How to raise money for a new business?

So, what do you do when you have an amazing business idea, but no money to fund it?

Well, unless your uncle is someone like Warren Buffet then you’re going to have to figure out how to raise capital. 

And of course, raising money is one of the biggest challenges any new or established entrepreneur may face. 

But spoiler alert: while raising money may seem difficult, there are more ways than ever before to get funding for a business, and getting capital is a lot easier than you may think. 

So in this post, we’re going to give you 12 of the biggest ways to raise money for a new business. Keep reading! 

Now before we dive in, we just have to mention that this is not direct financial advice.

But if you read until the end, you may find some great ways to raise money for a new business like yours. 

12 Ways to Raise Money for a New Business

1. Small Business Grants

We love grants because it’s one of the few ways to raise money completely for free.

You don’t have to pay back a bank, a private investor, and you don’t even have to pay back your mama. 

Now let us briefly define what a small business grant is. It is simply a sum of money that is given for a particular purpose. 

The two biggest places to get grants are from government agencies or organizations.

Typically, these organizations consist of nonprofits and very large corporations. 

For example, many people may not know, but last year Facebook provided $100M in cash grants and ad credits to help small businesses across 30 countries.

They dedicated a percentage of those cash grants to minority-owned businesses that took the hardest hit by the virus. 

To be considered for the Facebook grant, all you had to do is:

1. Go to the Facebook grant website.
2. Complete a digital application.
3. Upload documents (which acts as proof for your application).

In fact, that is the same process for most grants.

One important thing to note is that local governments grants and niche organization grants are generally less competitive than state and federal grants. 

Check out this list of small business grants post next to see more places you can apply for grants.

However, you should know that many organizations and governments have a cap on how much money is given as a grant either on a total or annual basis.

So it’s important to remember that you are not guaranteed to get one.

Now before we go on to the next one on the way to raise money for a new business, we’re curious, have you ever received a grant or applied to get one? 

One of the most frustrating things about applying for grants is that it can take weeks or months before you get any correspondence.

That’s why the next option on our list is business credit cards. 

2. Business Card Credits

Now we know this one may seem obvious, but before you skip through this, just hear us out on a few points. 

The reason why business credit cards as an option is because you can get approved very quickly.

Sometimes within the same day, as long as you have good personal credit as well. And sometimes speed is important.

When you have a great idea, you want to start working on it immediately, especially while you are motivated and have momentum on your side. 

On top of that, if you delay getting started for too long then a competitor or someone else may beat you to the idea. 

Now, here are some of the major pros of using business credit cards. So cards like Chase Ink may have special introductory benefits such as: 

• 0% interests for 12 months
• Earn cashback on the first $25,000 spent on certain items
• Earn cashback when you spend a certain amount 
• Redemption rewards
• Fraud protection

Those are the things that you get with most credit cards…

…and are really important when you are starting a new business and building new relationships with people that you may not fully know yet. 

Of course, there are some downsides of business credit cards and they can be risky, especially for new business owners because they have very high-interest rates. 

So, you’ll want to make sure that you are making very smart business investment decisions and have the means to pay off the credit when the time comes.

We’ve recently published a post on the best credit cards for bad credit, be sure to read it next.

3. Use Crowdfunding

If you have a strong conviction about your idea and it’s something that’s fresh, new and maybe even a little weird then use the power of the internet to raise the money you need. 

Crowdfunding sites like GoFundME have helped thousands of entrepreneurs raise money, get pre-sales and even market test their idea. 

Believe it or not, there are many from all over the world who are willing to donate and support your business idea.

You just need to put it out there and make them a sweet offer. 

4. Incubators and Accelerator

Incubators and accelerators give startup companies access to many resources that help them get off the ground.

Incubators typically give entrepreneurs physical space, business support, training, and mentoring. 

This, of course, is none of those resources that we just named are direct cash, but usually, these are some things that an entrepreneur may spend money on anyway.

For example, a good incubator may have an in-house attorney that can help you with your terms of service. 

However, if you are looking for cash, you want to join an accelerator.

Typically, accelerators help companies with seed funding and provide additional resources in exchange for equity.

It’s a bigger commitment for both the entrepreneur and the organization. 

5. Angel Investors

These types of investors provide capital in the form of a loan or in exchange for equity in your business. 

Many technology companies were funded by angel investors, companies such as Google and Yahoo.

The thing we have noticed about angel investors is that they are rare to come by and are usually found through networking. 

On top of that, many angel investors have an unorthodox approach to have they choose their investments.

So, getting an angel goes beyond just having a good business model.

You need some luck too. That being said, if you have a really innovative idea and you have a great business network then this can be a great route for you to take. 

6. Bank Loans

Next on our list on how to raise money for a new business are bank loans.

Now the reason why we like bank loans is because the process is really straightforward.

Unlike angel investing, grants, or crowdfunding, as long as you “fit” certain criteria you have a very high chance of securing a business loan. 

Now we have a lot of great posts that expand on how to get business loans, grants, and more.

However, if you don’t have an established track record then getting business loans may be a little bit difficult which is why we have the next one on our list.

7. HELOC

This tip is exclusive to homeowners so we will be brief. HELOC stands for a Home Equity Line Of Credit.

Essentially, you are able to take equity out of home, convert it into cash, and use it on anything you need. 

Typically, the bank is the one who will give you a HELOC which is basically a loan against your home equity.

And the great news is that HELOCs have a super low-interest rate.

Now, we know taking equity out of your home may seem risky to some people…

…but if you have enough conviction and confidence around your business then at the end of the day, your home is a liability and your business can be the asset that pays it off. 

Let’s move on to the eighth way to get funding for a business. 

8. Bootstrapping

We know some of you don’t want to hear it, but here it is.

So what is bootstrapping? It’s basically when you use your own money and the profits from your business to grow instead of seeking outside capital. 

We have personally bootstrapped two services-based companies that have gone on to make millions, so we definitely recommend it.

But it does come with some drawbacks. 

One of the major drawbacks is speed. You likely will run out of money and you likely will need to be patient until you have enough cash to grow. 

For example, if you spend $1,000 on an advertising campaign and you make $3,000 then you have a 3x ROAS or return on ad spend.

So you net $2,000 and things are looking great. You’re ready to blow this up…

…but since you’re bootstrapped, you only have $2,000 that you can spend for next month, and at max that would be a 3x return of $6,000.

Whereas, if you had a $1M ad budget, you can profit $2M on a 3x ROAS. 

Hopefully, we didn’t lose you there with all that mat. The bottom line is that when you are bootstrapping you must be patient and disciplined.

But eventually, you’ll have the capital that you need and overwhelming confidence in what you invest in because you have had a lot of small wins throughout the way.  

If you want to learn more about bootstrapping, check out our post on how to start a business without money. 

9. Friends & Family

Now if you have exhausted your resources or just have friends and family who are enthusiastic about being a part of your new company, then of course that is an option for you. 

In fact, we have a friend who raised about $50,000 to start a trampoline park and it was just what he needed to take his business to the next level.

And everyone came out happy with their investment.

10. Product Pre-sales

The first company that comes to mind when we think about this is Tesla. 

Before any of their cars hit the market, they put together a solid prototype, a marketing campaign, and started taking pre-orders.

Without a doubt, it helped Tesla to raise the capital needed for production and staff. 

Also, if you’re a gamer, you’ve probably noticed some video game companies also take pre-orders.

This in turn helps them to meet the demand of the game and access overall production needs. 

So take a page out of their book and offer your customers an option to pre-order your product to raise capital, while also gaining some market insights. 

Now when you have a more mature and established company, a great way to raise money is with the next option. 

11. Purchase Order Financing

So if you have a business and you have a large volume of product orders coming in…

…but not enough cash to cover the production of products until the payment from the customer comes through. 

This is how it works. A purchase order financing company will pay your supplier directly the cost to produce the products. 

When products are shipped to your customers, your business will receive payment from the customers.

And that money is used to pay back the purchase order financing company and they of course make interest on the costs of the products until you pay them back. 

A purchase order financing company may not be the most affordable way to raise money, but it’s a great option for those who can’t get financing elsewhere.

Now on to our last option on how to raise money for a new business.

12. Strategic Partners

A great business partner could arrive in many different forms. 

It can come from a supplier who is willing to give you a credit on your products until you are able to pay them back.

