credit gives you the flexibility you need to make sure you can continue to serve your customers without a hitch.

Recommended Option: FundBox

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Fundbox is a popular option for businesses seeking a line of credit because of its lenient requirements. Even if you’ve had credit challenges in the past, it doesn’t matter with Fundbox. This company takes the performance of your business into account when issuing lines of credit.

Through Fundbox, you can be approved for a line of credit up to $100,000 that can be used for any business purpose. If you have a low personal credit score, it isn’t a problem. There are no credit requirements to qualify for a Fundbox line of credit. However, you do need to have at least $50,000 in annual revenue, a business checking account, and a business that is based in the United States. Additionally, you must grant access to your accounting software so Fundbox can analyze the performance of your business. If you don’t use a supported accounting software, you can also submit business bank statements from the last 3 months.

Once you’ve been approved for a line of credit, you can initiate draws into your business checking account. With each draw, a fee will be charged. Fees start at 4.66% of the amount drawn. You will receive your funds in your account as quickly as the next business day. Repayment terms are 12 or 24 weeks, and payments are made weekly through ACH debits. If you repay your loan early, all remaining fees are waived.

Hiring & Covering Payroll

Hiring new employees means that your business is expanding, but this expansion comes at a cost. Or maybe you’re facing a completely different situation and you’re struggling to meet your current payroll. Whether you’re adding to your crew or just trying to overcome a financial hurdle to cover payroll, there are financing options to consider, including installment loans.

Installment Loans

An installment loan provides you with a lump sum of money that is paid back through regular payments over a set period of time. Each payment will be applied toward the balance of your loan, as well as toward fees and/or interest charged by the lender.

Your fees and/or interest will vary based on the lender you select and factors such as your personal credit score. The more creditworthy you are, the more affordable your loan will be. Repayment schedules may be daily, weekly, or monthly depending on the policies of your lender.

If you choose an installment loan to cover hiring or payroll costs, you need to run some calculations before you apply. Since you receive a lump sum, calculate how much you need to cover payroll or how much it will take to hire new employees to ensure you request enough money. If you’re unsure of how much money you need, consider applying for a line of credit or another form of flexible financing.

Recommended Option: StreetShares

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If you need an installment loan, you can apply for $2,000 to $250,000 through StreetShares. Repayment terms are between 3 and 36 months with APRs of 7% to 39.99%. A closing fee of 3.95% to 4.95% is added to the cost of your loan. Repayments on your loan are made weekly.

If you want a more flexible option, you can also receive a line of credit from StreetShares. You can receive between $5,000 and $250,000 with repayment terms between 3 and 36 months. A draw fee of 2.95% is charged for your loan, and APRs are between 7% to 39.99%.

To qualify for a term loan or line of credit with StreetShares, you must be in business for at least 1 year. A minimum revenue of $100,000 per year is required, as well as a personal credit score of at least 620.

Cash Flow Shortages

A cash flow shortage can negatively affect your entire business. Without sufficient cash flow, you’re unable to cover your daily operating expenses, pay your bills, or serve your customers. You lose profits, resulting in even more cash flow problems. Before you know it, your cash flow issue has spiraled out of control.

Cash flow shortages can occur at any time. In the food truck industry, for example, colder winter weather may affect the number of customers you have. Fewer customers mean less cash … and an increased chance of cash flow shortages.

Before you get to that point, take control of your finances by covering cash flow shortages with a short-term loan.

Short-Term Loans

With a short-term loan, you receive the cash that you need quickly and pay it back through regular payments over a set period of time. While some short-term loans come with repayment terms of 12 months or less, some lenders offer up to 3 years to repay your loan.

Many lenders do not use a traditional interest rate for short-term loans. Instead, these lenders opt to use a factor rate. This is a multiplier that determines the fixed fee added to your loan. Let’s say that you borrow $10,000. The factor rate is 1.3. Multiply the borrowing amount times the factor rate to find the total repayment. In this example, the total is $13,000. This means that your fixed fee for borrowing is $3,000. Learn more about factor rates and how they’re used to determine the cost of your loan.

A short-term loan is a good option when you know exactly how much money you need. If you need a more flexible option, consider applying for a line of credit or business credit card.

Recommended Option: OnDeck

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With OnDeck, you can apply for business loans up to $500,000. There are two different options to consider: short-term loans and long-term loans.

OnDeck’s short-term loans have repayment terms of 3 to 12 months with simple interest rates as low as 9%. This means that your interest rate is calculated as a percentage of your loan amount. For example, if your loan of $20,000 has 10% simple interest, you will pay $2,000 in interest.

OnDeck also has long-term loans with repayment terms of 15 to 36 months. Annual interest rates start at 9.99%.
An origination fee is also added to the cost of your loan. For your first loan, you will pay 2.5% to 4% of the total loan amount. Second and subsequent loans qualify for lower origination fees. All loans are repaid daily or weekly through automatic ACH withdrawals.

To qualify, your company must be in business for at least a year. You need at least $100,000 in annual revenue. Your personal credit score must be at least 500.

If you’re looking for a more flexible financing option, OnDeck also offers lines of credit up to $100,000 with APRs starting at 13.99%. To qualify, your company must be in business for at least a year and have $100,000 in annual revenue. You must also have a credit score of at least 600 to receive an OnDeck line of credit.

Emergency Funds

Your food truck is in need of repairs. Your equipment has suddenly given out and needs to be replaced. An unexpected expense has come out of nowhere and has turned your finances upside down. When an emergency arises, don’t panic. Know that there are emergency loans and other financing options available to help you overcome financial hurdles.

