Marcia built a successful boutique in Los Angeles on a long career in fashion. When she needed a small business loan, she got a high interest rate that almost crippled her business. Opportunity Fund was there to help her refinance the loan and set her on the path to financial success.

Our customers inspire us every day, and we want to regularly share those stories to inspire you, too.

Marcia built a successful boutique in Los Angeles on a long career in fashion. When she needed a small business loan, she got a high interest rate that almost crippled her business. Opportunity Fund was there to help her refinance the loan and set her on the path to financial success.

Starting a Career from Scratch

Marcia Charles has worked in fashion all her life. She started out working at department store warehouses in the Bronx at age 15. Over the next 35 years she grew into a self-taught fashion designer and merchandiser and self-made small business owner.

Marcia opened Pinky Rose Boutique in 2003 in Los Angeles. She works with wholesalers to stock up her boutique with the latest styles in clothes and accessories, plus she showcases her own designs.

“I created the Nadda dress,” Marcia said. “it’s not a dress but like a jumpsuit, comfortable with built in pockets that work as a belt and can be worn five different ways.”

Marcia’s leadership extends beyond her innovative fashions. She helped establish the business neighborhood around her boutique. “I work with people in the community to improve the neighborhood for small businesses,” she said. “I was the first boutique on the street. Along with two other restaurants, we were the first businesses here. When I started, there was nothing on the street.”

Now in her 60s, Marcia is using her experience and wisdom to keep her business going in a tough industry while building up her own fashion brand. She needed a small business loan to help with working capital. She ran into problems with her first lender Kabbage, a company that charged her a 45% interest rate that killed her business cash flow.

She needed a trustworthy and transparent lender who understood her business. Opportunity Fund was there to answer her call.

Finding the Right Fit for Financing

Marcia came to us through our community partner BusinessSource LA. After connecting with Marcia, our loan consultant Robert Zapata helped her understand what we do for small business owners and how we’re different from high interest alternative lenders. It helped her make the choice to work with us for her small business financing needs. Robert was able to close a loan for $7,500 in October 2015.

“It helped me pay off the Kabbage loan and get a lower interest rate,” she said. “That helped me stay in business, because the Kabbage loan would have probably put me out of business.”

Marcia - Pinky Rose Boutique

Our small business loans are helping Marcia keep the latest fashions in stock (photo courtesy of Michael Microulis)


She came back to us for three more loans to help with her wholesale expenses:

  • $15,000 in September 2016
  • $18,000 in February 2017
  • $25,000 in January 2018

“It’s helped me grow over the past three years,” she said. “Without Opportunity Fund I wouldn’t have the money to do it.”

Marcia’s vision for the future of Pinky Rose Boutique includes expanding to a second location that houses only her original designs and establish her comfort couture brand.

We’re excited to see the next designs coming from Pinky Rose and we’re honored to support hard working entrepreneurs like Marcia.


We hope this story has inspired you, too.  At Opportunity Fund, we offer easy-to-get, fast, and affordable small business loans to help small business owners succeed.  Visit our home page to find out more.

Opportunity Fund is tackling economic inequality so that hard work and perseverance means a shot at getting ahead, not just struggling to get by. Our programs are supported by a community of donors and investors whose contributions help to fund small businesses, support college students, and build stronger families and vibrant neighborhoods. Since 1994, the team has deployed $600 million and helped 20,000 families earn, save and invest in their own futures. Opportunity Fund has earned a 4-star rating from Charity Navigator, America’s largest independent charity evaluator, for our commitment to accountability and transparency.

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Your credit score shouldn’t be a game of limbo. Our content partner Nav explains how low credit scores work and how you can still get credit despite your low score.

Your credit score shouldn’t be a game of limbo. Our content partner Nav.com explains how low credit scores work and how you can still get credit despite your low score.

 

In the world of finance, it’s common to hear people bragging about their credit scores. These badges of money honor are one famously important indicator of how accomplished a consumer appears. The higher, the better, and so – when talked about openly – it’s most often the big numbers you’ll hear about.

What about those who are hanging out at the bottom? Their credit history may not be a sign of good times or wise decisions. Perhaps, they suffered from a horrible loss (such as a medical disaster or business failure) and their credit took the worst kind of hit. If everything that could go wrong, did go wrong, what kind of credit score numbers would we be talking about? When we open our dark, skeleton-filled financial closets, what is the lowest credit score that could be lurking there?

How Low Can FICO Go?

One of the scoring options used for evaluating personal credit, FICO (Fair Isaac Corporation), is used in over 90% of credit decisions, and it ranges from 300 (the lowest) to 850 (the highest). But just because you’re hanging out well above the 300 mark, doesn’t make your credit “good.” In fact, most lenders consider anything below 600 in the “poor” range, and you’ll find it hard to qualify for the best credit, mortgage, and loan offers available.

