Is A Bank Loan For Small Business My Best Option?

It’s no secret that obtaining a bank loan for small business is tricky at best. Banks have strict lending criteria and rarely compromise. Gone are the days where your local branch manager might find some wiggle room in your application. The small banks are continually being swallowed up by the big banks and to them, you’re just an application form amongst hundreds more.

Here at Funding Solutions we’re seeing a continual trend among small business owners. Bank loans are getting harder to obtain by the day. Let’s have a look at a few factors causing this trend.

Less profit on smaller loans

Banks are all about the bottom line. And the bottom line is there’s not much profit in a small loan. Have you noticed both business and personal lines of credit have covenants on them about the minimal amount borrowed? It’s for the same reason – the banks need you to borrow large sums of money in order to make money themselves. That leave the smaller borrowers out in the cold.

Increased regulation

Post-recession, banks have had to tighten up their standards and lending criteria. They need an almost 100% guarantee that loans will be repaid in full before approving an application. Unfortunately, small businesses are considered high risk when compared to established businesses, or businesses borrowing money with assets as a guarantee.

Rigid lending criteria

As well as increased regulation, lending criteria are so rigid that it’s almost impossible for most small businesses to meet. Unless you’re willing to put your personal assets on the line, it’s unlikely a small business will be considered for a bank loan, let alone a start-up business.

Do you really want a bank loan anyway?

Considering the above, do you really want a bank loan anyway? Do you really think this is the best fit for your business? Even if your application is approved, the repayment terms are just as rigid as the lending criteria. The duration of the loan is often too short for small business owner needs, meaning larger monthly repayments. And if you ever find yourself in the fortunate position to have extra funds, you’ll be penalized for wanting to pay extra or pay in advance. We’re not convinced a bank loan for small business is the best option available and neither should you be.

Thankfully bank loans aren’t the only means of raising capital for your business. There’s many more out of the box options to consider. In fact, we’ve gone to the trouble of compiling an extensive list of 35 ways to fund your small business. In an age of increased technology and enhanced ability to communicate at lightning speed, now is the best time for small business owners to seek alternative methods of funding rather than traditional bank loans. We live in an age where there’s a wealth of information at our fingertips only a few seconds away. Simple online searches can link up savvy small business owners with much more suitable ways to fund their small business. We’re more than confident that the best way you’ll find is to contact Funding Solutions to discuss your cash advance options. The application process is far easier than it is with a bank, and applications are assessed within 24 hours. If successful, funds are deposited directly to your account in approximately 72 hours. To top that off, the lending criteria is much more compliant with the needs of small business owners. What are you waiting for? Get in touch with Funding Solutions today to start your application. You’re only a phone call away from the best alternative to a bank loan for small business.

Is It Wise To Consider Venture Capital For My Small Business?

Suitable funding methods to further business growth aren’t always a luxury, but a necessity. This leads some small business owners to consider Venture Capital as a funding option. Have you been knocked back for a bank loan? Are you considering Venture Capitalists? We’ll discuss some of the pros and cons of Venture Capitalists in this article.

Definition of Venture Capital

A Venture Capitalist may be either an individual or a company. Venture Capitalists, or VC’s, invest in start up companies. They select companies that offer but don’t guarantee the possibility of profits. VC’s traditionally make larger investments than Angel Investors. They also tend to take on either a consulting or management role within the company they invest in.

Pros of Venture Capitalists

The average investment provided by VC’s is between $500,000 to $5 million.

VC’s have a vested interest in the success and development of your business. Most VC’s are successful business owners themselves. Therefore, they can be an incredible source of advice, experience, and business guidance.

VC’s usually like to share their success with other VC’s. This exposes you and your business to further funding opportunities.

Cons of Venture Capitalists

Separate from providing capital, VC’s also take on a management role and invest a lot of time and effort. Consequently, VC’s often expect (or demand) a large portion of the profits. As much as 50% annually can be requested.

VC’s are using their own money and taking a large risk on a start up business. They do this without a guarantee of profits. AS a result, VC’s are usually incredibly diligent. The due diligence process can take at least 6 months to be completed. This is a timely process for a start up business owner who needs immediate funds.