In an emergency, you need access to funds quickly. You don’t have days or weeks to wait for a loan approval. In these situations, a business credit card could help.

Business Credit Cards

Once you’re approved for a business credit card, you can put it into action immediately. You don’t have to wait for approval from the lender each time you use your card. If a sudden emergency pops up, your credit card is ready to use. You can use it to pay your suppliers or vendors, pay a bill, cover food truck repairs, or for other business expenses.

When you receive a credit card, the issuer will set a credit limit. You can spend up to and including this limit anywhere credit cards are accepted. Each month, you’ll make a payment that will be applied toward the principal balance and the interest charged by the lender. As you pay off your balance, your credit will become available to use again.

If you apply for a credit card for your business, make sure to compare interest rates and to read all of the fine print. Many cards come with introductory APRs that increase at a later date so make sure you’re aware of all terms for your card. You may also consider applying for a rewards card, which provides you with cash back or points to use for perks and benefits each time you use your card.

Recommended Option: Chase Ink Business Unlimited

Chase Ink Business Unlimited


chase ink business unlimited
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Annual Fee:


$0

 

Purchase APR:


15.24% – 21.24%, Variable

With Chase Ink Business Unlimited, you can earn unlimited 1.5% cash back with every business purchase. This card comes with a 0% introductory APR for the first 12 months, followed by a 15.24% to 21.24% variable APR. There’s no annual fee, and you can even receive $500 cash back after spending $3,000 within the first 3 months of opening your account.

To qualify for the Chase Ink Business Unlimited, you must have good to excellent personal credit. Unsure if the Chase Ink Business Unlimited is right for you? Check out other credit card options:

  • Compare Chase Ink Business Credit Cards
  • Best Business Credit Cards For Good Credit
  • Top Business Credit Cards For Fair Credit

When You Want To Start A Food Truck Business

The financing options previously discussed are great for established businesses, but what about food truck startups? Time in business requirements, annual revenues, and business credit scores are required for many loans, so what’s your next move if you fall short of these requirements?

New businesses and startups may not have as many financing options as established businesses, but there are options out there if you know where to look.

For example, you may not qualify for an SBA 7(a) loan, but you could get a smaller loan through the SBA Microloans program. Through nonprofit intermediary lenders, you could receive up to $50,000 to cover startup costs for your new food truck business. Although the maximum borrowing amount is $50,000, the average loan distributed through this program is $13,000, so this is an option that is best for startups with lower capital needs.

Sometimes, you may even have to get a little creative with your financing. Consider crowdfunding to raise money for your business. With crowdfunding, you’ll use an online platform to raise money to fund your startup costs. Investors will invest money in your food truck business in exchange for equity or a reward of your choosing. Your crowdfunding campaign can be a success if you effectively spread the word about your business through social media and other online outlets and offer equity or rewards that are enticing to investors.

If you have good credit, look beyond business loans and consider taking out a personal loan. Your personal income and credit score will be the main qualifying factors with a personal loan. With this option, you can receive very competitive interest rates and terms on a personal loan that can be used to fund your new food truck business. Learn more about using a personal loan for business.

Friends and family that are willing to invest may also be a financial option for your new business. If you receive a loan from your friend or family member, make sure that everything is in writing and that you pay as agreed, just as you would with any other lender.

Bad Credit? Your Best Food Truck Financing Options

Chart of Accounts

If you have a low personal credit score, your financing options are limited. Your low score will also result in higher interest rates and a higher overall cost of borrowing. Instead of being stuck with these higher costs and less desirable financing options, the smartest financial move is to build up your credit.

Know where you stand by applying for your free credit score and report online. Review your credit report for any errors and dispute any erroneous information to have it corrected or removed. Continue paying all loans, credit cards, and other debts as agreed. With a few easy steps, you can boost your credit score. With a higher score, you’ll be able to qualify for better, more affordable loans and financing.

If you’re in a hurry to receive money, waiting for months (or even longer) to build your credit score may not be an option for you. If you need financing quickly, there are options, but be aware that these options come at a higher cost.

If you have bad credit but your business is performing well, consider applying for a line of credit. Lenders like Fundbox and Kabbage consider the performance of your business — not your credit score — as the most important qualifying factor. With these lenders, simply fill out a short form with your personal information, then link your business accounts and/or accounting software to see how much you qualify to receive. Once approved, your line of credit is available to use immediately.

Another type of financing available to borrowers with bad credit is a merchant cash advance. When you receive a merchant cash advance, you receive a lump sum of money in exchange for future revenue. The merchant cash advance company uses a factor rate to add a fixed fee to the total amount borrowed. The money is then repaid through daily ACH withdrawals, although some providers offer weekly or monthly repayments.

With MCAs, you may have fixed or variable repayments. With some providers, the amount you pay never changes. With others, the amount you pay is based on a percentage of your sales. When you have higher sales, your payment is higher. When sales are down, your payment is lower. What you pay depends on the agreement you sign with your provider.

It’s important to proceed with caution when receiving an MCA. Financial experts advise against this type of financing due to the high costs and short repayment terms, which could lead to more debt. If you have a low credit score and no other financing options, carefully weigh out the pros and cons before signing a contract with an MCA provider.

There are also alternative lenders online that are willing to work with borrowers with credit challenges. Shop around, compare your options, and make sure that your return on investment justifies the cost of taking out an alternative loan.

