27. October 2017

By government definition, a small business is any business that is independent (not a subsidiary or having a parent company)that has less than 500 employees. 

These "Small Businesses" account for 99.9% of all USA businesses, are currently creating 62% of new jobs, make up 48% of employees, and 41% of the payroll in the USA. 

There are 29.6 million small businesses in the USA with 80% having no employees with roughly 400,000 new businesses being formed each month and also 390,000 closing each month.

So what we have learned is that 6 out of every 10 new jobs are from small businesses, 5 out of 10 employees are, and $4 out of every $10 is being pumped into the economy by small businesses.

Source: https://www.sba.gov/sites/default/files/Whats-New-w-Small-Business-2017.pdf

The other harsh reality is that 97.5% of new small business startups are failing. This usually means their owners have risked everything; personal savings, personal credit, and gone into debt trying to create something they believe in. This is also why Banks and other traditional lenders do not get involved as the risks of default are simply too high.

This leads to the other harsh statistic that 97% of small business loan applications are being declined. Lenders are looking for all the warning signs of a high risk of default and when they find even one they decline. 

Lenders are not in business to lose money for their investors so managing the default ratios in their loan portfolios becomes the primary concern. They have no concern of helping small businesses succeed, they simple do not want to lend to those that will fail.

Therefore as a small business owner if you want to receive traditional or bank lending you first have to make your business "bankable". 

The process of making your business bankable is clearly laid out for you step-by-step inside the Fundability.com business finance and credit educational system. The system is free. If you want to move your business from the 97% who get declined and into the 3% who get approved you will first need to place your business into the 3% Low Risk of Default category which is what Fundability.com teaches you how to do.

The upside of becoming bankable is that you give your business a far better chance of success.   

Build Business Credit, Business Loan Approvals, Pre-Qualify for Business Loans, Small Business Financing

26. October 2017

More often than not Venture Capital ruins more startups than it helps. First of all far too many startups spend a huge amount of time chasing Venture Capital that ends up going nowhere, And if they do land Venture Capital they end up with way more than they bargained for.

Venture Capital is interested in only one thing and that is huge returns. If they invest in your startup then the expectations become all about huge returns. What often happens is that they push development too fast and too far.  The result is either a not ready for market product or the need for even more capital which further dilutes your ownership until you are way down on the decision making totem pole.

I will use myself as an example.  I had a startup that was basically a great domain name with a good idea attached. I already partners (a whole other blog post) before we brought in Venture Capital. After Venture Capital I own 20% of the company I founded and created. Not good. I had lost control to make the important decisions and there were too many people now driving the bus.

Found a buyer for $10 million all cash. Great deal, right? Apparently not. Got out voted and told to go back and counter at $20 million. So I think you can guess the outcome of that story. A $2 million dollar windfall for a domain name and an idea blew away like so many fallen leaves. Moral to the story is Venture Capital does take a few to very high places, but most (probably 9 out of 10) just get blown away.

Do your homework very well, try not to get diluted too far, and don't give up control. If your business idea or plan is that great and has huge market potential then it is you who saw that and you who should drives the bus that gets you there. Venture Capitalists should be the passengers who buy the gas and help bring on other key passengers. That is what they are good at, not at driving or creating.

Alternative Business Financing, Small Business Financing

23. October 2017

And that number goes up when talking about small businesses with 10 or less employees. Small business owners have no insurance because it is their belief that there is not enough cash flow to support it and it is expensive.

First, let's review the cost of not having business insurance. No insurance means that you are putting your business at risk. Fire, flood, storm damage, theft, an accident, or a lawsuit anyone of which can wipe out your business and might do the same to your personal assets.

Fact, when it comes time to close on many types of business loans the lenders are going to require to see proof of insurance. They are usually all too happy to provide it, but it will be at double or triple the market rate. Better to get yours before they require it of you.

Many insurance companies have what they call "a business owner's policy". These policies provide basic property and accident coverage at a reasonable costs. These policies will normally satisfy your Landlord as well. You can usually lower the cost of this basic coverage by increasing the amount of your deductible. This costs you more if you need to make a claim, but can still keep you from being wiped out.

