Small Business Owners Seek Alternative Financing

Most business owners who are struggling today could really use a business loan but have no idea where to get one. People hear all the time that millions of dollars in business financing is being offered by banks. For instance, Wells Fargo recently announced the approval of more than $548 million in SBA 7(a) loans. When you hear business loan statistics like this does it translate to an actual place to go an apply?

The truth is that most of the large banks publicize figures like this to advertise and at the same time improve their public image. These loans are very easy to include in the banks’ portfolio because there is little risk, but this also makes them less attractive. The SBA guarantees up to 85% of the money so the banks only risk a small portion of their capital.  The SBA also controls the amount of money banks can make so this portion of the portfolio is not the breadwinner. The bottom line is that SBA loans are not very profitable and hard to find eligible applicants. Banks actually have to work hard to place this money.

These loan statistics do look good however to politicians, community message boards, public advertisements, and national press releases. If channeled the right way these types of initiatives can be very successful marketing or lobbying campaigns. There are very limited marketing opportunities for banks as they offer very few dynamic or out of the box products.

The average business is not eligible for an SBA loan. These loans are generally given to non-profits or community boosting organizations. It is not the place for a local restaurant or retail outlet to go and get a business loan. In fact, most businesses are not SBA friendly and that is why the actual business loan statistics in the overall economy today are at decade lows.

What Can Small Business Owners Do?

There is an alternative financing solution for small business owners. A merchant cash advance is a flexible business loan alternative that offers small business owners immediate access to working capital. Also known as a business cash advance, the lender exchanges an upfront cash payment for a set principal and fee total amount to be collected from a portion of future sales.

A merchant cash advance is attractive for several reasons. Because it is not a business loan there is no accruing interest. The fee charged on top of the amount borrowed is established from the very beginning and doesn’t change. Another great feature, because payments are deducted electronically as a portion of sales, when a business goes through a slow cycle payments towards the debt naturally adjust downward. This feature relives some payment pressure during slow business cycles which can be very healthy for developing businesses.

Many of the nation’s small business owners no longer have to look at bank statistics and wonder if they are eligible for a business loan. A merchant cash advance is a great business loan alternative that offers many of the small business owners excluded from SBA and Bank lending access to working capital.

How To Get a Business Loan For Women

Business Loans for Women

If you are a woman looking for a business loan it’s time to get the facts straight so you do not waste your time. Below you will find many of the different options available in detail so you as a business owner can make an informed decision about what is best for you. We have provided a small list and brief explanation about many of the business financing solutions available for women but by no means the all end list so you can continue to do research and we hope this resource will act as a great springboard for your efforts.

The Small Business Administration

The first topic of discussion regarding business financing for women is the Small Business Administration. The administration’s main function is to represent small businesses in government. In order to fulfill this representation they promote and support many programs to assist you with the starting of a business and resources to help you after you launch your business.

SBA Grants

The Small Business Administration DOES NOT offer financial grants for opening a business or expanding it. There are also very specific business requirements to receive a grant and the money is generally allotted to non-commercial organizations. Some examples would be educational institutions or not-for-profit organizations.

SBA Loans

The SBA does not provide business loans directly, what they do is guarantee loans given by participating banks and financial institutions. Some startup or expansion loan examples offered through the SBA are the Basic 7(a) Loan Program or the Microloan Program. Both of these loan programs are again very restrictive and allow for loans to specific types of businesses such as child care centers or rural area businesses that might assist in stimulating job growth or some other form of community improvement. There is a very thorough application process for these types of business loans.

SBA Resources for Women

The SBA does have a very good resource called the Office of Women’s Business Ownership. This particular resource offers women professional training and counseling in business in order to assist them in developing a company. It is hard work but you will learn tips on how to garner government contracts as well as business administration skills. This is a good resource for women who are determined to start a business but lack the required knowledge and many of the skills necessary.