AS a result of their high risk investment, VC’s often demand equity. This is usually in the form of a stake in your company. Some VC’s will also want to exercise control of business functions. They will want to make important business decisions for the company. If you give away too much of a stake in your business you could end up losing control of your own company.

In conclusion

In conclusion, there is no right answer. Venture Capital isn’t a one size fits all. Compatibility will depend on may variables. Vc’s will have to evaluate your business for profitability. It will have to be determined that your business is a worthwhile investment.  Are considering a VC to raise business capital? If so, the above points are worth reviewing before proceeding. When done correctly, a relationship with a VC could be successful and harmonious. If executed incorrectly, the consequences could be to the detriment of your business.

I’m not sure a Venture Capitalist is for me, but I’m not sure how else to raise business capital.

Funding Solutions has the perfect solution. The best part – you retain 100% ownership of your company at all times. Funding Solutions offers working capital to eligible businesses. Funds are used at your discretion for any need you see fit. The management and ownership of the company remain yours at all times.

In need of business capital? Don’t think a VC is suitable for you? Don’t have 6 spare months to wait for the due diligence process? Get in touch with Funding Solutions today! All you’ll need is 6 months trading history and receivables of $10,000 per month. Approved funds are deposited into your account in as little as 72 hours! We’re more than sure you’ll find this a much better option than taking on a Venture Capital agreement. We would love to hear from you: 855-204-6217 NOW to proceed.

Is A Business Line Of Credit My Best Finance Option?

Many businesses consider a business line of credit to be a great financing option. Why wouldn’t they – the banks claim to offer flexibility, value for money, convenience and easy access to your funds. Throw in a few statements like “it’s easy to apply” and you’d be forgiven for thinking it’s by far your best finance option.

Let’s have a look at the nitty gritty of a business line of credit, namely how they work, who qualifies, the pros and cons and other options available to you.

How does a line of credit work?

The process is similar to withdrawing a cash advance on a credit card, but slightly more complex. A line of credit allows you to withdraw funds up to a pre-determined amount, only paying interest and making repayments on the amount withdrawn. They’re flexible, able to be used for anything from expansion, purchase of new equipment to paying outstanding business expenses. They can even help with temporary limited cash flow.

Who qualifies?

Despite sounding like every small business owner’s dream, the reality is a business line of credit is extremely hard to get. Banks have lots of requirements you’ll need to meet in order to guarantee the bank will be re-payed money lent. Your credit history, current cash flow and collateral will all be evaluated. These are the three things not all start-up businesses and small business have in spades just yet! A lot of banks will also look at your trading history. If you haven’t got at least two years trading history it’s unlikely your application will be approved – yet another thing start-ups don’t have!

Pros and cons

Providing you can meet the criteria to get a line of credit in the first place, then meet the ongoing covenants of the loan a  line of credit can be a flexible means of credit for your business. The reality is that the cons outweigh the pros for start-ups and unestablished small business owners.

All too often start-ups and small business owners can’t meet the criteria when applying, or meet the ongoing covenants. Covenants such as how much you continually have borrowed (and how much interest you’re therefore paying) make this means of borrowing not quite as flexible as the banks would like you to believe.

Did we mention how strict the criteria is? You may be required to provide your personal assets as collateral in order to obtain approval. It’s long been thought that a strong business plan and a ‘can do’ attitude were all that’s needed in order to secure a business line of credit. The reality is that’s a misconception. They’re much harder to obtain than that because lenders need to be assured you’ll be able to meet the repayments.

Alternatives

Thankfully there are many alternatives to borrowing a business line of credit. Our article here, lists 35 ways you could fund your small business. It’s clear though that the best option is a cash advance from Funding Solutions. Applications can be made online and are assessed in as little as 24 hours. If approved, funds are debited directly to your account usually within 72 hours. That’s a much easier and faster process than any bank is offering! Did we mention the criteria is much more achievable to meet too? And, we won’t hit you with any fancy covenants. All that’s needed to apply is proof of a 6 month trading history and confirmation of at least $10,000 of receivables per month. Providing you meet those simple requirements you can access between $3000 to $500,000 and use the funds on whatever you see fit. Get in touch now by calling 855-204-6217 to obtain your more suitable alternative to a  line of credit.

