The Bottom Line Team

Our team of experienced contributors provide the information and tips business owners need to make smart financial decisions.

How Do the 2018 Tax Changes Help My Business?

It’s that time of the year again — tax season. If you’re digging out your toolbox and preparing to crack open the piggy bank, stop right there. Put the hammer down and let us show you how the 2018 tax changes are likely on your side.

The 2018 Tax Cuts and Jobs Act (TCJA) cuts taxes for many business owners, letting you keep more of your hard-earned money, or if you choose, pour more of it back into your business. But the new tax law means different tax cuts depending on your type of business.

For small businesses registered as C corporations, the top corporate tax rate drops from 35 to 21 percent. However, you’re likely organized as a so-called “pass-through entity” — a Sub S, LLC, proprietorship or partnership. In this case, and if you clear certain hurdles (more on those later), you’ll be able to deduct 20 percent of your “qualified business income” (let’s call it QBI, for short) from the sum that will be taxed at your personal tax rate.

So what is QBI? It’s basically ordinary, non-investment income from business conducted in the U.S., including income from sales and, in certain conditions, rental income. If eligible, you’d deduct that 20 percent of QBI in a similar manner as you’d write off itemized deductions. In other words, the deduction comes after you determine your adjusted gross income at the bottom of the first page of the Form 1040.

Show Me the Money

The 2018 tax changes also reduce personal tax rates, compounding the net result of the 20 percent QBI deduction. “This sounds like good news, but what does it actually mean?” I hear you cry from across the ether. To help explain, here’s a rough, hypothetical illustration of how the 20 percent QBI deduction might affect you (but please consult a tax professional for a more precise calculation).

Suppose that in 2017, you file a joint return and your taxable income from your business, after you’ve taken all the other deductions you’re eligible for, is $200,000. That would put you in the 28 percent marginal personal tax bracket, and you might be looking at a liability in the ballpark of $42,000. Ouch.

Under the new tax law, in 2018, $200,000 in taxable income would land you in a 24 percent marginal tax bracket. But, if all of that $200,000 is QBI, and you are able to deduct $40,000 worth of QBI (i.e. 20 percent of $200,000), you’d only be taxed on $160,000. Result: Your 2018 tax bill could be around $27,000 — that’s a $13,000 drop. Not bad.

About those previously mentioned hurdles for nabbing the 20 percent QBI deduction: You’re pretty much home free if you’re filing a joint return and your taxable income doesn’t exceed $315,000 ($157,500 for single filers). If you do exceed those limits, the amount of the QBI deduction you can take is based on a formula involving the size of your payroll, and could be lower.

Also, if you exceed those thresholds and have a certain kind of service business, like most professional practices, you might be ineligible for the full QBI deduction.

The new tax law changes may help you put more money back into your business.

Opportunity Knocks

As with any massive change in the tax law, the TCJA opens the door to some new tax planning opportunities. It will take a while for the IRS to wrap its arms around the new tax law and spell out the fine print. Aggressive tax accountants might encourage you to make certain moves right away to maximize your tax reduction opportunity, as long as they aren’t clearly in violation of the law.

And here’s the fun part. Now with a lower tax liability, you’ll have more free cash to invest in your business, and you get to start planning how you’d like to spend those extra bucks. Whether you’d like to upgrade your equipment or take out a loan so you can make an even larger investment in your business, the tax law changes will likely have you adding to your piggy bank, rather than taking a hammer to it.

4 Simple Steps to Repair Bad Business Credit

bad credit report

Business credit is a rose with thorns. The beauty of it is that you can rely on credit to get the business capital you need at the time that you need it. This can help your company respond quickly to changing market conditions, and get in early on new business opportunities.

The downside, however, is that if you miss payments to creditors, it leaves a mark on your credit score. The result may be the inability to borrow money in the future, lease real estate or equipment, or make sizable purchases on credit. All of these can act as direct hindrances to the growth, and possibly even the survival, of your business – even after you’ve dug your way out of debt.

Fortunately, there are a few strategic steps a small business owner can take to repair their business credit score. Let’s take a look at a few of the most important ones:

1. Communicate with your creditors

According to the Houston Chronicle contributor David Ingram, the first step to paving a road to better business credit is simply to get in touch with your creditors. At the end of the day, they want your money just as badly as you want to give it to them, so they’ll most likely work with you on creating a repayment plan that makes sense given the circumstances.

“Creditors may suspend your accounts and allow you to pay what you can each month until the debt is paid,” Ingram wrote. “Others may accept a settlement offer, closing your account for a lump sum payment that is lower than your total balance.”

