
Principles of Building Business Credit
Having access to the best business funding options may rely on your business credit. Here’s how you can build good business credit.
PPP loans were issued to help keep small businesses afloat during the coronavirus pandemic. As a form of unsecured finance, PPP loans were granted to qualifying businesses to help them continue to pay their employees, amongst other costs.There were strict eligibility requirements, as well as conditions as to what the loan had to be used to cover.
The Paycheck Protection Program is now on its second round of funding for eligible businesses. However, some business owners may have already been declined a PPP loan. If you applied, but received a denial, you may be wondering why. You may also be looking for alternative forms of business funding. On the upside, there are many other options you have available to your business (keep reading for more on these)!
We’re here to tell you everything you need to know after being denied a PPP loan. We will share some common funding methods so you can easily assess your alternative business funding options.
If your loan was denied, you’ll likely have received notice directly from the lender, rather than the SBA. It’s possible they won’t give a reason for your denial. There are some common reasons for denial, such as: a mistake in the application, your business doesn’t qualify for the loan or you have previously defaulted on a SBA loan. If you received a rejection without reason, you should try to contact the lender directly to find out why.
There are a few other kinds of loans that you can apply for in lieu of receiving a PPP loan.
The SBA has many other types of loans available for small businesses facing financial hardship and economic uncertainty. Here are a few options:
Whether you’ve been denied a PPP loan or are looking for unsecured financing options for your small business, you have a lot of routes to consider.
Let’s take a look at some popular business funding options that can provide you access to capital quickly:
Having the ability to access business funding quickly can greatly impact your success. Although many business owners were denied PPP loans, there are other SBA options to aid business owners facing the negative effects of COVID-19.
Additionally, alternative sources of unsecured finance like merchant cash advances or online term loans exist to meet the needs of small business owners.
Having access to the best business funding options may rely on your business credit. Here’s how you can build good business credit.
Did you know that there are more than 20 million ecommerce sites?
The world of online retail is extremely competitive. As a business owner of an ecommerce website, there are many things, both big and small, that can help you gain a competitive edge and boost your sales.
Depending on where you are in your business cycle, you may need to rely on financing methods like taking out a short term business loan to fund your efforts. Or, if you have enough cash flow, then you can reinvest into your business to increase profit.
We will break down 10 useful, tried and true optimization tips to boost your online sales. Then, we will get into various financing methods should you need some quick cash fast.
As an online business owner, you may find yourself in need of quick cash to finance your business costs. While traditional bank loans are an option, many new businesses won’t qualify because of the strict requirements. However, there are alternative forms of funding like taking out a short term business loan to get the capital you need to increase your sales.
A short term business loan is a type of loan that supports a temporary business capital need. Many businesses who aren’t approved for lines of credit will look to short term business loans. This attractive funding option tends to have a lower credit limit than a business line of credit, but they also provide businesses with funding fast.
They get their name from the repayment structure, which tends to be short term. Rather than paying back monthly or yearly, short term loans are often repaid on a daily or weekly term. It’s important to look at the annual percentage rate (APR) which affects how much you’ll owe back on what you borrow.
There are a variety of different types of short term business loans, including:
At Uplyft Capital, our focus is on merchant cash advances, a type of short term business loan that can provide you with approval and funding in less than a day. A merchant cash advance’s repayment structure is based on your business’ credit and debit card sales over a period of time. This means, you borrow money and then pay it back with a percentage of credit and debit card sales. It’s a great source of funding for businesses who need cash fast, have steady sales and are looking for alternatives to traditional loans.
Ecommerce businesses have skyrocketed over the years. New ecommerce sites make their way into the digital world on a daily basis. These digital storefronts have a grand opportunity to boost their sales with a variety of approaches and actions. For many, this will require some upfront capital for their short-term needs. That’s where a short-term business loan like a merchant cash advance can come into handy!