Or it can come from a distributor who really believes in your operating abilities. 

It can even come from a customer who believes so much in your mission and values that they are willing to partner with you to grow your business even faster. 

One important thing to note is a strategic partner is not necessarily a financial partner.

A strategic partner is someone who can help lift some of the financial burdens that a business may have by providing it for free or at discounted rates. 

For example, if your business needs a warehouse to operate from then a strategic partner could be someone who is willing to share a warehouse with you in exchange from some equity.

Now instead of you having to raise money and spend it on a warehouse, you have it for free with an experienced partner too. 

Strategic partners can help you get into a great place financially while in the startup phase. 

Takeaways

So there you have it! Now before you go out and use all these tips, let us just say this. 

There are millions of successful entrepreneurs, including ourselves, who never have to raise money.

And when you raise money, it’s really like a loan and you have a responsibility to pay the money back. 

And sometimes if you fail to return the money, the investors can claim your business or any other collateral that you put up. 

And when you have an investor or bank to answer to then that can suck some of the enjoyment out of building your business.

Of course, not always, especially if you have nice investors, but you could also have very mean or prudent investors as well. 

So keep that in mind when you’re considering raising money. 

Well if you need more financial advice, then check out our CFO services or investment advisory services today.

The post 12 Ways on How to Raise Money for a New Business (Grants, Loans & More) appeared first on Small Business Accounting & Finance Blog.

Do you need a loan to get your business up and running?

You’re not alone. About 43% of small businesses applied for business loans last year.

And of those, 66% were actually approved.

So in today’s post, we will break down the steps necessary to increase your chances of getting approved for business loans…

…and start that business you’ve been dreaming about.

Let’s get started!

5 Steps On How to Get Approved in Applying for Business Loans

Step 1: Evaluate your credit

At the end of the day, lenders will make the decision to loan, or not to loan, to you based on your credit profile.

As we’re sure most of you know, there’s personal credit and business credit.

But when just starting out, you have little to no business credit.

With that in mind, lenders will look at your personal credit and specifically your:

• outstanding loans, and
• credit report.

In conjunction with your personal credit, they will also review the financial standing of your business including:

• financial statements,
• business assets, and
• how long the business has been operating.

Now, we know what you might be thinking, “But I am just starting out and don’t have any of these things, plus I don’t have perfect credit either.”

Don’t worry, we have you covered. Starting first with your credit.

The key here is moving away from personal credit and starting to develop your business credit.

Business credit is very similar to personal credit. Business credit is the ability of a business to qualify for financing.

To build your business credit, the very first thing you need to do is register your business with the state.

We know a lot of people start as sole proprietors or general partnerships, in which case they are not considered separate from their business.

And therefore, no business credit can be established.

Instead, in order to build your business credit and increase your chances of getting business loans, you need to file the formal paperwork to legally establish your business.

This can be in the form of incorporating or forming an LLC.

Speaking of forming an LLC, we have a post that tackles the various LLC costs for you to establish your own LLC. So be sure to read it next.

Once you do this, you need to get an EIN or employer identification number.

This is 100% free on irs.gov.

Your business EIN acts like the SSN for your business.

While you are at it, you should apply for a Duns & Bradstreet or DUNS number and you can do so online at dnb.com

Duns and Bradstreet is one of the top business bureaus, and getting a DUNS number is critical in establishing and building your business credit.

Once you register your business and have an EIN, you can now open a business checking account.

This will help you further in establishing business credit by creating a clear separation between your personal and business transactions.

Check out our post that lists down the best business checking accounts that you can consider applying to.

A lot of times lenders request to see 3 or 6 months of bank statements as a way to determine how funded your business is at any given time.

So once your business account is open, start using it for all of your business transactions.

There should always be a positive balance and some activity every month.

Also, make sure to set up a business phone number, business email address, and professional website that is separate from your personal information.

Lenders will perform due diligence to see how reputable your business is.

If you have these things already established, you’re well on your way.

You’d be surprised to learn how many businesses actually don’t have an EIN, bank account, or even a professional email address.

Remember, we’re trying to establish that you are a separate entity from your business and that your business is legitimate on paper.

Step 2: Make sure that you have your financial statements in order.

The most common financial statements are going to be your balance sheet, cash flow, and profit and loss statement.

Lenders are going to analyze these statements in detail, so you want to make sure that your numbers are correct and complete.

Some lenders would prefer that your financial statements are audited by a CPA, but this can be costly for newer businesses.

An alternative is to instead have your financial statements ‘reviewed’ by a CPA which is a more affordable option.

If you want this affordable option, check out our accounting services here.

But if you don’t have financial statements, or have a limited operating history, you’ll need to develop financial projections.

Financial projections are a forecast of future revenues and expenses.

Typically, the projection will take into account external market factors. So, you’ll need to have a good understanding of your business and industry.

You should develop both short and long-term projections.

Your short-term projections should focus on your first year of business, while your long-term projections should account for the next 3 to five years of business.

Also, be sure to include charts and graphs to better illustrate your financial projections.

If your numbers are easy to understand or follow, the better chance you have in obtaining business loans.

You could hire a professional to do this for you, or there are plenty of free online templates to help you prepare projections.

Step 3: Determine how much funding you need to borrow and how you expect to use the funds.

Every lender will want to know how much you are seeking to borrow, and how you intend to spend the funds.

Is it for inventory? Hiring employees? Marketing efforts? Research and development?

Make sure to do thorough research in determining how big of a loan you need.

Requesting too little could lead to financial issues in the future, like running out of cash before you could complete your initiative.

Or, requesting too much could make the lender question your business altogether, and if you did proper research on your industry.

Creating your financial projections or even a budget will help you get clear on how much you’ll need.

Step 4: Assessing the value of your collateral.

Business collaterals are assets that can be seized and sold by the lender if you don’t make your payments.

And at the end of the day, a lender wants to make sure that they can get their money back.

So if you have collateral to show, you are way more likely to get approved for business loans.

Collateral can be equipment, inventory, real estate among other things.

Some lenders may not require collateral but may want a personal–which essentially puts your personal assets and credit score on the hook in case you default on the loan.

If you don’t have any collateral, unsecured business loans may be a better option.

Step 5: Research loan types and pick the right lender.

The most common types of business loans are:

• SBA loans – which is a government agency that partners with banks to guarantee a portion of your business loan.
• Bank loans – these are offered by banking institutions with repayment periods ranging from 6 months to 3 years or more.
• Equipment loans – are loans solely for equipment or machinery. These business loans use the equipment purchased itself as collateral. Similar to a car loan. These are available at some banks.
• Business line of credit – is similar to a regular credit card. As you repay the loan, the funds become available again to borrow.
• Microloans – are for loans generally up to $50,000. These are typically not offered at banks but instead by non-profit organizations or alternative lenders

Once you figure out which type of business loan is best for you, research lenders.

There are so many lenders (not just large banking institutions) willing to lend to small businesses, and the majority of them can be found easily online.

Here are some things to consider when deciding on a lender:

• Interest rates
• How much collateral, if any, do you have to put up for the loan?
• How long do you have to pay back the loan?
• Are there any additional fees?
• Are there any penalties?
• How long will it take for you to get funded?

Some general guidelines are:

a. Get business loans from the bank if:

• You’re not a new business and have been in business for at least 2 years.
• You don’t need cash right away.
• You have good credit.

b. Get a business loan from an online lender if:

• You’re a new business.
• You don’t have collateral.
• You need funding quickly.

c. Get a business loan from a microlender if:

• You’re a new business.
• You have bad or no credit history.
• You can’t get a traditional loan.

Once you’re clear on the type of loan and lender that is best for you, apply for the loan as soon as possible.

Applying for business loans and getting approval can sometimes take months.

Every loan and lender is different but in general, if you complete the first 4 steps mentioned in this post, you are already 90% on your way to getting approved for a business loan.

Is a Business Loan What You Need?

There’s something else we want you to think about is assessing if a business loan is what you need right now.

Here are some good reasons to get a business loan:

1. To grow your business.

Using a loan to expand your business is helpful in the long run since ultimately, you would be increasing your sales and cash flow by having a bigger business.

2. To buy long-term business assets.

Tying up cash to buy equipment or real estate may leave you in a cash deficit.

