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No products or services are offered or sold on this non-profit educational informational resource Editorials, opinions and articles are not a solicitation or an offer to sell, refer or arrange financing. Features in this publication do not promote or sell products, goods or services. - not a mortgage broker, finance broker or finance lender -    SmallBusinessReports.org does not receive sales commissions or referral fees.    82%       Eighty-two percent of small businesses are planning for growth —with 35% saying they will borrow up to $300,000 to expand. Yet, traditional banks reject 50-75% of loan requests from small business owners who often spend 33 hours searching, applying and paying excessive rates and needless fees.          Business owners ARE quickly getting the money they need —just not from conventional or local bank branches.        Non-bank alternative capital sources recently funded over $9.0 Billion to 250,000+ small businesses including medical & dental and elective aesthetic practices, medical devices providers, home improvement companies, veterinarian practices & animal hospitals, automotive services ...                                       Small Business Administration (SBA) 7(a) online loans                                    Business owners spend 33 hours searching online and applying for loans because traditional banks turn down two thirds of their applications.  They pay higher rates and needless fees when they do not find the right lender for their unique business. click link Why you need a business Business Finance Agency   POST-ELECTION SMALL BUSINESS OPTIMISM SUSTAINED IN JANUARY Small business optimism rose again in January to its highest level since December 2004, suggesting that the post-election surge has staying power, according to the monthly National Federation of Independent Business (NFIB) Index of Small Business Optimism, released today. “The stunning climb in optimism after the election was significantly improved in December and confirmed in January,” said NFIB President and CEO Juanita Duggan. “Small business owners like what they see so far from Washington.”  The Index reached 105.9 in January, an increase of 0.1 points. The uptick follows the largest month-over-month increase in the survey’s history. Five of the Index components increased and five decreased, but many held near their record high. “The continued surge in optimism is a welcome sign that economic growth is coming, said NFIB Chief Economist Bill Dunkelberg. “The very positive expectations that we see in our data have already begun translating into borrowing, hiring and spending in the small business sector.”   Small Business Owners Are Highly Optimistic      A large percentage of American small business owners are optimistic for growth in 2017 with some important investments in their businesses, including borrowing and hiring, according to a New York Life survey of more than 1,200 small business owners fielded recently by Ipsos Public Affairs.      “Small business owners are heading into 2017 with good feelings, and this was consistent across size and years in business,” said Brian Madgett, Vice President, New York Life.      “Small business owners have big plans for 2017, with many looking to incorporate tech, seek capital, hire, improve offerings to employees and explore ways to better manage their money,” said Madgett.       “We’re hearing positive economic sentiments across the country in our conversations with small business leaders. With this shift in attitude comes a renewed interest in financial planning and is no wonder that 55 percent report they plan to engage a financial professional for assistance as it relates to their business needs in 2017.” Small Business Owners Are Building Their Companies in 2017:           Plan to incorporate mobile technology in my business       66% Plan to network more with other business owners and/or professionals       64% Plan to grow my company-  open another location, increase revenues, expand capabilities, etc.       62% Plan to seek additional capital       55% Plan to hire more employees       52% Plan to improve my employee benefits package       49% Plan to take out a loan       46% SOURCE: New York Life / Ipsos Public Affairs     Small business owners are the most optimistic they have been since January 2008 "The latest overall Index score tells us that business owners are feeling positive about the future and have a renewed sense of confidence as they look to the year ahead," said Mark Vitner, Managing Director and Senior Economist for Wells Fargo Securities. "Not only do small business owners report that the operating environment for their businesses will be better in 2017 than it was in 2016, but business owners are anticipating growth for their businesses in the new year as more plan to increase their capital spending, add staff and apply for credit." The increase in small business optimism was largely driven by business owners' expectations that their finances will improve in 2017.  