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BUSINESS FINANCE

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Small Business Reports
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BUILD BACK BIGGER

We are compiling a Special Report: How to align your finance sources
with innovative strategies to compete and grow and achieve your business goals.

~ the editors

Lifeline to Main Street

click to open the report:
"Closing the Cash Flow Gap with Real Time Settlement 24/7"

Goldman Sachs Forecasts Acceleration In eCommerce Sales

https://www.pymnts.com/news/retail/2020/goldman-sachs-forecasts-acceleration-in-ecommerce-sales/

Aug 2020

Goldman Sachs has predicted that online shopping will expand by 19 percent each year during the next three years to come, which marks a rise from its past forecast of 16 percent.

“At an enterprise level, we’ve seen an acceleration in innovation over the course of the crisis as companies have rolled out curbside pick up programs, contactless checkout, personalized consignment deliveries, and retailers and marketplaces have adapted to reflect the shifting needs of consumers focused on the new essentials,” the firm said in the report.

Goldman Sachs also noted that eCommerce penetration rose to more than 40 percent in May from 16 percent of retail spending domestically in the first quarter of 2019. The firm noted that “traditional retailers” such as Kroger and Target notched “triple digit growth” in online shopping revenues and eCommerce platforms such as Etsy and Alibaba saw “surging demand.”

Small Businesses Are Shut Out of The Greatest Borrowing Binge Ever

“Capital markets access has become a determiner of life or death for business.”

https://www.bloomberg.com/news/articles/2020-08-13/a-2-trillion-credit-boom-leaves-america-s-smaller-firms-behind?srnd=premium

August 2020

Unprecedented government stimulus has allowed more companies to borrow at lower rates than ever before. Yet amid the credit boom, smaller firms that power America’s economic engine are often being shut out, hamstringing the recovery just as it begins.

The Federal Reserve’s pledge to use its near limitless balance sheet to buy corporate bonds has aided stricken airlines, oil drillers and hotels. It’s also helped companies from Alphabet Inc. and Amazon.com Inc. to Visa Inc. and Chevron Corp. access some of the cheapest financing ever seen. All told, firms have sold about $1.9 trillion of investment-grade debt, junk bonds and leveraged loans this year, according to data compiled by Bloomberg.

But for companies not large enough to tap fixed-income markets, the outlook is much more dire. Banks are tightening conditions on loans to smaller firms at a pace not seen since the financial crisis, while many direct lenders that have traditionally focused on the middle market are pulling back or turning to bigger deals instead. What’s more, the Fed’s emergency lending programs for mid-sized businesses and municipalities have been criticized as slow, complex, and largely inaccessible.

Some 70% of bank senior loan officers surveyed by the Fed said they have tightened lending standards on loans for small commercial and industrial firms in the third quarter. That’s the highest proportion since late 2008. The trend also extends to mid-size and larger firms as well, though the latter enjoy unprecedented access to capital markets. About 54% said they increased premiums for small borrowers, the most in over a decade.

A lack of bank credit for small and medium-sized firms could tip many into bankruptcy, adding to the thousands of local businesses that have already quietly disappeared amid the pandemic’s mounting devastation. Given the sector employs roughly 68 million Americans -- Fed Chairman Jerome Powell calls it America’s “jobs machine” -- and is critical to regional economies across the U.S., a prolonged inability to access financing runs the risk of stalling the nascent rebound.

Small Business Bank Customers Turn to Alternate Lenders

https://www.consulting.us/news/4691/us-banks-need-to-prepare-for-massive-credit-write-offs-says-accenture

August 2020

A strong data and analytics approach will help banks better determine the health of businesses, which may be masked by furlough and payroll protection schemes. A data-driven view will give banks a broader context of the current environment, as well as how consumer behavior has changed.

US banks will face up to $320 million in credit write-offs this year due to the pandemic, according to a recent report from consulting firm Accenture.

Athough banks may be tempted to pull back dramatically on lending, demand for credit will ultimately be met, either by non-traditional lenders – such as big tech and fintechs – or by companies offering financing for their own products and services.

“If banks attempt to aggressively reduce offers of credit, what might start as a slow trickle of customers turning to alternate lenders could quickly become roaring rapids that can drastically change the tide of lending,” McIntryre said.

The economy is running on borrowed time and money, as government stimulus props up shell-shocked businesses and the accounts of tens of millions of jobless Americans.

Contactless payments win out among health and safety concerns

https://www.consulting.us/news/4640/contactless-payments-win-out-among-health-and-safety-concerns

August 2020

Given that new consumer priorities are expected to persist indefinitely, the shift to contactless presents a significant opportunity in the payments landscape. Publicis Sapient suggests that this new reality is here to stay, and that there are widespread possibilities in this regard.

“These findings suggest that the move away from cash is solidifying. Contactless technology will be expected and will continue to shape the future of travel and dining, providing safer ways for guests to interact, while further integrating digital tools into new experiences,” said the firm in a statement.

The natural reaction for most has been to turn online for their purchasing needs, be it for groceries or other products. Publicis Sapient reports that more than 70% of consumers across these markets have shopped more online in the last three months than they usually do, and nearly half reported that this will continue for the foreseeable future.

At the same time, restrictions are being lifted in countries across the globe, and visiting public places is gradually starting to normalize. As people brave crowded areas, Publicis Sapient notes that they remain wary of infection risks, with many placing health and safety conditions as a top priority when venturing out.

Small Businesses Are Dying by the Thousands — And No One Is Tracking the Carnage

https://www.bloomberg.com/news/articles/2020-08-11/small-firms-die-quietly-leaving-thousands-of-failures-uncounted?srnd=premium

August 2020

While the businesses are small individually, the collective impact of their failures could be substantial. Firms with fewer than 500 employees account for about 44% of U.S. economic activity, according to a U.S. Small Business Administration report, and they employ almost half of all American workers.

To be sure, small business attrition is high even in normal times. Only about half of all establishments survive for at least five years, according to the SBA. But the swiftness of the pandemic and the huge drop in economic activity is hitting hard among typically upbeat entrepreneurs. About 58% of small business owners say they’re worried about permanently closing, according to a July U.S. Chamber of Commerce survey.

Yelp Inc., the online reviewer, has data showing more than 80,000 permanently shuttered from March 1 to July 25. About 60,000 were local businesses, or firms with fewer than five locations.

Shoppers Move Online Faster Than Payments Firms Expected

https://www.bloomberg.com/news/articles/2020-08-03/shoppers-move-online-faster-than-even-payments-firms-expected

Aug 2020

“For merchants, moving online is existential. It is how they will stay in business. They are jumping in with both feet, and not just dipping their toes in the water. It’s not hyperbole that we’ve seen a three- to five- year acceleration. That’s the math.” - PayPal Chief Executive Officer Dan Schulman

"Revenue from processing online payments surged 25% as more merchants started to let customers make purchases online. This was always our plan, but that was our plan two years down the road. It’s really brought ahead a few years of growth in the business.” - Global Payments Chief Executive Officer Jeff Sloan

" Visa has seen online spending excluding travel increase by 25% from a year earlier every week since mid-April, twice the growth it was generating before the pandemic." - Visa Chief Financial Officer Vasant Prabhu

“This muscle memory is building up with consumers. They have come to realize that experience works really well.” - Mastercard Inc. Chief Financial Officer Sachin Mehra

Walk-In Retail Exodus

Main Street Catastrophe as Foot Traffic Runs Home

Local Store Customers Not Present

What is your finance strategy?

Where is the customer email & purchase preference data?

We see two scenarios for most walk-in retailers and their suppliers:

1. Wait for absent customer foot traffic to return after unknown duration; or

2. Follow retail customers home where they shop online – and deliver from the stores

Few businesses can lose money indefinitely waiting for walk-in customers to return.

Main Street walk-in retailers are following their customers home with fully integrated online stores for ordering with shipping, home delivery or curb delivery from their retail stores.

Businesses with customer email and preference data are growing and prospering as online retailers.

Suppliers and retailers that cannot reach local retail customers online will need to merge with or acquire businesses that can grow with fully integrated online stores.

The right way to sell online to retail customers is NOT on third-party e-commerce reseller platforms that might might cobble together various e-commerce and payments applications that were not designed to work together.They resell the various e-commerce and merchant services including payments processing where service, security, and cost can suffer.

