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Able: World’s first collaborative lender knocks our socks off

Small business lending is often stacked in favor of the lender, but Able appears hellbent on changing the model and flipping it upside down.

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Able Lending is a creative, impressive platform

Small businesses provide half of America’s jobs, and produce trillions of dollars in revenue each year. In no uncertain terms, small businesses like yours are the bread and butter of the American economy. And yet, it is more difficult than ever to get the loans from banks. Alternative lenders are thriving as the small businesses that drive much of the US economy continue to seek sources of capital to grow.

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Able Lending is such an alternative lender offering a unique style of “collaborative credit.” Borrowers are asked to find three to five backers – generally friends, family, or fans who believe in the vision of their business – who agree to collectively fund at least 25 percent of your total loan.

Able loans the remaining 75 percent, as well as taking care of all of the legal paperwork, managing your monthly payments, collecting payments from your backers, and repaying your friends and family with interest.

There is a new way

Based in Austin, a veritable hotbed of startup and small business activity, Able seeks to empower the “Fortune Five Million” because they understand the importance of small businesses. The company states, “Right when you’ve been serving customers and serving communities, banks stopped believing in you and no longer lend you money. We all know that capital is your life blood. It’s how you grow and tell the story of your business. But now there is a new way.”

Able believes that if you can find a few backers willing to fund you partially, it shows that you and your closest collaborators truly believe in the business. By asking you to find some of your own backers, Able is also able to offer lower interest rates than most alternative lenders and banks.

What types of loans are available, how the process works

Loans are available from $25,000 to $500,000 with interest rates starting at eight percent, and loan contracts from one to five years. To qualify, your business must be at least six months old (most banks require one year) and must generate an annual revenue of at least $50,000. Most banks and other alternative lenders require businesses to be at least a year old with much higher revenues. Able is also looking for small businesses “strong growth prospects, passionate leadership, and supportive customers.”

The process of getting a loan from Able is relatively simple. You create a short profile about your business, connect it with your social media accounts, and find three to five backers. Within 24 hours, Able will contact you for more information. Able reviews your financials and completes a credit check, and will notify you within three days if you’ve been approved for a loan.

Finally, a win-win in a win-less financial world

Collaborative credit seems like a win-win situation for everyone involved. You get your loan at a reduced interest rate, and your backers get to support a business they believe in while also earning interest. Several Austin startups, such as Capital Factory, Rose & Fitzgerald, Chi’lantro, and Branch Basics, have funded their businesses through Able’s unique collaborative credit loans.

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Ellen Vessels, a Staff Writer at The American Genius, is respected for their wide range of work, with a focus on generational marketing and business trends. Ellen is also a performance artist when not writing, and has a passion for sustainability, social justice, and the arts.

Business Finance

How business owners should handle the trend of COVID-19 surcharges

(BUSINESS FINANCE) COVID-19 has caused a lot of money problems, but some places have decided to counter this with new surcharges, and hopefully they told customers about them.

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COVID-19 surcharges

Hidden surcharges have long been a subject of discussion among consumers. Banks, car dealers, hotels, and credit card companies are much more transparent than they once were. According to a 2019 survey by Consumer Reports, 85% percent of adult consumers were hit by an unexpected fee when paying for a service, so the practice is not completely gone. With COVID-19, some businesses are turning to surcharges to balance out their profit margins.

Can businesses add a COVID surcharge legally?

The impact of COVID-19 is continuing to unravel. FOX8 reports that a Missouri steakhouse and sushi restaurant included a surcharge related to the rising costs of food under the pandemic. A CBS affiliate in Midland, TX reminds consumers to check their bills, because restaurants and salons are adding surcharges. Some businesses are saying that state restrictions are increasing operational costs, while others relate it to the cost of goods. Even UPS has added surcharges to peak delivery slots. According to a librarian at the State Law Library, a private business in Texas has a lot of leeway in deciding what to charge.

A surcharge isn’t necessarily price gouging

In Texas, price gouging following a natural disaster is illegal. The surcharges that we’re discussing aren’t price gouging, just a way for businesses to temporarily raise prices without changing their menu or listing new prices. The Houston BBB recommends that if your business does add a surcharge, it should notify consumers about the charge before the bill arrives. Consumers who believe that they’ve been a victim of price gouging should file a complaint with the Texas Attorney General.

