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JER NETWORK           

Biz Blog

An ongoing series of informational entries

Our Latest Blog Entry

August 22 2019

How to Score the Lowest Rate on a Business Loan (Without Banks)

Accessing low business loan rates from banks can be tricky. Qualification requirements often exclude startups, seasonal enterprises, very small businesses with low sales volumes and businesses with shaky financial histories. Approval and underwriting for qualified businesses may take weeks or months. From your standpoint as a business owner, this means missing out on opportunities while awaiting funding.


Whether you can’t present the financial picture banks are looking for or you’ve tried to apply and were turned down, you’re not out of luck. 

Alternative financing provides another important option for business owners. If you’re bouncing back from tough times and those in need of fast funding to cover expenses, or pursuing growth, then alternative financing may be the answer.


Alternative Financing for Small Business Loans

What is alternative financing? Simply put, it’s a way for businesses to get funding from a source other than a bank.

Approval rates are higher, thanks to less rigorous standards for qualification, and cash is typically available in a few days. Some lenders are able to approve and deliver funding in just 24 hours.


This speedy process is possible because alternative lenders don’t ask for as much paperwork as banks. Usually, you need to provide just a handful of documents along with your application, like a few months’ worth of bank statements. A lender may ask for more information in certain situations to clarify your company’s financial standing.

Banks may reject an application due to credit score, poor cash flow or an unfavorable debt-to-income ratio. On the other hand, alternative lenders consider multiple factors to assess your ability to pay back a loan. The total picture of your financial situation affects the rates you can qualify for. On a standard small business loan, they can range from 7% to 99.7% on a standard small business loan.


Types of Alternative Lending for Businesses

Many of the same loan types banks offer are also available from alternative lenders. But, there are other options designed to meet the unique needs of businesses in various financial situations as well:

• Working capital loans – Short- or long-term loans to cover standard business expenses or invest in expansion projects

• Merchant cash advances (MCAs) – Funding obtained through an advance based on future credit card sales, which is then paid back using a percentage of each transaction

• Line of credit (LOC) – A fixed amount of funding available as needed, with payments made only on the amount drawn out

• Accounts receivable financing Selling outstanding invoices to a lender to receive a portion of the total upfront and the remainder when customers pay

• Equipment financing – Loans or leases to provide access to newer, safer or more high-tech equipment

Rates differ for each of these loan types. A business loan calculator can give you an idea of what you can expect to pay based on both rates and term lengths.

Alternative Lending Companies: Separating the Good from the Bad

Finding the best small business loan rates isn’t just about pricing; it’s about the experience. You want a trustworthy lender that provides good service in addition to cheap prices. It’s important to receive the proper assurances that you’ll receive help and support for the duration of the loan term.

It can be tricky to hit the “sweet spot” with alternative lenders. Some companies hide questionable practices behind promising sales language and can seem legitimate until you read their loan agreements. Here are a few tips to weed out the bad apples!


Find the Right Features

Ask these questions when comparing alternative lenders:


Do they have the loan option you want? Most offer several types of loans, but some focus on only one.

Can you access the amount of funding you need? Make sure you’re able to request enough to cover your expenses.

• What are the terms and rates? The numbers may be posted on the company’s website, or you may have to call to get specifics.

• Is collateral required? If not, are loans secured with a lien? Be clear about the level of risk to your assets before applying.

• Can the application be completed online? Some lenders may offer a paperless option to expedite approval and underwriting.


Beware of Predatory Practices

When a loan offer seems too good to be true, you could be dealing with a predatory lender. The unscrupulous practices of these companies can spell disaster for the unwitting business owner, but you’ll see the red flags if you know what to look for. Avoid lenders that:


• Offer loans with very short term lengths

• Ask for application fees

• Hide other fees in the fine print of loan agreements

• Use balloon payments to make loan rates appear lower

• Provide funding to businesses in questionable industries


Reading customer reviews can reveal a lot about how a lender does business, too. Complaints of unannounced changes to terms and rates, withdrawals after the end of loan terms or poor customer service are all good reasons to move on and look for another option.


How to Qualify for the Cheapest Business Loan Rates

Basic qualification requirements should be available on lenders’ websites. It’s usually a short list consisting of a specific amount of monthly or yearly revenue, a minimum time in business and whether or not a minimum FICO score is necessary.


