Margin of Error ValidityLet’s say you flip a coin 100 times. Since there is a 50% chance that a coin will land on “heads,” the average statistical results will be 50 times heads and 50 times tails. However, it is not likely you will get this exact result. Therefore, mathematicians in the field of statistics developed a separate label to account for the degree of error that the solution will deviate. This is also known as the Margin of Error. Having the ability to recognize and calculate the margin of error is a necessary skill for any small business owner. This metric comes in handy when deciphering survey data and asking for input from your customers.
Define Your PopulationIn statistics, a population is a pool of individuals from which a statistical sample is drawn within a study. A population represents every member who is grouped by a common trait or characteristic. Understanding a business’s population parameters is necessary to determine decisions or predictions based on your survey data. For example, say you want to determine the most popular social media platform your subscribers use. You may send a survey to your subscribers (your defined population) and ask them to select an answer from a specific set of selections. While it would be wonderful if 100% of your survey recipients responded, that’s uncommon. In this example, you’ll use your responses as your sample and infer that the patterns in their responses hold for the rest of your subscribers. In other scenarios, you may not be able to survey the entire population due to cost and time constraints. Instead, you’ll attempt to pick a representative subset to survey and use those results to draw conclusions. In either case, the margin of error determines how accurate the sample is to the entire population.
Simple Margin of Error CalculatorUsing this quick formula allows calculating the margin of error to be simple and easy. Let’s say you received 2000 responses to your query about social media platforms. In this case, the margin of error would be .022. Therefore, there is a 2.2% margin of error in your sample.
Extended Margin of Error CalculatorHere is the universal formula for calculating the margin of error for a sample. Z = Z score; this is already calculated. You can reference the following Z Score Table. p̂ = sample size proportion n = sample size
Step 1: Calculate p̂ by calculating the number of respondents that you are selecting. Ex: you can look at each social media site individually then compare it to the entire sample. The p̂ value is represented by a percentage of respondents. See the example below for more detail.
Step 2: Find Z Score corresponding to a 95% confidence level or 1.96 in this case.
Step 3: Calculate and convert to a percentage.Using the social media example again, let’s say the company conducted the survey and found that 30% of their customers prefer Facebook as their social media platform. Since you are comparing 30% of users that preferred Facebook to the 70% that preferred a different platform, here is how the equation would look: When we input these numbers, our answer is 2.0%, slightly different from the easy formula.
ConclusionUsing samples of a population for survey data will always provide a range, not a specific number. Therefore, the margin of error reveals the imprecision within the sample. The only real way to reduce your margin of error and improve your cash flow is to increase your sample size and get more respondents. The smaller the margin of error, the more confidence you may have in your results. The bigger the margin of error, the farther they can stray from the views of the total population. Finally, the margin of error calculators offers a certain statistical way of predicting the accuracy and reliability of your survey results compared to the entire population. FINSYNC is simplifying your financial management system. Check out our blog for more accounting solutions for your small business.
Best Credit Card for Establishing CreditAre you just starting up your business and have limited or poor credit? The Wells Fargo Business Secured Credit Card is the way to go. This card will help you begin to build your business credit while also earning 1.5% cashback on all purchases made. There is also a low annual fee of $25, which you can have waived after you’ve built up your credit. However, keep in mind that the rewards won’t be as good as those of unsecured cards because this is a secured credit card. Regardless, this is a great starting point as you begin to build up your credit.
Best Credit Card for StartupsIf you’re an up-and-coming startup with funding, the Brex Credit Card for Startups could be right for you. Brex offers up to 7x point rewards, depending on the purchase. Regardless, you’ll be sure to earn points on every dollar spent. Some additional benefits of the Brex card are their instant access to a credit line after you sign up. Keep in mind that you typically will need to have at least a $100k bank balance at any given time. So if you are an early-stage business with capital in the bank, this card could be for you.
Best Credit Card for Cash Back PointsLooking to earn cashback rewards on all your purchases while not paying any annual fees? The Blue Business Plus Credit Card from American Express is a great option. With this credit card, you’ll earn 2x points on all your purchases up to $50k each year. After the $50k, you’ll earn 1x points on all purchases. If you’re looking to double down on your point earnings, then this card could be for you.
Best Credit Card for Business TravelThe Chase Ink Business Preferred Credit Card is a top pick if your business requires travel. This card offers 3x points on the first $150k spent on travel, phone service, internet, cable, and advertising. To sweeten the offer, they’ll even throw in a 25% bonus if you redeem your points through Chase Ultimate Rewards. If you find yourself using multiple airlines and hotel brands, you can transfer points between partnering airlines and hotels. To top it all off, you can earn an additional 100k bonus points if you spend $15,000 or more within the first three months.