Transparency is part of good customer service

According to Consumer Reports, 96% of the consumers surveyed were annoyed with a hidden fee. I want to talk to the 4%, and find out why they weren’t. A surcharge under COVID-19 conditions can make sense. Cleaning and sanitizing takes time and money. Prices have increased. What’s bad business is trying to hide those surcharges until after the customer checks out. That’s not fair. Be transparent.

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Business Finance

Tool simplifies vendor payments, saves small businesses tons of time

(BUSINESS FINANCE) Melio is a B2B payment platform that simplifies bill payment for small businesses while freeing up their cash flow. Quick and easy, even from your phone.

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Designed to maximize cash flow and consolidate the complications of paying bills and vendors, the startup Melio could be a big boost for small businesses.

The way this payment workflow tool works is that it lets you pay any vendor –including those who do not accept credit cards- using a bank transfer, or check mailed on your behalf for B2B payments.

Specializing in small business payments, accounts payable, accounts receivable, online payments, and business to business payments; it is free to send and receive payments using bank transfers/ ACH but credit card payments incur a 2.9% fee.

The onboarding is straightforward, including integration and automatic sync with QuickBooks, which is essential for many small businesses. Lots of online customer reviews via Trustpilot and other sites claim that Melio is user friendly with responsive, human customer service. Melio fills the gap between the bill payer who wants to use a credit card to pay a bill, and the biller, who wants to receive their money as simply as possible, and without credit card fees. Many small businesses have to manage the challenge of payments to purveyors such as utilities and landlords that do not accept credit cards, or want to deal with the associated merchant fees.

Melio and bill payment services allow businesses who prefer to use a credit card for payment to do so. For a small business who could really use the float and cash flow of a 21-day billing grace period of a credit card, or using a card with a sweet rewards program, this could be a valuable option.

Melio does not have a mobile app to download, but it is described on the meliopayments.com website as having a mobile-friendly, responsive web app easily-managed across devices. Most of the reviews seem to confirm the user-friendliness of this tool, and the few poor reviews I have seen involved requests from Melio for compliance documents that were not satisfied by businesses, and resulted in undelivered payments. With more than 2 years since its founding, Melio is continuing to grow and cater to the needs of small businesses in the United States who want to streamline their accounts payable process.

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Business Finance

Politicians reconsider PPP rules too cumbersome for small businesses

(BUSINESS FINANCE) The PPP loans may have some changes coming soon, to help small businesses even more by extending the time they have to spend the money.

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Congress has reported talks over fixing parts of the Paycheck Protection Program (PPP), a key program designed to help businesses during the coronavirus pandemic. Changes could range between small tweaks to an overhaul of program requirements. Congress remains divided over a phase four relief bill (passed in the House last week) which includes several of those PPP changes.

The PPP was created to provide forgivable loans to businesses with fewer than 500 employees. Although the Treasury is continuing to offer updated guidance, any significant changes will require approval from Congress.

One of the major potential changes is an extension to the eight-week time frame for businesses to spend their loan money. Senator Marco Rubio (R.-Fla.) is advocating the change. He told reporters “I think the more important thing to change is the time frame in which they can use it for,” Rubio told reporters. “We do need to give them more time to spend those monies.” The hope is to pass those changes before the first PPP loan recipients reach their deadline in early June.

Other changes proposed in the House bill include extending the spending time period to 24-weeks and eliminating the requirement for 75 percent of loan spending on payroll in order to qualify for full forgiveness. The flexibility could allow recipients to allocate money towards rent, another challenge facing small business owners. While Senate Republicans haven’t shot down that option, they’ve voiced concern on the spending rule which was originally designed to keep workers employed. Meanwhile, Democrats argue for flexibility which could support businesses with fixed costs. Both sides are open to discussing a 50 percent payroll and 50 percent additional cost breakdown in a new PPP changes.

The Small Business Administration has reported $195 billion from the $310 billion of the second tranche of PPP has been approved. With no defined plan to reopen the country, small businesses are counting on relief programs. Senior White House advisor Kevin Hassett has said the government can’t continue to lend money to businesses indefinitely. “It is something we can do through Jun, I would, guess if there’s enough cash for that.”

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