SBA loans improve in response time
Following the aftermath of several major weather events that occurred last year, an increasing number of businesses are submitting loan applications for funding. The Small Business Association (SBA) is one of the mainstays offering assistance to entrepreneurs and business owners, but previously took as long as 70 days to notify applicants if their application was accepted. In fiscal year 2013, the SBA is working to greatly decrease that deadline.
In recent months, the SBA has decreased its average loan response time to 17 days. This will be of huge benefit to businesses seeking assistance as they can more quickly know if they will receive funding. After a natural disaster, managing cash flows to take care of necessary repairs can be troublesome, and it’s crucial to come up with a recovery plan quickly.
SBA loans to improve even more
The SBA’s faster response times will give businesses rapid insights into potential incoming funding streams during times of distress, and help them allocate those funds to the most needed areas of the business accordingly.
Additionally, if businesses receive a rejection from the SBA, they can begin seeking alternative funding sources immediately and waste weeks of time holding out on an application that ultimately will not be granted.
The SBA is a beacon in the business community for several reasons, a great deal of those centering on the resources they provide for entrepreneurs and business owners. Their decision to provide low interest rate loans for corporate disaster relief further shows the organization’s investment into the well-being of deserving companies.
Because it is a national organization servicing numerous businesses, it’s understandable that there be a backlog depending on the swath of areas affected by the disaster. But business owners whose companies are affected by these disasters will appreciate the SBA’s efforts to maintain faster loan response times, and be able to more quickly make decisions for how to restructure corporate finances during the recovery period.
6 questions to ask when considering a startup accelerator
(BUSINESS FINANCE) Accelerators can help change startups from unknowns to leaders in the industry, but does your startup need one? And if so, which one?
When I’m advising startups, I often hear the question: “which accelerator is the best fit for me?” (Besides the obvious YC or Techstars.)
First off, I’ll ask if your company would benefit from an accelerator, or if you need to pursue something for early early stage companies before you achieve more market validation, like an incubator. (Side note: If you’re curious about incubators, here is a comparison of the two.)
If you’re new to these terms, here’s a brief recap on startup accelerators:
Startup accelerators are for companies with established co-founders and market validation – companies can be anywhere from pre-revenue/self-funded, or even have raised at least $1M.
Most programs can last anywhere from 10 weeks to 3-4 months. With many top accelerators like YC and Techstars, you’ll be expected to move to the city where it’s hosted and spend 40+ hours a week minimum in their dedicated coworking space, and several accelerators will often offer housing stipends to make the move easier. These programs typically conclude with a demo day to pitch your product to a variety of community leaders, angel, and institutional investors.
If your product has achieved market validation and is in a place where you’re ready to scale, congrats!
Before you commit to an accelerator, ask yourself and the program these six questions:
1. What kind of mentorship is available?
By and large, one of the most valuable portions of an accelerator is the networking with peers and mentors. Ask what kind of mentors are available to you as a part of a program, and ask their specific involvement and the opportunities to connect. These mentors will be crucial in guiding your company’s growth. Even if they aren’t in the same industry or have solved a similar problem that your company is trying to achieve, their advice and connections could prove to be invaluable.
2. What are the perks?
You’re giving up a lot of equity to be in a program, but it doesn’t come without its perks. Many programs offer not only a cash investment or stipend for housing or other growth costs, but programs like Techstars offer free services such as web hosting costs (an upwards of ~250k), legal and accounting services, and other credits and perks that can be worth 6-7 figures. Make sure you know what you’re getting before you say yes to a program.
3. Do I want an industry-specific or industry-agnostic program?
This one is important and is directly related to #2. If your company sells CPG products, web hosting credits may not be valuable to your business, but a CPG-specific accelerator like SKU or The Brandery with direct connections to Sephora, Target, and Whole Foods may make more sense.
4. How much equity am I willing to give up?
Try not to make this a guessing game and make as many data-driven decisions on this as you can. Create a revenue and valuation model and see how much your company would benefit from the networking, fundraising opportunities, and perks offered, and see what the ROI would potentially be.