"Retailers and suppliers need their own online stores securely hosted by their payments services providers and fully integrated into their business for robust point-of-sale business management including payments, inventory, pricing, discounts, sales tax, employees, marketing, and reporting – with secure remote access."

Fully integrated online stores are easy-to-use and easy-to-get-started from leading payments services providers -- but are not widely available from traditional resellers of merchant services.

Main Street retailers will grow with two profit centers; walk-in traffic and fully integrated online stores.

Merchants and suppliers that invest in their own fully integrated online stores will expand the fastest. Proceeds from SBA PPP forgivable loans may not be used to invest in an online store. Merchants are refinancing expensive debt and expanding with low cost 2-10 year term loans.

The value of customer data suddenly is obvious to retailers and suppliers. It has become crucial. Merchants that collect customer emails and purchase preferences have a competitive advantage when opening a fully integrated online store.

Manufacturers will partner or merge with retailers to reach local retail customers online. Existing stores will transform some floor space into shipping centers and curb delivery stations.

Local customers are still shopping and purchasing – but online at home, possibly a long-lasting semi-permanent retail consumer trend. Amazon and others proved it. Now, every walk-in retail merchant needs a fully integrated online store to grow – alongside their walk-in traffic when it returns.

The question is: “Who has the retail customer email and preference data?”

-by The Editors 07/27/2020

Business owners refinancing expensive debt and expanding with 2-10 year term loans.

The National Federation of Independent Business said Monday (July 27) that 71 percent of small business owners surveyed have used their entire Paycheck Protection Program loan and that 46 percent of PPP borrowers anticipate needing more financial support over the next 12 months.

PPP loan use is restricted to specific items and cannot be used for inventory, additional marketing, or business expansion. If businesses need additional funding for other uses, a bank term loan might be the way to go.

Currently, banks are open for business and looking to lend. Many non-bank financing options have dried up because of the pandemic, and there are fewer options for small businesses than before.

Bank term loans are great for businesses looking to obtain bank level financing. These loans can be used to refinance existing debt or for working capital. The process is faster and easier than an SBA loan and more competitively priced than other options on the market. Bank term loans help build business credit and can also be used for working capital, debt refinance, and new equipment purchases.

--by The Editors July 2020

Small Business Owners Are Leaning on Credit Cards to Survive

7/31/2020

About 35% of U.S. entrepreneurs say they’re using personal cards or savings during the pandemic. Half say they won’t last to 2021 without more help.

https://www.bloomberg.com/news/articles/2020-07-31/small-u-s-businesses-rely-more-on-credit-cards-to-survive?srnd=premium

For more than one-third of small U.S. business owners, keeping their ventures alive during the coronavirus pandemic is coming at a high personal cost.

As the American economy faces an unprecedented contraction and Covid-19 deaths top 150,000, the debate over reopening states has hinged in some quarters on how to balance protecting lives and livelihoods. Government loans through the Paycheck Protection Program have helped support some businesses, but the accumulating months of reduced revenue are forcing entrepreneurs to buoy their own businesses with their personal assets and credit. Many have already succumbed.

One-Third of U.S. Restaurants Face Permanent Closure This Year

July 2020

https://www.bloomberg.com/news/articles/2020-07-31/one-third-of-u-s-restaurants-face-permanent-closure-this-year?srnd=premium

A new forecast projects that one in three U.S. restaurants may close permanently this year, showing how the Covid-19 pandemic is decimating an industry that employs millions of Americans.

As many as 231,000 of the nation’s roughly 660,000 eateries will likely shut down this year, according to an estimate from restaurant consultancy Aaron Allen & Associates provided to Bloomberg News. This will bring the industry’s steady growth to a halt and mark the first time in two decades that U.S. restaurant counts don’t climb. Restaurants have already shed millions of jobs this year, economic data show.

These patterns -- rising virus cases, retrenching customers, restaurants closing -- may spark an enduring change in consumer behavior. Additionally, capacity restrictions can make it difficult or impossible for restaurants to turn a profit.

The economic impact of restaurant closures will reverberate beyond the industry itself, which accounts for nearly 4% of U.S. gross domestic product and employed about 8% of America’s labor force before the pandemic.

More Than Half of U.S. Business Closures Permanent, Yelp Says

July 2020

https://www.bloomberg.com/news/articles/2020-07-22/more-than-half-of-u-s-business-closures-permanent-yelp-says

More than half of the business closures that were temporary when the Covid-19 outbreak began are now considered permanent, according to Yelp Inc.

Of the 132,580 closures listed on its website as of July 10, 55% are permanent, up 14 percentage points from the end of June, according to the Yelp’s Economic Average Report released Wednesday. More than 72,000 businesses have permanently shut down, with California, Texas and Florida accounting for the largest share.

When there’s a major outbreak in a state, consumers are less interested in frequenting businesses where it’s difficult to social distance, according to the Yelp report. New virus outbreaks across the nation have led 22 states to either reverse or pause reopenings, according to Bank of America Corp. economists, making it more difficult for businesses to stay afloat.

Restaurants accounted for the largest number of permanent closures in Yelp’s report, followed by the retail and beauty industries, bars and fitness centers. Even though many retailers were able to shift their models to offer curbside pickup and online ordering, those measures haven’t necessarily been enough to sustain them in the long term, according to the report.

Small Businesses Brace for Prolonged Crisis, Short on Cash and Customers

July 22, 2020

https://www.wsj.com/articles/small-businesses-brace-for-prolonged-crisis-short-on-cash-and-customers-11595433150?mod=hp_lead_pos5

Hopes for a quick economic recovery from the coronavirus pandemic have been dashed, and companies are exhausting rescue funds. Many are shutting down or slashing jobs again.

The failed dream of the American small business

Jul 22, 2020

https://www.vox.com/the-highlight/21320361/small-business-closing-covid-coronavirus-ppp-entrepreneur-economy-stimulus-loans

Independent businesses were once pillars of communities, but economic and systemic forces left many fighting for survival. Then came the pandemic.

Defined by the Small Business Administration as companies with fewer than 250 to 1,500 employees, depending on the industry, there are about 31 million small businesses in the US. Last year, they employed nearly half of the private workforce and created 1.6 million jobs.

But heading into the pandemic, nearly half of small businesses had two weeks or less of cash liquidity on hand, according to a report from JPMorgan Chase, turning forced shutdowns and lost revenues into an immediate fight for survival.

Tidal Wave of Competitive Demand in U.S. for Additional Small Business Funding after PPP

July 2020

A national survey by a private lender offers insights into how long small businesses expect their PPP funds to last and when they will need more funding. The research represents results from a survey of 500 US small businesses for a group of lenders. The in-house survey was conducted June 25^th through June 28^th

The need for additional financing after PPP (Paycheck Protection Program) is top of mind for many small business owners according to the findings from a survey paid for by a bank-enabling technology platform that has grown to become the #1 online bank network for SBA loans under $350,000.

According to the survey, 59% of those business owners in the national sample who had taken out financing of some type including a PPP loan since January 2020, only expect the financing to last for 12 months or less and 79% expect it to last for 18 months or less.

As a result, 61% of the national sample expect to need additional financing within 18 months, with approximately 1/3 expecting to need additional funds in 1 to 6 months, and another 1/3 in about 6 to 12 months.

“This survey illustrates that there is a tidal wave of demand coming from small business owners for continued access to low-cost capital. It’s vital that banks prepare now to help the many high-quality businesses get the capital they need to grow. This funding will not only help these particular small businesses expand but will help renew the national economic landscape as well.” -- editors

One way that banks can help prepare SMBs for their next round of funding is by assisting them with PPP Loan Forgiveness. The survey found that 70% of SMBs in the national sample expect to apply for PPP Loan Forgiveness in the next 60 days. Also, 48% of the businesses say they intend to apply for additional funding with their PPP lender or primary bank, suggesting there is a large opportunity for banks and PPP lenders to help their small business clients with funding after PPP.

