Maximize Your Credit Card Services with Small Business Loans
November 29th, 2009 | 
Author: Since June 15, 2009, the United States Small Business Administration has been processing deferred payment small business loans of as much as $35,000 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.
Watch the video related to small business loans
A short video featuring “Eat Me” company who received a small buiness loan from GLE oneLondon. The video shows the value of small business loans as a form of finance for growing businesses.
Help answer the question about small business loans
can one broker small business loans to banks like a mortgage broker do with home loans?I am a mortgage broker and want find out how I can fund small business loans too. can I broker them to banks?
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You stand a greater chance of getting a government-guaranteed loan through the Small Business Administration http://www.sba.gov/financing than a government grant. Read the SBA Financing page to learn about criteria needed for borrowing
It is hard to find grants to start a business. Unlike the myths that some perpetuate, federal government and even private foundations hardly give grant money for a for-profit business. And yes, grants mean PAPERWORK – lots and lots of it, that is why a cottage industry of grant writers was born.
Nonetheless, you can go to the Catalog of Federal Domestic Assistance (CFDA) http://www.cfda.gov and Grants.gov http://www.grants.gov – these are two sites created by the federal government to provide transparency and information on grants. Browse through the listings and see if you can find any grant that would support a for-profit venture.
Even if you buy books on "how to get grants" or list that supposedly has information on grants — all of them are mere rehash of what CFDA has, albeit packaged differently. But still the info is the same – hardly any grants for starting a for profit business.
Even SBA does NOT give out grants. From the SBA website http://www.sba.gov/expanding/grants.html
"The U.S. Small Business Administration does not offer grants to start or expand small businesses, although it does offer a wide variety of loan programs. (See http://www.sba.gov/financing for more information) While SBA does offer some grant programs, these are generally designed to expand and enhance organizations that provide small business management, technical, or financial assistance. These grants generally support non-profit organizations, intermediary lending institutions, and state and local governments."
Here is a listing of federal grants for small businesses. See if there is any available for individuals for starting a business — THERE'S NONE.
http://12.46.245.173/pls/portal30/CATALOG.BROWSE_BENEF_RPT.show
Most of the federal grants are given to specific target groups with specific requirements (e.g. minority business owners involved in transportation related contracts emanating from DOT – Grant#20.905 Disadvantaged Business Enterprises Short Term Lending Program
Grants are also often given to non profit groups or organizations involved in training or other similar activities (grant 59.043 Women's Business Ownership Assistance that are given to those who will create women's business center that will train women entrepreneurs
I suggest you read the following books to get ideas of how to finance your business:
Financing Your Small Business http://www.amazon.com/exec/obidos/ASIN/1572484500/powerhomebizguid
Small Business Financing: How and Where To Get It http://www.amazon.com/exec/obidos/ASIN/0808007386/powerhomebizguid
Financing the Small Business: A Complete Guide to Obtaining Bank Loans and All Other Types of Financing http://www.amazon.com/exec/obidos/ASIN/1580626815/powerhomebizguid
The SBA Loan Book http://www.amazon.com/exec/obidos/ASIN/158062202X/powerhomebizguid
Angel Capital : How to Raise Early-Stage Private Equity Financing http://www.amazon.com/exec/obidos/ASIN/0471690635/powerhomebizguid
Financing Your Small Business (Barron's Business Library Series) http://www.amazon.com/exec/obidos/ASIN/0764124897/powerhomebizguid
It was Mohammed Younus, the economist who put the word "microloan" on the map with the Grameen Bank in his native land of Bangladesh.
Here is his profile on the BBC website:
http://news.bbc.co.uk/2/hi/south_asia/6047234.stm
You might want to try a credit union. I don't think that there is a best bank for loans it has to do with credit.
If in the USA, check out the Small Business Administration, they can be very helpful on a new business start up.
The rate would depend on a lot of factors. But because this is a made up business, let's say that everything the bank looks at (credit reports, financial statements, collateral, etc) is perfect. If the loan is secured by real estate the rate most likely will be fixed at about 7.25% with monthly principal and interest payments based on an amortization period up to 25 years. If the loan is secured by the company's assets, the rate would be closer to 7.75% and probably a variable rate based on the 5 or 10 year Treasury Bill plus a spread added to it. Monthly payments would still be principal and interest, but the term and the amortization period would be shorter than above – closer to 5 years.
SBA.gov is a great source…..what out for scam artists posing as sanctioed govyt lenders though. Also…it takes time, plan on more time than you'd imagine
I Think it would be easier to get a personal loan and use the money for your business. A Business loan is not easy to get if you have little experience or starting a new business.
The reason being the new businesses often fail. It's might be easier to get a personal loan.
Even if you apply for a business loan you will need to personally guarantee the loan, therefore why go through all the red tape of applying for a business loan?