If you’re sitting at a 579 or lower, Experian lumps you into this substandard group. They have determined that 61% of consumers in this category are likely to become seriously delinquent, or even default on a loan, in the future. So, even if you aren’t anywhere near the 300’s, you could still have problems getting good rates, an adequate credit line, or access to the better utility plans offered in your area.

Who determines what is a “bad” or “poor” score? It’s not FICO or the other reporting companies. They just supply the number, which is an indication of your risk to lenders. It’s the lenders themselves that make the determination of whether a score can pass their lending rules. So, a consumer who can’t get a mortgage from one bank with a 620 score, may be able to get one with another lender. While the scores are standard, how they are interpreted isn’t.

What Creates a Low Credit Score?

Responsibility with payments is just one factor that affects your score. A serious delinquency, history of late payments, bankruptcy, or default will certainly lower your score. Most people at the bottom of the score range have had at least one of these, and possibly more. You can also have a lower score if you are paying responsibly but are using up most of the credit available to you. (Keeping your ratio of debt to available credit below 30% is key to keeping your score from dragging at the bottom.)

These aren’t the only things responsible for a lower score, however. Having a no credit or only very new credit can also lead to a poor rating. A recent Consumer Financial Protection Bureau report revealed that 26 million adults in the United States don’t even have a credit record, placing them in the same position as those with delinquencies when it comes to accessing credit services.

This is also why experts recommend that you participate in consumer behaviors that contribute to a score, even if you don’t personally favor the use of credit. You can start with a secured credit card that only allows you to charge what you’ve put as a deposit on your account. Asking your rental landlord to report your on-time payments to a reporting bureau can also help.

Can I Get Credit With a Low Score?

The short answer is “yes.” In fact, there is a whole suite of services, loans, and cards designed for the consumer with a low score. While it’s not likely to get access to much with the absolute worst score of 300, anyone in the poor range can benefit from a secured credit card, getting a co-signer, or being added as an authorized user on an existing credit card account. Just be sure you treat these options seriously, pay on time, and do the things needed to raise your score and get access to better credit solutions over time.

Another thing to remember is that banks aren’t limited to just using your credit score in qualifying you for credit. While one important factor, they also rely on your wages, job history, and income sources such as child support or alimony. The score is just part of a whole picture lenders look at to determine credit worthiness.

What’s Next For Credit Scores?

Despite feeling like having a low credit score is a lonely place to be, it’s not. While less than 5% of consumers have a FICO score at the 300-499 level, 20% still fall in the range under 599 – considered “poor” by most lenders. This shows that credit is still an issue for a good portion of the population and one that will take years to correct.

It’s not a reason to lose hope, however. The trend is pointing up, showing that the average credit score hit 700 for the first time ever in April of 2017. This may be because consumers have unprecedented access to see their scores through free or low-cost platforms (including as part of the FICO Open Accessprogram or their credit card statements.) The U.S. economy is also credited for much of the gain, with Experian noting an upward trend since the end of the Great Recession. This same Experian study reported that scores above 800 finally outnumbered those below 600 – a first for U.S. credit holders.  

Maybe, then, we are asking the wrong question. Instead of asking “how low can I go?” we should look at how high we must reach to live the life we seek. Often, the difference in getting what we need is a matter of a few easily attainable points.

 

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.

Loans are subject to credit review. Additional documentation may be required for credit approval. We are an Equal Opportunity Lender. Loans will be made or arranged pursuant to California Department of Corporations Finance Lenders License #6050609.


Opportunity Fund is tackling economic inequality so that hard work and perseverance means a shot at getting ahead, not just struggling to get by. Our programs are supported by a community of donors and investors whose contributions help to fund small businesses, support college students, and build stronger families and vibrant neighborhoods. Since 1994, the team has deployed $600 million and helped 20,000 families earn, save and invest in their own futures. Opportunity Fund has earned a 4-star rating from Charity Navigator, America’s largest independent charity evaluator, for our commitment to accountability and transparency.

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

Being ghosted means more than being ignored by friends – it can also mean that you have little to no credit. Our content partner Nav explains how getting ghosted can cost you more money when you need a loan and how to fix the problem.

Being ghosted means more than being ignored by friends – it can also mean that you have little to no credit. Our content partner Nav.com explains how getting ghosted can cost you more money when you need a loan and how to fix the problem.

 

Getting “ghosted” is never a good thing, especially when it comes to your credit scores. They can determine whether you can borrow money for your business, and how much borrowing will cost you. When you have little or no credit history, you’re essentially a “ghost” to the credit bureaus. Being a ghost can mean paying hundreds of thousands more in borrowing costs. It can also put you out of business.

