Saturday, May 26, 2018

Payroll Loans: 3 Best Options When You Need to Finance Payroll

Every small business experiences financial upswings and downturns. Ideally, you’ll experience more of the former than the latter—but you also know that the reality isn’t always perfect. So, when funds are drying up, and you don’t have the financial bandwidth to cover your employees, payroll loans can be life savers.

Of course, it’s absolutely crucial that you make paying your employees a priority, no matter what. Not only is not paying employees a breach of trust, but it actually violates the US Department of Labor’s Fair Labor Standards Act. Docking employee pay also indicates that you’re not withholding payroll taxes, and you could become personally liable for recovering those expenses.

For all these reasons (and more), it’s important to leave room in your budget to cover employee wages. But sometimes massive expenses, downturns in the economy, the loss of an important customer, and so many other unexpected factors can wreak serious havoc on that budget—and covering payroll just isn’t viable without shuttering your business.

If that’s the case, look toward a short-term loan, a business line of credit, or invoice financing. If approved, these payroll loans can give you access to the cash you need to pay your employees, stat.


Payroll Loans for Small Business: Your 3 Best Options

These three small business loans are ideal payroll loans for two specific reasons: they’re fast, and they’re flexible.

If you’re in need of a small business loan, you might be tempted to apply for a bank loan or an SBA loan, since eligible borrowers can get super-high loan amounts at super-low interest rates. But the timeline for SBA loan approval and funding can take a while on these loans—around a month, in some cases—and, depending on the type of loan you’re going for, your allowed use of funds will be limited.

But if you’re looking for a payroll loan, you need that money fast. And you need to use that money for, well, a very specific purpose. The three loans below—short-term loans, business lines of credit, and invoice financing—can give you access to cash quickly, and there are no restrictions on how you can use that capital.

We’ll also show you a few of the minimum requirements you’ll need for a lender to consider your business loan application, plus what the average, successful business loan application looks like for each type of loan. (Keep in mind that every lender is different, so these stats are really meant to serve as ballpark figures to guide you to approval.)  

1. Best Quick-to-Fund Payroll Loan: Short-Term Loan

You might have to deal with an unforeseen emergency, or an avalanche of invoices. But your staff still needs to get their checks. This is where short-term loans are a great tool for small businesses. Granted, these loans aren’t the cheapest, but if you’re in a crunch, they can be a good choice.

Online lenders can approve eligible short-term loan borrowers quickly, and get them the financing they need. You can have cash in hand in literally a day in some instances. The repayment periods on these loans are often less than a year, which is one of the reasons they’re ideal for quick-fix situations—like making sure your staff gets paid.

What you’ll generally want to have to apply:

  • Time in business: 9 months+
  • Credit score: 550+
  • Annual revenue: $100,000+

On average, most approved customers had:

  • 2+ years in business
  • 600 credit score
  • More than $150,000 in annual revenue

2. Best Long-Term Payroll Loan: Business Line of Credit

If you anticipate that a bombshell expense will keep you from covering payroll for more than a few months, consider opening a business line of credit.

Unlike a short-term loan, whose terms typically run only up to a year or so, business lines of credit are revolving: You can dip into these funds whenever you want or need, and you’ll only pay interest on the money you actually use. Then, you can renew your line of credit once you’ve paid down what you’ve spent.

Because of their flexibility, business lines of credit are ideal financing solutions for most businesses to keep in their back pockets, regardless of their financial concerns. After you’ve sorted out your payroll, you can use your line of credit to replenish inventory, fill in cash-flow gaps, invest in new marketing materials… or pretty much any other working capital expense, as long as it’s within range of your assigned loan amount, and you’re certain you can pay your loan bills.   

After you finish your business line of credit application, you’ll know whether you’re approved within minutes. If approved, you can draw down on those funds immediately, too.

What you’ll generally want to have to apply:

  • Time in business: 1+ year
  • Credit score: 550+
  • Annual revenue: $100,000+

On average, most approved customers had:

  • 1+ year in business
  • 630 credit score
  • More than $180,000 in annual revenue

3. Best Payroll Loan for Newer Businesses: Invoice Financing

If you’re a B2B business waiting on a batch of outstanding invoices, then invoice financing could be the best way for you to reclaim that missing cash and cover employee wages.

Here’s how it works: A lender advances you cash, typically in the amount of 85% of the value of your outstanding invoices. The lender holds off on the remaining 15% until your customer pays you back, and, in the meantime, they’ll charge fees on that percentage.

Because of those fees, invoice financing can become expensive. But the great thing is that borrowers often have an easier time gaining approval for invoice financing than they do for other types of loans.

This may seem obvious, but invoice financing companies are really concerned with the value of your invoices. In turn, they’re a little less concerned with your business’s financial history and credit score—after all, in this case, it’s not contingent upon you to repay your loan. All the onus is on the customer.

So, invoice factoring companies are a little easier on potential borrowers during the underwriting process. If you’re a newer business with a shorter credit history or lower credit score—which lenders in other types of loan deals may view as a red flag—you’ll have a shot at being approved for an invoice financing loan, so long as they deem your invoices valuable.

And if you are approved for invoice financing, you can access that cash in as little as under one day.         

What you’ll generally want to have to apply:

  • Time in business: 6+ months
  • Credit score: n/a
  • Annual revenue: $50,000+

On average, most approved customers had:

  • 1+ year in business
  • 600 credit score
  • More than $130,000 in annual revenue


What to Do When You Can’t Cover Payroll

All of these payroll loans are excellent options to consider if you’re in a bind. But securing a loan should really be the last step in your can’t-cover-payroll contingency plan. We spoke to a few business owners about how they plan their payroll coverage—and how they reroute when that plan goes awry.

1. Plan

Pretty much every small business owner agrees on the importance of an airtight budget plan. We hate to advocate for paranoia, but it is wise to err on the overly-cautious side when you’re taking your budget into account.   

Lisa Chu, owner of Black n Bianco, says, “To ensure all of my employees are paid, we always overestimate our expenses. That gives us room to cover payroll if we do end up spending more than we intend. Planning for your unexpected expenses is the most effective way to manage your cash flow.”

Ideally, you’ve accounted for those unexpected expenses in your cash flow projections. Richard Walton, CEO of AVirtual, says that that data is crucial. It can help you plan for the possibility of not being able to cover payroll way ahead of time—and plan accordingly.

“The first few years of running any small business are fraught with cash-flow issues, and this can lead to situations where you can’t cover your payroll,” Walton says. “I’m sure that almost all of us have been in this situation.

The best thing you can do to avoid this issue in the first place is to have a robust cash-flow forecasting system. You should be able to forecast a minimum of one month in advance, and include projections for 20% above and 20% below. Your forecast should always be able to cover payroll, even when you’re 20% below.

If your cash-flow projections show that you’ll be able to make repayments, and cover payroll moving forward, then you can consider taking out a loan.”