How To Navigate Economic Development Agencies

There are so many Government run small business support programs now that it’s time for an article describing how to navigate economic development agencies! It’s become a confusing but welcome minefield of different services for small businesses. Fear not, we at Funding Solutions have heard your frustrations and have compiled a 5 point list in order to navigate the many economic development agencies.

There’s thousands of state and local government agencies which provide small business assistance. An extensive list can be found on the US Economic Development Administration website. While there’s a world of opportunities just waiting to be optimised by small business owners in the form of loans and grants, the application process and criteria differ greatly between agencies. Rather than focus on one agency, below are some general but valuable tips to consider before applying for a grant or loan from one of the many economic development agencies.

Start by building your public profile.

Don’t underestimate the power of social media! Ensure you regularly update your social media pages and engage in comments and questions on your social media accounts.

Participate in community events where possible. Perhaps you could sit on an advisory board or contribute to a committee. Consider participating in workplace experience programs with local youth groups or colleges. All of this positive exposure always looks positive when applying for national, state or local government agency assistance.

Focus on services available to your industry.

Navigating government procedures and regulations can be complex. It need not be if you locate the economic development agency that is most relevant to your industry. Every state and city will have many agencies. Do some research and locate the most relevant to you. Rather than convince an agency to support you, focus on an agency that already provides support to your industry. You will most likely find staff are incredibly helpful and will assist you to navigate the complex procedures.

Broaden your market.

It’s time to think outside the box. Does your marketing campaign or target audience focus on the same old consumer group? If so, it’s time to get creative and broaden your consumer base. Perhaps your flagship product requires a little bit of tweaking in order to appeal to a greater market or you just need to jazz up your marketing strategy. Either way, a product or service that appeals to a larger portion of the community is a more appealing business for economic development agencies to support. Consider looking up the vendor list of local businesses and seeing if your peoduct or service will meet their needs.

Participate in customer and market research.

Following closely from the point above, obtain government statistics on your industry’s growth and development. This information will help broaden your market and identify any gaps in the market. It will also help you write a winning business plan which is always useful.

Take advantage of free advice.

The administrators of economic development agencies and their programs are a wealth of knowledge. Maintain a good working relationship with your local administrators. Seek feedback on unsuccessful applications and make improvements where identified. This puts you in good stead with administrators and their support staff.

This all sounds good, but what if you need cash flow NOW?

The above practical points are a longer term approach in order to successfully apply for loans and grants from the many economic development agencies at national, state and local levels. But what happens if you need cash flow now? That’s where Funding Solutions steps in. Amongst other things, we recognise an immediate need for cash flow. If you’ve got 6 months trading history and receipt of $10,000 receivables per month you can apply for a cash advance today. If approved the funds are deposited into your account in as little as 72 hours. What are you waiting for? Get in touch with Funding Solutions today on 855-204-6217 to start your application. It’s a much quicker alternative to raising capital than the many economic development agencies.

What is Working Capital?

Let’s start by looking at exactly what working capital is. It’s the amount by which current assets exceed current liabilities. A healthy business will have more assets than liabilities. Unfortunately this is not something that all businesses experience at all points in time. Despite the best of business management, at times there may be a shortfall in working capital.

How can I improve my working capital?

There are a few steps businesses can take towards improving working capital.

1. Pay your suppliers on time.

You’re in a better position to negotiate better terms or discounts if your invoices are paid on time. Ensure your Accounts Department are familiar with the terms of your outstanding invoices. Also ensure all your outstanding invoices are always paid on time.

2. Negotiate better deals.

If you always settle your accounts on time you’re in a good position to negotiate.  This may include discounts or more favourable payment terms. Discounts or longer payment terms would allow you to keep cash on hand for longer periods.

3. Track business expenses.

You’ll be able to see where excess funds are spent by monitoring business expenses. Perhaps you can shop around for a better deal on utilities, or rent to increase your working capital. Corporate credit cards are easy to lose track of. Ensure you monitor the spending of any employees who hold corporate credit cards. Take advantage of the ability to set spending limits on corporate cards.