Best Credit Card for Large ExpensesThe Discover It Business Credit Card is great if you expect a large number of small business expenses within the first year of opening the card. This card offers unlimited 1.5% cash back on all purchases and no annual fee. In addition, Discover will match all of the cash back you earned within your first year. That’s right, no minimum or maximum amount needed to receive the cash back matching offer. For example, if you spent $400, Discover will match $800.
Best Overall Credit Card for Small BusinessesIf you’re not looking to spend a lot of time finding the best card for one specific reward, and prefer a simplistic yet rewarding credit card, then the Capital One Spark Cash for Business is a good bet. This card might be the best overall for small businesses. With an unlimited 2% cash back reward on all purchases, this card can seriously reduce your expenses. The first year has no annual fee, and if you spend $4,500 within the first three months, you’ll even get a $500 cash bonus. Also, if you have employees, you can receive employee cards for free and increase the rate of cashback earnings. FINSYNC Payments allow you to preserve cash by shifting cash expenses to your card credit and amplifying your rewards. Even if your vendor does not accept credit, you can pay them electronically using the credit on your card.
Benefits of Traditional Relationship BankingKeep in mind that banks have a lot of data about your business in the form of individual transactions, accounting, and cash flow management analytics. But what are these conveying about your business and where it is going. Until recently, access to the data in an actionable format was challenging, but with the advent of integrated systems and tools, you can now make your accounts more transparent. Forward-thinking banks can now sync to business platforms that provide automated accounting and up-to-date cash flow projections. These tools make it easier to analyze your finances while monitoring your organization's cash coming in and out. While in the past, you would have had to have consolidated accounts receivable, accounts payable, payroll, and other data into a spreadsheet paired with your cash balances, now these projections are made automatically and in real-time. Moreover, when you need assistance with financing from a best-in-class bank, your relationship banker can discuss it. Together, you can decide on the best course of action based on data and local market experience. After all, banks understand economic drivers and opportunities that small businesses might not know.
How Can You Tell if your Bank is Ready?Start with FINSYNC, where we sync with a network of over 7,000 financial institutions. Also, your business dashboard syncs with FINSYNC's banker-facing Lender Portal as you seek financing. Your banker can quickly analyze your cash flow and how you qualify for various options. Banks increasingly recognize the importance of access and are a voice in the development of next-generation tools to support their business clients:
Responding to our client's needs as quickly and effectively as possible is a priority for Lamar National Bank. We accomplished this by becoming a Charter Member of the FINSYNC Network and leveraging technology solutions that help our clients operate more efficiently and at a lower cost. Empowering our clients to spend time on the things that matter most to them creates healthy and profitable businesses. In return, this is greatly beneficial for Lamar National Bank's growth and mission.
- Greg Wilson, CEO of Lamar National BankIndeed FINSYNC has formed a partnership with a network of banks to help your business be more efficient and successful. See if your bank is part of our growing network.
What Is Invoice Financing?This article from BlueVine about how to choose a factoring provider offers up a simple explanation of what factoring actually is.
How Does Invoice Financing Work?The basics of invoice financing are simple: a business wants or needs cash sooner than its customer’s payment terms (net30, net45, net60, net90, etc.), so the business “sells” that invoice payment to an invoice financing company for 97% of the value of the invoice at full payment. For example, if you invoiced BigCorp, Inc., for $10,000, but their payment terms are net60, you could ‘sell’ that invoice to an invoice financing company for 97% of that invoice amount, or $9,700. You get a large portion of your payment in 1-3 business days, so you have the cash immediately, and the invoice financing company earns $300 on that advance to you when your customer pays the $10,000.
Why Is Factoring So Paperwork Heavy?The simple answer to that is that the invoice financing company is taking a lot of risk by paying your business in advance on the promise that your customer will pay their invoice on time. It doesn’t have to be that way, but invoice financing does require some back and forth. Using the example above, you would need to provide the invoice financing company with your invoice to your customer, proof that your customer has accepted and agreed to pay the invoice, and proof that you delivered the customer’s order so that the invoice financing company can assess the risk of that transaction. Because every company’s invoicing, payable, and receivable systems are unique, each transaction is essentially manual, unless there is an existing relationship with the invoice financing company and your customer is a well-known, trustworthy customer who always pays their invoices on time. When an individual invoice is being financed, that transaction is unique, and the invoice financing company is offering the business an advance payment for that one invoice. Paperwork, time, and human interaction are required.