But if you’re using a loan to buy these assets, it can actually be a better setup for you as long as the assets are a good investment.

3. To temporarily improve cash flow.

If you’re in a seasonal business with predictable declines, then a line of credit could certainly help you meet your working capital needs.

It may not be a good idea to get a business loan if:

1. Your business has constant cash flow problems.

A business loan will not improve a continual decline in business. You would need to re-evaluate what your business is doing wrong from an operational standpoint.

2. You already maxed out your lines of credit.

Getting more loans will only negatively impact your business credit, and you’re less likely to get approved anyway.

It’s better to focus on paying down your existing debt before taking on more.

3. You can’t find any loan terms that suit your needs.

There’s no need to hastily getting into any financial trouble over loan terms that don’t serve you.

Take a pause, work on your credits and re-evaluate your loan option in a few months.

Now if you need more guidance for your specific financial situation, get our financial advisory services today!

The post Business Loans | How to Get Approved in 5 Simple Steps! appeared first on Small Business Accounting & Finance Blog.

Opening a business checking account at the same place where you bank personally may not be the best option for your business.

So, what are the best business checking accounts for small businesses? Let’s find out.

Today, we’re going to save you from spending unnecessary time researching the best business checking accounts.

Because we’ve compiled a checking account for literally every type of business here – new business owners, seasoned business owners, those with bad credit, you name it, we’ll be discussing it.

In fact, we’ll be breaking our list into categories so you can find the perfect business checking account for your needs and walk through the pros and cons of each.

Ready to get started? Let’s dive in!

How To Compare Business Checking Accounts

So, before we look at the top checking accounts, let us first tell you what you should look for in a small business checking account.

Some of these will be common and others may not have thought about. The key here is to look out for your specific needs.

Consider the following account characteristics before choosing your business checking or savings account:

• Sign-up Bonuses: Some banks have one-time cash bonuses you can qualify for when you open a business checking or savings account.
• High Transaction Limits: A limit on the number of transactions you can perform
• Excess Transaction Fees: Fee for transactions made above the monthly max
• Transfer Limits: A limit on the number of transfers that can be made out of the account per day or per-transfer
• Wire Limits and Cost: A limit on the number of wire transfers that can be made per day or per wire and the cost to do so.
• Daily Balance Requirements: A minimum balance requirement before fees are charged.
• Online & Mobile Banking: The availability and quality of the bank’s online and mobile platforms.
• ATM Access: The availability of ATMs you can access and the fees (if any to do so).
• Interest: Interest provided for balances within the account
• Nearby Branches: Accessibility to walk-in to a branch if needed

Now, let’s get into the categories.

Best Business Checking Accounts For Startups

Our top picks are NBKC, BlueVine, and Mercury business checking accounts.

Each of these banks has its own pros and cons that we will talk about in a second, but we like these three for new and startup businesses because they:

• are low cost and low maintenance with no monthly fees,
• with no minimum opening deposit,
• with no minimum balance requirements, and
• are online banks.

1. NBKC Business Checking

So, the NBKC business checking account is a checking account that packs a ton of pros for the great price of $0.

As mentioned above, there are no monthly account fees, no minimum balance requirement, and no opening deposit requirement.

Additionally, there are zero incidental fees which mean zero overdraft fees, zero stop payment fees, and zero fees for incoming wires.

But with all the mentioned zeros, they have unlimited transactions.

So, you can make as many transactions as you would like to without incurring a fee and they reimburse you up to $12 per month in ATM fees.

Now the NBKC checking account is great but not perfect, so here are the cons of the NBKC checking account?

They do not have branches outside of Kansas and their international wire transfer fees are pretty high.

But the biggest con in our opinion is that they do not integrate with third-party business tools such as Stripe or QuickBooks.

Even so, NBKC business checking is a great option for those who prioritize low fees over integrations.

2. BlueVine Business Checking

BlueVine business checking is a special and rare case in this category for two reasons.

Yes, they offer no minimum deposit or balance, no monthly service fees, no fees for non-sufficient funds, and unlimited transactions.

But BlueVine shines because they offer %1 interest on account balances up to 100,000.

The ability to earn interest on your balance is a rarity for this type of business checking account.

Do you know what’s also rare for online banks? The ability to deposit cash, which you can do with the BlueVine checking account.

So, where does the BlueVine business checking account lack?

Well, BlueVine is an online-only business checking account.

This means you won’t have access to any physical branches, and while they do offer the ability to deposit cash, there is a $4.95 fee to do so.

The biggest con we see with BlueVine is that there can only be one user on the account and only one debit card can be issued.

Which means if you are in a partnership, this may be an issue for you.

With that said, the BlueVine business checking account is great for those who don’t need multiple cards, might need to deposit cash, and would like to earn interest on their account balance.

At the moment, BlueVine has paused taking applications for their business checking account due to the high demand, but you can sign up for the waitlist on their site.

3. Mercury Business Checking Account

The Mercury checking account is another online-only checking account with:

• no monthly fees,
• no transaction fees, or
• minimum opening deposit, and
• unlimited transaction.

But, it has additional benefits as well.

Mercury provides both a checking and savings account in one which allows you to send and receive online payments, create virtual debit cards, and customize your banking.

They also offer third party integrations and multiple debit cards unlike the previously mentioned options.

So, what are the cons of the Mercury business checking account?

Well, sole proprietors are not eligible for the account and there is no ability to deposit cash.

If you are not a sole proprietor and likely don’t need to deposit cash, the Mercury business checking account is a standout checking account for you.

Best Business Checking Accounts For Bad Credit

Our top picks are RTBC, BBVA, and Woodforest National Bank.

If you have bad credit, you may have found that getting a business checking account can be difficult.

While it may be difficult, we’re here to tell you that it is not impossible. Especially with the options that we’re going to share with you today.

For those with bad credit, your best bet at a business checking account is to look for what are called “second chance banks.”

Second chance banks typically don’t use ChexSystems which is a reporting agency used to track checking and savings account usage in the United States.

If you’ve ever opened a bank account in the US, you have a ChexSystems report.

Nonetheless, let’s get into the best banks you can try that without a ChexSystems report!

1. Radius Tailored Business Checking

The Raduis Tailored Business Checking account is an online account that offers:

• unlimited monthly transactions,
• unlimited free cash deposits, and
• unlimited fee reimbursement at ATMs.

In addition, you can also earn unlimited 1% cashback on debit card purchases and unlimited 1.5% cashback on categories that change every so often.

This is a pretty great offering, though the Radius Tailored business checking does have its own shortcomings.

There is a monthly fee of $10 for accounts under an average monthly balance of $5,000, fees for wiring money, and there is a $25 incidental fee for things such as:

• stop payments, and
• non-sufficient funds.

2. BBVA Compass ClearConnect for Business Checking

The BBVA Compass ClearConnect for business checking offers free online banking that has:

• no monthly fee if you opt-in for electronic statements,
• unlimited free-free digital transactions, and
• no fees to use the ATM at participating 7-Elevens.

Note that with this account, there is a minimum opening deposit for this account of $100.

Additionally, an in-branch withdrawal limit of 5 before it is $1 per transaction, and a cash deposit limit of $5,000 per month.

Also, only sole proprietors can apply online. All other business types will have to go to a branch to open an account.

If none of the above work for you, you can also try credit unions near you or the following second chance bank offerings:

1. Woodforest National Bank’s Second Chance Business Checking
2. NorthOne’s Business Banking

If you want to know how to get business credit quick, then be sure to read this post next.

Best Business Checking Accounts For Established Businesses

Our top pick for established businesses – the Chase Bank.

Larger, more established businesses tend to need a few more options such as:

• additional accounts,
• higher limits on wires and cash deposits when it comes to their business checking needs, and
• typically have the cash on hand to waive any monthly fees that come with those extra perks.

1. Chase Business Complete Banking Account

The Chase business complete banking account boasts:

• same day deposits,
• integrated credit card processing,
• unlimited electronic deposits,
• no minimum opening deposits,
• a $300 sign-up bonus with qualifying transactions, and
• over 4,700 branches ot choose from.

There is a $15 monthly service fee with several ways to waive it such as a:

• $2,000 minimum daily balance,
• $5,000 limit on cash deposits per month, and
• a monthly limit of 20 on physical transactions is allowed per month.