4. Manage excess stock.

Ideally you’ll have a quick rotation on stock. If you have any old stock sitting around, consider selling it at a discounted price to free up some funds. Make sure you make a note of any stock that was slow to sell, and order less of that stock in the future.

5. Streamline your payment process.

One of the biggest delays of invoice payment is inaccuracies on invoices. Ensure your invoices are correct and issued on time. Make it as easy as possible for your clients to pay their invoices.

6. Don’t be afraid to do credit checks.

If you’re going to offer credit, don’t be afraid to conduct thorough credit checks. Be aware that time spent following up unpaid accounts also costs money. It’s best to only provide credit to worthy clients rather than spend time and money chasing up old debt.

7. Track revenues.

Seasonal business owners are usually great at monitoring business trends and revenues. It can be hard to survive the off peak period without careful financial planning. It’s important to track your business trends and revenues. This is most important if your business is seasonal. Perhaps there is a particular marketing campaign that works better than others. Or perhaps there’s a particular product that sells better than others. By monitoring this you can capitalize on the most applicable area of your business.

But how can I get instant working capital funds?

So you’re already doing all the above and still need access to working capital in a hurry? Funding Solutions are here to help. If you need fast access to extra working capital we have just the solution for you. A cash advance is a quick and effective way to boost your working capital. All that’s needed to apply is 6 months trading history and proof of $10,000 receivables per month. It’s so easy you can even apply online today! Once approved, funds are deposited directly into your account in as little as 72 hours. Once you have the funds you can spend them on whatever business expense you see fit. What are you waiting for? Extra working capital awaits you right now. Get in touch with Funding Solutions on 855-204-6217 to start your application. It’s the quickest and best means of instant working capital.

How Can I Get A Business Loan With Bad Credit?

Up until recently, options to receive a business loan with bad credit were limited. Kabbage loans for small business is just one service who has filled that gap. Traditionally, small businesses were required to see their bank for a bank loan. A recent trend in lending has seen many lenders such as Kabbage emerge in the lending market. Kabbage is unique, in that it is one of the more user friendly services available to small businesses. Kabbage has been regarded as the best short term loan provider for under $100k in trading. The application process is simple. The repayment schedule is simple. The interest paid is fair. But is it too good to be true? Let’s have a closer look.

Who can apply for a Kabbage loan?

You need to be generating at least $50,000 per year in revenues to be considered. However, this may exclude many small businesses and even more start up businesses. Also, you must have been trading for at least 1 year in order to be approved for a loan. This again excludes start up businesses which is a time when funds are often most needed.

What if I have bad credit?

As part of the application process Kabbage reviews your credit score. Linking business accounts to your application also offers that information for review. Kabbage doesn’t rely on your credit score alone. Kabbage is a good option to secure a business loan with bad credit. However, over looking a low credit score comes at a premium.

I’m approved. What now?

Ok, you meet the criteria and have been approved for a Kabbage loan. The total funds approved are a line of credit. Meaning, if you have approval for $10,000 you’re not required to spend the entire amount. You can spend as little or as much as you need. You will only be charged interest on the amount you spend. The balance stays readily available should you need it at a later date.

What else should I consider about Kabbage loans for small business?

Keep in mind you’ve given Kabbage access to view and monitor your revenue records in live time. Should your revenue decrease Kabbage will decrease your loan limit. This often happens at a time when you need capital the most. This can also be an issue for seasonal businesses. As part of the application process Kabbage will review your past 3 months trading history. If you apply during low season the chances are your records will show a decrease in sales. Peak season applications may be approved with a healthy revenue record. By the same token, low seasons leave reduced lending amounts. Once again, this is the time when small businesses need funds the most.

Also, keep in mind that rates on a Kabbage loans are higher than traditional lenders. Granted, the criteria isn’t as tough to meet but you will pay for the convenience with a higher APR. Kabbage APR ranges from 32% – 108%.

The APR is too steep. What other options do I have?