The resolution doesn’t necessarily have to entail one of the two options above. The bottom line is that you and your creditors can typically reach an agreement, as long as you’re transparent with them about your current situation.

2. Build credit with the help of your suppliers

With a few exceptions, no business really survives in a vacuum. The vast majority of companies rely on third-party suppliers for raw materials, ingredients or wholesale goods. While some suppliers expect payment prior to delivery of these supplies, others will offer “trade credit,” according to Nerdwallet contributor Teddy Nykiel – and this very standard practice may actually be able to help you clamber out of bad credit.

Establishing trade lines essentially gives your small business the option to pay several days or weeks after receipt of the materials.

“If you have this type of accounts-payable relationship, ask your supplier to report your payments to a business credit bureau,” Nykiel wrote. “Your business credit score will get a boost as long as you stick to the terms of the trade agreement.”

Over time, this can help improve your overall credit score.

3. Make payments on time

It may sound like a no-brainer, but more often than not, late or missed payments are the reasons that a small business ends up with a bad credit score. Sometimes small business owners will pay late only because they want to have a certain amount of merchant capital available to them in a given moment – perhaps because they foresee a big expense up around the bend that could lead to significant return on investment, or maybe because they prefer to have that safety net available at all times.

At the end of the day, however, the best safety net for a small business is good credit, and you’re better off getting a cash advance on a loan than you are putting off on-time payments.

4. Take out a small-business loan

Late loan repayment may have been what got you into your credit pickle in the first place, so why in the world would anyone with bad credit try to take out a small business loan? Furthermore, is that even possible to do with bad credit?

In response to the first question, taking out a small business loan can actually be your company’s salvation. Often, bad credit is the sign of past indebtedness, or old mistakes that left a dent in your business FICO score. It could have even been the result of EIN theft, which despite reflecting poorly on your company, is in no way your company’s fault.

In response to the second question, regardless of the reason that you’ve ended up with a bad credit score, if you can feasibly repay a small business loan on time, there are plenty of alternative lenders willing to finance your business, despite a less-than-stellar credit score.

“Eliminating your existing debt is a positive first step, but your business will need to continue to borrow money to strengthen your credit rating over time,” Ingram wrote in the Houston Chronicle. “Remember that borrowing money is not necessarily a bad thing; a problem only arises when you’ve borrowed more than you can reasonably repay.”

If you’re confident in your company’s ability to pay off new debts, take out a small business loan. It’s one of the best ways to enhance your business credit score.

Long-term vs. Short-Term Business Loans

short term and long term loans

What’s the difference between long-term and short-term business loans?

A long-term business loan involves multi-year repayment terms following a detailed application process. A short-term business loan provides a company with quick access to capital, sometimes in as little as 24 hours.

Whether it’s working capital, a merchant cash advance or some other type of business loan, how much money you plan to borrow is probably the single most important factor for you as a business owner.

However, there are plenty of other loan components to consider, including term length.

Whether your loan features short or long terms can impact everything from how much interest you pay over time to how much money you can ultimately borrow.

Short-term business loans

For most business owners, a short-term loan will be the way to go. These types of loans can provide you the funds you need fast, sometimes in as few as 24 hours.

And with more alternative lending choices available now than ever before, it’s become that much easier for business owners to skip the restrictive loan requirements of traditional banks and obtain the money they need from elsewhere.

“Most times, small to medium size businesses don’t need long-term financing …,” said National Funding founder and CEO David Gilbert. “Alternative lending options, like working capital loans, merchant cash advances or small ticket equipment leasing, offer the flexibility and quick turnaround needed for owners to keep their businesses running smoothly.”

Essentially, short-term loans are an easier way for business owners to get liquidity and overcome financial setbacks, as opposed to taking on larger, more long-term debt.

Long-term business loans

On the other hand, long-term loans may be necessary for some businesses. This type of financing involves multiyear repayment terms that can sometimes last for decades.

Whereas short-term loans may have higher interest rates at first, business owners who take on long-term financing typically end up paying more in interest. This is because the long term length allows interest to build up over time.

It is also generally more difficult for a business owner to obtain long-term financing. This is because they will need to go through more traditional lending channels in most cases, and contend with the strict qualifying standards put in place by larger banks.

While an alternative lender such as National Funding has bad-credit loans in place to help business owners with less-than-perfect credit histories, many traditional financial institutions do not.

Which is best?