-by The Editors

One in Five U.S. Small Firms Plan Layoffs After Using PPP Loan

July 2020

https://www.bloomberg.com/news/articles/2020-07-10/one-in-five-u-s-small-firms-plan-layoffs-after-using-ppp-loan?utm_medium=email&utm_source=newsletter&utm_campaign=Q9IEZUDWRGG201

More than 80 percent of small firms that got PPP loans say they will run out of money by August

More than eight out of ten small business owners who got coronavirus relief loans through the Paycheck Protection Program (PPP) say they will run out of funding by the first week of August, according to results from a Goldman Sachs survey released Tuesday [July 2020].

https://thehill.com/policy/finance/507236-more-than-80-percent-of-ppp-loan-recipients-will-run-out-of-money-by-august

Small businesses around the world struggle to survive

EDITOR’S NOTE — July 13, 2020 — Small businesses around the world are fighting for survival amid the economic fallout from the coronavirus pandemic. Whether they make it will affect not just local economies but the fabric of communities. Associated Press journalists tell their stories in the series “Small Business Struggles.”

https://apnews.com/640ed019edbcd90217d240752514cd41

UCLA Anderson Forecast says U.S. economy is in "Depression-like crisis"
and will not return to pre-recession peak until 2023

LOS ANGELES, June 24, 2020 /PRNewswire/ -- In its March quarterly forecast, the UCLA Anderson Forecast revised its outlook for the U.S. economy downward because of the expected impact of COVID-19, which was then still being referred to as an epidemic. Two weeks later, as the economy began shutting down because of the pandemic, the Forecast released the first revision in its 68-year history to assert that the U.S. economy was already in recession.

https://www.prnewswire.com/news-releases/ucla-anderson-forecast-says-us-economy-is-in-depression-like-crisis-and-will-not-return-to-pre-recession-peak-until-2023-301082577.html

SPECIAL REPORT

Do you know your business credit score?

One thing all small businesses have in common
is the unrelenting need to make money.

How each business does that is unique and different,
each with its own mix of exceptional products and processes.

Finance is the common language of small business owners,
and allocating capital efficiently is their real work.

Small businesses account for 45% of US GDP with 88% of these businesses
employing fewer than 20 people.

What are business credit scores?

In the same manner that your personal scores serves as financial ratings, your business credit scores rank the creditworthiness of your business. A number of factors influence your business credit score, including: payment history, credit utilization ratio, company size, industry risk, and more.

There are a few different business credit scores:

FICO® LiquidCredit® Small Business Scoring Service℠ is used by lenders to determine the likelihood of on time payments. The FICO SBSS score is based upon personal and business credit history, along with other financial information. The SBA uses this score to pre-screen applications for commercial loans under $350,000. Scores range from 0 to 300, where the minimum score to pass the SBA’s prequalification is currently 140.
Dun and Bradstreet PAYDEX Score is used by suppliers and vendors to determine what terms to extend on trade credit (eg. net-30, net-60, etc). Scores range from 1 to 100, higher scores indicating better payment performance.
The Intelliscore Plus℠ from Experian is used by lenders to determine the likelihood of delinquency over the next 12 months. Again, scores range from 1 to 100.

It’s worth noting that each scoring agency may compile different information on the same business. Thus, it may be that all three of your business credit reports and scores are different. (Pro tip: the only place where you can check all three of your business credit ratings and reports is Nav.com).

Why are they important?

As a business owner, you already know it’s important to keep track of your business’s financial health. Good business credit scores can help you in a number of ways, including:

Securing financing. Lenders might use your business credit scores to qualify you for a loan, or offer you better rates. For example, if you are applying for an SBA loan, you are required to have a minimum FICO SBSS score of 140, and most lenders will look for businesses with a score of 160 or above. It’s a good idea to check your FICO SBSS score before starting the SBA application process.

Winning business contracts with large organizations. Large companies, as well as the government, may check your business credit reports before they offer you a large contract. They do this to make sure their suppliers are reliable and pay their bills on time to subcontractors and creditors.

Securing better trade terms. If your business credit scores are high, your suppliers and vendors will give you favorable terms to purchase on credit. For example, if you are a contractor with high business credit scores, your supplier might give you a $10K line of credit and the payment won’t be due until 60 or 90 days after the purchase, giving you more flexibility to control cash flow.

Learn More About Refinancing

June 2020

Some business owners have received a Paycheck Protection Program (PPP) loan or an Economic Injury Disaster Loan (EIDL) to help rebuild during the coronavirus economic downturn.

However, these loans have strict use of funds guidelines and cannot be used for debt refinancing.

If payments on your current business debt are cutting into valuable cash flow, you can save up to thousands of dollars per month by reﬁnancing that debt with an SBA 7(a) loan. SBA 7(a) loans are known as the “gold standard” in small business financing:

Lower Interest Rates
Longer Terms (10 years)
Low monthly payments

The difference between debt consolidation and debt refinancing

Debt consolidation and debt refinancing are different. Here’s the difference:

Consolidation: This strategy combines multiple loans into a single one. So instead of being responsible for several separate loans, monthly payments, and billing statements, you bundle everything and handle it with one payment. Consolidation can also be called “simplification”.

Refinancing: When you replace one or more loans with a completely new loan with better rates and terms, you’re refinancing. Business owners going this route are interested in getting a lower interest rate to reduce interest costs and bring down monthly payments. When you refinance, you can pay off multiple loans with your new loan.

The benefits of refinancing business debt

There are three main reasons small business owners should consider refinancing business debt with a low-cost loan:

Lower monthly payments
High monthly payments can severely impact your business. With business debt refinance, you’ll benefit immediately from lower monthly payments-often as much as 50% to 80%. The money you save can be put back into your business.
Lower interest rates
The total cost of an expensive loan can be sky high. A new lower-cost loan decreases the interest rate, meaning you pay less for the money you’re borrowing.
Positive Credit Score Impact
If you have multiple loans your credit score can suffer due to your credit utilization ratio. When you pay off high interest debt, this ratio will go down. The credit utilization ratio is typically focused primarily on a borrower's revolving credit. This is a calculation that represents the total debt compared to the total revolving credit the business owner has been approved for.

When is the right time to refinance debt?

The right time to refinance debt is when you can qualify for a lower-cost loan. It’s important to know that there will be costs associated with a refinance. Make sure you’re aware of the following:

Total cost and terms
Annual interest rate
Total finance charge
Service fee
Debt reduction fee
Closing costs

Do the math to get the result you want from a refinance.

SBA loans

SBA 7(a) loans are known as the “gold standard” for good reason. They have low rates and 10-year terms. This leads to small monthly payments that are manageable and help you keep a handle on cash flow. SBA loans have gotten a bad rap in the past as being too time intensive. However, a good business finance agency can help streamline the application process.

SBA 7(a) loans, known as the “gold standard” for small businesses, have low rates, long terms, and very low monthly payments.

Unlike PPP or EIDL loans, SBA 7(a) loans from $30,000 - $350,000 can be used for marketing programs to strengthen your brand, connect with current customers, and attract new audiences. Marketing initiatives you can fund with an SBA 7(a) loan include:

Hiring an SEO or SEM firm to strengthen your online presence
Increasing inventory or expanding services
Launching traditional or digital advertising

The SBA debt consolidation loans offered through SmartBiz marketplace banks can be used to refinance:

Merchant cash advances
Short-term business loans
High-interest business loans
Daily or weekly payment loans
Business credit cards

Bank term loans

Bank Term loans are term loans meant to be repaid in a shorter amount of time than the 10-year term of a typical SBA loan. This type of loan can be a great way to get the funds you need until you are ready for an SBA loan.

The following Bank Term loans are available through SmartBiz marketplace banks for debt refinance. You can also use the proceeds for working capital and new equipment purchases:

$30,000 to $200,000 loan amounts
2 – 5 year repayment terms
Fixed interest rate as low as 6.99%
Monthly repayments
No pre-payment penalties

*Interest rate depends on loan term and the applicant's credit and financial profile.

Alternative lenders

Alternative lending is a broad term used to describe the wide range of loan options available outside of a traditional bank loan. Alternative lenders will consider borrowers who don’t qualify for bank loans due to time in business, poor credit, or other reasons. However, there’s a downside – and it’s important. Many alternative loans have high interest rates and short loan terms that can make them less suitable for low cost debt refinance.

Debt refinance examples

Business Story: PixelCutLabs, LLC

PixelCutLabs owner Brennen Bliss prefers not to borrow money. However, to get his business going, he had taken out high interest loans that were crippling his cash flow. He received a low cost SBA loan and is using the funds wisely. Bliss says, “We’re using the funds for debt consolidation. My advice is that if you can reduce your interest rates considerably, just do it. This loan is allowing us to stay alive and keep growing.”