Many business owners fall into the “ghost” category because they either never established a credit history, or because they immigrated to the U.S. There are more of these credit ghosts than you may think.

According to Nav’s data on 189,466 of its small business customers, 39% qualify as credit ghosts. These business owners had a personal credit score of 620 or lower, and had no or very limited credit history. In addition to personal credit, having little or no business credit history can lead to even more problems, like low business credit scores.

Nav’s own co-founder and CEO, Levi King, was once a credit ghost himself. He grew up on a farm in Idaho and was taught to pay cash for everything. It wasn’t until he started his first business, a sign manufacturing company that he realized the importance of building a positive credit history.

“One of my suppliers asked why I didn’t set up credit accounts with them. I had been paying cash on delivery for everything,” says King. “When they pulled my credit report, they said there wasn’t even a record for my company. It was as though I didn’t exist. If they didn’t know me personally, they would have thought my business was a scam.”

How Credit Ghosts Lose Out

For some entrepreneurs, you may have felt the bite of being a ghost when launching your business idea. You may have looked for financing, but got continually denied because of your low credit scores. It’s no wonder that 62% of business owners rely on personal savings to fund their business.

Even if you’ve launched your business, you’ll likely need money to grow or cover cash flow bumps. Traditional lenders will almost always check your personal and business credit reports. A bad credit score will usually lead to a denial for bank loans or credit lines.

This forces many to seek out alternative forms of business lending that have exploded over the past 15 years. Unfortunately, some of these lenders charge extremely high rates and have terms that are tough to understand. Do you know how to calculate a factor rate, for example?

“There are plenty of ways to get money for your business these days, but as a credit ghost you usually only qualify for high-cost financing, which can ruin your business because it’s too expensive, or put you in cycle of reborrowing,” King says. “Most of these lenders don’t report your repayment information to the credit bureaus, so your situation never improves.”

Who’s Most Likely To Be a Ghost

When someone immigrates to the U.S., their credit history doesn’t follow them. They may have run a successful restaurant in Japan for 10 years and had pristine credit, but when they arrive in the U.S., they are essentially invisible to lenders and other creditors. That’s a problem.

Immigrants are crucial to the health of the U.S. economy. They launch more than a quarter of all U.S. businesses and an estimated $126 billion in annual wages are paid to Americans who work at immigrant-run businesses.

Some companies are trying to help solve the problem. Nova Credit has built technology that allow immigrants to transport their credit history around the world. And Nav educates business owners on how to build their credit profiles and provide tools to make it simple to do.

In addition to immigrants, studies have shown that minority entrepreneurs can have a harder time accessing the credit they need to grow their business dream. The Federal Reserve Banks of Cleveland and Atlanta recently released findings from the Small Business Credit Survey that looked at access to capital issues for minority-owned businesses.

That survey found that 58% of black-owned firms reported credit availability challenges, versus 32% of white-owned firms. The same survey also revealed that 40% of black-owned firms reported not applying for financing because they were discouraged (in essence, they felt they’d get denied), compared with 14% of white-owned companies.

How to Un-Ghost Your Credit

If you feel like a credit ghost, there are some simple ways to build your profile. As a business owner, you should be building both your personal and business credit profiles — they are separate.

For your personal credit, get a couple credit cards, even if it needs to be a secured credit card, to start establishing credit history. Always pay on time and keep your credit utilization low, below 30%. (Don’t understand what credit utilization is? Read this.)

For your business credit, ask your suppliers about setting net repayment terms and whether or not they report to the business credit bureaus. You should be able to get net 15-day terms or more if you have a solid history and relationship with the supplier.

You should also apply for a business credit line from stores like Lowes or Staples. Almost any business can get approved for a small amount at these places. Finally, you can also open business credit cards in your business name. Like personal credit cards, always pay them on time and keep your balances low.

The good news for credit ghosts is that establishing a positive credit history should help you improve your scores relatively fast. In a matter of months, you may be able to un-ghost your credit, and put your business in a position to access affordable cash whenever you need it. You can track your business and personal credit score progress for free on Nav.

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.

Loans are subject to credit review. Additional documentation may be required for credit approval. We are an Equal Opportunity Lender. Loans will be made or arranged pursuant to California Department of Corporations Finance Lenders License #6050609.


Opportunity Fund is tackling economic inequality so that hard work and perseverance means a shot at getting ahead, not just struggling to get by. Our programs are supported by a community of donors and investors whose contributions help to fund small businesses, support college students, and build stronger families and vibrant neighborhoods. Since 1994, the team has deployed $600 million and helped 20,000 families earn, save and invest in their own futures. Opportunity Fund has earned a 4-star rating from Charity Navigator, America’s largest independent charity evaluator, for our commitment to accountability and transparency.