Once you devise the strategy by which you will grow your online sales, you can estimate your need for capital (if cash flow can’t cover the costs). Then, you have the option to apply for any type of short term business loan you wish to finance your expansion!
Having access to the best business funding options may rely on your business credit. Here’s how you can build good business credit.
There are many ways to boost your bottom line.
From focusing on maximizing sales to minimizing costs, there are various methods you can try to find what works to fuel your growth the fastest. Depending on your strategy and goals, you’ll require different funding requirements and methods by which you can attain the capital.
Some business owners may opt for a short term business loan. Short-term business loans are a capital funding method used for a business needs like working capital, buying equipment or expanding. If you’ve been denied business loans because of your credit history and financial status, you need to know that there are ways to find funding through business loans for bad credit.
Before we jump into the logistics, let’s take a look at some of the most common ways by which small businesses can transform into profitable powerhouses.
Options for business funding are plenty. If you have bad credit, then you may need to consider business loans for bad credit or short term business loans.
Growing a profitable small business won’t happen overnight. It’s useful to conduct research in your respective industry to figure out customer demand. Based on needs and funding options, you can outline a plan to run your business efficiently. This way, you can satisfy customers while maximizing profits and minimizing your costs.
The aforementioned strategies are just a few ways that small businesses can boost their bottom line. It could require a short-term business loan, an alternative funding method, or finding business loans for bad credit to make your dreams a reality.
Having access to the best business funding options may rely on your business credit. Here’s how you can build good business credit.
It’s estimated that 12-24 million ecommerce sites exist. With each day, new sites are added into the world. As with any type of business, having finances in order is key for growth and survival. Whether your financial leverage comes in a line of credit, loan, merchant cash advance or another form of funding, your ecommerce business will need it to make it.
Here, we will look at what financial leverage means in business, how it works, and your funding options for running an ecommerce business.
When it comes to business, leverage can be defined as “using borrowed capital as a funding source” to expand assets. Since you’re borrowing money, or using debt, to finance assets with potential returns, it’s an investment strategy. The hope is that the benefits will eventually outweigh the costs. So, you’ll be able to pay back the debt, plus any interest, and gain profits.
As with any type of financing, there are both upsides and downsides. The benefits of using financial leverage like a line of credit, for example, include:
If your company is considered to be “highly leveraged,” then it means that most of the capital is in the form of debt. That comes with its own sets of risks, and we will get to that shortly.
Financial leverage can be translated into a nominal amount by looking at a business’ financial statements. This will help you find out how much of the business is based in debt, or leveraged.
For starters, the main financial leverage formula to consider is:
Total Debt + Shareholder’s Equity = Financial Leverage Ratio
Shareholder’s equity can be calculated by taking the current number of outstanding shares multiplied by the current stock price. This will show you how much of your business is owed to others and not your own.
By looking at financial statements like a balance sheet, income statement or cash flow statement, you can also learn more about financial leverage with these formulas:
In these formulas, if you are running a retail ecommerce business and take out a line of credit, then that amount of credit becomes considered debt. It’s money you’re borrowing to buy assets, or equity. In this example, you may use this line of credit to purchase inventory, and inventory will translate to sales. Inventory is considered a current asset because it can be converted into cash within one year or less, if all goes well!
It’s easy to see from the above example that financial leverage is inherently taking on a risk. If you buy all that inventory on debt and cannot make sales, then you owe money and are not bringing in cash flow. That’s just one type of risk associated with financial leverage.
Financial leverage will also affect current and future cash flow. You’ll have to consider how much money you owe back on the borrowed principal amount as well as interest owed. Furthermore, your financial projections need to take into account financial leverage.
Depending on what you’re using the debt to purchase in forms of assets, there’s other risks like market risk, economic risk or the risk of natural disasters. If you use debt to purchase real estate and the values drop or a hurricane wipes out the building, then you’ve lost on your investment.