Paperwork Heavy, Until NowFINSYNC customers enjoy a very simple process for invoice financing. Drag and drop your invoice onto the payments request screen, and click “Collect”. That’s it. Your financial institution now has everything they need to make a decision on financing that invoice. The very short video below demonstrates the entire process in just a few seconds.
Watch the Video:
Apply for Business Financing in Three Easy Steps
FINSYNC customers start by logging into their accounts. If you don’t have a FINSYNC account, you can create one free here https://info.finsync.com/free-trial-payments.
Once you log in, you’ll arrive at the main user dashboard. At the top right, you’ll see the green PLUS sign. Click here to expand that menu. Then click on “Apply for financing”.The next three screens are straightforward information gathering screens, some of which are already pre-populated from your FINSYNC account.
Loan InformationThe first screen is information about the loan itself. Banks, credit unions, and other lenders refer to this as their “product type”, and this information helps the lender know what category your loan fits into in their business model. The information needed for the loan includes the following:
- type of loan
- purpose of the loan
- what collateral you have
- term of the loan
- payment frequency you’d like to request
Business InformationThe second screen is all about your business. The lender needs to know standard information about your business. The fields to complete include the business’ name, address, and phone number, how long you’ve been in business, your current debt, and whether or not you own or rent your property.
Personal informationThe final screen is where you’ll enter or update your personal information. This information is mostly pre-populated from your FINSYNC account and otherwise pretty self-explanatory. At the bottom of that page is the personal authorization form. You’ll check the consent box, which authorizes the lender to perform a credit check, and type in your name, and click submit. That’s it, you’re done. What’s next? Well, generally in 1 to 4 days, you’ll get a decision from a lender. In the event that a lender needs more information from you, we’ll contact you directly. FINSYNC’s intuitive online tools can help you easily visualize, manage and protect your company’s cash flow so you can gain insights that will optimize your chances of getting the best financing to grow your business.
- You are self-employed and have no employees; OR
- You did not reduce the salaries or wages of your employees by more than 25%, and did not reduce the number of hours for your employees; OR
- Your business experienced reductions in business activity as a result of health directives related to COVID-19, and the business did not reduce the salaries or wages of its employees by more than 25%.
What Are The Differences?There are two major differences between the PPP Forgiveness Application and the PPP EZ Application:
- In the EZ form, there is no Schedule A section, and
- Certain questions in the long-form have been removed from the EZ form because they are not relevant.
How Does the EZ Form Work?
The main workflow of the PPP EZ form is the same as the long-form, as illustrated in the graphic below. Our form follows the SBA PPP EZ form instructions, which you can find here.
The video below provides an explanation of the EZ form and also walks you through how we’ve implemented the PPP EZ application into our PPP Forgiveness Solution.[embed]https://youtu.be/ZjD_oH0rzUg[/embed]
Debt Financing for Small BusinessPerhaps the clearest, though not the easiest, option to get the capital required for a small business is to go to your local bank and borrow it. Sounds easy, but it is much more complicated than that. Here are some things you must do and consider in order to get a business loan from a bank — any bank.
- Do you have a relationship (existing accounts) with the bank already?
- How is your credit score?
- Have you created a complete, professional business plan?
- Do you have financial projections for your business for at least 3, perhaps even 5 years?
- How much cash will you personally be able to invest in the business?
- Will your business support both the payback of the loan and your personal income?
Investor Financing for Small BusinessInvestors are known for taking more risks than banks; however, investors still want their money back, and with a high rate of return on their investment. That means that, not only should you be prepared to demonstrate everything you needed to demonstrate for a bank loan, but also that you’ll be able to deliver to your investors their desired rate of return. That return usually comes in some sort of “exit” event, meaning that you sell your business or take the business public. An IPO is not usually an option for a small business, though being acquired can be, if the business is in a market that is consolidating. The more important part of your effort to raise capital from investors will be your relationship with them. In a small business or startup investment, the investors are usually investing in the entrepreneur. That’s you. If they know you, your history, your competence and capabilities, then their confidence will already be high before they even see your business plan. Before you ask for investment dollars, make sure you build relationships with the investors.
Small Business GrantsFinally, small businesses can apply for grants to capitalize their operations. We covered the basics of loans and investor financing because there are many similarities to grants; however, there are a lot of differences, too. First, what’s similar among loans, investments, and grants?