2. Save

Once you’ve nailed down your projected financials over the next few months—or, even better, few years—then it’s time to start building up a cash cushion.

A little extra padding certainly helps Trave Harmon, CEO of Triton Computer Corporation, weather downturns, and ensure that his employees weather them, too.

“I’ve been in business for 17 years, and running out of cash for payroll has only happened once,” Harmon says. “At the time, I took out a short-term, two-week loan from the bank and applied it to payroll. It worked.

That was over a decade ago, but it’s been on my mind ever since. What I’ve learned is this: Over-save. For every $5 we make, we transfer $2 into our business savings account. These extra funds mitigate the effect of unexpected expenses, help our business expand, allow us to pay taxes, and, especially, cover payroll.”

If you need some help keeping track of your financials, and creating a resulting budget, choose business accounting software that’s as easy and intuitive as it is feature-laden.

3. Communicate

Even after planning and saving, at some point in your business, you may still find yourself without the funds to cover employee wages. Know that you’re certainly not the first small business owner who’s experienced this situation. What really matters is that you communicate openly with your employees, and assure them of your compensation plan.

“There was one occasion where we overspent due to an unexpected large expense for equipment,” Chu says. “It affected my ability to make payroll on time. It was very embarrassing, but I gave my employees a detailed explanation of what happened, and shared my plan to ensure that this didn’t occur again. I also told them I was going to borrow from friends and family to make sure they were all paid within the week.

Having a clear and transparent dialogue with my employees made them feel secure that this was a one-time event. My employees are the backbone of my business, and I do whatever I can to make sure they’re happy and feel secure working for my business.”

If you’re not sure how best to approach your staff—it is a sensitive issue, after all—Walton suggests presenting them with hard financial evidence, especially in the form of your budget plan and cash-flow forecast. That way, you can show your employees exactly why and how your financials went off track, and how a payroll loan (or other financial solution) will fit into your adjusted budget.

Above all, Walton says, “honest, open, and transparent communication eases concerns amongst the key stakeholders of your business, and it’ll reinforce their confidence and trust in you as a leader.”


How to Find the Payroll Loan That Works for Your Small Business

It’s best to design your business’s budget from the get-go so that you can always cover payroll. But sudden expenses, sales dips, and missing invoice payments can throw even the most meticulously planned budgets out of whack, and it can take time to get your business back into the swing of things.

And you also want to do everything in your power to keep your employees from bearing the brunt of that downturn. That’s when it may be time to look into a payroll loan.

Short-term loans, business lines of credit, and invoice financing are all excellent options if you’re in need of fast, flexible cash.

As is always the case, do some research to figure out which type of loan works best for your business, what you’re eligible for, and, most importantly, what you’ll be able to afford. If you lock yourself into a loan with sky-high interest rates, you might end up falling into a cycle of debt. Work with a loan specialist to ensure you’re getting the best deal possible.  

But when you do secure an affordable payroll loan, you’ll rest a little easier knowing that you can tide your employees over while you all work toward your next windfall.

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Friday, May 25, 2018

The 6 Best Retail Business Loans, According to Your Needs

If you’re a shop owner who has to balance ebbing and flowing demand, stock orders, difficult customers, and invoices with short deadlines, you already know how challenging it can be to keep your store up and running from one month to the next. But what you might not know is that there are financial options, including specific retail business loans, to help you stay afloat.

Finding the best retail business loans isn’t as easy as calling up your local bank and asking for them to drop by with a fistful of cash, though. Picking the best business loan for your needs means knowing where to look.

Banks may not always be as willing to dole out loans to retail businesses, given the inherent ups and downs of the business. But that doesn’t mean that you can’t get approval from a lender; it just means you need to know what the best retail business loans are, and how you can use them.

Let’s take a closer look at your options for the best retail business loans based on what you need. Whether you own a flower shop or a bespoke moustache wax boutique, there’s bound to be a loan for your company that will help hedge against downturns, cash flow-stifling bills, and changes in your customer trends.


Best Retail Business Loan for Flexible Use: SBA 7(a) Loan

There’s a reason everyone—us, your neighboring small business owner, the US government—raves about SBA loans quite a bit. And that’s because these government-backed business loans really are the crème de la crème.

SBA loans offer generous repayment terms and super-competitive interest rates. With SBA 7(a) loans specifically, the most popular among them, there are few limitations on what you can do with the money if you’re approved.

Why are they so good? SBA loans are guaranteed up to 85% by the US Small Business Administration (hence SBA loan). That means banks, which do the actual issuing of the loan, end up more willing to take on your loan since they’ll get repaid by Uncle Sam in case your business takes a turn for the worse. Their risk is lower in case you can’t pay back your loan.

Who should apply for an SBA 7(a) loan?

Anyone who qualifies, really!

That said, because of their desirability and favorable terms, SBA loans are among the most difficult small business loans to secure. If you’re a US-based, for-profit business with a proven track record of investment into your business (both money and sweat equity), you have the mandatory requirements checked off. Next, you’ll need a strong credit and revenue background.

If that’s you, start exploring what’s involved in putting together an SBA loan application.

Best Retail Business Loan for Buying Real Estate: SBA 504/CDC Loan

Your retail business is taking off, your customers love you, and your store’s mobbed on weekends. We can’t help you with the tough decision about whether or not your company’s ready to expand its footprint or open another store. But from a lending standpoint, at least, you have options.

The best retail business loan for real estate is also an SBA loan—but it’s the second most popular program, the SBA 504/CDC loan. This is a loan meant specifically for investing in fixed assets, real estate included. Just like SBA 7(a) loans, these loans are backed by the government, so their rates are low—as low as 4%—and you can borrow up to $5 million. The SBA recently added a 25-year term to some SBA 504/CDC loans making them even more coveted.

Who should apply for an SBA 504/CDC loan?

Of course, as we mentioned above, if you can qualify for any SBA loan (7(a) loans can be used for real estate, too), you should definitely try to snag one. But, again, these are the most competitive loans out there, both in terms of desirability and rates, so there’s no such thing as a shoe-in. Take a look at SBA loan requirements here.

If a 504/CDC loan is off the table for you, you can also look to term loans for real estate purchases. Bank loans are difficult to get—especially if you’re a new business, don’t have a long-standing relationship with a bank, or don’t have perfect credit—so you should see which term loans you qualify for if that seems like the right approach for you.

Best Retail Business Loan for Patching Cash Flow Issues: Line of Credit

Part of the unpredictability of retail cash flow means that even if you get approved for a retail business loan, you might not need to end up using the full amount of your loan. Why pay interest on money you don’t need to use?

If you need to patch intermittent cash flow issues, a business line of credit is the best retail business loan for you. This type of loan is something of a hybrid between a conventional loan and a business credit card; you apply through a lender for a certain amount, but then draw only what you need, only when you need it. And when you take out money through your line of credit, you’ll only pay interest on the amount you’re borrowing.

Who should apply for a business line of credit?

