Our lending experts are here to answer your toughest questions about small business financing. Gerardo Campos, a loan consultant here at Opportunity Fund, shares his insights on lending with this Q&A about applying for a loan. Continue reading to find out what to expect when applying for loans and how you can be better prepared.

Our lending experts are here to answer your toughest questions about small business financing. Gerardo Campos, a loan consultant here at Opportunity Fund, shares his insights on lending with this Q&A about applying for a loan. Continue reading to find out what to expect when applying for loans and how you can be better prepared.

 

Q: What can borrowers expect in the application process?

A: After completing a loan application form, a loan consultant will pull your personal credit and call you with any questions. Sometimes additional documentation may be required to be sent in after your application is reviewed.

Q: How long should the process take from start to finish?

A: It depends on the lending institution and the amount of money requested, but it should take between two and thirty days. Here at Opportunity Fund, you can get funds in as few as two to five business days.

Q: How will credit scores impact the application process?

A: Your credit score is not the sole determining factor in whether or not you get a loan, but some lenders are stricter about minimum scores than others. Credit scores are indicators of creditworthiness and past payment history. When we pull your credit score, it will have a small impact on your credit score because it indicates you are looking for a loan.

Q: Why is time in business important?

A: As a responsible lender, we require that you’ve been in business for a minimum of one year because we want to make sure you already know how to run a business. We also want to make sure there is a profitable margin large enough to repay your loan.

Q: What are options for making payments?

A: The easiest way to make payments is to set up automatic payments. You can have it taken out weekly, bi-weekly, or monthly. Other options for paying include at your bank, at a 7-11, by mailing in a check or money order, or over the phone if your bank account information was provided at the time your loan was approved.

Q: What happens if a borrower has trouble repaying their loan?

A: Always talk to your lender if you are having problems repaying your loan. We can always work something out if you have proof of hardship such as a death in the family, medical problem, or natural disaster.

Q: What documents should a borrower have ready before applying for a loan?

A: Take a look at this handy, easy-to-use checklist for all the documents you need when applying for a loan.

Download the PDF here:

Loan Preparation Checklist

 

For information about Opportunity Fund’s small business loans, please contact us at 866-299-8173 or loans@opportunityfund.org.  For questions about your existing loan or other customer service questions, please contact us at 866-299-8173 or sbhelp@opportunityfund.org.


Opportunity Fund is California’s largest and fastest-growing nonprofit lender to small businesses. In FY16, we made $60M in loans to help more than 2,200 small business owners invest in their businesses.  Opportunity Fund invests in small business owners who do not have access to traditional financing. As a founding member and signatory to the Borrower’s Bill of Rights, we believe in the important role small businesses play in our community and the economy, and we aim to help owners financially succeed.

Visit us online at http://opportunityfundloan.org and follow us on Facebook and Twitter

Accounting and bookkeeping isn’t the most fun part of running your small business, but it is a very important part of keeping it in the black. Our content partner Nav shares advice on what to keep track of, how to prevent financial problems, and why knowing the basics of booking is so important for your business’ growth.

Accounting and bookkeeping isn’t the most fun part of running your small business, but it is a very important part of keeping it in the black. Our content partner Nav.com shares advice on what to keep track of, how to prevent financial problems, and why knowing the basics of booking is so important for your business’ growth.

 

Last year we asked 100 business owners across the United States and Canada an important question:  “What do you wish you knew before starting your business?”

Of all the answers we received, the most common thing business owners wish they knew more about was accounting and bookkeeping.

Accounting, specifically bookkeeping, is a substantial piece of owning a business.  Whether you’re just starting out or you’re a veteran business owner, the efficiency and reliability of your bookkeeping can play a large role in the overall success of your business.  From helping you plan for the unexpected to being prepared for tax time, bookkeeping basics can go a long way.

While small business bookkeeping can be complex, here are a few tips and practices that can help you stay prepared and keep your finances in order.

Anticipate Long & Short Term Expenses

You may not be able to see into the future, but there are some unexpected expenses that won’t be included in  your planning and bookkeeping.

