If you’d like to know more about merchant cash advances and payday loans, as well as how they can benefit your business, this post is for you. Below, you can find out a little more about these borrowing methods and who they work for. Then you’ll be able to assess your small business’s needs and decide which is right for you.

What Are Merchant Cash Advances?

First, let’s dive into merchant cash advances for small businesses.

A merchant cash advance is a loan that small businesses can take out, to be paid for with future earnings. The business that is borrowing the money receives the cash immediately in a lump sum. This is then paid back when customers pay for their goods or services with a card.

If your business takes payment by card machine or online, you’ll be able to apply for a merchant cash advance. The lender will take a small portion of each card payment, as they work in partnership with the card providers. This money from card receipts acts to pay off your loan. Interest rates still apply, so you will pay off more than you originally borrowed.

The amount that can be borrowed is determined by the average sum of card payments you have taken in the last 6 months - 1 year. The lender will then use this average to determine how much your business can feasibly borrow and pay back. They will then draw up a repayment plan, based on your estimated card earnings.

The Advantages of Merchant Cash Advances

Many small businesses opt for merchant cash advances because they offer a lot of freedom and flexibility, with very little of the stress associated with taking a loan. Below, we’ve listed some of the benefits of merchant cash advances, so you can see if it’s the right choice for you.

1. Easier to obtain than business loans - One of the main benefits that draw small businesses toward merchant cash advances is the high likelihood that they’ll be approved. If you’ve been rejected for a business loan, you will likely still be eligible for a merchant cash advance. Not to mention, the borrowing process is much faster than business loans and requires a lot less paperwork too.
2. Great for small businesses - Following on from the above, merchant cash advances do not rely on credit history or need to be secured against your assets. This means, that if your small business has no credit history or few resources, you can still apply for and be granted a merchant cash advance in those testing early years.
3. Very little admin - When it comes to paying back your merchant cash advance, repayments are ‘invisible’. The card terminal provider pays directly to the loan service that issued the advance, meaning you don’t have to worry about writing cheques or filling out forms. You can store your card receipts in your business’s preferred way to keep on top of your repayments.
4. Slow month? No problem - Finally, the flexibility of merchant cash advances draws a lot of small businesses to this choice of loan. You won’t have to start scrimping or saving for payback, as when your loan is granted the terms of repayment will be based on your average monthly earnings. To add to this, regular repayment adapts to the number of card payments you’ve taken in a predetermined amount of time. This means the repayment amount changes to work directly with your business.

What Are Personal Payday Loans?

Now you know about the ins and outs of merchant cash advances, let’s look at personal payday loans.

Personal payday loans are loans taken out with the intention of paying them back once the borrower receives their weekly or monthly income. This means they are usually short-term and will rarely be larger than $500. This is because many states set a limit on the amount that can be borrowed in a payday loan.

If you take out a personal payday loan, you won’t need to worry about making regular payments, as these loans are usually repaid in one lump sum. The due date for repayment will be agreed upon, depending on the terms of your payday loan, but is usually around 2 weeks - 1 month.

Interest rates do apply to personal payday loans, however many states also set limits on the amount lenders can charge per $100 borrowed. The cost of your loan will be made clear to you when you decide to borrow. Some states also allow borrowers to ‘rollover’ their loan to the next month, meaning you’ll only have to pay the interest rates until the next deadline.

The Advantages of Personal Payday Loans

Personal payday loans are a favored choice for those looking for a quick cash injection that they know they will definitely be able to pay back. The highly manageable nature of payday loans, alongside many more options for customization than official loans, lead small business owners to choose this form of borrowing. Some other advantages of payday loans are listed below.

1. Easy access - Similarly to merchant cash advances, payday loans have a very high acceptance rate. They don’t look at your credit history, just your current affordability, and employment, and if you’ve been rejected for other types of loans, you can still apply for and be granted a payday loan. The application process can be completed online, with the money in your account in less than 24 hours after starting the application.
2. Unsecured loans - Again, like merchant cash advances, personal payday loans are unsecured. This means you don’t have to put up any of your resources or assets as collateral. They also offer a lot of freedom when it comes to how you use the money, and many lenders have very few restrictions on what you can do with the cash.
3. Change your mind? - A huge benefit of payday loans is that you can cancel the loan up to 14 days after you’ve received the money and repay the loan without interest if you change your mind, as stated in the Consumer Credit Act 1974. This can be especially helpful if you’ve received some money from elsewhere and don’t want to be tied to interest repayments.
4. Online management - Since most of the payday loan process is completed online, many lenders will provide you with an online management system that is available at all times. Through this, you can choose exactly what you want to borrow and how long for, find out how much you need to pay and what you’ve already paid, make early repayments, and even change the term of your loan.

