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Business Credit Card – Startup Funding for Your New Business

Business Credit Card – Startup Funding for Your New Business

If you are an entrepreneur hoping to start a new business, a business credit card may be just the thing you need. Although business credit cards have been around for many years, they have only recently started to provide incentives that are truly enticing to those starting a new business. When business credit cards were first offered to the businessperson, they were geared more toward corporate executives. This is no longer true. Today, credit card companies realize the value of the small business owner.

Types of Business Credit Cards

With the push to draw in more cardholders, credit card companies are offering a vast array of business credit cards. For this reason, it is best to take the time to compare business credit cards in order to determine which one is best for your business. For example, you can get a business credit card offering airline miles, rewards, or cash back incentives. Even if you are a new business that is using your credit card to help get yourself started, you need to take the time to choose a card that is best for the long run. Applying for every business credit card you can find and hoping to get approved for one will reflect negatively on your credit report. In addition, you might end up with a credit card that is not right for your business.

Taking Advantage of Your Business Credit Card

After you have found the business credit card that works best for you, it is time to start taking full advantage of it and get your business off the ground. In fact, a business credit card can be a great way to start pumping money into your business and helping it grow. Quick and simple, a business credit card does not require going through a long loan application process at the bank. In addition, you don’t need to lie out a business plan in order to justify the loan. Instead, you are free to spend the money when you choose and how you choose, providing you with a greater amount of flexibility than a traditional loan.

After the initial set up of the business is complete, you can take complete advantage of your business credit card by paying off your business expenditures at the end of each billing cycle. This is particularly important if you have a business credit card with a high interest rate, which is common for cards with special rewards programs. If you think it might be awhile before you will gain enough revenue to pay off your loan through your business credit card right away, then you need to be sure to select one with a low APR.

Another option is find a business credit card with a great introductory APR. Some of these introductory APRs last as long as a year, while others may be just six months, three months, or one month. Sometimes, the length of this introductory offer is determined When you compare business credit cards, look for one that will provide you with an introductory period long enough to get you to the point when money starts rolling in rather than flowing out.

Growing With You

Many business credit cards do not have a preset credit limit. This can be an advantage to a small business that is just starting out because the amount you can charge on the card grows along with you. The more you spend and repay, the more leverage the credit card company will give you. This can be very handy because you do not have to wait for approval to increase your credit limit. In addition, some credit cards only allow for an increase once per year – this can be bad news for a business looking to expand. So, when you compare business credit cards, be sure to find one with plenty of spending room, or look for one that can grow as you grow.

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Which Financing Solution Is Right for Your Company’s Needs?

Approximately 2/3 of small businesses carry some sort of debt. If you are struggling to finance everything you need to perform your business, then you might be interested in small business capital loans. Companies with cyclical or seasonal revenue will often require more funding to stay positive during the off-season period. There are some businesses that require loans that can be used for everyday operations. Whatever your case may be, it’s important to choose the right lender.

What about insurance rates? They will vary considerably depending of you opt for conventional or alternative financing, as well as factors such as the duration of the loan, your credit score and history, and the age of your business. The nature of certain types of lending products, such as shorter terms (four months), such funding tends to come with higher rates. Rates on industrial / commercial bank loans have been consistently lower in recent years.

If you need working capital however, then small business capital loans from a good bank is probably your best option. It’s not just daily operations for which some companies require working capital. There are growth and expansion needs as well. Without sufficient funding coming in, it will be difficult for a small business to grow and expand.

Some banks are backed by the SBA, although the SBA itself doesn’t offer small-business loans. The 7(a) loan program offered by the SBA allows qualified businesses to borrow working capital of up to $5 million. Online lenders are ideal to look into if you need fast approvals and funds. This is because they use AI and machine learning technology to assist in the approval process.

There might be some loans that are more tailored to your needs better than a general working capital loan. For example, you could try and apply for a new franchise loan if you are interested in franchise financing. Or you could look into inventory and equipment loans.

No matter what you’re looking for, there are various small business capital loans options at US Business Funding. The application and approval processes are very fast, and there is a very high approval rate.

 

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Why Didn’t I Get Approved?

There are several factors that typically are considered when a credit team is reviewing a business profile to issue a decline or approve decision for financing equipment or providing working capital. There is some flexibility among lenders when considering the different factors but there is a common base that many work from. The lenders with stricter and tighter guidelines are normally the ones offering the lowest rates so they have a narrower risk profile for each decision. The more flexible lenders, which means the ones able to work with higher risk clients, have higher rates; they win some, lose some (client defaults) but are able to maintain their return-on-investment profit margin.