Other Types of Grants for women

The term grant is used quite often in regards to women and minorities and it is often misunderstood by aspiring entrepreneurs as a way to get free money to start a business. There are countless organizations that offer grants but it is important to understand that this type of funding is offered for specific circumstances and they are very restrictive. You have to go through all the grants available to see if it is possible that you fit the criteria of these grants for women.

Traditional Bank Business Loans

It is not necessary to provide the names of banks as they are household names so the discussion here will be the question of availability of these types of business loans. As many of you know the economy is struggling and this as had a severe impact on bank lending policies. The truth is that if you do not have a very good credit history and a substantial amount of assets you are likely to be denied any size small business loan. It must be emphasized though, you should by all means make the attempt if you believe you might qualify because only with a bank will you receive some of the lowest borrowing rates. It is a very lengthy application process but it can be well worth it if you are approved.

Merchant Cash Advance or Business Cash Advance

This is one of the most flexible business loans for women available today. This is technically not a business loan; it is an alternative to business loans. This type of financing is only available to existing businesses that generate revenue on a monthly basis. The merchant cash advance company provides a bulk payment upfront against a portion of future sales generated by the business. There is a fee for the advance and both principal and fees are paid back by a daily percentage deducted from each sale the business makes, usually via the credit card processor although lately there have been advances structured deducting the business bank account called ACH loans.

This business loan alternative has one of the fastest turnaround times and a very simple application process. A one or two page application and the business must provide recent monthly statements. Credit history is less scrutinized because the business cash advance is based off the monthly revenues and not the individual. This means that bad credit applicants have the chance of being approved. Although the premium will be much higher than a bank because of the risk involved, but it is very quick and make a big difference in developing your company if used correctly.

The above details are a small perspective into the business loans for women application process and the actual available options for business financing. At shield Funding we offer business loans for women through our Merchant Cash Advance program and we have a very high approval rate for existing female business owners. If you have any questions about business loans for women programs or would just like any information on the subject visit http://shieldfunding.com.

Merchant Cash Advance Versus Invoice Factoring

A merchant cash advance is a fantastic and relatively new financial product that is an extension of invoice factoring. The two products share many similarities but are very different in one important aspect. They both are similar in the idea of selling receivables to a business lender at a discount. Where they differ is that factoring considers invoices or established sales when creating a business loan for an applicant whereas a merchant cash advance considers sales yet to be generated in determining the amount and terms of business financing. Both financial products can be very useful for business owners looking to develop their company.

Invoice Factoring

Factoring in detail is where a business owner sells invoices or accounts receivable loans to a factor or lender at a discount. The lender gives the business a cash advance at a varying rate of about seventy to eighty percent of the total invoiced amount plus possible fees. This allows business owners to get immediate money for funds that are yet to be received, and in turn these businesses can capitalize on market pricing swings, expansion plans, and many other strategies for developing their business.

Merchant Cash Advance

A merchant cash advance is an exchange where the lender gives a company owner a business cash advance against a small portion of the company’s future credit card sales. The actual sales are projected and have yet to take place. Here the lender offers the merchant a cash advance for a fee and there are usually set percentages of daily sales deducted to payback the principal and fee of roughly fifteen percent. Merchants can utilize the money in any way they wish so it can be useful to cover operating expenses or be a tool for any type of company advancement.

Both invoice factoring and merchant cash advances are business loan alternatives that give business owners access to immediate capital against sales generated. They both are very useful for assisting smaller companies in the development process. If you are a business owner seeking immediate business financing you can determine which one is the right fit for your company.

Removing Gender Bias in the Financial Lending Industry

Women have been discriminated against in the business loan industry for as far back as one can remember. There are many reasons gender bias exists even though it would technically be illegal under fair lending laws to deny business financing based on one’s gender. Many private lending companies have been taking the first step in eradicating this type of lending behavior by offering merchant cash advances for female business owners. This article discusses why this stereotypical behavior exists and recent developments in the private lending sector that may change the way women are treated by financial institutions.