Establishing Your Needs…

If you’ve made the difficult decision that you want to take out a loan, there are a few things you’ll need to consider beforehand. Getting everything in order before you start applying for loans will not only expedite the borrowing process but allow you to choose the right borrowing options for your business.

How much do you want to borrow?

You should get this figure as exactly as you can, so you’ll know when, where, and on what you’ll be spending your loan. Borrowing too little won’t help you achieve the goals you’ve set for your small business but borrowing too much can set you back further than when you applied for the loan.

How much can you feasibly pay back?

Take a look at your average monthly earnings and outgoings vs. your potential repayment plan and remember to include the cost of the loan in this equation. This will also help you get a better idea of the final amount you need to borrow, and how quickly you’ll be able to pay it back.

How quickly do you need the money?

Time to spare is not a necessity for receiving a loan, as payday loans can pay out very quickly. However, the longer you have before you need to take out your loan, the more time you’ll have to assess your needs and find the lender that will be a viable partner for your business.

Choosing the Right Loan

Now you know about the loans that are available to you, as well as what your small business needs, you can go ahead and select the loan that works for you.

Merchant Cash Advances - This type of loan is great for small businesses that want an easy and ensured method of repayment. The money can be used for legitimate business purposes, and the increased success of your business because of this will pay directly toward the loan. It may take a little longer both to be paid out and to repay a merchant cash advance, so if you have time to spare then this is the choice for you.

Payday Loans - This borrowing method is the best choice for those who know exactly how much they need and when they’ll be able to pay it back. Great for a quick payout, if you need money immediately, payday loans might be for you. You’ll be able to customize the term of the loan and manage your loan online, so you can focus on your business.

To find the best loan and lender for you, you should shop around to see what different companies have to offer. Remember to always read the fine print to find out the exact terms of your loan and repayments, and whether you’ll be able to make early repayments or not.

Sources

• https://swoopfunding.com/uk/business-loans/merchant-cash-advance/
• https://www.capalona.co.uk/product/merchant-cash-advance/
• https://www.consumerfinance.gov/ask-cfpb/what-is-a-payday-loan-en-1567/
• https://www.little-loans.com/payday-loans/advantages-and-disadvantages
• https://www.cashlady.com/info/payday-loan-benefits
• https://fundbox.com/blog/5-factors-to-consider-when-taking-out-a-small-business-loan/
• https://www.forbes.com/advisor/in/personal-loans/guide-to-help-you-choose-the-right-personal-loan/

The post Understanding the Differences Between Merchant Cash Advances and Payday Loans for Businesses: Which is Right For You? appeared first on MoneyThumb.

MoneyThumb has many customers who are lenders of short term and payday loans and use our product, PDF Insights, to make quicker and smarter lending decisions. One bright spot during the pandemic response has been the heavily increased need for these types of lenders to offer their services.

Today on the Rules of Thumb blog, we would like to direct your attention to a great article from WalletHub. The article covers a study revealing the US states where small loans are most needed and offer interviews with financial experts on making smart lending decisions and where people can find the safest options for the short-term or payday loan.

Below is a list of the 4 financial experts WalletHub enlisted and the 3 questions they were asked:

Jesus M. Salas
Ph.D. – Associate Professor of Finance, Perella Department of Finance, Lehigh University School of Business

P.V. Viswanath
Ph.D. – Professor of Finance, Lubin School of Business, Pace University

J. A. Connell
CPA, CGMA – Associate Professor of Business, Stephens College of Business, University of Montevallo

Frank H. Shafroth
Director, Center for State and Local Government Leadership, George Mason University

1. What are the long-term implications of taking a short-term loan in the context of the current economic crisis?
2. What are the safest borrowing options for people in need of quick cash for financial emergencies?
3. As the coronavirus pandemic has put millions out of work and overwhelmed the unemployment offices, what policy interventions can be taken by local authorities in order to help those in need financially during this economic downturn?