Overall, this account is best for growing businesses who do not need to make large and frequent monthly teller deposits.

Now those are our top picks for business checking accounts.

How to Open a Business Checking Account

Whether you decide to apply online or in-person, here are the most common items needed to open an account:

• Business legal name as it appears on your business license
• Business Employee Identification Number (EIN)
• Business address, business phone number, and business email.
• Government-issued ID for all owners, such as a driver’s license or passport
• Ownership Documents such as Partnership Agreement (Partnerships), Articles of Organization (for LLCs), or Articles of Incorporation (for corporations)

Well, there you have it, the best business checking accounts!

If you’re interested in applying for the best business credit cards too, then here’s our post for that.

We can also help you evaluate your financial situation and make the most of your finances with our financial advisory services. Go ahead and check it out today!

The post Best Business Checking Accounts For Startups & Bad Credit: High Approval Online Bank Account appeared first on Small Business Accounting & Finance Blog.

Inflation Rises to 5% in May

There are a lot of worries and predictions coming up about inflation.

And what we have noticed is that there’s a lot of advice out there on how to handle inflation personally.

But, we haven’t seen many people talk about how to handle inflation as a business owner.

Of course, inflation can absolutely destroy a business, reduce cash flow, and stagnant growth. Which is the main reason you see investors starting to worry and pull back in the stock market.

So in this post, we want to dive straight into how businesses can handle inflation in 2021, 2022, and pretty much at any time. Keep reading!

Let’s not waste any time and jump straight into how to handle inflation as a business owner.

5 Ways on How to Handle Inflation as a Business Owner

Tip #1: Beat the inflation rate

So let’s do some math together. Let’s look at a pretty bad scenario where there is an annual 12% inflation rate.

Now we know, that’s pretty aggressive, but let’s go there for a second.

So we have an annual inflation rate of 12%, which month over month is a 1% inflation rate. So, let’s say your business made $10,000 in August.

Well because of the 1% inflation rate, that $10,000 is actually now worth $9,900.

This means your purchasing power decreased by $100. So, if you want to maintain your purchasing power then you need to at least $10,102 to beat the inflation rate.

Simply beating the inflation rate will help your business handle inflation a lot easier.

So as a business owner, especially right now in 2021, you need to be prudent with keeping up with inflation.

And running your own numbers to see how your business and employees may be losing purchasing power is a good way to start.

There is a website called usinflationcalculator.com that we use to keep track of what is happening

So of course, your next question is probably…

“If I make more money then yes I can beat the inflation rate, but how do I do that?”

Well, one of the obvious answers is to increase prices as inflation goes up.

But you want to do this strategically because you don’t want to confuse your customers and employees with prices rising every month.

Also, you can simply just try to push a little bit harder and get more organic sales so you are beating the inflation rate.

Optional Tip: Consider business loans

In 2020, corporations took out a record amount of loans to help their companies maintain with the help of the federal government facilities.

And it was eye-opening to us because in our opinion it showed how important corporations are to the fed and they definitely don’t want to see them go out of business.

But, as we know, as a small business owner debt can be scary because the future isn’t always certain for us like it may be for corporations.

However, when you look at debt we know that as inflation goes up, debt becomes cheaper.

So if you have a business that is already established. we repeat it is established, and you have positive cash flows that you can predict with relatively strong confidence.

Then you may want to consider taking a business loan to make more business investment because you likely can pay it off as inflation rises.

Tip #2. Master cash flow

So one great thing about business is that you likely have some recurring expenses which force you NOT to hold on to cash and continue to be productive.

But now is the time to get even more disciplined when it comes to managing your cash flow.

And one of the BEST things you can do is make sure your cash flow is as predictable as possible.

This means you can reasonably estimate what you are going to make next month as revenue, and what you are going to spend as far as expenses go.

And with those two things, you are able to get to an estimated profit.

Based on the level of profits, you can decide or put this away, as an emergency fund for your business. Or, are you going to reinvest these profits back into the business?

Either way, when you are able to anticipate your cash flow then you can start planning now on what to do with the cash.

Tip #3. Lock in prices now

This one goes along with our second point of mastering cash flow.

So what you want to do is lock in prices now for goods and services that you know you will need in the long term.

Now, this tip will likely come easier for experienced business owners because they know what they spend money on every year.

But for new businesses, you need to think really hard about what it is that your business needs.

And if you discover that it’s a long-term need after testing of course, then try to lock in a long-term rate.

Most vendors and online SaaS companies prefer you to do an annual contract because that also gives them predictable cash flow.

So do some digging, thinking, and research to figure out what prices you need to lock-in.

Tip #4: Invest in business assets

So remember when inflation goes up, so does the price of goods. So when that goes up, you will have to pay a lot more money for it.

So if there is a business asset that you need right now, something that you know you’ll need for sure, let’s say you run a manufacturing plant and you need new equipment.

Well, if you anticipate the cost of that equipment going up due to inflation and you need it for your business, making the investment makes sense.

Because in the worst-case scenario, if your business does fail then at least you have an asset that you can potentially sell at a higher price.

Plus depreciation benefits, but we’ll save that for another time.

The point is to invest in business assets that could end up appreciating in value as inflation rises.

You could also invest in a rental property, a piece of real estate in a great area that your business can operate in and own. And, as inflation increases the price of your property can go up as well.

Or maybe you invest in a business asset like a website, or NFT, or social media presence. All of which you could sell later on if you needed to.

Tip #5: Look at accepting other forms of currency

Cryptocurrencies like bitcoin are becoming more popular and many people believe that they will hold their value if the inflation of cash goes out of control.

So if you’re in the inflation camp then maybe you want to get a jump and start researching how to accept other forms of currency.

Now we’re not saying that you actually need to set this up now, although some people are like this website here from Cardone have already started accepting bitcoin.

Of course, you heard of companies like Tesla also accepting bitcoin. Although they recently pulled that back.

The point is, they’ve started researching it, and you can do the same.

Companies like PayPal are also starting to accept cryptocurrency. Plus, we’re sure other big payment processors will join the party as well.

Wrapping Up

So there goes the top 5 ways on how to handle inflation as a business owner.

And if you want more advice for your specific financial situation, then be sure to check out our financial advisory services here.

Or, schedule a meeting with us today!

The post 5 Ways to Handle Inflation as a Business Owner in 2021 appeared first on Small Business Accounting & Finance Blog.

Today’s post is all about crypto!

Now we’re pretty sure you’ve heard of cryptocurrency in the news, social media, or just talking with friends and family.

But, do you understand it?

Well if you’ve done any research on it, you may have found yourself even more confused.

It’s not exactly an easy topic to understand.

But don’t worry, we’ve done all of the research for you.

And this post will help you understand what is cryptocurrency, how it works, the future of crypto, and even if it’s a good investment or not.

So let’s dive in!

What is Cryptocurrency?

Simply put, cryptocurrency or crypto is a digital currency.

Digital currencies are only available in electronic form. Opposed to physical currency, like the dollar bill.

Digital currencies work like physical currencies in the sense that you can use them to buy goods and services from vendors who accept digital currencies.

But how does cryptocurrency really work?

What makes it valuable?

To understand this, you need to understand what money is.

Money is a medium of exchange.

Instead of trading bread for butter, money is used to represent the value of goods and services.

In the past, gold and tobacco were used as a medium of exchange for goods and services.

But since that wasn’t the most efficient way to exchange goods and services, the government adopted a new form of money which we know today as the US dollar.

Prior to 1971, the US dollar was backed by gold. Where each dollar had a value directly linked to the asset gold.

Today, the US dollar is backed by the government. Meaning by “full faith and credit”, it ACTS as legal tender for goods and services.

The term “full faith and credit” were the exact words used in the 1971 bill that did away with the US dollar being backed by gold.

Hmm, full faith and credit? Isn’t credit debt?

Yes. It is.

Notice on the top of any bill, it says “Federal Reserve Note”. A note is a promise to pay a debt.

When you accept a dollar bill, the US government is in debt to you in actually having something of value to back that dollar bill or justify its value of one dollar.

Through the centralized banking system, the dollar bills going around only represent legal tender.

Not actual lawful money. Lawful money is money backed by gold, gold itself, silver, treasury notes, and bonds.

So in actuality, the US dollar is not backed by anything besides all of our trust and faith that we put in the US government.