Be sure to look at what your policy covers, such as; fire, storms, casualty, theft, fraud, embezzlement, and injury claims. Floods are almost never covered under a basic business policy and normally require a rider.

The bottom line is that operating a business without having business insurance is a very bad idea and one that can damage you personally if you don't attend to it. 

Many of these policies have no deductible for liability actions with a standard starting point deductible of $250 for property damage. Again, most lenders, leasing companies, landlords, etc. will require proof of insurance before doing a deal with you.

Business Loan Approvals, Lender Compliance Items, Pre-Qualify for Business Loans, Small Business Financing

22. October 2017

When you’re just starting a business the more free education about how business financing works the chance you have of obtaining it. 

There are a lot of articles and reading material out there but very little is specific. That is where Fundability.com is very different. The business finance and credit education system goes into great detail about what is required to pre-qualify for each type of financing program. It details exactly what steps you and your business must take in order to make yourself pre-qualified, fundable, and bankable.

The goal of the system is stated as "Never Be Declined Again". The methods to that goal are showing you how to build and optimize business and personal credit, letting you see the approval criteria of more the 4,000 lenders and 3,000 vendor lines of credit, and providing step-by-step instructions with a virtual coach on each step telling what to do, how to do it, and why.

The Fundability System takes all the guess work out of business financing and provides you with a vast amount of free educational material. 

When your business is just starting out, the worst thing you can do is to apply at multiple lenders and get turned down because you had no clue what they required for approval. The problem is that once you get turned down three or four times now even those lenders who would have approved you will now not. The reason there are all those inquiries in front of them.

What business owners don't realize is that business credit doesn't work like personal credit. With personal credit everyone can see within a few days if you got approved or not. If you got approved that tradeline shows up on your reports within a week or so. With business credit the tradeline will not show up on your business reports until you use it. Therefore lenders do not know if you got approved for those other 3 or 4 inquiries and if you are just sitting on multiple approvals. 

Think of it this way. If you asked lender number 5 for a $100,000 loan. Lender 5 assumes that you also asked lenders 1, 2, 3, and 4 for the same thing. They can think that all those lenders approved you and you are sitting on $400,000 in approvals in front of theirs. So they decline you. But if they were Lender number 1 you would have been approved for the $100,000 you needed. And all because you applied before you educated yourself and before you knew that you were pre-qualified.

Go to Fundability.com and educate yourself first, then apply.

Small Business Financing

20. October 2017

It is staggering to think that less than thirty out of every one thousand businesses is able to obtain the financing they need from a bank. So unless you know exactly how to prepare and you work to pre-qualify your business before you apply you have about a 3 in one hundred chance of being approved. Wow!

What can you do about it? The best thing you can do is to increase your odds of being approved for any type of financing; bank, traditional lenders, alternative financing, crowd funding, etc.. You do that by knowing exactly what is required to become pre-qualified, fundable, and bankable.

Pre-qualified is simply knowing that yoiu are ready to apply for one or more specific business finance programs.  Fundable is knowing that you meet the general requirements of a large number and type of lenders. Bankable means that you have gone the extra mile to make sure all Lender Compliance items have been completed, you have built and optimized your business credit scores, that you have optimized the personal FICO 8 scores of the business owners, and you have made sure your business has a bank rating of a low 5 or above.

Having your business become bankable before you apply for any type of business financing will help insure you hear "Approved" rather than "Declined". Doing nothing put just applying will almost certainly place you in the 97% who are not getting approved now.

Becoming bankable have many other benefits. Vendors will offer you better terms and without personal guarantees. Landlords may give you lower rates and leases with signing personally. Business financing offers will come in the mail for all types of programs. You may beat out a competitor for that project or contract because your business is viewing as more credible or stable.

Your business becoming bankable is also something that can increase the value of your business if and when you sell. It is also transferrable to the new business owners making your business much more attractive than others the buyers may be considering.

The bottom line is it you want to move your business into the 3% rather than the 97% you will need to do the work to become bankable.  

Build Business Credit, Business Credit Scores, Lender Compliance Items, Pre-Qualify for Business Loans