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Kabbage could be the best lending option for the next phase of your biz

(FINANCE NEWS) Kabbage offers lines of credit between $2,000 and $100,000 for small businesses, even Realtors. Ready to hire more support team members but need some aid? Check this out.

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Thinking outside the lending box

If you are a business owner, you know how tedious it can be finding feasible banking options. Depending on your financial history, financial need, and current financial state, it can take months before not only finding the right bank or lending option, but to be accepted as a client. We know the pain, and decided to find the best alternative lending option for small business lines of credit.

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Why alternative lending instead of big bank?

Alternative lending companies aren’t typically as strict as big name banks, and therefore have higher acceptance rates. The leniency from alternative lending companies is great for small businesses with financial dings or questionable credit history. Alternative lending also offers benefits such as quicker approval times, more flexibility, and less paperwork.

Alternative lending options

There are a dozen alternative lending options that have gained popularity over the years, such as Lending Club and OnDeck. While you should definitely take a look before deciding, after extensive research and our own personal experiences with debt, we suggest Kabbage as an excellent option for small business in financial need.

Kabbage immediately separates itself from other options with its application and approval process that takes the headache out of “sign up”.

Instead of a lengthy underwriting process that has to be done in person, Kabbage’s application is done completely online, and has an almost instant approval process if requirements are met.

Small businesses must have been in business for at least a year, and earn at least $4,200 in mostly revenue. Monthly revenue, transaction volume, and credit score are also deciding factors.

Finding the proper paperwork takes a large chunk of time in itself, which is why Kabbage offers its users the option to save time by linking the application to a business checking account or online banking service such as PayPal instead.

Once linked, Kabbage will review the data to determine loan eligibility. Compatible banks and online services include: Chase, Bank of America, Wells Fargo, PNC, U.S. Bank, Regions, BB&T, TD Bank, USAA, Citibank, Capital One, SunTrust, Navy Federal, BBVA Compass, Fifth Third Bank, PayPal, Authorize.Net, Stripe, Sage, Square, eBay, Shopify, Yahoo, Amazon, Etsy, and Intuit.

FYI: Kabbage also looks at personal credit score, which should be at least above 550.

Loan terms

Kabbage offers lines of credit between $2,000 and $100,000, and functions more as a credit card than a traditional loan. For example, if you are approved for a $100,000 line of credit but only use $20,000, you only pay fees on the $20,000. Users can also draw money against their line of credit as often as once a day.

The fees mentioned above range anywhere from 1.5 to 12 percent of the loan amount for the first two months on a six month loan, or six months on a 12 month loan. There is a standard one percent fee for remaining months. Outside of these monthly fees, there are no added costs for a line of credit, which is another reason we suggest Kabbage. Most of the other lenders we researched had additional fees.

It is also important for small businesses to note Kabbage does not enforce any limitations on how the loan is used. Inventory, design, marketing, or whatever you decide to spend it on, is your prerogative. This is in contrast to other lending companies, who want to know explicit plans about how the money is to be spent before approval.

The catch

Although we like Kabbage overall, it is our responsibility to tell you about the things we don’t like. The biggest complaint we have is the limited amount of time small businesses have to repay their loan.

While there is a 12 month option, which is still not a lot of time, the only other option is six months.

So for small businesses with financial needs that span longer than a 12 month repayment term, Kabbage may not be the right solution.

Don’t take our word for it…

As stated in the beginning, there are a dozen other options for alternative lending, along with traditional lending options. And although we appreciate you taking our word for it, applying for the wrong loan can make a bad financial situation worse. So please be sure to research your different choices, keeping your specific needs and goals in mind.

If the decision is too tough on your own, consult with an accountant or financial expert to find the best option for you and your small business.

#Kabbage

Lauren Flanigan is a Staff Writer at The American Genius, hailing from the windy hills of Cincinnati, with a degree in Marketing from the University of Cincinnati. She has escaped the hills, and currently resides in Atlanta, where you can almost always find her camping at a Starbucks strategizing on how to take over the world.