- You’ll need a solid, professional business plan
- There will be a lengthy application process
- A relationship with the granting organization will help a lot
- There will be expectations for the results of the money from the granting organization
- You don’t have to pay back a grant
- The granting organization does not take an ownership interest in your business
- There is no interest nor expected return on investment for a grant
Government Grants vs. Private GrantsA quick search for “Small business grants” brings up the SBA’s grants page, which provides a solid introduction to exactly what the US Government is currently providing grants to accomplish. Add your state name in front of that search, and you’ll get more specific, local information about how to apply for grants in your community. Searching for Private small business grants generally leads you to organizations like Clark Howard or NerdWallet, which provide a wealth of information on all things financial. There’s no such thing as “free money”. At the very least, you will have to put in hours applying for a grant, which includes detailed business plans, forecasts, and other documentation. However, knowing that you have (at least) three options to raise capital for your small business operation can open your eyes to many more possibilities.
Portal for PPP Loan ApplicationsFINSYNC is no stranger to handling loan applications. We have been a provider of electronic business loan applications that support multiple types of loans since long before COVID-19. A big part of the process of handling loan applications is the multi-user portal to which loan applications are submitted. This portal helps small businesses and lenders communicate, review, and process various types of loans. When the PPP rolled out, we saw an opportunity to help small businesses with the application process. We followed SBA guidance and quickly adapted our tools for PPP intake and underwriting, and later added PPP forgiveness intake and processing in the same tool.
Problematic PPP Loan Forgiveness ProcessNow that the PPP loan forgiveness application process is open, several problems have arisen. We continue to hear from small businesses that the forgiveness application is as complicated as a tax return. Many struggle to gather the right documentation or decipher the latest guidance from the SBA. When it comes to lenders, they are poorly prepared as well. The simple fact is that lenders are not set up to forgive loans, much less a huge volume of forgiveness applications in a short time frame. That high volume and short time frame, paired together with the changing SBA guidelines, have made it difficult to properly review and process forgiveness applications. Recently, FINSYNC's Eddie Davis explained how banks can make PPP forgiveness manageable to the Independent Community Banker’s Association. It’s clear that businesses need assistance to complete this complicated process. But how can lenders help when the guidelines are continuously updated and banks don’t have the accounting expertise businesses need?
Focus on Educating CustomersIn addition to focusing on developing a robust application tool, FINSYNC is working to educate small businesses that need guidance. Our goal is to deliver the most current information via resources like the PPP forgiveness guide, which contains what you need to know, have, and do to maximize how much of your PPP loan will be forgiven. We’re also offering small businesses a PPP forgiveness calculator that allows those who received a PPP loan to track their expenditures, and ensure maximum forgiveness. The calculator is an easy, fill-in-the-blanks tool that also includes examples you can use for guidance. We’ve broken it down to five steps that should leave you with a complete PPP loan forgiveness calculation. Both tools are updated as the SBA provides new information, and we email our clients as soon as we are up-to-date on the newest changes. Another part of customer education is professional help. FINSYNC’s network of vetted small business accountants is available for those that may need additional guidance.
Easy, Step-by-Step Application ProcessThese educational resources can set you up for success once you’re ready to fill out your PPP loan forgiveness application. FINSYNC’s application process is completely electronic, including application documents, signatures, and, of course, the e-submission to the SBA. For banks and credit unions, the FINSYNC solution does not require any core or IT integration. You can start your PPP loan forgiveness application by going through a simple intake form that mirrors the SBA form. After filling out the form, you are taken to the main portal where your PPP loan forgiveness will be processed. You will create a secure username and password to protect your account and then submit the required supporting documentation Banks typically have multiple team members review an application before it ultimately is approved. FINSYNC makes it easy for bankers to complete their individual tasks, and then hand it over to the next user. This way it becomes a team effort, where each member gets notified about all important changes. After the application is fully reviewed, it is ready for submission to the SBA electronically or manually (when available). The bottom line is the PPP forgiveness process is complicated and there are some details that still need to be worked out. However, we’re gaining more clarity every week. To make this process easier for your small business, take advantage of educational materials and request your bank use our review tools to make this process easier for everyone.
The PPP Forgiveness ProblemBanks and Credit Unions were not set up to forgive loans, much less forgive loans in the volume that PPP has created. Add to that challenge the fact that in-person meetings are not possible, the PPP Forgiveness Application is as complicated as a business tax return, and constantly updated “guidance” from the SBA. Finally, banks and credit unions are not accounting advisors to their small business customers, nor should they be. But these PPP lenders still have to figure out how to process all these PPP Forgiveness applications, and the window for doing so gets smaller every day.