To learn the answers to the questions posed to the experts, click on this link to read their responses.

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The above information is designed mostly for consumers, but what about small businesses? What loan options are available and how can a small business survive without depending on government intervention?

CNBC offers this article, Small Business Owners Worry They Won’t Survive Coronavirus Without Federal Loans, But Experts Say They Have Options from the Make It section of their website. We have listed below highlights from that article for your reading convenience:

1. Keep bringing in business

The post Experts Chime In on Safest Lending Options During Coronavirus appeared first on MoneyThumb.

Unfortunately, Covid-19 and the subsequent shutdowns of businesses and people out of work have redefined what “off the charts” means for unemployment claims and other leading economic indicators. When it comes to the merchant cash advance market the preliminary impact of the lockdown over traditional funding avenues can be seen more clearly due to the fact that when incomes and revenues are disrupted, consumers and businesses will often prioritize which debt to take care of first. They may be unwilling to pay certain accounts, even if able to do so, in order to preserve cash for prolonged uncertainty. This is not the case for the merchant cash advance market as payments are remitted automatically; therefore, the cashflows are aligned with and reflect true business performance free of the impact of paid prioritization. These facts have made examining the effect of Covid-19 on the merchant cash advance market much easier.

As early as the second half of March, payments from merchants drop approximately 20% to 30%. In addition, the payment pace continued to decline in April and May. At the same time, merchant cash advance lender's portfolios look worse as performing loans are paid down and a lack of new loans results automatically in their portfolios having more risk.

While the immediate outlook is grim, a lot of relief and stimulus is working its way through the economy. The U.S. Government is intent on providing support as states are starting to re-open as quickly and as safely as possible. In retrospect, nobody had a pandemic playbook and programs like PPP were designed, deployed, and funded on the fly with collaboration from both banks and non-bank lenders during volatile markets.

Non-bank lenders’ success in being able to reach truly small businesses, as well as the speed and efficiency in deploying the funds, has not gone unnoticed. The PPP experience also highlighted stark differences between the types of clients that large commercial banks serve versus those served by non-bank lenders. As deBanked reported, banks focused on larger clients whereas non-bank and fintech lenders assisted much smaller businesses in comparison. Origination fees on PPP loans were not insignificant either. SBA pays PPP lenders a 1% to 5% origination fee depending on the funded amount. For example, Ready Capital reported gross revenue of $100 million on $2.1 billion funded. Notably, Ready Capital’s average PPP loan size was approximately $70,000 compared to an average of more than $500,000 for JP Morgan Chase for approximately $15 billion the bank funded in round one of PPP.

Small business activity is not only a leading indicator of distress but also at the center of any significant economic recovery. Small businesses account for 45% of GDP with 88% of these businesses employing fewer than 20 people. There is no meaningful recovery without small businesses getting back on their feet. As businesses re-emerge, their financing needs will vary widely in timing, amount, frequency, term, etc. depending on industry and many other factors. Continued involvement from the federal government whether in the form of deploying more low-interest rate loans, forgivable loans, or loans with some sort of guarantee is likely.

In conclusion, it is looking like in the long term, the merchant cash advance market will most likely fare better overall than traditional lenders. Merchant cash advance lenders who can continue to serve their clients either by extending a suite of private credit or by facilitating the deployment and servicing of government funds will succeed.

The post The Impact of Covid-19 On the Merchant Cash Advance Market appeared first on MoneyThumb.

So first let's go over exactly what PPP loans are. As part of the US government stimulus package resulting from the coronavirus pandemic, $350 billion was allocated toward PPP loans to help save small businesses. Millions of businesses were forced to close their doors by government order to help stop the spread of the virus, thus the origination of PPP loans. Below is an explanation of PPP loans from the US treasury department. Although this information is designed for small business owners, it is imperative that a private lender hoping to make PPP loans understands the basics:

SMALL BUSINESS PAYCHECK PROTECTION PROGRAM

The Paycheck Protection Program provides small businesses with funds to pay up to 8 weeks of
payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and
utilities.

Fully Forgiven

Funds are provided in the form of loans that will be fully forgiven when used for payroll costs,
interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the
forgiven amount must have been used for payroll). Loan payments will also be deferred for six
months. No collateral or personal guarantees are required. Neither the government nor lenders
will charge small businesses any fees.