Business Finance

You got an LLC and you’re ready to hire – 3 things lenders look for

(FINANCE NEWS) Yes, securing a small business loan of any kind is tedious and depends on varying lending organizations and business needs, but there is a list of general requirements small businesses should be aware of before getting knee-deep in conflicting information about lenders.

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401k retirement fund

If you are reading this, you probably have an LLC for your small business already, or money talk gets you going. If it is the former, let me say CONGRATULATIONS, and insist you pat yourself on the back in honor of your small business’s progression. Your arrival at a point where expansion is necessary is no small feat given half of small businesses fail in the first year. So, kudos to you.

Now, back to the money talk…

For LLC businesses looking to expand, please don’t fret about all of the information you’ve seen on the web. Yes, securing a small business loan of any kind is tedious and depends on varying lending organizations and business needs, but there is a list of general requirements small businesses should be aware of before getting knee-deep in conflicting information.

After some extensive research posing as the owner of imaginary businesses and annoying every loan officer who’d take my call, I’ve found three general lending requirements. I also provide a collection of the tangible information banks will likely review to meet those requirements. Take a gander:

Assets
Small businesses must have necessary assets: steady cash flow, financial reserves, personal collateral to support a variety of business fluctuations (i.e. unexpected employee loss), and a realistic pay off plan. These assets and financial safety nets are necessary for any lending organization to be confident in your business’s ability to support employee expansion in lieu of current expenses.

Proof of past
Just as you will come to expect from your soon to be employees, lenders want proof of the past and how you’ve managed past loans to align with your business goals. Historical evidence will further determine if your expansion is feasible, but also if it is worthy for the company to accept the lending risk.

Specific plans
Finally, be prepared to provide your small business’s explicit expansion plan, including how you arrived at your suggested loan amount and how you intend to divvy out the funds. It is important that you are as specific as possible in your projected numbers, seeing as one employee could make a $60,000 difference, and largely affect your expansion plan and financial need.

Before you go…

Now that you’re equipped with the magic three, you’re probably feeling empowered to walk into your nearest bank and demand your small business loan. Let’s first be sure you have all of the necessary information on-hand and ready to produce.

Lending companies that look for the magic three before investing arrive at their conclusion after collecting data from the following pertinent information:

– Proof of collateral
– Business plan and expansion plan
– Financial details
– Current and past loan info
– Debts incurred
– Bank statements
– Tax ID
– Contact info
– Accounts receivable information
– Aging
– Sales and payment history
– Accounts payable information
– Credit references
– Financial statements
– Balance sheet
– Profit and loss history
– Copies of past tax returns
– Social Security Numbers
– Assets and liabilities details

Now, my friend, do I release you as proud as a parent unto your nearest bank to secure your small business loan and begin growing your staff the way you’ve dreamed. I’m confident you will find the aforementioned information helpful in said quest, and would like to wish one last time (because it’s impossible to over-congratulate) a sincere CONGRATULATIONS on your businesses growth.

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Business Finance

Financial impostor syndrome – what it is and how to fix it

(FINANCE) Financial impostor syndrome is more common than most know, but seeing polished people in your industry may make you feel like your struggle is unique – it’s not.

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financial impostor syndrome

If you’ve ever felt like a fraud when it comes to your success, you’re not alone. Impostor syndrome is recognized as a “a psychological pattern in which an individual doubts their accomplishments.”

Typically, impostor syndrome is discussed as it pertains to your career, but it can manifest in other areas, like with finances.

Financial impostor syndrome has many components. You might feel as if you are bad with money and can’t be any different. Maybe you’ve made some bad decisions in the past.

You let these mistakes define your financial future.

Or maybe you dwell on the endless Instagram posts from people in your industry that depict the glamour of their financial successes (not knowing that they don’t own that jet, their client rented it for the weekend, or that they have a Ferrari but are potentially hiding it from being repossessed).

Some people believe money is bad or that they don’t deserve financial stability. Especially freelancers and entrepreneurs.

Alternatively, you may have money in the bank, but feel like a fake or fraud for earning it. You might think it was just luck that you have any resources, rather than believing in your own capabilities.

