Category Archives: Finance

What You Need to Know About Business Loans

Nowhere is the saying “you need money to make money” more true than in the crowded, competitive, fast-moving world of small business. As you seek to establish and grow your enterprise, access to capital (or the lack thereof) will be one of your biggest hurdles.

For small business owners facing expenses that just can’t wait, traditional approaches—SBA loans from banks, for example—can be burdensome, inconvenient, and ultimately disappointing. On the other hand, while the APR for a bank loan is usually around 6 or 7%, the APR for an online loan can climb above 30%!

It’s a simple fact that the faster you need a loan, the more you’re going to pay for it. That doesn’t necessarily mean you’re going to regret it, though—if it grows your business, keeps you afloat at a crucial stage of development, and ultimately carries you forward, the cost will have been more than worth it. Let’s take a closer look at a few lenders and see what they have to offer by way of fast business loans.

 

Kabbage

Kabbage isn’t a “business loan” product, rather they are offer a business line of credit. They are worth mentioning here because business owners can receive funds from Kabbage the same day they apply.

Minimum requirements: At least 1 year in business, with a minimum of $50,000 in annual business revenue

Time for approval and funding: Kabbage’s online application process usually takes around 7 minutes to complete, and you can get funds the same day.

Required paperwork: Along with basic information—business address, tax ID, credit scores, and SSN—Kabbage looks at the online systems used by your business. It takes data about your business from online systems like Amazon, PayPal, QuickBooks, Etsy, etc., in order to evaluate your creditworthiness.

How much can you borrow: $2K to $100K. Kabbage will give you a maximum credit limit that you can borrow against, always keeping in mind that you only need to draw on the credit line as needed, without ever having to use the full amount. You only pay interest on the funds you use.

How long can you borrow it: either 6 or 12 months, with payments automatically deducted from your bank account on a monthly basis.

APRS and fees: The APR for Kabbage loans ranges from 30% to 100%. Most of these fees are charged in the first two months, although you can save money by paying the loan off early.

Personal guarantee and collateral: While Kabbage doesn’t require a personal guarantee, it does place a lien on your general business assets for loans over $20K. Your business assets can be seized if you don’t repay the loan, but your personal assets can’t.

 

OnDeck

OnDeck’s short-term business loan product exists as a way for business owners to quickly take advantage of opportunities or handle obstacles that they encounter. Unlike OnDeck’s merchant cash advance, an OnDeck short-term small business loan reports payment history to business credit bureaus, thus helping you build your business credit.

Minimum requirements: A personal credit score of 500 or higher, at least 1 year in business, with a minimum of $100,000 in annual business revenue

Time for approval and funding: OnDeck’s loan application process takes approximately 10 minutes. By applying online or over the phone, you can receive funding as quickly as within 1 business day after you’re approved. Being prepared—providing thorough information and having any necessary documents ready to go beforehand—can help speed up the process.

Required paperwork: Business tax ID, bank statements for the last three months, the SSN of business owner(s), merchant and credit card processing statements for the last three months (if applicable)

Credit Cards for Bad Credit

Credit mishaps happen for a number of reasons, and perhaps one has happened to you. The good news is that there are a few business credit cards for bad credit which will give you the chance to build your business credit so that you can qualify for credit increases or new cards without having your personal credit called into question. (Solid business credit scores can open a number of other doors as well).

To save you time, we’ve put together a list of what we think are the best business credit cards for bad credit available to business owners.

 

Secured Business Credit Cards

For business owners looking to build their business credit, another option is a secured business credit card. A secured card requires a security deposit that can be used to pay your debt if you default. This is a way for credit card companies to minimize the risk of a bad credit borrower. Secured cards usually allow borrowers to charge up to the amount of their security deposit (below you’ll see a case where that isn’t quite true).

 

Our Top Picks:

1. Wells fargo Business Secured Credit Card

Pros:

  • Rewards: 1% cash back or 1 point for every dollar spent: your choice. $50 annual fee after the first year to enroll in rewards program
  • Low interest: Prime rate + 9.90% APR
  • 21-day grace period on purchases

Cons:

  • Annual fee: $25
  • $50 annual fee after first year to enroll in rewards program

The Wells Fargo Business Secured Credit Card allows cardholders to secure a credit line between $500 – $25,000, depending on how much you are willing to deposit. With this card, the amount of your credit line is equal to the amount you deposit. This card has a very low interest rate and the annual fee is low at $25. The only big drawback is that cardholders who wish to earn rewards points on their purchases will have to pay an annual enrollment fee of $50.

 

2. BBVA Compass Business Secured Visa Credit Card

Pros:

  • Low interest: 16.49% (or WSJ Prime + 12.99%)
  • Rewards: 1 point for every dollar you spend. Choose your own categories in which you’d like to earn double or triple points.
  • No rewards enrollment fee

Cons:

  • Annual fee: $40
  • Only 90% of your deposit will be available as a credit line

The BBVA Compass Business Secured Credit Card works similar to the Wells Fargo Secured Credit Card, however your credit line will only be equal to 90% of your deposit amount. There is a higher annual fee at $40 per year, but there is no fee to enroll in the rewards program. Additionally, the annual fee for the first year is waived. The rewards for this card include double or triple points in the category of your choice, which is a great perk for business owners who spend a large portion of their credit on one category, such as gas or groceries.

 

Keep In Mind…

Secured business credit cards or business credit cards for bad credit can be good options for business owners with poor or fair credit who need a small amount of capital now. Even with a low credit limit, these cards can help you build business credit Before you apply, here are couple things you’ll want to do:

  • Know and monitor your credit score. You can monitor your personal and business credit score with a free Nav account.
  • Make sure a business credit card is the best option for you, and look into business loans if you think a loan might be a better financing option for your business.

