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Minority
Small Business Loans FAQ's
What
are the Fastest Ways to Receive a minority business loan for
small business?
Develop
a business plan. Save your own money and think about getting a home equity
loan if you have good credit and a home.
Take
these steps first because any sophisticated investor will want to know
how much of your own money you have invested in your business, before
they give you any money.
Think
about it, why would anyone invest in your business if you aren't willing
to invest in your own business? A business plan also shows other potential
investors that you are serious and have researched your industry and business
market.
Next
think about getting personal loans from friends and family without getting
further into debt, by offering them a stake in your company, or equity
financing.
Make
sure you have every thing in writing with either family and friends on
both equity or debt loans, because you don't want to risk personal relationships.
Make
sure you inform them that the average business takes 5 years to show a
profit, and that they know the risks - 75% of startup businesses fail.
I have
bad credit so how can I receive a minority small business loan?
Try
to repair your credit. However, if you don't have a lot capital, and you
will have a hard time raising financing because of bad credit, think about
joining a church or community credit union to borrow small amounts of
capital. This way you know you can repay to build up a track record with
these untraditional credit institutions for larger financing sources in
the future.
Next
join small business training programs which make you eligible for financing
after you go through an extensive business development program.
Groups
to seek out for minority small business loans with good track records
are Project
Enterprise in New York, and the legendary Accion
lending program on a global basis.
Accion
is responsible for a lot of the business startups in the U.S. Hispanic
community and now they are expanding their services worldwide into Third
World countries like Africa, Caribbean, and South America. They are open
to help people of all ethnic groups.
What
are the best resources to approach for minority business loans?
Some
of the leading sources to receive minority small business loans are The
Bank of America, Banco Popular, and Wells Fargo banks. Also if you are
making good revenues in your business it is time to look at 2nd stage
financing like Angel Investors at Angel
Forum, and Venture Capitalists. Check out the Business grants section
of this site and also www.grants.gov.
Also
join our ezine Keep it Real Profitable to
get alerts on the latest minority business grant and minority small business
loan alerts along with the top tips on web marketing and search engine
promotion.
Good
luck on your search for Capital and financing. |
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(Lesson 12)
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Please
note also see Kamau's Business Blog
for the latest Minority Business loans and minority small business grants
after reading this section
New Business Finance and
Credit Articles
9 Steps to Establish Business Credit
Small business owners should take steps to build credit in the name of their business as a way to keep track of business expenses, conserve cash flow for essential business operations and protect personal assets and personal credit. Building business credit can be accomplished regardless of your personal credit history.
The most important element to building business credit is finding lending institutions, credit card issuers and vendors that will establish business credit without you giving a personal guarantee from your personal credit information.
Business credit is also a way of building your company’s image and identity. The following are 9 Steps to Establishing Credit for Your Business:
Step One
Decide how you want to structure your business. This may take some research but a few common ways to structure a business are: C-Corporation; S-Corporation; Sole-Proprietorship; Limited Liability and Partnerships. For business credit separate from your personal credit you will need to structure your business as a Corporation or LLC.
You can also purchase a “shelf” or “aged” corporation in the State where you want to do business. A shelf or aged corporation is one which has no activity and is created and put on the “shelf” to age and use at a later date. There are companies which sell shelf corporations.
Step Two
Obtain an employer identification number (EIN). Business credit is tracked using your business name, business address and employer identification number. You may obtain an EIN from the IRS online. (www.irs.gov). The application is real simple and takes about 5 minutes. As a sole proprietor you may apply or if you are a corporation any officer may apply.
Step Three
Open a separate bank account under the exact legal name of the business. Business checking accounts can be opened with as little as a $100.00 deposit.
Step Four
Business address and telephone number must be listed under the business name in the 411 directory and the telephone must be answered in your business name.
Step Five
Obtain required business license, permits, registrations, etc., in the City or Jurisdiction where you do business.
Step Six
Technically, at this point you are ready to establish business credit with some vendors such as Staples. Simply go to www.staples.com fax your business phone bill along with the credit application on your business letterhead to apply for business credit. No personal guarantee is required and you should receive the standard business credit line of $750.00
Step Seven
Establish a profile with Dun and Bradstreet (DNB) and obtain a D-U-N-S Number. DNB is the largest tracker of business credit. The D-U-N-S Number is a nine-digit identification number that provides unique identifiers of business entities. The website for Dun & Bradstreet is www.dnb.com.
