Myths Small Businesses Must Bust on Acquiring Small Business Loan

Myths Small Businesses Must Bust on Acquiring Small Business Loan

Small business owners have joined the group of people that get scared at the mention of the word ‘loan’. The problem has increased in magnitude to a point that fewer small businesses are willing to visit their banks for a loan to help the startup.

In the US alone, more than $50 million is released to startups each day in a year to support them financially. With the assistance of the Small Business Administration, alternative banks and lenders can loan money to startups.

Therefore, what myths regarding small business loans should owners of such enterprises seek to overcome?

  • Acquiring the loan will take ages and involve tons of paperwork

There is no difference between the time taken to apply for and get approval for SBA loan and the other types of conventional loans. Applying for such a loan from a qualified lender is the best way of reducing the time it will take to learn whether you have won approval or not.

  • SBA provides loans thus eliminating the need for visiting banks

It is wrong to imagine that SBA provides loans. SBA is nothing more than a governmental program formed with the objective of decreasing risks to banks that desire to issue loans to small businesses.

  • Perfect credit is a requirement for obtaining SBA loans

A business owner with low credit scores should not conclude that he has zero chances of getting approval for his request for a loan from the bank. Perfect credit scores do not translate to loans. The emergence of alternative lenders has allowed for other factors to also come into play.

  • SBA loans come with higher interest rates as well as fees

SBA has worked hard to ensure that small businesses pay lowest fees and interest rates for all types of SBA loans. SBA monitors interest rates closely. SBA limits the amount of interest rates and fees that lenders can charge the small business.

  • The business is doing well thus does not need business loan

The growth of more small businesses depends on acquisition of business loans. Finding extra funding helps support all the growth that you believe the business needs. A growing business soon requires expanded cash flow to support daily operations.

  • Only banks are good for obtaining business loans

Depending on the size of the business loan that you need, the best approach is to look at alternative lenders if in need of between $500 and $20,000 in funding. Banks are good when you need more money for a longer period and at lower interest rates.

  • Asking for Bigger Smaller Business Loans leads to Rejections

The amount of loan that you need does not influence the bank to reject or approve your application. The bank and other alternative lenders look at several factors other than amount that you need.

The increase in applications for small business loans is partly due to the incredible work that SBA has done in the US. All projections indicate that the interest in small business loans will continue increasing, thus the importance of separating truths from myths.

Learn more on how to get a loan or a grant from the government for your small business from the video below.

Therefore, it is important to learn the basic truths regarding the business loans before submitting your application. Do not limit your chances by believing in an untruth or a myth. Talk with SBA and find out more from their experts or representatives.

With such knowledge, your goal of growing the business and ensuring that it remains afloat in the face of intense competition as well as numerous other challenges will be much easier because of the business finances that you are able to obtain through small business loans.

Tips for Protecting the Business against Financial Fraud

Tips for Protecting the Business against Financial Fraud

Financial fraud is one of the fastest rising crimes in corporate America. Small businesses seem to be the hardest hit with this rising crime. Experts have cited the factors they consider responsible for the increase in this type of crime. The factors include:

  1. Complacency on the part of small businesses
  2. Elimination of checks and balances in companies regarding financial matters
  3. Recession

A small business that desires to reduce the cases of financial fraud within its operations must learn how to identify such incidences before they occur. Putting up the right strategies is also effective in eliminating financial fraud and ensuring that the business is not at risk of collapse.

The three primary risk factors that increase the likelihood of a small business experiencing financial fraud are as follows:

  • Failure to screen employers properly before hiring them when background checks can be helpful
  • Failure to put up proper financial records regarding handling of cash as well as bank accounts and record-keeping
  • Displaying too much trust on employees who have not proven that they deserve it

If you want to protect the small business against financial fraud, it would be great to identify the right strategies to put in place. The good news is that some of the strategies do not require much in the way of financial investment. However, some of them need financial investment.

The strategies worth implementing within the small business to ensure that financial fraud disappears for good include the following:

  1. Employing financial checks as well as balances by undertaking monthly internal reviews of the company’s finances while ascertaining that the payments are compatible with invoices. Checking the authenticity of all documents is highly advisable.
  2. Protecting computer systems and practicing web awareness while paying special attention to cyber protection. Install the latest firewalls and antivirus software on the computer to protect it against malware and other similar threats.
  3. Guarding all sensitive hardcopy documentation from theft by employees. Checks, credit card information and the mail are just but some of the hardcopy documentation that could do with enhanced protection.
  4. Using secure online bank and other financial facilities is highly recommended. In this regard, it would be wise to use the online banking services provided by reputable major banks that guarantee 24-hour payment management, account transfers and access to information.
  5. Acquiring proper insurance is a good way to cover the business against losses arising from financial fraud. Some of the fraud types that the insurance cover include embezzlement, robbery, credit card fraud and forgery.

For the above reasons, it is critical that you institute the right measures at the workplace to protect the business against financial fraud. It is worth remembering that a business can collapse if financial fraud continues unabated within the organization.

