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6 ways to avoid wasting time when applying for a business loan

(Business Finance) Applying for a business loan can be a huge timesuck, but it doesn’t have to be if you know the right questions to ask yourself before beginning the process.

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The small biz challenge du jour

“One of the biggest challenges faced by small business owners is finding the capital they need to fuel growth and fund working capital,” said Ty Kiisel, a contributing author at OnDeck, a tech company aiming to solve small business’s biggest challenge: access to capital.

Kiisel notes that finding a loan can be a time-consuming process, citing former administrator of the SBA ,Karen Mills, who argues that the average small business owner spends about 25 hours filling out the paperwork associated with completing a loan application.

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“Asking yourself a few key questions before you sit down with a lender will make a lot of difference in how seriously they take your loan application,” said Kiisel, adding, “how long it takes to get an approval–and help you avoid wasting a lot of your precious time.”

In his own words below, Kiisel offers the six questions you should ask yourself prior to beginning any loan process:

1. Can I really afford a loan?

Dumb question, right? Not really. One of the first questions every lender wants answered is, “Can this borrower repay the loan?” That’s one of the reasons they want to see some experience in business and your bank statements. If you can’t honestly answer, “Yes, I can afford a loan payment,” it’s not likely your loan application will end with a “Yes” from the lender.

2. How much do I really need?

“As much as I can get,” is never a good answer. Small business owners always need capital, but borrowing capital can be expensive–in some cases very expensive. Paying a premium for more capital than you really need just doesn’t make sense. What’s more, in some cases it’s possible you might need more than what you’re asking for. You’re wasting time with the “As much as I can get” answer. It tells the lender you haven’t really thought enough about what you’re going to do with the capital and can even be a red flag that causes a loan officer to disregard your request completely.

3. Why do I need the money?

This question fits hand in glove with Question #2. Borrowing capital to take advantage of opportunities to purchase such things as equipment or inventory at a discount is a great reason to access credit (provided you can positively answer Question #1). Even if you need to augment a short-term cash flow need or have some other need for financing, you should be able to articulate exactly why you need the money and how much you are looking for. This tells the lender you understand how to use borrowed capital and you’re not a waste of his or her time.

4. Do I have all my ducks in a row?

Although every loan and every lender is a little different and requires different documentation, if you have some of the most requested documents in order before you visit a lender (and this applies to both traditional and online lenders), you’ll avoid wasting everyone’s time. Start with your past two years of business and personal tax returns, the last three months of bank statements, and a list of other loans or lines of credit you may have. Standard financial documents like a current P & L statement should also be at your fingertips. It’s not enough to have the documents either, it’s important to really understand what all this information means. I once spoke with a lender who said, “If I know more about a business by looking at the financial data than they do, I’m not going to offer them a loan.”

5. What’s my current credit score?

Did you know you have both a personal and a business credit score? If you’ve only been in business for a few years, your personal credit score will be part of the equation, but it doesn’t tell the whole story. Your business has a credit score too. Dunn & Bradstreet, Experian, and Equifax are the three major business credit reporting bureaus and they all have different scores for displaying a business’ credit worthiness. A bad credit score doesn’t necessarily mean you won’t get a loan, but it could mean you’ll need to pay a little more for the capital. It might also make a difference in where you should be looking for a loan.

6. What are my real chances with this lender or loan type?

It’s really important to understand the nature of the financing you’re looking for. For example, if your credit score is weak and you don’t have five or six years under your belt, a traditional loan at the bank, or maybe even the SBA, will be a waste of time. Nevertheless, even if you have less-than-perfect credit, but have a healthy business with a steady cash flow, there are a lot of online options that will work for you if your first year is behind you. Investigate and study your options before you start applying to save time.

Knowing what to avoid is the first step to escape wasting time. More importantly, it may even help you save time–time better spent making your business successful. It’s often said that time is money, ask yourself how much is your time is worth.

The American Genius (AG) is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.

Business Finance

Bankruptcy doesn’t mean what it used to; no longer the end

(FINANCE NEWS) With the way the world works now, bankruptcy doesn’t necessarily mean game over.