There is no charge and you will receive a D-U-N-S Number within 30 business days. You can pay for their credit builder services in order to receive the D-U-N-S immediately, but it is definitely not necessary. Companies where you apply for credit that use Dun & Bradstreet services will request your credit file and this will establish your file. It may take up to 45 days for the companies to report.
Note: If you do decide to pay for their credit builder services preparation is vital when contacting Dun & Bradstreet. Make sure you have covered all your bases. What you say to DNB
goes permanently into your file.
Step Eight
Now that you have received your D-U-N-S number you are prepared to apply for business credit. As you begin to establish business credit it is imperative that you pay your invoices before the grace period. A Paydex Score of 80 is considered very good and is based on your payment history with at least five (5) vendors.
It makes a difference for every day you pay earlier than the actual due date unlike personal credit. Business credit scores range on a scale from 0 to 100 and a Paydex score of 80 will get you the best business credit cards and terms.
Step Nine
After completing the process you may want to apply to the following companies with no personal guarantee required. Do not apply for everything at one time. This may get your
business credit file flagged. Allow a couple of weeks between applications.
-
Office Depot
-
UPS
-
Staples
-
Fedex/Kinkos
-
T-Mobile
-
Dell Computers
-
Office Max
-
Nextel
-
Chevron Oil
-
Cingular
-
Nebs
Lisa Phillips is a credit professional and a regular contributor to Rebuild Credit Score.
How to Finance
Your Internet Business
Could you increase your business faster if you had access to capital? If your business is anything like almost every other business in the world today it probably can.
You may be thinking that my web or net-based business has very little overhead and therefore needs little capital. But if you feel this way it may be time for a serious reality check.
Even the largest most successful businesses in the world, those enjoying great profit margins -- require access to capital!
If you feel your net marketing efforts are stalled or require more time to show fruit you probably need some serious cash infusion to move forward.
In short, the challenges to running an Internet business are increasing. When the Internet first hit commercial usage, back in 1995, many extolled the notion that the barrier to business entry online was much lower than in traditional business. This is somewhat true even today but with some caveats.
As traditional businesses have successfully moved online the bar has been raised significantly. These traditional businesses have built strong offline stores or companies and now have strong Internet sales operations. We call these companies “bricks and clicks” businesses because they have both a strong offline and online sales presence.
Today traditional businesses are bringing both click and brick sales channels, considerable insight, savvy, recognized brands, believability, and of course capital to invest in their net businesses. These factors make it much more competitive to be successful in online business now than it was a few years back.
Many offline traditional businesses are increasingly dominating online business with the deep resources to acquire the necessity tools, assets, and consultants to do so. For example News Corp became a major player online by purchasing MySpace.com, for over 500 million dollars, to get a high traffic social networking web-based service.
In a similar fashion the New York Times purchased About.com, again for about 500 million, to get a piece of the growing online advertising revenues since its offline print advertising base is shrinking. Major offline retailers like Macy’s, Bloomingdale’s, and Walmart have strong online web properties making millions of dollars online. These brick and click operations are the envy of many online business people.
On the other hand online business people are finding it harder and harder to start – grow – and expand their businesses. For instance search engine optimization (SEO) once the online marketer’s secret weapon has been largely marginalized by Google’s obvious time based filter on newer sites sometimes referred to as “the dreaded Google Sandbox”.
Pay Per Click (PPC) advertising once a fast and low cost marketing option for online business people is constantly increasing in price. As larger better financed offline business continue to use search engine marketing these businesses are driving up the bidding prices of PPC advertising.
Other forms of advertising like email advertising is becoming more expensive because of email filters and delivery problems. Even article or its derivative “bum advertising” marketing promotion is becoming more competitive requiring editing and distribution services or software to be effective.
More importantly Internet business people with some success in generating fulltime income discover that in order to expand their business at a more rapid rate they need more access to capital. Even the model business symbol of exponential growth Google went to the capital markets to raise more capital to grow even faster.