Ultimately, which type of funding option is best depends on your specific business needs. For most small business owners, a short-term loan will likely be more suitable. However, sometimes long-term financing may be necessary.

Either way, it’s important to work with a lender who understands the workings of small businesses and can tailor your loan to support your success.


How to Get a Business Loan with Bad Credit and No Collateral

Bad Credit Business Loan

Small business owners can develop a successful, vibrant organization and still deal with common problems like bad credit and a lack of collateral. Does that mean your business can’t secure a loan?

While having good credit and collateral on hand can help you secure a loan in some instances, there are established, dependable alternative lenders – like National Funding – that can work with a wide variety of financial situations.

The problems you may encounter

Credit is a long-term situation, and items as old as seven years can have a major impact on your rating. Many times, people and businesses have bad credit because of limited resources, not conscious decisions that lower their scores. Both your personal credit score – calculated on a scale of 300 to 850 – and your business credit score, usually measured from 0 to 100, play a role for small businesses.

Turning the corner financially – by starting a successful small business, for example – doesn’t erase a credit score. You have to contend with your rating until items are resolved or fall off your report. That means complications when seeking loans from traditional lenders, like banks and credit unions. These institutions place significant weight on small business owners’ credit scores when deciding whether to lend money to a given company.

Collateral is a much different subject than a credit score, although its presence or absence has a similar impact on the loan decisions made by banks and credit unions. Some businesses simply have collateral that is easily used to secure a loan, while others don’t. Similarly, some business owners have personal possessions they feel comfortable putting on the line, but others don’t have that luxury.

While the Great Recession is in the rear-view mirror, the impacts of that economic downturn on banks and similar lenders led to the development of more conservative lending practices that continue to this day. Many small businesses that could have secured a loan in the past from traditional lenders cannot any longer.

A lack of collateral and a low credit score can mean extreme difficulty in securing a loan through more traditional means. Instead, your business needs to consider working with a more flexible and responsive alternative lender.

Overcoming these obstacles

Business loans for poor credit aren’t impossible to find. In fact, working with an alternative lender like National Funding can mean avoiding a number of the frustrations and other issues that arise when dealing with a traditional lender. As opposed to the severe and frequently hidden limitations on lending put in place by banks and credit unions, National Funding offers a clearly visible baseline standard that businesses can use to determine if they can start the process.

Does your business have:

  • A full year of operations under its belt?
  • At least $100,000 in gross yearly sales?
  • Three months’ worth of bank statements?

By meeting these qualifications, your company is starting off on the right foot when applying for a loan through National Funding. You don’t need to worry about the state of your business or personal credit score, nor the availability of qualifying collateral.

Of course, traditional lenders don’t only look at credit scores and collateral when determining creditworthiness. They may also require many months or years of bank statements, tax forms, detailed business plans and other documents that may be difficult to assemble to their exacting standards.

Working with National Funding means avoiding these lengthy, time-consuming and sometimes-painful processes in favor of a more direct approach. You can apply for a business loan between $5,000 and $500,000 through our easy, no-obligation application process and a decision in as little as 24 hours.

Small Business Loan Requirements: Traditional vs. Alternative Lenders

traditional and alternative lenders

In a perfect world, obtaining a working capital loan for your small business would be as simple as asking and receiving. However, it’s important to remember that lenders don’t simply hand out money to just anyone.

Lenders are taking on risk by making funds available to small business owners. Therefore, they will analyze certain criteria in an attempt to determine if a loan is too risky. At the very least, these criteria will influence the parameters of the loan – amount, term length, interest rates, etc.

By understanding the following small business loan requirements, you can make yourself a more attractive borrowing candidate.

What do traditional lenders require?

What criteria take precedence can differ from lender to lender, but there are some factors all traditional lenders will consider. These include:

  • Amount
  • Credit
  • Cash flow
  • Collateral

The higher the amount, the more risk a lender is taking on. Meanwhile, a poor credit history could indicate a borrower who may not be able to make repayments, increasing the risk further. Limited cash flow would support this viewpoint, and a lack of collateral to cover a loan default often acts as the death knell for small business owners seeking a loan.

However, the days of depending on traditional financial institutions for small business loans are over. In today’s marketplace, borrowers have more options than ever thanks to alternative lenders.

What do alternative lenders require?

Alternative lenders like National Funding feature business models that differ from traditional banks and credit unions. This makes it possible for them to offer loans to small business owners who may otherwise not qualify.

For instance, National Funding offers working capital loans and merchant cash advances of up to $250,000. There are also bad credit small business loans for borrowers to consider.

