Late on a Loan Payment? How To Do Damage Control
It can happen to the savviest of business owners. Unanticipated expenses arise. A customer doesn’t pay on time. External events like the weather drive down sales. As a result, you might find yourself unable to make a loan payment on time.
Late payments can hurt your personal credit score and your business standing with creditors, even resulting in collection efforts in some cases. If you find yourself in this position, follow these 3 steps to minimize the damage and get back on track.
1. Communicate With The Lender.
The most important thing you can do if you know you’re going to be late on a loan payment is to communicate that to the lender before the payment deadline. A lot of borrowers mistakenly avoid the lender. According to Kristin King, Vice President of Rockford Bank and Trust, “There are ways that we can help customers that are experiencing cash flow difficulties, but I caution them to communicate with me early.” Keeping the line of communication open allows you to work with the lender to come up with a repayment plan and possibly avoid consequences, such as penalty interest rates and damage to your credit score.
First, Identify the Problem
The first thing the lender will want to know is why you’re late. Is it a temporary problem? Or has there been a fundamental change in your business that will cause you to continue to miss payments? Whatever the cause, be straightforward about why you will be late on the payment. That will calm the lender’s anxiety, so they won’t be as quick to report the late payment to credit bureaus or jack up your APR.
Then, Suggest a Solution
The next step is to explain to the lender what type of repayment modifications will help you get back on track. Sam Graziano, CEO of online business lender Fundation, says the following options may be available:
1. Defer and repay. For example, if you’re late on a $600 payment, the lender may allow you skip (defer) the payment this month and tack on $200 to your next 3 months’ payments.
2. Forbearance agreements to pay smaller amounts in each installment for the remainder of the loan.
3. Pay interest only for 60-90 days.
There’s no guarantee that a lender will offer you a payment plan, but they will usually be understanding if you haven’t missed payments in the past. If the lender offers a deferral, keep in mind that the missed payment will be added to the loan balance, so you’ll be paying more interest in the long run.
If you can reach some kind of consensus with the lender, the lender most likely will not report a one-time late payment to the credit bureaus. However, if you’re regularly late or are more than 30 days late without a repayment plan in place, most lenders will report you to the credit bureaus. This can hurt your personal and business credit scores. In addition, if you go 90 days or more without paying, the lender may initiate collection efforts (exact time frames for credit bureau reporting and collections depend on your loan agreement).
2. If You Anticipate Missing Payments, Consider Refinancing.
Missing a loan payment every once in a blue moon isn’t too big a deal, but if it happens regularly, that’s a sign that you can’t afford your monthly payments. In that case, you may want to refinance your business loan before you miss more payments.
Refinancing basically allows you to pay off your loan by taking out a new loan with a lower interest rate and/or longer repayment term. Typically, lenders will allow you to refinance only if you have a good credit score, so you should try to refinance before missing too many payments. If you’re interested in refinancing, a good place to start is the lender that gave you the original loan.
Refinancing has pros and cons that should be carefully evaluated. The primary advantage is that you get lower monthly payments if you refinance when there are historically low interest rates (like right now). You also get a longer repayment term to spread out your payments. The refinancing fees are the primary disadvantage, as they can sometimes displace any savings you get from lower monthly payments. In addition, you may be charged a prepayment penalty for refinancing your loan, which could again wipe out any savings you get from lower monthly payments.
If you can refinance at the right time and without paying a lot of fees, that can lower your monthly payments and save you money on interest.
3. Don’t Be Late Again.
A single late payment won’t do much harm, but if you regularly miss payments, lenders will report that to the credit bureaus. In addition, lenders will charge a higher penalty APR and late fees for tardy borrowers. Paying on time going forward will help fix those problems.
Minimize Damage to Your Credit Score
According to Credit Karma, payment history accounts for about 35% of your credit score, making it one of the most important factors in calculating your score. A late payment can stay on your credit report for up to 7 years. However, by paying bills on time going forward, you can slowly lessen the impact. A good way to force yourself to stay on track is to set up automatic monthly loan payments. That encourages you to keeps expenses low and your bank account as full as possible.
Try to Get Rid of the Penalty APR and Late Fees
Late payments often trigger late fees or an increase in interest rates (called penalty APR). I recommend asking the lender if they can waive these penalties, particularly if this is your first ever late payment. Some lenders may have internal policies regarding penalty APR. For instance, many lenders will restore your original APR if you make a certain number of consecutive on-time payments (there is a law requiring lenders to restore your original APR after 6 consecutive on-time payments, but this law only applies to consumer credit cards, not to business loans).
Consider Changes to Your Business Finances
Even if this is your first time missing a loan payment, you should carefully examine your business finances and figure out what happened to prevent a repeat occurrence. There are some changes you might be able to make:
• Set aside some “emergency business funds” each month to use when unexpected events happen.
• Cut business costs and overhead wherever possible.
• Regularize your cash flow. In Kristin King’s experience, “most business owners experience timing issues between collecting on accounts receivable and the due date of payments.” By requiring upfront payment or enforcing payment deadlines, you can stabilize your cash flow. Doing business with habitually tardy clients could be hurting you more than helping you.
• Choose financing that suits your business. Some types of financing, such as invoice factoring, are specifically designed to stabilize cash flow. We can help you find financing that fits your business needs.
Making changes to the way you do business now will prevent problems in the future.
Bottom Line
It’s not the end of the world to be late on one loan payment, but it’s best to nip the problem in the bud so it won’t happen a second or a third time. Regain control by communicating with the lender, refinancing if the monthly payments are too high, and paying on time going forward. Selecting the right form of financing for your business is also key, and FitBizLoans can help you make an informed choice.
Small Business Hiring Tips: What to Consider When You’re Ready to Hire
There’s something exciting about picturing your small business filled with passionate employees. But small business hiring is an art, and it’s often difficult to pinpoint the roles that you need filled and the total number of employees that your business can support.
While there’s no firm answer to the question — How do I hire the right employees? — there are key considerations and hiring tips that can help you make the right choice for your small business.
Here are some key small business hiring tips:
Take Into Account The Nature of Your Business
When you run a growing restaurant or retail store, hiring new employees is inevitable. But small business staffing becomes a bit trickier if you own a company that provides consulting services or a web-based product. You have to more carefully consider how many employees you need, because the lack of a brick-and-mortar location makes for less obvious roles.