The PPP Forgiveness SolutionWe’ve created a solution for all PPP lenders that requires zero core integration. Our plug-and-play PPP forgiveness solution is divided into three phases:
PPP Forgiveness: So Complex It’s Like a Tax ReturnThe PPP Forgiveness Application is much more complex than anyone expected it to be, especially compared to the “good faith” application that was required to get a PPP loan. We continue to hear that the Forgiveness application is at least as complicated as a business tax return. We shouldn’t be surprised by this complexity, given that PPP loans were created to be free money to the businesses who needed it the most. The difficulty comes in substantiating that “need” with documentation. Most small businesses do not do their own tax returns. There’s a reason for that, and the same reason may apply to completing the PPP Forgiveness Application. To solve that issue, we offer our network of virtual accountants for those businesses that need assistance. Or, perhaps the business’ existing accountants don’t provide this type of guidance. Either way, we can match any small business with a virtual accountant to help them through the PPP forgiveness application process.
How the FINSYNC PPP Forgiveness Solution WorksFirst, the education phase offers free materials including a simplified PDF guide on exactly how to prepare for and complete the PPP Forgiveness Application and a calculator (Excel and Google Sheets) for small businesses to utilize in calculating how much of their loan can be forgiven. Then, as guidance arrives from the SBA, we update these materials and make sure our users get the right updates. We also inform each user that accountant assistance is available through our network of vetted professionals. Next, after the eight week PPP use window has passed, the user will complete the intake form, which is a bank-branded workflow that directly follows the SBA PPP Forgiveness application. Once the user gets through the form section, we create an account and password for their portal. Once they're in the portal, they complete the application including submitting their supporting documents and the lender’s team gets notified that there is a new application pending. Finally, once the forgiveness application is submitted in the lender’s portal, that’s when the lender’s users can access the application, and start processing it to it’s next point, and then passing it on to the next phase for the next user to access it. Ultimately, the lender’s users carry those through to the point at which the application is ready for SBA submission. At that point, the lender either electronically or manually submits the PPP Forgiveness Application to the SBA.
Very Affordable PricingOnce your lender’s portal is deployed, you get visibility into the business and their PPP Forgiveness Application status throughout the process. The cost is $350 per lender user per month, with no long-term contract. You tell us how many users you want and that's what we bill you. You can cancel anytime you need to. We then charge just $25 per successful SBA e-submission. There is no implementation fee.
Schedule A DemoSchedule a personalized demo here. We will be happy to answer specific questions and walk you through the various tools.
Updated Guide and CalculatorOur SBA PPP Loan Forgiveness guide and calculator are absolutely free, and you can download them by going to this page. We’ve created a Microsoft Excel version and a Google Sheets version of the calculator. The guide is a 4-page PDF. Get them both here.
What Changed?The Community Bankers Association of Georgia has a good update here. To sum up the major changes, other than the issuance of the actual application, here are the pertinent bullet points from that CBA of GA article.
- Options for borrowers to calculate payroll costs using an “alternative payroll covered period” that aligns with borrowers’ regular payroll cycles, as opposed to exactly 8 weeks from the day you received funding.
- Flexibility to include eligible payroll and non-payroll expenses paid or incurred during the eight-week period after borrowers received their PPP loan.
- Step-by-step instructions on how to perform the calculations required by the CARES Act to confirm eligibility for loan forgiveness.
- Statutory exemptions from loan forgiveness reduction based on rehiring by June 30.
- The new exemption for borrowers whose good-faith, written offers to rehire workers were declined.
What’s the PPP Loan Forgiveness Application Look Like?You can download that document (PDF) here. To sum it up, it looks a lot like a 1040 tax return. That’s good news for our accountants, whose job it is to help us work through forms like this one, but it’s bad news for anyone who thought they could do it themselves. The application is complex, which is why we’ve done the following:
- Created a guide, much clearer than the official SBA instructions. You can see those for yourself here.
- Created a calculator that will help you prepare to complete your official application.
- Vetted thousands of accountants, and set up a simple matching process for any small business to find the right accountant in a few steps.
What Happens Next?We expect the SBA to continue updating its guidance for PPP loan forgiveness as more and more businesses get funding and then begin the forgiveness application process. We encourage everyone who received a PPP loan to go ahead and download the SBA forgiveness application, so you can begin to prepare (or find an accountant for help). Eight weeks after you received your PPP loan, you will have most of the data that you’ll need to complete your forgiveness application. However, we also encourage everyone who received a PPP loan not to wait, but rather to keep accurate and up to date information on your payroll costs and other necessary payments that fall under the acceptable forgiveness uses for your PPP loan. If you are like most people, you will need help from your accountant. We encourage you to invite your accountant to join our network and help you complete and submit your PPP forgiveness application through your bank via our portal. Invite your accountant here or find a virtual accountant here.
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