Key drivers of this quarter's Index score included: Revenue – More than half (58 percent) expect their business's revenue to increase a little or a lot in the next 12 months, up from 48 percent in July. Stronger cash flow – Seventy percent believe their cash flow will be somewhat or very good in the next 12 months, up from 65 percent in July. Capital spending – Thirty-five percent say they plan to increase their capital spending a lot or a little, up from 25 percent in July. Hiring – Thirty-six percent expect the number of jobs at their company to increase a little or a lot over the next 12 months, up from 21 percent in July. This is the highest reading in the 13-year history of the survey.  SOURCE:  Wells Fargo/Gallup Small Business Index          Eighty-two percent of small businesses are planning for growth —with 35% saying they will borrow up to $350,000 to expand now.        Business owners spend 30+ hours searching online and applying for loans because their banks decline two thirds of their applications.   They pay higher rates and needless fees when they do not find the right source of funding for their unique business. Businesses replace old customer financing… because of turn-downs & fees      If you use an old company for customer financing, their outdated systems and service can slow you down and cost you money if they are not keeping up with the smart new digital financial tech platforms with one application, any device, deep FICO Prime, Near Prime and Sub Prime for more approvals, 100% online, competitive low rates, zero risk and no fees. Small Business Demand for Capital Hits Four-Year High Thirty-five percent of small businesses are planning to raise capital in the next six months. Sixty-five percent of small businesses cited growth or expansion as the reason for seeking capital. Working capital fluctuations and increased demand rounded out the top three reasons for raising capital.  Small business owners plan to seek capital to fuel growth within the next few months, and that demand for capital may indicate growth in the small business sector in 2017. Bank loan success rates reached an all time low for small businesses and the success rate between small and mid-sized businesses (between $5 – 10M in revenue) reached its largest gap since the study began in 2012.  Only 29 percent of small businesses successfully secured a bank loan. This low success rate for small businesses may reflect bank skittishness over businesses with fewer collateral assets. This could account for why a large percent of small businesses were seeking capital from friends and family (46 percent) in the last quarter. Unfortunately, business owners are spending 33 hours searching and applying online for financing, but many are are not getting the right loan for their business because they did not find the best lender for their business' specific needs, and it is costing them higher rates and needless fees. SOURCE:   Graziadio School of Business and Management at Pepperdine University with support from Dun & Bradstreet      A survey of more than 1,000 small-business owners found that 82 percent of small-business owners are planning for growth in 2017 – a strong sign for overall economic health heading into a new year. Broadly, respondents are planning the following for 2017: 58 percent: buying new equipment or furniture; 34 percent: selling a new product; 33 percent: hiring an employee; 30 percent: offering a new service; 23 percent: moving to a new location.      Yet, fully 80 percent say access to financing is their main hurdle to staying competitive.                        SOURCE:  Insureon Small Business Outlook       Small business owners are getting the financing they need, but not from traditional sources.  This is a welcome development compared to recent years when conventional banks, credit cards or unregulated merchant cash advances were the only choices for small business financing. What's your strategy?   "With innovative finance strategies to keep your business growing, you can focus on running the company   ~ not searching for capital."   example only No products or services are sold on this educational informational resource EXAMPLES ONLY   EXAMPLE ONLY - Rate determined by revenue strength, growth, years of ownership, etc. No products or services are offered or sold on this non-profit educational informational resource Editorials, opinions and articles are not a solicitation or an offer to sell, refer or arrange financing. Features in this publication do not promote or sell products, goods or services. - not a mortgage broker, finance broker or finance lender -    SmallBusinessReports.org does not receive sales commissions or referral fees.      Small businesses succeed with quick online lending      Tech-driven online funding makes it simple and easy for small business owners to quickly access the right capital for their unique business so they can smooth out their cash flow and invest in the business.  Online business funding is based primarily on revenue strength and growth, so it is easy for most small businesses to qualify for working capital.      However, too many business owners typically are spending 33 hours searching, applying and trying to make sense of all the new online funding. often without success.