Whether you have brick-and-mortar location(s) or are solely running an online store, the explosion of ecommerce has ushered in the need for ecommerce funding. The good news is that since it’s such a popular business venture, there are many options to provide you with financial leverage.
Ecommerce businesses often rely on financial leverage because of the nature of the business. Whether you need a line of credit or quick cash to buy inventory, equipment, pay for warehousing or operational costs, etc., you will take on debt to grow.
Ecommerce is a quick-paced platform that requires you to provide value consistently to your customer. Since the internet moves so fast, you can set yourself apart by being prepared for whatever is to come. This will mean being able to get cash fast to meet spikes in demand and changing customer spending habits, so financial leverage is a concept you’ll want to know well.
Having access to the best business funding options may rely on your business credit. Here’s how you can build good business credit.
When seeking business funding, there is a list of criteria you’ll have to meet for approval. Depending on the type of funding you want, the requirements will differ. But, what do you do if you have bad credit? The good news is that you can find funding, even with bad credit. We’re going to share some alternative business funding methods with you. Additionally, we’ll get to the bottom of what credit means, why it matters and what makes it good or bad.
Small business funding is the process and act of borrowing capital. Capital is provided through business loans or lines of credit from lenders so that small businesses have money to cover their needs.
Depending on the type of business funding you select, there will be a unique process for approval. The amount of capital you can receive also varies by funding method.
Every small business owner has their own set of needs at any given time. When cash flow is running low, access to quick capital can be the answer to many problems a business is likely to face. Some reasons why a small business may seek outside funding include:
To receive small business funding, the process usually includes these steps:
The lender will assess if a borrower qualifies to receive funding. Even if a lender does not approve a borrower, they may still make suggestions for other sources of funding. Approval rates vary by the type of product a borrower applies to receive. The likelihood of being approved along with the amount of time the funding process takes can depend on:
When small business owners don’t qualify for business loans for any list of reasons, then they can look to alternative business funding options. These provide borrowers with quality and accessible financing methods.
Alternate funding began in the 2000s because traditional lenders were facing a challenge to finance all small businesses. The economy and small businesses continue to rely on alternative business funding methods because they offer variety, convenience and better terms in specific cases.
Here’s a list of some types of alternative business funding options available to small business owners:
Alternative business funding is a good solution for any business owner who may have:
One of the most common reasons why small business owners get declined for loans is due to bad credit. Credit is the ability to borrow money and pay it back later. Creditors are banks, lenders, merchants and service providers who give money upfront (grant credit) because they trust you’ll be able to pay it back.
Creditworthiness or your credit refers to a rating that allows creditors to judge your likelihood of paying back the money. In the United States, creditworthiness is based on credit history, or your record of borrowing and paying back money. Independent credit bureaus store these records and share the reports with lenders.
Your credit report includes information like:
Credit matters in small business funding because it is one of the main criteria by which you are judged for approval. It also matters for when you sign a lease for an apartment or home (can affect the amount of your security deposit), take out insurance (helps determine your rate), open an account for a utility company or even to judge your character when you apply for a job.
If you’re worried that your credit won’t be good enough for a loan, or you’ve already been denied, it’s okay. There are still ways to get business funding with bad credit.
To be the best prepared for alternate funding, you should:
When it’s time to apply for business funding options, outline the criteria by which you’ll be judged. If you clearly don’t qualify according to lenders’ criteria, don’t waste your time trying.
Instead, re-evaluate where you stand financially and look to alternate sources of business funding. There is definitely a way to get the cash you need at any phase in your business cycle.
Having access to the best business funding options may rely on your business credit. Here’s how you can build good business credit.
There’s a lot to know about the different types of loans, as well as the alternative types of business funding out there. Many businesses opt for loans backed by the Small Business Administration (SBA).
We’ll talk about what small business loans are, the various types, interest rates, repayment terms and everything you need to know before you sign any paperwork.
