General Business and Finance Blog

If your business still does not have a merchant account that allows you to offer full credit card services, you are turning your back on profits. Just take a look at all of your competitors. All of those that pose serious competition accept credit card payments. Those that do not have credit card services do not have great sales figures to show, either. Even statistics point to the fact that companies that have credit card services earn much more than companies that do not have credit card services. The average credit card sale is while the average cash sale is only . That means you are losing potentially per sale.

You may also be spending more by accepting only cash and check payments in your business. The processing of cash and checks has been found to be more costly, requiring more manpower in handling. Studies have shown that the average processing cost of credit card payments is only 2.7% of a transaction while the average processing cost of checks is 4% of a transaction and the average processing cost of cash is 4.8% of a transaction. Once again, you are leaking profits by refusing to accept credit card payments.

So how do you accept credit card payments in your business? This is where credit card services come in. The old route is to apply for a merchant account in a bank. You will then have to lease the software and equipment necessary to actually process payments and send the data to your account. If you want to accept credit card payments online, you need to apply to a payment gateway that allows real time credit card authorization for online transactions. You should ensure that your payment gateway is compatible with the bank or financial institution where you have your merchant account, and with the software and equipment you have leased.

In choosing the bank or financial institution for your merchant account, consider their expertise in combating fraud and reducing chargebacks. Also make sure that they are experienced in handling merchant accounts with online transactions.

If you are a small business owner, stick to a bank or financial institution that caters to small businesses rather than large companies. You may be able to get better rates and packages designed for your specific niche.

There are options for credit card services that offer everything you need in one easy package. You will not have to deal with various entities or go through various procedures. Often, these options also have added benefits, among them, quick reporting on your credit card sales figures. They may also offer interest on your credit card sales income, even up to money market rates.

One very important feature of your credit card services that you may not know of is that it can automatically qualify you to avail of small business loans. Once you have established a record of sales through credit, most credit card services will allow you to make cash advances that are practically like getting previously approved small business loans without having to put up any required collateral. The credit card services consider your future income through credit card sales as your collateral. This can go a long way in further growing your business.

Payment will not be a problem, either. For as long as you have sales through credit payments, you automatically get to pay your small business loans. It does not matter how much your sales are. Your payments are automatically deducted as a percentage of your sales. You are always covered.

Now do you still need further convincing on the benefits of credit card services for your business?

Bad credit is one of the main reasons for bank loan denial. A credit score lower than 580 will most likely ruin your chances for a business loan. Multiple credit checks also lessens your chances for approval. And of course, a recent file for bankruptcy will ensure denial on your request.

Fortunately, there is no reason for despair if you belong to this group of people. There are now available alternatives for getting a small business loan, regardless of your bad credit. It is important, however, that you understand your circumstances before jumping into these alternative means for a business loan.

You can opt for an unsecured personal loan in such cases. But before you do, consider these factors first. One, how much do you need as a business loan? Factor in the numbers and come to a close estimate of how much you really need. Two, how much can pay each month. You have to note that personal business loans often have higher interest rates per month and if you’re not careful, you might become more in debt than you actually were, before the business loan. And three, will you be making minimum payments? Avoid making minimum payments because it actually costs more in the long run.

A business cash advance is also one way of securing the money you need. A small business loan through cash advance is  relatively an easy process to go through as compared to borrowing money from a bank. Most small business, even if they do have good credit, have often little asset and property. This is what makes business cash advances a good alternative for small entrepreneurs in need of immediate money. The only important thing your business should have is access to credit card services (i.e. you accept credit cards for transactions). You just need to have your business’ credit scores established. The best way to do this is to separate your personal credit from your business credit. It is recommended that you control most, if not all, of your business credit needs from only one of two credit card service providers so you have better chances at getting approved quickly. Lastly, your business will need to have gained ,500 to ,000 as minimum credit card sales per month.

Most cash advance providers base the amount of business loans by average monthly credit card sales, and of course, your actual need for capital. A business cash advance as a business loan is recommendable because the processing time for approval of your business loan can be as short as 3 days. Since newly opened small  businesses encounter a lot of time constraints with suppliers and clients, easy and immediate access to additional funding is always a plus. Furthermore, cash advance as a small business loan now comes easy with the help of the internet. You can apply for a business cash advance online and have it approved the next day. The business loan will be directly deposited into your account once it is approved.