Owning a small business also creates opportunity, such as leveraging new technologies, outsourcing tasks and finding contractors to get the productivity you need without adding to payroll (see more below).
Know When to Outsource
While it’s exciting to create jobs through a small business, it’s not always recommended to add a full-time employee — especially if there’s technology or an outside firm that can perform the duties at a significant savings.
Small businesses traditionally outsource advertising, accounting and other administrative tasks. But before you hire for a particular position, look into technologies and small (sometimes one-person) firms that can do a great job at a far lower cost.
The Right People vs. The Right Roles
It’s difficult to know exactly what skills and experience you need at a small business. Some move forward with the philosophy of running lean and hiring the right people rather than focusing on specific roles.
How do you hire the right person without focusing on the role? During the hiring process, find employees with a wide skillset, varied experience and a fervent belief in your company’s mission. Plug them into positions with the understanding that you run with an all-hands-on-deck approach — any team member may be called on to perform a unique task at any time. If you find the right people, the specific titles and roles will develop over time.
How Are Your Finances?
Can you afford additional employees? It’s the obvious question when it comes to small business hiring, but failing to fully consider the answer can cost you.
Think through the full cost of each position you have in mind. That means calculating salary, as well as the cost of insurance and other benefits, payroll taxes, unemployment insurance, workers compensation, supplies and a slew of other expenses. It adds up quickly. Luckily, Fundation offers plenty of small business financing options, such as working capital loans and business expansion loans that can give your company the financial support it needs to hire new employees and successfully grow your business.
Consider Temporary Employees In Place of Full-Time Hires
Small business hiring is stress-inducing for a business owner, and rightfully so. You want the perfect people pouring all of their talent, experience and energy into seeing the business reach its full potential.
But finding those people is more difficult in reality than on paper. If you’re not ready to commit to a full-time team member, consider using temporary help such as contractors, temp agencies or freelancers.
This route can help you better understand the skillsets needed for maximum impact on your business, while giving you the productivity and flexibility you need.
Understanding how to hire the right people for your small business can be extremely challenging, as every business has individual needs and roles to be filled. While there are many helpful small business hiring tips to get you started on the right track, successful hiring and staffing ultimately results from understanding your company’s unique needs as well as financial flexibility.
Is it time to hire? If so, Fundation can provide the growth capital needed to comfortably hire new team members without placing stress on your cash flow.
Contact Fundation today and learn more about the small business lending solutions available to help your business grow.
How to Plan for Your Business Expansion: A Checklist for Success
Is it time to take out a business expansion loan to help your company grow further?
Here are five key questions to ask before you act on getting a business expansion loan:
- Are we ready for business expansion funding?
Your small business growth and expansion success hinges on your ability to do one of two things: find more customers or expand your products and services.
Finding more customers will allow you to increase sales of your current products and services. Expanding your business’s products and services will give existing customers the opportunity to purchase something new and different, while also attracting new customers.
If you can’t find more customers or expand your products and services, you may want to ask: Are we truly ready for business expansion?
- Where are we going?
If you are ready for a business expansion, it’s time to think about the right location. Do you want to own or rent?
Buying a facility is a big commitment. Commercial mortgages are typically offered at shorter rates than residential — expect 10 to 15 years. Shorter terms mean higher payments. Is your small business prepared to handle this increase?
Renting is safer but less stable. There’s no guarantee that your space will remain available beyond your lease. Renting also means the additional cost of paying an up-front deposit, often the first and last month’s rent.
If your new space needs improvement, you must set aside funds from your business expansion loan for construction or renovation. New locations in the same market also siphon off about 20 percent of the original location’s business. Is your bottom line strong enough to absorb all of this?
- Do we have the right people? (And, can we afford them?)
You can’t expand without taking on new employees. Additional employees equal additional wages and benefits. While a business expansion loan can help you afford more employees, you will likely save money by hiring strategically. Make sure to consider the value of hiring the right employees for your small business; if you work in a niche industry and find it difficult to hire talent with the right skills and experience, a business expansion could be even more challenging. Your expansion won’t go well if you compromise in hiring standards to fill new positions.
Management must be able to trust employees during an expansion, because it by nature reduces management’s ability to be hands-on in all aspects of the business.
- Can we maintain a stable inventory?
Inventory management is one of the biggest challenges for businesses. As you consider how to grow your small business and consider your expansion financing options, think about your ability to manage an increased inventory.
Industries that see seasonal ebbs and flows in demand must put extra effort toward mastering and maintaining a stable inventory. Additional capital can help stabilize inventory by keeping products stocked at optimal levels during periods of fluctuating revenue. Without proper inventory financing and management, you’ll find that your warehouse is either overflowing with unsold products or empty and unable to fulfill orders.
- Where will we find business expansion financing?
Here’s where it all comes together. Unless you’re overwhelmed by cash on hand, you’ll need a business expansion loan to help cover the cost of new facilities, new employees, increased inventory and the many other realities of growth. Do you have a good source for business expansion financing?
Fundation exists to help businesses just like yours. We provide business expansion loans that can be used to secure a new facility, add new talent or master your inventory.
All of our business expansion financing is custom-designed to meet the different needs of unique small businesses. Our loans feature conventional terms, refinancing options and prepayment without penalty.
Do you need capital to finance a business expansion? Contact Fundation and explore the possibilities today!
CT Corporation Announces Partnership with Fundation Group LLC to Provide Information to CT Customers About Small Business Loan Options
New York, NY – October 14, 2015 – Wolters Kluwer’s CT Corporation, a leading provider of business formation and legal compliance services, announced today a partnership with Fundation Group LLC, a New York City-based online commercial lender.
CT and Fundation customers will appreciate the connection between the companies, as each offers vital services for small businesses throughout the business lifecycle. “Like CT Corporation, Fundation provides critical services for small, growing businesses,” said Fundation Chief Executive Officer, Sam Graziano. “Businesses owners need everything from incorporation and guidance for growing their company, to financing for immediate and long term capital needs.”