Financial impostor syndrome keeps you from reaching your potential.

Most people who have impostor syndrome also have low self-confidence and fear that they’ll fail. This can self-sabotage success. Instead of taking initiative and making positive changes, someone with impostor syndrome may bury themselves in work and avoid taking on extra responsibilities that could prove themselves.

When it comes to money, you might think that you can’t make changes, so why try? This type of thinking limits you.

Overcoming financial impostor syndrome isn’t going to happen overnight, but it is possible with some work.

1. Talk about it. You have to look at the reality of your situation versus your perception. Work with a mentor or mental health professional who can help you get information about impostor syndrome and help you manage your symptoms. You may want to consider getting a financial coach or manager.

2. Make a list of your accomplishments and successes. Celebrate your achievements. Learn to recognize what you contributed to your successes.

3. Create a new script for times when you feel like a failure. “I can improve my finances.” “I am able to stick to my budget.” I deserve financial freedom.”

4. Change your habits. Take small steps towards financial success. Spend cash only. Automate your savings and your bills. Cut up credit cards. Learn your strengths and weaknesses. Stick to your budget.

Additionally, you must forgive yourself for past mistakes.

Everyone has at least one or two regrets when it comes to their money. We don’t always see those mistakes, because we only hear about the person’s success. If you can’t learn to forgive yourself, you restrict your ability to make changes. Blame and shame never help anyone change behavior.

Make a plan to change your financial impostor syndrome. No matter what you’ve done in the past, you can start making small changes to your financial situation to find a way out. You deserve it.

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Business Finance

7 ways to quickly get outstanding invoices paid to you

(FINANCE) It’s easy to feel uncomfortable bringing up money with your superiors, but for a freelancer, it’s more important than ever to bring up the issue. Here are 7 tips to get your invoices paid quickly.

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financial advice

For many, an awkward topic of conversation revolves around money. Whether asking for a raise or asking to borrow money, people often feeling uncomfortable when talking money.

This is equally, or possibly even more so, true for freelancers who are solely in charge of their finances. Without a system of weekly direct deposit, freelancers have to work overtime to keep their earnings in order.

The issue with this is that clients also have a lot on their plates, and something as simple as a freelancer’s paycheck is common to fall through the cracks. This causes freelancers to have to work friendly reminders into their repertoire.

However, freelancers may not always be knowledgeable of the best ways to keep their finances in check (no pun intended). Below are seven ways to enhance payment methods.

  1. You have to be willing to make billing a priority. Due to the fact that money is awkward to talk about, as aforementioned, many let this fall by the wayside. The best way to do this is to keep up to date with your invoices and send them as soon as they are done. Making a calendar specific for billing can help with this idea.
  2. This second bit dates back to when we were young and learning our manners: it is crucial to be polite. Not only is it the right thing to do, but it also increases speed in payment. Using “please” and “thank you” in invoicing emails are said to get you paid five percent faster.
  3. It is best to try and keep a complicated concept like finance as simple as possible. Make sure you are creating specific due dates. This will help to signify importance of payment.
  4. Now that virtually anything can be done online, it would make sense to use electronic payment verses an old-school check. Accepting online payments will get a user paid, on average, eight days faster as opposed to a check.
  5. This is an important notion to keep in mind for any aspect of your business life: be professional. Invoices are often seen by many eyes so it is best to include your business’s logo on said invoice. This has been found to increase chances of being paid on time by 10 percent.
  6. Specificity is urged again in the form of transparency. Make sure you are giving detailed descriptions on each invoice so that anyone looking at it knows exactly what you are being paid for. By doing this, you are 15 percent more likely to be paid on time.
  7. While you may be invoicing month by month, try to avoid sending on the 30th or 31st. Being that everyone, generally, sends their invoices in on these dates, it takes 10 – 20 percent longer to be paid. With everyone sending it at the end of the month, it has a tendency to back up payroll.

The most important thing to remember is that while the topic of money may be awkward, it is your money. If you let a few invoices fall behind because you are uncomfortable reminding your client, this has a way of adding up. Be sure to keep on track with your finances to earn what you are working for.

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