Use your small business loan to purchase new equipment, marketing, pay debt or taxes, or pay the payroll. Banks and big lending companies are now not the only way of getting a small business loan for your immediate business needs. Fast, online cash advance is now the new means of making your business grow and compete in whatever market you are thriving on.

To achieve financial independence, experts encourage even currently employed individuals to consider entrepreneurship. Setting up your own business, no matter how small, is touted as one of the best ways toward building the foundation for wealth. Those who are concerned about having a safety net need not take the plunge recklessly. One can start setting up a small business even while employed.  

Of crucial use to small businesses are credit card services and small business loans. The entrepreneur needs to know how to avail of these tools and how to effectively wield them for maximum business growth.

Credit Card Services

A small business would do well to get reputable credit card services in order to prosper in the current business climate. Availing of credit card services will enable it to accept both credit card and debit card payments. This is true either for brick-and-mortar businesses or internet based online businesses. After all, most consumers nowadays routinely use credit cards or debit cards for payment purposes. It only makes good business sense to be well-equipped for the needs of credit card users and debit card users as well as for the needs of customers who pay in cash.

Merchant services provide credit card services covering a wide range of solutions for the processing of credit cards and debit cards as payment options. These credit card services include traditional terminal equipment at point of sale, where credit cards or debit cards are swiped. It also includes software and high speed IP solutions for both traditional commerce and e-commerce. Credit card and debit card payments can, therefore, be accepted in person or through the internet, by phone or by fax.     

Small Business Loans

Any business – whether a small start-up business, a medium-scaled one or a big business company – will be needing an infusion of additional capital sooner or later. Additional capital is always needed for expansion, additional inventory, additional manpower, new systems, new equipment or a new physical layout.

Capital is not always easy to come by, though. The original investors’ personal coffers may have been emptied by the earlier outlays. Prospective investors may not be keen on shelling out funds in times of crisis. Businesses, therefore, have no choice but to seek business loans.

Getting business loans is a difficult process. Even small business loans are not readily approved. Be prepared to present a lot of documentation and paperwork. For small business loans, the proprietor’s personal credit history is taken into account and related references need to be submitted. Of course, the company’s financial statements are just as important in proving the feasibility of the business and its capacity to repay its business loans. Having a detailed business plan will show your business strategies and projections, demonstrating your business acumen.

Unfortunately, even with all the requirements completed, applications for business loans – including small business loans – are, more often than not, disapproved.

Solutions

Some merchant services provide a comprehensive solution for the needs of small businesses in relation to credit card services and small business loans. The set up is elegantly simple. A small business need only avail of the company’s credit card services to be eligible for merchant cash advances. These cash advances are actually small business loans, except that there is no need to go through the complicated application process for business loans. Repayment is made very easy and worry-free, too. A certain small percentage is built into the credit card processing rates to take care of the advances. This way, repayment is actually done automatically in a very affordable manner and according to income flow.

Small business owners would, indeed, be wise to look into these timely business solutions.

Since June 15, 2009, the United States Small Business Administration has been processing deferred payment small business loans of as much as ,000 to be given out to 10,000 small businesses. This is covered by the SBA’s America’s Recovery Capital (ARC) Loan Program.

To qualify, companies should be private enterprises that are for-profit. They should have up to five hundred employees only and should be at least two years old. Furthermore, they should be able to prove financial need with a twenty percent decrease in sales, revenue or working capital. On the other hand, they should be able to prove that one of their two years in business has been profitable, and that with the infusion of cash they will be able to meet their existing and future debt obligations. This means positive cash flow projections. The ARC small business loans are intended to be used to pay outstanding debt such as payables to vendors.

For this batch of small business loans, there are no fees or costs involved, except if the borrower defaults on the loan later. In that case the SBA-approved lender can charge costs for securing and liquidating collateral.

The ARC small business loans also do not charge interest. Actually, the SBA pays the interest for the borrowers. Disbursement of the loan can take as much as six months but payment of the principal is also deferred for the next 12 months. After that, the borrower has five years to repay the loan principal.