CT supports businesses of all sizes, providing incorporation and registered agent services to startups, as well as business licensing and other compliance services to businesses in growth mode. Fundation is an online direct lender providing the equivalent of bank loans - conventional, fixed rate term loans of up to $500,000 and terms up to 4 years. Offering the product features of a bank loan, with the speed and efficiency of a technology company, Fundation provides customers with a simple borrowing experience with application to funding in as little as three business days. Fundation lends nationally to a broad range of small businesses, including healthcare providers, professional services firms, technical services and engineering firms, manufacturers, bars and restaurants, hospitality providers, and personal services companies like child day care and auto repair firms.
“Expanding a business and seeking capital go hand in hand,” said Jennifer Friedman, CMO of the small business segment of CT Corporation. “CT’s goal is to partner with our customers – bringing them the latest information to help them keep their businesses healthy and compliant throughout their entire business lifecycle. That’s why it’s great that we can share information on Fundation as one funding option many customers could want to pursue.”
The partnership will allow customers of CT and Bizfilings (also a Wolters Kluwer brand), to more easily and efficiently acquire information on Fundation. Interested customers may complete the loan application process with Fundation directly, to pursue the necessary funding for business opportunities such as expanding service offerings, making capital improvements, opening new locations, managing cash flow, and refinancing higher-cost debt. More information can be found on: https://ct.wolterskluwer.com/fundation and www.bizfilings.com/fundation
Regions Inks Unique Deal to Tap Booming Fintech Industry
Regions Financial Corporation has collaborated with financial technology or "Fintech" startup, Fundation Group LLC, to diversify its lending base. Regions will now be able to offer its lending products to Fundation Group's online customer base, comprising small businesses.
Regions had been looking for a prospective online partner since last year. Based on sources, the search finally ended with Fundation Group, since the company underwrites its own loans, as opposed to certain others like LendingClub Corporation that simply matches borrowers to lenders.
According to Regions, "20 percent of small business owners in the U.S. are already turning to online lenders to meet their credit needs". As such, Regions seeks to capitalize on this shift in customer preference. Moreover, the first-of-its-kind deal between a large full service bank and an online business lender will likely translate into an opportunity for Regions to grow loans and hence, revenues, on a steady as well as long-run basis.
Agreement in Detail
The agreement allows customers of Fundation Group to access Fintech's online loan application form directly through Regions' website.
Additionally, services of Fundation Group will facilitate quicker filing of loan applications for Regions' lending products. Notably, at Fundation Group, customers are able to execute loan application in less than 10 minutes, with such loans generally getting funded in 3 days.
Further, Fundation Group will underwrite fixed-rate installment loans up to $1 million, while all other types of loans valued above $1 million will be underwritten by Regions.
Growing Popularity of Fintech Companies
Notably, the distrust upon banks, post the 2008 financial crisis, has likely acted as a positive catalyst for these Fintech companies, which offer similar services on an alternative platform. At the same time, an ever-increasing demand for technology and less stringent regulatory requirements (compared with banks) has given rise to various Fintech start-ups, of late.
These online lenders are attractive to customers, given the increased transparency and enhanced personal experience offered by them. Customers are able to choose suitable products from a wide array of available options.
Driven by such popularity, the global Fintech industries have seen their investments tripling year over year to more than $12 billion in 2014. In fact, 25% of such investments (in terms of total value) have been made in lending-based companies.
What it Means for Regions
Regions has entered into an industry that is set to revolutionize the financial services sector in the future. According to The Goldman Sachs Group, Inc., the Fintech industry is predicted to eat away $4.7 trillion in revenues and $470 billion in profits from traditional Wall Street firms. As such, Regions is poised to benefit from the unique collaboration.
Moreover, access to a large online customer base will help the company further leverage its traditional banking operations. Besides, as mentioned earlier, it will lead to higher loans and improved revenues for the company.
Best Alternative Small Business Loans – 2015
By Chad Brooks, Business News Daily Senior Writer
Here at Business News Daily, we know that businesses have diverse financial needs. We researched and reviewed dozens of alternative small business loans, and came up with the ones we think are best for a variety of business needs. Here is a roundup of our top picks and an explanation of how we chose them.
Want to learn more about small business loans? Here's a breakdown of our complete coverage:
- Small Business Loan Guide
- REVIEW: Best Alternative Lender for Working Capital Loans
- REVIEW: Best Alternative Lender for Lines of Credit
- REVIEW: Best Alternative Lender for Startup Loans
- REVIEW: Best Alternative Lender for Merchant Cash Advances
- REVIEW: Best Alternative Lender for Bad Credit Loans
Best Working Capital Loans: Fundation
Fundation offers conventional fixed-rate loansbetween $20,000 and $500,000, with annual percentage rates ranging from 7.99 to 29.99 percent. Applications can be filled out online in 10 minutes, and a final decision on approval takes place within 24 hours. To qualify, you must be in business for at least two years, as well as have at least three employees, an annual revenue of at least $100,000 and good personal credit. Fundation provides excellent customer service over the phone and via live chat. Go here for a full review of Fundation.
Best Lines of Credit: Kabbage
Kabbage specializes in small business lines of credit of between $2,000 and $100,000. Each time you draw against your line of credit, you have six months to pay it off. Instead of paying interest, however, you pay fees of between 1 and 12 percent each month. To apply, fill out an online application, and link the system to either your business bank account or an online service you are already using, such as QuickBooks. Kabbage's platform automatically reviews the data on those sites to determine if you meet its standards for a loan. The process typically takes just minutes to complete. Once approved, you have instant access to your loan. Go here for a full review of Kabbage.
Best Startup Loans: Accion
Accion is a nonprofit microlender that specializes in small business loans. It offers loans specifically for startup businesses that have been open for less than six months. Accion's loan amounts and minimum requirements vary by state. Some of the more common requirements are a minimum credit score of 575, sufficient cash flow and proof of income. Maximum loan amounts range from $10,000 to $100,000. Applications can be filled out online, with approval usually taking place within one month. Accion's loans, most of which have annual percentage rates starting at 10.99 percent, are repaid on a monthly basis over the length of the loan. Go here for a full review of Accion.
Best Merchant Cash Advances: RapidAdvance
RapidAdvance offers merchant cash advances of between 50 and 250 percent of your monthly credit card volume. You repay the loan by giving RapidAdvance a fixed percentage of your future card receipts until the loan is paid off. To qualify, you need to have been in business for at least three months, have at least $2,500 in monthly credit card receivables and have a physical location for your business. You can apply for the advance online or over the phone. The approval process can be completed in 24 hours, with funds becoming available within three days. Go here for a full review of RapidAdvance.