A line of credit is a great option for retail businesses that need to borrow money for occasional purchases or payments. Consider the line of credit as being similar to borrowing a bit of cash to hold you over, rather than an option for making big-time investments in your company for the future.

This is one of the simpler business loans to get approved for, and if you work through an online lender, you can often get a decision very quickly, too. You generally won’t need to show outstanding revenue, time-in-business numbers, or a stellar credit score—just proof that you’ll be able to repay a lender.


Best Retail Business Loan for Making Payroll: Short-Term Loan

It’s tough to make payroll when you get flooded with invoices—or, worse yet, when you have to cover an emergency repair, like a literal flood. You have to make sure your staff gets their checks, but need to keep your doors open for business, too.

This is where short-term loans could really help you out. Granted, this type of retail business loan isn’t the cheapest out there, but it can help out small business owners in a crunch.

Online lenders can approve eligible short-term loan borrowers fast, and get them the financing they need. The repayment periods on these loans are often less than a year, which is one of the reasons they’re ideal for quick-fix situations—like making sure your valuable staff gets paid.

Who should apply for a short-term loan?

Borrowers who need to get their hands on flexible business financing quickly, and aren’t looking for a long-term solution. Payments on these types of term loans are daily or weekly, which is tough for businesses with spotty cash flow. Plus, they’re more expensive than other loans.

The upside? Bad credit is generally accepted—many borrowers get approved around a 600 credit score—which is a plus for accessibility.

Best Retail Business Loan for Updating Your Tools: Equipment Financing

You might have a computer from 1989 that manages your inventory, and an ageless dot-matrix printer that still (theoretically) prints orders well past its due retirement. You’ve meant to modernize, but kept deferring investment to more immediate needs.

Equipment financing is made to allow you to get what you need and keep your business humming. These retail business loans allow small businesses to purchase any kind of machinery they need for their company—whether that’s a new computer system, an industrial bread slicer, or a new delivery van. And these loans are self-secured, because the equipment you purchase with the loan itself serves as collateral.

Bear in mind that equipment loans come with their own pitfalls. For example, your loan is still in effect if your equipment breaks, which means that you’ll be paying for a broken laptop well after its shelf life. You’ll also have to make sure you’re depreciating the value of your equipment every year as well, as the actual cost will drop as your item ages.

Who should apply for an equipment loan?

If you need to make a big purchase for a specific fixed asset, this can be a great solution. And all you generally need to start the process is an equipment quote. Even newer businesses, and owners with weaker credit scores, can be considered for these loans because of the nature of the self-collateralization.

Many lenders can approve qualified borrowers quickly. Interest rates fluctuate between 8-30% (dependent on the purchase and the borrower’s credit), and the terms of the loan last about as long as the equipment does. There’s little paperwork involved in equipment financing loans, too.

Best Retail Business Loan for Restocking Your Shelves: Inventory Financing

Maybe you’re a clothing boutique trying to stock a trend forecasted to spread like wildfire next season, or a coffee shop that needs to tap your usual source for green beans. Regardless, there are going to be times where you need to make big inventory purchases to keep your business churning, and you might not have the cash to support it.

Inventory financing allows you to replenish stock without having to put up additional collateral. Like equipment financing, the inventory itself is what the bank uses to secure your loan (and will sell it if you don’t repay). This means that you don’t have to tie up your business’s other property or cash in order to get an inventory loan in the works, which can be helpful if you’re operating on a shoestring budget.

Small businesses are generally best served to look outside the network of big banks for inventory loans—you’ll likely have a hard time getting the money you need. Most of the big-time lenders work with wholesalers and larger retailers only, so your best bet is to pursue an inventory loan with an alternative financing company or online lender.

Who should apply for an inventory loan?

Inventory loans usually take one of three forms—a business line of credit, a short-term loan, or a general term loan—that a lender issues to a borrower for the specific purpose of buying inventory.

Inventory financing can be a good solution for product-based businesses who need to stock up before busy seasons, or if a huge rush hits and they’ll have a guaranteed sell-through. That “guaranteed” part is pretty important, because inventory financing is both expensive, and also generally requires a pretty high minimum principal as compared to other loans. A lender might need you to borrow on more cash than you need in order to qualify—which wouldn’t make financial sense for your business, unless you know you’ll be able to sell through the investment.

You also may have to go through a due diligence period where lenders will review your financials—so if you need to seize a quick opportunity, inventory financing might not be the right option for you.


Finding the Best Retail Business Loan, No Matter What You Need

There are plenty of options to choose from if you’re looking to borrow money for your retail business.

Every option—whether you’re looking at a business line of credit, SBA loan, equipment financing, or anything else—comes with its own perks, conditions, and potential setbacks. Before you come to the table, make sure you know precisely what you’re looking to borrow money for—and especially for retail business loans are concerned.

Knowing your needs, plus the differences between the various loan options available to you, can end up saving you a fortune in the long run.

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Thursday, May 24, 2018

11 Types of Difficult Customers and How to Handle Them

No matter what industry you’re in, you’ve most likely dealt with a difficult customer at some point. Whether the issue you faced was beyond your control or a direct response to a mistake, in business you may encounter the good, the bad, and the ugly.

It can be challenging to know exactly how to handle a difficult customer, but with the right tips and tactics you’ll be prepared to navigate any situation that comes your way. Identifying which customer type you’re dealing with is the first step to successfully handling the incident.

Once you know what type of difficult customer you’re dealing with, it can be helpful to keep a few key tips in mind. Approach each encounter uniquely and cater your communication method to the customer type you’re working with.Think about shifting your mindset and look at every interaction as an opportunity to build rapport. Stay calm and professional no matter what situation you find yourself in. If you play your cards right, you’re likely to end up with a returning customer and in turn, avoiding customer churn.

Check out the infographic below on 11 types of difficult customers and the best ways to help them:

Difficult customers infographic

Mind Tools | Inc. | Forbes

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The 10 Best Ways for Seasonal Businesses to Safeguard Their Finances

If you own a seasonal business—such as a tax preparation office, a lawn-care service, or a vacation resort—the revenue you make during your busy period has to cover your expenses throughout the entire year.

That means running a lean, disciplined operation even when the money is pouring in, and making sure there’s enough cash left over when customers stop calling.

From cutting unnecessary expenses to finding creative ways to generate income, here are 10 things that seasonal businesses can do to protect their finances and stay above water.


How Seasonal Businesses Can Cut Expenses

1. Don’t overspend on labor.

The team you need in your busy season is not the team you need in your off-season.

To avoid burning your annual operating budget on labor costs, you should keep only a small team of permanent employees to maintain essential operations year-round, and add seasonal employees during the months when you know you’ll be busy.

Employing temporary seasonal workers is a significant cost-saving measure for seasonal businesses. Also known as “contingency workers,” these employees generally aren’t entitled to the same costly medical benefits as full-time core employees, and often don’t stay with your business long enough to earn pay raises. Plus, if you hire independent contractors, your business doesn’t need to pay payroll taxes on their wages.