Must Keep Employees on the Payroll—or Rehire Quickly

Forgiveness is based on the employer maintaining or quickly rehiring employees and
maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if
salaries and wages decrease.

All Small Businesses Eligible

Small businesses with 500 or fewer employees—including nonprofits, veterans organizations,
tribal concerns, self-employed individuals, sole proprietorships, and independent contractors—
are eligible. Businesses with more than 500 employees are eligible in certain industries.

If you are wondering whether as a private lender you are eligible to offer PPP loans to borrowers, read this information fact sheet for lenders, also from the US treasury department. The main criteria are that you must be certified as a lender by the Small Business Administration. But that is not a problem because here is the application to become an SBA certified lender. If you meet the following requirements, as listed on the application, you will qualify:

Lender Eligibility Requirements

Depository or non-depository financing providers may be eligible to participate as lenders in the
Paycheck Protection Program if they meet the criteria described in the attestations below.

Lenders must attest to all of the statements in either Group A or Group B below.

Group A. Lender attests that it:

Is a depository or non-depository financing provider; AND Lender originates, maintains, and services business loans or other commercial, financial receivables or participation interests; AND Has a formal compliance program relating to, e.g., auditing and compliance with applicable laws; AND Applies the requirements under the BSA as a federally regulated financial institution, or the BSA requirements of an equivalent federally regulated financial institution; AND Has been operating since at least February 15, 2019; AND Has originated, maintained, and serviced more than $50 million in business loans or other commercial financial receivables during a consecutive 12 month period in the past 36 months.

Group B. Lender attests that it is:

A service provider to an insured depository institution; AND Has a contract to support such institution’s lending activities in accordance with 12 U.S.C. § 1867(c).

Once you determine you are qualified to become a PPP lender, you can begin making loans. However, time is really of the essence, since of the $350 billion allocated for PPP loans, $250 billion has already been claimed. But don't be disheartened, there is already plans being made to provide another $250 billion in the next stimulus package for PPP loans.

If you still have questions about making PPP loans as a private lender, leave a comment below and we will help you find the answer. We would really appreciate it if you would share this blog post on your social media page so that everyone you know can become educated about PPP loans, especially your private lending peers.

The post Can Private Lenders Offer PPP Loans? appeared first on MoneyThumb.

But what about merchant cash advances during this pandemic? Are they a good idea or not? We figured the best way for both our team at MoneyThumb and our readers to decide on the wisdom of a merchant cash advance at a time like this is to see what financial experts from around the web think. Below are the opinions of those we find most informed:

• Spend Matters thinks merchant cash advances are good for e-commerce vendors as coronavirus idles service economy.
• David Goldin, President, and CEO of AmeriMerchant, in an article at DeBanked, says that merchant cash advance lenders should create shorter term limits for loans and diversify.
• Forbes believes merchant cash advances are one of four ways to minimize the impact of the coronavirus on your small business.
• Biz2Credit thinks a merchant cash advance is a great way to make sure you still have good cash flow as a small business during this time.
• Shield Funding says a merchant cash advance is a good idea for restaurants, retail stores, salons, and other businesses that process a lot of credit card transactions. Although most of these types of service industries have been forced to close, for now, we foresee that changing very soon. The economy can only afford to stay shut down for so long.

As you can see from the information above, five authorities on finances as they pertain to small business are all in agreement that a merchant cash advance is a good solution to temporary financial problems during this pandemic.

However, there are also other avenues of financial assistance that have been created for small businesses that are unique to this pandemic, especially from the government. This article from Forbes does an excellent job of listing programs available to small businesses at this time. They even have a list of resources per state. Below are a few of the financial relief programs being offered from that article:

• Paycheck Protection Loans: The U.S. Small Business Administration (SBA) will guarantee loans with terms of up to 10 years and interest rates of up to 4% to businesses with fewer than 500 employees. Businesses can qualify for loans of up to $10 million, and the loans will be provided by lenders including banks and credit unions. Eligible businesses can get loan deferment for six months to a year, and the loan may be forgiven if the businesses maintain payroll for eight weeks at employees’ normal salary levels.
• Expanded access to U.S. Small Business Administration Economic Injury Disaster Loans: As part of its disaster assistance program, the SBA is providing working capital loans of up to $2 million to small businesses and nonprofits affected by the coronavirus. These loans carry an interest rate of 3.75% for small businesses and 2.75% for nonprofits. Loan repayment terms vary by applicant, up to a maximum of 30 years. The stimulus updated the program so that sole proprietors and businesses with fewer than 500 employees qualify, and applicants don’t need to provide a personal guarantee on loans under $200,000. Payments can also be deferred for up to four years.
• Emergency grant of $10,000 to SBA Economic Injury Disaster Loan applicants: Even if your business is denied a loan, you can still access this grant, which can be used to provide employee sick leave, maintain payroll or meet other needs like paying rent.

