Small Business Financing Myths

How many times have you heard that it’s hard to get small business financing? It’s a common refrain and every entrepreneur has wondered how to better raise capital. The truth is that it’s not nearly as hard as you think. Here are some common myths about funding a business and how they don’t hold up in real life.

1.VC’s Just Want Harvard And Stanford Grads

There are plenty of examples of Harvard and Stanford dropouts starting billion dollar companies. You can probably name a few just off the top of your head. The truth is that those people are the exception to the rule. Many entrepreneurs don’t have that academic pedigree and most get started much later in life. You don’t have to have the same trajectory as Mark Zuckerberg or other famous entrepreneurs. Let your ideas do the talking.

2.You Need Specific Industry Experience

This is another common myth. When it comes to software engineering it certainly helps to have a Silicon Valley background. There are plenty of other cases where entrepreneurs built on their industry experience to launch a new product. That industry experience is a stepping-stone but it’s not essential. Many entrepreneurs have built disruptive companies without direct experience in that industry. Elon Musk founded Tesla after revolutionizing the digital payments space. Figure out what core skills you bring to the table; you’ll probably find that they are much more transferrable than you think.

3.You Need Connections To Get Capital

Having deep connections in Silicon Valley or on Wall Street definitely helps when it’s time to raise money. Building those relationships will certainly make your life easier. Are they essential? Absolutely not. In a strong economy, investors are willing to put money behind entrepreneurs and ideas that they truly believe in. It’s also easier than ever to get your business off the ground and start out solely online. Demonstrating success without abundant capital is the easiest way to convince investors to open their checkbook.

4.You Need Sales To Attract Investment

This might be confusing after explaining Myth #3. One way to attract capital is to show you can bootstrap and still make money. But what if you’re not there yet? Sometimes you need to sell your idea instead of a product that’s ready to hit the shelves. One way to get funding is to develop a unique, marketable, and more importantly patented, idea. You may not even need to develop a marketing or distribution plan. Investors may have the contacts to license your innovation to larger companies. Sometimes a good idea goes a long way.

5.The Process To Get Funding Is Hard And Complex

This is another myth that’s easy to disprove. It’s easier than ever to get capital; you just need the right partner. Loan Solutions OU specializes in getting small businesses the loans and credit they need without the hassle of going to a big bank. We offer several small business financing solutions. You can take out merchant cash advances, secure loans against invoices or other assets, or finance major business expenses. You can focus on growing your business while Loan Solutions OU finds a way to make your vision a reality.

Small Business Financing Truth

Many entrepreneurs take these myths for granted-don’t make that mistake! Getting funding isn’t hard if you’ve got a good idea and can execute. Contact Loan Solutions OU today and see how you can get the financing you need.

Every successful business had to begin somewhere. Apple started in Steve Jobs’ garage, after all. While you’re probably not aiming toward worldwide corporate domination, you know your business plan has solid potential… as long as you can get funding. Too often, traditional lenders seem willing to hand over cash only to businesses that are already operating at high volumes. If you’re in the early stages of building your business, you need to know that funding is available to you through a variety of approaches. Alternative funders look at the full array of strengths that you bring to the table, rather than just the size of your business. Here’s how:

What Makes a Business Strong?

Monthly gross sales aren’t the only measure of a company’s health, especially when you’re just getting started. Here are some earmarks of a strong business, regardless of its size:

Right amount of Inventory

If you’re selling products, one indicator of your management ability is the amount of inventory that you have on hand. Too much may mean extra expenses for storage and insurance, or even that your stock might become obsolete before it moves. Too little inventory can leave you unable to meet the demands of an upcoming busy season. Planning ahead for extra funding so your inventory stays at target levels is a sign of good judgement — and if your schedule is tight, alternative funding has a fast turnaround time.

Financial Ratios in the Expected Zone

Different industry sectors normally have different ratios of gross profits to net sales, for example, or of net income to total assets. Sometimes an entire industry will experience a temporary downturn, and savvy lenders understand the background context for such trends. When your financial profile looks good compared to your competitors, that’s a great indicator of creditworthiness.