2. Take control of your invoices.

Collecting past due invoices can be difficult. This is especially true when you tend to bill your clients infrequently. The greater the amount on an invoice, the more difficult it will be for your client to pay.

Start sending invoices bimonthly or throughout the course of a project. Smaller amounts and more frequent billing cycles will help you keep your uncollected receivables top of mind.

In order to ensure timely payments and more stable cash flow, many businesses also choose to incentivize early payments. Although many companies assume that this means discounting invoices, there are better tactics that can help you collect:

  • Create a valued customer group and offer perks, loyalty rewards, and special treatment. This doesn’t need to take away from your margins—you can waive charges for rush orders, offer free shipping, send holiday cards, or even host an exclusive event.
  • Offer a discount to customers who prepay for the year ahead. While this won’t help you collect past due invoices, it will provide you with cash flow during your off season.
  • Charge a hefty penalty for overdue invoices rather than discounting them for prompt payment.


3. Secure better terms from vendors.

For many businesses, reducing supply costs is the easiest way to drive profits. The key is staying vigilant: Always keep a close eye on what your vendors are charging you for supplies and raw materials, and be on the lookout for unexpected price hikes.

Remember: It’s not your vendors’ responsibility to make sure you’re getting the best deal, it’s yours. At least once a year, you should invite other vendors to bid for your account, and try to find better deals—at the very least, it keeps your suppliers honest.

Even if you’re satisfied with the vendors you have, there are ways to negotiate for even better terms. Offer to buy supplies in bulk or pay upfront with cash, in exchange for a friendlier price—and your continued loyalty. If you’re an important asset to your supplier, they’ll want to keep you happy.

How Seasonal Businesses Can Manage Their Working Capital

4. Maintain a six-month cash cushion.

Ideally, you should have six months’ worth of operating expenses stashed in the bank. Otherwise, an emergency situation or a down year could potentially wipe you out.

If you haven’t built a cash safety net for yourself, put any growth plans on hold this year and direct your business profits toward your savings until you have enough to withstand an unexpected setback.

5. Line up backup financing.

Even if your cash savings are strong, it’s always a good idea to have a financing source on standby that you can draw from in case of unexpected needs or opportunities.

In addition to small business loans and lines of credit, seasonal businesses may want to consider merchant cash advances, in which a lender provides a business with funding in exchange for a portion of the business’s future receivables. Since you’re remitting a fixed percentage of your revenue, your payments will be lower during the slow season.

6. Hedge against linked commodities.

Many seasonal businesses are greatly affected by weather and natural disasters, and your chances of controlling elements are slim-to-none. However, by hedging against linked commodities markets, you can protect yourself from unfavorable conditions.

For example, many state and local governments, tourism economies, and snow removal companies are heavily affected by snowfall. These entities can purchase binary snowfall options, which net them a return in the case that it’s a down year for snow accumulation.

While the learning curve can be steep, hedging against linked commodities greatly reduces your risk as a business owner by stabilizing your cash flows and earnings. We highly recommend consulting an experienced advisor before investing.


How Seasonal Businesses Can Generate Revenue in the Off-Season

7. Sell off excess inventory.

Leftover product is dead weight. It can be expensive to keep in storage, and you might have trouble convincing your customers to buy it the following year.

When your peak season is over, start slashing prices near wholesale level (or even at a small loss) in order to get shoppers to take it off your hands. The closest you can get to zero inventory in your off-season, the better.

8. Rent out your owned assets.

You might not have any use for your storefront or machinery during your off-season—but another business might. If you own your own real estate, look for another company or organization that would want to rent the space in the months that you don’t need it.

The same goes for your owned equipment. Anything from trailers and forklifts to electrical generators can provide you with a source of income during your off-season.

9. Take your business online.

Retail shops aren’t the only seasonal businesses that find success selling online. After all, you don’t need to sell a physical product to take advantage of the digital space. Landscapers, snow removal companies, kayak tours, and kid’s summer camps can all benefit from establishing a strong online reputation.

Build a website, optimize your local business listings, and start generating leads online. Instead of converting shopping cart transactions, focus on building your contact list. As the season approaches, send email newsletters to get prospects excited about your offering and keep them in the loop year-round.

This low-budget approach will help you boost brand equity and customer retention, not to mention off-season sales.

10. Diversify your services.

Sometimes, you just have to get creative. Ask yourself: How can the services I provide during the peak season be of value to customers during the off-season?

Your summer landscaping business can serve the same customers in the winter by offering tree and snow removal services. If vacationers stop going to your beach resort when the first cold fall winds start blowing, you can still operate the space on a limited basis for business conferences and retreats.

If the idea of shifting your business model doesn’t appeal to you, then be flexible about what your “peak season” really means. For example, you can offer your services earlier in the year than your competition. If your contracting business tends to be busiest in the summer, start your marketing efforts near the beginning of the year, and consider offering early-bird rates for work done in the spring. That way, you’ll have customers and cash flowing in before your core operating season even starts.

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Wednesday, May 23, 2018

20 Business Networking Strategies to Get You Invaluable Connections

Ensuring your small business’s success requires a ton of personal investment. But that investment is hardly limited to cash—you’ll also need to invest your time, energy, and attention into promoting your company and building a professional support system. Business networking is the best way to start in on this intangible, but crucial, investment.

But networking for business is something of a catchall. Realistically, your reasons for business networking will shift during the life of your company and your career as an entrepreneur. As a small business owner, you might want to network to publicize or your product or service, find a mentor, establish yourself as an expert within your field, seek investors for business financing, discover opportunities to invest in other businesses, or simply connect with other professionals in your industry.

Whatever your professional goal is, walking into a trade show, happy hour, conference, or any other business networking event at which you’re expected to mix and mingle and impress and schmooze and sell your vision and convince people of your awesomeness can be… a little overwhelming.

Happily, you’re far from the first small business owner who’s felt a little stressed out by the prospect of business networking.

Before you head out to your next networking event, consult this list of 20 business networking strategies provided by small business owners and other networking pros. By following these tips, you’ll be better able to promote your business, create real and lasting connections with other professionals, and even have fun while you do it.


20 Business Networking Tips to Set You Up For Success   

1. It’s not what you know, it’s who you know.

The most important lesson I’ve learned in networking (and which I wish I’d known years ago) is to take every opportunity possible to meet new people. Don’t dismiss a single soul—you never know who you’re talking to, who they might know, or how they might be able to contribute. As my father always told me a kid, ‘It’s not what you know, it’s who you know.’ That statement has proven so true, especially in a business networking setting.”

—Lori Cheek, Founder and CEO of Cheekd and Networkd

2. You get what you give.

“People often go to networking events seeking individuals who can help them. But I think this is the wrong approach: Networking is all about helping others. Engage in meaningful conversation, share your interests, and see how you can offer your resources to the other party.”