Most people today understand how difficult it is to establish proof that discrimination exists on any level. A recent study about gender bias in the lending industry was conducted by a group in Chicago and one major finding was uncovered through a series of interviews with women entrepreneurs. Many of these female business owners applied for a business loan and noted that although bias was not apparent they could sense it “primarily through loan officers’ comments and remarks”. The most common remarks were comments about family plans such as marriage, child bearing and subsequent child care, as well as other well known remarks related to gender that had nothing to do with the applicant’s business acumen or qualifications.

Now although any sensibly minded individual, man or women, could be easily offended by this type of behavior, the reality is there are some actual data that suggests women put family first. In a study done almost a year ago analyzing the priorities of female business owners the findings suggested that “Women are more willing to put work on the backburner for family”. For argument’s sake if we accept that women business owners do prioritize their families over business, it still does not warrant exclusion from receiving business financing.

Many business owners, whether they are a man or woman, have both plusses and minuses in the way they operate their companies. This article could go on forever extolling the positives women bring to business leadership such as they take less risk, they are better managers of finance as demonstrated in the home, and they are more communicative and personable, characteristics that make a business better. Yet there are dozens of studies that show how women have continually been denied access to capital in comparison to men. Well the merchant cash advance industry has taken an aggressive position on funding women in business and this can have dramatic effects on female business financing in the future.

The reason why business cash advance lenders do not discriminate when approving applicants is because this business loan alternative is based solely on the company as an applicant and not an individual. A merchant cash advance is an exchange where the lender provides an upfront payment or lump sump of capital against future account receivables for a fee. Merchant cash advance companies can even offer business loan options to individuals with bad credit because of the lending criteria. It is the flexibility in this financial product that has made it so attractive for women. Many of these providers allow the entire application process to occur online so there is almost no chance that women will be subjected to offensive remarks. Also, these lenders only focus on the business as an applicant so there is no concern with family priorities. It is all about financial performance and this is the way it should be.

If merchant cash advance companies continue funding women it is only a matter of time before banks and other lending institutions have to become more flexible in order to share in the economic pie. These business cash advances will also establish a track record of business loan payoffs that will make it even easier to judge an applicant on their financial merit and not gender status. There are increasing numbers of women entrepreneurs and with merchant cash advance companies as a source of business financing it is inevitable that more and more business loan opportunities will open up for women and gender bias will become a thing of the past.

Women in Business: A Dark Horse in the Coming Election

While more women in the work place are slowly making their way to the top, some women are deciding to follow a different path. As we move into the 21st century, more and more women are deciding to take their careers into their own hands by opening their own small businesses. This has become an important political platform as more female business owners will be looking for an administration that is favorable towards women in business, or in other words a Republican administration.

Mitt Romney addressed a group of women in Virginia the other day emphasizing how his administration would be the right vote for these businesswomen. Highlighting political plans for women in business would not only assist females as an overall group, it also has the potential to stimulate job growth. Addressing the concerns of this growing group that is likely educated and definite turnout voters is a smart angle for Romney to build voting capital.

Women in business statistics will show a very clear trend that has been developing over the last decade and a half. The number of women owning small business has grown significantly during the last decade. Between 1997 and 2007, women owned businesses increased by 44%. In fact, between 2002 and 2007, the number of women owned businesses increased by 20 percent while the number of male-owned businesses increased only by 5.4 percent.

Since the last election the number of women in business has continued to increase significantly. Today, female-owned businesses account for roughly three trillion dollars in total economic output and is expected to continue growing if you consider the huge growth in female students in college. Looking at these numbers, if the various trends continue it is likely to have a considerable impact on the coming election. If more women are going into business it is likely that if they are not registered republicans, they soon will be.