Best Bad Credit Loans: OnDeck
OnDeck offers fixed-rate loans of between $5,000 and $250,000. To qualify, you need a minimum credit score of 500 and annual revenue of at least $100,000, and you have to have been in business for at least one year. The loans have lengths ranging from three to 24 months and an average interest rate of 15 percent of your total loan amount. OnDeck loans are paid back on a daily or weekly basis. You can apply for a loan online or over the phone. Approval can be completed in just a few minutes, and funds will be deposited into your account within 24 hours. Go here for a full review of OnDeck.
Our Methodology
To determine the best alternative lenders, we started with a pool that included all of the lenders on the comprehensive list below. After some preliminary investigation, including a look at other best-pick lists and initial research into each one, we interviewed small business owners to discover new ones to add to our list. We also eliminated peer-to-peer lenders and online sites that match businesses with lenders, because they didn't fit into this year's best-pick categories.
Ultimately, we settled on 20 alternative lenders to research as best picks: Accion, American Business Credit Services, American Express, Balboa Capital, BFS Capital, CAN Capital, Dealstruck, Fora Financial, ForwardLine, Fundation, Kabbage, Merchant Advisors, Merchant Cash and Capital, OnDeck, PayPal, RapidAdvance, Rapid Capital Funding, Shield Funding, SnapCap and Square. (See below for the full list of alternative lenders.)
Next, we researched each lender by investigating the types of loans it offered, the amount of money that could be borrowed and for how long, the application and approval process, and repayment procedures. We also considered any general term rates that were listed on these lenders' websites. After narrowing the list to 14 final contenders, we contacted each lender's customer-service department by phone, and live chat if possible, and posed as business owners in order to gauge the type of support each one offered.
In all, we analyzed each lender based on the following factors:
- Application and approval process
- What it takes to qualify
- How long it takes to get a loan
- Loan amounts
- Loan terms
- Repayment process
- Customer service
- Better Business Bureau ratings and complaints
- Online user reviews
It's important to note that our best picks were not selected based on the lender most likely to approve your business. Each lender evaluates businesses differently, and each business has a different financial makeup. Considering these factors, it would be impossible for us to try to determine any business's likelihood of securing a loan with any of these lenders. In addition, our review process did not fully examine specific loan interest rates. These are determined individually for each business based on the amount of money being borrowed, the loan term and the business's financial makeup. We did, however, consider any average rates that were provided.
Here is a full list of alternative lenders and a summary of what each company claims to offer. This alphabetical list also includes our best picks.
*Accion: Accion is a small business microloan lender. The company provides two types of loans — one for established businesses and the other for startups. Loan types, amounts and requirements vary by state. Each loan type is secured and features fixed interest rates. us.accion.org
Advance Funds Network: Advance Funds Network (AFN) offers a number of flexible business-financing options for small and medium-size businesses, including bad credit business loans, cash advances, invoice and purchase order factoring, and equipment leasing. AFN's products are available to all businesses, regardless of credit score. advancefundsnetwork.com
American Express: American Express offers merchant financing to small businesses that accept American Express cards. The financing offered is a commercial loan, not a purchase of receivables or a cash advance. A business must repay the loan in full, together with the loan fee, regardless of its future credit and debit card charge volume. americanexpress.com
American Finance Solutions: American Finance Solutions purchases businesses' future credit card transactions, and advances that money to them. After receiving the advance, this lender deducts a fixed percentage of the business's daily credit card sales until the advance is paid in full. To qualify, businesses must have been in operation for more than a year and process at least $5,000 in credit card sales each month. americanfinancesolutions.com
Balboa Capital: Balboa Capital offers several small business loan products, including working-capital loans, franchise loans, equipment leasing, and flexible small business loans. The company makes quick credit decisions, offers loans of up to $250,000, processes quickly and has no restrictions on how businesses can use the money. balboacapital.com
Biz2Credit: Biz2Credit is an online marketplace for small business funding. The company connects small businesses in need of funding with lenders. Biz2Credit can help small businesses obtain a variety of loans, including SBA loans, equipment financing, business acquisition loans, commercial loans, lines of credit, franchise loans, real estate financing, disaster loans and merchant cash advances. biz2credit.com
BlueVine: BlueVine helps businesses free up cash trapped in their invoices by giving them an advance on the amount due. There are no hidden fees, paperwork or obligations. The application is completely online, and there are no long-term contracts or termination fees. Once a business is approved, a credit line will be set to be used as needed. bluevine.com
BoeFly: BoeFly is an online marketplace for small business loans. The site is a loan exchange that connects small business owners with more than 4,000 business lenders. BoeFly is a subscription service that does not charge any transaction fees. boefly.com
The Business Backer: The Business Backer specializes in small business financing. This lender offers a variety of loan types, including factoring, purchase financing, specialty financing, equipment leasing, traditional loans and lines of credit. To qualify, businesses must have been operating for at least a year, as well as have annual revenue of at least $150,000 and a personal credit score of 550 or higher. businessbacker.com
Business Credit & Capital: Business Credit & Capital specializes in offering retailers, restaurants and service businesses merchant cash advances. Business Credit & Capital purchases a percentage of future revenue, and advances those funds to businesses. There are no restrictions on how the money can be used. For businesses to repay the loan, the lender collects a daily percentage of sales. businesscreditandcapital.com
BFS Capital: BFS Capital offers both small business loans and merchant cash advances. The company provides small business loans of between $4,000 and $2 million to a wide range of industries, including restaurants, retail stores, service providers, manufacturers and wholesalers. bfscapital.com
CAN Capital: CAN Capital offers small business loans and merchant cash advances. Loans through CAN Capital range from $2,500 to $150,000, and mature in four to 24 months. No personal collateral is needed, and funds can be transferred in as little as two business days. cancapital.com
Capital for Merchants: Capital for Merchants is a business cash advance lender. Capital for Merchants pays for a business's future sales up front and gets paid back with a fixed percentage of daily credit card receipts, or via automatic debits from a checking account on a set schedule. Upon approval, funding is available within 72 hours. capitalformerchants.com
Corporate Business Lending: Corporate Business Lending specializes in working with business owners with less-than-perfect credit. The lender, which has a quick application process, works with both startup and established businesses. corporatebusinesslending.com
Credibility Capital: Credibility Capital is a marketplace lender focused on prime-credit small business borrowers. Its platform matches businesses with institutional investors to fund loans ranging from $10,000 to $150,000. The Credibility Capital Risk Score incorporates a range of data to arrive at a recommendation for a particular interest rate. The lender's borrowers are small businesses seeking capital primarily for business expansion and inventory financing. credibilitycapital.com