Small-business loans are issued by banks or participating lenders and guaranteed by the SBA. The SBA is able to guarantee percentages of these small business loans as follows:
Many small business owners opt for SBA loans because their rates and terms are typically more flexible and lower than other financing methods. That being said, not all small and new businesses can qualify for business loans. Before we jump into what it takes to get a business loan, let’s see what types of SBA loans are available.
The SBA guarantees loans of different amounts and for different purposes. Under each program, different groups process the loans as follows:
Interest rates for SBA loans are determined by participating lenders who set their interest rates based on the prime rate plus a markup rate, which is called a spread. It looks like this for the 7(a) loan program based on loan amounts and the repayment terms.
Receiving approval for a SBA loan begins with an application process. It can be a lengthy process, taking weeks or months before you see funds or rejection. There are very specific criteria you must meet to be able to apply for a SBA loan in the first place. So, if you fall into any category of ineligibility, it’s not even worth applying.
If you are eligible to apply, then you should prepare the following paperwork that will be needed for the application:
Although the process and application can be lengthy, SBA loans do offer some of the best interest rates and repayment terms when compared to other business loans, and they are guaranteed if a borrowed defaults. That’s why it is a good place to begin. However, such lenders do care about your cash flow and credit history. They will stringently choose businesses that they believe have high creditworthiness and are unlikely to default on the loans. Lenders will look at what’s known as the 5 C’s, namely:
They’ll also want a strong business plan and down payment. As such, some up-and-coming businesses may have a harder time proving this good history.
This is just one of the reasons why many small businesses can benefit more quickly from merchant cash advances (MCA) over traditional bank loans. A merchant cash advance provides borrowers with a lump sum of money upfront in what can be less than 24 hours turnaround. As repayment, businesses promise a portion of future credit card sales that will be proportionally paid back. In most cases, it’s much easier to apply for and receive a MCA than a business loan.
Although the Small Business Administration doesn’t provide loans per se, they do guarantee loans on behalf of small businesses that borrow from participating lenders. Since they are guaranteeing the borrower, the application process is rigorous and requires that small business owners are in good standing to pay back the loans they borrow.
However, not all small business owners will be approved for SBA loans, nor do they all qualify. Some good alternatives for small business funding include merchant cash advances or lines of credit. Every form of borrowing money comes with its own terms and costs, so it’s best to assess your current business standing to see what option leads you down the safest and most cost effective route.
Having access to the best business funding options may rely on your business credit. Here’s how you can build good business credit.
The first big decision you’ll have to make is how to fund your small business. You may ask yourself, “Should I get funding?” or “Should I seek investment?” No matter how you phrase the question, you’ll essentially be asking how to do it.
What works best for some isn’t the right choice for others. There are many variables to each funding route you may choose to take. Let’s weigh the pros and cons of some of the most common ways by which you can get business funding.
2. Borrow Money – Formal: One of the most popular options that entrepreneurs use to get their company off the ground (and continue to use throughout its existence) is to borrow money from an institution or government. There are several options to choose from when you borrow money. A few common sources include:
a. Bank loans: You can apply to receive a business loan from a bank. If you don’t know where to begin because there are so many options, try use our Marketplace, which is designed to match you with the loan provider that best suits your current needs.
b. Merchant cash advances: A merchant cash advance is a way to borrow a lump sum of money quickly. When you get a merchant cash advance, you promise to pay it back with a portion of credit card sales.
c. Investors: There are different types of investors. Angel investors are individuals who lend money usually at the inception of a new business idea. They tend to give large sums. Venture capitalists invest in several new businesses on behalf of clients. This makes receiving venture capital a competitive scene.
3. Borrow Money – Informal: If you don’t want strings attached when you borrow money, you may be in a position to take a loan from friends or family members. You can also consider crowdfunding platforms like Kickstarter. Even when you seek assistance from personal ties, it’s best to prepare a business plan and showcase how you will be able to pay back the money in a set timeframe.
Finding the funding source that makes sense for your new business adventure will require research. How you choose your funding method will affect the early days of your business, which lay the foundation for what is yet to come.