You can’t determine future revenue, but you can predict it by review past revenue cycles and tax returns to help you get an idea of what you may owe.  Additionally, you’ll want to review revenue on a regular basis (monthly or quarterly, for example) and calculate taxes owed.

Another great way to account for both long and short term expenses is to review the history and current state of your business with regards to things like inventory, building maintenance, equipment needs, and slow seasons.  It’s a lot easier to pay for things like roof repairs or equipment servicing when you plan for it.  The same is true for balancing inventory and cash flow during periods when business may be slower than normal.

Set Up & Use Business Specific Accounts

It’s tempting, particularly if you’re a new small business owner, to use your personal accounts for some expenses.  However, unless meticulously tracked, this can lead to problems down the road.

By setting up (and using) business specific checking, savings, and credit card accounts, you’ll be able to refer directly to statements to help correctly record and reconcile your books regularly.

If you are just starting out, make it a point to open accounts that will be used specifically for transactions within your business. Not only will this help you stay organized, but you’ll also be able to establish credit for your new business while protecting your personal credit from potential losses.

Save Receipts & Track Expenses

Bookkeeping is a year-long event, and that means you’ll need to keep track of your expenses and other transactions over that 365-day period.  Sometimes, particularly if you’re a new business owner, you may not know what receipts you should keep or which expenses can be deducted come tax time.

Saving receipts, no matter how small they are, will help you track your expenses and will help your accountant or bookkeeper get a clear and concise picture at the end of the year.

Tracking and analyzing these expense receipts, preferably using an app made specifically for businesses, will also enable you to understand labor costs or costs associated with specific clients or projects.

Designate a file or folder on your computer to keep all of your scanned and uploaded receipts. Better still, save that file or folder to some sort of online storage program (Google Docs, Dropbox, etc.) to ensure it’s safe from computer glitches or malfunctions.

At the end of the year, you may find you don’t need every receipt you’ve saved, but this is a situation when it’s better to keep it and not need it than to need it and not have access to it.

Monitor Accounts Payable & Receivable

One key part to bookkeeping is understanding and planning your cash flow, or when you will be receiving or making a payment.  Being on top of bills will help you avoid credit issues associated with late or defaulted accounts, and staying on track with customer invoices will allow you to stay on top of bills and accurately estimate cash on hand.

One of the major benefits of solid bookkeeping is getting a picture of where your business stands; accounts payable and receivable play a big role in this picture. You’ll also be able to note any ebbs and flows in your business or identify areas in which you may be able to expand, scale back, or are in need of additional attention.

Become Familiar with Business Bookkeeping Terms

Whether you plan to do all the bookkeeping yourself, utilize bookkeeping programs (we’ll get to that next), or hire someone to handle the books, it’s in your best interest to become familiar with some of the frequently used terms and concepts used in business finance.

Some of these (cash flow, inventory), may be terms you’re already familiar with, while others (owners’ equity, retained earnings) may not be as familiar. You can find lists of important terms all over the internet, including one found here.

Utilize an Online Bookkeeping Service

There are multiple ways you can approach bookkeeping.  Some of them aren’t very efficient (relying solely on memory and a notebook, for example), while some, like utilizing an online bookkeeping services, can help you save money, grow your business, and ultimately keep your finances straight.

There are a wide variety of online bookkeeping services that range from more hands-on platforms that put you in the driver’s seat, to services that will provide you with a designated individual or team to manage your finances.  Ultimately, the decision should be based on your comfort level and budget.

After reviewing the options available, we at Nav.com have partnered with what we feel are the best business solutions available to small business owners. Hop over to our Business Services page to review and learn more about these great service providers.

These are just a few of the key things that are important to improve your overall business organization.  By practicing these and becoming more familiar with the financial side of your business, you’ll be able to develop your own unique approach to successfully managing your business bookkeeping.

 

This article originally appeared on Nav.com and was re-purposed with their permission.

For information about Opportunity Fund’s small business loans, please contact us at 866-299-8173 or loans@opportunityfund.org.  For questions about your existing loan or other customer service questions, please contact us at 866-299-8173 or sbhelp@opportunityfund.org.