Another benefit to taking out a personal loan is that when your business makes a profit you can repay the loan to yourself tax free. Rather than than taking that money as profit from the business.
Hope this helps
I'm not sure if this is the same person you saw on the Daily Show, however I think it's Grameen Bank, whose founder won the Nobel Peace Price. Attached to the Bank is the Grameen Foundation. The bank makes microloans to deserving persons to start or fund small businesses in developing countries. Check out the website of the Foundation to donate much needed funds:
Many of the National banks and some community banks have small business loan programs. When getting a loan here are things the bank looks for:
A business plan detailing the product/service,, customer,location, and financial analysis.
Your business experience and how well you understand this industry. Can you make this business work. Do you have personnel on your staff to supplement your lack of skills.
Credit history which demonstrates your ability to handle credit. Your personal credit score needs to be well above average.
What collateral do you have and how can you guarantee the loan in case of problems.
Terms – How much, How long and For what? Can the what be reposed in case of problems?
Your equity. They like to see you putting up more than 25% of what you need.
You could try the SBA Microloan Program where you can get up to $35K. http://www.sba.gov/services/financialassistance/basics/sbarole/LOANPROG_MICRO.html .
Its sounds pretty complicated so Ill just post the link to the site i found
http://pittsburgh.bizjournals.com/pittsburgh/stories/2009/02/23/story11.html
hope that helps
Its nice to have a respectful exchange on this forum for a change
I would say you that many banks would only lead you around £10,000 pounds or $14,000 to start your business and you will need:
-Strong business plan
-Produce projected profits
-Have a good idea, product or service
I would consider getting an enterpruneur to finance the business.
Dragons Den -BBC1
Anglesden.com
Dual citizenship has nothing to do with getting a business loan.
No, they're not. In fact, they take much longer to take (add another 3 -6 weeks processing time for normal loans)
If you're applying for a loan and if it is a big amount, SBA may consider other factors aside from your business credit:
http://www.sba.gov/services/financialassistance/eligibility/qualify/index.html
- A business plan explaining what the business is
- Your background and experience in the business — in my experience, this is KEY in the eyes of the bank because they want to make sure that you know what you are doing and that you can make the business work. If you don't have any experience with the business, have someone on board that knows the business to give banks assurance that someone will guide you
- Your credit factors because it shows your dependability and how well you handle credit. They will do a credit check on you and poor credit history may be frowned upon, or even reason for the disapproval of your loan application
- Your collateral. Banks, even SBA guaranteed loans, want the borrower to show collateral. They want to be guaranteed that somewhere somehow they can get payment from you
- Condition or terms of loans. Banks would want to know three important things: "How much money are you requesting? What will it be used for? and For how long will it be needed?" Banks oftentimes prefer to approve loans for items that can be identified, has lasting value, and can be repossessed and sold if things fail.
- Equity investment
There are SBA lenders (banks) that deal with small business loans. You will need to put up some collateral, generally your house or other personal asset.
Interest rates vary. Go in an talk with an SBA officer, they can explain it all to you.
This may not be exactly what you are looking for, but, I think you are taking over an established business, as in, someone in your family or all of you are taking over legal ownership of the restaurant…you could go to a regular bank in your area and get a small business loan using your restaurant as collateral. With solid cash flow statements, I can't see why you would be turned down. Local banks are always looking to partner with local businesses because it makes them look good and builds their credibility in the community.
So, before you get adventurous, start by looking to see which banks are listed in your local chamber of commerce directory. Those folks would be the ones looking to support local businesses. When you get a local banking contact, invite that person to your restaurant for lunch…or join the chamber of commerce and host a chamber event, like a happy hour if your serve drinks or offer chamber members coupons.
In my opinion, when it comes to banking, relationship building in your local business community is more effective than fishing around for companies offering programs who don't really understand the true value of your business.
There is a non-profit organization called Prison Entrepreneurship Program which is described as "a Houston-based nonprofit organization that leverages the skills of senior business executives to constructively redirect these talents and equip inmates and former inmates with entrepreneurial training—enabling them to productively re-enter society."
http://prisonentrepreneurship.org/
As for small business loans, felons typically find it hard to get one, even SBA. SBA adopts a "cautious" approach to lending to felons and oftentimes bases its decision on how serious the crime committed was and whether there is strong likelihood that the offense will be repeated again.
since u do not say what or where u are planning to do this it is a guess.
land loans are often separate from business loans.
working capital for 2yrs is a long shoot.
It will depend on your personal credit even though it is for a business. The bank will evaluate the ability the company is able to pay back the loan and that is how they determine the amount to loan you. In this economic climate, you will not be able to get a loan without significant financial commitment from you such as cash and collateral.