Credit Cards for Startups Your Business

As the founder of a startup, there are plenty of good reasons for you to consider using a business credit card. Not only can it help you keep personal and business finances separate, it can come in handy for covering cash flow, building your credit history, and saving money through various perks and rewards.

Not all business credit cards for startups are equal, however, and you’ll want to choose one that best fits the needs of your business. If you’re required to travel often, for example, you might want to go with a card that offers great airfare and hotel rewards. If you’re looking to transfer existing debt from a high cost loan or credit card, you’ll want to choose a card with a low or zero balance transfer fee. Others who plan to carry a balance might choose one with a low interest rate.

 

Why wouldn’t I just use my personal credit card?

Well, glad you asked. Here are three serious advantages to using a business credit card for business purchases:

  1. Having a business credit card allows you to keep your personal and business expenses separate. You’ll be able to track business expenses more easily, making tax time, as well as maintaining a company budget, much less of a headache.
  2. By getting a card in the name of your business you’ll start to establish a business credit score separate from your personal one. That means that if you have to make a late payment, your business credit will take the hit instead of your personal credit (there are exceptions—read about which business credit cards report to personal credit bureaus here).
  3. As you start to establish a business credit profile, you’ll build your business’s credibility. When it comes time to apply for other business financing, solid business credit scores can help you qualify for more financing at better rates.

How to Manage The Business Loans

As a small business owner, every dollar you save on interest and fees paid for a small business loan is a dollar back into your business. That’s why it’s so important to make sure you’re getting the best deal that your business can qualify for and fulfills your business’s needs.

But with over 44 different financing options, the research involved in finding that best deal and how to get it could take days, if not weeks. That’s not easy, especially when you’ve got a business to run.

To save you time, we’ve put together a list of what we think are the best small business loans for business owners. Check out the list below and sign up for a free Nav account to find out if you qualify.

At the top of the best small business loans list is SmartBiz, an SBA loan provider whose entire application process is online, making it much more flexible process for business owners.They offer 7(a) loans with interest rates starting at 6% (Prime Rate + 2.75% – 4.75%). The total financing cost or Annual Percentage Rate (APR), will include associated fees: referral fees, packaging and guarantee fees, and estimated closing costs. SmartBiz boasts that their APR ranges from 6.96% to 9.06%.

SmartBiz loans are available up to $350,000. If you need a larger loan, Celtic Bank is another great option that offers SBA 7(a) loans $350,000 – $5M.

Requirements to qualify:

  • FICO SBSS score of 160 or above (get your FICO SBSS score with a Nav Premium Plus account).
  • Must have 2+ years of tax returns filed for the business
  • The SBA has a few additional requirements, including:
    • Business must be a small business. The definition of “small business” will vary based on your industry.
    • Business location must be in the U.S., and some business must be done in the U.S.
    • Applicant must have reasonable invested equity. This means the applicant must own a significant portion of the business (>20%).
    • Must be able to demonstrate a need for the loan, and that the loan will be used for a reasonable purpose.
    • Must not be delinquent on any existing debt obligations to the U.S. government.

How to Manage Credit Cards for Travel

Business road warriors are used to packing their bags. But wouldn’t it be more exciting to get ready for your upcoming trip if you knew there were sweet rewards involved?

That’s where business credit cards come in. You probably know of or have a personal credit card that rewards you for your purchases with miles or points that you can spend on flights or hotel stays. But business credit cards for travel sometimes offer even better rewards than personal cards, along with a host of other perks including helping you separate your personal and business finances and build business credit.

Here are some of the best business credit cards for travel we’ve identified for frequent flyers that could be a big win for your business.

The Platinum Delta SkyMiles card from American Express is a great card for frequent Delta travelers who plan to make a large amount in purchases ($50,000+) on their card each calendar year. This card has a killer signup offer of 35,000 bonus miles and 5,000 Medallion® Qualification Miles (MQMs) if you spend $1,000 in the first 3 months. MQMs help you get closer to reaching Medallion status in the Delta SkyMiles program. As an added bonus, you’ll get a $100 statement credit after you make a purchase on Delta using your card within the first three months.

Added benefits:

  1. Two miles per dollar spent on Delta purchases, and one mile per dollar on all other purchases.
  2. No foreign transaction fees.
  3. Earn more miles with boost programs: 10,000 bonus miles and 10,000 MQMs after $25,000 in purchases each calendar year, as well as another bonus after $50,000.
  4. Earn a domestic, round-trip companion pass each year you renew the card.
  5. Added Delta bonuses: free checked bag, priority boarding, 20% savings on purchases in-flight.

Drawbacks:

  1. If Delta isn’t a convenient airline for you, this won’t be the best card.
  2. $195 annual fee.

The Starwood Preferred Guest Business Credit Card from American Express offers a flexible rewards program for frequent flyers of many different airlines who enjoy comfortable resort and hotel stays. New cardholders will earn 25,000 bonus points after they spend $5,000 in the first 3 months. Along with a generous rewards program, new cardholders will earn additional bonus points if they spend even more. Earn SPG Gold status after 30,000 in purchases on your card in a calendar year, which allows you to score more hotel upgrades, late checkouts, welcome gifts during hotel stays, and more.

Added benefits:

  1. Five “starpoints” per dollar spent at Starwood Hotels, two points per dollar at Marriott Reward hotels, and one point on all other purchases.
  2. Points can be redeemed at over 1,300 hotels and resorts, and over 150 airlines within the SPG program.
  3. No foreign transaction fees.
  4. Free Boingo WiFi at over 1M Boingo hotspots.
  5. Access to Sheraton Club Lounge.