Following are the basic factors to be aware of so you know where you fall and if there are too many red flags then you can decide not to apply for financing and go a different direction. Learning and preparing in advance will help you understand the process so at the end of the day you don’t throw up your hands and say, “Why didn’t I get approved?” These are only general guidelines and exceptions can be made but somehow they will always have to minimize the risk to the lender.

Factor 1: Time in business. This is the easiest to verify since the secretary of state where you live will have the registered business file; you should check and make sure you are in good standing and active. Less than two years puts you in the ‘start-up’ business category which means rates will be higher and the amount you can finance will be capped at $30K, $50K or $100K depending on the other factors. Two to five years in business is the medium range and still requires the owner’s personal guaranty and over five years in business is the ‘established’ category and can get approved without an owner’s guaranty with borrowing amounts only limited by the business’s performance.

Factor 2: Personal credit. For businesses which have to personally guaranty, the owner’s credit score is very important; particularly the younger the business is. Poor, damaged or low scores indicate how the owner might operate his/her business and is a strong indicator of success or failure and potential default. If your credit has issues, a credit repair service should be the first step before applying for any financing. Most credit repair takes at least three to six months.

Factor 3: Cash flow. Bank balances in your business account, personal account, and savings have to be adequate to pay for the new debt along with enough cushion for emergencies. If you deposit $1000 and spend $1000 then there are no reserves for emergencies or new debt even if the new equipment will make you lots of money. Underwriters are looking for cash influx and reserves that can cover business slowdowns, emergencies, etc. The amount needed will depend on the amount you want to finance.

Factor 4: Comparable borrowing experience. Credit looks to see what you have financed in the past; for newer businesses your personal borrowing will come into play. Car loans, home loans, credit cards and similar will be important to see how those have been managed. As a business gets older you will want to make sure you finance even small pieces of equipment and take out business credit cards to help establish business credit history. Some vendors offer financing for small tools and, even if you can pay cash, you should finance it to help build your profile. In the long run comparable credit becomes very important and for many lenders a necessity.

Factor 5: Business credit. Dun & Bradstreet and Paydex are common bureaus underwriters use to review business history. Judgements, liens, pending lawsuits and slow pay history is revealed in these reports. You should request a copy and work to rectify any issues and if a settlement is in the works then a letter validating that should be on file. Credit will always consider a good story to support any issues as long as you have strong documentation. Open liens should be worked on and settled since very few lenders will approve any business with open liens.

There are many other factors a credit analyst will consider but these five are the backbone of most credit decisions. You don’t have to be optimal in all five to get approved but at least two of the five have to be strong. If not, some lenders will allow a family member to co-sign as a guarantor on the loan which normally is a last resort for business owners. A co-signor might allow you to get approved but you still will fall in a higher risk, higher rate category. Overall, you should evaluate where you rate, fix what you can and if you decide to move forward in applying for financing at least you will be better prepared for the outcome.

No matter what you’re looking for, there are various small business capital loans options at US Business Funding. The application and approval processes are very fast, and there is a very high approval rate.

 

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How to Apply for a Small Business Loan?

In order to get your business off the ground, or to continue operating, you must be able to obtain the financing you need. It’s not easy to get that money – especially if you lack business experience and don’t have a very good credit score. There are things you can do to increase your chances of getting approved. Here are a few tips on how to apply for a small business loan:

• Write a detailed business plan that explains why exactly you need the funding, how you’re planning to spend the money, and what you are going to do in order to pay it back. The last part is especially important, as you must demonstrate that you will be capable of gaining profits, and that through those profits you’ll be able to repay the lender with interest.

• Research the different types of loans and determine which would be the best one for you to send the application to. The SBA loans are backed by the US Small Business Administration, but they typically have strict eligibility requirements. There are term loans that are offered by financial institutions such as credit unions and banks, and can range from short-term to long-term solutions. Other options include lines of credit, merchant cash advance, microloans, crowdfunding, etc.

• At some point when you learn how to apply for a small business loan you should take the time to review your credit history and score. If your business has been around for less than three years, you probably won’t have much of a business credit history. You might have to use your personal credit history, and if it isn’t very good, you might have some problems getting approved. Review the credit reports and consider working with a credit repair agency that will help you remove any potential errors and clear some issues up.