—Anayet Chowdhury, Cofounder of ArgoPrep

3. Go alone. (You can do it!)

“I find that it’s best to go to networking events alone so you’re forced to talk to new people. I also think it’s wise to do your homework in advance. If the attendee list is publicized, make note of who you’d like to meet beforehand.

It may seem scary to go on your own, but remember that everyone is there for the same reason—they all want to make new connections. So don’t be shy; just walk up and introduce yourself! The only thing you have to lose is an opportunity.”

—Lori Cheek

4. Don’t forget your business cards.

“Never, ever leave home without your most essential, ‘old-school’ networking tool: Your business card. Even in the digital age, business cards are still the single fastest way to share who you are, what you do, and how you can be contacted.”

—Lori Cheek

5. Find your community…

“An easy way to find your tribe is to take classes. I particularly like attending General Assembly classes. Many are free, and they’re typically populated with knowledgeable teachers who are willing to help you troubleshoot beyond the classroom, as well as other experienced business owners in your industry.”

Orion H. Brown, Founder and CEO of The Black Travel Box

6. …but get out of your comfort zone, too.

Sticking with what you know has its place, but meeting people from other industries can be highly rewarding for your business and career. We’re an ed-tech industry, but we’ve recently invested in and partnered up on amazing projects in the entertainment industry after meeting impressive individuals at networking events.”

—Anayet Chowdhury

7. Make a networking goal, and stick to it.

“Find networking events through your local Chamber of Commerce website, Business Network International, Board of Trade, industry associations, Facebook events, and more. Start by setting a goal of going to one networking event per month. Hold yourself to it, regardless of how badly you may not want to go the day of the event!

I set up as my default homepage on my internet browser so I can regularly keep my eye on upcoming events. This simple trick has helped me attend networking events more regularly.”

Mazdak Mohammadi, Owner and Founder of blueberrycloud

8. Create a game plan.

In the early stages of my business, I was fumbling with networking and obtaining leads. But then I thought: I have a business plan and a marketing plan—so why not draft a strategic networking plan? I outlined my objectives, my target networking audience, the type of events I wanted to go to, and a budget. I encourage anyone, especially those going through a career transition, to create a networking plan. It’ll help you navigate that new environment with purpose.”

Michelle Ngome, Founder of Line 25 Consulting

9. Network with your own customers.

“Put yourself wherever your customer is, whether that’s networking in person at trade shows, or virtually through online forums or social media. Either way, connect with your customers on their home turf and hear them out on their pain points. That way, you can better design your business or service to solve those problems.”

—Erica Wassinger, Cofounder of The Startup Collaborative

10. Leverage your current network.

“People you already know can be the best resource for meeting new people in your industry. I typically send an email to 50-100 people already on my list, bcc everyone, and just write from the heart—I ask for feedback, make announcements about my business, or just plain catch up on the latest thing I’m working on. And always end your note with an ‘ask.’ I shamelessly plug that I’m looking for funders, product developers, and word-of-mouth referrals. So far I’ve yielded all three, just by emailing my existing network.”

Orion H. Brown

11. Be kind.

“Prospective customers and jobs can come from anyone, anywhere, at any time, so always be on your best behavior. Focus on making friends with people before you need them for their connections—you never know who is in, or will be in, a position to help you out down the line.

A few other networking tips: Remember to bring plenty of business cards, don’t try to monopolize anyone’s time, send follow-up notes to the best prospects, and don’t get into political discussions with people you don’t know!”   

—Paige Arnof-Fenn, Founder and CEO of Mavens & Moguls

12. Go to the happy hour.

“I know not everyone likes to drink, but grab a club soda with lime and get out to industry happy hours. Not sure where to find them? Keep it simple. If you sell a product or service, then you are a marketer. Try your local American Marketing Association chapter. They typically hold monthly events that attract all industries.”

Orion H. Brown

13. Listen more than you speak.

It may be tempting to get as many words in as possible, but I’ve found it’s a much better strategy to focus on the quality of your words, not the quantity. That way, everything I’m saying is worthwhile, and, more importantly, it lets the other person fill the empty space. People are much more likely to remember an engaging conversation than a single thing that someone told them.”

—Jerry Haffey Jr., President of Business Development at Ambrosia Treatment Center

14. No need to limit your conversation to business.

“It’s much easier to build successful business relationships when you connect with people on a deeper level than simply business.

Most successful networking experiences I’ve had began with topics that weren’t work-related at all, like hobbies or book recommendations. Even when at a business event, be willing to share what you’re truly passionate about.

Once you establish common ground, you can build a strong network of friends and experts in diverse fields. With that common ground, you’ll feel comfortable asking for advice when you need it, and you’ll be happy to offer your advice in return. All in all, networking is about building trust, and giving as much as receiving.”

—Rune Sovndahl, Cofounder and CEO of Fantastic Services

15. Don’t be afraid to make the first move.

“When I was just starting out, I reached out to anyone and everyone who would take a few minutes to share their story with me and listen to my pitch. It was so helpful for me to get an idea of what it’s like to be a business owner, and I received some excellent feedback on my business model and product.

When I reached out to those experts and small business owners, I was straightforward about my inexperience and my desire for help. I think my honesty made people even more willing to chat with me and share their advice.”

—Ally Compeau, Founder of Woof Signs

16. Don’t expect immediate gratification.

“Don’t get discouraged if you don’t meet people who can immediately help you. Many of the most valuable network leads I’ve gathered came from people who remembered me, then later introduced me to people they knew who would be beneficial for my business.”

Orion H. Brown

17. Relax.     

“There’s a saying in business that ‘People do business with people.’ It’s important to remain professional at networking events, but you should try to approach everyone with a kind and informal attitude. People may be slightly put off if you’re overly formal or stiff. And everyone there is looking to make new connections and gain valuable insights from each other. So, eventually, something will naturally come up in conversation that you’ll find relevant and useful. (This is especially likely if you researched the attendees in advance.) Just relax, enjoy the event, and the right insights will come your way.”

Steve Pritchard, HR Consultant at AngloLiners

18. Practice.

“Nervous? Keep on networking. Socializing is like a muscle; the more you do it, the stronger your socializing skills become.”

—Jason Patel, Founder of Transizion

19. You get what you give.

“Networking should not be mistaken for the face-to-face version of a ‘cold call.’ Instead, focus on building relationships and adding value to those relationships. Whether you’re just meeting someone or following up with an existing contact, ask yourself the magic question: ‘How can I help you?’ By making it about them and not you, you’re more likely to build the trust needed to sustain a working relationship and add value to those relationships. Ultimately, you’ll get as much as you give.”

John Baker, Chief Technology Officer, DeployBot

20. Keep in touch.

“Following up is absolutely key in networking. Boomerang on Gmail lets you schedule emails and set reminders in case people don’t respond to an initial email. If you just met someone and want to keep in touch with them, schedule an email that asks how they’re doing, and offer a chance to meet again when your schedules free up. This keeps you from writing emails in real time when time is of the essence. It’s  a big time-saver.