What is astonishing is that the White House and the current administration has lost sight of the importance of women in business. Last year when the administration released “Women in America: Indicators of Social and Economic Well-Being,” there was not a single word mentioned about women business owners in the entire 85-page document. This is a huge oversight that may have a serious implications in November.

The information here suggests that there is a dark horse group of voters that the current administration missed and Romney’s group seems to be taking full advantage of the misstep. Women business owners are going to have a significant impact on the coming election and it is likely to contribute to a much tighter race than many democrats and pundits believe.

Merchant Cash Advances Stimulate Job Growth

The economy continues to struggle and one of the main reasons for this is that banks continue to refuse small businesses access to capital. Small businesses in America are one of the biggest contributors to job growth; a small note inconspicuously pointed out by Chairman of the Federal Reserve Ben Bernanke. In a recent meeting the Chairman pointed out that, “the inability…to get credit to expand a small business is one of the reasons why job creation has been relatively slow.” The conundrum here is that many economists agree with this statistic yet banks are not willing to provide small business loans to individuals with less than perfect credit.

A solution that would certainly stimulate the job market and fuel the economy is informing small business owners about how to receive a merchant cash advance. This alternative business loan is offered by private lenders to businesses owners that suffer from bad credit. A merchant cash advance is an exchange where the owner of a business sells a small portion of their future sales and receives a bulk payment in advance of those receivables.

One of the main reasons that this type of business financing is not as popular as it should be is because the public is not aware the product exists. Most business owners are accustomed to the idea that you go to a bank for a business loan and if they deny you that’s it. However, the truth is that there are many private lenders willing to take a chance on small businesses and they are very flexible when it comes to bad credit applicants. Cash Advanced to businesses would be a sure way to contribute to their expansion and ultimately energize job growth.

Offering knowledge to the public about a merchant cash advance is one sure way to fuel the economy and job growth. If banks are not willing to fulfill their obligation to stimulate the economy there are many merchant cash advance companies willing to risk working capital on good companies. Informing the public about the existence of merchant cash advances is some good advice the Chairman should consider in his next meeting if he wants to help solve the problem of job creation.

Promoting Women Leadership in Business

Yesterday Business Leaders got together at Bentley University’s Center for Women to discuss the challenging task of advancing women in business. The Center hosts its annual forum where the overall theme is “Moving from Conversation to Action.” The core of the groups challenge is overcoming the disparity between men and women in leadership positions in the business sector. This article is an attempt to promote this type of gathering to foster more support for similar events as well as introduce ideas that should be generated at these types of gatherings.

The irony of this issue is that statistics have proven that women business leaders achieve better economic gains yet the opportunities for them to enter these positions are far and few in between. One of the problems with this type of forum is that it is intended to promote solutions to the obstacles women face by supporting women at the different stages of their careers. The disagreement here is that promoting career placement and support is different than promoting women leadership. Yes women do need this type of support, but getting to a leadership position is almost impossible or at best years and years in the making with no actual guarantee.

Qualified women need to get into a leadership position from the outset and get the support they need at the early leadership levels. For instance, providing more business loans for women is one way that would support female entrepreneurs that want to grab a leadership position by the horns. The global leaders who command these forums could not only give their support financially, but they can also offer continued support programs for women business leaders in the form of education, resources, and contracts specifically targeting these developing businesses.

Let’s face it, it is a good idea to talk about action in place of conversation, and promote support for women in their careers, but many women navigating through their career would surely be better off launching their own business rather than climbing the ladder where men are constantly blocking their path.

If past performance is indicative of future results women are going to be successful business leaders. With that said it would be a good investment for our overall economic stability as well as society if we provided business loans for women. Whether it is a new company starting up or it is additional capital as the company expands, these types of small business loans would be the best action global leaders can take. This is the kind of platform the group should focus on at the next meeting and I believe will lead to more women business owners and leaders.

