From long-term, low-interest-rate loans to quick cash you can secure with shaky credit, learn about five popular ways to fund your small business. By FINSYNC Finding a small business loan that suits your specific needs — and you can realistically qualify for — can be a tricky prospect. The best type of loan for your business depends on several factors, including how long you’ve been in business, what you’re going to use the funds for, if you have collateral, and how healthy your credit is, to name a few. Learn about five popular options that may be available to your small business, depending upon your specific situation. Term Loan When you think of a traditional bank loan, you’re likely thinking of a term loan. Issued by a bank, these loans have fixed interest rates and are paid back via monthly or quarterly payments made over a defined period of time. If you’re a well-established business with excellent credit and solid financials, this may be the most favorable loan you can get. Term loans tend to have the lowest interest rates, and you can borrow a large amount of capital. However, they can also be difficult to qualify for, and you can expect an in-depth application process — something to keep in mind if you need cash in a hurry. Term loans also generally require collateral. Business Line of Credit The difference between a term loan and a business line of credit boils down to flexibility. With a line of credit, you use it when you need it (up to a set limit) and only pay interest on what you use. You have the freedom to draw from your line of credit whenever you need to. Lines of credit can provide the security of a cash cushion for your business, which can be especially helpful if your cash flow tends to fluctuate or you frequently face unexpected expenses. A business line of credit may be fixed or revolving. The latter works a bit like a credit card combined with a cash advance. Once you repay what you’ve borrowed, your line of credit resets and you may borrow up to your limit again. A fixed line of credit doesn’t reset once you’ve used it. Like term loans, lines of credit can be difficult to qualify for, though you’ll have a good chance if you’re an established business with excellent credit. Equipment Loan Does your business need a new printer? A delivery van? Perhaps you’re starting a food truck? Equipment loans are worth considering, as they can help you purchase both new and used equipment. The beauty of an equipment loan is that the equipment itself serves as collateral. Unlike many other types of loans, it generally makes no difference if you’re a brand new business. If something happens and you can’t repay the loan, the lender is entitled to the equipment itself. Invoice Financing If you’re in the business of invoicing customers, you’ve likely encountered some cash flow issues caused by late payments. Invoice financing allows you to borrow money against the amount of money you’re owed, so you can get the cash immediately — without having to wait for your clients to pay up. Borrowing against your unpaid invoices can be as simple as a click and you get funds fast, which can help you avoid cash flow dips that may make it difficult to pay your vendors or even your employees. Like equipment loans, invoice financing is also less difficult for new businesses to qualify for. Is your credit less than stellar? We’ve got good news: The credit of your customers matters more than your own with this type of loan. SBA Loan The Small Business Administration helps businesses that may have difficulty qualifying for a term loan by teaming up with banks to guarantee part of the loan. This win-win situation reduces the risk for banks and allows more businesses to qualify for low-interest-rate loans. While SBA loans are open to new businesses, long repayment terms and low interest rates mean that they’re highly competitive. There are several types of SBA loans. The most popular is the SBA 7(a) loan, a flexible loan up to $5 million that small businesses can use for nearly any business purpose. If you need funds for commercial real estate, to renovate your business or for equipment, consider a SBA CDC / 504 loan. In this program, a bank funds up to 50 percent of the loan while a nonprofit certified development company (CDC) covers up to 40 percent (you’re responsible for the final 10 percent of project costs). In order to qualify, you’ll need to occupy at lease 51 percent of the space you’re funding. If you want to borrow $50,000 or less, the SBA’s Microloan program may be for you. For this type of loan, the SBA partners with community-based non-profit lenders to offer smaller loans. The average Microloan is for around $13,000 and has terms up to six years. Streamline Your Efforts Don’t let the variety of loan options out there overwhelm you. Online tools like FINSYNC simplify the loan application process by connecting you with a diverse lending network that offers a variety of loan types — via one simple application. Simply tell us the purpose of the loan and what type of collateral you have (if any), and we’ll do the rest.