Also, connecting on LinkedIn is a no-brainer. Don’t have a LinkedIn? Take 30 minutes to create a profile. It’s free.”

—Jason Patel


The Most Important Business Networking Tips to Keep in Mind

Whatever your goal is, the most important thing to keep in mind when you walk into a business networking event is that it’s simply a form of socializing. True, it has the word “business” in the title, and that can add on the pressure.

But, as so many of the above small business owners and networking professionals reminded us, everyone networks for the same reason: To meet great people.

So, even when you’re at a formal business event, try to have fun. At the very least, approach people with true curiosity, and be open to hearing their stories. When you’re relaxed, you’re more receptive to connecting with like-minded people—and they’ll be excited to help you out with your business venture, or link you up with someone else who can.

The post 20 Business Networking Strategies to Get You Invaluable Connections appeared first on Fundera Ledger.

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How to Get a Business Loan with No Money in the Bank

There are so many driving factors behind the search for a small business loan, but the most common of them all is to get access to cash so you can nurture your business. If you’re low on cash, it makes a lot of sense that you’d want to apply for financing. So, you’re probably wondering how to get a business loan with no money—if that’s even a possibility.  

Across industries, a common thread holding businesses together is the need for capital. Sure, a freelance consultant’s needs are going to be different than a restaurateur’s, but all of them stem from money needs. The catch-22 of it all lies in the fact that it can sometimes require existing money to qualify for a business loan.

You might have disposable funds that you just don’t want to tap into to apply for a business loan. Other times, you just might not have the cash flow a lender is looking for to be approved for a business loan. Whatever the scenario, we’ll take a closer look at how to get a business loan with no money in the bank.


Common Reasons You Might Need to Get a Business Loan with No Money

Before we get into exactly how to finance a business with no money, let’s take a step back: What are some common causes for a low-to-zero balance in your business bank account? Figuring out the why will help you know what exactly to do next:

1. You’re waiting to get paid.

Many businesses work on contracts: construction, trucking, consulting. Almost all B2B companies. As a result, sometimes you need to wait for your services rendered to render you payment.

In some cases, these waiting periods can last months. But you don’t have the luxury of being able to sit around before you start your next job, contract, or project—as they say, “time is money.” So, you start that next project because, quite simply, you have to.

And as you wait to get paid, you’re still incurring expenses. So, the funds in your account begin to shrink instead of grow.

2. Your business is struggling to scale due to resources.

When you first opened up shop, you probably used startup-sized resources to get your business off the ground. But that small pool of resources you started out with can’t keep up with your growing business.

The truth is, bigger businesses need bigger amounts of capital to thrive. One of a small business loan’s many uses is to provide that additional capital boost. With your loan, you can replenish inventory to meet your customers’ growing demands, hire more employees, even open up a second location—whatever it takes to keep up with your own growth. But if you’ve wiped your original reserves clean, you’ll have a hard time securing that business loan at all.

So, when drawing up your business plan, it’s important to factor in the inevitability of scaling. You work hard to get your business to where it is today, so you want to make sure that when you kick things into growth mode, a lack of funds doesn’t bring you to a screeching halt.

3. You’ve mixed personal and business finances.

For a whole host of reasons, financial advisors recommend not mixing personal and business finances. But this is a tricky issue, and everyone handles it differently. Depending on your lifestyle, industry, and countless other factors, it can be hard to know how much of the money you earn should stay within your business, and how much should go to paying down your mortgage.

After all, you founded your business on the belief that this is your livelihood: It might have been your dream, but now it’s very much a reality. Even if your personal and business cash flows are indeed separate, it can be tough to view them as such.

Here, too, it’s important to plan exactly where funds will be heading on both a personal and business level. It can be all too easy to pull too much from your business bank account to pay for that mortgage, or any other countless personal expenses you encounter on a daily basis.

A healthy business bank account should never dip below zero, resulting in the dreaded “NSF.” In order to avoid this, leave an extra couple thousand dollars sitting in your business checking account. At the very least, this is a rainy day fund. In its truest form, that cash cushion can mean the difference between success and failure, especially because it’ll enable you to apply for small business financing when the need arises.

→TL;DR (Too Long; Didn’t Read): There are lots of reasons why you might be suffering from cash flow problems. Part of finding the right financing without a high bank balance is understanding why you aren’t flush with reserves.  

Why Lenders Are Looking at Cash Flow When You Apply for Small Business Loans

If you’ve applied for a business loan before, or at least looked into it, you likely know that small business lenders don’t often consider candidates who don’t have a nice bank account balance to back up their applications. But if you need to get a business loan with no money, you should understand why lenders care about cash flow in the first place.  

At the most basic level, cash flow indicates the health of your business. Positive cash flow means there’s more money heading in your direction, and a negative cash flow means the business is struggling.

Of course, you care most about the health of your business in terms of how it’ll affect your day-to-day operations. But as soon as you land in the small business financing market, your business is important to lenders, as well.

How do lenders determine whether they feel comfortable extending you a loan? In large part, by investigating your cash flow.


How Lenders See Cash Flow and Risk Assessment

As mysterious as they may seem, lenders are actually pretty easy to understand, especially when you’re considering their business loan requirements. One of their most crucial requirements is cash flow.

Some lenders require a certain amount of funds in a potential borrower’s business bank account before even considering extending a loan. Other lenders are a little more forgiving of cash flow, as long as other requirements, like personal creditworthiness, are strong.

Every time a lender extends a loan, they’re taking a big risk. They need to know that a borrower is able to manage additional debt, and has the financial capacity to repay that debt in full.

So, the terms of a loan are always a reflection of that risk. If lenders deem a business risky, they’ll hike up the interest rate, increase payment frequency, and shorten the repayment period. If they view a business as low risk, the opposite will occur.

Low bank balances are a big contributing factor toward a riskier business assessment. A major reason for this is that loans operate on automatic withdrawals. If your loan requires you to make weekly payments of $400 but you never have more than $1,000 in your account, chances are you won’t be able to consistently pay your loan bills in full and on time. Needless to say, this isn’t a good situation for you or the lender.

Overall, it makes sense that lenders construe positive cash flow—or sufficient money in the bank—as an indication of a business’s reliability. And that’s why, on the flip side, it can be tough to get a business loan with no money in the bank.

→TL;DR: Lenders are concerned with cash flow because they want to make sure they can get their loaned money back. Lower bank balances often reflect higher risk.

Your Top 3 Options for Financing a Business with No Money

As you can imagine, it’s tough to get a small business loan with no money. And while it’s unlikely that you’ll be able to secure a traditional term loan or SBA loan with limited funds, you still do have financing solutions available to you.

You might have an easier time qualifying for the following financing solutions. And, if you do, these alternative loans can help boost your business’s cash flow, so you can be in a position to graduate to a small business loan that yields even larger amounts of cash.   