What could you do with the right funding?

business capital based on revenue strength & growth

Inventory / Equipment

Expansion / Growth

Advertising / Marketing

Emergencies / Seasonal

Working Capital

Bills / Taxes

Pay off Cash Advances

see article below
ROI  5X RETURN

Fifty eight percent (58%) of small businesses plan to obtain financing this year 2016, higher than the 52 percent of 2015. The top reasons for using the proceeds – for those considering loans of $100K or less – are:

• Buying and repairing equipment (19 percent);
• Purchasing inventory (18 percent);
• Expansions (15 percent);
• Software and technology (15 percent).

SOURCE:  CHASE Business Leaders Outlook Survey 

Eighty one (81) percent  of small business owners say they need working capital, but over half of those (63%) are too time starved to apply for a loan, or they don't believe they would be approved because banks turn down roughly 70% of small business loan applications, especially requests for under $500,000. 

SOURCE:  CITI RESEARCH 

Quick Decisions.  Quick Funding.
business capital based on revenue strength and growth

Short term capital makes it quick and easy for small business owners to access the money they need to smooth out cash flow and invest in the business.

Working Capital

Nobody faces more challenges on a daily basis than business owners. In fact, for owners of small businesses, handling so many different challenges is the source of great satisfaction — and some headaches, too.

But when business owners are asked to name their greatest challenge, one thing tends to top the list most often: accessing working capital to manage cash flow. In other words, making sure there is enough capital flowing in to cover everything that needs to flow out.

There are a variety of reasons why cash flow can be a steep challenge for small business owners. Needs can precede revenue. Or perhaps you’re getting paid more slowly than you’d like. Or if you’re a seasonal business — a garden center, for example, or specialize in hardy, cold-weather clothing — and you have peak sales months and require that revenue to stretch across your off-season months.

Often, business owners can optimize cash flow by negotiating longer payment cycles with creditors and encouraging debtors to pay in shorter time periods. But there are other solutions that can help you sail through the lean months with plenty of working capital on hand:  short-term business funding.

You can put small business funding to work immediately for your business, whether it means meeting payroll for a few months, negotiating a great deal on inventory for paying in cash or hiring and training those new employees you need. Our business financing solutions for working capital can help you operate without missing a beat or even take advantage of an unexpected or one-time business opportunity.

And then there are those costs that no business owner sees coming: The sudden need to replace an important piece of equipment or the need to upgrade technology to improve efficiency and save money in the long run. Repairs, sprucing up the exterior, landscaping, even marketing and advertising can all be critical elements to your brand and your ability to growth the business. In today’s super-competitive environment, this is no time to skimp, especially when applying for business funding. Working capital can be just a few clicks away

Inventory Financing

As any business owner who is managing inventory will tell you, it can be more complicated than taking items off the shelves and selling them to customers.

The central issue is that inventory is purchased with your business’s cash, either upfront or over a period of time, as your items are sold. What this means is that, as inventory sits on shelves waiting to be sold, the business’s cash is tied up, not working in other ways for the business. Most small and medium-size businesses are constantly watching their cash flow and often don’t have the luxury of tying up their cash in inventory. They need to keep their capital reserves and business lines of credit available for other things.

But there are sound business reasons, depending on the situation, for purchasing large amounts of inventory, like stocking up during an off-season. And getting inventory financing means you won’t have to tie up your cash to do it.

Inventory Financing as a Multi-Purpose Solution

Getting small business capital to purchase inventory makes good sense for all kinds of businesses, in a variety of situations. A few of the most common uses for inventory business funding include:

• Seasonal: Many businesses have peak months of the year when they make most of their income. But, the cash generated during this time may not stretch through off-season months, even though this is the best time to buy your inventory for next year.

• Pre-holiday or special event: While retail businesses generally don’t want excess inventory sitting around, in the months leading up to Christmas or back-to-school shopping, for example, having more inventory than usual can translate into more sales. But you have to have the working capital to purchase large quantities.

• New product rollout: If you’re offering a hot new product that research tells you is going to be a hit, you’ve got to have plenty of inventory on-hand to meet the demand. But stocking up that much inventory is expensive, and you’re not sure you can swing it.

• Competitive move: Let’s say your competitors are going to offer a new product, or you’ve heard that they are. Having it first, or even offering something better, can trump the competition and generate some impressive sales at the same time. But you’ve got to act quickly—where will you get the cash?

Use Business Inventory Funding to Purchase at Lower Costs

Generating more sales and leveraging a competitive challenge are excellent reasons for purchasing inventory in bigger quantities and at different times than you normally would. But there are other dollars-and-cents advantages to business inventory funding. Inventory financing frees you from the constraints of your business’s cash flow, allowing you to make the most efficient and cost-effective inventory purchasing decisions.

• Purchasing volume discounts: Vendors are usually happy to offer discounts when you purchase inventory in large volumes.

• Off-season discounts: Taking inventory off your vendors’ hands in off-season months saves them money, too. Often, they’ll pass that savings on to you.

• Time-sensitive opportunities: Business owners are sometimes presented with unannounced promotions or even vendor liquidation sales. If you have an opportunity to purchase inventory for pennies on the dollar from a vendor that is going out of business, then it’s in your best interest to act quickly to do so.