Each small business can only avail of one ARC loan. SBA-approved lenders will offer the loans until September 30, 2010 or until available funds run out, whichever comes first.

There are, however, an estimated 30 million small businesses in the United States and only 10,000 of them can avail of the government’s small business loans. What if you do not happen to be among the 10,000 lucky recipients? How will your small business survive?

There are even doubts being raised on whether as much as 10,000 businesses can indeed avail of the ARC loans. There are fears that there may not be enough lenders willing or able to participate in the program. Lenders will have to advance the full amount of the loan, will not receive payment on principal for a full year, and will not be able to charge any fees, thereby absorbing all administrative costs. This may be too steep for many lenders. They may not be able to afford to participate at all.

This is where you as a small business owner can and should maximize your credit card services. We are not talking about your personal credit card services here. Instead, we are referring to the merchant services that enable your small business to receive credit card  and debit card payments. Surely, any business these days avails of these types of credit card services. After all, more people pay by credit card or debit card rather than cash.

Most credit card services offer small business cash advances that can be as substantial as small business loans. These small business loans do not require any collateral because they are secured by your company’s future credit card receivables. This is even more convenient for your business because repayment is also built into those receivables. Credit card services automatically deduct a percentage from your income to go toward loan repayment. For as long as you have incoming sales, you can support your loan. Interest rates are often quite affordable considering how the loan can help your business.

Small businesses should therefore look into maximizing these credit card services for small business loans. The survival of your business could hinge on this.

Setting up a home-based business may be a more cost-effective alternative to setting up a major company, but it may still drain the limited resources of a small business owner. To keep the business going, small business loans will definitely be necessary. These can be availed of through credit card services. This article will show you how.

First, you need to set up your home based business. Do your research on the type of business you want to establish. Find out what licensing and zoning requirements you need to meet and ensure that you meet them all. Do not attempt to cut corners here.

Get the services of an accountant, even if only on a consultancy basis, to help you set up your books and records correctly from the start. Ask for help in determining deductions so that you can plan on your business expenses. Establish a routine for keeping strict records of all income and expenses right from day one. Keep all business related receipts, invoices, client records, bank statements, bank deposit slips and canceled checks.

Being home-based, you need to set aside a particular place in your home just for your business. Make sure it can accommodate all the necessary equipment. Check that you have the appropriate electrical outlets and have them installed if needed to avoid overloading your system. Set up rules to keep the area insulated from household noise and disturbances.

Have a business phone installed that is separate from your residential line. Avoid having your children answer the business line. Install an answering machine to take calls when you are out or occupied.

Get a post office box so that you can use that address in your official stationery and other documents, keeping your business profile professional. Hold client meetings in rented conference rooms or set business meetings in good restaurants.

One of the most important steps in setting up your home-based business is to acquire credit card services that will enable you to accept credit card payments and debit card payments. These credit card services provide all the necessary software and hardware for you to be able to process payments in person, online or by phone. This step alone already expands the customer base that you can access.

Credit card services will also serve you well once your home-based business begins to feel the need for additional capital. When you need to get small business loans, you will not have to approach banks which are most likely not sympathetic to small home-based businesses.

The need for small business loans usually comes when the home-based business is already at least a year old. At such time, your home-based business would have created an average monthly credit card sales record with your credit card services company. You can refer to that when you approach your credit card services company for small business loans, sometimes called cash advances.

Credit card services do offer small business loans to their clients based on average monthly credit card sales, without the need for any collateral. The aforementioned average monthly credit card sales guarantee your company’s capability to pay the small business loans. Payments will be automatically deducted as a percentage of future credit card sales. This arrangement frees you from worrying about the amortization for your small business loans, too.

As soon as you pay up your small business loans completely, you are automatically eligible for new small business loans for as long as your home-based business is getting a good monthly average in credit card sales. With the help of credit card services, you can continue to expand and grow your home-based business.