Painting with a Twist

Mary Grupka and Lisa Scibetta own an art studio catering to individuals and groups who want a fun night. Mary and Lisa used credit cards and a line of credit to cover the unexpected costs, planning to pay them back easily. However, they found themselves unable to get ahead on paying off the expensive debt.

Mary and Lisa secured a $100,000 SBA loan from a SmartBiz Loans marketplace bank with low rates and a ten-year term. They immediately put the low-cost funds to work. Mary says, “Our first step was debt consolidation. We were putting out $6,000 a month and now we’re paying $1,100 a month. It’s a significant savings. We’re staying ahead of the curve instead of just trying to keep up.”

Triple D Towing

Owner Milton Martinez had taken out two small business loans that he wanted to pay off. They required daily cash payments and were leaving him strapped. He needed to create additional income instead of paying high interest rates. “By getting rid of the two small loans I’m saving $15,000 – $18,000 dollars,” he says. “That’s money I can put back into growing my business or into savings.”

[Note from the editors -- After lobbying Congress with our letter below, members of both the House and Senate
Committees on Small Business did pass an expanded "Investing in Main Street Act of 2019."
https://finance.yahoo.com/news/fed-expands-main-street-lending-facility-with-lower-minimums-higher-risk-retention-194347770.html

Letter to Congress

Small Business Reports

business journal for business owners

SmallBusinessReports.org

April 21, 2020

US Senate Committee on Small Business and Entrepreneurship
US House Committee on Small Business

Letter from the Editors:

     Representing millions of small business owners in the United States of America,
Small Business Reports applauds you for your attention to small business loans.

     A floodlight of national concern illuminates a sudden interest in small businesses and reveals
the glaring lack of business loans available to small business owners, access to capital that large companies take for granted.

     Small businesses need short term loans through online lenders that have developed reliable accurate finance tech to quickly qualify and quantify risk and to speed up application underwriting for fast funding.

     Small Business Reports envisions a super highway for small business loans operating with private money flowing unrestricted through a newly upgraded digital finance infrastructure originally built and expanded by online lenders since 2008 for funding short term business advances and loans.
It already exists and must expand.

     Money pouring out of stocks is flowing to small business loans for high yield. Small businesses will power the economic recovery if they have access to capital from private investors. And online lenders need access to private money in a secondary market.

     We believe you see this picture, too—along with millions of small business owners who are paying attention, who vote, and who can make America hum with new growth.

Sincerely,

THE EDITORS

Small Business Reports

How to Help Small Businesses Survive

Columbia Law School, Law & Economics Research April 10, 2020

Small businesses are among the hardest hit by the COVID-19 crisis. Many are shuttered, and far more face cash flow constraints, raising questions about just how many will survive this recession. The government has responded with a critical forgivable loan program, but for many of these businesses, this program alone will not provide the cash they need to retain workers, pay rent, and help their business come back to life when Americans are no longer sheltering in place.

This essay calls on regulators to find new and creative ways to work with existing intermediaries, including banks and online lenders, who have the infrastructure and tools needed to help small businesses get the additional loans they need to survive and thrive. Leveraging existing institutions could enhance the speed, scale, and scope of the government’s response, all critical virtues in the efforts to support small business.

click here for complete report

PAYCHECK PROTECTION PROGRAM (PPP) INFORMATION SHEET

PAYCHECK PROTECTION PROGRAM (PPP) INFORMATION SHEET

click here

click here

SBA (7A) Business Loan Rates Drop 4.75% for $30,000 to $5 Million

The Federal Reserve lowered the benchmark interest rate again.

It is a great time for businesses to apply for low-cost funding for operations, expansion, or refinance.
SBA loan rates dropped to 4.75% for $30,000 to $5 million (Prime plus 1.5% to 2.75%).

The new finance sources pre-qualify you with a lender in less than 5 minutes without impacting your credit score. You can get funds as fast as 7 days after your application is completed and approved.

A soft credit pull for pre-qualification will not affect your credit score. To process your loan application for funding, lenders will request a full credit report from one or more consumer reporting agencies, which is considered a hard credit pull, and it happens after your application is in the funding process and matched with a lender who is likely to fund your loan.

It is an opportune time for businesses to apply for a SBA or Bank Term loan or Short-term Working Capital. Low-cost funds can be used for operations, expansion, refinance, equipment, inventory, commercial real estate, and more.

An infusion of capital often can change the trajectory of a business to help meet its goals and grow, whether it is an SBA loan, a Bank Term loan, or customized flexible business financing.

Special Report

New Finance Sources Shift Away from Resellers

Are you with a reseller?

This year—2020—the new sources in all three areas of business finance shifted away from resellers to direct relationships with businesses and merchants, eliminating the need for resellers after decades of using them exclusively for small businesses.

click here for complete update

Why you should be wary of "online lending" websites

Small Business Credit Survey (SBCS) Federal Reserve Board December 2019

Uncertain Terms: What Small Business Borrowers Find When Browsing Online Lender Websites

https://www.federalreserve.gov/publications/files/what-small-business-borrowers-find-when-browsing-online-lender-websites.pdf

Special: Report Review - Innovation Readiness

45% of business owners say innovation is critical to staying competitive.

More businesses are recognizing that they must embrace innovation
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62% say reliable smart point-of-sale tools
would make running their business easier and more efficient.

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Business Funding
Federal Reserve Small Business Credit Survey 2019

a wide variety of information on small business financing in the U.S. click here

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Accelerating Automotive into the Digital Future

There's mounting pressure in the automotive industry to transform from mechanical-centric into software-defined

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Customer Financing

U.S. consumers' access to credit worse than previously thought: Fed study

As many as 60 million Americans tend to have a hard time qualifying for credit cards,
according to a report released by the New York Federal Reserve. click here

Feature Article

Are all three areas of your business finance tuned
and aligned as one high performance machine?

Business Loans
Customer Payments
Customer Financing

How many reps does it take for all your business finance?
How well do they know your business?
Do they work together toward your objectives?

The new finance sources today have the best finance tech
for superior security, service and point-of-sale business tools.
New leaders eliminate resellers after several multi-billion dollar mergers.

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Investing in Main Street Act of 2019

"We support two bills in the US Senate, S. 1994 & HR. 116,
to expand access to capital available for small businesses."

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- not a paid political message -

Special Report
Access to Credit
Good finance news for small businesses

Bank lending standards for firms easing long-term, Fed survey shows

(Small Business Reports) - 8/5/2019 - The U.S. Federal Reserve’s quarterly survey of senior loan officers showed an overall easing of standards on commercial and industrial business loans compared with before the financial crisis.

U.S. banks left loan standards unchanged on commercial and industrial loans to large and mid-sized firms during the second quarter and eased standards on such loans to smaller firms, according to the latest survey of bank officers.

“Banks, on balance, reported that their lending standards on C&I loans are currently at the easier end of the range of standards between 2005 and the present,” the report said.

That is notable because a rise in U.S. business debt to historic levels has raised red flags at the U.S. central bank over financial stability vulnerability. Fed Chair Jerome Powell said he does not see high corporate debt as posing the same sort of systemic threat that the subprime mortgage market did.

Here are some facts about the U.S. economy - 2019

Jobs have grown for 106 consecutive months, the longest streak on record.

At 121 months, this is the longest bull market in American history.
The unemployment rate has been at 4 percent or less for 16 consecutive months, the longest such streak in 50 years.

Inequality remains a crucial problem, but wages are now growing the fastest among the lowest-wage industries, thanks to state-by-state increases in the minimum wage and the effects of low unemployment.

The University of Michigan’s consumer-sentiment index, which peaked at 112 in 1999, has hovered above 90 for more than four years, something that hasn’t happened since the 1990s.

Latino unemployment has fallen to its lowest rate on record.

Black unemployment, too, has fallen to its lowest rate on record, and, as the investor and Bloomberg columnist Conor Sen points out, the unemployment rate for black teenagers, which peaked at 48.9 percent in 2010, has plunged to yet another record low in 2019.

Small business owners are optimistic and hungry for growth, according to one source for online business funding

Small business loan requests in the second quarter 2019 increased by 57% over the previous three-quarter average. Total amount funded to small businesses across the U.S. grew by 21%:

The average loan amount among small business borrowers increased 11%.
The number of business owners reporting working capital as the main use of funds grew by 15%. Funding payroll grew by 33%, and making equipment purchases grew by 14%.
The average credit score of U.S. business owners held relatively steady in Q2, coming in at 667. Business owners in Washington D.C., Montana, Hawaii and Wyoming have the highest average credit scores in the nation.
The top small business industries funded are construction (with an average of $17,701 per loan) and restaurants (with an average $18,821 loan).