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

Current credit all paid off and looking for a new loan? Our content partner Nav explains why waiting a month may be better for you.

Current credit all paid off and looking for a new loan? Our content partner Nav.com explains why waiting a month may be better for you.

 

You ran through an analysis and decided it’s time to borrow to boost your business. You paid off your old credit card balances and took steps to shore up your credit score. You scrubbed through your financial statements to make sure they are accurate and professional. Is it time to apply for the loan? Probably not just yet. Follow along to learn why you should wait 30 days to apply for a loan.

What happens when you apply for a loan?

The loan application process requires data from many sources to make a decision. Depending on where and how you apply, you may get an instant online decision or have to wait weeks for a reply from a traditional bank.

Regardless of where you apply for a business loan, the lender will review your loan application, financial information, and credit history before making a lending decision. If you have perfect credit, no balances, and strong finances, you shouldn’t have a problem getting approved. But it doesn’t always work like that.

Many businesses need a loan at exactly the wrong time. When you have high credit card balances, are strapped for cash, and need a little more working capital to get through the season, a loan may be just what you need. But in that situation, you might not come off as a great, low-risk applicant to the bank. This is where waiting to apply for a loan may increase your approval odds.

A zero balance doesn’t mean your credit score says zero.

Both personal and business credit scores factor in current balances on credit cards, lines of credit, and other loans. If you max out your credit card, the impact is even bigger. Armed with this information, you may think that you can simply pay off your credit card and apply for the loan right away. But the lender might still see your old, high credit card balance even though you paid it off.

This isn’t because your credit report is wrong, per say, it is because of delays in credit reporting. Each time you have activity on a credit card or other loan, your bank systems usually update within a day or so. But your credit report does not update as quickly or frequently as your account balances.

The credit bureaus track credit report data for over a hundred million Americans. Considering that many people have multiple accounts, it wouldn’t be feasible to update everyone’s credit reports on the fly.

Here’s how the credit reporting system works.

Considering the scale of it, the credit reporting system in the United States is quite impressive. Three companies, Equifax, Experian, and TransUnion, collect data from hundreds of millions of accounts and data sources for consumer credit scores. For business credit scoring, Experian, Dun & Bradstreet, and FICO are leaders in credit scoring and reporting. But a lot happens behind the scenes to calculate those credit scores.

In most cases, every credit account you open is reported to at least one of the big three consumer credit bureaus. Every time you have activity on your account, your bank tracks that activity. Then, typically once every month, the banks will send updated information for each account to the credit bureaus. Because of this timing, it is possible for you to pay off a balance and have to wait a full month before your credit report is updated.

The timing might work out that your credit is updated the next day, but there is no guarantee. Also keep in mind that each lender reports on its own schedule, and might not report all accounts on the same day. If you pay off multiple credit cards, your credit report will likely change a few times before the final payoff is accounted for and your credit report and score jump.

Debt utilization makes up 30 percent of your personal credit score, which makes it the second largest factor in your score after payment history. Don’t underestimate the power it has to influence your score. If you can pay off all revolving credit accounts and wait for your credit report to refresh, you will be in much better standing for a new loan, assuming nothing else goes wrong with your credit in the meantime.

Wait for a 30 day cycle before applying for a loan.

Each time you apply for new credit, that credit application shows up as an inquiry on your credit report, which can lower your credit score. Don’t apply for a loan and get rejected. Pay off your debt, patiently wait a month for your credit report to update, then apply for the loan.

If you want to know for sure that your credit report is updated before applying for a loan, Nav is for you! A free account gives you both a personal and business credit score for free, and premium accounts give you scores from multiple credit reporting bureaus. Sign up and check your credit before the bank so you don’t end up with a surprise rejection of your loan application. It takes just a few minutes to get your free credit score and tips on improving your credit. You have nothing to lose, give it a try today!

 

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 tackling economic inequality so that hard work and perseverance means a shot at getting ahead, not just struggling to get by. Our programs are supported by a community of donors and investors whose contributions help to fund small businesses, support college students, and build stronger families and vibrant neighborhoods. Since 1994, the team has deployed $600 million and helped 20,000 families earn, save and invest in their own futures. Opportunity Fund has earned a 4-star rating from Charity Navigator, America’s largest independent charity evaluator, for our commitment to accountability and transparency.

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

Everybody knows that a loan is not a free bundle of money. Loans come with fees and interest, and you end up paying more than the original amount you received. The true cost of a loan can get confusing and expensive. Read how much a loan really costs.

Everybody knows that a loan is not a free bundle of money. Loans come with fees and interest, and you end up paying more than the original amount you received. The true cost of a loan can get confusing and expensive. Read how much a loan really costs.