Business Credit Cards

Your business’s biggest expenses, like payroll and rent, will require loan-sized funds to satisfy. But you can absolutely meet the countless other expenses you face daily with a business credit card. Plus, using a credit card responsibly (which, in large part, means paying your credit card bills in full and on time every month) will boost your credit score. Other than cash flow, your personal creditworthiness is a crucial factor in the business loan application.

There are countless business credit cards on the market today, and they all come with perks, rewards, and features that match the reason you’re looking for funds in the first place.

As we said before (and as you’ve definitely heard before that), it takes money to make money. Using a cash back business credit card is case in point: Spending in certain categories earns you hard cash, which you can then reinvest back into your business.

In particular, the Chase Ink Business Cash credit card offers one of the most generous cash-back rewards programs on the market.

Right off the bat, you’ll get $300 cash if you spend $3,000+ within the first three months of owning your card. Then, you’ll receive 5%, 2%, or 1% cash back, depending on which categories you spend in (like cell phone, internet, and cable services, or office supply stores).

The Chase Ink Business Cash Credit Card also carries no annual fee, which helps you save even more.

Even if you’re in a position in which you need to build credit, you still have options for cash back cards. The Capital One Spark Classic for Business will let you not only earn 1% flat cash back on all purchases with no annual fee, but you’ll build your credit, too. Just make sure you pay your bills in full and on time, of course.

The minimum approval for this credit card is a 550 credit score, so many business owners have options for business credit cards, no matter where they stand.

→TL;DR: Business credit cards are a good place to start, and there are options for business owners with many different credit profiles.

Equipment Financing

The underwriting process for an equipment loan is a little different than that of a traditional term loan. The lender fronts you the cash to fund up to 100% of a piece of equipment, and they use the equipment itself as collateral.

For that reason, lenders are just as concerned with the value of the equipment itself as they are with your business’s financial record. The terms of an equipment loan are based off of credit (both business and personal), time in business, and how well the equipment fits into your business plan. Cash flow isn’t a major factor in that decision.  

If you’re looking for a new machine, computer, or vehicle to boost revenue, it makes a lot of sense to look into an equipment loan.

→TL;DR: Since the financed equipment provides collateral in an equipment loan, this kind of business financing is easier to secure.

Invoice Financing

Invoice financing ties back to a situation we discussed earlier: When you’re waiting to get paid for completed work, that money is as good as guaranteed. And there are lenders who can analyze those unpaid invoices and extend you the funds ahead of time, so you don’t need to wait idly by until you get paid.

Like equipment loans, invoice financing is a type of collateralized loan. In this case, invoice finance companies use your business’s unpaid invoices as collateral and, in exchange, they’ll front you the missing cash.

Also like an equipment loan, invoice financing companies are just as concerned with the value of your invoices as they are with your business’s finances. So, not only will you receive your invoice payments quickly, but businesses with limited cash flow might have an easier time qualifying for this type of loan than others.

→TL;DR: Businesses with limited cash flow might have an easier time qualifying for invoice financing, since these lenders focus on your accounts receivable.

The Best Solution to Get a Business Loan with No Money

If you’re looking into how to get a business loan with no money, it’s definitely worthwhile to look into the above financing solutions. But, in reality, the best course of action is a little less exciting. If you can wait, wait!

You’ll have the best luck getting a business loan with favorable terms when your business’s financials are in order. In the meantime, focus on saving.

Ask yourself: What costs can I cut without fundamentally undoing what I do best? You may be surprised by how much your business can save by making a few operational changes. Also, create specific a savings goal, and adjust your budget accordingly. And open up a separate business checking account that you automatically transfer funds into intermittently.

Once you build up your business’s cash cushion, both the lending world and your own world will become so much easier to manage.

The post How to Get a Business Loan with No Money in the Bank appeared first on Fundera Ledger.

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Tuesday, May 22, 2018

How to Get Merchant Cash Advance Debt Relief

When it comes in the form of a small business loan, debt can be beneficial to keeping your business functioning and growing. But, as a small business owner, you’re likely also aware of the bad kind of debt, which can be debilitating to businesses and their individual owners.

And, as you also already know, there are lots of ways to find yourself in debt. For some small business owners, one of these ways is by rushing into a merchant cash advance. Financing companies offer these types of loans for fast access to capital, but they can be extremely expensive. And, since MCA providers take a chunk out of a company’s daily profit, they can inflict major cash-flow issues, leaving businesses unable to keep themselves afloat.

If you’ve found yourself in serious debt because of a merchant cash advance, don’t lose hope. Many business owners who find themselves in this position have overleveraged their debt to receive a merchant cash advance loan.

We’ll tell you more about merchant cash advances, why they can be harmful to your business, and how to relieve any debt these types of loans may have caused.


What Is a Merchant Cash Advance?

Before we dive into why merchant cash advance debt can be harmful to your business, let’s look at just what a merchant cash advance is.

A merchant cash advance is a loan that your business pays back through customer credit card purchases. Financing companies provide a lump sum of cash, which they calculate according to your business’s credit card receivables. In return, that financing company takes a percentage of your credit card sales.

Typically, MCA providers automatically withdraw a percentage of the credit card payments made at your business at the end of each day. They’ll continue to pull these daily amounts from your business until the lump sum is paid back.

Small business owners might consider merchant cash advances because they’re generally easier to qualify for than other types of small business loans. Plus, you can see that lump sum of cash in your bank account fast.

5 Drawbacks of Merchant Cash Advance Debt

Some business debt can be a great way to grow your business—but too much debt will only hurt your business, with no end in sight or ability to pay it all off. In particular, merchant cash advances can quickly land you in debt.

There are some very specific drawbacks of excessive business debt, especially the debt acquired through merchant cash advance loans.

1. It’s expensive.

There are no two ways around it: Merchant cash advance debt is expensive.

In addition to their repayment terms, merchant cash advances loans charge a fee. The fee is based on factoring, and typically ranges between 1.1 and 1.5. Don’t be fooled by those small numbers, though, because factor rates aren’t the same as APRs.

If a lender quotes you a factor rate, you’ll multiply the factor rate by the loan amount to find out the total amount you owe. All the interest is included in that factor rate amount. APRs, on the other hand, are used when a loan accrues interest.

So, with a merchant cash advance, your equivalent interest rate might end up as high as 100% per year. This charge is what makes it so easy for your business to find itself overleveraged by merchant cash advance debt.

2. You’ll have to deal with high, repetitive payments.

Paying off your merchant cash advance in less than a year may sound like a great deal, but the repetitive payments might not be worth the trade off. As well, there’s no benefit to paying off a merchant cash advance quickly: The higher your credit card sales, the more money you’re losing to the MCA provider that day—and the more deeply you’re going to feel the effects of that debt.

Many financing companies also take out payments automatically each night, meaning the cash is gone before you even see it. This makes repayment easy, but it can also cause you an additional cash-flow problem.