Funding Solutions offer business capital in as little as 72 hours. Unlike Kabbage, Funding Solutions doesn’t request ongoing access to your business accounts. Once you’ve been approved for a cash advance the funds are yours to utilize as required in your business. Funding Solutions lending criteria is more suitable to small businesses. We understand seasonal businesses and start up businesses. All you need is 6 months trading history and receivables of $10,000 per month. This criteria is much more attainable for small businesses and start ups. Get moving today! You’ll find this a much better alternative to applying for a business loan with bad credit. But don’t take our word for it, see for yourself! Contact Funding Solutions on 855-204-6217 to get your application under way.

National Association For The Self Employed And Your Small Business

Following up on our recent article 35 ways to fund your business, we suggested the National Association for the Self Employed (NASE) as being a potential means of funding your small business. While this is true, it’s in a more indirect way than simply borrowing capital for example.

The role of NASE and small businesses

NASE has many roles with information and support for small business being one of them. Another is to provide small business owners with scholarships and grants in order to indirectly grow and improve their business.

NASE Growth Grants

Every month one winner is chosen to receive a Growth Grant to the value of $4000 USD to support the growth of their small business. The grant is provided as a means of capital and can be used for hiring additional staff, marketing or investment in software or hardware.

How can I apply for a NASE Growth Grant

• Firstly you need to be a NASE member.
• Secondly, you must be able to identify a business need that could be fulfilled by the grant.
• Provide an explanation and financial plan of your expected grant spendings.
• Demonstrate how the grant proceeds will grow your business.
• Lastly, provide a current business plan and financial records.

NASE Dependant Scholarships

Another service NASE offers is a Dependant Scholarship. Members can apply for a scholarship on behalf of their dependants ages 16-24. NASE recognises that the ever increasing education costs are a concern for many parents, especially those of struggling small business owners. NASE offers many scholarships each fall to the value of $3000 per scholarship. The aim is to help ease the financial burden of education costs on small business owners.

How can I apply for a Dependant Scholarship for my children?

The criteria for scholarships takes into consideration the below:

• Leadership abilities
• Academic performance
• Teacher recommendations
• Career and educational background (and future)
• School, community and extracurricular involvement
• Financial need

Where can I apply for NASE scholarships and grants?

Start by becoming a member on the NASE website. Following that, applications can be made on the following page: https://www.nase.org/become-a-member/grants-and-scholarships

Long term financial assistance

A scholarship fund, while incredibly helpful and a wonderful opportunity for a college student is a short term financial band aid for small businesses. The National Association For The Self Employed recognizes this and also provides other forms of non financial support and information on their Business Help Page. However, the financial aid is short lived and parents and small business owners are required to pay the balance of the college fees.

Similar to a scholarship, a Growth Grant is a short term band aid for a financial wound in your business. While a grant can be a great way of getting ahead in the short term, a longer term more sustainable option should also be considered. That’s where Funding Solutions can help. Applying for a grant is a time consuming process. If your application is unsuccessful you can apply again, however no feedback is given on individual applications due to the high amount of applications received. Without feedback, it’s hard to know exactly where your application needs strengthening. As you can imagine, this can be an incredibly time consuming and fruitless exercise.

Alternatively, if you’re in need of capital for your business you should consider contacting Funding Solutions on 844 267 0025 today. You don’t need to be a member of any associations, we don’t need to see your business plan or proof of how the cash advance will benefit your business. All we need to see is at least 6 months proof of business trading and receipt of $10,000 per month in receivables. Applications can be made online with an answer expected in as little as 24 hours. If approved, you can expect the funds to be in your account in just 72 hours. This is much less time than it takes simply to apply for a grant!

What are you waiting for? You could start work on your National Association For The Self Employed grant or scholarship application, or you could apply with Funding Solutions today and be as close as 72 hours to some much needed capital for your business.

Our recent article, 35 Ways To Get Funding For Small Businesses provides some great examples of business funding ideas.

Some business owners will be able to bootstrap their way to success. Others may need the help of business funding. Perhaps your online store is seasonal. Perhaps you’ve had a sale and need extra stock. Perhaps you need cash for advertising or to hire new staff. Or perhaps you’ve found an opportunity to buy stock at a heavily discounted price. Whatever the need, even the best of businesses need business funding from time to time. An online store is no exception.