Borrow More Money!
Small businesses can improve their credit rating by borrowing more money. You heard me right! Borrow money even when your business does not need it and pay it back on time or better still clear the loan early. Bizarrely, if you have never applied for a loan before then this will negatively impact on your credit score.
The clever way to improve your credit score is by taking advantage of offers that charge you zero percent interest if you pay by a certain date. Why pay the bank interest on a loan when you have money in the bank?
Some lenders offer some very low interest rate loans for asset purchases. Use their loans to buy cars, office equipment or machinery.
Use your cash in your bank to negotiate early payment discounts with your suppliers. Many suppliers with poor cash flow will even offer up to 2% extra discount if you pay their invoices within 7 days.
Lenders base your credit score on your payment history and the amounts of debts outstanding. If you have taken out many small loans and paid them back on time then this will stand you in good stead for when larger sums of monies are required.
Ask for a Quotation First.
When applying for credit make sure you get a quotation first before actually applying for the loan. Lenders will not do a credit search to give you a quotation. They will contact one or more credit reference agencies when you apply for a loan.
Every time you apply for a loan the search gets recorded. You want to keep this “credit footprint” as small as possible.
Do not Move House
Changing your house address can be disruptive to your credit score. Lenders like to see stability and moving house can add minus points to your credit score. If you are planning on moving house apply for your business loans before you move.
Know Your Credit Score
Lenders base their lending criteria based on reports from credit agencies and your businesses trading history. Sometimes credit agencies can get it wrong or still record a debt outstanding that was cleared years ago. For a small fee they will happily send you your businesses credit report. Make sure you examine it for errors and highlight them. They are obliged to change the report if you can prove that sums outstanding have been cleared.
You should check your credit score with the credit agencies at least every couple of years to make sure that there are no errors.
Do not Close Unused Accounts
If you have credit cards that you no longer need, destroy them every time a new one arrives. You credit scores benefits if you have credit facilities from many different lending institutions. Some lenders charge you a set annual fee for a credit card so make sure you cancel these.
Clean up Your Balance Sheet
Get rid of slow selling stock. Dispose of unwanted machinery. This will improve you balance sheet and enhance your credit score.
Boosting your credit score will not only improve your standing with the banks. Suppliers also check your credit score and some even offer better deals to companies that are less of a credit risk.

In the current phase, a bad credit is not the obstacle it once was; since well every 6th person in the UK is now estimated to have an adverse credit score. Considering the fact of the matter, the lending authority has taken up offering the provisions of Adverse Credit Business Finance to entrepreneurs having bad credit rating, poor credit, no credit rating.

Before start up any business an entrepreneur has to be prepared with conserve capital on the commitment of having an outstanding management which works with patience and persevere. Above all, the indispensable part of any enterprise is the management of the required money.

More often than not, it would happen that some individuals had to forgo from the benefits of these adverse credit business loans. Considering the fact of the borrowers’ financial malaise, the lending authority has categorised the adverse credit business finance loans into two forms i.e., secured and unsecured forms. For the former, arranging collateral plays a rigid part of the process, whereas the latter devoid of the pledging placing. And due to the reason of no placing of collateral evades borrowers from the threat of property seizure.

There are many lenders available online and offline for the provisioning of the adverse credit business loans. However for instant and quick processing online method of availing adverse credit business loans is preferred. There are many benefits of the online processing of adverse credit business finance. One of the main advantages of the online processing of the adverse credit business finance is of its round the clock working which unlike to the traditional processing of business financing. If an entrepreneur is out of station and needs money, only the optional tool he may have with him is of online accessing of the money provision. The method is simple and convenient and fast at processing.

Today, money market is full of many different sorts of business loans, however lenders specialised in adverse credit business finance are able to offer better service to entrepreneurs with bad credit scores. Their credit scores are used to determine whether you are eligible for adverse credit business finance. A higher interest rate is incurred upon individuals with adverse credit rating as compensation for the risk they take.

In order to take advantage of the borrowers’ financial malaise, an influx of lenders has joined the money market. Due to the cause, the competition amongst lenders heats up. And forcibly they have to offer adverse credit business loans on easy terms and conditions. Borrowers invest the sanctioned amount at infrastructural development of their planed business.