 

That’s right, you will pay more for a loan than you borrowed

As a small business owner, you have probably had some experience with loans. Whether you’ve gotten a working capital loan for your business or have a credit card you’re making payments on, you have paid interest on money you borrowed. Despite how common credit is in our culture, we don’t sit down and think about how much interest we will actually pay over time.

If we take “8% fixed interest rate” for example, you might assume they will pay 8% of the amount of money they borrowed. Interest isn’t that simple. For each month you still owe money, you will pay 8% of how much is left over that month. Good news: the amount of interest accumulated each month will go down as you pay it off.

Certain types of loans can actually hurt your business

We talk a lot about how dangerous Merchant Cash Advances (MCAs) are for small businesses, but it is important to stay away from these. MCAs or payday loans take a percentage of your sales to pay off your debt. This sounds easier than putting away a large chunk of money to pay each month, but this hurts your cash flow. Additionally, you may end up paying up to 350% APR. Bad news: this means that your loan will get extremely expensive and will really hurt your small business.

APR is a good indicator of your loan’s true cost

Your Annual Percentage Rate (APR) is calculated using your monthly interest rate as well as all the fees and additional costs of a loan. This makes APR a good indicator of how much a loan costs you each year, but it can be misleading if you pay off your loan early.

A low monthly interest rate sounds good, but it is important to be aware of any other fees that add up. Your lending institution may have early repayment fees, late payment fees, collateral collection fees, origination fees for simply getting the loan, check processing fees, and many more hidden costs! Always read the fine print closely.

Know the difference between fixed and adjustable APR. If your interest rates change, this could be bad if the economy suffers. This article by Investopedia will explain APR in more depth.

Choose a trustworthy lender

The best way to avoid an expensive loan is to educate yourself and choose a lender who is trustworthy. Opportunity Fund is transparent about fees, interest rates, and how much a loan will really cost you. Check out this easy-to-use loan calculator to find out your APR and monthly payments.

 

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 tackling economic inequality so that hard work and perseverance means a shot at getting ahead, not just struggling to get by. Our programs are supported by a community of donors and investors whose contributions help to fund small businesses, support college students, and build stronger families and vibrant neighborhoods. Since 1994, the team has deployed $600 million and helped 20,000 families earn, save and invest in their own futures. Opportunity Fund has earned a 4-star rating from Charity Navigator, America’s largest independent charity evaluator, for our commitment to accountability and transparency.

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

Loans are a common way for businesses to acquire capital, but some loans are more affordable than others. Whether your small business is doing well or in need of more capital, refinancing your loan is an option to consider. Keep reading for a few signs that you might want to refinance.

Loans are a common way for businesses to acquire capital, but some loans are more affordable than others. Whether your small business is doing well or in need of more capital, refinancing your loan is an option to consider. Keep reading for a few signs that you might want to refinance.

 

You’re Not Making Profit

Two of the most common reasons small business owners refinance their loans is because they need additional working capital or because they want to lower their interest rate. Both of these reasons boil down to the issue of not making enough profit. Whether you are paying too much for an unaffordable loan or working to pay it off and needing more money, refinancing is a good option.

Keep in mind that interest rates might be higher because of updated pricing. If you now have better credit and a longer on-time payment history than when you first took out your loan, you might have the opportunity to qualify for a lower rate. This is when you should take advantage of the opportunity to pay less in the long term by refinancing.

You’re Stuck in a Debt Cycle

Merchant Cash Advances (MCAs) are dangerous and expensive ways to get fast cash. You can get the capital you need quickly, even with bad credit. The hidden costs are hidden fees, high interest rates, early payment penalties, and tricky terms that hide important information you need to know as a small business owner.

We are seeing more of our borrowers come in needing help paying off their debt cycles caused by MCAs and other predatory loans. While we try to help where we can, it’s important for you to really explore your options and demand to read the fine print before jumping on a fast, expensive loan.

That being said, refinancing your loan is one way to get out of bad loan situations. Different lenders have different terms for refinancing and consolidating debt, but having one line of credit instead of many looks better on your credit report and is less expensive in the long run. Opportunity Fund only offers refinancing if you need additional funds on top of your existing loan, but we are here to help your small business succeed in any way we can.

Holidays are Approaching, And You Need More Working Capital

Your needs as a small business owner are always changing, and often you need more working capital as holidays approach. During the summer, some of our borrowers request additional funds because they had extensions on their tax returns and now face larger bills than they expected. During autumn, we see borrowers start planning for the holiday season and need to hire more people, increase stock, and ramp up marketing efforts. Whatever the reason or season, refinancing is often an inexpensive way to get additional funding.