The upside is that you can start with one funding method and always change it up as the business grows. Your needs will change as you grow and scale, too. If you’re worried about being approved for a business loan, look to merchant cash advances. If you have family and friends with disposable income who are willing to lend some cash, you can avoid the competition of finding a venture capitalist.
Getting started is the first and most necessary step!
Having access to the best business funding options may rely on your business credit. Here’s how you can build good business credit.
For any business, a grant is a solid method for funding because you don’t have to give it back. The types of small business grants available are growing in number, which adds to the chances that you will be awarded.
Here’s everything you need to know about small business grants, including who is eligible, the options available and how you can apply.
A small business grant is money awarded to help fund small businesses and nonprofits on their path to success. Governments and private organizations offer small business grants. You can consider a grant to be a gift, because it doesn’t have to be paid back. Unlike a loan, a grant requires no collateral, fees or interest.
Although the money is free, a grant may come with terms attached. The grant-giver may speculate how you can use the funds. For example, a grant may be provided to hire more employees, so if you use the money to buy equipment instead, you’ll have to pay it back. You may also face legal ramifications.
Eligibility for grants depends on who’s giving them. For example, a government small business grant won’t be provided to cover operational expenses or pay back debt. Government grants are most attainable for nonprofits related to medical research, technology and education.
However, organizations provide small business grants for:
As alluded to, grants come from two main sources, namely the government or private organizations. Private organizations like charitable foundations may also offer grants.
Although it would be helpful to have, there isn’t a centralized database for all grants. Instead, you have to search for specific types of grants based on your needs. But, we’ve compiled a quick list of places to start.
Government Grants:
Private Corporation Grants:
Foundation Grants:
Free money is the best funding method, but it doesn’t make it the easiest. Since you don’t have to pay back the grant, organizations do have to be highly selective in who they award the money to.
For starters, the application process tends to be lengthy (but, let’s face it – it has to be that way). To begin, it’s best to find a grant that specifically meets your needs. Then, you can follow these best practices to boost your chances of winning the money:
Small business grants are highly competitive. Whether they come from the government or organization, it requires that your business fits the requirements perfectly like a puzzle piece. When applying for small business grants, it’s also a good idea to have other funding methods in mind in case you aren’t awarded with the free money or need more.
For some, a merchant cash advance may be the right fit! A merchant cash advance offers you money upfront in exchange for a portion of future credit card sales. If you experience a slow month of business, then the money you pay back becomes a function of your sales, so it can be less stressful than having a fixed rate on a loan.
No one would refuse getting free money to help set their business up for success. For this reason, small business grants are highly competitive and not always the right fit for every small business. But, if you can find a small business grant that aligns with your needs, then it’s worthwhile to take the time to apply meticulously.
At the same time, you can check out merchant cash advance options. It’s just another useful low risk way to secure business funding quickly.
Having access to the best business funding options may rely on your business credit. Here’s how you can build good business credit.
When running a business, it’s likely that you’ll borrow money at some point in some form or other. There are various options when it comes to borrowing money. If you have to decide between bank loans vs. credit, then it’s useful to first understand how they are similar and different from one another.
Let’s take a look at everything you need to know so you’ll be prepared to make the right decision.
A loan is a lump sum of money that gets repaid with interest. Interest is the cost of borrowing money and is often set at a fixed percentage of the lump sum. Repayment typically happens over time in regular payments until the full amount borrowed is paid back. The majority of loans are amortized, meaning that each payment is the same amount.
There are a myriad of kinds of loans. Throughout life, people tend to take out loans for personal reasons, like a mortgage when buying a home or a student loan for education. Businesses take out small business loans to help cover their expenses.
A business loan is also known as a commercial loan. Loans are provided to help businesses with operational costs, hiring staff, buying inventory or for any other capital need. Business loans come in different forms, some of which include: a bank loan, invoice financing, microloans, business cash advances, cash flow loans, asset-backed financing, and mezzanine financing. Depending on your need and business structure, it’s best to research the types of loans you can receive to find out what works best.