Difference Between Cryptocurrency and USD

Cryptocurrency operates in a decentralized system. It is not backed by the bank or the government.

There is not a banking system that supplies, transfers, or holds the money.

In this way, no entity regulates or controls cryptocurrency.

Instead, it is a currency in which transactions are verified and records maintained by a decentralized system using cryptography or digital code, rather than by a centralized authority.

Cryptography is a method of protecting information through the use of codes. 

This is so that only those for whom the information is intended can read and process it.

How Cryptocurrency Works

Let us illustrate this for you.

Let’s say you go to lunch with your friend, Lee.

Lee pays for lunch but since Lee always pays, you insist on sending him your share using cryptocurrency.

Using Bitcoin, for example, you initiate a transaction by sending Lee 3 bitcoins.

In your transaction, you make sure to send the bitcoins to Lee’s wallet address.

Every bitcoin user has a public wallet address or public key. You can think of the wallet address as an email address.

The transaction then goes through a hashing encryption algorithm.

The encryption algorithm includes all of the transaction details, including who the sender and receiver are and the amount being sent.

Also, included in the encryption algorithm is your unique private key. Only you know your private key.

Your private key acts as your signature to the transaction as the sender.

The transaction is now transmitted to the rest of the bitcoin network using Lee’s public key.

However, the transaction can only be decrypted using Lee’s private key, which only he has knowledge of. This ensures that only Lee can receive your bitcoins.

Blockchain Technology

These transactions are validated and are being added block by block to a blockchain.

A block can be thought of as a single transaction, like the 3 bitcoins you sent to Lee represents a block.

Blocks or transactions are validated by “miners”.

As you saw, your transaction is transmitted to the rest of the bitcoin network as public information.

Miners see this and validate it by solving a complicated mathematical problem. The miner to solve this first is rewarded with a certain amount of bitcoins.

The process of solving this mathematical problem is called ‘proof of work’, and is how the currency is created since miners are rewarded with bitcoins.

Once validated, your and other transactions are validated and added to the blockchain where they cannot be changed or removed.

With this mining process, your and Lee’s wallet is updated. With yours showing 3 less bitcoin and Lee’s showing 3 additional bitcoins.

Types of Cryptocurrencies

There are other types of cryptocurrencies besides Bitcoin, such as:

• Ethereum

• Dogecoin

• Binance

They each may have slightly different features with how their currencies are exchanged.

But the general process remains the same. They all use blockchain technology to exchange currency.

Advantages of Cryptocurrency

Some of the advantages of cryptocurrencies are:

• There isn’t a third-party intermediary involved, like a bank or the government
• Zero banking fees
• More confidential as each transaction is a unique exchange between 2 parties which protects users from identity theft.
• Easier international transactions
• It’s quick. Transactions happen in a matter of minutes, compared to bank transactions which oftentimes take several hours or days.

Disadvantages of Cryptocurrency

Some disadvantages of cryptocurrencies are:

• It is volatile because there is a lack of the inherent value of cryptocurrency which also explains the highs and lows of its market value.
• It is difficult to understand. Cryptocurrency is based on blockchain technology which was only introduced in recent years. It is understood by very few.
• Lack of regulation, which makes it difficult for the government to track down users which can be ok but can also be a breeding ground for money laundering and criminal activity.
• No refunds. If you accidentally pay someone, there is no guarantee you’d get your money back.

What Does the Future for Cryptocurrencies Look Like?

Crypto is a very new concept and if you feel left behind… don’t.

Only about 15% of Americans own some form of cryptocurrency.

Though that is expected to increase.

Companies like PayPal, have started to allow their users to buy and make transactions with cryptocurrencies like Bitcoin.

Visa and Mastercard have also joined the crypto wave by publicly endorsing the use of Bitcoin.

Overall, cryptocurrency is not only attracting individual investors…

…but also financial institutions and large corporations that are looking to profit from the emerging trend of digital assets.

With its rising popularity, it’s fair to say that it is only a matter of time more laws and regulations are imposed on the use of cryptocurrency.

Just recently, the White House announced new tax reporting requirements for cryptocurrencies and crypto asset exchange accounts or businesses that receive crypto assets of $10,000 or more.

There’s even a question on individual tax returns now that asks about virtual currency transactions, which relates to cryptocurrency taxes.

Furthermore, the Federal Reserve is conducting studies that explore a move to a central bank digital currency. Results from the studies are expected to be released in the summer of 2021.

This comes shortly after China bans financial institutions from the cryptocurrency business.

Is Cryptocurrency a Good Investment?

Now, the verdict is still out whether or not investing in cryptocurrency is wise or not.

Investor, Warren Buffett, has said, “Cryptocurrencies basically have no value and they don’t produce anything… In terms of value: zero.”

Whereas fellow billionaire investor Elon Musk has said, “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.”

And also, “I think bitcoin is really on the verge of getting broad acceptance by conventional finance people.”

Ultimately, it comes down to you.

And if you want to invest more wisely, then don’t hesitate to get in touch with one of our investment advisors today to help you out.

Contact us at 470-240-1437.

The post What is Cryptocurrency: Crypto Explained for Beginners appeared first on Small Business Accounting & Finance Blog.

Today, we are here to help you find grants for your business – basically free money that does not have to be paid back.

There are many places to look for grants. But they often overly priced, overly confusing to navigate, or extremely outdated.

So, we’ve compiled a list of the best grants and places to find grants to save you time and money.

In this post, you’ll learn the different types of grants.

As well as the best websites to find grants, the best grants to apply for right now, and tips to help you get the grants you apply for.

Let’s not waste another second and dive right in.

List of Small Business Grants: 2 Main Types

The first thing to know is that there are two main types of grants – government grants and private grants.

Government grants are provided by your federal and state governments.

On the other hand, private grants are provided by corporations and foundations.

We’ll be revealing a list of small business grants from both types starting with 7 private grants.

List of Small Business Grants: 7 Private Grants

1. The Barstool Fund

The first private grant on our list is The Barstool Fund which is a fund by the CEO of the famous Barstool Sports media company and aims to help small businesses impacted by the pandemic.

It has raised over 20 million dollars so far and is an ongoing crowdfund to help businesses in need that apply. Just visit the Barstool website to apply.

2. Nav’s “Legitify Your Small Business” Grant

Nav, a company that provides free help with business financing offers a $10,000 small business grant to help small businesses grow.

Nav recently announced Upcycle Hawaii as the latest winner of the quarterly grant and the next round of grant application are open right now.

Applications close again on May 31. So be sure to visit their website and apply now if you have not already.

3. FedEx Small Business Grant Contest

Next is the Small Business Grant Contest. Since 2013, FedEx has provided eligible businesses with grants of up to 50,000.

Your window to apply happens on a yearly basis so be ready for the next opening if you missed it this year.

Winners also receive a credit to use FedEx services. And at least one winner will be a Veteran Business based on the company’s commitment to supporting U.S. military veterans.

4. National Association for the Self-Employed (NASE) Growth Grants

If you are self-employed, be sure to look into NASE. The NASE Growth Grants are offered to members and are worth up to $4,000.

Grant applications are reviewed quarterly and you must be able to demonstrate how you plan to use the grant money to help your business grow.

5. Google Ad Grant

Did you know that Google provides a grant for non-profits? That’s right.

Google provides up to $10,000 per month in search ads shown on Google.com to qualifying non-profits.

So if you are a non-profit, be sure to take the ad grant.

6. The StreetShares Foundation Veteran Business Grant

If you are a veteran, this grant is for you!

The StreetShares Grant was created to provide access to capital opportunities for veterans or active-duty members and their spouses.

The grant amounts range from $4,000 – $15,000 and applications are based on the social impact of the military community, plans for the proceeds, market fit, and more.

7. Wells Fargo Community Investment Grants

Wells Fargo offers non-profits local business grants in almost every state.

The grants are typically awarded to non-profits who align with Wells Fargo’s four focus areas such as:

• financial health,
• housing affordability,
• small business growth,
• sustainability and
• environmental justice

Now, let’s look at a few grants provided by the government.

6 Federal Small Business Grants

1. Small Business Innovation Research Program

The grant program for the SBIR is a grant program by the SBA to encourage businesses to conduct Federal Research and Development for the government.

The grants are not focused on any particular industry so you may be able to find a grant that relates to your business.