Small-business owners' optimism has edged up over the past three months. In the latest quarterly Wells Fargo/Gallup Small Business Index survey, conducted July 8-12, 2019, the overall index is +136, up from the +129 recorded in Quarter 2. The index is a measure of owners' present and future optimism -- both of which saw upticks this quarter.

Small-business owners remain upbeat about their companies' financial outlook and the overall national economy and appear to be planning on expansion by applying for new credit products in the coming year. Although the current U.S. trade and tariff situation is being debated on many levels, relatively few small-business owners say it is affecting their business directly. As for challenges, owners remain concerned about core business basics -- attracting customers, developing new products for their business and fending off competitors.

Editors' notes:

Speculative money fleeing the stock markets today in search of growth and relative safety is surging to the higher risk returns of an expanding U.S.capital market in small business funding on Main Street with 30 million small businesses.

The strong U.S. Main Street consumer economy today is not measurably disturbed by the recent global economic slowdown, the 2020 election, stock markets, trade wars, Fed interest rates, recession fears, foreign civil unrest, wars, or the environment. Small businesses are expanding and creating jobs.

SOURCES: Theatlantic.com, Reuters.com, Google.com

Small Business Reports smallbusinessreports.org

Special Report

Why are some businesses more successful than others?

Who can you trust for business lending, customer payments, and customer financing?

Once upon a time, local bankers provided small business loans and credit card processing ─and customer financing for larger companies. Your local banker probably knew you.

Today ─since 2008─ local banks mainly provide business checking and business credit cards. They are resellers for payment card processors that now offer competitive direct accounts to merchants. Local branches continue to shrink in favor of online banking. And it doesn't matter if your banker knows you.

Banks decline roughly 75% of small business loan applications for less than a million dollars because they are not profitable, while most small businesses are applying for under $250,000.

Yet, 45% of small businesses plan to finance their expansion in the second half of 2019. - Pepperdine University - Graziadio Business School - July 2019

Only about 20% of small business owners have trusted the Internet for business finance. They tend to be younger businesses with owners that have time to search online, decide or guess which website to trust, and apply on a web form for small amounts.

Fortunately for the small businesses that plan to expand, the local banker is being replaced by the business finance agency for business funding, customer payments, and customer financing. A business finance agency is equal parts personal relationship and finance tech with trusted proven sources based on experience.

However, many business finance agencies are small and some may not be found easily onlne by searching because they do not want to be crushed by crowds of unqualified applicants. So they can be hard to find.

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Finance Performance Inspection

Three fast questions your business finance agency should ask you:

Business Funding —SBA business loans, bank term loans, short-term working capital
1. How much money could you use for expansion, operations, or refinancing?

Customer Payments —reliable business tools free up time and eliminate resellers
2. How long have you been with your payment services provider - over a year?

Customer Financing —easy point-of-sale competitive advantage boosts revenue
3. What percent of your sales is from customer financing?

How many reps does it take for all your business financing? —more than one?

Are all three areas of your business finance aligned for efficient growth?

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Customer Financing Boosts Sales 20% to 30%

Competitive businesses increase sales promoting "good credit to no credit" point-of-sale financing

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

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Special Report

How Unsecured Business Loans Work

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Take Your Business Mobile

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Intelligent Financing Boosts Revenues

Annual Special Report

Businesses See 2019 Growth ... Confidence Surges

Business owners poised to end 2018 on a high note. Four in five entrepreneurs anticipate year-over-year revenue growth, and many plan to expand their businesses.

Strengthening these growth plans is a groundswell of economic optimism as business owners are increasingly confident in the continued positive performance of both the national economy and their local economies.

American small businesses plan to finish 2018 with a bang, according to the fall 2018 Bank of America Business Advantage Small Business Owner Report. And they’re optimistic about the year ahead.

Small Business Optimism Is Up for 2019

Wells Fargo/Gallup Small Business Index

Separately, according to the latest quarterly Wells Fargo/Gallup Small Business Index, optimism among small business owners increased substantially over the last quarter. The quarter, according to the index, received a score of 129, which is 11 points higher than last quarter’s score of 118, and apparently the highest in the survey’s 15 year history.

Small business owner survey respondents said positive business financials are largely the cause for their optimism. Eighty percent of respondents rated their financial situation as “very good” or “somewhat good,” while 84% said they expect their financial situation to be “very good” or “somewhat good” in the coming year. A record 55% of business owners reported increases in revenue, with 62% anticipating revenue increases in 2019. In addition, 74% said they had good cash flow in the past 12 months, and 78% said they expect their businesses to have good cash flow over the next year.

Bank of America Small Business Owner Report

The Bank of America Small Business Owner Report is a biannual study exploring the concerns, aspirations and perspectives of small business owners throughout the U.S. and in 10 major cities.

Eighty percent of entrepreneurs are confident their 2018 year-end revenue will exceed that of 2017. In addition, over the next 12 months:

Fifty-seven percent of business owners believe their revenue will increase (vs. 51 percent in fall 2017).
Sixty-seven percent plan to expand (vs. 59 percent in fall 2017).
Twenty-seven percent plan to hire (vs. 16 percent in fall 2017).
Fifty-five percent are confident the national economy will improve (vs. 46 percent in fall 2017).
Fifty-four percent express similar confidence in their local economies (vs. 48 percent in fall 2017).
Fifteen percent intend to apply for a loan (vs. 8 percent in fall 2017).

Competition for talent heightens as small business hiring ramps up. As business owners make plans to hire in the year ahead, they acknowledge that identifying and retaining employees has become a significant challenge. Among business owners who sought to hire new employees, 50 percent say the tightening labor market had a direct impact on their ability to find and hire qualified candidates. In response, business owners have modified their hiring strategies to find and recruit top talent by:

Shifting to a more flexible culture in terms of hours, location and extra time off (25 percent).
Using social media more actively (23 percent).
Offering higher salaries (17 percent).
Promoting how the business impacts the local community and highlighting charitable work (12 percent).
Using an outside recruiter (9 percent).

The top economic issues concerning business owners are:

Health care costs (63 percent vs. 72 percent in fall 2017).
Interest rates (44 percent vs. 43 percent in fall 2017).
Trade policies (43 percent; issue not surveyed in 2017).

Despite unique challenges in managing a small business, entrepreneurs love what they do. Ninety-one percent say the added stress of entrepreneurship has been worth it, and 90 percent would recommend that others follow in their footsteps. Business owners are feeling the holiday spirit, as 83 percent plan to offer at least one holiday perk to their employees. The top holiday perks being offered are:

Office closures (50 percent)
Flexible hours or vacation time (41 percent)
Salary bonuses (38 percent).

Wells Fargo: Small business optimism soars on strong revenues and cash flow

The Q4 survey marks a record-high score in the survey’s 15-year history.

Optimism among small business owners jumped significantly in the latest quarterly Wells Fargo/Gallup Small Business Index, with an overall Index score of 129. That is 11 points higher than last quarter’s score of 118 and the highest in the survey’s 15-year history. The fourth quarter 2018 survey was conducted Nov. 8–14, immediately following the midterm elections.

Survey respondents said positive business financials drove the record high.

Eighty percent of respondents rated their financial situation as very good or somewhat good, and 84 percent said they expect their financial situation to be very good or somewhat good over the next year.

A record 55 percent of business owners reported increases in revenue, with 62 percent estimating revenue increases in the next year. In addition, 74 percent said they had good cash flow in the past 12 months, and 78 percent said they expect their businesses to have good cash flow over the next year.

“As we head into the end of 2018, small businesses are continuing to indicate that they are thriving and hopeful for the future,” said Andy Rowe, Wells Fargo head of Customer Segments. “With owner optimism hitting its highest level in the 15 years Wells Fargo has been conducting this survey, we are excited to see what this will mean for their continued capital investment and growth.”

“With the increases we’ve seen in business owners’ revenues and the high degree of confidence business owners have in their cash flow, it’s not surprising that taxes remain a key issue for them,” said Mark Vitner, Wells Fargo managing director and senior economist. “While the number of business owners that don’t expect changes to their operating environment remains high, most see the current environment as very good and many business owners are looking to expand their business in 2019.”