3. Merchant cash advances won’t benefit your credit.

Many businesses turn to merchant cash advances when they think they’re out of other loan options. If you truly have no other options, a merchant cash advance will work, since many MCA providers accept bad credit.

But if you’re trying to build your business credit score and history, a merchant cash advance won’t help you: Merchant cash advance lenders don’t report your repayment history to the bureaus—and on-time repayment is one of the best ways to improve your business credit score.

On the other hand, one of the benefits of a merchant cash advance is that it won’t hurt your credit history, either. You’ll have to assess whether this is harmful or not for your business.

4. It’ll land you in a cycle of debt.

Remember this when considering a merchant cash advance: This should be a one-time, short-term, last-resort loan option. Consider all loan options prior to accepting a merchant cash advance.

If you’re reading this article you may have found out why: The never-ending merchant cash advance cycle.

A merchant cash advance can be what you need to fix a cash-flow problem. But paying it off daily might put you right back into a cash-flow problem and unable to grow your business.

This might inspire you to take out another merchant cash advance—and, before you know it, you’re caught in a vicious debt cycle.

5. There are better loan options out there.

When looking for a business loan, know that there are many cheaper options than a merchant cash advance. If you have any way of avoiding taking out another merchant cash advance loan, take it.

Another merchant cash advance loan will only throw your business deeper into debt. We’ll show you multiple options on how to find merchant cash advance debt relief.

Options for Merchant Cash Advance Debt Relief

Paying off merchant cash advance debt isn’t easy for every business. And paying off that debt can restrict your cash flow and impede your ability to grow your business.

But if you find yourself with too much debt from one or more merchant cash advance loans, it’s time to take back your control over your business and get out of debt.

And there are many ways to get out of merchant cash advance debt and make your business operable again. Let’s examine each one and find which is right for your business.


1. Replace your merchant cash advance with a term loan.

Replacing your merchant cash advance debt with a term loan is one of the ways to refinance your merchant cash advance debt.

Term loans are a good option for many businesses, because these loans carry much more favorable terms than MCAs. More specifically, they have lower interest rates, longer repayment periods (which makes it easier to manage your cash flow), and monthly, not daily, loan payments.

If you decide to go the term-loan route, make sure you let the lender know that you’re using the funds to refinance merchant cash advance debt. Some lenders put restrictions on how their funds may be used, so it’s important to make sure you’re aware of the stipulations of any term loan you apply for.

2. Get an asset-backed loan.

An asset-backed loan is guaranteed by your business’s assets, which means that if you don’t pay back the loan, the bank or lender can collect your assets to recoup the debt. There are many different kinds of collateral, including property, inventory, personal guarantees, and blanket liens.

Collateralized loans are less risky to lenders, since they have a built-in safety net in case a borrower defaults. That makes these loans a little easier to qualify for than unsecured business loans, so businesses with limited financial histories might have an easier time securing these types of loans if they’re willing to put up collateral.

Asset-backed loans also offer lower interest rates and longer repayment terms than merchant cash advances, so you’re almost always better off securing an asset-backed loan than a merchant cash advance from the get-go. But you can also use an asset-backed loan to refinance your merchant cash advance debt.

Another benefit of asset-backed loans is that your ability to repay it will be reflected on your credit history, since many lenders report to the credit bureaus. So, if you find an asset-backed loan that works for your business, you’ll be paying off your debt more affordably and raising your credit score (assuming you pay your loan bills in full and on time, of course!).

3. Renegotiate your merchant cash advance.

If you’re in debt because of a merchant cash advance, or if you’re dealing with your business’s first merchant cash advance, you might be eligible to renegotiate your loan terms.

When renegotiating your merchant cash advance debt, you’ll need to show the financing company that you’re able to repay your debt according to the loan’s new terms. If your business is seeing higher credit card sales or more purchases in general, this can be a great tool for renegotiating your merchant cash advance debt.

The more evidence you can show the lender that your business is doing well—and can reliably pay back your loan—the more likely they’ll be to negotiate with you and give you better repayment terms.

If you are able to renegotiate your merchant cash advance debt, you still might want to combine this solution with another type of loan. Renegotiating might make repayment easier, but you could make it even easier and more affordable if you also refinance your debt using a long-term loan.

4. Consolidate cash advance loans.

If your merchant cash advance debt is from multiple merchant cash advances, you might want to consider debt consolidation.

Debt consolidation means taking out a single loan to repay all of your existing debt. The major benefit of debt consolidation is that it can lower your average or overall repayment interest.

Plus, making multiple payments daily or monthly to different lenders can get confusing, making it easy to miss a payment and get charged late fees. But with a debt consolidation loan, you only need to keep track of one loan.

So, debt consolidation simplifies your life and makes it easier to repay your merchant cash advance debt. But if you decide to consolidate your merchant cash advance debt, it’s important to work with a lender who understands debt consolidation. Not every loan product can be used for debt consolidation, so make sure to let your lender know your intended use of this new loan.

Overall, the goal of debt consolidation is to make repayment cheaper and easier. And to ensure that you’re appropriately consolidating, only work with lenders who have experience in managing merchant cash advance debt.

5. File for bankruptcy.

If your business is simply facing too much merchant cash advance debt, you can consider filing for bankruptcy.

Bankruptcy should be reserved as a last possible resort, but it can also mean the difference between saving and ruining your business. Bankruptcy will negatively affect your credit report, but it also might keep your business from completely failing.

There are three options when filing for business bankruptcy: chapter 11, 7, or 13. Which chapter of business bankruptcy you file for depends on your ownership structure, and what you want to happen to your business afterward.

If you think your business needs to go down this route, be sure to consult with a business attorney and accountant.

Stop Paying Merchant Cash Advances and Relieve Your Business of Debt

Merchant cash advances can prove tempting to small business owners in need of fast cash, especially for those businesses that make much of their money through credit card transactions. But, in reality, the negatives of merchant cash advances can far outweigh the positives. Namely, they can land small business owners in a cycle of debt that they can’t seem to get out of.

If you’ve found yourself with too much debt from merchant cash advance loans, you’re allowed to worry. But you don’t worry too much: There are 5 main options out there to help you handle your debt:

  1. Replace your merchant cash advance with a less expensive long-term loan, with easier repayment terms.
  2. Secure an asset-backed loan, which might be easier to qualify for than an unsecured loan.
  3. Renegotiate your merchant cash advance for more favorable terms.
  4. Consolidate multiple cash advances into a single loan, to make repayment cheaper and easier.
  5. File for bankruptcy if your debt is untenable.

Whether you choose to consolidate your debt, take out a term loan to repay the merchant cash advance debt, or file for bankruptcy, know there’s an option that’s right for your business.

And although getting out of merchant cash advance debt can seem difficult, any of these options can save your business money, improve your cash flow, and help you make your small business flourish again.

The post How to Get Merchant Cash Advance Debt Relief appeared first on Fundera Ledger.

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