Free up time to focus on mission critical areas by putting administrative tasks on autopilot with intuitive online tools that can do the heavy lifting for you. By FINSYNC Running a small business can make you feel like you’re stuck in a circus-juggling act. It’s difficult enough to keep the doors open and make sure your employees get paid without the added pressure of tracking your cash flow and keeping your books. It can seem near impossible to find the time or energy to harness the passion that got you into business in the first place, much less focus on sales, customer service and other areas that require your immediate attention. Financial management shouldn’t feel like a full-time job. There’s no better time than right now to get a handle on overwhelming administrative tasks so you can get back to the heart of your business. FINSYNC is here to help: We’ve got three intuitive tools to help you win the battle against runaway financial management once and for all. Automate Your Accounting Are you tired of spending endless hours filling in spreadsheets? Is your budget a little too tight to hire a full-time bookkeeper? We hear you. Fortunately, there’s an easier — and less expensive — way to get a handle on your accounting. In a word: automate. It’s never been easier to sync up your finances with a sophisticated online tool that can take care of your accounting automatically. Simply import your bank transactions, and they’ll be automatically categorized for you on a complete general ledger. Easily track your expenses, tackle month-end reconciliation, and prepare your taxes in a fraction of the time. You can also generate reports that make it simple to drill down to the details you need. Bottom line? Automating your accounting is a shortcut to actionable insights that can help you make better business decisions. Invoice on Autopilot Are you still spending time writing checks, preparing invoices and mailing all of the above? What if you could pay vendors or collect payment for your goods and services with the click of a button? It’s that easy with invoicing software that can save you hours on administrative tasks. Set up recurring invoice schedules and auto payments to shrink your to-do list, and skip those excruciating calls to overdue clients with alerts that automatically remind customers when payments are due — or past due. Invoicing on autopilot saves ample time and makes it easier for you to both collect and make payments. The benefits extend to your clients by making it easier for them to pay you, which can help you get paid faster and keep your cash flow solidly in the green. Simplify Cash Flow Management You know how important it is to monitor your cash flow, but somehow keeping track of the money that flows in and out of your business can seem like an overwhelming task. What if we told you that cash flow management doesn’t have to be difficult? Beyond helping you get a handle on your current cash flow, intuitive online tools can make it easy to spot trends and plan for the future with automatic projections based on your history. Once you can see where your cash flow is going, it’s easy to make adjustments and schedule payments to avoid a dreaded shortfall that can put you in the red. Visualize your past, present and future with the help of automatically generated charts and graphs that give you a picture of your cash flow that’s easy to comprehend — and act upon. The Power of Consolidation How many different apps, passwords and software systems does it take to run your business? If you’re still keeping track of a slew of disparate systems to handle various financial management tasks, consider improving your efficiency by consolidating your efforts onto one system. When you sync your finances on FINSYNC’s platform, you get access to all of the tools you need to automate your accounting, invoice on autopilot and easily analyze your cash flow. In other words, you can automate your back office from a single platform with one password. Simplify your financial management to save time, get more mileage out of your resources, and maybe even get back to all of those things that inspired you to build your business in the first place.
By FINSYNC Getting rejected for a small business loan is practically a rite of passage for entrepreneurs. Rejection rates can be as high as 73 percent with traditional banks. The odds improve a bit with alternative lenders, who generally approve around 57 percent of small business loan applications, but the rejection rates can be disheartening. Ready for some good news? Lenders reject loan applications for the same often-avoidable issues over and over. When applying for a loan, it helps to think like a lender. Consider five common reasons small business loan applications are frequently denied, and take steps to avoid these common pitfalls.