Top challenges continue to be hiring and attracting new business

For the third consecutive quarter, survey respondents said hiring and retaining staff was their top challenge, at 18 percent. In addition, the number of business owners who expect to have an increased number of openings in the next 12 months remained steady at 35 percent.

Other challenges cited include attracting new business (10 percent) and taxes (9 percent), both of which have continued to be top issues for small business owners.

December 2018

Small businesses are on an upward trajectory

· Anticipated small business loan demand is at its highest level since 2012, with 48 percent planning to take out a loan in the next 12 months

· Nearly two-thirds of small businesses (65 percent) anticipate an increase in sales, compared to just 5 percent that expect a decrease

· Small business economic confidence ratings outpace those of consumers by more than two times (43 percent vs. 21 percent)

SOURCE: PayNet / Raddon 2018

Small businesses are in full-on growth mode. It is a good time to expand, compete and grow.

Businesses are looking to banking partners for reasonable capital infusions, but are discouraged by slow reviews, impersonal processes and denials.

Following the 2008 financial crisis, a combination of regulatory and risk factors lowered credit volume among larger financial institutions, hampering the pace of recovery. The lingering effects of these factors continue to hamper small business growth today.

Record-Breaking Small Business Optimism Fuels Confidence to Expand

click here -- December 2018 Special Report

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

Special Report

November 2018

Cost of a Customer Data Security Breach

Lost Trust = Lost Business

COST: $148.00 per stolen record on average

A stark warning to merchants about their payment card processing:
Many resellers - which includes banks - cannot keep up with new financial tech for payments processing, inviting customer data breaches and fraud that some merchants do not survive.

Are you with a reseller? Or do you have a direct account with a Top 5 payment processor? Big difference!

“One-third of the cost of data breaches is from lost business”

IBM / Harris (2018) found that 75 percent of consumers in the U.S. say that they will not do business with companies that they do not trust to protect their data.

The number of businesses experiencing losses from cybercrime is increasing in North America, and so is the scale of their losses. The number of businesses reporting losses of more than a million dollars is rising.

• 60 per cent of small to medium-sized businesses go out of business within six months of a cyberattack
• 70 per cent of cyber attackers deliberately target small businesses
• 71 per cent of cyberattacks hit businesses with fewer than 100 employees
• $180,000 is the average loss that small- and medium-sized businesses sustain from cyberattacks

CLICK HERE for Complete Report - Is your payment processor a reseller?

Now is a good time to expand. Business is booming.

--National Federation of Independent Business (NFID)

click here for complete news release

Small Business Optimism Shatters Record Previously Set 35 Years Ago

Expectations translate to financing growth, profits according to NFIB’s leading indicator survey

Washington, D.C. (September 11, 2018) — The NFIB Small Business Optimism Index soared to 108.8 in August, a new record in the survey’s 45-year history, topping the July 1983 highwater mark of 108. The record-breaking figure is driven by small business owners financing and executing the plans they’ve put in place due to dramatic changes in the nation’s economic policy.

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Is Your Customer Financing Working?
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Does it boost revenue?

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More Approvals? .. Fewer Declines?

U.S. Small Businesses Anticipate Growth And Expansion

NEW YORK, April 30, 2018 /PRNewswire/ -- According to The Harris Poll, nearly three out of four small businesses in the U.S. plan to expand their product and service offerings this year.

With strong expectations for growth, small businesses are well-positioned to make improvements and upgrades. A total of 72 percent of small business owners report that expanding product and service offerings within current geographies is the top priority for this year.

Investment Priorities, Sources and Key Issues

When it comes to investing in their businesses, 50 percent say technology is at the top of the list, followed by equipment upgrades (47 percent) and hiring staff (36 percent).
To that end, over half of small businesses expect hiring at their company to increase over the next year.
Despite these expectations, small businesses remain focused on a number of key issues. Data security is the top concern for small businesses (68 percent), followed by continued economic uncertainty (64 percent) and rising inflation rates (61 percent).
The top ways in which small businesses have capitalized their company in the last five years include internal sources of funding (38 percent), secured bank loan (33%), and leasing/equipment financing (22 percent).

Understanding these key trends can help small businesses innovate and contextualize potential challenges. With data security as a top concern, we understand why half of small businesses are looking to upgrade technology at their businesses.

· Small business optimism and plans for expansion have reached historic highs.

o In March, the NFIB’s small business optimism index reached its 16th consecutive month in the top 5 percent of 45 years of survey readings.

o According to Wells Fargo, small business optimism is at an eleven-year high.

o In April, NFIB’s monthly jobs report showed that a net 20 percent of small business owners reported job creation plans, remaining at a historically high level, and 33 percent reported raising compensation, the highest reading since November 2000.

Small Businesses Struggling
With Cybersecurity Breaches
of Customer Payment Data

click here for Featured Article

The number of businesses experiencing losses from cybercrime breaches of customer card data is increasing in North America, and so is the scale of their losses. The number of businesses reporting losses of more than a million dollars is rising.

• 70 per cent of cyber attackers deliberately target small businesses
• 71 per cent of cyberattacks hit businesses with fewer than 100 employees
• $180,000 is the average loss that small- and medium-sized businesses sustain from cyberattacks
• 60 per cent of small to medium-sized businesses go out of business within six months of a cyberattack

"Over the next five years, smaller payment processors and resellers may not have the resources and technology needed to keep up with continuous upgrades in security required to protect merchants' customer payment data from fraudulent hacker breaches."

Small business owners embody the American pioneering spirit and remind us that determination can turn aspiration into achievement.

CRITICAL TO THE ECONOMY: Small businesses are responsible for a significant portion of U.S. economic activity and are vital asset to the economy.

· There are nearly 30 million small businesses in the United States employing over 57 million people, according to the Small Business Administration (SBA).

o A 2012 study found that small businesses produce nearly half of private non-farm gross domestic product (GDP) in the United States.

· Small businesses, defined as firms employing fewer than 500 employees, play a huge role in the U.S. economy.

o Small businesses comprise over 99 percent of all firms with paid employees in the country.

o Over 97 percent of all trade activity comes from small businesses, generating one-third of the United States $1.4 trillion in total known exports.

o Small businesses employ 48 percent of private sector employees and represent 41.2 percent of private sector payroll.

o Small businesses are diverse, representing 8 million minority-owned businesses.

· Small businesses are an engine for job creation.

o Historically, small businesses are responsible for two out of every three net new jobs created in America.

o Over half a million new small business are launched each year in the United States, creating more than 2.5 million new jobs per year, according to the Bureau of Labor Statistics.

· Small businesses are diverse, representing millions of women and minority owned businesses.

o According to the SBA, there were 9.9 million women-owned businesses as of 2012, including 4 million firms owned by Latinas and African American women.

o Almost 99.9 percent of women-owned owned businesses are small businesses.

o Women owned small businesses employ 7.3 million employees across the Nation.

o Small businesses represent 8 million minority-owned businesses.

o The number of minority-owned businesses is growing faster than non-minority owned businesses, with minority-owned firms generating nearly $1.4 trillion in annual economic output.

SMALL BUSINESSES ARE BOOMING: small business optimism and the economy have reached historic levels.

· The economy is growing and wages are rising at small and large businesses.

o The Council of Economic Advisers estimates that the corporate provisions of the Tax and Jobs Cut Act alone will raise GDP by 2 percent to 4 percent over the long run, increasing household income by $4,000.

o Department of Labor data from March shows a 4.1 percent unemployment rate, which is a 17 year low, and wages are up 2.7 percent over the past year, the highest of any calendar rate since 2008.

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Seven Ways Banks Measure Small Business Credit

Why does qualifying for a small business loan have to be such a mystery?

According to a CB Insights study, cash flow issues are the second most common reason startups fail, accounting for 29% of failures. In many cases, access to capital would make a big difference. Yet the loan application process is notoriously opaque for small business owners.

Research from the Federal Reserve Bank of New York shows the average small business owner spent 26 hours searching and applying for credit, contacted three financial institutions and submitted three credit applications. Despite this time-consuming work, only half of small-business applicants end up being approved for the loan amount they applied for.

Compounding this problem, many small-businesses owners may not know that they have a business credit score or how to access that information. Banks also don’t have to provide a reason for declining, and small businesses may not understand steps they can take to improve. What's more, small-business owners generally can’t afford a CFO able to help them with this process.