The U.S. Small Business Administration (SBA) coronavirus resource page provides a list of relief programs, and it offers guidance to small business owners during this crisis.

The post Are Merchant Cash Advances for Businesses A Good Idea Right Now? appeared first on MoneyThumb.

You would think the practice of borrowing money to pay taxes would be frowned upon, but the opposite is true. In fact, financial experts and the IRS itself suggest that business owners take out a small business loan if they don't have the ready cash to pay their taxes. Below are a few legitimate reasons why taking out a loan to pay your business taxes is a good idea from our friends at Fora Financial:

3 Reasons to Use a Business Loan to Pay Taxes

1. Interest Rates

The IRS treats the money you owe them like a loan and charges interest every day that your payment is overdue. Even worse, the interest on a tax debt is compounded daily until your balance is paid off, which means the amount you owe can grow quickly. Due to this, you should pay in full as quickly as possible to avoid expensive interest charges on your remaining balance.

Many alternative lenders offer business loans that can be used to cover your tax liability and at a far lower cost. And unlike interest accrued on an outstanding tax debt, interest on loan payments can sometimes be taken as deductions on your next tax bill.

2. Extra Fees

The Internal Revenue Service will take action if your bill is left unpaid; you’ll incur steep penalties. If you neglect to pay your bill, the IRS will impose an additional fee of half of one percent of your outstanding taxes due for every month that your payment is late. What’s worse, the late payment penalty is on top of accrued interest. To avoid this, apply for a business loan prior to tax season, so that you can avoid paying money in late fees.

3. Avoid Crippling Penalties

As a department of the Federal government, the IRS has the authority to dole out punishments for avoiding payment on your tax bill. The IRS may issue a tax lien, which gives them legal ownership of all your assets, including personal and business property.

A tax lien can have far-reaching implications for your business. It can affect everything from selling your business to obtaining credit. That is because the government will have first dibs on your firm’s assets if you default, which makes lending you money a much bigger risk.

If there is a tax lien on your business, you may not be able to obtain a business loan through a bank. You may, however, be able to borrow from alternative lenders that may be more willing to work with special situations.

Conclusion

If your business doesn’t have the funds to pay its tax bill, there are options other than to default. The nuclear option comes with far-reaching consequences, including damage to personal and business credit. Even if you decide to keep your business running, it may be crippled by the effects of your bankruptcy.

Using a business loan to pay taxes can help you avoid expensive interest payments and penalty fees. It can also prevent your operations from experiencing penal action from the IRS, such as tax liens. Consider seeking a business loan from alternative lenders, which are typically easier to obtain, and place fewer restrictions on how funds can be used.

If taking out a small business loan is looking like an option for you, MoneyThumb would like you to know we have a PDF financial file converter specifically designed for small businesses. This converter will help you get your financials in order for your chosen lender quickly and easily so getting a loan will be a breeze.

The post Should You Take Out a Business Loan to Pay Taxes? appeared first on MoneyThumb.

So what exactly is a merchant cash advance? A merchant cash advance has historically been for businesses whose revenue comes primarily from credit and debit card sales, such as restaurants or retail shops. Now, merchant cash advances are available to other businesses that don’t rely heavily on credit card or debit card sales. Merchant cash advance providers say their financing product is not technically a loan. A merchant cash advance provider gives you an upfront sum of cash in exchange for a slice of your future sales.

There are several reasons that small business owners opt for merchant cash advances as opposed to a traditional small business loan. The Rules of Thumb blog from MoneyThumb has listed a few of those reasons below:

• You'll Receive A Lump Sum of Cash Very Quickly. ...
• You Don't Need Impeccable Credit. ...
• There's No Set Payment Amount. ...
• Use the Money However You'd Like. ...
• You Aren't Risking Your Assets or Credit Rating.

