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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 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

Clyde helps smaller brands to offer product protection programs

(BUSINESS FINANCE) For small brands that sell not-so-little items, Clyde is a big deal! Now you can offer product protection normally reserved for the big brands.

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For small businesses seeking to adapt to their new or growing online presence, Clyde, a platform allowing small business consumers to receive extended warranties and protection on purchases may be the answer.

Due to the current pandemic, online retailers have reported on average, a 200% increase in digital sales. Online commerce is only expected to continue its growth with 52% of consumers suggesting they will not return to in-store shopping, post COVID-19. With online shopping in demand, stolen packages, damaged products, and lost goods are also surging.

If you’re ordering from a superstore like Amazon, Target, or Walmart, chances are your items are protected and will be quickly replaced upon a discovery of any of the above issues. However, for smaller companies, protection on consumer goods is usually not offered, not because smaller companies don’t want to give their customers this option, but because finding insurance for small businesses is hard.

Clyde, a company working to provide product protection programs to small retailers through the navigation and connection to insurance companies, intends to change that. Clyde gives small businesses or as their CEO, Brandon Gell, would say, “everybody that’s not Amazon and Walmart,” the opportunity to provide their customers with individual product protection or an extended warranty contract that can be purchased at checkout.

Clyde also provides the retailer with a portion of the insurance profit, serving as an incentive for smaller companies who usually get left out of this profitable market. Product protection is responsible for a whopping $50 billion market, so getting in on the game is key. The company also provides sellers with critical data analytics, product performance statistics, that otherwise would not be obtainable to smaller companies.

Not only is Clyde protecting consumer purchases, but its mantra acts in the best interest of smaller companies normally left out of big commerce perks. The company’s dedication to provide smaller businesses with access to revenue and its consumers with product protection at a time where the demand is higher than ever may allow this company to flourish.

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Business Finance

Will cash still be king after COVID-19?

(EDITORIAL) Physical cash has been a preferred mode of payment for many, but will COVID-19 push us to a cashless future at an even faster rate?

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No more Cash

Say goodbye to the almighty dollar, at least the paper version. Cashless is where it’s at, and COVID-19 is at least partially to thank–or blame, depending on your perspective.

Let’s face it, we were already headed that direction. Apps like Venmo, PayPal, and Apple Pay have made cashless transactions painless enough that even stubborn luddites were beginning to migrate to these convenient payment methods. Then COVID-19 hit the world and suddenly, handling cash is a potential danger.

In 2020, the era of COVID-19, the thought of all the possible contaminants traveling around on an old dollar bill makes most of us cringe. Keep your nasty sock money, boob money, and even your pocket money to yourself, sir or madam, because I’ll have none of it! Nobody knows or wants to know where your money has been. We like the idea of taking your money, sure, but not the idea of actually touching it…ewww, David. Just ewww.

There is no hard evidence that cash can transmit COVID-19 from one person to the other, but perception is a powerful agent for changing our behavior. It seems plausible, considering the alarming rate this awful disease is moving through the world. Nobody has proven it can’t move with money.

There was a time when cash was king. Everyone took cash; everyone preferred it. Of course, credit cards have been around forever, but they’ve always been just as problematic as they are convenient. Like GrubHub and similar third party food delivery apps, banks end up charging both the business and the consumer with credit cards. It’s a trap. Cash cut out the (greedy) middle man.

Plus, paying with a credit card could be a pain. Try paying a taxi driver with a credit card prior to, oh, about 2014 when Uber hit the scene big time. Most drivers refused to take cash, because credit cards take a percentage off the top. Enter rideshare companies like Uber. Then in walks Square. Next PayPal, Venmo, and Apple Pay enter the scene. Suddenly, cabbies would like you to know they now take alternate forms of payment, and with a smile.

It’s good in a way, but it may end up hurting small businesses even more in the long run. The harsh reality of this current moment is that you shouldn’t be handling cash. No less an authority than the CDC recommends contactless forms of payment whenever possible. However, those cabbies weren’t wrong.

The banking industry has been pushing for a reduced reliance on cash since the 1950s, when they came up with the idea of credit cards. It was a stroke of evil genius to come up with more ways to expedite our lifelong journey into crushing debt.

The financial titans are very, very good at what they do, at the expense of all the rest of us. The New York Times reported on the trend, noting:

“In Britain alone, retailers paid 1.3 billion pounds (about $1.7 billion) in third-party fees in 2018, up £70 million from the year before, according to the British Retail Consortium.

Payment and processing companies such as PayPal (whose stock is up about 55 percent this year) and Adyen, based in the Netherlands (up 72 percent), also stand to gain.”

All kinds of banking-related industries stand to benefit as well. Maybe we’ll go back to spending physical cash one day, but I don’t think there’s any hurry. Fewer old grandpas are hiding their cash in their proverbial mattresses, and the younger, most tech-savvy generation seems perfectly content to use their smart phones for everything.

We get it. Convenience plus cleanliness is a sweet combo. If only cashless payments weren’t such a racket.

If this trend towards a cashless future continues, future travelers may not experience what it’s like to fumble with foreign currency, to smile and shrug and hand over a handful of bills because they have no idea how many baht, pesos, or rand those snacks are. They may not experience the realization that other countries’ bills come in different shapes and sizes, and may not come home with the most affordable souvenirs (coins and bills).

We shall see what the future holds. Odds are, it may not be cash money, at least in the U.S. I hope the cashless movement makes room for everyone to participate without being penalized. We’re in the middle of a pandemic, people. We need to find more ways to ease the path for people, not callously profit off of them.

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Business Finance

How NASA helps small businesses reach for the stars

(BUSINESS FINANCE) NASA has been providing $51 million in grants to small businesses and innovators.

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With the political and social climate that we are all trying to survive this summer, there only seems to be a few things that bring us a light of hope. For some it’s the little gestures that keeps the smiles on our faces; little helping hands that keep us going from day to day. But thanks to some forethought in our government system, there are some rather large helping hands coming down from the top as well. The organization that sends people to the moon is also making some dreams come true here on Earth.

NASA has just announced their latest batch of small business grants. Grants that amount to a total of approximately $51 million. This money is being sent out at the most crucial early-stage of small business funding. Over 300 businesses are receiving up to $125,000 to develop and bring new technologies to the world.

This grant system has been in place nearly as long as NASA itself. The Small Business Innovation Research/Technology transfer program is designed to bring in entrepreneurs and inventors’ ideas, and combine them with NASA’s assets to bring their dreams to fruition, bringing something from the lab to the marketplace.

It is set up into a three-phase system. According to The Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR), the first phase, Idea Generation, provides grantees with up to $125,000 for a 6 – 12 month period to “establish the technical merit, feasibility, and commercial potential of the proposed R/R&D efforts and to determine the quality of performance of the small business awardee organization prior to providing further Federal support in Phase II”. If they succeed, they may be eligible to move onto Phase II, where they will be awarded a new grant of $750,000 for 2 years to continue the R&D efforts and start on a Prototype Development. Phase III is called the Infusion/Commercialization stage and it is the culmination of years of work and grant access for these businesses. This also includes a few extra requirements like matching funding for things like marketing.

Over the years, the selection has covered numerous disciplines with an extraordinary range of industries. Some of the highlights this year are high-power solar arrays, a smart air traffic control system for urban use, a water purification system for use on the moon, and improved lithium-ion batteries. These are just a few of the many innovative projects. The list covers a huge assortment, but a few people have noted the number of neuromorphic computing efforts as well.

This list is updated periodically throughout the year as each deadline is met from previous grant holders. It’s a constantly updating assortment of tomorrow’s toys, and a great way to look toward the future.

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