Be aware that requirements may vary between loan types. Some loans aren’t available to startups, for example, even if the lender will otherwise work with less-established businesses. Others may require higher FICO scores or additional factors like a minimum monthly deposit amount. However, some lenders are willing to be flexible. If you’re not sure whether you meet the requirements, you should be able to get more information by filling out a prequalification form or calling the lender.


Generally, a stronger financial picture will get you better rates.

Author, Matt Carrigan

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Matt Carrigan is the Content Writer/ He loves spending every day creating content to educate business owners across every industry about business growth strategies, and how they can access the funding they need!

Our Second Blog Entry

July 22, 2019

Private Equity Investments Vs. Business Loans: What You Need to Know

So, your idea for a new business worked! Now, you’re at a stage where you need financing, fast, or else you may not be able to sustain growth.

What happens next?

Most business owners in this position go down one of two roads. Either they seek out a private equity investment to get capital and relinquish full control over the company, or take out a small business loan.


Should You Seek Out a Private Equity Investment or A Business Loan?

Both choices result in capital to grow your company, and push it to the next level you’ve been striving toward. But with what strings attached?


The choices you make early on in the life of your start-up can have lasting repercussions on your business. But more importantly, it can impact the way that you, personally, benefit from your business’s success.

Understanding the long-term impact behind both of these decisions can set you on the right path to financing for your start-up or young business.

To make matters more complicated, there are a few different types of private equity investments you can seek out.


What is an Angel Investor?

Angel investors have a reputation of coming in at the eleventh hour to save the day. Generally, angel investors are individuals with a high net worth looking to invest in a rapidly growing company.

However, most angel investors also have some business experience of their own. According to a Harvard Business School study, 55% of angel investors previously founded or served as CEO for their start-ups.

Angel investors are particularly popular in technology (51%) and financial services (39%) industries.

Unlike investors who provide capital at later stages, angel investors offer capital much earlier on, when companies believe they have no other funding options.


Why Do Start-Ups Choose Angel Investors for Funding?

Angel investors can be a beneficial resource for start-ups in a desperate position.

Angel Investors Don’t Look for Experience

Angel investors do not have financing qualifications the same way that banks and alternative lenders do. Because these are private individuals choosing how and where to invest their money, they can make choices based on their own criteria.

Generally, these investors make decisions based on the individual business owner, how innovative the idea is, or the entrepreneur’s skills.

The more promising the idea, the more likely the angel investor is to put stock (and capital) into it. After all, angel investors can only earn a high ROI when an idea takes off.


Lighting the Way As Your Company Grows

Angel investors rarely take a capital-only approach. In fact, most will take an active role in helping your company to grow, too.

When your start-up is growing rapidly and struggling to gain footing, this can be quite helpful. Thanks to business experience, angel investors have a unique perspective. By sharing this perspective, they can help your company to grow and reach higher profit margins.

Often, the role the investor plays in guiding the company can grow over time, occasionally taking the reins from the entrepreneur.


Potential for Future Funding Down the Road

Business partnerships are hard to forge early on, but can be crucial to sustaining your growth and accessing resources later on. Down the road, angel investors may be open to providing even more funding later on.

However, it’s important to remember that accepting even more capital from an investor entitles the investor to a larger percentage of your revenue.

No Repayment Required

One appealing part of partnering with an angel investor is that there is no repayment required, unlike a business loan. Once you accept the money, the capital becomes yours to use for any purpose selected by you or your investor.

You’ll never have to repay a dime of the capital, as the investor is instead paid through your company’s revenue on a continuous basis.

The Flip-Side: What Else You Need to Know About Angel Investors

Depending on the agreement and your relationship, angel investors may not be quite so angelic.

There are some negatives to keep in mind as you search for financing.


Forfeiting Sole (or Shared) Company Ownership

As of now, you (or you and your business partners) own your company. If you opt to seek out or accept help from an angel investor, then everything changes. You and your business partners would no longer have sole ownership of the company.

Instead, the company would be partly owned by the investor as well. The exact percentage varies based on the amount the investor contributes.

If investors (or a group of investors) own the majority of your company, then they could even vote to remove you from your own company.


Lose Access to Profits Forever

Bringing on an angel investor can shake up your bottom line as well. When you accept capital from the investor, you will also lose access to the profits.