You’ve Come to This Blog Post

If you’ve come to Opportunity Fund looking for information about refinancing your loan, then you’re already one step ahead. It means you are a proactive entrepreneur always looking for ways to increase profitability and decrease expenditures.

Opportunity Fund prefers borrowers who have paid off at least 70% of their existing loan – or in some cases at least 6-12 months of on-time payment. We can refinance your loan, increase the loan amount, update rates and loan terms, and only charge you a loan fee for the additional funds. You don’t need to pay a fee for the existing balance.

Think you’re ready to refinance your loan? Stop and take a moment to think if your business really needs additional financing. It’s important to only take out a loan if your business really needs it. Make sure you thoroughly understand your business’ finances and funding options before accumulating debt that could be unnecessary. If refinancing will increase your interest rate by 2% or more, we recommend keeping your existing loan and look for a second, inexpensive loan.

 

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

You want to get the most affordable loan possible to grow your small business, but your NAICS code could be hurting you. Our content partner Nav explains how and why you should look at your classification.

You want to get the most affordable loan possible to grow your small business, but your NAICS code could be hurting you. Our content partner Nav.com explains how and why you should look at your classification.

 

Even if you didn’t choose a NAICS code for your business (or have no idea what an NAICS code is), you probably have one.

North American Industry Classification System (NAICS) codes are six-digit codes used by the federal government to classify businesses into an industry. The system was created for statistical purposes but is also used for non-statistical purposes, including determining eligibility to bid on government contracts and the risk level associated with your business for some loans and financing options. There are 20 sectors and more than 1,000 industries in the U.S. NAICS system.

Because there is no agency that governs how NAICS codes are assigned to businesses, these codes are largely self-assigned or assigned to your business by an agency collecting information on businesses. For example, the U.S. Census Bureau may assign an NAICS code to your business based on a survey you took. If you applied for an Employer Identification Number (EIN) on the IRS website, information from your application can be used to assign your business a code. This code will also show up on your business credit reports.

 

How Your NAICS Affects Your Wallet

How risky your business is determines whether or not you qualify for the best loans and financing options. Some industries, as determined by NAICS codes, are riskier than others, and your NAICS code tells a lot about how risky your business is in the eyes of a lender.

There are a number of ways your industry code can cost you money.

1. By bringing down your business credit scores

NAICS and SIC codes are recorded in business credit reports. The industry in which your business is classified can have an impact on your business credit score — for example, Experian’s business credit score uses your industry code as one factor determining your score. If you are incorrectly classified in a higher risk industry than the one in which you operate, it could be bringing down your business credit scores. These scores are then used by lenders, vendors and suppliers to qualify your business for trade terms, loans, and lines of credit.

2. By lenders determining your eligibility and rates for a loan

Lenders are going to want to know your NAICS code to qualify your business for a loan. Any given lender may deem some industries too risky to work with. Typical “high risk” industries include gambling, political lobbying and businesses involved in pyramid sale distributions, but the list goes on. The Small Business Administration, for example, has a long list of ineligible businesses that they will not work with for their popular 7(a) loan program based on operating activities.

3. Determining whether your business is “small”

The SBA uses size standards to determine if you are a “small” business. Only “small” businesses can qualify for government programs designated for small business, including the SBA’s loan programs and certain government contracting opportunities.

If your business is classified under the incorrect industry, it could make a difference whether or not you are classified as small because different industries have different size standards.

For example, let’s say you are a residential remodeler, but you started your business specializing in roofing. Your NAICS code may be 238160 for Roofing Contractors, when it in fact should be 236118 for Residential Remodeler.  This might seem like it’s not worth the hassle of changing, but depending on your annual receipts, it could determine whether you are a small business. Roofing Contractors must have annual receipts of less than $15 million to be considered small, whereas Residential Remodelers can have annual receipts of up to $36.5 million.

The industry code may also determine how many opportunities are available for your business — in the case of our remodeling example, residential remodelers tend to have more opportunities available than specialized industries do.

4. Whether you qualify for contracting opportunities

Business opportunities presented by the federal government are offered to specific industries based on what the government buyer is looking for. The government uses NAICS codes to classify these solicitations for a business.

Here’s an example of where the industry code might show up on a solicitation form through fbo.gov:

This opportunity is set aside for NAICS code 236118, Residential Remodelers. If you are classified, instead, under NAICS code 236115, New Single-Family Housing Construction (except For-Sale Builders), you might miss this opportunity.

Although NAICS codes may seem a dry, complicated subject, taking the time to make sure (a) that your business has received one, and (b) that it’s accurate, could mean the difference between growing your business and being hung out to dry. You can check your business’s DUNS number, and your NAICS and SIC codes for free at Nav.