Since Google’s initial public offering (IPO) it has snapped up major growth orientated web services like YouTube.com (for 1.5 Billion) and Feedburner.com. It also used its market capitalization to snap up advertising powerhouse www.DoubleClick.com also for over a billion dollars, giving it an even more dominating position in online traffic and advertising. The point to be made is: home-based Internet businesses also need to have access to capital to grow their business beyond their positive cash flow. We as online business people must learn to tap into financing with other people’s money (OPM).
With more access to cash or capital you could do more things like:
(1) Increase your website’s conversion rate with split testing driven from your search engine PPC or CPM campaigns;
(2) Hire more writers for your article and content marketing efforts;
(3) Advertise in ezines and high traffic websites and…
(4) Build your email lists by buying co-registration leads.
You could use these methods and a myriad of other online promotional efforts if you have access to capital. Let’s face it -- access to capital is the life-blood of any business!
Even Internet businesses need access to OPM to be competitive in this more mature era of net-based business.
If you are an Internet entrepreneur in need of financing here are some creative sources to get money to expand your business…
(1) Personal funds or bootstrapping is how most entrepreneurs start their businesses. Personal financing which includes using personal credit cards is to be contrasted with the opposite end of the personal fundraising option of getting money with a home equity loan. The shortcoming of this kind of financing is your personal assets and credit score limit how much money you can borrow. Plus it opens you up to personal financial liability and ruin if you aren’t careful.
(2) Friends and family is another popular way business people finance their business. Also be careful using this option. You should have formal documents and a realistic repayment schedule drawn up, explained, and agreed to when obtaining financing from loved ones. If you aren’t very careful you run the risk of alienating or offending a friend or family member over a... business deal gone bad.
(3) Microloans – Are a great way to get initial financing for your business for a few reasons. If you are just starting out in business with an innovative online business but your credit is less than stellar you should check into a microloan. If you have good credit but little collateral microloans are also a good option. Microloans are usually provided by nonprofit businesses financed by the government and major corporations to give business loans to emerging business people. Do a search on Google for a Microloan organization in your area. A good source of microloans is www.AccionUSA.org and may be peer-to-peer service www.prosper.com.
Ironically, as you become more successful in your business your need for capital will increase. Along your business journey you may qualify for higher forms of financing like SBA loans, business grant financing (usually for nonprofits or research firms), franchise financing, inventory or factor financing, and angel or venture capital (VC) investing. You should know what type of financing you could qualify for in the future. Having business financing knowledge in advance will give you more innovative and creative ways to head-off potential cash flow problems in the future.
It would be wise advance planning to start familiarizing yourself today with various forms of financing you can use in the future. You have to cultivate a positive relationship with these financial sources now in order to grow and expand later. Your advanced knowledge of financial resources that can be tapped in the future can help you pre-position your Internet business for faster growth and expansion because you will have access to various forms of business capital.
Consider the fact that even large companies like Google, making billions of dollars online without major advertising, needed to go to the capital markets to grow and expand their business. The story goes that the founders of Google started out with credit card financing, then angel investors, with subsequent VC money before they went public with an IPO. Prepare yourself now and cultivate a positive relationship with financiers. Good financial contacts or brokers are as important as other professionals like lawyers, accountants, and insurance agents. You need good financial contacts on your business team. With your financial access in place you will have a smoother ride in starting or expanding your business.
In fact you will be in a much better position to thrive, survive, and compete with your Internet business if you have access to capital. To learn numerous ways to fund your business checkout: www.RaiseCashFast.com.
After a 2-year fight with cancer Kamau Austin has dedicated himself to helping businesses start, grow, and expand with creative financing. For more effective and innovative financing ideas visit http://www.RaiseCashFast.com
Tap 7 Innovative Ways to
Finance Your Business
By Kamau Austin
Business and financing go together like peanut butter and jelly, ice cream and cake, or love and marriage. You can have one without the other but -- it is a lot more enjoyable to mix them together.
Business and financing have been inseparable partners undoubtedly since time immemorial. If you are an innovative entrepreneur in today’s emerging field of Internet business this powerful relationship may have escaped you.