- Not Enough Time in Business
- Asking for Too Much, or Too Little
- Poor Credit
- Weak Cash Flow
- Lack of Planning
When a traditional bank loan is difficult to secure, consider these diverse ideas to get access to the capital your startup requires. By FINSYNC As an entrepreneur, getting your business off the ground is one of the most difficult challenges you’re likely to face. In the early days, when you’re up and running but not quite yet established, capital to keep things going can be seemingly impossible to come by. Traditional bank loans can be especially difficult to secure, as financers generally require at least a year or two of business history, along with a solid cash flow. What can you do when your startup needs money now? Good news, you have options. Consider these six ways to fund your new business, from traditional avenues to others you may have overlooked. Equipment Financing Does your new business need a delivery van? A copy machine? A pizza oven? You may qualify for an equipment loan, even as a new business. While banks traditionally only extend financing to established businesses, equipment loans can be slightly easier to come by — and may even carry a lower interest rate than conventional loans. Why? The rule with this type of loan is that it can only be used to purchase — you guessed it — equipment and machinery. This can be less risky for lenders because the equipment itself serves as collateral; if you default, the lender can take your equipment to cover the loan. Invoice Financing If your business invoices its customers, and you need funding fast, invoice financing may be a viable option for your startup. In invoice financing, a lender loans you money against the invoiced amount that your customer owes you. This can be especially helpful if you have a long payment cycle and can’t afford to wait for your customers to pay their bill. Invoice financing can also be easier to qualify for than traditional loans. Lenders often don’t require a long business history, and approval is generally based on your customer’s credit rather than you own. Your own credit and cash flow are secondary. You can also get funds fast, and the application process is fairly simple. With FINSYNC, you can essentially turn invoices into cash in one click — and your customers will never be notified that their invoice has been financed. SBA Microloans If you don’t need a large loan (over $50,000), consider applying for a SBA Microloan. For this type of loan, the Small Business Administration partners with community-based non-profit lenders to offer small business loans. These loans generally feature low interest rates because the government guarantees a portion of the loan, which reduces risk for the lenders, especially when financing startups. Low interest rates and accessibility for new businesses make SBA Microloans competitive, but you may have a leg up if you run a minority-owned business or operate in a disadvantaged area. SBA Microloan lenders focus on local communities, and often go beyond funding to provide business-based training and technical assistance. Business Credit Card If you have limited business history and solid personal credit, a business credit card may be a good way to finance your business. In addition to your credit, issuers will take a look at your combined income (business plus personal). The better your credit, the lower your APR will be. Beyond being fast and easy to apply for, business credit cards offer other perks. Ideally, you want to pay off your balance in full every month to avoid paying interest. If you have good credit, shop around for a 0% interest introductory offer to buy yourself some time so you can comfortably carry a balance for up to 15 months. You can also look for a card that offers a cash back percentage or awards points. Bonus: A business credit card helps you build up your business credit and establish that all-important business history. Small Business Grant While securing a small business grant from a non-profit or government organization isn’t easy, this “free” money (without interest or fees) can be well worth the effort — especially if you run a non-profit or mission-oriented business in a community that’s served by this type of funding. Many grants are available for women and minorities, and the SBA offers a variety of grants as well. Keep in mind that small business grants are highly competitive and the application process can be lengthy, so this may not be a viable option if your business needs money fast. Self-Funding Though not without its risks, self-funding your new business is worth considering if you don’t qualify for other types of financing. Always use caution when tapping into any form of your personal savings, or borrowing money from friends and family. If your business is incorporated, you may have the option to borrow from your retirement funds with Rollovers as Business Start-Ups (ROBS). This option allows you to use funds from your IRA or 401K (without immediate taxation) to cover new business start-up costs. Downsides include high fees, increased IRS scrutiny and, of course, the risk of losing your retirement savings. If you have excellent personal credit and solid income, a personal business loan may be an option. Just remember that your personal assets are on the line if you default. The same goes for a home equity loan. While this may be a viable source of funding for your new business, you’re at risk of losing your home if your business struggles and you’re unable to make your loan payments. Bottom line, a traditional loan that may seem out of reach isn’t the only way to fund your new business. Think strategically to access the capital you need to keep your business running in the often challenging early days. And always be sure to weigh the risk and effort involved when considering sources for funding your startup.