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When it’s over, it’s over. Perhaps you heard your best friend utter this phrase after a bad break-up. It’s true, most things that end, end for good. Except in this case, when it comes to the retail business.

We have seen a record number of retailers declare bankruptcy this year. Beloved teen retailers like Wet Seal have closed down their stores and malls have become ghost towns.

Reuters estimates that nineteen major retail chains have already shut down for good. While you may not miss the tight, neon dresses sold at Bebe, closures of all of these retailers result in a tremendous loss of jobs.

And it is not only job losses from the store in your hometown, often it is hundreds of locations across the nation.

For most of these retailers, bankruptcy was the definitive end to the business. After filing, most companies choose to close all locations and liquidate the assets. This is the most common path to take, until now.

Even with the surge of bankruptcy, those behind the business are finding alternative paths to keep the business alive.

Behind the scenes, there are three core groups invested in every business: the company’s creditors, vendors, and landlords. All of these groups have a vested interest in keeping the company alive even if they are in debt.

The most recent trend for bankrupt businesses has been to keep stores open and negotiate debt loans rather than shutting down everything. The truth is that a lot of these businesses still attract customers and have a large cash flow, even if they are technically bankrupt.

For instance, Toys ‘R’ Us manages to take in $800 million each year on average which makes it a viable business. Of course, they are $5 billion in debt, but with an extension and restructuring of their business, they could one day turn a profit. However, this will only happen if they are given the chance to keep their doors open.

There are other options to lending helping hands to bankrupt businesses. After the popular teen retailer Rue21 declared bankruptcy landlords agreed to reduce their rents 20% on average. Though these situations are not ideal, this mentality gives businesses a life beyond bankruptcy and save thousands of jobs in the process.

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Business Finance

Everyone’s favorite online retailer is set to accept Bitcoin by October!!!

(FINANCE NEWS) One big name online retailer is about to hop on the cryptocurrency train and start accepting Bitcoin at check out as soon as October.

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There’s no denying that cryptocurrency has taken off like wildfire, but will Amazon be jumping on the bitcoin bandwagon?

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According to one top source, Amazon has already started flirting with the idea and could be ready to fully use bitcoin in October.

Kind of a big deal

The news broke via The James Altucher Report, which is run by the former hedge fund manager and venture capitalist James Altucher. Altucher uses his experience in the business realm, where he has cofounded over 20 companies, to offer realistic financial advice and insight.

He communicates via his popular newsletters, blog and podcast. According to Altucher, Amazon is geared up to change their payment options as early as October.

Already Testing the Waters

Last year, Amazon partnered up with Digital Currency Group, a major investor in Bitcoin, to act as an intermediary between them and their clients. Amazon’s role is to handle all transactions, many of which include the popular cryptocurrency.

Major companies like Google, Ebay and Paypal already accept bitcoin so it is just a matter of time until Amazon follows suit. Even Japan and Russia recognize it as legal currency.

Amazon + Bitcoin = AmaCoin?

Don’t think of bitcoin as Amazon’s only option. Some speculate that Amazon may one day create their own currency.

As a company that has already started testing drones as a future delivery method, custom currency does not seem so out of this world.

The blockchain option has been a refreshing alternative to using traditional banks, especially for those who do not have faith in the current banking practices.

There are questions

If Amazon jumps onboard and rolls out a plan to use bitcoin this year, Altucher anticipates a major surge in its value. Since they have yet to announce an official strategy, and because the option of them creating their own currency is still up in the air, it is unknown how Amazon will integrate it into their system.

Will Amazon find a different way to accept bitcoin? Perhaps a brand new way? If Amazon does start using bitcoin they will join many other tech companies that have already anticipated the growth in its value. Amazon isn’t the only company that has started transitioning over. Many other tech companies have already started to become intermediaries to manage digital transactions.

#AmazonBitcoin

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Business Finance

Pirate Bay is mining cryptos using their users’ CPU… those scallywags

(FINANCE NEWS) Cryptocurrency and mining and pirates. It all sounds like something out of a sci-fi novel, but trust us, it’s 100% real.

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Who pirates the pirates?