Running a small business also requires lump sum amount as any other ventures. You might realize this in a better way. But due to the lack of funds you cannot make further investments. Moreover, your credit profile has been badly affected by bad credit and left you in the worst situation ever. Retaliating bad credit and availing a loan in such a situation is not a hard task if considered the bad credit small business finance. Bad credit small business finance is the easiest and shortest route to derive funds and make investments. Bad credit small business finance is a loan available with or without collateral. And based upon the use and equity of collateral, lenders release amount to applicants. It is a loan that can be borrowed to purchase raw materials, equipments, machineries, stationeries, commercial sites and also to make investments. The business professional with the aid of this finance can buy shares and stocks and also commercial sites. So, every sizable ends pertaining to the infrastructure and advancement of business can be catered. Small business bad credit finance are of short and long reimbursement course.

As you are one among the many whose credit profile has been devastated by bad credit, it becomes essential to pin down the presentation of the expenses and investment while applying for bad credit small business loans.

The funds of bad credit small business finance come against reasonable rate of interest. Interest figures are calculated keeping in notice the economical and economical disparity of people. But as you are already in a state of financial disruption, so always look for the marginal charges suiting the budget.

Approval process of bad credit small business finance is fast and quick because the activities are carried through the online application method. The online is always improved and less documentation process is required to follow. So, you can shed all your mental stress and concentrate in the expansion of business as bad credit small business finance is available around the clock.

The recession’s impact on personal credit cards has been well documented over the past few months – in fact the responsibility for the ‘credit crunch’ has been squarely laid at the feet of inappropriate credit lending by the banks. Many people are receiving letters from their credit card lenders informing them of an increase in interest rates as the lenders try to recoup some of the substantial losses incurred as the financial crisis deepens, but what effect has the general fiscal malaise had on business credit cards?
The economy still needs to operate to fight off the worsening financial picture, and businesses (particularly small businesses) will still need lines of credit. With the Bank of England base interest rate at a record low, business leaders are now calling on the government to cap interest rate charges on business credit cards to give them a little bit of breathing space. The government has consistently resisted the calls on the grounds that a cap could harm the consumers they are designed to protect by restricting access to credit and also reducing the transparency of charging structures.
Credit cards – particularly for small businesses – are an additional form of financial income, allowing short-term flexibility and playing a vital role in keeping other lines of credit open to a business. Using a business credit card can enable a small business to ensure that suppliers are paid on time whilst giving the business an interest-free period in which to bring in sufficient funds to pay off the credit card debt. Although this may sound like a case of robbing Peter to pay Paul, this financial juggling act is what keeps many businesses trading and can avoid them having to take out costly loans or charge-laden overdrafts. But as the recession really begins to bite, businesses may find that obtaining a business credit card in the first place becomes far more difficult.
The worst thing a budding entrepreneur can do is to use their own personal credit card to finance their business. This makes it very difficult to separate business and personal finances and makes the businessman personally responsible for the debt. Business credit cards also have similar offers to personal credit cards, including interest-free periods, balance transfer facilities and often additional perks as well. This makes them ideal for short term, small credit payments and for larger businesses it enables a number of employees to use the same facility through multiple card access. As the full effects of the recession begin to be felt, business credit card users may see some of these perks start to disappear as card issuers attempt to cut the costs of their cards and reduce their exposure to potential bad debt.
Some businesses are using business credit cards to pay their tax bill, which is tempting as it avoids any fines for late payment. However, HMRC has become more flexible as the recession showed that many businesses were struggling with their tax bills, and have introduced a deferred payment scheme. Before putting the tax bill on a business credit card it may be worth investigating this option first rather than incurring interest charges on the amount via the credit card.
As financial belts tighten, business credit cards may start to become more of a luxury rather than a necessity for many businesses. Although there are still plenty of opportunities for small businesses with a good credit record to take advantage of business credit cards, lenders will invariably be stricter in their acceptance criteria than during the credit boom of the eighties and nineties. Before applying for any form of credit it would be wise to take the time first to ensure that you meet all the requirements for acceptance, as repeated refusals will damage your credit rating further. Credit needs to be used wisely, and careful management of a business credit card is still a good option for small and medium size businesses that want an additional line of funding available to them for everyday use.

Copyright (c) 2009 Marco Carbajo

In the past during good economic times you may have become used to using personal credit cards to finance purchases, equipment, and even payments to suppliers or vendors when starting and operating your business.