And unlike traditional lenders, National Funding does not require borrowers to put up personal assets as collateral, since all financing is unsecured.

Along with simple, straightforward applications, variable repayment terms and the ability to obtain cash in as little as 24 hours, the benefits of business financing from an alternative lender are clear.

Tailored business solutions

Regardless of what type of lender you utilize, the most important thing is working with professionals who understand your specific needs as a small business owner.

Minimal paperwork, quick turnaround, flexible repayment options – these are all essential in the small business marketplace. You owe it to yourself and your business to borrow from a lender who recognizes and supports this.


4 Ways to Stay Cash Flow Positive Through Your Slow Season

For small business owners, managing cash flow is an important part of keeping their enterprise moving forward. While it’s a major consideration for every type of company, those with traditional busy and slow seasons have some additional important considerations to make. Whether you operate a business based on summertime tourism, manufacturing specialized parts for snow removal or a totally different kind of seasonal business, this advice can help you manage your cash flow throughout the year.

1. Clear recognition leads to better planning

There’s no doubt you know when your business hits its revenue peaks and valleys. But do you know exactly how long the busy and slow seasons last? Do you know if a variety of internal and outside factors could impact the length of each season next year? Detail-oriented planning and a look back at past records can help you determine exactly how long each season lasts, as well as any periods of medium activity between the two extremes. This approach is vital for accurately estimating revenue and expenses at your busiest and slowest times, which in turn leads to better cash flow management.

2. Take the long view

It’s easy to spend more when revenue is high, and sometimes it’s necessary to address truly critical issues that could otherwise have a major impact on your business. There are plenty of instances where you can spread out spending and budget to take on projects throughout the year and maintain a more regular and healthy cash flow. This approach lets you take on projects during times when they may be less expensive or more easily completed, as well as maintain a reserve of available funds to address unexpected issues.

3. Find expenses to trim during the slow season

There are certain needs that have to be addressed year-round for businesses, even when they’re experiencing their slow point of the year. From utilities to inventory, some requirements can’t take a break just because many of your customers do. However, you can and should identify areas where you can cut back on spending during times when certain services simply might not be necessary.

Business 2 Community suggested a budget division between necessary and nice to have, and seasonal businesses can make two such lists: one for peak operations and another for the less-busy times. Staffing is an obvious consideration, as many seasonal businesses scale back employee schedules – and associated payroll responsibilities – when demand drops. Every business is different, so take a long look at your financial obligations during the off-season and determine where you can make some temporary cuts. When it comes time to start spending on those needs again, you’ll have a steadier cash flow backing you up

4. Smooth over peaks and valleys with a small business loan

Sometimes, despite the best efforts of small business owners, cash flow issues arise. That’s especially true for businesses with slow and busy seasons. This isn’t anything to be discouraged by, especially if you’ve taken steps to plan ahead and avoid such a concern. An unexpected expense or undeniable opportunity for growth may arise despite your best efforts.

Consider how your business can address these opportunities and problems with a small business loan that fills the gaps in a seasonal business’s finances. National Funding is proud to offer effective, attractive terms, a simple application process and quick decision timelines that are all in line with the needs of small business owners. Get in touch with us today to learn how you can use a small business loan to address cash flow issues and continue to prosper.


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What Tasks Should Small Businesses Outsource?

Outsourcing Small Business Tasks

As a business owner, you have a long list of responsibilities and tasks you need to be on top of. But there are some things that you simply don’t have the time, expertise or money for.

An important lesson successful business owners learn sooner or later is that turning to a helping hand at the right time can make a big difference. Most businesses outsource certain business tasks to reduce the chances of making a critical mistake, save time and refocus their attention on their core business.

If you’re not doing the following small business outsourcing, it might be time to consider it.

Building a website for your business

Every business needs a website, regardless of industry. Your online presence is likely the first impression potential customers will have of your company. Make sure it’s a good first impression by having a website that is informative, easy to navigate and attractive. If you’re unsure of where to begin on that front, it’s best to turn to a web development pro.

Web design isn’t a skill you can master in a day. Learning the basics of HTML, JavaScript and CSS, the three programming languages essential in building a functional website, isn’t easy. As such, this is a task that’s better handed off to a developer adept in these languages, Business News Daily wrote.

“A new business owner should never invest all of their time ensuring the HTML, JavaScript and CSS are integrated correctly,” explained Lisa Chu, owner of Black N Bianco, a kids’ formal wear retailer. “It’s very time-consuming, and your morale will be dead by the time you have a working website. Outsourcing your website design and development is the best option because it will cost you a lot less than hiring from your local website design firm.”