Opportunity Fund is California’s largest and fastest-growing nonprofit lender to small businesses. In FY16, we made $60M in loans to help more than 2,200 small business owners invest in their businesses.  Opportunity Fund invests in small business owners who do not have access to traditional financing. As a founding member and signatory to the Borrower’s Bill of Rights, we believe in the important role small businesses play in our community and the economy, and we aim to help owners financially succeed.

Visit us online at http://opportunityfundloan.org and follow us on Facebook and Twitter

Don’t like spammy phone calls and emails? Ever wonder how your contact information gets into seemingly random hands?  Our content partner Nav shares five tips for how to protect your personal contact information from predatory lenders and scams.

Protecting your contact information from predatory lenders and scams is important for the security of your small business and for not wasting your valuable time. Read this post from our partner Nav.com for five easy tips.

 

Since I started reviewing online lenders, I have filled out 30+ online business loan applications to understand the alternative lending market. The applications include direct lenders as well as loan brokers. An unintended consequence is that I am getting 10+ cold calls from loan brokers and alternative lenders on a daily basis. I don’t know how they get my phone number exactly, but I suspect someone sold my contact information as leads to lenders/brokers.

In the beginning, there’s novelty. I would answer the phone calls and try to pry more information from the “fast and easy” funding people. But after a while, it just became annoying. I stopped picking up my phone unless it’s someone from my contact list. I missed a few important phone calls from that. In retrospect, if I had known what I know, I would have taken the following steps to protect my contact information so that I don’t get spammed all the time.

  1. Get a phone number through one of the virtual phone systems such as MightyCall. This will become the number you use to register your company, and the number you use to apply all the business financing products.
  2. Get a separate email for all the spams you are going to get once you fill out a loan application.
  3. I don’t think you need a separate mailing address. But throw away all the snail mails that include a fake check or a pre-approved $50K business line of credit. These are mostly loan sharks who charge insane amount of fees no matter how much they sound like they are here to help your business.
  4. Now, don’t use your primary contact information on any corporate registration documents, yellow pages, phone directory, your website, loan applications or final loan documents. Your information will be spread around through many different ways. Some lenders/brokers might sell your information. Some of the information is available through secretary of state or business credit bureau. The best way to protect your private contact information is not to give it away in the first place.
  5. You might still want to check your messages on the VoIP phone number and emails regularly but you don’t have to worry about being harassed like me.

I have had enough. I am getting a new phone number. Be ultra protective of your primary contact information so you can get into contact with people who are important to you while avoiding spammy phone calls which are mostly counter productive.

 

This article originally appeared on Nav.com and was re-purposed with their permission.

For information about Opportunity Fund’s small business loans, please contact us at 866-299-8173 or loans@opportunityfund.org.  For questions about your existing loan or other customer service questions, please contact us at 866-299-8173 or sbhelp@opportunityfund.org.


Opportunity Fund is California’s largest and fastest-growing nonprofit lender to small businesses. In FY16, we made $60M in loans to help more than 2,200 small business owners invest in their businesses.  Opportunity Fund invests in small business owners who do not have access to traditional financing. As a founding member and signatory to the Borrower’s Bill of Rights, we believe in the important role small businesses play in our community and the economy, and we aim to help owners financially succeed.

Visit us online at http://opportunityfundloan.org and follow us on Facebook and Twitter

If your small business is not on LinkedIn, it should be. Our content partner Nav explains why promoting your small business on LinkedIn is so important and how it can help expand your company’s audience and engagement.

If your small business is not on LinkedIn, it should be. Our content partner Nav.com explains why promoting your small business on LinkedIn is so important and how it can help expand your company’s audience and engagement.

Among social media platforms, LinkedIn is typically seen as the most professional one.

The site boasts more than 380 million users spread out across 200 countries and territories.  Unlike Twitter and Facebook, this platform is strictly business for most members. LinkedIn users see a business’s or individual’s profile as a Web-based resume.

With this in mind, as well as LinkedIn’s goal of connecting professionals, your branding strategy for the site has unique demands. So how can you use LinkedIn to build business relationships across the world without the stepping outside your office?