What You Need To Apply For Food Truck Financing

When you apply for food truck financing, what you need to apply is based on the type of loan you’re applying for and the lender you’re working with. At the very least, you’ll need to fill out an application providing personal information including:

  • Full Legal Name
  • Legal Business Name
  • Contact Information: Phone number, email address, mailing address
  • Federal Tax ID
  • Social Security Number
  • Annual Revenue

For some types of financing, like lines of credit and business credit cards, little more is needed. However, loans such as equipment financing and SBA loans may require additional information and documentation, including:

  • Business & Personal Bank Statements
  • Business & Personal Income Tax Returns
  • Balance Sheet
  • Profit & Loss Statement
  • Business Plan
  • Financial Projections
  • Resumes For All Business Owners
  • Debt Schedules

Requirements vary and a complete list of all required information and documentation will be provided by your chosen lender.

Final Thoughts

Running a food truck can be extremely lucrative, but like any other business, you may encounter financial challenges. When this occurs, just know that there are loans and financing that can be used to cover unexpected expenses, expand your business, or even start a new business.

Understand the types of financing available to your business, shop around for the best rates, and make all payments as agreed to open up future financing opportunities and to prove yourself as a responsible borrower and business owner.

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Understanding Rollovers As Business Startups (ROBS)

You’re ready to start your own business, and you just need the financing to bring your ideas to life. However, in your journey to become a business owner, you may encounter challenges. Many new business owners find that securing a business loan is easier said than done. When it comes to requirements surrounding time in business, annual revenues, and personal and business credit history, you may find yourself falling a little short.

Whether you want to purchase a franchise, acquire a business, refinance your existing business, or start a new business, sometimes you have to get a little creative with your financing. One idea that probably hasn’t crossed your mind is a Rollovers as Business Startups plan. If you have a retirement account, read on to learn how you can leverage this account to start or grow your business.

What Is A ROBS?

Rollovers for Business Startups — or ROBS — is a type of transaction you can use to fund your new or existing business if you can’t take out a loan or work with outside investors. This method of funding your business does not involve borrowing money. Instead, you are rolling over funds from your individual retirement account, 401(k), or another retirement account to use as financing for your business.

Since you aren’t borrowing or cashing out your retirement account, ROBS allows you to invest your retirement funds without being penalized. A ROBS transaction is a financing choice for many entrepreneurs that don’t qualify for startup loans or traditional financing.

How A ROBS Plan Works, Step-By-Step

A ROBS plan is a complicated transaction, which is why most people that choose this funding avenue work with an attorney or a ROBS provider. However, even if you work with an expert, it’s important to understand how the process works.

Step 1: Establish A C-Corp

The first step of the rollover is to establish a new C corporation, an entity with shareholders that are taxed separately from the entity. A C corporation is the only business structure that will work with a ROBS.

Step 2: Set Up A New 401(k)

The next step is to set up a new retirement plan for the business. The business then becomes the sponsor of the 401(k) plan. In most cases, the entrepreneur will be the only employee of the new corporation and will be the only participant in the 401(k) plan, although you may wish to discuss other options with your ROBS provider or attorney.

Step 3: Roll Over Existing Retirement Accounts

Through a series of legal forms, funds from an existing retirement account are transferred to the newly-created 401(k) plan. Because these funds have been rolled over, the transaction is not a taxable distribution and will not incur penalties.

Step 4: Use Funds From 401(k) To Purchase Stock

Funds in the new 401(k) plan are then used to purchase stock in the C corporation. Now, the C corporation has cash from the sale of the stock.

Step 5: Build Your Business

With money in your pocket, you can use funds to acquire a business, fund your startup, or inject money into an existing business — all without tax liabilities or penalties.

Who Qualifies For A ROBS?

project management software

Anyone with an eligible retirement plan qualifies for a ROBS. The most common retirement plans used for this purpose include 401(k) plans, 403(b) plans, and defined contribution plans like Traditional IRAs, Simplified Employee Pension, and Thrift Savings Plans. You may also use a combination of qualifying plans.

The retirement plan you use to fund your business cannot be from your current employer. Most employers will not allow you to roll over your account while you’re still working for them. However, plans from prior employers, your own 401(k), or self-directed IRAs are eligible to roll over.

Earlier, we discussed the steps for setting up your ROBS. Those steps included setting up a new C-corp and becoming an employee. This isn’t just something that you write on the forms and forget. You must be a legitimate employee for the business. While there are no hard rules as to how much time you devote to the business, you should expect to commit at least 1,000 hours per year. If this doesn’t work for you, consider other financing options for your business.

You also must ensure that you meet all the requirements of your chosen ROBS provider. Some providers have requirements related to the minimum amount of money in your retirement fund, how you’re using the funds, and the type of requirement account you plan to roll over. Before selecting your ROBS provider, understand their requirements. We’ll offer up provider recommendations a little later in this article.

Pros & Cons Of Using A ROBS

Cheaper alternatives to Shopify

A ROBS sounds like a great way to finance a business, doesn’t it? Approached correctly, a ROBS can be a financially-savvy move. However, it’s also important to understand that there are drawbacks to using a ROBS. Before you dive in, weigh out the pros and cons to determine if this is the right financial solution for your situation.