Maintaining your website

Once your website is built, the work on it still isn’t done. Systems are constantly being updated, and if your website’s structure goes untouched for years, it’ll fall behind the times. It’s crucial to keep your site updated on the latest trends and systems updates to keep it working efficiently. Outsourcing this task to someone who is always up to date on the latest web design changes will help keep your site current.

Payroll and taxes

Getting payroll right is critical. Your employees and any contractors anticipate their paychecks to come on schedule and with no errors. Further, the IRS expects small business owners to take every measure possible to correctly pay taxes to the right government entities.

But the truth of the matter is, payroll is hard and tax codes are complicated. It’s not unheard of for a small business owner to make a mistake. In fact, more than $2 billion in fines were issued among small business owners in 2014 alone, the IRS reported.

Payroll and tax mistakes can be detrimental to your business. Don’t take chances. Leave your payroll tasks to someone who has dedicated their career to learning payroll best practices and tax code.


Underestimating the danger of hackers is a mistake no business owner should make. Size of an organization isn’t a big concern to criminals. In 2015, 65 percent of spear-phishing attacks were aimed at small- and mid-sized businesses, according to data from Symantec.

Like website systems and best practices, cybersecurity is something that is constantly in flux. Coders work hard to improve online security, while hackers are close on their heels, trying to pick every lock they encounter. Letting yourself fall behind means having outdated locks that can easily be picked by an up-to-date hacker.

Even if your IT service provider says your data is safely tucked away, get a second opinion from a cybersecurity professional. Any time your business’s data or customers’ information is at risk, it’s better to be safe than sorry.

Many entrepreneurs know how to tackle tough projects and learn all they can to accomplish a task. But it’s important to distinguish between the tasks that you should do yourself and those that are best handed off to someone with a bit more experience. Not only will you save yourself the time and frustration of learning complicated processes, but you’ll also make your business stronger in the long run.

What is working capital and how can it help my small business?

There are plenty of specific financial and operational terms to learn and use as a small business owner. One especially important phrase that many small business owners may not be familiar with is working capital. Whether you’re wondering exactly what working capital is or how an increase in it can help your business, read on to learn the most important facts related to this concept.

What is working capital?

Understanding the technical definition of the term working capital is vital for understanding its role in financial planning and how its presence or absence can affect your business. To put it simply, working capital is the amount left over when your current liabilities – bills owed to vendors, payments for facility maintenance, payroll and many other costs – are subtracted from your current assets, such as cash reserves, inventory and similar considerations.

The current asset category generally includes anything that can reasonably be converted into cash inside of a year’s time. Anything that isn’t likely to be sold inside that timeframe is categorized as a long-term asset and isn’t included in the working capital equation. That distinction is important when calculating working capital, as certain major assets like real estate and specialized equipment generally aren’t included when making this important determination.

A positive working capital figure is obviously desirable, as it indicates your small business has more assets than it does liabilities. A negative working capital figure can indicate a company will have trouble paying off short-term debt and may not have enough revenue and other assets to continue operations in the future. However, it’s also important to not have too much working capital on hand, as it indicates a company isn’t investing or otherwise effectively using its excess assets. The working capital ratio, determined by dividing current assets by current liabilities, should generally be between 1.2 and 2.

It’s worth noting that specific industry and individual business finance and payment practices can all have an effect on working capital needs. As Accounting Coach said, a business focused on sales to individual customers at the time of purchase can usually function with less working capital than a company that doesn’t expect payment for 60 days and has to pay suppliers within 30. There are plenty of other factors, like specific accounting principles and strategies, which can have an influence as well.

How does working capital help my business?

Working capital helps your business by allowing you to address debts, invest in projects to boost business performance and have cash on hand to contend with unpredictable expenses. A lack of working capital leaves a business vulnerable to sudden issues that can drain available cash and limits the ability to take advantage of opportunities to grow and diversify.

One effective strategy for boosting working capital in the short term is to seek out a working capital loan. This approach means getting money in your hands quickly to meet the financial requirements of a variety of needs, and then paying it back over time under terms that are mutually agreeable to you and your lender.

National Funding is proud to offer working capital loans of as little as $5,000 to as much as $500,000 to qualifying small businesses. Our nearly 20 years of experience working with small companies just like yours mean we’ve crafted a quick, simple and effective lending process that aligns with your needs. To learn more about how easy it is to apply for a working capital loan from National Funding, get in touch with us today.