Starting a traditional business without money to finance it is pretty much known to be a prescription for disaster. The startup costs for a traditional business for example like a few months rent and security for office space, renovations, legal and accounting setup fees, advertising and marketing costs, not to mention product creation or distribution investments could run in the tens, if not hundreds, of thousands of dollars.
For instance almost 20 years ago I started a small boutique in mid-town Manhattan in NYC. It was my first business, and my partner and I invested about $24,000 for a 300 square foot space. This was of course a bare bones no frills startup. Today it would be probably $100,000 to do the same thing. In contrast an Internet based business or virtual freelancer could probably get started for less than $5000.
In contrast, people who run Internet or virtual freelance type businesses many times have low overhead and startup costs. Therefore, they sidestep the perennial and traditional search for business capital. Nevertheless, as more and more large well-funded businesses develop online marketing aplomb the need for capital will become more of a factor in order for netpreneurs to compete in Internet business.
Furthermore, as countless smaller netpreneurs compete with you internationally, the need for business insight and access to financing may become essential to survive and thrive with your online business or virtual freelance company.
I certainly understand the desire and need for Internet marketers to want more access and the low barrier of entry to start a business online. I can empathize with many netpreneurs and virtual freelancers aspiring for the dream of financial freedom and economic independence promised by an Internet based businesses with a low startup cost.
When I first started in Internet business I was too poor to afford a computer and wasn’t even familiar with logging into Windows! I used the free computers at the public library to find leads and to fax them sales letters.
It wasn’t long before I was using Internet marketing to build a fulltime income online. However, it took me a few years to realize that I could expand a lot faster in business if I were able to leverage the efforts of others. In order to acquire a support staff of people to help me grow my Internet business I needed cash. Financing my business from my sales alone was starting to cause cash flow problems for my business. I was giving contract work to my virtual staff of nine (9) people. In other words to expand my business I needed a cash infusion secured by a business loan. This was the only way I could go forward and have a positive cash flow. At some point any business online or offline will need a cash infusion powered by financing.
Business financing is defined as anything you can do to get capital to start, grow, and expand your business. Financing would include some of the following business funding options:
(1) Business Grants are forms of financing usually reserved for nonprofit organizations, companies with innovative technology, or businesses that solve a social problem. Usually grants are given to companies to help the social good. Grants are funds that don’t usually have to be repaid. Despite the fact that grants don’t have to be repaid, there are stringent criteria and stipulations in order to qualify for grant funding. The government and foundations that provide grant funding are looking for you to achieve goals that enhance social good.
There is a lot of hype about free money from the government and corporations but most of this is really distorted marketing spin and misinformation. Some companies are selling a CD or database of funding sources. These are not necessary because there are really three (3) big research websites for finding grant funding sources. Angela Belcher-Epps a successful grant writer who has raised over 20 million dollars in grant funding says, “you can get bogged down with too many grant research resources”. She recommends using the main three: (1) www.FDNCenter.org; (2) www.grants.gov; and www.FundsNetServices.com.
Conversely, Ms. Belcher-Epps also suggests profit companies can form strategic “partnerships with nonprofits to obtain financing from grant sources. You can learn more about her insights at: www.raisecashfast.com. Dr. Beverly Browning, one of the country’s leading grant writers having raised over 100 million dollars in grant funding, also teaches people how to become successful grant writers. You can obtain a copy of her books on Faith-Based Grants and How to Become a Grant Writing Consultant click here. It also should be explained that much of the hype around free grants actually centers around your company qualifying for minority or disadvantaged certification status and getting government contracts. The RaiseCashFast.com site also gives you access to this information.
(2) Personal funds or bootstrapping is how most entrepreneurs start their businesses. Personal financing which includes using personal credit cards is to be contrasted with the opposite end of the personal fundraising option of getting money with a home equity loan. The shortcoming of this kind of financing is that it is limited by your personal credit score and assets. Furthermore this form of financing opens you up to personal liability for the loans and possibly a great deal of debt or even bankruptcy.
(3) Friends and family is another popular way business people finance their business. Take care with this option because you must have formal documents and a realistic repayment schedule for this financial money-raising source. You don’t want to ruin, alienate, or offend a friend or family member over -- a business deal gone bad. If you borrow from friends and family it may be a good idea to get an online loan management service to protect both parties and keep payments on schedule like www.virginmoneyus.com.