A couple of even more detailed reasons for choosing a merchant cash advance over a traditional loan for your small business are listed below:

• High approval rate – When we compare the approval rates of the MCA and of the regular commercial bank loans, it instantly becomes obvious that the MCA has the highest approval rate. In fact, the advances are rarely denied, as negotiations are normally started when some problems are noticed.
• You won’t lose your home. Merchant cash advances, (MCAs) are unsecured, so you don’t need collateral. This means you don’t have to forfeit any personal or business assets if your sales plunge and you fail to repay. However, the MCA provider may require a personal guarantee, which is a written agreement that makes you personally responsible for repaying the advance. If this is the case, the MCA provider may still try to recoup any losses.
• When sales are down, your payment may be too. When the repayment schedule is based on a fixed percentage of your sales, repayments adjust based on how well your business is doing.

As you can see from the information above, a merchant cash advance has its advantages. However, there are times when it will be a better idea to choose a traditional loan rather than opting for a merchant cash advance for your small business. In this previous Rules of Thumb blog post, Merchant Cash Advance vs. Business Loan: Which is Better? we did a major comparison of the two, but for your reading convenience, we have listed below a few reasons to decide on a traditional loan rather than going for a  merchant cash advance:

1. Since the interest rate is much higher for an MCA if you have good credit a traditional loan may be preferable.
2. Your business is already established and profitable.
3. You need a large amount of capital
4. You want more stable repayment terms

In conclusion, there are times when an MCA, (Merchant Cash Advance) will be a more appealing choice for your small business than a traditional loan. Quick cash without a long application process, one that does not take your credit too much into consideration with repayment terms strictly based on your sales. This kind of cash infusion can be a great boon to your business by helping you get through a rough patch.

The post Are Merchant Cash Advances a Good Idea for Small Businesses? appeared first on MoneyThumb.

What Is a Merchant Cash Advance?

A merchant cash advance (MCA) is a cash advance given in return for a percentage of a business’ daily credit card receipts. MCA providers charge a cost of capital between 1.1x and 1.5x of the amount advanced. This results in a cost of capital that’s much higher than other small business loans.

How Merchant Cash Advances Work

With a merchant cash advance (MCA), the provider purchases a portion of your future daily credit card receipts, advancing you those funds upfront. The provider collects a percentage (8% to 30%) of your daily credit card receipts as payment until the factor rate (typically 1.1x to 1.5x of the amount advanced) is repaid.

There are three basic steps involved in the process of obtaining an MCA. It begins with applying for the MCA, which can be done online. From there, the MCA provider will tell you the terms that you are approved for, which includes the factor rate (ranging from 1.1x to 1.5x of the advance). If you agree to the terms, funding (up to $500,000) occurs within five days. The provider collects the holdback percentage (8% to 30%) daily, directly from your credit card processor, until the advance is repaid.

Merchant Cash Advance Costs, Terms, & Qualifications

Merchant cash advances (MCAs) typically range from $5,000 to $500,000 and have factor rates between 1.1x and 1.5x. Repayment is based on a holdback percentage that varies by lender and can range from 8% to 30%. There are minimal eligibility qualifications for MCAs, making them easier to obtain than most short-term financing solutions.

It is becoming more and more natural for small businesses to apply for merchant cash advances as an alternative to traditional financing options. We hope the article we have shared from Fit Small Business has been helpful to you in understanding exactly how the merchant cash advance industry works. The MoneyThumb team would appreciate it if you would share this Rules of Thumb blog post on your social media page so that others can learn about small business merchant cash advances. Thank you!

The post A Small Business Owner's Guide to Merchant Cash Advances appeared first on MoneyThumb.

Unlike the information on your personal credit report, which can only be accessed by authorized individuals, business credit reports are available to anyone—including prospective investors, customers, partners or suppliers. Selecting a lender that reports to one of the major business credit bureaus, like Experian, Dun & Bradstreet, or Equifax, and making all payments as agreed will strengthen your business profile. It might also help you borrow at lower rates and get improved credit terms with suppliers.

As you can see, making sure the lender you choose reports to business credit bureaus can highly affect your future business. To help you make sure you are choosing a lender who reports to business credit bureaus, the Rules of Thumb blog from MoneyThumb has listed below five small business lenders who fit this criterion, courtesy of Fundera:

OnDeck

Specializing in small business loans, alternative lender OnDeck offers a variety of lending options. Short-term loans of up to $250,000 are available for 3 to 12 months, perfect for financing smaller projects. Longer term loans come in terms ranging from 15 months to 36 months, and you can borrow up to $500,000. Or, keep things flexible with a business credit line of up to $100,000. In any case, OnDeck reports your payment credit history to business credit bureaus.

