Most business owners want to know what the best funding options are for their business. There are several factors that come into play that will determine which funding options are best. If your business is brand new with no revenues and you have a personal bankruptcy, the funding options are going to be very limited vs.if your business is brand new with great personal credit. Even through others will tell you that business credit does not involve your personal credit that is simply not true. Are there options that do not involve your personal credit? absolutely. Does your personal credit play a key role in the amount of options available for funding? Yes.
On the other hand, if you have been in business for 5 years, there are revenues, profits and a strong personal credit score you want to grow your business to the next level and you need cash to grow, this is a situation where many options may be available to your business.
It always makes the most sense to build business credit and your funding options when your business does not need the business credit. Of course, that is not what most businesses do. They wait until, many times, it is too late to build business credit. If that is your situation, your options maybe limited if you are one month away from shutting the doors. Most of our clients, as they go through the business credit building process, wish they would have started the program 6 months earlier (because they wish they already had the results). The sooner you start the better!
Did you max out your personal funds and funding from family and friends and now the business needs to stand on its own? Here is how you can do that.
When your business builds business credit the proper way, even if you have limited start-up financing, your business should be quickly be in a position to access better business credit options in the future. That is part of the business credit building process.
Let’s cover some of the most common funding options:
Accounts Receivable Financing:
- A great tool to start and grow a business. If you engage in a business where you provide service to another business (larger company) or a government agency, they are not going to pay you cash for your services. You have to provide terms to get the contract for that business. This requires cash flow for you to be able to float until you get paid.
- Here is how it works: You can obtain a line of credit based upon the accounts receivable. This is based upon the credit of your clients or customers, not your credit. If you are working with large corporations, and the corporation is strong, when you invoice the company, you can receive instant cash to cover your costs, paying your payroll, marketing expenses…
- You are basically leveraging the receivables for cash.
- If you working with small business owners with ok credit, this may not be the best approach. This method is best used when you are contracting with larger corporations with strong credit and typically comes into play with staffing or janitorial type businesses.
Business Revenue Lending
- This works great for a business that has been in business for at least one year. Business revenue lending is a cash advance based upon the revenues of the business. The money can be used for any purpose by the business. The revenues includes, credit card receipts and any cash sales. Some of the general criteria include: $150K during the year, one year in business, and ideally you have a 540 FICO or higher. There is no collateral except for future receipts. There are no upfront fees and no restrictions on how you can use the money. There is a personal credit check, but in most cases does NOT require a personal guarantee. This is based upon consistency of your business revenue. The advance is paid back on a daily basis from your business checking account with an ACH.
- Great option for a new business to finance their equipment to save on cash flow. This even includes signage financing. If you need business signage that is an option to help you grow. Even a car wrap can be financed to help you advertise your business on your car. Now, building wraps are more and more popular to help advertising for your business message. This allows you to spread these costs over time vs. using your cash flow to pay for these expenses. A FICO of 600 falls within great range to qualify for equipment financing. Do you need new computers? This may be a great option for your new business.
Retirement Plan Business Financing
- When properly established, your retirement money may be accessed to start or grow a business. Without incurring any tax penalties. This has become a more popular option. A rollover package on the retirement account can put you in a position to secure even more capital through the business which you have started.
Unsecured Business Financing
- This is a very popular option for a start-up business. The criteria at the time of funding: a 650-700 FICO is required, no major derogatories or late payments. There are a number of strategies that are used to help you gain success in this category. This reports, like many of the funding options, to the business credit bureaus, not your personal credit.
Merchant Cash Advance
- This is based upon the volume of your credit card sales on a monthly basis (except for American Express revenue). You should be in a business for at least one year. There are two factors with this type of funding: the cash advance ratio and the remit ratio. The remit rate is the percentage of daily credit card revenue that will need to be paid back to pay down the advance. The Cash Advance ratio is how much are you paying for the advance. It may be a 1.28 or higher. That means if you secure an advance of $100K, you will need to pay back $128K.
There are other options for your business. If you have been in business for 4-5 years and have everything in place, you may qualify for additional financing options vs if you are brand new with no revenues. Yet, as you already know, we can help support you either way to BUILD BUSINESS CREDIT FAST!
Take the Next Step and Call Fast Business Credit at 1-888-313-6333 and ask to speak
with one of our Senior Business Credit Analysts.
The Funding Specialist:
After you start with our Ultimate Business Credit Builder Membership Training Center and your company goes our compliance review, your business will be able to determine which funding options are best for your business with you work with our funding specialists. During the process you are able to restore your personal credit which will put your business in the position to secure more money to grow.
When you speak to the Funding Specialist, they will take you through a process to determine what funding options are best for your business. The objective is for the Funding Specialist to understand the goals of the small business owner. The robust portfolio of solutions will help them tailor the best options for your business. Once the funding options are available for you, the Funding Specialist doesn’t abandon you. It is important through the process to have someone to talk to for advice. The Funding Specialist will want to know what your plans are for the money. This is important. They are NOT just there to get your qualified and move onto the next client. The Funding Specialist will help you make good business decisions, even with product promotion and how to best get the product out to your market.
The primary goal is to give you the best combination of business credit funding options. For example, if your business needs $30,000 to buy some equipment, increase your marketing and makeover some web sites. Your best funding may be a combination of an equipment lease and an unsecured line of credit.
The overall support and advice will be value that you receive from the Funding Specialist many times, even more so then the funding that you will receive.