(4) Microloans – If you are just starting out in business or have an innovative online business with less than stellar credit you should check into a microloan. Micro-lenders are nonprofit businesses financed by the government and major corporations to give business loans to emerging entrepreneurs and their companies. Do a search on Google for a Microloan organization in your area. Great places to secure microloans are www.AccionUSA.org and www.Prosper.com. Or check into the SBA 7(m) Microloan program to find a microloan program in your area. Usually you will have to go through a business training program to qualify for these loans that can tap out at about $35,000. However in my research I have seen micro-lending organizations in some states claim they loan between $100,000 to $700,000! Don’t sleep on micro-lenders. Microloans can make a big difference in your business solvency.
(5) SBA Loan Guaranty programs – while the SBA doesn’t actually give business loans it can help you secure a loan. The SBA helps you secure loans you would not probably receive through banks or other traditional financial sources on your own. According to Entrepreneur magazine there are about 50 million dollars a day approved in SBA loans.
The SBA does this by backing or guarantying a certain percentage of the loan so the bank has more assurance that the loan will be paid. There are various SBA programs where they will help you obtain loans for various things like working capital, acquiring a building, buying new equipment, and business expansion. These loans are usually in the $100,000 to $2,500,000 range. The most popular SBA program is the 7(a) program. It loans up to about $750,000. You can ask your local banker if they participate in the program. National banks with a strong track record of SBA loans are Bank of America, JP Morgan Chase Bank, and Banco Popular.
(6) Angel investors are high net worth individuals who are looking to invest in promising companies. Certified angel investors have at least 1 million dollars in assets (real estate, stocks, bonds, etc.) or need to be generating $250,000 in yearly income.
Usually angel investors are people who are successful in business or investing. When they decide to sign on to financing a company usually the angels bring a lot of business savvy into your venture. Angels typically invest in fields in which they are comfortable. They obviously want to invest in promising companies with great upside potential. Angels want to invest in a company that will get bought by a major corporation or become eligible for an initial public offering (IPO) and sell shares on one of the major stock exchanges.
Angels usually do financing deals in the $500,000 to 1 million dollar range. More recently angel investors have become more sophisticated by creating groups to share research and financial resources. This way they spread out their risk with other angel investors and can be less anxious when giving you financing. A great place to find out about angel investing groups is http://www.AngelCapitalEducation.org.
(7) Venture Capitalists (VCs) are the next stage of financing businesses can aspire to obtain. VCs are professional investors who manage the financing of institutional investors like private and public pension funds, foundations, corporations, wealthy individuals and other investment groups.
VCs tend to finance companies in both innovative and higher risk business sectors. This is why in recent years they are known to invest in the Internet, technology, and bio-medical fields. However the companies they finance obviously must have tremendous promise. Venture capitalists look to capitalize on their investment in 5 to 7 years. They are looking for companies that can do at least 25 million dollars in 3 to 5 years.
Venture capitalists are sophisticated financers who do their research and due diligence. They realize every deal they do will not be a hit. Since they are investing money from a investment fund (and not their personal money) they may be less “in your face” than angel investors. Their financial investments start at about 1 million dollars. However, these days they look to invest at least 5 million dollars in up and coming companies. As with angel investors, VCs are looking for companies that will go public with an IPO or be purchased by a major company at a windfall profit.
Obviously, venture capitalists get large numbers of financial proposals but only fund a limited number of deals a year. Some VCs feel recently there is a good deal of capital available but not enough good bankable ideas. Good places to learn more about venture capitalists are http://www.RaiseCashFast.com or http://www.capitalvector.com.
There are many other both traditional and newer sources of business financing today. Factoring and peer to peer lending are two that come to mind. The smartest thing you can do is to start making yourself informed about a number of innovative ways to get capital to start or grow your business. Prepare yourself now with the insights and knowledge to get future business financing. Check out this site to obtain more info on business financing.
After a 2-year fight with cancer Kamau Austin has dedicated himself to helping businesses start, grow, and expand with creative financing. For more effective and innovative financing ideas visit http://www.RaiseCashFast.com
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