The program is structured into three phases with grants awards ranging from $50,000 to over one million dollars depending on the phase you get to.

2. Small Business Technology Transfer Program

The STTR program exists to foster the advance of technology by pairing eligible small businesses with actual research institutions. This is similar to the SBIR program,

The STTR program is not geared toward any specific industry.

And, it is also structured in three phases with grant awards provided in the first two phases up to $150,000 in phase 1 and up to one million dollars in phase 2.

3. National Institute of Health Grants

The National Institute of Health is a part of the Department of Health and Human Services and they offer grants to encourage biomedical research.

In fact, they are the #1 provider of grants that fund biomedical research. At the time of this post, there were over 14 pages worth of grants still available.

4. Department of Justice Grants

The Department of Justice provides grants for programs that help improve state and local law enforcement as well as programs that improve the justice systems.

If that applies to you, at the time of this post, there were over 60 grants still available.

5. Department of the Interior Grants

The Department of the Interior Grants provides small business grants through a number of departments, including the:

• U.S. Fish and Wildlife Services,
• Indian Affairs, and
• the National Park Service

6. USDA Rural Development Business Grants

The Department of Agriculture offers grants to small rural businesses with fewer than 50 new employees and less than $1 million in gross revenue.

Awarded funds must be used for projects that improve rural areas and towns. Examples include:

• incubators,
• technology development,
• land development,
• pollution control,
• improvements in transportation,

…and more.

How to Find a Grant for a Small Business

Now that you have a list of small business grants, let’s go over the best ways for you to find grants.

You could try your hand at a Google search but the result is millions of searches and likely confusion.

So to save you the headache, here are the 5 best ways to find grants on your own.

1. Small Business Development Centers

That’s right. Your best chance at finding grants for your business is by contacting your local Small Business Development Center.

In addition to helping you find local and state grants for free, Small Business Development Centers can help you:

• get financing,
• develop your marketing,
• get counseling and training,

…and much more.

Also, they will be able to assist you in applying for the Small Business Innovation and Research (SBIR) grants which we discussed earlier.

So seriously, if you’ve never reached out to a Small Business Development Center, do it asap.

2. GrantWatch

We like GrantWatch because it is an up-to-date database with over 26,000 grants for small businesses, non-profits, and even individuals.

Also, GrantWatch isn’t just a list of federal grants. GrantWatch has:

• corporate grants,
• foundation grants,
• local grants,
• state grants, and
• federal grants

…on their platform for your small business to choose from.

And if that wasn’t enough, this is going to blow your mind guys… They have a customer service line that will help you research and find the perfect grants for you.

3. Grants.gov

Grants.gov is a database managed by the federal government that lists all federal government grants across all agencies.

This makes it extremely easy to research and find federal grant opportunities for your business.

To be a government ran, the database is extremely easy to navigate. You can filter based on:

• keywords,
• status of the grant,
• funding type,
• eligibility type,
• grant category, and
• by government agency

Additionally, grants.gov provides an enormous learning center that can help you understand more about grants.

This includes eligibility, the different program types, how to protect yourself from grant fraud, and more.

If you need help applying for grants or registering to the database, a video series is offered on the site that can walk you through step-by-step.

4. SCORE

SCORE is a nonprofit partner of the Small Business Administration that provides workshops, resources, tools, and mentors to aid in the success of small businesses.

While SCORE does not directly provide grants, their small business mentors can help you with finding grants and applying for grants.

They even host webinars all about grants and the grant process.

5. Local Libraries

Last but not least on the list is to check with your local library.

Yes, your local librarian has access to hundreds of databases including those that have grants and are very good at researching as well.

Additionally, librarians can typically point you in the right direction for resources and expert help that can assist you with finding, applying, and maintaining grants.

Grant Tips For Small Businesses

Now, let’s look at 5 quick tips to help you when looking for and applying for grants.

1. When researching, be sure to look for grants from companies and organizations that align with your business values. Don’t take money from anyone.

2. When researching, check eligibility requirements first. Only spend the time applying for grants you know you are eligible for.

3. When researching, start with smaller/local grants. They will likely have less competition and you can improve your grant writing skills before going for very big grants.

4. When applying, focus more on the solution or contribution you will be able to provide if awarded the grant money and less on the problem.

5. When applying, pay attention to details. Some grants have very specific requirements for things such as word count, typeface, and more.

List of Small Business Grants: Final Takeaways

Well, there you have it – the ultimate list of small business grants for 2021.

So, what grants you plan to apply for?

If you have more questions regarding business grants or how you can manage your business finances in general, then consider hiring our CFO services.

Or, you can also contact us today to talk to one of our financial experts.

The post Ultimate List of Small Business Grants for 2021 [Local, Private, and Federal Grants] appeared first on Small Business Accounting & Finance Blog.

You want to build your business credit and want to know the most effective and fastest way to do so.

Perfect. You are in the right place.

Business credit is extremely underrated and overlooked by most businesses even though it is a key ingredient to business success.

So in this post, we will be going over what business credit is, and everything you need to know about it.

This includes the:

• big benefits of it,
• perfect steps to build it,
• top vendors and business credit cards for small businesses, and
• how to monitor it

We think you are ready for a play-by-play process on how to get business credit quick!

Let’s get started.

What is Business Credit?

There are 4 things we want you to know

Business credit is a company’s ability to buy something today and pay for it at a later date.

You establish business credit based on the repayment history of your business.

Business credit is tied to your businesses’ EIN, which is like a Social Security number for your business. We’ll be going over how to get one later in the post.

And there are 3 major business credit bureaus: Dun & Bradstreet, Equifax, and Experian.

Benefits of Business Credit

Now that you know what business credit is, let’s look at 4 big benefits of business credit:

1. Higher Limits

The first big benefit of business credit is the higher limits that you can get approved for compared with your personal credit.

According to data from Experian, the average personal credit limit is around $30,000, while the average small business credit card limit is about $56,000.

We’ve seen instances where the business credit limit is more than 2-3x higher than someone’s personal credit limit.

Higher limits mean more purchasing power for your business that can go toward things like tools, technology, rent, and inventory.

2. Utilization Freedom

With a personal credit card, your credit score is negatively affected if you use more than 30% of your credit limit.

Even if you pay the card in full each month, your credit score will plummet.

But with a business credit score, utilization is not a major factor that affects your score.

This gives you the freedom to use your business credit limits without worrying too much about your utilization.

3. Does not Affect Your Personal Credit

The third, and likely biggest benefit of business credit is that business credit does not affect your personal credit.

Yep, we’ll say it again for the folks in the back…

Business credit does not affect your personal credit.

So you can be rest assured that if some unfortunate event did happen where your business credit is ruined, it will only affect that business.

It will not affect any other current or future businesses you create.

We do have to make one disclaimer that there are some business credit cards that do report on your personal credit like Capital One and Discover cards.

While others like Bank of America and Citi cards only report to commercial credit bureaus.

4. Better Approval chances, terms, and prices

The fourth benefit of business credit is that when it is good, you typically have higher chances of approval, better terms, and better pricing on:

• leases,
• loans,
• lines of credit,
• vendors, and
• products

And this ultimately saves your business money and allows you to use more capital to grow your business.

Now, let’s talk about the thing you are all here for, the steps on how to get business credit quick.

7 Steps on How to Get Business Credit Quick

Now, let’s go over the 7 steps to establish and build your business credit.

Step 1: Incorporate and register your business

Those who operate as a sole proprietorship or general partnership have no separation between them as a person and their business as the business is the owner.

This means that a sole proprietorship or general partnership can’t have a separate business credit history from their personal credit history.

By incorporating a business or forming an LLC, you create a business that is legally separate from the owner.

Read this post to learn more about how to incorporate a business.

Step 2: Get an EIN

As mentioned above, a business federal tax identification number, also called an EIN, is a nine-digit number that acts like the social security number for the business.

Businesses need an EIN to open a business bank account and obtain business credit.

Some businesses also require an EIN from their vendors in order to pay them for services.

Here’s how to get one, if you don’t have one already:

1. Start a Google search for “EIN”
2. Click on the first organic link from the IRS
3. Click “Apply Online” under step 3

Step 3: Open a business bank account

You will want to open a business checking account in the legal name of the business.

Once open, be sure to pay for all transactions using your business bank account, including your credit card payments, if you have one.