Pros

  • No Debt: You aren’t borrowing against your retirement account or taking out a loan. With a ROBS, you’re leveraging your retirement account to receive the money you need for your business, so you won’t be indebted to a lender.
  • No Interest: Because you aren’t taking a loan from a lender, you won’t have to worry about paying interest for borrowed funds. This means that you’ll have more money to invest in your business.
  • Easy To Qualify: If you have a qualifying retirement account, you can get the financing you need with a ROBS. You won’t have to worry about your personal or business credit score, a lack of revenue, or any other factor considered by a lender. Because you are leveraging your own account and aren’t taking out a loan, the requirements of traditional lenders do not apply.
  • No Penalties: When you withdraw your retirement funds to finance your business, you may be subject to early withdrawal penalties and taxes. With a ROBS plan, you won’t have to pay these costs, leaving more money in your pocket.
  • No Personal Guarantees Or Collateral: Remember, a ROBS is not a loan, so you won’t have to sign a personal guarantee or put up collateral to receive your funds. With a business loan, you may be required to do one or both, which means that if your business fails and you can not pay back your loan, you risk losing your personal assets. With a ROBS, the money invested from your retirement account is the only thing at risk.

Cons

  • Risk Of Losing Your Investment: Although you won’t have to worry about losing your personal assets if your business fails, you do risk losing your money for retirement. Of course, there have been many entrepreneurs that have started successful businesses using a ROBS. However, you should know that there is always a risk involved. If your business fails, you lose your retirement money.
  • Fees & Tax Liabilities: Unlike a business loan, you won’t have to pay interest to a lender with a ROBS plan. However, this doesn’t mean that this strategy doesn’t come at a price. Because you are creating a C-corp, your tax liabilities may be higher than other business structures. If your transaction is not set up properly, you may have to pay penalties to the IRS if you’re audited. This is why it’s so important to select a ROBS provider that understands the process and is able to help avoid missteps when setting up and maintaining your ROBS. Setting up and maintaining your ROBS also has associated costs. With most providers, you’ll be required to pay a setup fee, as well as monthly maintenance and reporting fees.

The Best ROBS Providers

While it is possible to roll over your retirement funds to finance your business yourself, handling the paperwork and navigating the legal requirements can be confusing. Instead of tackling this difficult task on your own, leave it to the experts. If a ROBS sounds like the right next step for you, consider working with one of these two lenders: Guidant Financial and Benetrends.

Guidant Financial

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In addition to financing options — including Small Business Administration loans and unsecured loans –, Guidant Financial offers ROBS to eligible applicants.

To qualify, you must have at least $50,000 in a rollable retirement or pension account. Eligible accounts include:

  • 401(k)
  • 403(b)
  • Traditional IRA
  • Thrift Savings Plan (TSP)
  • Simplified Employee Pension (SEP)
  • Keogh

With Guidant Financial, you can roll over up to 100% of your account balance to fund your business. Most applicants receive funding approximately 3 weeks after starting the application process.

To set up your ROBS, Guidant Financial charges a setup fee of $4,995. An additional $139 per month is charged as a Plan Administration fee.

Benetrends

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Benetrends Financial offers a variety of business funding solutions, including Small Business Administration loans, equipment leases, securities-backed lines of credit, and startup loans. One of the company’s most popular funding options is its Rainmaker Plan.

The Rainmaker Plan is a ROBS that was first launched by Benetrends in 1983. With this plan, you can roll over your 401(k) or IRA to receive funding for your business in as little as 10 days. Benetrends offers an in-house team of professionals that will offer guidance throughout the process. When you apply with Benetrends, you’ll work with a Financial Funding Expert to design a custom plan to best fit your business needs.

Benetrends also offers Audit Shield protection, which protects your plan in the event of an IRS or Department of Labor inquiry or audit.

To get started, Benetrends charges an initial setup fee of $4,995, which includes setting up your plan and your C-corp. After paying your initial fee, a monthly service fee of $130 is charged for ongoing retirement plan services. Fees are all-inclusive and include services such as audit protection, legal support, and compliance at no additional cost.

Final Thoughts

A ROBS isn’t the right financial solution for every aspiring entrepreneur. In some cases, you may want to explore other options, including SBA loans, traditional loans, and startup loans. However, if you have a qualifying retirement plan, you’ve reviewed the benefits and drawbacks, and you don’t want to go through the hassle of securing a traditional loan, this may be the right financing option to launch or recapitalize your business.

The post Understanding Rollovers As Business Startups (ROBS) appeared first on Merchant Maverick.

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The Best Medical Practice Business Loans And Financing Options

Doctors are among the top-paid professionals in America, but the cost of doing business sure isn’t cheap. There’s the pricey medical equipment, medical licensing costs (not to mention the cost of medical school to earn those licenses!), malpractice insurance, practice management software, medical association fees … and the list goes on. On top of the steep expenses associated with running any type of medical clinic, the slow nature of insurance reimbursements means you are often not even paid for your services in a timely manner.

On the bright side, doctors and other medical professionals are prime candidates for business financing, as they have low default rates and plenty of business collateral in the event that they do default. Whether you decide to go through a bank or an alternative (online) lender will depend partly on your qualifications as a borrower and partly on what you need the loan for. In this post, I explore which types of loans and specific lenders are best suited for different medical practice loan purposes.

Financing Need Best Loan Type Recommended Lender
Building a new clinic Bank loan Lendio
Purchasing medical equipment Term loan or Equipment financing OnDeck
Working capital Term loan or Line of credit Fundation
Practice expansion SBA loan SmartBiz
Hiring & payroll Business line of credit Kabbage
Cash flow shortages Business credit card Ink Business Preferred From Chase
Emergency funds Short-term loan LoanBuilder

Best Loan For Building A New Medical Clinic

Private practices looking to open a new medical clinic will sometimes need a business loan to build and open their clinic, including both construction and other startup costs. In order to take on such an endeavor, you will likely need a large sum of money that will, in many cases, exceed the amount of capital you could feasibly borrow from an online lender (online lenders’ borrowing limits tend to max out around $500K). Even if you are moving into an existing building, you’ll need a sizable loan to outfit your new clinic with equipment, insurance, staff, etc.