• More favorable terms: Paying upfront, instead of over time, is a huge boost to your vendors’ cash flow and reduces their carrying costs. It also puts you in a strong position to negotiate the best terms for your business, rather than having to accept terms handed to you.

Considering increased sales, purchasing discounts and more favorable terms, getting short-term business funding to finance your inventory purchases can be a very profitable business decisions.

Business Equipment Financing

For small and medium-sized businesses, growth depends on having the tools to work in the most efficient and productive ways possible. But having the right equipment and keeping it current can really take a bite out of your cash flow.

The answer? Getting equipment financing for your business can be a sound investment in your future. And the additional revenue you generate, not to mention the money you save on repairs and maintenance, can more than pay for the cost of business equipment funding.

Equipment Leasing vs. Purchasing Equipment

You’ve probably heard that equipment leasing is the way to go to prevent your equipment from becoming obsolete. But lets take a closer look. Equipment leases are generally longer term, and it can be costly to get out of them early. And because your lessor wants you to roll over your equipment lease into a new one, it’s tough to comparison shop and make sure you’re getting the best deal.

Depending on your situation and the type of equipment you need, buying may be your best option. You can choose between purchasing new or used equipment. You can build some equity in the equipment. You can sell it on your timetable and not have to wait for the end of a lease. You can shop vendors and equipment, and as a small business, may even consider joining a purchasing group to extend your buying power.

Save on Equipment by Paying in Cash

As with inventory, there are some sound financial reasons for getting short-term business funding to purchase equipment and pay in cash. These include:

• Being able to negotiate a better price

• Having full ownership, building equity

• Being able to upgrade quickly

• You may qualify for tax deductions

• Having vendors compete for your cash purchase

• Not being locked into a long-term lease

• Being able to sell the equipment when you decide

• Being able to choose from new and used equipment

Business Equipment Funding

More and more businesses are turning to equipment funding options like the short-term business capital to purchase the equipment they need. Equipment can be virtually anything required for business purposes, including:

• Machinery and other manufacturing or industrial equipment

• Furniture and fixtures

• Vehicles

• Technology

Many businesses require frequent equipment upgrades—impossible to do if you’re leasing your equipment. And given new developments on the horizon nearly every week, it’s difficult to continue dipping into cash reserves or lines of credit to purchase equipment. But especially when you consider the revenue this equipment will help generate, business equipment funding can be the perfect solution.

Business Expansion Capital

With each new customer, piece of inventory and sale, your business is growing and expanding—and it’s all good. But growth can be overwhelming if one day you realize you’re desperate for more help, are falling behind and can’t seem to catch up. Where do you go from here?

Financing for Expansion and Remodeling

Once you’re ready to expand, it is key to put a plan and resources in place to handle the controlled growth of your business. Don’t ignore the signs that you’re on the verge of significant growth.

One of the biggest mistakes business owners make is waiting too long to remodel or expand their business to accommodate their growth. They may be waiting until they hit a certain milestone or accumulate a certain amount of working capital. By then it may be too late, with growth making heavy demands that the business can’t meet. And the business may be irreparably harmed by failing to deliver.

Instead, financing expansion or remodeling can keep you from falling into the growth trap. Getting business expansion capital enables you to put the tools in place for handling additional business before it happens. Not only can you better manage your business’s growth, but having the capital on-hand can also propel more growth.

How Do You Know When To Expand?

Don’t ignore the signs, even subtle ones, that your business growth is beginning to control you, not vice versa. A few of the most common ones:

• Staff shortages

• Inventory gaps

• Unfilled orders

• Untapped markets

• Competitors pulling ahead

• Rapidly changing industry

The Signs Are There – Now What?

Start building your growth plan by figuring out exactly what you need in the way of additional resources to manage and leverage your growth. There are so many different ways to expand, from remodeling your current facilities to adding a new location. Being specific will enable you to focus on the areas which will yield the most results for your business.

It’s important that you establish the relationship between capital and results. Once you’ve identified the areas of greatest growth potential and what you’re going to need to leverage them, you can begin to quantify the amount of business financing you’ll need and how those funds will contribute to the results you expect. For example: To expand your warehouse and inventory, you may need $300,000. But you’ve also calculated that this investment will net you well over $500,000 in the next two years. Is it worth it? You bet.