This creates a clear separation between personal and business expenses.

Step 4: Get a business phone number

You will want to get a separate phone number for your business that is in your business name. This can be through a:

• landline,
• VOIP service like Google Voice, or
• cell phone provider

Also, make sure your business number is listed within directories such as the Better Business Bureau, YP.com, and Angie’s List.

Step 5: Register with Dun & Bradstreet to get a D-U-N-S number

Dun & Bradstreet is one of the top three business credit bureaus. Here’s how to get a D-U-N-S number for your business.

1. Go to Dun & Bradstreet’s website at dnb.com
2. Click on “D-U-N-S number” in the menu
3. Then click “Get a D-U-N-S Number” and go through the steps

Now that you have established business credit, you can start to build it. Let’s move on to the next step to see how.

Step 6: Establish trade lines with vendors/suppliers who report

This step is extremely important!

By establishing trade lines with vendors and suppliers who allow you to buy products today, pay later, and report on your business credit…

…you can easily start the process of building up your business credit payment history.

When doing so, apply to at least 3 of them and make sure they report on your business credit report.

There are plenty of companies out there but here are three very popular trade lines you can start with ASAP.

• Shirtsy – Shirtsy is an online store to buy customized apparel for your business.
• ULINE – Uline is one of the top sites for packaging materials and supplies.
• Quill – Quill provides cleaning & office supplies for your office space.

Step 7: Apply for a business credit card

Next, apply and obtain at least one business credit card for your business.

To help you get started, you can check out this post we have published previously that went over the best business credit cards.

No matter which one you choose, make sure they report on your business credit.

And as mentioned previously, if you want to avoid affecting your personal credit, be sure the credit card you choose only reports on your business credit as some report on both business and personal.

Step 8: Pay vendors early

Paying on time will keep you away from negative scores and get you a good business credit score.

But what most people don’t know is that paying early will get you the highest scores.

If possible, pay off your credit lines early to help boost and maintain your scores.

As you can see, in just a few simple steps you can go about how to get business credit quick.

Now let’s discuss how your credit scores are calculated.

How Credit Scores are Calculated

Just like the top three personal credit bureaus, the top three business credit bureaus all have different algorithms for determining your score.

But even with different algorithms, here are the most common factors that fall into three categories:

1. Payment history
2. Negative remarks such as charge offs, delinquent invoices, or legal filings
3. Demographics, which means the number of trade lines, size of business, and years on file

Note that most bureaus need minimum information such as one tradeline to generate a score.

How To Monitor Your Business Credit

Lastly, let’s discuss how to monitor your business credit.

A survey by Wall Street Journal found that 25% of small business owners found credit-damaging errors on their reports after looking.

That’s why it’s definitely important that you actively monitor your report so you at least know where your business stands.

All three bureaus will provide you your business credit report but they will charge you for it.

Luckily, there are several places online such as Nav and CreditSignal, that will give you options to view your credit file for free.

Conclusion

Well, there you have it. A complete guide on how to get business credit quick.

If you need more help with managing your business finances, we offer various solutions for your specific needs.

From accounting to bookkeeping, CFO, to tax planning and tax preparation – you can count on our expert team to help you with that.

Simply contact us today to get started!

The post How To Get Business Credit Quick for Bad Credit & New Businesses + Vendors List appeared first on Small Business Accounting & Finance Blog.

If you are looking for actionable steps to help you build wealth from someone who has done it before, this is the post for you.

We want you to get ready because you are about to get one step closer to financial freedom with Grant Cardone’s top 10 financial freedom secrets for building true wealth.

Here we go.

Grant Cardone’s Top 10 Financial Freedom Secrets

Secret 1: Use The 40% Rule

Source: Grant Cardone

Secret 2: Do it Faster

Source: Grant Cardone

Secret 3: Make Freedom the Target

Source: Grant Cardone

Secret 4: Multiply Your Money

Source: Grant Cardone

Secret 5: Raising is Better Than Saving

Source: Grant Cardone

Secret 6: Worry About Your Money

Source: Grant Cardone

Secret 7: Learn Sales

Source: Grant Cardone

Secret 8: Cash as Trash

Source: Grant Cardone

Secret 9: Reduce Your Tax Liability

Source: Grant Cardone

Secret 10: Exceed Your Monthly Income With Passive Income

Source: Grant Cardone

Conclusion

Well, there you have it- the Grant Cardone’s top 10 financial freedom secrets!

How about you? What is your rule for financial freedom?

We truly hope this helped someone today. And if you want to really build your wealth, you should consider working with financial experts or hire a virtual CFO today.

If this is something you want to learn more, check out our CFO services and investment advisory services to help you manage and grow your wealth for a better future.

The post Top 10 Financial Freedom Secrets by Grant Cardone appeared first on Small Business Accounting & Finance Blog.

We have an exciting update for you about the EIDL loan that you don’t want to miss.

Action is required so please read until the end.

We’re not going to waste any more time so let’s get right into it.

EIDL Loan Increase Amount

The SBA just expanded the EIDL loan in two major ways:

1. First, the max loan amount was increased from a $150,00 max loan amount to a max loan amount of $500,000.

This is more than 3x the original amount and this is good. This is great for the small businesses and non-profits that need this money!

We’ve always thought the $150,000 max loan amount was too little, and we’re glad to see the SBA has finally increased it. It’s about time.

2. The SBA increased the economic injury coverage period from 6-months to 24 months of economic injury.

That is huge! Not only can you borrow more money, but you can now get 24 months of relief.

SBA Administrator Speaks

Here’s what the SBA Administrator, Isabella Casillas Guzman had to say about the increase:

“More than 3.7 million businesses employing more than 20 million people have found financial relief through SBA’s Economic Injury Disaster Loans, which provide low-interest emergency working capital to help save their businesses. However, the pandemic has lasted longer than expected, and they need larger loans. Many have called on SBA to remove the $150,000 cap. We are here to help our small businesses and that is why I’m proud to more than triple the amount of funding they can access.”

We agree wholeheartedly with everything Isabella Casillas Guzman said and we know you do too.

So, let’s talk about what all of this means for you and how you can get the increased limits and timeframe.

And that is whether you already received the loan or this will be your first time applying.

Email from SBA on Loan Increase

If you have already received the EIDL loan, you should have gotten an email in your inbox from the SBA sometime between April 6th and now.

Let’s take a look at the email.

If you don’t see an email from the SBA, make sure to check the email you used for your original application, and be sure to check spam too.

We’ve been hearing a few people mention that they found theirs in spam.

Also, not all emails have been sent out yet due to the sheer number of people who received the loan.

If you did not get the email, you can still use the steps we are about to go over to request an increase. So don’t panic!

Here is the first half that gives an overview of the loan increase limit:

The second half of the email goes into detail on how you can request an increase:

Steps to Increase EIDL Loan Amount

Here are the steps outlined within the email.

Step 1: Send an email to CovidEIDLIncreaseRequests@sba.gov. Don’t forget the “s” on “requests there.

Step 2: Use the subject line “EIDL Increase Request for [insert your 10-digit application number]”.

You should be able to find your application number in previous emails regarding your loan.

Step 3: Include in the body of your email identifying information for your current loan including:

• application number
• loan number
• business name
• business address
• business owner name(s)
• phone number

Step 4: Lastly, do not include any financial documents or tax records with your initial request. SBA will send a follow-up email notification if it needs additional documents.

Tips and Tricks to Get Approved

Here are a few things to know about sending the email.

1. Some people have been receiving an auto-reply and others have not.

If you don’t receive an auto-reply and don’t get an email bounce back, your request should have gone through.

2. Only send one email.

If you send multiple, it may restart your position to get a response or could slow down the overall response time.

In the bottom half of the email, the SBA does state that:

“Due to high volume of incoming requests, SBA reports it may be several weeks before a response is received from the agency on the next steps to follow. Those who request a loan increase should not resend multiple requests if they do not hear back right away from the SBA as the extra emails could slow down the overall response time.”

We know you may get antsy if you don’t hear back from anyone, but please only send one email so you can maintain a good spot in line to hear back.

You’d think the SBA would have a better system than email to ask for an increase.

But, we guess we should know better by now based on previous rollouts of everything related to PPP loan or the EIDL.

What Documents are Needed?