 

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

Our lending experts are here to answer your toughest questions about small business financing. Shanna McClearn, a business development officer here at Opportunity Fund, shares her insights on lending with this Q&A about P&L statements. Continue reading to find out what they are, why you need to create one, and how it can help you get the loan your business needs.

Our lending experts are here to answer your toughest questions about small business financing. Shanna McClearn, a business development officer here at Opportunity Fund, shares her insights on lending with this Q&A about P&L statements. Continue reading to find out what they are, why you need to create one, and how it can help you get the loan your business needs.

In our blog post about the loan application process, we talked about preparing financial documents before applying for a loan. One of the most important documents lenders want to see after tax returns and bank statements is a P&L statement.

If you aren’t finance savvy, a P&L (Profit and Loss) statement is a document that summarizes your small business’ earnings and expenditures. Sometimes referred to as an income statement, a P&L shows how your business is doing over a period of time. It’s important to have an accurate P&L statement if you want an affordable loan to grow your small business. Keep reading to learn why.

 

Q: Why should business owners create a P&L statement?

A: Profit and loss statements are used to help business owners keep track of what is going on in their business and prove to lenders they can afford a loan. Having cash in the bank doesn’t always tell the full story. An owner can have a lot of cash in the bank, but that may be because they are not paying their rent or not paying all of their taxes. There’s no way to really tell without proper financial statements.

Owners need to know their numbers.  They should know their monthly/quarterly/annual sales and expenses. This helps owners track trends in their profits and spending. You need to know when and where to make adjustments before you’re running a deficit. Without a P&L, neither the business owner nor a lender will accurately know if the business is actually making money in the long-term.

Q: How does a P&L work with other financial documents? What’s the difference?

A: The P&L, Balance Sheet, and Cash Flow Statements are all interrelated. For example, the net income from the P&L is reported in the equity section of the balance sheet. If a business owner prepares the P&L on a cash basis versus an accrual basis, then cash flow from operating activities (i.e. cash from sales and cash paid to vendors or employees) would be included in the cash flow statement. Even if it may seem redundant, all of these financial documents paints a complete, detailed picture of how your business is doing.

Q: How will preparing financial documents help me get an affordable loan?

A: Besides a tax return, a profit and loss statement is the only other document that can tell a lender how the business is doing. Lenders need to be able to determine if the business is generating enough cash flow to pay the business expenses plus the proposed loan payment. Without a P&L, lenders won’t be able to calculate if the business is able to support a loan payment. If a lender doesn’t ask to see financial statements, chances are high that they are preying on you with an unaffordable loan that will cripple your business.

Q: What makes a stellar P&L statement stand out?

A: The more detailed, the better. Lenders want to know the source of the sales revenues. These type of details help lender truly understand the operations of the company. P&Ls that only show total sales and total expenses, with no itemization, are not really helpful. Here are a few examples of good itemization:

  • For a restaurant: breakdown your revenues from food sales versus liquor, beverages, or other merchandise.  
  • For a service company: breakdown your revenues from ongoing contracts versus one-time customers.
  • In general: it’s important to itemize your expenses so that lenders can see detailed cost of goods sold (COGS) and operating expenses like rent, payroll, and advertising.  It’s also good to note if there were any one-time expenses included on the P&L, like legal fees related to a lawsuit or start-up costs for a new product line.

From a lender’s perspective, accrual based accounting is better than cash based accounting because it’s a more accurate way of recording when revenues and expenses are recognized instead of paid. Discuss this with your accountant to see if this is possible for your business.

Q: What mistakes do borrowers make when preparing their financial statements and can borrowers avoid those mistakes?

A: The biggest mistake that small business owners make with their financial statements is taking a hands-off approach.  It’s understandable that small business owners are busy, and financial statements may not be their core competency. Many owners just pass along information to their bookkeeper or accountant and leave it up to that person to take care of all the financials. However, it’s important to take the time to understand what the numbers on the statements mean. You should learn how to read the financial statements to decipher things like how products are selling period-over-period, how product pricing may compare to expenses, and how expenses are trending each period.

Another big mistake small business owners make is only creating financial statements once a year. If you are only tracking revenues and expenses on a yearly basis, it’s hard to keep track of things because you are referring to outdated information. For instance, if adjustments to pricing need to be made or if the rental contract needs to be renegotiated, it’s difficult to know what adjustments to make if you don’t know and track the company’s numbers.  

Q: How do I get started?

A: Start by having a discussion with your accountant or bookkeeper. Collect your records of sales and expenses, calculate net income, and fill out a formatted document that will cleanly show your net income.

For a detailed guide on creating a P&L statement, check out this handbook by Zions Bank:

How to Prepare a Profit and Loss (Income) Statement

 

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

Our lending experts are here to answer your toughest questions about small business financing. Sonia Muñoz, a collections officer here at Opportunity Fund, shares her insights on the loan payment process with this Q&A about how to work with your lender if you have a late payment   . Continue reading to find out what to expect if you are late making a payment and how you can avoid negatively affecting your credit.