Bank Loan

A bank loan is usually going to be the best option to open a brand-new medical clinic. Bank of America, US Bank, Wells Fargo, and many other banks and credit unions across the country offer specialized loans for medical practices, in large amounts that can cover the cost of a new construction.

This is a good option for doctors who can wait up to several months to get a long-term loan to finance their new office or clinic. To qualify for a bank loan, you’ll need strong business credentials and a down payment, but if you are in the position where opening your own medical clinic is the next logical step for you, you probably already have these qualifications.

Recommended Option: Lendio

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Although Lendio is technically an online lending service, they connect borrowers with bank loans as well. Their partners include both big banks and credit unions, making it easy to borrow as much as $5 million to build and open your new medical clinic. Lendio does not originate loans; rather, they serve as a one-stop shop for business financing by connecting borrowers with appropriate lenders in on online marketplace.

Lendio is a good option for medical practice construction loans, as Lendio will shop your request around and present the best loan offers, so you can easily compare offers and decide on the best loan for your business.

To learn more about commercial construction loan options, read Commercial Construction Loans: The Ultimate Guide.

Best Loan For Purchasing Medical Equipment

Often, medical practices need to purchase medical equipment but don’t have the capital to buy the equipment outright. Some reasons for needing a medical equipment loan could include replacing broken equipment, investing in new technologies, buying equipment to expand your services, replacing outdated equipment to meet new industry regulations, or buying equipment to outfit a new practice.

Term Loan Or Equipment Financing

There are various ways to finance a major equipment purchase, but two common financing types for this purpose are term loans and equipment financing. A term loan is a traditional installment loan wherein borrowers receive a lump sum that is repaid in installments over a period of several months to years, depending on the term length. You can obtain a term loan from either a bank or an alternative/online lender; if you are purchasing multiple pieces of equipment for a new practice, or a very costly item such as an MRI machine, you may need to pursue a bank loan.

Equipment financing is another way for medical businesses to purchase equipment and is also suitable for very large equipment purchases, such as a CAT scanner. This type of financing includes both leases and loans, and is typically self-securing, meaning it doesn’t require any collateral other than the equipment itself. Leases are a more expensive way to secure equipment, as you do not own the equipment at the end of the term—but if your borrower qualifications (credit score, time in business, etc.) are weak, this type of financing is easier to get than an equipment loan or term loan.

Recommended Option: OnDeck

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OnDeck offers fast, easy, short-term business loans that work great for one-time purchases such as medical equipment for a new or existing practice. This online lender originates loans of up to $500K, with term lengths of up to 3 years. To prequalify, you only need 12 months in business and $100K in revenue. Having poor credit may not be a problem, but more qualified applicants will receive lower interest rates.

With a time to funding of just a few days, an OnDeck loan is especially useful when you need to replace broken medical equipment ASAP and can’t wait a month or two for a bank loan to come through.

If you prefer to go the equipment financing route, check out our chart of the best equipment financing lenders.

Best Loan For Working Capital

Best Time Tracking Integrations

Working capital, i.e., money to run your day-to-day business operations, is the lifeblood of any business—especially for doctors, who might have to wait long stretches between insurance reimbursements. Whether you work as a surgeon, dentist, chiropractor, dermatologist, spider vein specialist, or any other type of doctor, you coffers need to be full even if your appointment book is also full.

Term Loan Or Line Of Credit

A term loan is always an option for working capital, and many online lenders offer loans with “working capital” right in the loan description. A term loan is suitable for short- or medium-term working capital needs. A working capital (term) loan is a good “general” type of business loan to have if you have various expenses you need to cover in the near-future.

A line of credit is another option, and one more suited for long-term working capital needs. With an LOC, you can withdraw cash only as needed and only need to repay what you borrow. You can think of a line of credit as a sort of “cash cushion” to tide you over during short times, even if you don’t know if or when those slim times will arise.

Recommended Option: Fundation

fundation logo

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Fundation offers installment loans up to $500K and lines of credit up to $100K to shore up your working capital funds. Term loans are repaid on a bi-weekly basis, while lines of credit are repaid monthly. You will need to have an established business with at least 3 full-time employees (including yourself) in order to apply, so not all businesses will qualify. But if you meet the qualifications, Fundation is one of the highest-quality loan/LOC providers online, with competitive terms, excellent customer service, no prepayment penalty, and a time to funding of only 2–7 days.

To learn about more working capital loan options, read Working Capital Loans: What They Are And Where To Find Them.

Best Loan For Medical Practice Expansion

When it’s time to expand your medical practice by opening a second clinic, it’s also likely time to take out another loan. Whether you are constructing or purchasing a new office space to see patients, you are likely a very qualified borrower at this point in terms of your revenues, time in business, collateral, etc. Thus, you can likely qualify for a high-quality loan from a bank or from the SBA (if you don’t yet exceed their size and income requirements).

SBA Loan

SBA loans have the best rates, and if your business has strong qualifications as most expanding medical practices do, the SBA will be keen to lend to you. According to 2016 SBA data, dentist offices and medical offices (excluding mental health specialists) are respectively the third and fifth top recipients of SBA loans in terms of number of loans. Medical practices have a low default rate and lots of collateral in the event that the borrower does default. Therefore, an established private practice that wants to expand to a second office is a prime candidate for an SBA loan, such as a general 7(a) business loan or a CDC/504 loan.