Credit Card Processing Specialists: Credit Card Processing Specialists offers merchant cash advances to small businesses. Its merchant cash advance services work by providing funds up front while taking repayment back when it processes payments based on an agreed-upon percentage. creditcardprocessingspecialists.com
Dealstruck: Dealstruck provides a variety of small business funding options, including business term loans, revenue-secured term loans and asset-based lines of credit. The company offers loans between $50,000 and $250,000. Businesses approved by Dealstruck need to be profitable, with annual sales of at least $250,000 and more than one year of operating history. dealstruck.com
Everest Merchant Services: Everest Merchant Services provides small businesses with merchant cash advances. Its four-dimensionalunderwriting and approval process focuses on future credit card transactions and receivables revenue as a repayment method. This system allows the company to quickly estimate and assess its return probability using all the dimensions of a business and not just a credit score. Repayment is based upon future swiped Visa and MasterCard credit card transactions. ems-merchants.com
Fastpoint: Fastpoint is a merchant cash advance provider. Fastpoint buys a portion of a business's future credit and debit card transactions at a discounted rate. The advance is repaid with a fixed percentage of the business's daily transactions. Only businesses with a credit card processing account may apply for a cash advance through Fastpoint. fastpoint.com
FastUpFront: FastUpFront provides completely unsecured business cash advances up to $250,000. All businesses that accept credit cards are eligible for a cash advance from FastUpFront. The cash advances are based on future sales, not credit scores. fastupfront.com
First Working Capital Group: First Working Capital Group specializes in small business funding. The lender offers a variety of loan types, including ongoing lines of credit, merchant cash advances, equipment leasing and franchise financing. First Working Capital Group provides loans regardless of credit history. Instead, this lender gives considerable weight to how long businesses have been open when determining the amount of funds that can be provided. firstworkingcapital.com
Fora Financial: Fora Financial offers flexible working-capital solutions to small businesses in need of financing. The lender offers both small business loans and merchant cash advances. Fora Financial serves a variety of industries, including manufacturing, medical, retail, wholesale, transportation, restaurants, construction and auto. The lender makes funds available within 24 hours of approval. forafinancial.com
ForwardLine: A nationwide supplier of financing to small businesses, ForwardLine uses technology and nontraditional credit algorithms to finance 98 percent of U.S. businesses that banks consider too small and too risky for a business loan. ForwardLine offers both small business loans and merchant cash advances. Financing is based on monthly credit card sales volume. Repayment is made by applying a small percentage of credit card transactions to the balance. forwardline.com
*Fundation: Fundation is a direct lender that delivers small balance commercial loans. The firm provides fixed rate loans of up to $500,000 using its own capital. Loans are available in one- to four-year repayment periods. Long-term loans are designed for borrowers who are looking to make large investments in their business (such as by expanding a product or service, hiring new employees and making capital improvements), and shorter-term loans are designed to help business owners with everyday operating costs. Both types of loan have fixed interest rates starting as low as 7.99 percent, with payments automatically debited from the customer's account twice a month. fundation.com
Fundera: Fundera gives small businesses access to multiple loan offers through one application. Fundera does not loan money directly to small businesses, but rather connects small businesses with different financing options. Types of loans the company helps set up for small businesses include small business loans of up to $1 million, merchant cash advances, equipment loans, factoring, 401(k) rollover funding and lines of credit. fundera.com
Fundbox: Fundbox offers business owners a way to fix their cash flow by advancing payments for their outstanding invoices. There is no approval process, no forms to fill out, no phone calls to make and no obligation. Businesses connect their accounting app to add their unpaid invoices, and pick the unpaid invoices they want to clear. An advance for the amount is automatically transferred to their bank account. fundbox.com
GoKapital: GoKapital helps entrepreneurs obtain business loans nationwide. With GoKapital, you can apply for a number of business lending options, including SBA loans, short term loans, lines of credit, merchant cash advances, equipment financing, franchise loans business acquisitions loans, loans for Latinos and small business loans for women. Businesses can be instantly pre-qualified for a loan by filling out an online application. gokapital.com
Headway Capital: Headway Capital offers small businesses lines of credit ranging from $5,000 to $30,000. Once approved, businesses can borrow as much money as needed, whenever it's needed, up to the available credit limit. With each draw, a business can select the repayment schedule that best suits its needs. In order to be eligible to apply, your business must have been in operation for at least one year, and it must be located in Florida, Illinois, Missouri, North Carolina, Pennsylvania, Virginia, Washington or Wisconsin. headwaycapital.com
*Kabbage: Kabbage is a provider of working-capital loans to small businesses. Kabbage uses data generated by dozens of business operations to understand performance and deliver fast, flexible funding in real time. Kabbage can support any small business by analyzing various data sources that you use every day to run your business. kabbage.com
Kalamata Capital: Kalamata Capital is a data-driven, alternative finance company focused on small business. The lender offers a wide range of loan types, including working-capital loans, business expansion/acquisition loans, SBA loans, lines of credit, equipment financing, inventory financing, accounts receivable factoring and merchant cash advances. Utilizing automated data aggregation and electronic payment technology, Kalamata Capital can make credit decisions in as little as 24 hours. kalamatacapital.com
Kiva Zip: Kiva Zip is a program that provides small business owners in the U.S. with access to capital through person-to-person lending. Its loans are crowdfunded by a community of lenders from around the world. As first-time borrowers on Kiva Zip, small businesses have the opportunity to raise up to $5,000 in capital with no interest or fees. Through Kiva Zip, anyone who wants to support small business growth and local job creation can choose to lend $5 or more to a small business of his or her choice. zip.kiva.org
Lending Club: Lending Club offers loans to most types of businesses in 45 states, including professional and personal services, retailers, contractors, health and wellness providers, automotive, wholesalers, manufacturers, and restaurants. Its loans can be used for a variety of purposes, including business expansion, inventory or equipment, working capital and refinancing. lendingclub.com
LendingTree: LendingTree connects consumers to lenders that compete for their business. LendingTree lenders offer an array of loan types, including business loans. The loan amount approved for a business is based on several key factors, such as how long the company has been in business, its annual revenue and its credit score. lendingtree.com
Lendio: Lendio is an online service that helps small businesses quickly find the right business loan. Lendio makes business loans by matching qualified small business owners with active banks, credit unions and other lending sources. lendio.com
Maverick Capital: Maverick Capital is a business funding provider that offers loans of up to $250,000 and merchant cash advances. This lender also offers a Hybrid Program that combines traditional cash advances with microloans. With the Hybrid Program, the cash advance is paid back through a combination of a holdback percentage of your credit card sales and a weekly payment. maverickcapital.biz