The more capital the investor provides, the more of your revenue they’ll have in the future. Unless you buy the investor out down the line, they’ll be entitled to this profit forever.


Angel Investors are a Short-Term Solution, But a Long-Term Expense

The magic number can be enticing, and difficult to refuse when you’re in the early stage of your business. But as you journey into the future, accepting this capital could cost you a significant share of your revenue.

In the short-term, you’ll receive money right away. But in the long term, an angel investor will cost your start-up dearly.


Well, What About Venture Capitalists Then?

If angel investors are out, what about venture capitalists?

Unfortunately, funding from a venture capitalist can be even more difficult to obtain, and cost even more in the long run.

In the grand scheme of things, venture capitalists operate in much the same way as angel investors. They’ll invest capital, receive equity in return, and generate a percentage of these profits.

But there are a few key differences.


Venture Capitalists Invest in Older, More Profitable Companies

Angel investors readily invest in younger companies, but venture capitalists aren’t so eager to do so. In fact, their investment criteria is quite different.

Rather than targeting younger companies without any capital, venture capitalists are primarily interested in funding lucrative companies with massive potential.

For this reason, the investment is usually much larger, too.

Larger Funding Amount (And Equity Share)

Venture capitalists skilled in identifying lucrative opportunities. When they do, they’re more likely to make a sizable investment with a huge ROI potential than to dip their toes in the water.

Angel investors tend to invest, on average, around $25K in new opportunities. For younger companies, this capital injection can be a crucial push along the road to success. But for more established or ambitious start-ups, it might not make the cut.

On the other hand, venture capitalists will contribute a far more significant amount of money, generally in the neighborhood of $1-5 million.

With this larger investment comes a larger share of start-up equity, and a lower potential for the innovators in the start-up to profit.


More Corporate Structure

Angel investors tend to exist as individuals, investing in opportunities they deem profitable. There is nobody else holding them accountable for these decisions, except a possible financial advisor.

Venture capitalists generally exist as corporate entities. With access to funds from multiple individuals, VCs allocate these funds across several promising start-ups. The number can vary by quite a bit, and the diversity of the industries can vary as well.

Some venture capitalists specialize in a certain industry, like social media, tech, or finance. Others choose a different strategy by investing in multiple industries to diversify the risk associated with these investments.


Do The Math: Business Loans Win Every Time

When you take out a business loan, you’re agreeing to repay the capital you take out, plus interest. But in the grand scheme of things, this cost is significantly lower than taking on an angel investor.

To start, you can maintain both control over both your company’s direction and your revenue. Your lender is just a financial resource; you’ll never submit to any specific direction or requests!

For example: say you choose to borrow $200,000, to be repaid over the course of three years. Three years from now, you’ll have repaid the loan in full. Then, you can utilize your revenue stream to grow your business even more.

At no point will you have to worry about forfeiting revenue, or taking direction from anybody else about the growth of your own company.

When it comes down to it, interest is a small price to pay for unrestricted access to your revenue, and control over your company.

Author, Matt Carrigan

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Matt Carrigan is the Content Writer/ He loves spending every day creating content to educate business owners across every industry about business growth strategies, and how they can access the funding they need!

Our First Blog Entry

June  22, 2019

Get Back to the Future with Revolutionary Construction Tech

New trends in construction technology are changing the way contractors approach building projects. According to industry predictions, the majority of building and construction processes will rely on automation by 2050 thanks to emerging innovations.

This isn’t science fiction. It’s the reality of where construction tech is headed, and it could have a big impact on how you plan, coordinate and build for your clients. Here’s how these new tools can streamline your business, lower costs and create a safer environment for workers on the job.


Virtual and Augmented Reality (On and Off Construction Sites)

What if you could look at a building site or finished project and plan for potential setbacks before beginning construction? You can with one of the most “sci-fi” of all emerging technologies in construction.

Virtual reality makes it possible to perform site walk-throughs with your team to evaluate areas for potential hazards. It can also take clients through a virtual model of a building to help them visualize how it will look once complete. Then, you can use these insights to better implement safety measures or tweak building plans.