Well, pirates, naturally. Piracy is a fractal. There is nothing so small that someone won’t strap on an eyepatch, grab a parrot and snag themselves an unlawful piece.

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Such is the swashbuckling tale recently broken on Reddit about Pirate Bay, which is borrowing visitors’ CPU cycles to mine cryptocurrency.

TRANSLATION, PLEASE?

To translate that from Internet to English, “mining” cryptocurrency means volunteering your computer to verify blockchain transactions. We’ve covered blockchain in depth before, but the short version is it’s a particular security protocol that encrypts tokens representing money.

When you join a cryptocurrency exchange, you use that exchange’s blockchain to encrypt your stuff.

Some members of an exchange volunteer their computers to verify that transactions have taken place. Then they’re encrypted, never to be futzed with again. Those members get paid for their trouble with fractions of coins from the exchange.

The volunteers don’t actually do anything. The verification and encryption are automatic. That’s the point of cryptocurrency: no flighty or nefarious humans are involved in the bookkeeping. It’s all about the robots. That said, somebody owns the robots, and robot time is worth money. Therefore, miners.

SIXTEEN COINS – WHAT DO YOU GET?

“Miners,” in common currency dork parlance, are folks who invest in verifying transactions on a large scale, turning those fractions of coins into meaningful profit. It’s a smart way to make consistent money.

One big caveat: you need serious computing power to do it enough to matter.

Lifewire estimates an upfront cost of $3000 to $5000 to get real money out of the process. That said, their estimate also says 50 dollars a day in profit, which means over the course of a year you’re talking 3 to 5 times the money you put in. Ain’t chump change.

YAR

Which brings us to Pirate Bay. Pirate Bay is, as I’m sure the pure and innocent readers of American Genius would have no reason to know, a torrent site where various forms of media may be secured for free by nefarious means.

You’re shocked, I’m sure. Not everybody is, it turns out: as of this article, it’s the 88th most popular website on Earth. 25th in Canada! Canadians, man. They’re tricksy.

So, unsurprisingly, is Pirate Bay.

To state the obvious, swiping media and giving it away is not a working business strategy. Robin Hood did not have a positive P&L ratio. Typically – I’m told, I of course would have no way of knowing this myself – torrent sites support themselves through ad revenue. That wasn’t cutting it for Pirate Bay, plus they just wanted to get rid of the ads for an improved user experience, so they experimented.

Their first scheme was borrowing users’ CPUs while they were on the website, using unused processor cycles to mine cryptocurrency.

BROTHER, CAN YOU SPARE A CRYPTODIME?

The rollout was flawed. In fact the rollout was nonexistent: the only reason anybody even knew it was happening was somebody effed up the miner script and it started taking 100 percent of users’ CPU cycles as long as they were on the page. Oops.

But fair dues, Pirate Bay did exactly what tech folks should do when caught with their digital drawers down.

They fessed up in an official statement that explained their intent, addressed the problem people were complaining about, and invited further input. That’s more than can be said for, say, Uber.

More to the point, if the cryptocurrency mining plan goes forward, Pirate Bay will be providing a service to consumers in exchange for compensation at stated rates. The fact that it all comes in a novel form – the service is peer-to-peer, based on a model of free sharing; the compensation is provided voluntarily by people who aren’t receiving the services; the rates are measured in CPU cycles rather than money – doesn’t change the fact that fundamentally, “service to consumer for compensation” equals “business plan.”

For another time

Whether it’s a workable business plan or not is a question for Future Matt. Present Matt just has a question: if it does work, if Pirate Bay becomes a self-supporting enterprise trading encrypted, peer-to-peer money for an encrypted, peer-to-peer service, what then? At what point does it become more reasonable, and for that matter more ethical, to accept peer-to-peer transaction as a real thing and regulate it accordingly, as opposed to banning it outright?

Ask Piet Heyn. Better yet, order a mojito and run it past Captain Morgan. (It’s better because you get a mojito.) Back in the days of real pirates, when you wanted to rein them in, you just legalized them. If Pirate Bay establishes a legitimate revenue stream, that may well be the smart next step.

#PirateBay

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