Generally speaking, online stores have less overheads than bricks and mortar businesses. For a start, an online store doesn’t necessarily need a shop front. An online store can operate from a home or garage. That not only saves on renting premises, but also storage, security and extra utilities. That doesn’t mean it’s free to run an online store though. There are still expenses incurred that sometimes may get a little out of hand. This is especially applicable with advertising costs.  Advertising costs can amount to a  large part of an online business’ expenses. At times you might be able to do without advertising and promotion. but at other times it’s an expense that must be spent to keep up with the competition.

The most obvious funding sources

Traditional funding

Traditional lenders are often the first choice business owners consider when applying for funds. It’s worth noting that traditional lenders have strict lending criteria. This makes it especially difficult for online businesses to get approval.

Self funding

Many online business owners start small and self fund. As their income grows money is reinvested back into the business. This allows the business to grow and develop. This may be applicable if you have a nest egg of personal funds that you’re willing to use to fund your online store. Mixing personal with business finances isn’t always a wise move though.

Self funding is a  viable option for online store owners. But it’s a decision that should be carefully considered.

Risky business

Running your business by credit card can be risky business. Credit cards carry a high interest rate, making it harder each month to get out of debt and into a positive cash flow.

The best funding source

A cash advance from Funding Solutions is the best solution to your business funding needs. Lending criteria is fair and equitable, making it easy for online businesses to apply. The application process can be completed online and an answer provided in 24 hours. If approved funds are deposited into your account in as little as 72 hours. This means you can move fast and take advantage of that stock fire sale you’ve been keeping an eye on. All you need is 6 months trading history and proof of $10,000 receivables per month. Cash advance funds from Funding Solutions can be spent on any business expense you see fit. There’s no pesky financial reporting back to us on where funds are spent. What are you waiting for? Get in touch with the friendly team at Funding Solutions on 855-204-6217 to start your application. It’s the best business funding solution available to you today.

Crowd Funding For Small Business and Its Success Rate

Crowd Funding for small business is a popular emerging funding source. Specifically in the start-up and small business crowd. It’s a trend showing no signs of slowing down! Many new crowd funding platforms are emerging every day. For a detailed list of crowd funding platforms see this list.

Most crowd funding platforms accept all projects without review. Most platforms are available anywhere, to anyone at any time to raise funds for anything. It’s debatable whether crowd funding platforms were originally designed for personal or business use.  On the other hand, an emerging trend is the use of crowd funding for business use. Let’s have a look at some of the benefits of crowd funding.funding.

Advantages:

• It can be a fast means of raising cash without upfront fees or having to provide collateral.
• Pitching your business idea or project idea can be a good means of (free) marketing as well as raising funds.
• Pitching your idea can also provide (free) feedback and constructive criticism. This could potentially save thousands of dollars in consulting fees.
• Crowd funding for small business is a good means of testing the market for your good or service. If the public is willing to fund your idea, it’s a good indication it will be well received in the market.
• Your measured progress is traceable. You can log in and confirm available funds at any moment.
• Traditional lenders tend to prefer tried and tested businesses and products. Crowd funding investors are more likely to take a chance on a new and unique idea. In most cases, one that a bank would decline funding for.
• Professional online presence and business manner are key even without raising your desired funds. Professional business presence may lead to a private investor. At the very least, it will result in long-term loyal customers.
• There is no approval process. Most platforms allow anyone to post any business idea online. This is a great option for businesses that can’t work with traditional lending institutions.

The Reality.

For all those advantages, there are unfortunately a few disadvantages to crowd funding. Let’s have a closer look below.