More Tips About How to Apply for a Small Business Loan

• Compare different offers and terms. Pick at least 3 lenders that seem to offer the ideal terms and conditions for you. If you don’t take the time to review multiple options, you might miss out on a lower interest rate. Don’t apply for TOO many loans, however, since it could hurt your credit score.

• Read reviews about each lender you are considering to see what other businesses of similar size of yours are saying about them. Which lender seems to have a good rating with companies in your industry? Which ones are in solid financial standing?

Now that you know how to apply for a small business loan, start getting all of your credit info and reports ready, and create a good business plan.

Looking for business loans, call EJ Joier @ 248-943-3040.

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How to Apply for a Business Loan

Are you interested in learning how to apply for a business loan? It’s a process you’re going to have to go through if you want to start a business, or have a business and aware of the fact that you will need additional funding at some point. If you are concerned that you might not be able to obtain the funding that you need, here are some tips to help you better understand the process and increase your chances of getting approved.

• Always have a strategic approach to borrowing so that you will be “less reactionary” in the future. Anticipate your needs and keep in mind that an unexpected emergency could always happen.

• You’ll be expected to demonstrate how, precisely, you will be using the funds. The more specific you can be to lenders, the better. Don’t just ask for $10,000 in working capital. Request $4,000 for inventory, $3500 for new hires, and so forth. The creditor will be more confident in your planning skills and your understanding of how funds should be deployed. Be sure and explain how the loan will benefit your business and how it fits in with your plans for growth.

• Consider what kind of lender will be right for your company’s needs. A traditional loan through a bank or similar financial institution might not be the best option for you. There are angel investors, crowdfunding options, online lenders, etc. Whichever route you decide to take you must always be upfront and honest about everything when filling out the loan. You must get the details about each lender’s requirements and how to apply for a business loan with them specifically.

More Tips About How to Apply for a Business Loan

• Determine if you’ll be required to secure a loan with collateral. You’ll probably have to do this if you lack a good, solid business credit history. Carefully select what kind of collateral you will have to put up. Decide if the loan will really be worth applying for and if you absolutely need the money to the point where it will be worth it to put up the collateral. Take every precaution necessary to ensure that you will not go into default.

• It’s difficult to believe, but many business owners can’t properly articulate a lot about their industries, or even know much about their competitors. Part of knowing how to apply for a business loan is being able to communicate and develop talking points about your company’s operations, cycles, financial status, industry trends, and competition. You must demonstrate that you are able to keep up with all of the changes and instills confidence in potential lenders that you really know what you are doing. 

These are just a few things you need to understand and do in order to increase your chances of getting approved. To learn more about how to apply for a business loan, it’s worthwhile to consult our funding manager, EJ Joier at 248-943-3040.

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What Are Your Options for Financing As a New Business Owner?

It’s not easy at all for new businesses to get all of the funding they need. Even if you have excellent personal credit, you still might have trouble obtaining all of the business money you need. The good news is that there are a variety of options available these days, including online banks and crowdfunding. Just take the time to research all of the new small business loans and determine which ones you should try going for.

Microloans might be worth looking into as well. There are SBA microloans, which are typically available up to $50,000, as well as non-profit organizations that offer micro-lending options for up to $35,000.

Before applying to any kind of loan, there are a few factors you must consider about your own finances. In addition to your own credit report, you need proof that you will be able to repay the loan. Make sure you communicate any experience and expertise you have that will be directly applied to the business you are trying to establish.

You’ve probably come to the realization that new small business loans don’t come with the lowest interest rates. If you’ve been in business for less than two years, you will have a more difficult time qualifying for a big loan with a low interest rate. If your credit isn’t the best, you might have to put up some collateral and get a secured loan.

New Small Business Loans for Equipment

If it’s primarily equipment you need, then go for an equipment financial loan. This type of loan is specifically designed to help organizations pay for the equipment and machinery they need for getting started. They are similar in structure to a traditional loan, although the repayment terms can be for a longer period of time. Keep in mind that the proceeds can ONLY be used to purchase the machinery / equipment you need. The downside to an equipment loan, obviously, is that if you default, the lender has the right seize that equipment.

While some entrepreneurs actually take out a personal loan to fund their startup, this might not be the best idea considering that if the business should fail, you and you alone will be responsible for it. Not only will the business fail, but your own personal credit will be destroyed.

Your best bet is to look for new small business loans with online lenders. There are many options available, such as vendor programs, equipment leasing and financing, working capital, and so forth. The approval rate is very high, and you can get started right away.