Good Sales Track Record

If your company is young, you don’t have years and years of history to show — but even a one or two-year timeline can paint a picture of the direction you’re heading in. When you know that future sales will be solid, as long as you can get a cash boost today, a merchant cash advance may be the perfect funding option for you. Payment periods are flexible, because they are based on a percentage of daily receipts. You can get the fast funding you need, without the stress of locking yourself in to fixed payments.

Customer Satisfaction

Do you have happy customers tweeting and posting about their interactions with you? Small businesses succeed or fail based on how happy their customers are, and if you have a social media presence, you’ll know what people are saying about you. More importantly, you can enter the conversation. Log in at least once a day, to boost your positive feedback and respond sensitively to any negative reviews. Sometimes customer suggestions are the most valuable source of new product ideas.

Get the Funding That’s Just Right for You

Choosing the right financing solution is a major element in helping your business grow sustainably. You don’t want to get locked into the wrong kind of loan early on, because new businesses usually operate on narrow margins. It’s essential to talk to people who make it their business to help small businesses turn into livelihoods and futures. At Loan Solutions OU we do everything in our power to try to get the funding you need.

It’s hard to qualify for a traditional small business loan through a bank, and it’s even more difficult to get funding through a Small Business Administration (SBA) loan. If you do make it through the 60 – 90-day application process, you still aren’t in the clear.

Traditional lenders have rules about how you spend the money from the loan, and there are serious repercussions if you don’t meet the requirements. The big question is why do banks care how funds are used once the loan is approved? And are there any other options that offer more flexibility?

The Basics of an SBA Loan

Traditional lenders, including the SBA, are not interested in taking risks. They want to be sure you will repay the money you borrowed. One of the ways they increase the likelihood that you will manage your finances properly is by putting restrictions on how proceeds from loans are used. For example, you can’t use these loans to pay off other debts. Unfortunately, as most small business owners know, sometimes that is exactly why you need the extra cash.

These are some of the programs currently offered by the SBA. As you can see, the type of loan you apply for depends on how you plan to use the money.

• SBA 7(a) Loan – Working capital up to $5 million
• SBA CDC/504 Loan – Purchase of commercial real estate that you will occupy
• SBA CAPLines – Revolving credit line that your business pays back and reuses
• SBA Export Loan – Funding specifically designed for businesses that export goods and services
• SBA Microloan – Working capital up to $50,000
• SBA Disaster Loan – Help for businesses that have been harmed by a natural disaster

The problem with these restrictions is that things change. You might need to rearrange your financial plans based on fluctuations in sales, economic ups and downs, or any number of other issues that comes up in the course of running your business. When you borrow from a traditional lender, you don’t have any flexibility. You can’t change your plans when it comes to how loan proceeds are spent. Fortunately, these restrictive programs aren’t the only option.

New Options for Small Businesses

Technology has made it possible for small business owners to connect with more lenders than ever before. Today, you have options beyond what a traditional bank or the Small Business Administration can offer. Non-traditional lenders have streamlined application processes and fast approvals, because they use technology to make things easier for you.

These lenders offer you flexibility, because they trust you to repay your loan. They understand that sometimes, you face unexpected obstacles, and you need cash quickly to keep your business afloat. Often, you can qualify for a loan, a cash advance, or a line of credit to be used as you see fit. There may also be options for more specialized products, like commercial real estate loans and bridge loans.

Loan Solutions OU is a leader in small business lending. Credit decisions are fast, and you don’t have to submit endless documentation. In fact, many borrowers have the funds they need in just 24 hours. Best of all, Loan Solutions OU doesn’t put restrictions on how you use your money. As long as it is used for your business, you can make decisions that are right for you.

The process of getting a traditional bank loan for your small business is frustrating. It’s nearly impossible to get a banker’s attention if you have questions. You are expected to fill out a long, complex application on your own, submit all of the supporting documentation that is required, and then wait. And wait. And wait. If you are lucky, two or three months later you get a decision – and when it comes to banks, it’s rarely good news.

Why does it take so long? Is there a faster way to get cash for your small business?

Banks Are Not Adventurous

Steve Jobs started Apple in his garage. Jeff Bezos started Amazon the same way. Today, these companies are two of the most successful in history. However, it is unlikely that either of these entrepreneurs could have gotten a traditional small business loan in their early days. Banks just aren’t adventurous.