LinkedIn is your company’s resume

Like your business credit report, a LinkedIn profile can tell potential customers and partners a lot about your company. For business-to-business organizations, it is particularly important to keep an updated company profile and succinct descriptions amongst your employees — this will signal to potential customers that your company is well organized and worth considering.

The site allows for the creation of company pages for free, which can include basic information about the business — such as location, founding date and website — as well as different modules for posting content and status updates. Once your company page is active, employees can include a link in their personal profile to the company one, indicating that they work for your organization. Through your employee’s connections, you can further build your audience and connect other professionals with your business.

Lead and They Will Follow

Increasing brand awareness involves acquiring “followers”. These followers will become your company advocates and will play a key role in spreading your content as a means of online word-of-mouth marketing. Here are two simple ways to utilize tools you already have to boost your follower count:

  1. Leverage your employees. Encourage your employees to post to their network about your business, linking back to the business’s profile page.
  2. Add a “follow” button to your website. Your best LinkedIn advocates will likely be the ones who already love your brand. Let your frequent website visitors know that you are on LinkedIn by adding a simple follow button to your website.

LinkedIn has a paid advertising service that can be used to gain these followers or promote any content you post to your company page. If your business can spare room in the budget, these ads can allow you to target campaigns to individuals in specific industries and job functions. The site includes a number of packages that are priced based on the level of engagement you want to drive for your business.

Social Media Branding in the Professional Sphere

After you’ve done what you can to convert your employees and current brand advocates on LinkedIn, you can use LinkedIn to connect with various other professionals. This is particularly useful if you sell to B2B clients. Here are some tips for engaging with these companies:

Join LinkedIn groups. This social media platform has various groups that are networks of users with similar interests and career experiences. For example, if you own a marketing agency, join the digital marketing group. Find ones that relate to your business and join to connect with other users.

Start, join and respond to discussions. Users engage in discussions in the groups they join. Take an active role in these conversations. Doing so presents an opportunity to show your subject-matter expertise and give possible connections a view into your company’s mission and goals.

Post content. There are various ways to create posts on LinkedIn, from embedded slide presentations to links. Consider posting pictures and short videos of day-to-day operations at your business so users can have a virtual tour. You can also post job openings and company news.

Publish content. In addition to posting content to your LinkedIn page, you can also publish articles that will show up in LinkedIn Pulse. Check out the content channels for LinkedIn Pulse to see if any of them relate to your business, and target those audiences.

 

This article originally appeared on Nav.com and was re-purposed with their permission.

For information about Opportunity Fund’s small business loans, please contact us at 866-299-8173 or loans@opportunityfund.org.  For questions about your existing loan or other customer service questions, please contact us at 866-299-8173 or sbhelp@opportunityfund.org.


Opportunity Fund is California’s largest and fastest-growing nonprofit lender to small businesses. In FY16, we made $60M in loans to help more than 2,200 small business owners invest in their businesses.  Opportunity Fund invests in small business owners who do not have access to traditional financing. As a founding member and signatory to the Borrower’s Bill of Rights, we believe in the important role small businesses play in our community and the economy, and we aim to help owners financially succeed.

Visit us online at http://opportunityfundloan.org and follow us on Facebook and Twitter

Not qualifying for a bank loan can be disheartening. Our content partner Nav shares four types of businesses that usually don’t qualify, five reasons your small business might not, and options for successfully funding your business’ needs.

Understanding why your small business might not qualify for a bank loan can save you time and confusion. Find out what those reasons are – read this post from our partner Nav.com.

Small business is booming, but you’d never know it judging from small business loan approval rates. Although the economy is rebounding from the 2008 financial crisis, not much has changed for those seeking small business loans from traditional banks. At just 21.3 percent approval rate in January 2015, less than a quarter of small business loan applicants receive their loans.