Merchants Advance Network: Merchants Advance Networkis a merchant cash advanceandunsecured loan provider. The lender offers loans and cash advances of between $2,500 and $1 million. To apply, businesses must fill out a loan application and provide three months of their most current credit card and bank statements to document sales. The entire underwriting process typically takes between five and seven days. merchantsadvancenetwork.com
Merchant Advisors: Merchant Advisors offers an assortment of loan types, including small business loans, working-capital loans, restaurant loans, bad-credit loans, cash advances, SBA loans, restaurant equipment leasing, lines of credit, franchise financing, 401(k) business funding and home-based business loans. onlinecheck.com
Merchant Cash and Capital: Merchant Cash and Capital purchases a business's future sales or credit card transactions and advances that money to them up front. After the business gets the advance, Merchant Cash and Capital deducts a fixed percentage from the company's daily gross sales or credit card sales until the advance is made whole. To qualify, a business must have been in operation for at least six months, have a minimum of $10,000 per month in gross sales and not have any bankruptcies. merchantcashandcapital.com
National Funding: National Funding offers small businesses a range of financial services and products, including working-capital loans and merchant cash advances. The company's small business working-capital loans require no pledge of personal assets. nationalfunding.com
*OnDeck: OnDeck offers loans to small and medium-size businesses. The company uses data aggregation and electronic payment technology to evaluate the financial health of businesses when determining whether to approve a loan request. The company's proprietary credit models look deeper into the health of a business, focusing on overall business performance rather than the owner's personal credit history. ondeck.com
PayPal: PayPal offers working-capital loans to small businesses that already process payments through PayPal. In most cases, the maximum loan amount is 8 percent of the sales a business has processed through PayPal in the past 12 months. When applying for a PayPal working-capital loan, businesses select the daily repayment percentage, which is the portion of future sales that will go toward repaying the loan balance. The loan balance is repaid automatically as businesses make sales through PayPal. paypal.com
Prosper: Prosper loans are not traditional small business loans; they are personal loans based on applicants' credit scores and are issued to individuals, not businesses. These loans are desirable in a variety of cases, such as when a business doesn't yet have a proven track record. Prosper loans are unsecured and don't require any collateral. prosper.com
SBL Group: SBL Group offers loans ranging from $5,000 to $1 million. Funds are typically available within 24 hours, with repayment terms ranging between three and 24 months. To qualify, businesses must have been in operation for more than three months, have income of more than $100,000 over the past 12 months and have a credit score higher than 500. smallbusinessloansgroup.com
*RapidAdvance: RapidAdvance offers small business a variety of financing options, including loans, merchant cash advances, lines of credit and SBA bridge loans. Businesses can be approved for loans in 24 hours and receive funds within three days. RapidAdvance has provided more than $700 million in financing to thousands of small businesses. rapidadvance.com Read our full review here.
Rapid Capital Funding: Rapid Capital Funding specializes in merchant cash advances for small and medium-size businesses. Rapid Capital Funding qualifies businesses for advances of between $5,000 and $500,000. The actual amount depends on each business' sales and history. Unlike other financing options, Rapid Capital Funding does not require a plan for the money and doesn't require it to be used for any specific purpose. rapidcapitalfunding.com
RedFynn: RedFynn offers a variety of credit card processing solutions, including business cash advances. Eligibility for cash advances is not determined by credit score alone; a business's current sales and length of time in operation are also considered. redfynn.com
SmartBiz: SmartBiz offers SBA loans of up to $350,000 with interest rates between 6 and 8 percent. After completing the application, businesses can receive funds in as little as seven days. SmartBiz is a joint effort of Golden Pacific Bancorp and Better Finance. Golden Pacific is a member of the SBA's Preferred Lenders Program, and Better Finance is a financial technology company that provides leasing and credit solutions. smartbizloans.com
Shield Funding: Shield Funding is an alternative lender specializing in bad-credit business loans. To be eligible, you need to have been in business for at least four months, and have bank receipts or accept credit cards as a form of payment. A minimum of $5,000 per month in gross revenues is required for companies that accept credit cards, and approximately $20,000 a month in gross revenues is required for those that do not. Shield Funding provides business cash advances and unsecured business loans of up to $500,000 for a variety of purposes, including to improve or expand a company, manage payroll costs, purchase inventory or equipment, acquire customers via marketing, improve or create a website and pay off creditors. shieldfunding.com
Small Business Loans Depot: Small Business Loans Depot offers an assortment of loan types, including bank statement loans, small business loans, working-capital loans, equipment loans and equipment refinance loans. Loans are available from $5,000 to $150,000. The amount for which a business can qualify depends on business and personal credit, time in business, the amount of equipment owned and gross sales. smallbusinessloansdepot.com
SnapCap: SnapCap is an alternative lender that specializes in unsecured business loans of between $5,000 and $600,000 for general purposes, expansion, inventory or equipment. The lender offers a paperless application process and a 48-hour turnaround. There are no collateral or annual revenue requirements. In addition, SnapCap places little emphasis on personal credit when determining whether to grant a loan. snapcap.com
Square: Square offers small business funding to its customers that have an active credit card processing account with Square. Square capital can be used to increase inventory, buy equipment or open a new location. Businesses make loan repayments to Square automatically as a fixed percentage of their daily card sales. The payments are tied directly to card sales. Businesses pay more when sales are strong and less if things slow down. squareup.com
Sure Payment Solutions: Sure Payment Solutions is a small business financing company. The lender offers loans of up to $500,000, business cash advances and accounts receivable financing. Sure Payment Solutions offers flexible payment options, no early or late payment penalties, no application fees and 24-hour approvals. surepaymentsolutions.com
Swift Capital: Swift Capital provides fast business funding, with amounts ranging from $5,000 to $300,000 and pricing starting as low as 9.9 percent. Through the use of its data and technology systems, Swift Capital can streamline the approval process and eliminate the paperwork. For funding amounts of $10,000 or less, funds can be wired to your account within one hour. Repayment is typically made through daily automatic deductions from each business's checking account. swiftcapital.com
United Capital Source: United Capital Source offers a variety of loan types, including small business loans, accounts receivable factoring and merchant cash advances. The company can approve loans of between $5,000 and $2 million. Businesses with bad credit are not automatically eliminated from loan consideration. Approvals can be granted in as little as 24 hours. United Capital Source's loans are unsecured and don't require a personal guarantee or collateral. unitedcapitalsource.com
Are you an alternative lender that would like to be added to this list? Please feel free to contact Chad Brooks at [email protected].