Banks are worried that you will default on your loan, and they won’t get their money back. This is based on statistics – many small businesses do fail in the first five years. Banks simply don’t want to take the risk. That means they only lend to extremely well-qualified applicants. You have to complete a lengthy application and supply extensive documentation to prove that you are likely to pay the loan back. Often, your application is reviewed by a long list of small business bankers before a decision is made. That can easily take 60 – 90 days.

What About a Small Business Administration Loan?

The federal government knows that banks don’t want to lend money when there is a risk. However, the government also knows that small businesses are critical to the country’s success. The Small Business Administration (SBA) offers a compromise. If you borrow from a bank through one of the SBA programs, the SBA guarantees your loan.

Of course, a guarantee like that comes with strings. The biggest one is the amount of documentation you have to provide. This is just a taste of what the SBA requires before guaranteeing your loan:

• Comprehensive business plan
• Credit check
• Financial statements
• Owners’ resumes
• Details on collateral

Getting the paperwork together is time consuming for you. It takes even longer for the SBA and the bank to review it. For many applicants, 60 – 90 days is a best-case scenario. Sometimes it takes longer to get an approval.

The problem with this lengthy application process is that you can’t handle small cash flow problems promptly, and you can’t take advantage of growth opportunities if an unexpected chance comes your way. Fortunately, there is good news. It doesn’t have to take a long time to get the funding you need for your business.

Fast Funding Solutions

The beauty of technology is that you can cut out lots of time-consuming steps when it comes to submitting an application. You can speak to a loan officer by phone and submit your information online in minutes. Thanks to new financing tools, non-traditional lenders don’t need as much documentation to make a solid credit decision. Sometimes, all you have to provide is basic identification and a few months’ worth of bank statements from your business account.

Loan Solutions OU is a leader when it comes to leveraging the power of technology to make fast credit decisions for small business owners. Many borrowers have the money they need in just 24 hours. If you need cash for your business, you don’t have to wait months for a decision. Call Loan Solutions OU at 800-631-3370 today.

Did you know the IRS charges a penalty of 5% of the unpaid taxes for each month or part of a month your return is late?

That’s no small amount. So, don’t procrastinate! You will literally pay for it.

Listed here are four things you need about filing taxes for your business in 2019. Follow them, and tax season will be a breeze for you (or at least not as big of a headache).

1. Know what form you’ll need

It all depends on if what you’ll be filing as:

• If you’re a sole proprietor, or someone who owns an unincorporated business by yourself, attach a Schedule C form to your personal income tax return.
• If you’re a limited liability company (LLC) that’s a partnership, fill out Form 1065 to report income, expenses, losses; if you’re an LLC that’s a corporation, fill out Form 1120.
• If you’re a corporation, fill out Form 1120 (same as LLC that’s a corporation).
• If you’re an S corporation, fill out Form 1120S.

For your reference, understand an LLC is a business structure where owners are called members. It combines the pass-through taxation of a partnership with the limited liability of a corporation.

Also, the main tax difference between an S corporation with a corporation is that S corporations pass corporate income, losses, deductions, and credits to shareholders. This avoids double taxation, and makes S corporations similar to LLCs when it comes to taxes.

Keep that info in mind if you’re thinking about changing the type of business or establishing your business.

2. It’s all about calculating revenue against expenses

Ultimately, what you pay in taxes depends on your total profits, which can be simplified to be revenue minus expenses. What you need to produce is an income statement. This should clearly detail all your revenues and expenses.

Revenue includes all your sales, as well as bank account interest, capital gains, returns and allowances, and other unclassified income.

Expenses, as a guide in The Entrepreneur notes, includes labor, office rent, equipment purchases, automobile expenses, utilities, and more.

Given that there are a lot of things involved with filing taxes, the chances of paying more than you should in business taxes are high. For instance, you could leave out legitimate business expenses when filing taxes, and that means you’ll pay more than you should as your profits will seem higher.

To avoid this possibility, consider hiring a good CPA so that you file taxes in the most efficient and effective manner possible. The American Institute of Certified Public Accountants is a great place to search for high-quality CPAs.