• It’s rare, but some crowdfunding platforms can reject your idea before it’s published. You may need to shop around to find a platform that will publish your fundraising request.
• Exposure of your crowd funding venture is a lot of work. It isn’t as simple as posting your idea and letting the platform do the rest. You’ll need to spearhead extensive promotion and publicity campaigns yourself. Tapping into your personal network is essential. However, this is a line some business owners prefer not to cross.
• Raising funds may draw unwanted attention to your business from current consumers. Some consumers will consider it a current and popular means of raising capital. Others may see it as a sign of financial struggles.
• Funds are only kept if you’ve met your goals. You’re not allowed to keep the funds you raised and change your project to fit the amount raised. Funds are returned and a new project advertised reflecting the new budget.
• Failed funding attempts can reflect negatively on your business.
• Announcing your idea can expose it to competitors copying your idea.
• Regulations might be different in different states or countries. Do your homework before starting a crowd funding venture.

As you can see, there are some great pros to crowd funding but also some serious negatives to be considered.

I don’t think crowd funding is for me. Do I have to settle?

No, absolutely not! Funding Solutions offers working capital to small businesses. You’ll need to have at least 6 months trading history and $10,000 in receivables per month. Funding Solutions is small business owner orientated. It’s not best practice to promote your business or project idea to the market for copycats to imitate. Rest assured, your application process is confidential and quick! If approved, funds are in your account in as little as 72 hours. What are you waiting for? Get in touch today on 855-204-6217 to start your application. You’ll find this a much better alternative to crowd funding for small business.

PayPal Working Capital And What You Need To Know

PayPal Working Capital is an emerging finance option for small businesses, particularly online businesses. We identified PayPal Working Capital as an alternate funding source. Read 35 Ways To Get Funding For Small Businesses, and learn which funding sources made the cut. PayPal Working Capital is a stand out among the alternative funding sources we identified. It is particularly aimed at online businesses. This is an area that has been lacking a specific lending solution for many years. PayPal Working Capital is also one of the more competitive lending solutions. It features some of the most flexible lending options.

Tell me a little more about PayPal loans.

Loan amounts are between $1000 and $85,000. Terms are usually less than 12 months. Making the minimum repayment every 90 days is crucial. The APR is between 15% – 30%. PayPal loans don’t require a personal guarantee. PayPal merchants can borrow up to 8% of their annual PayPal volume.

How do PayPal loans for small business work?

In a nutshell, you can borrow up to 8% of your annual PayPal volume. Fees are set based on the amount you agree to repay. Subsequently, you can choose between 10-30% of your incoming receipts to repay the loan. For example, if you borrow $8000 and choose to repay 10% of sales your fee will be $949. If you choose to repay 30% on the same amount borrowed your fee will be $294. Payments are automatically deducted each time a sale deposits funds into your PayPal account. As a result of no sales, no amount is repaid on your loan for the day.

Sounding a little too good to be true?

You’re right. As good as it sounds there are downsides to PayPal Working Capital. First of all, not all businesses use PayPal as a professional payment method. Even online companies still feel PayPal is best suited for the personal shoppers market. To be eligible for a PayPal loan you need to have regular sale receipts through PayPal. This in itself ties your business to PayPal as a payment method. Paypal isn’t the only online payment method company out there. Others in the market may charge fewer fees per transaction. Once you have obtained a loan through PayPal you’re quite restricted. You’ll need to keep using PayPal as a payment method for your sales invoices.

The amount PayPal loans offer small business is small in comparison to other lenders. There is a required $20,000 in sales invoices annually through PayPal for loan eligibility. While it’s easy for some companies to receive that, it’s not always guaranteed exclusively through PayPal.  This could involve switching the payment method of your clients and customers to PayPal. Switching payment methods is a tedious and time-consuming process. Clients often see this as a sign the provider is experiencing financial hardship. They have even used it to either negotiate better terms for themselves. Some even seek another provider.

Do I have any other alternatives?

Of course. Funding Solutions offers working capital to businesses. Our criteria also keep small business in mind and streamlines the application process. Do you have 6 months trading history and are in receipt of $10,000 receivables per month? If so, you can apply for a cash advance. If approved, funds are deposited into your account in as little as 72 hours. The benefit of a Funding Solutions is that you can continue to use any payment methods you like. This approach is far less disruptive to your business and business processes. Funding amounts are from $3000 to $500,000. What’s stopping you? Get in touch with Funding Solutions today on 855-204-6217. Start your simple online application. You’ll find it’s a much better alternative to PayPal Working Capital.