Financing Your Growth with Business Expansion Funding

Small business capital can be used to fund new avenues of business growth or enable you to add critical resources to your existing operation to better manage your growth. Here are some ways additional capital can help your growing business:

• Adding staff, especially those with specialized or technical skills

• Expand your online presence and offerings

• Expand/remodel your physical location

• Add new equipment or technology

• Add a new location(s)

• Franchise your business

• Roll out new products/services

• Expand into a new market(s)

• Create partnerships with other businesses

• Acquire another business

• Diversify into new businesses or markets

Don’t let business growth get the better of you. Pay attention to the signs and have a plan for managing your growth. 

Financing For Marketing and Advertising

For small businesses, the need for the right marketing or advertising mix has never been greater. The competitive landscape is increasingly intense. Customers are more demanding and less brand-loyal. Your brand promises and values must be articulated (and delivered on) in a continuing and consistent fashion.

Marketing and advertising can connect all these dots but it requires clear objectives, a sound strategy and follow-through with tactics and execution. Also, some research on the front-end and measurement on the back-end. And, oh yes, probably some trial-and-error along the way.

Getting marketing right takes capital. And while there are many low-cost avenues for effective marketing such as social media channels, putting all the necessary pieces in place will likely involve some cost. And in today’s environment, marketing and advertising are not areas where small businesses should economize unnecessarily.

Smart Marketing and ROI

More than ever, a smart and effective marketing strategy means being able to calculate your return on investment (ROI) upfront. And the path to ROI involves testing. Before you commit to a long-term approach or major expenditure, try it first on a smaller scale, whether with a small group of customers or in a limited way in the marketplace. Use the feedback to tweak as necessary and scale up from there. And continue to measure ROI as you go.

Capital for Marketing and Advertising

As the saying goes, sometimes you have to spend money to make money. Depending on your business, your competitors and your objectives, the right marketing and advertising mix for your business may require some upfront spending. Make sure you’ve got a robust online presence and that you’re using at least a couple of social media channels. But you might also need a mobile app. And don’t neglect more traditional forms of media like radio or outdoor advertising.

As with things like inventory or equipment, there are sound business reasons for getting small business capital for marketing and advertising expenses.

• More concentrated spending upfront may be necessary for hitting your projected ROI

• You may be able to negotiate better prices

• You can acquire customers more quickly

• You can roll out new products or services with a bang

• You can invest in some quality research

• You can differentiate your business from competitors more effectively

• You can hire an expert or agency for a major marketing campaign

• You won’t need to tie up your cash reserves

Marketing and advertising are a key component to small business growth. 

No products or services are offered or sold on this non-profit educational informational resource

A recent survey of 592 small business owners sponsored by the Electronic Transactions Association (ETA) and conducted by Edelman Intelligence revealed that most business owners anticipate a 5X return for every dollar they borrow. 

The most common reasons for seeking business funding were to purchase equipment (54 percent) or to purchase inventory (51 percent).

Identifying the purpose of your funding will help you identify the term of the capital that makes the most sense to meet your needs. As a general rule, the shorter the term the higher the periodic payment, but the lower the total dollar cost. Longer-terms typically have a lower periodic payment, but the total dollar cost of accrued interest, or total cost of the capital, will be higher (this is often true even if the APR for the shorter-term is higher than the long-term loan).

You might be surprised to know that 57 percent of the small business owners in the survey chose a shorter-term (six-month) to minimize the total interest cost when compared to a longer-term.  

How much money am I looking for? This is a straightforward question. Unfortunately, popular culture has many business owners convinced that a lot of money will solve all their problems. When we have occasion to ask a borrower how much they’re looking for and the reply is, “As much as I can get,” we cringe. This answer tells a potential lender that you haven’t really thought through your purpose. Your purpose should drive the answer to this question.

We disagree with the idea that you should borrow as much as you can at any opportunity you have because you never know when you won’t be able to borrow again. There are costs associated with borrowing that should be thoughtfully considered every time you seek borrowed funds. In fairness, We look at this process from a very conservative point of view. In our opinion, if the borrowed funds will drive increased returns on investments (“ROI”) or add value to the business, small business funding could make a lot of sense. In other words, know precisely what is required to fulfill your business need, but no more.