5. What are the funding and exit numbers?
This is an objective way to view the success of an accelerator: # of funding raised and exits. Of course, younger accelerators will have smaller numbers, but it’s worth looking to see if a company has raised $ after. Seed-DB is a great resource to view these numbers for hundreds of accelerators globally.
6. What do alumni think?
All accelerators are going to tout the transformative experience that is their program, and program mentors will likely have a similar narrative.
The best resource to learn the real experience of an accelerator: ask its alumni, and they’ll give you the truth. Make sure to survey both recent and more experienced alumni, as they’ll be able to speak to both the short term and long term benefits.
Personal experience: the night before I was set to hear from an accelerator on my application status, two alumni stressed to me that the time and equity investment wasn’t worth it. I consider this providence!
Finally, two items to note:
Choosing an accelerator is all about finding the right fit between you and the organization. Sadly, not all accelerators are created equal, and try to view a potential relationship with an accelerator as an investor relationship, or better yet, dating. There’s a reason the phrase “no money is better than bad money” is prevalent in the startup community.
Make sure to do your due diligence and ask the right questions to make sure a specific program is worth the investment of time, energy, and equity.
And sometimes? That may not mean an accelerator is a right fit right now or at any point, and that’s okay.
This editorial first appeared here in November 2019.
Weed greed: Some states are raking in the tax dollars on cannabusinesses
(FINANCE) The tax profits from weed sales in these states just may be enough to push politicians toward legalizing the drug cross-country.
States are making bank on weed taxes
The Marijuana Policy Project makes the case to legalize cannabis with its recently released report. According to the report, as of December 2021, states that legalized adult-use cannabis brought in a combined total of $10.4 billion in tax revenue since 2014. This tracks the 18 states where marijuana is legalized for recreational use. It does not include medical marijuana, which would dramatically increase the figure. The figures also don’t include local tax revenue, just tax revenue at the state level, nor does the report include any licensing or business fees that are generated by the industry.
Which states are bringing in the money with cannabis taxes?
Eighteen states have legalized marijuana for adult use. In some of those states, the laws were just approved, so tax collections have not begun or not yet available. Here are some of the figure’s from the MPP report.
|State||Tax collection in 2021||Total taxes received since cannabis was legalized|
|Colorado||$367+ million (thru November)||$1,791,138,715 (2014)|
|Washington||$480+ million (thru September)||$3,051,390,820 (2014)|
|Oregon||$138+ million (thru September)||$635,512,128 (2016)|
|Alaska||$24+ million (thru October)||$95,004,906 (2016)|
|Nevada||$471+ million (through September)||$471,544,647 (2017)|
|California||$976+ million (through September)||$3,123,477,637 (2018)|
|Massachusetts||$205+ million (through November)||$384,529,750 (Nov. 2018)|
|Michigan||$188+ million (through November)||$271,129,649 (Dec. 2019)|
|Illinois||$387+ million (through November)||$562,750,974 (2020)|
|Maine||$11+ million (through November)||$13,063,204 (Oct. 2020)|
|Arizona||$121+ million (through October)||$121,463,757 (2021)|
Most states have legislation that puts the tax revenue toward specific initiatives. In Illinois, 20% of the revenue goes into mental health services. In Michigan, many of the funds have been put toward schools and transportation. California directs its revenues toward local non-profits that benefit “people adversely impacted by punitive drug laws,” and invests a portion of the money in environmental programs.
Marijuana is profitable
The Hustle reports that Denver generated over $237 million and West Hollywood in California has generated $2.2 million in one year from 6 dispensaries in less than 2 square miles. The Tulsa World reports that Oklahoma, which has only legalized medical marijuana, collected over $55 million in 2019. With more Americans leaning toward decriminalizing marijuana and making it legal, the profits to be made from marijuana sales may push politicians toward legalizing weed.
Get outstanding invoices paid to you by following these 7 steps
(FINANCE) For a freelancer, it’s more important than ever to bring up the issue of getting paid on time. Here are 7 tips to get your money.
For many, an awkward topic of conversation revolves around getting paid. 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.
- 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.
- 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 5% faster.
- 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.
- 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.
- 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%.
- 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% more likely to be paid on time.
- 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% 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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