Depending on which type of SBA loan you apply for, you can use the proceeds to purchase an existing building or land or construct new facilities. You can also use the funds to buy equipment for your new offices or to renovate an existing building. However, it’s important that you’re not overqualified. For example, to qualify for an SBA CDC 504 loan (commercial construction loan), you must have a tangible net worth of less than $15 million and an average net income of less than $5 million. If your practice is larger than this, then you’ll need to secure a regular bank loan.

Recommended Option: SmartBiz

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SmartBiz is an online marketplace offering a fast and efficient way to get an SBA loan, including commercial real estate loans. Through SmartBiz, you can get an SBA loan of up to $5 million, without having to do as much paperwork or wait as long as you would for a standard SBA loan (several months). This online-SBA loan hybrid isn’t as quick as a lot of other online lenders, potentially taking about a month for funds to come through, but it’s still a lot faster and easier than applying for an SBA loan the traditional way.

If you want to know more about your options for getting an SBA loan to open a second doctor’s office, you can read up on SBA loans for real estate. If you are expanding your practice by acquiring another medical practice, I recommend you read my post on how to get a business acquisition loan.

Best Loan For Medical Clinic Hiring & Payroll

Medical clinic payroll loans are sometimes necessary when you’re in a pinch and need to pay your staff but don’t have enough cash on hand. Similarly, you might take out a loan to hire a doctor or specialist that will add considerable value to your practice. A loan may be especially crucial if a key staff member or practice partner quit abruptly and you need to hire a replacement fast.

Business Line Of Credit

As mentioned earlier, a business line of credit can act as a “cash cushion” to draw from when you’re short on funds. Even if business is slow, you still need to pay your staff, and an LOC lets you transfer funds to your business bank account immediately. Similarly, you can use this capital to take on a short-term or unexpected staffing expense such as hiring a new specialist. Even if you’re not currently having an issue funding the payroll, it’s important that you have a source of funds available to help fill any gaps that could arise.

A short-term loan is also an option for a payroll emergency, but an LOC is more appropriate for ongoing expenses such as payroll.

Recommended Option: Kabbage

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It’s wise to plan ahead a bit so that you already have the LOC in place before you need to draw from it to fund the payroll. However, life doesn’t always work out so neatly. If you’re having problems paying your staff, you’re likely in a desperate, if not dire, situation and need money ASAP if you want to keep your practice open. To help you out in such times, Kabbage has one of the fastest LOCs in the business; in many cases, medical practice owners can apply, receive a funding decision with personalized rates and fees, and start drawing funds within just a few minutes.

Kabbage can also be used for other working capital needs for your medical practice and is a terrific option if you don’t have great credit, as they consider your business performance in lieu of your credit history. However, the rates and fees can also be pretty high, so if you have strong credit and/or some time to wait for funds to come through, you might get cheaper capital through a lender like Fundation.

Best Loan For Cash-Flow Shortages

Cash-flow shortages can happen to any of us, but doctors are especially vulnerable to them due to slow insurance reimbursements. Usually, you know payments are coming through eventually, but you have gaps during the month or year when cashflow is not as strong as you need it to be to support various daily and periodic business expenses.

Business Credit Card

Credit cards work well for smoothing out cash shortages for a business’s day-to-day expenses, because you can charge both large and small expenses, and also earn reward points or cash-back while you’re at it. Even better, if you’re able to pay off your balance with each monthly statement, you aren’t charged any interest or fees at all except for a small annual fee. With timely payments, you’ll also help build your business’s credit profile.

Credit cards are also good for cashflow gaps because unlike most short-term loans where you have to make payments on a weekly or even daily basis, credit cards let you make monthly payments. If you’re looking to charge a large expense and don’t expect you’ll be able to pay it off in the near future, you might even be able to find a card with a 0% APR introductory rate for the first year.

Recommended Option: Ink Business Preferred From Chase

Chase Ink Business Preferred



Apply Now 

Annual Fee:


$95

 

Purchase APR:


17.99% – 22.99%, Variable

This is one of the most popular business cards on the market, and for good reason. Medical professionals and other business owners earn extra points (redeemed for cash or milage) for common business expenses such as internet, phone, advertising, and travel. Some other perks include a signup bonus, additional cards for employees at no extra cost, and cell phone protection.

Ink Business Preferred from Chase is particularly useful if you or your staff need to travel to medical conferences to learn about the latest treatments in your field or give presentations. But even if you don’t travel much, the card still rewards you for standard business purchases including online advertising, which most doctors and dentists spend a lot of money on. At the same time, you’ll also be able to solve your problem by covering cashflow gaps.

Note that you do need to have at least “good” credit to get this credit card. Check out our business credit card comparison page to compare Chase’s business credit cards and others. Or, if you need more money than you can access with a credit card, look at some cash flow loan options.

Best Loan For Emergency Funds

Lawsuits, acts of God, vandalism, and theft are just a few types of emergencies your medical practice could face. Malpractice lawsuits are an especial risk for doctors — particularly those in certain fields, such as cosmetic surgery. Malpractice insurance may not cover all of these costs, unfortunately, in which case you’ll need to take out a loan.

