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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

Square POS for restaurants wildly improves service

(TECHNOLOGY) Square, a card payment-processing company, has created a point of sale app specifically for restaurants.

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If you’ve spent any time processing card payments in an informal capacity, you’re probably familiar with Square—a company which facilitates card payments via a smartphone or tablet app and a free card reader. Square’s most recent endeavor tweaks their existing product for a more specific environment: restaurants.

Square for Restaurants is exactly what it sounds like: the traditional Square app optimized for a restaurant setting. The app’s features include improved operating speed, accommodations for both front-of-house and back-of-house operations, and a general user interface which is geared toward quick data entry rather than the traditional Square interface’s more cluttered approach.

While the app’s interface lends itself to payment processing and general front-of-house functions at first glance, Square for Restaurants offers multiple other restaurant-centric options to fit different roles. For example, a server might use the app to take and process an order or keep track of which tables have been attended, while a supervisor might generate payroll or archive receipts.

The instant availability of things like order information and seating arrangements also means that customers will have less time to wait between interactions, and staff will have significantly fewer instances of confusion or wasted down time.

Centralization of your kitchen’s various menus is another key aspect of the app. Since the app automatically synchronizes any changes, you can ensure that everyone sees the same breakfast, lunch, and dinner menus on any given day of the week. Additionally, menus can be customized on the fly, allowing you to add a high-demand custom order or special item with a few taps.

As you might expect, the POS comes with all the powerful analytics tools and accessibility which accompany the standard Square app. You can do things like track your best-selling dishes, make adjustments to the menu, and review your monthly overhead from anywhere that has Wi-Fi access; once you’ve made your changes, they will display in the app, making it easy to keep everyone on the same page.

Whatever your position on Square’s products in the past, Square for Restaurants promises to be a fresh take on the oversaturated POS (point of sale, y’all) software market.

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Business Finance

Calculator for what your freelance rate should be

(FINANCE) When every second on the clock counts and saving is imperative, where can you go to figure out your optimal freelance rate?

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The issue of what your freelance rate should be is daunting for most, but is especially stressful for those who aren’t particularly mathematically gifted. When every second on the clock counts and saving is imperative, where can you go to figure out your optimal rate? A new calculator has an answer.

What Is My Day Rate is a salary calculator which determines the hourly (and daily) amount you’d have to charge in order to meet your optimal salary.

The calculator itself is intuitive enough: upon landing on the What Is My Day Rate webpage, you simply enter your preferred annual income and wait for the results to load. You’ll see both a daily and an hourly sum appear shortly thereafter.

The process of figuring out how much to charge is simple, but that doesn’t mean the process is simple.

What Is My Day Rate draws from similar geographical, workplace, and demographic data to give you a number which reflects post-holiday, post-fee, post-non-billable work results.

By clicking the “See how we calculated this” link at the bottom of the page, you can see a specific breakdown of how What Is My Day Rate determined your rate.

You’ll notice that they take into account weekends, holidays, sick leave, bonuses, benefits, and more.

If division is a strong suit for you, you may also notice that What Is My Day Rate operates on a 40-hour workweek model, meaning your rate might even be optimistic for your standards.

One problem with the calculator is that it doesn’t account for taxes of any kind; while it factors in a rather generous benefits percentage and adds in things like mandatory vacation time and unpaid sick leave, there’s still a noticeable gap between the calculator’s projected expenses and what you would probably have to pay.

On the plus side, tax brackets change, so you’ll be able to plug the day rate results into a separate tax calculator without worrying about accuracy issues.

What Is My Day Rate is a valuable tool for any freelancer looking to establish their daily freelance rate without necessitating a spreadsheet and several hours of botched accounting—or a more expensive alternative. If you’re worried about undercharging, head over to their site to lock in your rate ASAP.

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Business Finance

20 states won’t grant or renew a professional license if your student loans default

(FINANCE) If your student loans default, your professional license may be revoked – a hard blow to medical practitioners, Realtors, delivery drivers, and so many more hard working people.

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Student loans represent a significant financial burden for recent graduates, with average loan debt in 2017 hitting $37,172, and the impact of debt repayment at graduation causes many Americans, mainly younger professionals, to delay everything from traveling the world and marriage, and even opening their own business.

Beyond the burden of debt, student loans are particularly tricky because they play by some different rules.

Most debt for example, doesn’t accrue interest while you don’t make any payments, and the flexibility of the repayment options can put borrowers in difficult situations where they don’t recognize their repayment amount. In addition, because the way we relate to the lender (AKA the federal government), the consequences of student loan debt often makes it seem less important to pay.

However, most of that flexibility is limited to non-private student loans. Private student loans have all the troubles of regular loans, with some added bite.

One way that student loan debt is different from other forms of consumer debt is that not even bankruptcy can clear you.

In 1976, Congress passed a law that put public student loan debt in a separate category that can’t be discharged. In 2005, Congress extended that to private student loans.

Not paying your student loans can lead also lead to wage garnishment and tax refund seizure.

But perhaps the most painful and insulting consequence of student loan default can be the withholding of your professional (or even your driving) licenses. If you’re a barber, nurse, teacher, lawyer, psychologist, realtor or need to drive a car, that can be devastating.

NYT uncovered that the following 20 states that allow this include:

  1. Alaska
  2. Arkansas
  3. California
  4. Florida
  5. Georgia
  6. Hawaii
  7. Illinois
  8. Iowa
  9. Kentucky
  10. Louisiana
  11. Massachusetts
  12. Minnesota
  13. Mississippi
  14. New Mexico
  15. North Dakota
  16. South Dakota
  17. Tennessee
  18. Texas
  19. Virginia
  20. Washington

Beyond the damage to credit scores, liens on properties, and the financial consequences, these license seizures can represent financial ruin, and can punish well-meaning borrowers and those who are working on public service loan forgiveness as well.

The most important thing you can do is know your options.

If you have public loans, explore repayment options, explore refinancing with direct loans, and most importantly, communicate with your lender. If you have private loans, consider moving that debt into something more manageable, especially since private loans have no interest cap, a personal loan or a home equity loan can be a more affordable option.

The best way to handle default is to avoid it – and don’t drown by avoiding swimming. Most importantly, get in the know, explore your options, and get talking. And if you’re feeling extra motivated, work with your state representatives and work on getting legislation to help make students loan more manageable.

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