Unfortunately times have changed for business credit for small business and what has become a shocking reality to many are the ramifications of what the co mingling of personal credit files for business financing has resulted in.

Many small business owners who have followed the traditional route of personally guaranteeing each and every credit card, credit line, or loan for business have come to realize that they have put their personal assets and family at risk!

The single greatest challenge during these tough economic times facing small business in America is adapting to change. Less than ten percent of business owners in America know how to truly separate their personal credit from business credit let alone understand how to set up a business credit profile an establish a good rating.

So what is business credit?

It’s the ability to obtain financing under the name of your business without using your personal credit or guarantee. Business credit should be separate and based on the corporation’s credit worthiness not yours! Recently Entrepreneur Magazine was quoted as saying “You should differentiate your personal credit from your business credit.”

If you own a separate legal entity for your business than you have a unique opportunity that no other individual or sole proprietor has. It’s the ability to establish a business credit profile that is completely separate from a personal credit profile.

If you think you’re business is just making it fine despite the current economic times and you don’t need the credit think again! The reality is that your business will at one point require an influx of cash in order to cover unforeseen operating expenses, development, expansion, legal fees, inventory or a range of other items that a business may require in order to grow.

One of the key advantages of having business credit is instead of putting your personal credit and assets at risk every time your company requires financing you would now be in a position to secure the financing you need with your businesses’ credit.

Some other benefits you can expect include:

*any debt you accumulate for the business would only report to your business credit file not your personal credit file.

*eliminating the co-mingling of funds–and this includes the “co-mingling” of credit profiles so you won’t jeopardize the protection of the corporate veil.

*protecting you and your family from personal liability when you get approved solely on your businesses’ credit file.

*improving your personal debt to credit limit ratios by transferring the balances of business debt used with your personal credit to your business credit.

*increase your businesses’ ability to obtain cash credit 10 to 100 times greater than you can obtain personally.

SAVING MONEY! For example, an individual might pay up to 13% interest on a $100,000 line of credit whereas a business could qualify for an interest rate of 7%. That would save you almost $40,000 in interest alone.

So how do you get started? Setting up and establishing business credit for your business can be broken down into eight steps:

1.Corporate Conformity – This is where you will set up your business entity whether it’s an S-Corp, C-Corp, LLC or Limited Partnership. This is the foundation part of your business credit so taking short cuts or side steps can result in poor ratings and reduce your chances for funding.

2.Business Plan – This is not a mandatory step, but it’s necessary for your overall business success as well as a door opener for some specific lenders.

3.Business Credit Profile – Once you have completed corporate conformity you’ll be ready to set up your business credit profile with Dun & Bradstreet. (The next 3 steps have to do with trade accounts also known as vendor credit lines. There are over 500,000 vendors extending credit to businesses, but less than 6,000 of them report your payment history to your business credit profile. Selecting the right vendors is also an important part of the process.)

4.Tier 1 Trade Accounts – This is the first step where you set up trade accounts for your business that are known to grant small amounts of credit to businesses that have no credit history.

5.Tier 2 Trade Accounts – At this point you set up business trade accounts for your business that are known to grant credit to businesses that have little business credit history. Because most Tier 1 accounts will now be reporting on your business credit profile you can now apply for Tier 2.

6.Tier 3 Trade Accounts – These companies will grant credit in higher amounts than what was granted from Tier 1 and Tier 2 accounts.

7.Tier 4 Cash Credit Accounts – Tier 4 accounts consists of creditors who will grant your business cash credit cards, typically with a Visa or MasterCard logo. Benefits at this step include no personal guarantees and affect on your personal credit profiles.

8.Advanced Business Financing – At this stage of the process your business credit file is built, you have history, business scores, rating; access to funding and you can continue to obtain even larger amounts of financing by following some advanced business credit building strategies.

After the recent economic downturn business owners like you are faced with a new era when it comes to business financing. Banks, lenders, suppliers, leasing companies and others are making adjustments, adopting new rules, and facing new regulations in the lending arena.

Now more than ever you need to be pro active and establish a new level of financial preparation which includes establishing a strong business credit profile, a favorable business credit rating, and a solid bank rating. I encourage you to start building your business credit today and enjoy the benefits and peace of mind that comes with it!