Therefore, speak with the appropriate experts on financial fraud today. Do not hesitate to implement the appropriate strategies within the business. Financial fraud can signal the death of the small business that is struggling to remain afloat in the face of intense competition.

Why is Financial Management Crucial for Small Businesses?

Why is Financial Management Crucial for Small Businesses?

Prior to starting a business, it is critical to learn all the aspects of financial management that you need to be handling going forward. If you do not give this component the attention that it deserves, your business could fail thus placing you in huge problems. Proper management means that the business uses finances efficiently and effectively in achieving its objectives. Proper financial management has several components that include the following:

  1. Planning
  2. Observing
  3. Organizing
  4. Managing

Strategies for Effective Financial Management

Small businesses often believe that financial management should only focus on control and allocation of financial resources as well as procurement. The goal of this strategy is to ensure that the business never runs out of finances for its regular and daily operations. All small businesses can engage in financial management without much worrying by adhering to the following tips.

Initially, you should calculate the amount of money needed for your daily upkeep and to meet your financial obligations.  After doing the calculations, the next step involves pulling the money from the business income. Thereafter you should now reinvest the remaining amount back into the business. This strategy would not only help you manage the business finance well, but also ensure that the venture enjoys remarkable growth.

No matter how much you receive in profits (which may be soon after establishing the business), never give in to the temptation to spend it on leisurely activities. Financial discipline is an integral part of running a business. In fact, without financial discipline, one would struggle to embark on successful financial management. If you want to engage in leisurely activities, wait until the business reaches the next level and is firmly established.

No matter the stage of growth your business is at, covering the payroll will always remain one of its major challenges. No matter how tempting it is, do not embark on hiring new staff not unless the business really needs them. If you discuss this issue with the current employees, they would be willing to stretch and maximize their full potential. It is only after doing this that you can or should proceed with hiring new staff.

It is vital for businesses to separate the money required for paying taxes from all the other monies. Remember that failure to pay the requisite taxes could attract the tax authorities on to the business and lead to plenty of problems. Avoid the problems entirely by ensuring that the money for taxes remains untouched and separated from the rest. Negotiate the terms of agreement with all the suppliers and contractors with whom the business interacts from time to time.

Finally, remember that proper financial management is central to business finance and helps the owner to grow a successful business with time. Learning the basics of financial management or the importance of financial management is mandatory for all businesses. Exercising financial discipline and avoiding unnecessary expenses, especially where leisure is concerned, is crucial to the success of the money. Lack of financial management remains the fastest way through which to destroy your business.

What to Look for When Choosing a Bank for Business Finance?

What to Look for When Choosing a Bank for Business Finance?

Choosing a bank from which to raise the finances for your business requires plenty of research and exploration. The ability to consider all the right factors also plays a huge role in ensuring that you select the right kind of bank. The choice of bank should depend on not only your lifestyle, but also the financial needs you desire to meet.

The reputation as well as safety that the bank has or provides should be part of the priorities you look for from such financial institutions. What should you base your criteria for choosing a bank for business finance?

  • Your Financial Needs

Searching for a bank depends on your financial needs. Many customers have developed a habit of opening checking as well as savings accounts. In fact, many customers prefer banking with a single institution. In this regard, you will find customers who have no problem opening a checking as well as savings account with the bank for the following needs:

  1. car loan
  2. personal loan
  3. equity credit line for the home
  4. mortgage
  • Credentials

A good bank has the best credentials. Reputation is what other customers have to say about the financial institution with whom you desire to open an account or raise finances for your business. For this reason, it pays to find some clients with accounts at the bank and ask them what they feel about the institution. FDIC deposit insurance makes larger banks a good choice.

  • Physical Convenience

Choose a bank that you can access easily from your office or home. The physical location of the bank should play a significant role in determining whether you select it or not. The extended hours at which the bank remains open, beyond what other financial institutions offer, is also crucial in providing you with the desired level of physical convenience.

  • Fees and Service

Each bank has a unique set of structures regarding fees and service. While checking with the bank, concentrate on the following types of fees:

  1. account fees
  2. minimum balances
  3. ATM fees
  4. overdraft protection
  5. overdraft fees

It also pays to ask the bank for its policies regarding international travel in case you plan to travel or use foreign currencies. Some banks are renowned for providing additional services at extra fees. Other banks provide additional fees but at no extra cost.

  • Personalized Service

A bank with national presence provides customers with several benefits and conveniences. On the other hand, a bank with a national reach might not provide you with the quality of personalized services and banking that you deserve/need. This is why some entrepreneurs prefer local entities. However, it is worth noting that the national bank would be great if you need:

  1. IRAs
  2. Loans
  3. Credit cards
  4. Online bill payments

If you lead a busy lifestyle and need help with wide ranging financial activities, such as the aforementioned, then the larger bank with a national presence would be the best option. If you adhere to the guidelines mentioned above, choosing the right bank for assistance with business finance would never be an impossible task for you.