3. Having a checklist makes everything easier

You can make the tax filing process go much faster if you have all the info you need on hand. Consult this checklist:

• Income statement: If you’re not already, start keeping records of all gross receipts and sales
• Cost of goods sold (if applicable): This includes the cost of the materials along with labor, inventory and distribution expenses.
• List of expenses: From legal services to insurance, include any money spent to support the company’s operations. Don’t forget about things like advertising, transportation, airfare, meals while traveling, and commissions paid.
• Payroll documents: This should include payments made to contract workers and freelancers.
• Last year’s business tax return: It’s a great reference, too (if you have it).
• Bank and credit card statements: This will help track the money that’s coming in and going out.
• Depreciation schedule: This covers the depreciation, or loss in value, of your company’s long-term assets, like equipment, buildings, and office furniture.
• Asset purchases: Have receipts on hand if you’ve bought new equipment, vehicles, computers, etc.

4. Use all the resources available to you

The IRS has a lot of resources available on their tax center page. Use that as a reference. There’s also plenty of info available with companies like TurboTax.

Additionally, small business tax software like QuickBooks and inDinero can automate many of those time-consuming accounting tasks. It’s worth the investment when you consider the time you save and how you eliminate the potential for errors that happen when you manually record financial information.

The point is this: Small business owners have to wear many hats, and one of them is accountant. To make that role easier, utilize all the resources available. And, if you can, hire a CPA to help out.

Making tax season go smoothly

What perhaps is most helpful is good record-keeping processes. This will eliminate confusion and having to hunt down potentially lost documents and information.

In the end, tax season isn’t something that will excite your team, but if you make it the company norm to maintain clear and accurate financial data, filing taxes will be much easier this year. And your team can get back to what matters most: Building a sustainable, successful business.

Are Business Loans Hard to Get?

Applying for a business loan can be a tense time, especially if you’re just starting out. If you haven’t had a chance to build a solid credit record, or you have concerns about your current credit file, you may not rate your chances with the bank. It’s true that many banks and traditional lenders will want to see at least two years of promising business operations or a decent amount of collateral before they will even consider you for an SBA-backed loan, because they see you as too much of a risk.

But the good news is that a less than perfect credit history doesn’t rule you out!

How Do You Get A Business Loan With Bad Credit

Sure, most banks and more mainstream lenders won’t look kindly on you. But there is a new breed of lender out there who will take a more personal approach to your specific circumstances and offer a diverse and flexible package of alternative funding opportunities. Innovation, entrepreneurship and thriving businesses are great for all of us, so there is a growing trend for lenders who specialize in supporting startups and small businesses that need a helping hand.

If you’re just getting off the ground, or if you can feel the shadow of bad credit looming over you, this is all the more reason to speak to a specialist about your options for financial support. Getting the right advice can help you to focus your energies on the channels that have the best chance of success for your business, and you can get some tips on how to start building your business credit for the future.

 Can You Build Business Credit Without Personal Credit?

Your business credit and your personal credit aren’t the same thing, and they take different factors into account. It is true, though, that a lender may look at your personal credit as an indication of how much of a risk you might be in terms of owning and running a business.

Business credit might also come into play when you’re being assessed for insurance, lease agreements, or working with vendors and partners, so even if you’re not planning to apply for a loan imminently, it’s a good idea to think about how you can build your credit history.

The bottom line is that you should focus on what you can do to build your business credit, specifically, but don’t let your personal credit count against you.

How Do You Build Credit For A New Business?

If you’re launching a new business, here are three simple things you can put in place today to start building credit for the future:

1.  Continue to do all you can to protect your personal credit rating.

2.  Establish lines of credit with your vendors or suppliers, so that you can show a regular pattern of paying off your balance in a timely manner. This also shows that your suppliers have a level of trust in you.

3.  Get incorporated and apply for a federal Employer Identification Number, so that your business has its own identity that’s separate from you as an individual. This also means opening business bank accounts in the legal name of your registered business.

So if you’re worried about bad credit, don’t count yourself out! There are lots of great, flexible funding opportunities out there that will give you the boost you need and help you to build your credit history for the future. Just make sure that you speak to a loan specialist who is experienced in dealing with startups and small businesses as they will be able to point you towards a solution that’s tailor made for you.