Short-Term Loan

Emergencies need fast solutions, and the fastest solution is a short-term loan. Though the borrowing rates are higher than a long-term loan, a short-term loan is easier to qualify for and you’ll get the money in just a few days. If your business was damaged physically or financially by a natural disaster, you might also be eligible for an SBA Natural Disaster Loan.

If you’re only getting the loan to protect yourself against a possible emergency in the future, a line of credit card or business credit card would be a more appropriate option than a short-term loan.

For further reading, check out Emergency Business Loans: 7 Ways To Get Business Funding Fast.

Recommended Option: LoanBuilder

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LoanBuilder stands out from most short-term lenders for a few key reasons: LoanBuilder loans are relatively inexpensive (for a short-term loan), there is no origination fee or any other up-front fees, and borrower requirements are low. LoanBuilder allows you to “build” your perfect loan, letting you adjust to your liking the loan amount and term length and seeing how those adjustments affect your loan’s total cost and weekly payment amount.

Note that voluntary health organizations (nonprofit medical centers) are among LoanBuilder’s restricted industries, so you’ll need to own a for-profit medical practice to apply for this loan.

We hope that your emergency does not exceed $500K, which is what LoanBuilder and most other short-term lenders max out at. For a big, BIG emergency, you can use a service like Lendio to search for loans of up to $5 million.

Do Banks Offer Medical Practice Business Loans?

Banks do, indeed, offer medical practice business loans. You can use a business loan from a bank or credit union to open a new practice, expand your current practice, buy equipment, access working capital, or cover just about any other medical business need. However, bank loans can be difficult to qualify for if you don’t have at least two years in business, on top of strong revenues and excellent credit. Thus, a bank loan is best for established medical practices that wish to borrow a large sum to expand their clinic or build a new one. As mentioned previously, it is possible for new practices to qualify for a bank loan (to build a new clinic, for example), but you’ll have to have strong business credentials and enough money for the down payment.

Some bank loans are SBA loans, which means the loan is guaranteed by the U.S. Small Business Administration. These loans are some of the best loans you can get, as they have both low rates and fair terms.

If you need a smaller amount of money, say $10K–$50K, or you don’t have the rock-solid borrower credentials banks like to see, it’ll be easier and faster to get a loan from an alternative/online lender.

Pros Of Bank Loans:

  • Lower interest rates and longer repayments terms (compared to an online lender), especially if you qualify for an SBA loan
  • Access to large amounts of capital for major investments such as building a new clinic or acquiring commercial real estate
  • Banks may be willing to overlook medical school debt
  • Some specialized medical practice loans are available

Cons Of Bank Loans:

  • Long application process involving lots of paperwork
  • Requires (likely multiple) in-person visits to the bank
  • Can take months for money to come through even after approval, due to a lengthy underwriting process
  • Can be difficult for newer practices to qualify for

On the other hand, an online lender can offer:

  • Quick and painless application process
  • Access to capital within the same business week
  • Only need fair credit, modest revenues, and 6 months-to-1-year in business to qualify
  • Can borrow small amounts of money, as little as $5K

Something else to consider when deciding between a bank business loan vs. an online business loan is that doctors tend to be well-qualified and have their pick of financing options. So, a medical professional taking out a loan will usually pay lower interest rates than would a borrower from another industry. This means that even though online loans tend to be more expensive in general, a doctor might pay only slightly higher rates for an online lender than they would for a bank loan, and without having to jump through all the extra hoops required to get a bank loan.

What To Consider When Choosing A Lender

Some important things you’ll need to consider when choosing a lender are as follows:

  • How much money you need
  • Which loans you qualify for
  • The loan’s fees and repayment terms
  • How much and how often your loan payments will be (and whether you can afford them)
  • Whether you’re willing to pay a little extra for the convenience of an online loan

In order to find out all the important information you need to make an informed decision, you will need to apply for multiple loans so you can compare their offers. It’s easy to prequalify for most online loans within minutes; if you are pre-approved, the lender will present you a loan offer with the rate they’re willing to give you based on the information you’ve supplied. In many cases, getting pre-qualified will not affect your credit score at all. (You’ll need to supply more information about your business and agree to a hard-pull on your credit only if you accept the offer.)

Like I mentioned earlier, you can use an online loan matchmaker service to save time and pre-apply to various loans at once. This is also a good way to figure which loans are appropriate for your financing needs if you have no clue where to start.

What You’ll Need To Apply For A Medical Practice Loan

Before you apply for any loan, you’ll first want to check your credit score to make sure there are no major issues. If you have a little time to improve your personal credit score and your business credit score (if you have one), polish up that credit to the best of your ability. Next, it’s time to start pre-applying!

When you pre-apply for a loan, you’ll usually just need to supply a few pieces of information, such as:

  • When you started your medical practice
  • How much money you need
  • How soon you need the money
  • What you need the loan for

The lender will generally check your credit at this time. In many cases, this will be a “soft pull,” which will not affect your credit score. However, if in doubt, ask customer service before applying if pre-qualifying will affect your score.

Some other key pieces of information and documentation you need, possibly a little later in the application process, are:

  • Your Tax ID number (EIN) and Social Security number
  • Documents to verify your identity
  • Recent personal and business federal tax returns
  • Average bank balance with recent business bank statements
  • Estimated annual gross revenues
  • Proof of business ownership
  • Copy of medical license and other relevant licenses and permits
  • Proof of insurance
  • Total outstanding business debts
  • Financial statements, such as P&L and balance sheet

The exact application requirements and documents vary from lender to lender, and as you might have guessed by now, you’ll need to supply a lot more information and documentation if you are applying for a bank loan or SBA loan. Online loans, by contrast, require a lot less. To qualify for a Kabbage online line of credit, for example, you’ll just need to give the lender read-only access to your business bank account.