When small-businesses owners understand what factors into lenders’ decisions, they can work to improve their businesses and become more attractive in the eyes of lenders.

Knowing how banks evaluate the creditworthiness of a small business is a great place to start. There are seven key factors:

1. Business Debt Coverage

How much debt does the business currently carry, and can it afford to cover all of its existing debt obligations, as well as any new debt? To determine this, banks look at a company’s cash flow and its annual business debt payments.

2. Combined Business and Personal Debt Coverage

Business and personal finances are often interconnected. For this reason, banks usually take into account your personal debt obligations. What they want to know is: If the business is struggling and can’t afford to pay the debt, will the owner of the business be able to make the payments? This measure is calculated in much the same way as business debt coverage and takes into account business and personal cash flow, assets and combined debt obligations.

3. Business Credit

Did you know your business has its own credit score? There are a few different business credit scores that banks may use:

• FICO® LiquidCredit® Small Business Scoring Service℠: Scores range from 0 to 300.

• Dun and Bradstreet PAYDEX Score: Scores range from 1 to 100.

• The Intelliscore Plus℠ from Experian: Here, too, scores range from 1 to 100.

These scores are designed to quantify a business’ ability to repay a debt. Several factors influence your business credit score, including payment history, credit utilization ratio, company size and industry risk.

Note: “Hard pulls” can have a negative impact on the business and personal credit scores. Try to avoid applying for loans until you’re reasonably confident you’ll be approved, or check before you apply that the company does a “soft pull” that won’t impact your credit scores.

4. Personal Credit

Even if a business has a stellar credit score, banks want to understand the creditworthiness of the people running the business. Three credit agencies calculate a person’s credit score (known as FICO scores): Experian, Equifax and TransUnion. Though the models -- and, thus, the scores -- for each agency vary slightly, they’re based on the same criteria, which include payment history, amounts owed (including utilization), length of credit history, new credit and the types of credit in use.

5. Business Debt Usage

Banks want to know whether the amount of debt a business is carrying is appropriate for the business’ size and industry. Business debt usage compares outstanding business debt to either business revenue or assets.

6. Personal Debt Usage

Can you, as a business owner, access credit when you need it? Do you have available credit that you’re not currently using? Banks divide an owner’s outstanding debt balances by the total available revolving credit to calculate personal debt usage. In general, banks would like personal debt usage to be no more than 30%.

7. Business Revenue Trend

Banks want to know whether a business is currently growing. They assess the business revenue trend by calculating the average revenue growth over time. To limit the risk of default, banks look for revenue growth trends that match (or exceed) the industry average.

Note: Banks pull the revenues from tax returns. If businesses have previously been denied loans, it’s generally advisable that they reapply after a new tax return.

It’s important to remember that all seven of these measures will change over time. So, if your business was previously denied and your finances have improved, it may be worthwhile to reapply. Since banks rely on tax returns, the right time to reapply may be after you file your next return. One watch-out on this: Avoid initiating too many “hard pulls” on your credit, because this can hurt your score.

How can I keep track of all this, you ask? After all, most business owners are experts in their fields, not in finance. One alternative is to hire a financial adviser, but they can be expensive. The good news is that there are tools available today online today to help small businesses keep track of their finances and make the loan application simpler. So, if you can’t afford a “real” CFO yet, you might consider a digital online service instead. Digitizing your financial documents can also help, so when it’s time to apply for a loan, all the documentation is organized and searchable.

Ultimately, shedding light on the lending process will benefit all parties involved. Applicants will know whether they’re likely to be approved and won’t waste time if they’re not.

Transparency around the process is a good for lenders, too, as it will improve the quality of loan applications, increase approval rates and make the lending process more efficient and profitable.

Small businesses represent 99.7% of our country’s firms, according to the Small Business Administration. It’s time to empower them with valuable information about their finances, so they can reach their full potential and help our economy grow.

Business owners who cannot wait or do not qualify for a traditional business loan from a bank often get the money they need quickly as short term advance from other sources that use finance technology for alternative credit scoring. The short term advance has become the preferred strategy for many small businesses.

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America's Resurgent Economy

Small Business and Consumer Confidence at Record Highs

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Small Businesses More Interested in Capital

Innovative Main Street Capitalism Inspires
Confidence in the American Dream

Small companies are getting more interested in borrowing, but many are still finding it hard to get loans from banks. Over 60% of small businesses are planning for capital expenditures in 2018, yet 82% of small business loan applications are denied by the banks.

That’s the finding of a quarterly survey of small businesses released in December 2017 by Pepperdine University’s Graziadio School of Business and Management and Dun & Bradstreet Corp.

The survey findings show that owners who have shied away from risks like borrowing ever since the election may be feeling more secure about taking on debt. But banks that are adverse to risk, especially given the rules imposed on them by the Dodd-Frank banking law, are still wary about small companies.

Banks also are closing branches and paring credit in small towns and rural America, focusing instead on large urban markets. That leaves many communities without the friendly faces of finance that once sustained them and worsens a tough economic environment. -- Wall Street Journal 12/26/2017.

On a positive note, many companies wanted financing because they want to grow or acquire another business — 44 percent of small businesses, and 47 percent of mid-sized ones.

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Small Business Optimism Hits Near All-Time High

Not since the roaring Reagan economy has small business optimism been as high as it was in November, according to the National Federation of Independent Business (NFIB) Index of Small Business Optimism, released today.

“We haven’t seen this kind of optimism in 34 years, and we’ve seen it only once in the 44 years that NFIB has been conducting this research,” said NFIB President and CEO Juanita Duggan. “Small business owners are exuberant about the economy, and they are ready to lead the U.S. economy in a period of robust growth.”

Report: Small Business Optimism Index
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Working Capital

Is it the right time to finance growth?
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The Ins and Outs of Qualifying for a Small Business Loan

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The Ins and Outs of Qualifying
for a Small Business Loan

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Small Business Financing Guide

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.

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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."

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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

ROI 5x RETURN

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.

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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

It’s amazing how far the alternative financing industry has come in such a short time. According to a new report by KPMG and the University of Cambridge, alternative finance lending for businesses has grown at an annual rate of over 156% since 2013, while lending volumes from traditional sources has grown by only 25%.

Market size & growth

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

An installment loan is what many of us think of when we think of a loan. The borrower receives the capital in a lump sum and then pays it back over time, usually monthly, in equal payments at a fixed interest rate. Installment loans are typically available from a range of finance providers.

Smart lenders, however, have created next generation installment loans that completely change the experience for small business owners.

Now, loans can often be made in a matter of days, The application process is simple and fast, and less documentation is required. Further, many lenders don't require personal collateral or an appraisal.

Many business owners like the fixed payments, which allow them to anticipate and manage their financial obligations. Like any other loan, however, interest rates, payment terms, fees and eligibility can vary widely so business owners need to be diligent in shopping for the best loan for their needs. Business owners should look for established capital providers with proven experience with businesses of their size and in their industry.

2. Sales-Performance

Sales-performance -- sometimes called revenue-based financing -- offer flexible repayment based on cash flow. Borrowers pay a fixed percentage of each day's credit or debit card sales to the lender.

This new flexible business funding is replacing the unregulated merchant cash advance.

Many entrepreneurs like this type of funding because it helps them manage the inevitable ups and downs of running a small business. Some days, weeks or months will be busier than others and their repayment (and loan term) will reflect that variation. More is sent on busy days, less on slower days.

Funders have also revolutionized these types of products. Since the funding is often repaid through an automated process using the business's credit card processor, the owner doesn't have to remember to write a check to stay current. When the funding is repaid, the payments stop automatically.

These cash flow friendly funding products are offered for amounts ranging from just a few thousand dollars to hundreds of thousands of dollars. In choosing the right funding, it's important for business owners to consider their overall needs, goals and resources, and the associated terms and fees. These types of capital, for example, may carry higher costs than conventional loans. On the other hand, small businesses that can't wait or don't qualify for traditional bank loans, or have seasonal fluctuations, may see this as an attractive option.

3. Small Business Administration (SBA) Loans

These government guaranteed loans can be attractive to small business owners. They often have competitive low interest rates, a longer repayment period and more flexible lending standards than traditional bank loans. They may not be suitable for every type of business, however.

According to the SBA, small business loans range from about $5,000, called a microloan, to $5 million, the largest guaranteed amount. The average SBA backed loan is about $370,000. The large majority of small service businesses, such as hair and nail salons, won't require a loan nearly that large.