So, what kind of shot do you have at securing funding? And do you even qualify for a small business loan from a traditional bank? We’ve got the answers. Here are the types of small businesses that typically do not qualify for small business loans from traditional banks:

  1. Sole Proprietors – There are more than 28 million small businesses in the United States, and a whopping 23 million of them are sole proprietors. Unfortunately, if you’re a sole proprietor, the numbers aren’t in your favor. Traditional banks view sole proprietors as high-risk because there is a greater chance the loan will not be repaid due to lack of income, death, or incapacitation.
  2. New Businesses – Banks typically want to lend to established businesses. Although they encourage business owners to apply for loans during their startup phase, they really prefer to work with companies that are at least two years old. Statistically, a large number of businesses don’t survive past their first year of business, so once you hit the two-year mark, traditional banks take you a bit more seriously.
  3. Industry-Specific – The type of business that you own and the industry that you fall under can be a deciding factor for many banks. In some cases, banks have chosen to reject loans solely based on a business’ industry.
  4. State-Approved Businesses – There are types of businesses that are authorized at the state level, yet lack legitimate state recognition. For example, cannabis shops or marijuana distributors are highly unlikely to receive a loan approval from a traditional bank.

Business Loan Denial Reasons

Traditional banks generally look at very matter-of-fact figures when analyzing whether to approve a small business loan. Here are some of the most common reasons banks give small business applicants the ax:

Credit History – A strong credit history is a non-negotiable to banks. Without a good personal and business credit score, your chances of securing a small business loan from a traditional bank go from small to virtually nonexistent. Banks will look into both your personal and business credit history. On average, banks like to see a personal credit score of 680-720 and a history of strong money management skills, such as effective management of the business budget and/or personal finances.

Losses on Tax Return – Showing profit is important in general, but it’s especially important for banks. In the beginning, many small businesses opt to maximize deductions. However, there is a high likelihood that a bank will reject a loan application if the small business doesn’t show a net profit.

Lack of Current Cash Flow – Banks fear that a business will focus on paying off expenses rather than paying off a loan, so lack of cash flow is a red flag. Banks tend to view a negative cash flow as a representation of a business’ health.

Insufficient Collateral – Traditional banks prefer to work with businesses that have collateral because if the business defaults on the loan, the bank can acquire the collateral and sell it to recoup the loss. This is another catch-22, though. On the one hand, banks require new small businesses to provide collateral when applying for business loans. The problem is that startups usually don’t have collateral such as vehicles, real estate, investments, or business equipment. If serving up your business or home as collateral scares you, there are many options to get a loan without collateral.

Customer Base – Banks like to grant loans to industries they consider stable. If they view your customers as a targeted niche, they may reject your loan application. Generally, they prefer to work with a business that has a diversified portfolio of clients.

The Solution

Ok, so you fall into one (or all) of the categories mentioned above. Does that mean you should give up, call it quits, and live off ramen for the rest of your life? Absolutely not. While traditional banks may make you feel like your business isn’t worthy of their trust, there are other options. Alternative lenders use data and technology to review your business health and approve loans instantly and online.

 

This article originally appeared on Nav.com and was re-purposed with their permission.

For information about Opportunity Fund’s small business loans, please contact us at 866-299-8173 or loans@opportunityfund.org.  For questions about your existing loan or other customer service questions, please contact us at 866-299-8173 or sbhelp@opportunityfund.org.


 

Opportunity Fund is California’s largest and fastest-growing nonprofit lender to small businesses. In FY16, we made $37M in loans to help more than 1,800 small business owners invest in their businesses.  Opportunity Fund invests in small business owners who do not have access to traditional financing. As a founding member and signatory to the Borrower’s Bill of Rights, we believe in the important role small businesses play in our community and the economy, and we aim to help owners financially succeed.

Visit us online at http://opportunityfundloan.org and follow us on Facebook and Twitter

Go from rejected to approved on your next business loan application.  

Learning how to bounce back after being rejected from a small business loan is important for your business’ short and long-term success. Find out how – read this post from our partner Nav.com.

It’s amazing how one piece of paper can have the power to open doors to your dreams, or close right in front of you, holding you back from what might have been.

When you receive a business loan rejection letter, you may feel like the door of opportunity has slammed solidly shut. There’s not a sliver of light escaping around the edges. Whether you’re launching a new business, looking for a way out of a sales slump, or trying to jump-start an expansion idea, being turned down for a loan feels like you’ve reached a dead end.