- See more at: http://www.businessnewsdaily.com/8448-best-business-loans.html#sthash.H686pqqh.dpuf
Why Fundation Would Rather Work With Banks Than Compete With Them
Much of the narrative written about alternative lenders is the story of a competition, with traditional lenders (banks mostly) on one side of the divide — and a wide field of online alternative lenders on the other.
But to Sam Graziano, CEO of Fundation, that view is a little bit off — because in many cases the reality is that traditional bank-based lending and its emerging online counterparts really aren’t staking out the same ground.
“Alternative lenders, to use the term broadly, exist to do what banks can’t or won’t do,” Graziano told PYMNTS in a recent conversation.
And that, he notes, is actually very good news for emerging online lenders like Fundation.
“I think if banks really wanted to do something and to make small loans, banks could price alternative lenders out of the market,” Graziano noted. “They have the cheapest cost of capital out there. They have 80 percent of their balance sheet made up by deposits, which costs virtually nothing today. There is the operating expense, which is a big part of the business as well, but I think that is dwarfed by the cost of capital advantage.”
An advantage, he says, that in the last 5 to 10 years banks haven’t been eager to press.
“In some asset classes, non-conforming mortgages or unsecured consumer loans for example, it’s not quite as much an argument about ‘can’t’ so much as it’s an argument of ‘won’t,’” Graziano explained. “Banks got burned pretty badly by those asset classes in the last credit cycle and they decided to stay away from this stuff.”
In small business lending, on the other hand, the question hasn’t so much been about willingness, as it’s been about ability — or at least ability to underwrite those loans in an efficient and profitable way.
“Small business lending suffers from more of structural challenges, meaning the banks have not decided for now they don’t want to do this stuff because they decided against it,” Graziano explained. “Structural means there is stuff that prevents it from being an efficient or profitable business line for banks.”
And overcoming those “structural difficulties,” is the reason Fundation exists. The problems are well-known throughout financial services — small businesses are a high-risk group, and they tend to also be low collateral. Other than those basic similarities, the category “small business” captures an unimaginably large and heterogeneous population that’s hard to assess. Banks handle that difficulty with high demands for and lots of (time-consuming) documentation. Fundation comes at the problem rather differently.
“We do everything soup to nuts. We find customers through partnerships or directly. We underwrite, originate and hold on to loans as an account on our balance sheets, which means we take risk in every loan we originate,” Graziano said, noting that structurally its model is very similar to that of a traditional bank.
He also noted because they carry the loans — instead of selling them off like a marketplace lender would — they are particularly invested in their partners’ outcomes and evaluating those risks well.
“We are very heavy on aggregating third-party data in real time, doing a lot of automation, using disparate data sources and combining them to determine what kind of risks we are taking,” Graziano explained.
Banks certainly could build that kind of very specialized platform, but it would be both entirely too time-consuming and costly to do so — particularly when working in concert with a platform player like Fundation is an option.
An option that Regions Bank tapped into this week, with its announcement that it will be integrating its small business lending with Fundation with what they are described as a “first of its kind” effort at delivering coordinated lending solutions.
“Small businesses continue to drive growth throughout the economy, and in order to meet their ever-evolving needs and desire to utilize online and digital processes, the financial services industry must provide innovative solutions that offer flexibility, speed, and capital access in a responsible manner,” said Joe DiNicolantonio, head of Regions Business Banking.
“We know that 20 percent of small business owners in the U.S. are already turning to online lenders to meet their credit needs. This unique agreement with Fundation allows Regions Bank to expand loan product offerings and method of delivery for small businesses while also cultivating long-term revenue and loan growth opportunities.”
And it’s an opportunity for Fundation to expand its offering to Regions’ customer base across 16 states in the South, Midwest and Texas.
“Partnering with banks has been a great conversation point in our industry for a long time,” Graziano noted. “We are trying to really work to build a solution that exists right on a bank’s homepage, so we can really partner to get the customer into the right product.”
And building out those partnerships with banks is what’s on the agenda for the rest of the year of Fundation. Graziano expects to announce at least one other big tie-in before the year’s end.
Topics: Alt Lending Tracker alternative lending Featured Fundation
5 Things to Prepare Before Consulting a Small Business Lender
The pursuit of growth capital is exciting, and you want to make the process go as quickly and easily as possible. To avoid delays, make sure you’re fully prepared before applying for a business loan.
Here are five key things to prepare before consulting a small business lender:
- Business Plan
Not all small business lenders who ask for your business plan will read it page by page. But it’s a necessary document to get a small business loan, and it helps you internalize your vision for the business. After creating a compelling business plan, you’ll be able to quickly and succinctly answer questions and discuss your company’s plans for the future.
An additional tip: If you focus on one area, spend as much time as possible on describing leadership and other key team members. If someone reads just one section of your business plan, they’ll read about the people behind your products and services.
- Loan Purpose
Any small business lender will want to know exactly what the loan proceeds will go toward. Do you need to stabilize cash flow? Hire new employees? Expand to a new business location?
The lack of a specific purpose for loan proceeds is a red flag for small business lenders. It gives the appearance of disorganization and a directionless vision.