Lending Club

If you’ve been in business for at least 2 years, have $75,000 or more in annual sales, own at least 20% equity in your business, and keep fair or good credit with no recent liens or bankruptcies, Lending Club could be a good fit. Need-to-know information: loan or credit lines up to $300,000, no prepayment penalties, and your payments are reported to the business credit bureaus. However, make sure to watch out for origination fees that range from 0.99% to 6.99%.

Funding Circle

International alternative lender Funding Circle has lent over $1.5 billion to business owners worldwide using funds from individual investors. Founded by small business owners, satisfied customers say the application process is fast and easy, and the cost is competitive.

Fundation

Fundation is an especially fast-working alternative lender. According to their website, loan proceeds from Fundation could hit your bank account in as little as three business days. Their conventional fixed-rate loans of up to four years can be paid off at any time without penalty, and they report your payment history to business credit bureaus.

BlueVine

For small businesses struggling with cash flow issues and earning at least $70,000 in annual revenue, BlueVine offers credit lines with advances based on your outstanding invoices. Your application takes just a few minutes, and you choose which invoices to submit. When you’re approved, BlueVine advances you 85% of the invoice amounts submitted, less their fee, plus an additional “rebate” amount when your client pays your invoice through your BlueVine account.

A healthy business credit report can help you get better rates and terms on borrowing and credit arrangements with suppliers, as well as raise your profile with customers and the business community.

However, choosing a lender that reports to the business credit bureaus is just one aspect of improving your business credit profile. To build strong business credit, also update and review your own business credit regularly, apply for trade credit with suppliers, and be sure to make all payments in full and on time.

The post Small Business Lenders Who Report to Business Credit Bureaus appeared first on MoneyThumb.

Fortunately those days are long gone and most of the credit goes to the internet. The web has opened up numerous opportunities for businesses outside of their local banking market. In fact, more entrepreneurs and small business owners today are seeking financing options online than ever before. The boundaries of distance and time have been obliterated…and that means a plethora of options for your clients.

Various Lending Options for Your Accounting Clients

While the lending market has evolved, the basic need for working capital remains the same. According to the U.S. Small Business Administration, there are 23 million small businesses in America—accounting for 54 percent of all U.S. sales. Since 1990, major corporations have cut jobs by 4 million, while small businesses have added 8 million new jobs to the market. Now more than ever, small businesses need financing options that are accessible and affordable to start and grow their organizations. And who better to guide them on their lending options than you?

Small business lending today is completely different than it was before the recession. With banking tightening up their lending portfolios and credit scores taking a hit, its hard for small business owners to borrow in a time when they really need the working capital to rebuild and grow. The increase of online lenders has been a breath of fresh air because they are not regulated by the same standards as big banks and are eager to lend to small business.

Making sure clients understand finance options

With the wealth of new options, small business owners need to be careful to clearly understand finance options, terms, and conditions before signing on any dotted line. Technology has certainly improved the lending industry, but it has also created difficulties for entrepreneurs and small business owners when it comes to understanding all loan options and making sound financing decisions.

Key areas of concern include interest rates, factor rates, and amortization periods on borrowed money. When a small business owner searches online for a loan, they are bombarded by ads for cash-advance merchants and quick cash offers. Small business owners may be attracted to the quick turnaround time and relative ease of obtaining a cash advance, but the price of this borrowed money can be a major downfall. This is where the guidance of an experience accounting professional is critical for clients.

While technology has opened up a new world of lending options, the internet cannot take the place of one-on-one guidance. Dedicated consulting and real-world experience from an accounting professional is important in helping business owners make such a big financial decision. Leaving these decisions up to a search engine and a web form can be risky and can have serious implications for business owners who does not fully understanding the terms and conditions of most short-term loans.

Technology undoubtedly serves as a helpful and necessary tool for progress and advancement in the lending industry, but a return to a more localized and personalized loan application process will only benefit small business owners. All of this adds up to further strengthening the client-accountant relationship as you take on the role to educate and assist your clients in the world of lending.

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