A line of credit allows borrowers to draw money and spend it up to their limit. Once the money is repaid, often with interest, then the credit can be spent again. It serves as a revolving account.
For example, if you have a business credit card, then you are given a business line of credit, or an amount you can borrow for the month. Let’s look at what this may look like with numbers. Say you have a business line of credit for $10,000 and you spend $3,000. Then, you have $7,000 in credit to still use before you hit your credit limit. Once you repay the $3,000, then your line of credit is back to $10,000.
There’s no right or wrong answer in terms of choosing between a bank loan and a line of credit. However, depending on your needs and timeline, one could be more beneficial than the other.
A business line of credit provides you with advantages like:
On the other hand, a bank loan can be more useful in specific instances, including:
An easy way to decide between a bank loan and a line of credit is to think of it this way:
Another big difference between the two is the interest rate and terms.
Lines of credit and loans are offered based on assessments of your business. It’s possible that you will apply for a small business loan and be denied by a lender. When this happens, there’s no need to panic. There are alternative funding methods to consider like a merchant cash advance. At Uplyft Capital, you can simply apply for a merchant cash advance and receive capital almost immediately. Take a look at our programs to see what may be fit for your needs!
Both small business loans from traditional banks and business lines of credit have helped businesses stay afloat and prosper. To determine what is the right funding method for your business, start by determining the amount of capital you need. Then, take a look at your inflow of money and ability to pay back the borrowed amount. After you calculate interest rates and weigh your costs and benefits, you will be able to find the funding option to support your business goals.
Having access to the best business funding options may rely on your business credit. Here’s how you can build good business credit.
By now, you’ve probably heard of the Paycheck Protection Program (PPP). For small business owners, this federal loan program was set to close to applicants at the end of June. Just four hours before the program was set to expire on June 30, a bill passed to extend the program. President Trump signed the “PPP Extension Act” on July 3, which means that eligible borrowers now have until August 8 to apply for funds and receive loans with forgiveness terms.
The goal of the program is to provide a loan that will help to pay employees’ salaries, mortgage payments and operational costs. Over 4.8 million small businesses have already submitted their applications to receive aid from the government during the coronavirus pandemic.
Before the program expired, there was still $130 billion left unused. The application process is still set up to be reviewed on a first-come, first-serve basis.
Not to be confused with the Paycheck Protection Program Extension Act, there was another bill recently signed regarding PPP. The Paycheck Protection Program Flexibility Act of 2020 (PPPFA) slightly amends the original PPP forgiveness terms.
Here’s a look at what got updated:
If you fall into one of the following categories, then you are eligible to apply to receive a Paycheck Protection Program loan:
To apply, you have to fill out the necessary documents and submit an application online.
Some applicants for PPP have been denied. While there are many reasons why your PPP application could be rejected, it doesn’t mean that your funding options stop there. At Uplyft Capital, our goal is to provide small businesses with nearly immediate funding through our merchant cash advance programs.
Merchant cash advances could be better than loans for some businesses for several reasons. Some of the benefits are that you don’t need a high credit score for a cash advance, the repayment terms are relative to your monthly sales, there’s no personal guarantee, and there are no strings attached. This money is yours to use for whatever you need, not just for payroll or operational costs.
Even if a merchant cash advance is not the right fit for you, you can leverage Uplyft Capital’s marketplace to find a loan provider that is tailored to your needs.
There’s nothing new to say about how dramatically impacted small businesses owners have been at the hands of the coronavirus pandemic. But, the upside is that there are many ways to still keep afloat by applying for financial aid from outside sources. Whether it’s through the government’s PPP program and its extension, or through Uplyft Capital’s programs or a different lender, it is possible to get funding fast.
Having access to the best business funding options may rely on your business credit. Here’s how you can build good business credit.