Also, think about your ideal loan structure before applying. How much money are you seeking? What is your ideal term? What would be a manageable interest rate? You may not get your desired structure, but it’s a good starting point for discussing and considering the possibilities for your small business loan.
- Financial Statements
It’s important to describe where your business has been financially and where you see it going in the future. Prepare your financial documents - balance sheet, income statement, tax returns and bank statements - that put your financial history in black and white.
Additionally, you should create realistic financial projections that paint a picture of where you see your business going in the future. These projections should highlight your need for the financing you seek.
Credit Report
You should always monitor your company’s credit. Pull a business credit report before seeking a loan, and prepare explanations for all that it includes — especially late payments and other blemishes. Any small business lender will want to know how much credit you’ve accessed in the past, as well as how you’ve handled it.
Legal Documents
Know how your business is legally organized — its legal name, its members, etc. This information is not always top of mind, but it should be included in articles of incorporation or other documents used to form your business. Also obtain copies of any existing commercial leases, franchise agreements and other binding documents.
Getting organized for a loan application doesn’t have to be complicated. At Fundation, we make the small business lending process as easy as possible. If you so choose, our online application system can pull relevant legal and financial documents for your convenience— with your permission, of course.
This helps everyone focus on the most important aspect of the small business loan application — finding a way to get you the growth capital needed to see your business reach its full potential.
Are you looking for a small business lender that will provide you with both the financing and advice to help your company reach new heights? Contact Fundation today and complete our streamlined application process in less than 10 minutes!
How a Working Capital Loan Can Help Your Business Succeed
Running a small business comes with the realities of month-to-month operations — satisfying payroll, purchasing inventory, paying bills and much more.
Working capital loans for small business endeavors take the stress out of the day-to-day battle to stabilize finances and keep the company’s doors open. When you stop worrying about paying the bills, you can focus on improving your business and taking advantage of growth opportunities.
How do small business working capital loans work? Here’s a quick rundown:
A Different Kind of Small Business Loan
Almost any small business loan application will require a loan purpose. Not working capital business loans. This is a special category of loan that is made to help you meet your monthly obligations; day-to-day operations that aren’t necessarily related to profitability.
Working capital is a known concept in business lending, and you’ll find a number of options when looking for a working capital loan.
At Fundation, we offer business capital loans in principal amounts up to $150,000. These loans feature 1- and 2-year terms, as well as fixed interest rates. You make payments twice monthly, and there’s no prepayment penalty.
How Funds Are Used
Any business owner knows that revenue is rarely constant throughout the year. If you don’t have a significant cash base, lulls in revenue can put pressure on your ability to meet payroll, purchase inventory, replenish supplies, pay bills and satisfy any number of other regular obligations.
When you secure a working capital loan for your small business, you have a reserve that can help cover these expenses. If it’s low season, you don’t have to worry about making payroll. If your boom season is coming, you have extra cash to boost your inventory.
While business capital loans are not used for growth, they can give you the flexibility needed to take advantage of opportunities.
The Freedom to Seize Opportunity
Yes, working capital loans provide small businesses the strength to weather downturns. They also give small businesses the freedom to seize opportunities.
Here’s a scenario: You have the chance to acquire a key competitor. The business acquisition would be a huge boon to your future prospects. But applying existing capital toward the purchase would put into jeopardy your ability to cover upcoming expenses.
With a working capital loan, you have the money needed to satisfy monthly obligations — freeing up your capital to use for an acquisition, or a key hire, or the introduction of a new product.
Nothing undermines growth more than battling each month to stay afloat. Fundation provides working capital for small businesses, helping these growing companies stabilize operations so that they can focus on what matters most — sustaining success and growing for the future.
Contact Fundation today and learn more about the working capital loans available to your business.
How to Improve Your Business Credit Score: 10 Tips from Fundation
Ensuring you have good credit for your business is essential for obtaining loans and operating successfully in the long term. Once you have that line of credit, your business’ credit score affects your financial future.
Maintaining a good credit score is vital. Here are 8 tips to improving your business credit score:
- Refinance
Refinancing your existing loans can give you a lower interest rate and make the debt easier to pay off. The better your credit rating is, the easier it is to refinance your loan with a lower interest rate.
- Make your payments on time
Keeping track of all deadlines and making payments on time is crucial to improving your credit score. A late payment could be reported, and your credit score will drop as a result. In addition, late payments often incur penalty fees—eventually, the costs will add up and you’ll be paying more than you owed.
Getting into the habit of making payments on time can save your credit score. You can even make payments in advance, saving you the risk of accidentally missing the deadline.
- Limit new accounts
Once you have your business credit card, don’t open new accounts if you can avoid it. New credit applications can have a negative effect on your credit score. Companies will offer incentives for opening new accounts, but keep them to a minimum to keep your credit steady.
- Don’t close your old accounts
It may seem natural to close old accounts once you’ve paid off the debt, but keeping them around will have a more positive effect on your credit score. Credit history is a factor of your credit score, and keeping those old accounts around will benefit your report. It shows potential lenders and investors that you pay off debt reliably and they can trust your financial future.
- Don’t mix business and personal finances
Make sure all of your accounts are categorized properly. Open your business accounts with your Employee Identification Number, not your social security number. Keeping your business accounts separate from your personal accounts will help you maintain good credit on both—or keep bad credit from your personal account from affecting your business score.
- Handle problems promptly
Things can go wrong, and missing a payment is not the end of your good credit. If you know you are going to have problems making a payment or you made a mistake, call the lender and discuss the problem. Effectively communicating your situation can convince them not to report the late payment immediately, giving you time to make the payment before it hurts your score.
- Monitor your business and personal credit
Keeping tabs on your business credit score is the best way to make sure the report is accurate. You can keep track of how your habits are affecting your score as well as find errors that could be negatively impacting your credit. Monitoring your personal credit can also help when lenders and investors are looking at your report. Some lenders will look at your personal credit score in addition to your business credit, so keeping both under control will help your business.
- Fix errors quickly
If you’re monitoring your credit report, it’s likely that you’ll find errors that are hurting your score. Fraudulent accounts and other mistakes that go unnoticed will continue to hurt your credit score and can lead to bigger problems. Fixing those errors as you find them can improve your credit report and ensure that the data your lenders are seeing is accurate and reliable.
At Fundation, we look at more than just business credit scores when reviewing small business loan applications. Contact us today to find out more!