The application process can also be demanding and time consuming. For example, potential borrowers must submit a personal and business credit history, personal and business financial statements, and a detailed business plan, among other documentation.

Recognizing that its application process can be demanding, the SBA has introduced new online tools to help borrowers. However, business owners often wait weeks or months for approval and funding.

While SBA loans make it possible for banks and other lenders to provide credit to more businesses, they may not be the most practical (or attainable) choice for many small businesses. The agency notes, for example, that "reasonable to strong collateral (personal and business assets) is very important" and it expects the loan be "fully secured."

4. Customer Purchase Financing

Innovative one-stop online full credit spectrum consumer funding solutions help to solve a daily problem for business owners. Smart tech-driven consumer funding platforms that work on any device at the point of sale provide a wider range of financing options and lower rates for consumers who are purchasing higher-end goods and services from $500 to $25,000, including automotive services, dental, medical, veterinarian, elective cosmetic surgery -- an affordable alternative to using their credit cards.

Through the integration of multiple strategic lending partners in combination with unique lending structures, instant credit decisions are available for the most competitive customer financing products for each level of credit score through one streamlined platform, empowering merchants to better serve their customers and significantly increase sales revenues.

The result for the small business or medical practice is more approvals for all types of credit scores at the time of the transaction.

New customer financing provides for the important things in life. Whether it’s a medical procedure not covered by insurance or a new roof, we’re there to cover expenses over $1,000. Our innovative financing platform empowers merchants to extend instant financing at the time of the purchase transaction. With a simple online application on any device, your consumers receive the best loan product regardless of their credit.

Capitalizing on the Golden Age of Financing

In the past, banks were the first stop for many small business owners. Now, years after the financial crisis, banks are still cautious about small business lending and are focused on loans in the six-figure range, which is more than many small businesses need.

Further, while traditional bank loans can offer attractive interest rates, the process can be slow and complicated. According to research from the Federal Reserve, small business borrowers typically spend 33 hours searching, applying and completing loan paperwork, and successful applicants wait weeks or months for the funds to actually be approved and available.

Every business owner knows his or her business best and the choice of financing is based ultimately on the specifics of the business, including the long-term plan, projected growth trajectory and available resources. A diverse and growing field of capital providers offers more choices and more customization than ever. With the Golden Age of financing, small business owners have an unprecedented opportunity to find the right partner to quickly meet their capital needs -- just not from a bank.

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

THE TRUE COST OF CAPITAL

According to the newest study (2015) by the Federal Reserve Bank of New York, business owners are spending 33 hours on average searching and applying for credit. That's up from 25 hours in 2013.

That’s an enormous amount of time for a business owner to spend away from running their business. While traditional bank loans may offer low rates, their process is demanding and very time-consuming, and businesses often don’t get approved – and if they do they’re often required to collateralize major assets like their home.

It’s important to also understand the actual rates being offered to fully understand the total cost of the loan. For example, some lenders believe that shorter-term loans are better quoted on a cost-per-dollar basis because annualized rates on a short-term loan are very duration sensitive and may confuse a borrower as to the actual total interest cost, especially if they are being compared to an annualized rate on a longer-term loan which often has a higher total cost.

Depending on the type of capital product and length of term, the presentation of the cost of money that allows borrowers to best comprehend the true cost of their lending option may differ.

The cost of business capital can be stated three ways:
● As an APR (annual percentage rate)
● As a factor rate (i.e., $1.XX for every dollar borrowed)
● As a total payback amount ($20,000 for the $20,000 borrowed)

Data from a March 2016 survey indicates that small businesses find “total payback amount” the easiest way to understand the cost of capital associated with business funding.

When asked which method was easiest to understand, two-thirds of respondents chose total payback amount; only 17.4 percent chose APR and 15.3 percent chose factor rate.

Considering only the APR can be misleading for determining the cost of a short-term (months) business capital when compared to a longer term (years) loan because the lower APR often can be the more expensive loan over time.

YOUR CREDIT SCORE

The Overachiever’s Guide to Getting a Perfect Credit Score

While your personal FICO credit score may not be a determining factor for short-term business funding, it is always an important consideration.

Technology driven funding makes quick decisions based on revenue, strength & growth.

Short-term unsecured online business capital tailored
with flexible terms and variable or fixed payment
options to fit your business needs, goals and timing.

Bank lending became ultra-conservative after 2008, and today banks continue to close local branches, and bankers are still really restrictive in loans they are willing to approve.

"Only one in five small business loan applications are getting funded," says Carolyn E. Predmore, a marketing professor and faculty moderator for the entrepreneurship club at Manhattan College in Riverdale, New York.

"Small business owners, even with excellent credit, are often too small to get a bank loan, and as a result, small business finance options have grown quickly," she said.

When tight lending restrictions commonly found at traditional financial institutions spur you to look elsewhere, small business finance options can answer the need for easily accessible, flexible small business working capital. The funding is faster and easier to obtain, but also at a higher cost of money.

For small business financing, cost of money typically ranges range from low-teens to mid-30s, or more depending on credit issues, term of the financing and the overall health, strength and age of the business -- and other data.

Cost of money should be viewed as an actual dollar figure, not just an annual percentage rate (APR), so the small business owner can quickly decide if the benefits of funding outweigh the cost of money.

Annual percentage rates may have been created and promoted by bankers to hide the true actual total cost of financing in real dollars from consumers.

There’s also this misperception that "alternative" financing is for bank turn-downs or sub-prime borrowers, but it’s really not that at all.

It costs the bank too much money to actually find the customer, underwrite the loan, process the loan, close and service it. They’re spending the same amount to close a $50,000 loan as a $500,000 loan, so the economics don’t make sense. This means small businesses often seek amounts too small for banks to underwrite, even if they have a great track record.

You simply may be too busy to apply for a conventional bank loan. If you own a business and are working around the clock, you don’t necessarily have time to go through the lengthy tedious process with the bank, which could take weeks or months.

Banks often have exhaustive approval processes, high minimums, and flawless credit requirements.

After all, finding a business loan on your own can be daunting, consuming three full workdays on average and requiring that you make sense of myriad complicated loan options.

The current conventional funding process for a small business is time consuming, complex and often does not result in the small business actually getting a loan, or they get far less than requested. Small businesses contact at least 3 different financial institutions for help and spend an average of 33 hours applying for credit, according to the latest Federal Reserve Bank of New York Small Business Credit Survey in 2015.

Today, smart business financing offers the convenience of a relatively quick decision and easier access to capital.

However, many small companies are letting fear of rejection keep them from applying—and getting—business loans. And that can do them serious harm, both in the near term and over the life of their business. Many more firms fail to apply for credit because they fear being rejected than actually get rejected.

But there's a wealth of smart business finance options for small businesses who need working capital for any reason.

Over the last few years, an array of technology-driven
lending platforms have emerged with innovative strategies that
change the way people, businesses and institutions access and
invest money. Increasing numbers of consumers – raised on
ATMs, credit and debit cards and online money transfers – are
embracing the speed, convenience and transparency offered by
these platforms. Furthermore small businesses, limited by nearly a
decade of tight credit and declining loan approvals from banks
and traditional lenders, are searching for alternative sources
of commercial working capital for the following reasons:

Speed: Using algorithmic technology, credit decisions and underwriting takes minutes, not days.
Transparency: Investors and borrowers alike gain visibility into the funding process, including costs, risks and rewards.
Customer-centric: Platforms bring the “brick and mortar” branch into the on-demand and mobile application generation.
Data: Platforms have re-engineered the definition of credit worthiness. FICO may still be a factor, but it’s no longer the only determining factor.

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Debt refinance examples

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Small Business Optimism Shatters Record Previously Set 35 Years Ago

Expectations translate to financing growth, profits according to NFIB’s leading indicator survey

Small Business Optimism Hits Near All-Time High

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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.

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Inventory Financing as a Multi-Purpose Solution

Use Business Inventory Funding to Purchase at Lower Costs

Business Equipment Financing

Equipment Leasing vs. Purchasing Equipment

Save on Equipment by Paying in Cash

Business Equipment Funding

Business Expansion Capital

Financing for Expansion and Remodeling

How Do You Know When To Expand?

The Signs Are There – Now What?

Financing Your Growth with Business Expansion Funding

Financing For Marketing and Advertising

Smart Marketing and ROI

Capital for Marketing and Advertising

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