Our lending experts are here to answer your toughest questions about small business financing. Sonia Muñoz, a collections officer here at Opportunity Fund, shares her insights on the loan payment process with this Q&A about late payments. Continue reading to find out what to expect if you are late making a payment and how you can avoid negatively affecting your credit.

When you have a business loan, making payments on time can be difficult. Emergencies, hardships, and forgetfulness can all delay sending in that monthly payment. Fortunately, there are many opportunities to solve this problem without hurting your credit.

 

Q: What happens is a borrower is late making a payment by a few days?

A: If a borrower is late by only a few days, they will not be liable for a late fee. Opportunity Fund has a grace period of 10 days to help small business owners avoid late fees. Sometimes a check gets delayed in the mail or you just forget. However, after these 10 days borrowers will accrue interest for each day they are late.

 

Q: How will borrowers be contacted about late payments?

A: If the payment is late by less than 5 days, the borrower will receive a courtesy call from our collections department as a reminder. After that, a second reminder will be mailed to your business address. If the payment is late by more than two weeks, a collections officer will try to visit the borrower to find out what’s wrong. It is only after a month of these reminders that serious action – such as calling references or repossessing collateral – will be taken.

 

Q: How will late payments affect a borrower’s credit and business?

A: Late payments will only affect the borrower’s credit with Opportunity Fund but not with the credit bureaus. Since we automatically send reports once a month, payments late by 29 days or less will not have any effect on your credit. The chance of getting approved for a repeat loan with us will decrease depending on how late payments are and how frequently a borrower misses a payment deadline.

While a late payment will not significantly harm your credit, it can have a negative effect on your small business. Paying late fees and interest hurts your income because you end up paying more than originally planned for. Paying on time is good for your working capital, and Opportunity Fund does not penalize for early payments.

 

Q: What can a borrower do if they cannot make their payment on time?

A: Borrowers can avoid affecting their credit with us and with credit bureaus by paying on time every month, but if they are unable to do so due to financial hardship there are options. Opportunity Fund offers different kinds of assistance in cases of financial hardship. Borrowers should keep open communication and reach out if they need help.

 

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

Each month, we’re sharing and promoting free or affordable online tools that help small business owners run their businesses better. This is your toolbox for five affordable money management resources.

Each month, we’re sharing and promoting free or affordable online tools that help small business owners run their businesses better. This is your toolbox for five affordable money management resources.

As a small business owner, you already know that the world runs on money. Financing your business is tough sometimes, and managing your capital is just as difficult. We’ve compiled this list of tools and resources that will help you understand your finances and manage your accounts.

 

How much it costs: Free

What it does: Mint is a completely free, all-in-one service for managing your finances. Not only does it allow you to connect your business bank accounts and credit cards to see your cash flow, but it offers so many helpful and easy-to-use options. With Mint, you can pay bills, see your credit report, set and track monthly budgets by spending category, receive alerts so you don’t miss a payment or incur fees, and more. This is a safe, secure application that is available online and as a mobile app.

 

How much it costs: Free with premium features like payroll services starting at $20 a month

What it does: Wave offers free accounting and invoicing software. You can easily track your cash flow so tax season is a breeze, schedule invoices and send out emails when payment is due, and scan receipts with your mobile camera directly into your accounting records. For a small monthly fee, you can also add on detailed payroll services.

 

How much it costs: Free

What it does: Tidyform has dozens of free templates for you to download. Choose from invoices, receipts, orders, contracts, budgets, timesheets, payroll, balance sheets, and many more. In addition to financial forms, you can download templates for marketing, HR, and any other paperwork your small business might need.

 

How much it costs: Free

What it does: This website has over 30 free courses to help you understand and manage your accounts. Choose to learn the basics like balance sheets and debt or enhance what you already know as a small business owner with topics such as bank reconciliation and depreciation. While a lot of this content may seem extremely detailed for everyday small business operations, educating yourself will help your business in the long run. This resource is also a good way to improve your ability to do your own finances if you don’t have an accountant.

 

How much it costs: Free

What it does: The Internal Revenue Service (IRS) put together a nine-part video workshop to explain everything your small business needs to know about taxes, planning for retirement, payroll, and hiring undocumented employees. You can choose to watch any lesson independently from the others with detailed outlines and transcripts for easy review.

 

We’re always looking for the best affordable online resources including tools to promote to small business owners like you. If you have a tool you’d like to share with fellow business owners, contact us at sblending@opportunityfund.org.

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 opportunityfundloan.org and follow us on Facebook  and Twitter

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