Rejection Stings

Though it’s little comfort in the moment, know that you’re not the only small business owner receiving this bad news. Small business financing remains 17 percent below the peak reached prior to the 2008 recession, according to a report published in January by the Federal Reserve Bank of Cleveland. According to the Associated Press, rejection rates for black and hispanic business owners are around 20 and 19 percent, respectively, and business loan rejection for other segments rests around 14 percent.

Despite the sense of despair you may initially feel, being turned down for a loan doesn’t necessarily mean you’re trapped without options. A business loan rejection may simply be another challenge on the road to entrepreneurial success. By shoring up any weak areas in your operations now, you’ll set your business on stronger footing for the long run.

Small Business Owners Face Greater Challenges

Survey data suggests loan approval rates overall are generally increasing. But the beneficiaries of the loosened purse strings are primarily large and medium-sized businesses targeted by bigger financial institutions. The Federal Reserve Bank of Cleveland report shows small business lending (loans under $1 million) remains low. Some experts, like Karen Mills, former administrator for the SBA, believe this is because there’s more profit for banks managing larger loans.

Is Your Business A Good Candidate for Credit?

In order to improve your future chances at qualifying for a loan, it’s important to understand the reasons behind the rejection. When you apply for a loan, both your personal and business credit histories will be reviewed to determine your creditworthiness. If you or your business has little credit history or, worse, a poor credit history, your application is more likely to be rejected.

Does your business have a steady income stream? Does your cash flow statement show sufficient margin between payables and receivables? Small business owners who plan to apply for a loan in the near future should remember the importance of maximizing earnings and keeping expenses low.

If your business loan rejection is primarily due to an unfavorable credit rating, you’ll need to repair your credit before applying again. Check your credit report for erroneous information, develop a plan to pay down debt consistently and on time, and be sure to stay well below your available credit spending limits. Over time, these steps will help to improve your personal and business credit scores.

What’s Your Plan?

So you had a big idea in your head, but not necessarily well articulated in your loan application? That may have been your key mistake.

In absence of a solid business plan, a lender lacks sufficient information about how you intend to use your financing to form an educated opinion about the viability of your goals. This lack of information can lead to a business loan rejection, even if your credit rating and other financials are in great shape.

Your subjective, romantic vision of a forward thinking business might gain you attention at a cocktail party, but it doesn’t show lenders any evidence of your repayment ability. Hand sketches on napkins or a couple of articles torn from a trade magazine aren’t substantial evidence of your calculated risk, projected timeline, knowledge of competition and market, and so on.

A well-formed, professional business plan is essential in demonstrating your own understanding of your business potential. In addition to a mission and vision, business model, and marketing strategy, your business plan should include a thoughtful forecast of your earnings potential and an expected break even point to demonstrate your clear understanding of what it will take to make your business financially viable.

What’s Next After Business Loan Rejection?

Like an athlete rallying back from a disappointing showing at last year’s competition, you need to take some time to assess and prepare before furthering your search for funding.

First, evaluate your business credit reports. Look for errors, address old or dormant accounts, and confirm timely payment. Next, improve your cash flow by reconciling past due amounts, minimizing spending, and maximizing sales. Build up a reserve that banks will look on favorably as a means of possible repayment.

If writing and Excel aren’t your thing, work with a friend or relative who can help turn your vision into an articulate plan documented with numbers and data. Consider ways to strengthen your relationship with a local lender or credit union, and contact your local Small Business Development Center for some hands-on advice.

Your recent business loan rejection may have closed one door, but that doesn’t mean there aren’t open windows nearby. With your hard work, you’ll be sailing through to the other side in no time, moving fast toward realizing your small business dreams.

 

This article originally appeared on Nav.com and was re-purposed with their permission.


 

Opportunity Fund is California’s largest and fastest-growing nonprofit lender to small businesses. Last year, we made $37M in loans to help more than 1,800 small business owners invest in their businesses.  Opportunity Fund invests in small business owners who do not have access to traditional financing. As a founding member and signatory to the Borrower’s Bill of Rights, we believe in the important role small businesses play in our community and the economy, and we aim to help owners financially succeed.

Visit us online at opportunityfundloan.org and follow us on Facebook and Twitter

Opportunity Fund. Working Capital for Working People. opportunityfund.org