Technological Influences on The Lending Industry

Technology and the Internet are changing the way lenders provide business loans today. It wasn’t too long ago that if you wanted a business loan you would have to walk down to your local bank and talk with an account representative about securing financing for your business. The process would often require a lot of paperwork and weeks of seeing your application bouncing from one desk to the next before a business loan could be approved. Your application had to be analyzed for risk, your industry had to be analyzed for risk, and finally you as a client had to be looked at from a risk perspective. All of this would take weeks before you could have an answer.

Well today technology has influenced the lending industry in a big way. According to some industry reports, in 2011 alone Merchant Cash Advance Companies advanced over 750 million to business owners and many believe that number is a lot higher but because of the private nature of these lending companies getting accurate statistics is difficult. The main reason why these companies are growing so significantly is because of how technology facilitates the loan process.

To begin the process, many of these private lenders allow you to apply online and the initial inquiry takes only about 2 minutes. Once you apply for a merchant cash advance the lenders who will underwrite the loan immediately begin analyzing your business to check for its creditworthiness. Many lenders will look at your Facebook page and many other social media and online portals to determine what kind of business you have. So even before you speak with an account manager they already have a very good idea about your business.

After their initial risk analysis a very brief conversation will take place between you and the lender about your business. The lender will require from you an email or fax with your monthly gross revenues and some banking details, and they will use one of many online providers to instantly obtain your credit history.  This whole process can be completed in about thirty minutes. You can be funded sometimes in as quickly as 24 hours from a signed contract.

Many business owners require immediate funding. Technology has allowed private lenders to complete the whole application process online sometimes in as quick as a few minutes. This type of access to capital will surely help small business owners and the overall economy and we owe it all to technology.

New Business Owners Need Additional Financing

A merchant cash advance is a great way for a new business to get the money they need to continue operating. Opening a small business takes a lot of hard work and investment money. Once the business is open, business is often slow at first, until the merchant begins to build an established customer base. This can present problems to business owners – you just spent thousands of dollars to open this business, you have no more money you can afford to invest in your business, and the business is not yet paying for itself. While this is a sticky situation, it should not spell the end of a new business. As mentioned, many times it takes a year or two before a business has the customer base it needs to stay strong. However, many lenders will not loan a business money unless it has already been open for one to two years. Despite this, there is still another option you can use to get cash for your business.

 Funding Your New Business

If your business has not been open long enough to qualify for a business loan, you may still qualify for a merchant cash advance. A merchant cash advance is similar to a payday loan, and will get your business cash as quickly as the next day. Most merchant cash advance lenders only require your business to have been open for a minimum of three months. This is especially great for new businesses that may not qualify for other types of financing. You can use this funding to finance anything that your business needs. This includes paying bills, buying new equipment, or covering the payroll of employees. Plus, you’ll be able to pay your advance back very quickly, often in a year or less. You won’t even have to deal with the hassle of making payments, since payments are automatically deducted from your credit card sales. A specified percentage of your card sales are deducted from your store’s income each month, until the advance and all associated fees or interest are paid off. This method of paying off your advance is very easy, plus it is not a pain to your pocketbook. Your store will still be bringing in more and more profit each month, even with the small percentage that the merchant advance office takes.

 Getting a Merchant Advance

In order to get started on the path to bringing your new business further success, contact an online merchant cash advance agency as soon as possible. Their websites are very informative, and will provide you with all the specifics about how their merchant cash advances work. Applying is very simple, you just need to fill out a short online application. Many times, this application can be completed in five minutes or less. Once you have submitted your application, you should learn if it was accepted or rejected within twenty four hours. Sometimes, you may even be able to get the money you requested into your hands on the very next day. Getting a merchant cash advance is one of the smartest decisions a new business owner can make for their company.