96 percent of the ETA survey respondents say the capital they secured enabled them to drive business growth. In our opinion, a purpose that will generate a positive ROI or growth of some kind is a good reason to consider small business funding.  

Determining the amount of money you need can also help you determine which lender to approach. Over the last several years many traditional lenders have moved upstream, looking for bigger businesses and bigger loans. Banks, for example, would rather lend $500,000 or $1 million than $50,000. It’s hard to blame them; they both carry about the same administrative and regulatory costs associated with underwriting the loan.

Fortunately, technology-driven funders specialize in capital amounts which are specifically geared towards small businesses. According to the ETA survey, the average funding amount for online business capital was $25,000. And the average number of times those business owners had borrowed over the past five years was three.  

No products or services are offered or sold on this non-profit educational informational resource

Of those planning to take out funding, 61 percent plan to get less than $100,000. Karla Pankow, who runs a farm enterprise called Bossy Acres in northern Minnesota, as well as an agricultural business consulting firm, said she sees financing at that level as a crucial component of small-business operations.

"Without strategic capital, we wouldn't be able to grow in meaningful ways," says Pankow. "Whether that means purchasing more technology, repairing equipment or expanding into new markets, this smaller-scale funding help us to achieve our aims."

No products or services are offered or sold on this non-profit educational informational resource

see below -- "Four Types of Small Business Financing"  

The problem is that getting loans from banks has gotten harder for small businesses, which tend to fall between the cracks at the nation's biggest banks. Consumer loans such as mortgages and credit cards benefit from a standardized and streamlined origination process. Loans to big businesses offer economies of scale, which offset the individualized attention that's needed to analyze a business' creditworthiness. But loans to small business offer neither of these advantages.

Banks have thus begun to step back from the market segment. According to Community Reinvestment Act data, loans for less than $1 million are 34.9% below their pre-crisis level. That equates to a $115 billion drop since 2007.

Today, the Small Business Administration (SBA) supports half as many small businesses, a decline of over 40,000, and two-thirds as many jobs, as it did prior to the recession. Instead of making small loans to small businesses, the fastest growing SBA loan segment has been for loans over $2 million—growing 91% since 2012. Now, nearly a third of the SBA's annual lending authority goes toward supporting these large loans, ostensibly at the expense of smaller dollar lending.

The solution to this problem lies in technology driven lenders with fast, competitive business loans for millions of American small businesses that the banks have left behind.

SOURCE:  CHASE Business Leaders Outlook Survey

SOURCE: Electronic Transactions Association  

Key findings:

• 96 Percent of respondents said the funding they secured enabled them to invest in business growth. 
  
• 91 percent of respondents were likely to take out capital again from a technology driven funder.
  
• 99 percent of respondents expressed overall satisfaction with their funding experience.
  

The survey also indicated that the majority of small business owners look to minimize total capital cost when facing a short-term Return on Investment Opportunity. 

Fifty-seven percent (57%) of respondents chose a 6 month term with a higher APR over a 9 month term with a lower APR to minimize total interest and fees. 

The Survey Criteria Data is based on 592 Small Business Organizations surveyed by Edelman Intelligence 2016

"We are seeing too many small businesses severely impairing their balance sheet by going online to unregulated merchant cash advance dealers."

If your small business is relying on conventional sources for consumer financing or unregulated merchant cash advances for working capital, you are probably paying more than you should. 

In fact, many traditional sources of business lending and conventional consumer funding have not updated their technology for years, or even decades. 

Small businesses succeed with quick access to capital

     However, business owners typically are spending 33 hours searching, applying and trying to make sense of all the new business lending. often without success.

No products or services are offered or sold on this non-profit educational informational resource

business capital based on revenue strength & growth

see below -- "Three Key Ideas to Consider"

 The new applications are easier -- on any device. Approval decisions are quicker usually within hours if not immediate, and funding is faster usually within one or two days via direct deposit - or same day. 

Small business owners -- now for the first time -- have convenient easy access to quick short-term money to cover ordinary expenses, seasonal fluctuations, taxes, unexpected emergencies or sudden opportunities.

Technology-powered lenders use innovative and proprietary risk models combined with daily performance data to evaluate business performance and facilitate access to capital for small businesses in a fast and efficient way.

What could you do with the money?

Fast application and efficient approval processes mean it is easier for businesses and consumers to qualify for the financing they need.  