Here are some useful references for further reading so you can learn more about applying for a business loan for your medical practice:

  • Small Business Loan Requirements: What You Need To Apply
  • 20 Tips To Improve Your Business Loan Application
  • How To Get A Small Business Loan: The Step-By-Step Guide

Final Thoughts

Most doctors who go into private practice will need a loan at some point in their career. With medical business financing, you can keep your practice as healthy as you keep your patients, even during slow or uncertain times. You can also use business financing to expand your growing medical practice, making timely investments that will take your practice to the next level.

In general, financial institutions love to lend to doctors, who typically have strong cash flow and are unlikely to default on their debts. Even if you have middling credit and medical school debt, you still probably have plenty of choices when it comes to financing your practice. The growing availability of alternative lenders in recent years provides even more choices, even for medical professionals with a tattered financial past.

The most important thing when obtaining a loan for your medical practice is to consider all of the financing options available and determine which is best for your particular needs. If you follow all the advice I’ve outlined for you in this article, you will be well on your way to securing a high-quality loan to help build your dream practice.

The post The Best Medical Practice Business Loans And Financing Options appeared first on Merchant Maverick.

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The Best eCommerce Platforms For Your Small Business

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

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

Shopify BigCommerce 3dcart Ecwid Wix

3dcart

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Monthly Cost

$9 – $299

$29.95 – $249.95

$19 – $229

Free – $99

$25 – $40

Core Features

Great

Excellent

Excellent

Good

Good

App Store

Very Large

Large

Moderate

Moderate

Small/Moderate

Ease Of Use

Very Easy

Easy

Moderate

Very Easy

Easy

Web Design

Great

Good

Good

OK

Excellent

Customer Support

Great

Great

Good

Good

Good

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

What To Look For In An Ecommerce Platform

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

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

And, of course…

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

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

1. Shopify

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

Pricing

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

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

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

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

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

Features & Add-Ons

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

Here are a few Shopify features we like:

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

Ease Of Use

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

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

Web Design

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

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

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

Customer Support

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

Who Is Shopify Best For?

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

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

2. BigCommerce

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

Pricing

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

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

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

Features & Add-Ons

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

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

Ease Of Use

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

Web Design

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

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

Customer Support

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

Who Is BigCommerce Best For?

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

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

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

3. 3dcart

3dcart

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

Pricing

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

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

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

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

Features & Add-Ons

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

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

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

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

Ease Of Use

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

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

Web Design

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

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

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

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

Customer Support

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

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

Who Is 3dcart Best For?

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

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

4. Ecwid

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

Pricing

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

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

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

Features & Add-Ons

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

Noteworthy Ecwid features include:

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

Ease Of Use

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

Web Design

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

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

Customer Support

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

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

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

Who Is Ecwid Best For?

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

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

5. Wix

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

Pricing

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

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

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

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

Features & Add-Ons

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

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

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

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

Ease Of Use

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

Web Design

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

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

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

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

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

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

Customer Support

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

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

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

Who is Wix Best For?

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

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

Quick Pricing Comparison

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

eCommerce Platforms Pricing Summary

Pricing Levels Differences Btwn. Levels

Shopify

Lite: $9/mo.

Basic: $29/mo.

Shopify: $79/mo.

Advanced $299/mo.

Plus: Custom

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

BigCommerce

Standard: $29.95/mo.

Plus: $79.95/mo.

Pro: 249.95/mo.

Enterprise: Custom

  • Available features
  • Annual store revenue

3dcart

Startup: $19/mo.

Basic: $29/mo.

Plus: $79/mo.

Pro: $229/mo.

Enterprise: Custom

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

Ecwid

Free: $0/mo.

Venture: $15/mo.

Business: $35/mo.

Unlimited: $99/mo.

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

Wix

Business Basic: $25/mo.

Business Unlimited: $30/mo.

Business VIP: $40/mo.

  • Storage
  • Customer service
  • Available features

Final Thoughts

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

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

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

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

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

Shopify BigCommerce 3dcart Ecwid Wix

3dcart

Review Visit Site

Review Visit Site

Review Visit Site

Review Visit Site

Review Visit Site

Monthly Cost

$9 – $299

$29.95 – $249.95

$19 – $229

Free – $99

$25 – $40

Core Features

Great

Excellent

Excellent

Good

Good

App Store

Very Large

Large

Moderate

Moderate

Small/Moderate

Ease Of Use

Very Easy

Easy

Moderate

Very Easy

Easy

Web Design

Great

Good

Good

OK

Excellent

Customer Support

Great

Great

Good

Good

Good

The post The Best eCommerce Platforms For Your Small Business appeared first on Merchant Maverick.

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Differences Between Invoice Financing And Invoice Factoring

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

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

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

What Is Invoice Factoring?

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

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

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

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

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

Financing VS Factoring: What’s The Difference?

Invoice Financing Invoice Factoring

Uses invoices as collateral for a line of credit

Sell invoices for immediate cash

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

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

You are responsible for collecting invoice payments

Factor is responsible for collecting invoice payments

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

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

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

What About Invoice Discounting?

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

Invoice Factoring VS Discounting

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

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

How To Choose An Invoice Financing Solution

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

Notification VS Non-Notification

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

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

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

Collecting Payments

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

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

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

Asset-Backed Line Of Credit VS Lump Sum

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

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

Final Thoughts

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

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