Understanding Bad Credit Business Loans

If you are looking to expand your business, you are likely to need a business loan to do so. In the same way that lenders look at the credit rating of an individual when lending money, so, too, do they examine the credit history, rating or score of a business. Because of the high rate of failure associated with businesses, it is difficult to be approved for a business line of credit before the business has established a successful track record and positive credit history. The worse the credit score of the business, the more it will cost to get a loan. If the business has particularly bad credit, it may not even be able to secure a loan.

Securing a business loan will be difficult for a business if its credit score is 650 or less. When a financial institution is evaluating a credit application from a business, it examines the business thoroughly. In addition to the amount of money a business borrows and how well it repays those loans, a lender will look at the size of the business determined by its total assets and number of employees. Unlike personal credit ratings, where all the credit reporting agencies use the same formula to generate a credit score, there is no designated standard for determining business creditworthiness. Each business credit reporting agency has its own evaluation system. There are currently seven credit reporting agencies that deal with business credit ratings: Experian, Transunion, Equifax, Dun and Bradstreet, Accruint, ClienChecker and Credit.net.

Bad credit is not uncommon in the business world. Many business owners soon learn that while an initial business start-up loan was available and helped them to start operating; funding for expansion, maintenance or growth requires an additional loan, which may be difficult or impossible to get. A business owner’s personal credit history may also damage the chance of the business being approved for a loan, since lenders generally look at a combination of both personal and business credit, when making their lending decisions. There are essentially three types of funding a business with bad credit may get:

Vendor Lines of Credit

Vendor lines of credit, or trade accounts, are the first type of credit that will be extended to a start-up business. The manufacturers and suppliers of the materials required to run a business or produce its products will often offer credit to a business, allowing the business to receive the goods it needs and pay for them at a later date. During the first few transactions, these manufacturers and suppliers/vendors are likely to offer very short credit terms. For example, they may specify that complete payment is due 15 days after the goods are delivered. This is known as “Net 15.” As the relationship between the suppliers and businesses strengthen and improve, so too may the credit terms, and payments may be extended to Net 30 or Net 60. These terms may be coupled with a credit incentive for early payment. Lines of credit are a good way for a business to start building a positive credit history. However, late payments or failure to pay will damage the business’ credit score.

Credit Cards

Business credit cards are often the second type of credit a business will try to obtain. Most credit card companies will request personal information about the business owner, such as his Social Security Number. This usually indicates that the credit card company will report negative credit history to personal credit rating agencies, instead of the business credit rating agencies. This means that the owner’s personal credit score could be negatively impacted. It is important to try and get a credit card from a company with a good reputation for extending credit to small businesses without requiring personal credit information. A secured business credit card is another option. Most banks offer secured business credit cards that are connected to business savings account. The business owner deposits money into the savings account, and the bank issues a business credit card with a limit that is equal to the funds deposited into the savings account. This kind of account is the perfect way to build a positive business credit history until a business owner can qualify for an unsecured credit card.

Informal Investors

Businesses with bad credit may have no other option than to seek loans from informal investors such as family and friends. These people may be willing to loan money based on their personal relationship with the business owner rather than the credit worthiness of the business. This can compromise personal relationships. Government programs, credit unions and some universities with research and development funds targeted at certain industries may also offer a loan to a business with bad credit history.

There are other options for funding an existing business such as a merchant cash advance or a business cash advance. These types of loan instruments are offered to business owners that even fall below a 500 FICO score. The loan or exchange is an upfront payment with repayment done via a portion of future generated sales. This type of business financing does not rely as much on credit as it does the business model and existing and projected gross revenues. It is often the only option business owners have to receive business financing, although it will come at a larger premium in comparison to traditional bank loans..

Whatever option you choose to pursue as a business owner, the bottom line is that building good credit takes time and it is always healthy for owners of a business. It is important to be objective and realistically evaluate your business plan on a regular basis so that you can maximize its potential for success. Listen to lenders – they have years of experience to share with you. If they are not prepared to give the business a loan because of its bad credit history, this should be a signal to you that your business is not operating as it needs to be.