And more customers are approved for larger amounts at the time of the purchase or transaction. 

Quick underwriting for small business funding goes well beyond the owner's credit score to look at the business' cash flow, bank accounts, payment card processing, tax returns, other credit history and factors using proprietary algorithms to produce reliable funding decisions within hours, even with various credit issues.

Today's small business owners can select a finance provider, choose a funding application process that meets their needs, and specify a flexible repayment schedule.

It is a welcome development for time-strapped small business owners, particularly those who run demanding operations such as medical & dental offices, home improvement businesses, automotive services, restaurants, retail stores, beauty shops, nail salons and spas. New types of funding are helping to meet their needs with smart, fast capital for business capital and customer financing.

But it can also be challenging to sort out all the choices, from traditional options such as banks or traditional Small Business Administration products, to alternatives such as one-stop customer financing, short-term installment funding, or flexible term capital where repayment is based on daily sales performance.

For business owners looking to access capital quickly for business capital and customer financing, there are three key ideas that can help simplify and make sense of all the new business lending (see below). Consider the pros and cons of each to help choose the best option for your small business.

business capital based on revenue strength & growth

Breaking New Ground in Small Business Financing

University of Cambridge, Judge Business School

In 2015, the Americas alternative finance industry grew to $36.49 billion, a 212 per cent annual increase from the $11.68 billion in 2014. Between 2013 and 2015, alternative finance platforms across the Americas have delivered over $50 billion in funding to individuals and businesses, with the US market contributing 99 per cent of the total funding volume. With $36.17 billion in total transaction volume in 2015, the US is the world's second largest online alternative finance market behind Mainland China. 

THREE KEY IDEAS TO CONSIDER

The bank is still a good option in some circumstances, but it’s not the only option. Nor is it the one-size-fits-all solution it might have been 30 years ago. There are many situations where traditional financing options just don’t work, and there may be a better and quicker option.

With that in mind, these three questions will help you evaluate options and choose the financing that will be the best fit for your situation.

1. What is the purpose of the funding? 

It should start here. Identifying the purpose helps answer other questions, such as: Is it a short-term or a long-term need? What kind of capital cost makes sense? Is there a positive and certain return-on-investment opportunity that exceeds the cost?

For example, if you have an opportunity to purchase soon-to-turnover inventory at a discount but need to borrow to do it, the total cost of the capital might be the key metric to help determine whether or not the financing makes sense.

Additionally, the purpose should influence the term. In the above example, it might not make sense to borrow with a term of four or five years to purchase inventory that will turn within a few months. A shorter-term might make more sense and have a lower total cost than a longer term.

Think of it as you would when purchasing a new car. Most people would never purchase an automobile with a 30-year loan – the total cost of the loan would be very high. Short-term needs, such as purchasing inventory or ramping up for a new contract, might be best served by short-term financing.

There are times, however, when longer-term financing makes more sense. Purchasing heavy equipment, constructing a new building, or any other business purchase that could be depreciated over several years might be better suited to a long-term equipment loan.

2. How much money do you need? 

The amount needed helps identify where to look. For example, many banks would rather lend $500,000 or $1 million instead of $10,000 or $150,000 – it’s just too expensive for them to accommodate the lower loan amounts. However, with streamlined application and approval processes, smart funders are better positioned to offer those types of capital, as well as larger amounts.

3. How is your credit profile? 

While it is not going to prevent you from getting financing, your personal FICO credit profile could impact where you’ll find success. For example, the bank typically looks for a personal score of more than 680, and the US Small Business Administration’s new minimum threshold is 600 for smaller loans.

Nevertheless, a less-than-perfect personal score doesn’t rule out financing for an otherwise healthy business from technology-driven lenders.

Smart lenders have found that a business owner’s personal credit score really isn’t the best proxy of a business’ creditworthiness. Although a good personal score and a good business credit profile won’t guarantee financing, they do add options. A healthy business with cash flow to support regular periodic payments is a better measure.

Determining the right financing requires more than comparing interest rates. Term, total cost, the business’ credit profile, and the total health of the business are all factors that identify the type of financing that makes the most sense given a particular business-use case. 

business capital based on revenue, strength & growth

see below -- "The True Cost of Capital"  

FOUR TYPES OF CAPITAL

1. Business Installment Loans