Augmented reality (AR) may be even more useful, especially during construction. Instead of creating a completely virtual environment, AR overlays virtual elements on top of existing spaces or structures. Using AR, your team members can see how frameworks and components fit together in advance, which improves accuracy and efficiency. Complex building projects become easier with visual step-by-step instructions designed to help workers anticipate problems and troubleshoot onsite.


Drones to Map and Build

Drones have a certain futuristic appeal, but they’re also incredibly practical when it comes to construction. These remotely operated machines can scope out construction sites, collecting a significant amount of data at a fraction of the cost of using a human team.

To get the most from this new construction technology in 2019, you need to think big.

Sure, drones can take great aerial photos of where you’re going to build your next project, but they can also do detailed surveillance to create highly accurate maps. The data drones gather prepares you to meet onsite challenges that would otherwise take you by surprise and slow down the construction process.

As work progresses, you can perform fly-overs with drones to get up-to-the-minute progress reports. No more driving from site to site to see how workers are doing or dealing with calls from frustrated clients who want to know why you haven’t updated them. If something isn’t going according to plan, drone surveillance provides the information you need to make informed decisions about where to send more workers, or changing your overall approach.


Real-Time Collaboration in the Cloud

Cloud-based software is making its way into the construction industry and changing the way clients, project managers and employees communicate.

This digital construction technology allows all parties to share information in real time, an important feature when multiple teams are working together on a project, or you’re trying to oversee several sites at once. The data updates automatically any time changes are made, and all information shared in the cloud is accessible from any type of device.

This means you can update construction plans from the office, and every employee onsite will know immediately without you making any calls or driving out to the site yourself.

Cloud collaboration goes hand-in-hand with building information mapping (BIM). Although BIM isn’t a new concept in construction, technology is making it easier to perform and implement. Each letter of the acronym represents a component of the process, and all are critical to creating successful finished projects. Building design combines with all the information necessary to complete the project, and this data is then used to create an initial model.

BIM is a quick, efficient approach to design and analysis that results in actionable models and systems. Parties can collaborate via the cloud during and after the BIM process to execute plans onsite. Project managers get real-time insights into progress and can communicate easily with employees to facilitate effective implementation.


3D Printing for Buildings and Parts

Imagine finishing your construction plans and simply printing out everything you need instead of waiting for an order of parts and materials to arrive. It’s possible with innovations in 3D printing technology.

Buildings can now be designed and printed with all the necessary openings for wiring and plumbing, a process that allows some 3D-printed homes to be constructed in as little as 24 hours.

Although it’s probably not feasible to adopt this technology on a wide scale yet, especially for smaller construction businesses, you can still benefit from the lower costs 3D printing offers. When you need a specific part or a custom piece, you can create it on the spot using 3D printing with no delays or holdups. Projects progress faster, making for happier clients and a more lucrative business.


Wearable Tech

Connectivity between project managers and team members is especially important in construction environments, where communication is essential to safety and accuracy. Wearable technology, such as sensors with internal gyroscopes, make all workers easily visible and trackable, which allows for both monitoring work and responding quickly to emergencies. If workers slip or fall, help can be sent immediately upon receiving an alert from the sensor.


Other sensors are able to:

• Track biometrics and signal workers when they may be nearing exhaustion

• Sound alarms when workers get too close to ledges, moving machines or other hazards

• Collect important data to help project managers analyze potential problems at work sites

But wearables don’t stop with connected devices. Exoskeletons are being developed to help reduce the physical load involved in construction work. By providing supplemental strength, these futuristic devices may be able to prevent many of the common overuse injuries workers experience on the job.


Finance Your Investment in Digital Construction Technology

Adopting these construction tech trends can catapult your business into the future by giving you an impressive array of tools to improve how you approach projects at every stage. It’s an investment with the potential to pay for itself in cost savings realized during planning and building and a reduction in worker injury claims. But to get the benefits, you have to be able to afford the best tech for your business.

Equipment financing can provide access to the latest tech without straining your business budget. When you finance, the cost of expensive new tech is spread out in payments across months or years, making it possible to upgrade your construction tools and implement better processes right away. The option to finance a new model at the end of the terms means systems stay current and you stay ahead of the competition.

Author, Phil Rinaldi

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Phil is a guest author to contribute finance, marketing, and tech news. With a background in Business and Marketing, he provides insights into current trends, tech, and marketing strategies.

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