It appears that most people are not having to submit any additional document requests.

Those who do have to submit extra docs typically are asked for 2019 taxes and 4506-Ts and look to be new businesses or bad credit.

We are also seeing reports of people in Facebook groups & on Reddit who are seeing 3x their initial loan amount.

How to Apply for EIDL Loan for the First Time?

Now, that was instructions for those who have already received an EIDL.

If you are thinking about applying or have recently applied and waiting for a response…

…you will automatically be considered for the $500,000 max loan limit and the increase of 24 months of coverage, according to the SBA.

You can go to sba.gov and if you scroll down a bit you will see a big icon that says EIDL.

If you click that, it will take you to the page where you see the loan detail and can also apply.

EIDL Loan Terms to Know

As of now, the loans carry the following terms:

• Non-forgivable, Fixed 3.75% interest rate for businesses or
• Non-forgivable, Fixed 2.75% interest rate for nonprofits
• 30 years term
• No pre-payment penalty or fees
• Up to $500,000 loan amount
• 24 months of coverage for your business.

Wrapping Up

We’re ultimately excited about the increase in limits and loan amounts.

And, we truly hope that the SBA moves with speed so the small businesses and non-profits get the help they need and deserve.

Speaking of small businesses, as CPAs and business owners ourselves, we know how important effective financial management is to growing a business.

This is especially true for small and start-up companies.

So, if you need more guidance with your business’ finances, here at LYFE Accounting, we offer financial advisory services as well. Talk to us today to get started!

The post EIDL Loan Increase Update: New Email From SBA on How To Get Approved – 150k to 500k appeared first on Small Business Accounting & Finance Blog.

Over the course of 2020, the rules related to PPP forgiveness application have changed.

Some revisions have made the process easier for businesses with smaller loan amounts.

The latest stimulus relief bill passed in December of 2020 had two provisions that could help people with smaller loan amounts.

So in this post, we’re going to cover those two important changes and then dive into some frequently asked questions from the SBA.

Basic PPP Rules

Let us first discuss the basic PPP rules that have been established.

• For loans of $150,000 or less

The PPP revisions allow these borrowers to complete a modified one-page forgiveness application form. The form is still in the process via the SBA.

• For loans of $50,000 or less

The SBA form 3508S is a simplified application form that for the most part requires the business owner to answer some questions.

Changes in EIDL and PPP Loan Forgiveness

Now, what has changed?

So in the stimulus bill passed in December, one of the major changes was around the EIDL or Economic Injury Disaster Loan and PPP loan forgiveness.

Originally, if your business had been a recipient of an EDIL grant, the amount of their PPP loan eligible for forgiveness would have been reduced by the amount of the grant.

However, the latest bill does away with this provision, and PPP forgiveness is no longer impacted by having received an EIDL grant.

So if you applied for both grants, then that means you could have received two grants for your business in 2020.

And even though a lot of our businesses struggled, this stimulus definitely helped us stay afloat last year.

Perhaps the most important part of the December 2020 stimulus surrounds the ability to deduct the expenses that the PPP loan was used to cover for federal tax purposes.

The IRS had previously opposed this referring to it as double-dipping. This is a big deal for your business and will potentially save you a lot of money at tax time.

While the latest stimulus bill resolved the issue of federal tax-deductibility of these expenses, the ability to deduct these expenses at the state level was not covered.

Each impacted business owner will need to review this issue based on their state’s rules.

So those were, in our opinion, the two biggest rule changes as it relates to your PPP forgiveness and overall tax situation.

We’ll now move on to the documents you need for the PPP forgiveness application.

What You Need For Your PPP Forgiveness Application

Now let’s talk about those PPP forgiveness applications.

First of all, there are a lot of people that are delaying getting their application done. And we know there are hundreds of other things to be worried about right now.

But, if you ignore this, your PPP loan will remain a loan and you could miss out on free money.

This is like a grant and if you don’t complete the application in time then you will likely regret it if it becomes a loan.

Now technically you still have plenty of time.

The deadline to apply for your PPP loan is within 10 months after the last day of the covered period.

A quick side note here, if don’t know what a covered period is, it simply means 8 or 24 weeks from the day you received the loan.

And you can choose which period to use and match it up with your payroll which is called the alternative covered period.

Now, if borrowers do not apply, OR if the SBA determines that the loan is not eligible for forgiveness (in whole or in part), the payments on the PPP loan are no longer deferred and the borrower must begin paying principal and interest.

So many lenders recommend taking a full 24 weeks, to give yourself enough time to qualify for full loan forgiveness.

However, you should know that waiting might increase the amount of interest you need to pay with respect to any part of the loan not being forgiven.

FAQs About PPP Forgiveness Application

Now, these questions are just some frequently asked questions directly from SBA, which we assume are the questions most people want to know the answers to.

Question #1:

Which loan forgiveness application should sole proprietors, independent contractors, or self-employed individuals with no employees complete?

These individuals who had no employees at the time of the PPP loan application and did not include any employee salaries will automatically qualify to use the loan forgiveness application form 3508EZ or lender equivalent and should complete that application.

Question #2:

The PPP loan forgiveness application forms (3508, 3508EZ, and 3508S) display an expiration date of 10/31/2020 in the upper-right corner. Is October 31, 2020 the deadline for borrowers to apply for forgiveness?

The SBA directly says that borrowers may submit a PPP forgiveness application any time before the maturity date of the loan, which is either two or five years from loan origination.

But keep in mind that after 10 months, you still need to pay interest and principal.

Question #3:

Are payroll costs that were incurred BEFORE the covered period, but paid during the covered period eligible for loan forgiveness?

The answer is yes.

For example…

If your covered period starts on April 20th, but your payroll cycle ends on April 18th and you made the payment for that cycle on April 24th, then that payment will be eligible for loan forgiveness because they were paid during the covered period.

Question #4:

For purposes of calculating cash compensation, should borrowers use the gross amount before deductions for taxes, employee benefits payments, and similar payments? Or the net amount paid to employees?

The gross amount (which is before any contributions or taxes) should be used when calculating cash compensation to employees.

Question #5:

Are salaries or wages the only ones covered by loan forgiveness? Or can a borrower pay lost tips, lost commissions, bonuses, or other forms of incentive pay and have such costs qualify for loan forgiveness?

Payroll costs include all forms of cash compensation paid to employees, including tips, commissions, bonuses, and hazard pay.

Note that forgivable cash compensation per employee is limited to $100,000 on an annualized basis.

Question #6:

How is the amount of owner compensation that is eligible for loan forgiveness determined?

This is a difficult question to answer because the amount of compensation of owners who work at their business depends on the business entity type.

Businesses range from C Corp, LLC, Partnership, etc. and it depends on whether you are using an 8 or 24 week covered period.

However, at the highest level, the amount of loan forgiveness applied for owner-employees and self-employed individuals’ payroll compensation is capped at $20,833 per individual.

And that is in total, across all businesses in which they have an ownership stake in.

If the total compensation across businesses that receive a PPP loan exceeds the cap, then owners can choose how to allocate it based on the business entities.

Question #7:

Are nonpayroll costs incurred prior to the covered period, but paid during the covered period, eligible for loan forgiveness?

The answer is yes,

Eligible business mortgage interest costs, eligible business rent or lease costs, and eligible business utility costs incurred prior to the covered period and paid during the covered period are eligible for loan forgiveness.

Question #8:

Will a borrower be subject to a reduction to its forgiveness amount due to a reduction in full-time employees during the covered period if the borrower offered to rehire one or more laid off employees but the employees declined?

If you are able to document in good faith that:

1. You had an inability to rehire individuals who were employees of the borrower on Feb 15, 2020.
2. There was an inability to hire similarly qualified individuals for unfilled positions on or before December 31, 2020.

If this is the case, you need to inform your state unemployment insurance office of any employee’s rejected rehire offer within 30 days of the employee’s rejection.

Then you need to maintain documents such as a written offer to rehire an individual, a written record of the offer’s rejection, and a written record of efforts to hire a similarly qualified individual.

So there you have it, we gave you some quick updates for the PPP forgiveness application in 2021.

If you need more assistance with your financial management or tax filings, we’ve got your back. Contact us today to get started!

The post PPP Forgiveness Application: 2021 Updates and FAQ appeared first on Small Business Accounting & Finance Blog.