National Funding financing for small businesses

4 Key Holiday Shipping and Delivery Tips for Small Businesses

Holiday Shipping and Delivery Tips

Shipping and delivering purchases to shoppers is one of the biggest factors that contribute to overall customer satisfaction. And no time of the year is shipping and delivery more important than during the hectic holiday season. But, why not implement a year round strategic shipping and delivery policy for your small business to keep your customers satisfied and create good will for your company?

While these might seem like minor aspects in the larger shopping experience, 93 percent of respondents to the 2015 Pitney Bowles Holiday Shipping Survey said that shipping options were an important factor. With shoppers placing so much weight on this aspect of the transaction with your company, you need to have a plan in place to meet and exceed customers’ expectations.

Consider these four holiday shipping and delivery tips to optimize customers’ experience during the holiday shopping season:

1. Offer free shipping

Not charging customers for shipping their purchases can be a hard sell for some business owners. This leads to greater overhead and cuts into the profit margin for each item sold.

However, surveys show that customers are much more likely to make a purchase if your company offers free shipping. According to a recent Ask Your Target Market survey, respondents were 84 percent more likely to buy from brands that offered free shipping. Further, 75 percent of respondents said free shipping promotions were a better incentive for shopping than other types of special offers or discounts.

You don’t necessarily have to offer free shipping for every-sized purchase. In fact, you can dangle the option of free shipping once customers reach a certain minimum dollar amount in their shopping cart. The Pitney Bowles survey showed that shoppers were 60 percent likely to buy more items to reach the threshold necessary for free shipping.

2. Use multiple carriers

There’s no reason to stick exclusively to one shipping company. Using a single carrier exposes your company to the possibility of delivery delays if there’s a problem with the particular company you’re using.

Each carrier provides its own unique advantages, whether it’s a discount at a certain volume or a flat rate once a specific weight is reached. Consider developing a strategy that incorporates the best prices and shipping options from a range of carriers. You may find that smaller packages are less expensive to deliver through one shipping company, while larger boxes are cheaper with a different carrier.

3. Let customers track the delivery status

Not knowing how long it will take for their items to ship can be one of the most infuriating aspects for customers during their shopping experience. Thankfully there are ways to incorporate delivery tracking features in emails that immediately get sent to the customer. This method alleviates the need for customers to go to the carrier’s website and punch in their tracking number to check on the status. Instead, sending a tracking email directly to customers’ inboxes ensures they have easy and direct access to this information any time they need to check it.

4. Utilize online shipping software

Keeping track of customers’ addresses, purchases and financial information as well as details and accounts with a variety of carriers can be a complex nightmare if there isn’t a dedicated system in place to manage all of this data. While shipping software used to be limited to the world of major corporations, small businesses can now take advantage of less expensive cloud-based shipping software solutions.

Although digital shipping platforms do require an initial investment to implement, using a merchant cash advance from an alternative lender can provide your small business with the working capital necessary to adopt this software and truly optimize your holiday shipping and delivery experience for your customers.

What should you expect when applying for a small business loan?

As a small business owner, you may have already looked into applying for a small business loan to fuel plans for expansion or otherwise put your company in the best possible position for success. While the application process for a small business loan is simple and straightforward when you work with the right lending partner, it can be hard to find information about what to expect during the process.

Use this guide to prepare yourself for the small business lending process and remember that there’s not much to worry about when working with a knowledgeable and experienced partner.

What do I need to have on hand to apply for a small business loan?

Requirements for information can vary greatly between traditional financial institutions, dedicated small business lenders like National Funding, and other sources of capital. Many traditional lenders will, for example, request more detailed and involved information than other providers. In order to apply, a bank may require a small business owner to share or provide access to some or all of the following:

  • Personal and business credit reports.
  • Personal and business income tax returns.
  • Cash flow and profit and loss statements as well as a balance sheet.
  • A detailed business plan.
  • An application that collects additional data.

Other items that may be necessary include collateral for the loan and a variety of legal documentation. Traditional lenders may also set a range of conditions related to a business’s size, revenue, length of time in operation and other factors.

However, this isn’t always the case when partnering with a specialized provider like National Funding. Along with a one-page application, small business owners who work with us only have to:

  • Provide three most recent monthly bank statements
  • Demonstrate $100,000 in annual gross sales
  • Confirm at least one full year of operations.

What does the timeline look like?

Loan timelines are also highly variable, depending on the organization loaning you the funds. Approval and provision of funds can take many weeks or even months, depending on a variety of factors that are out of your control. Sometimes, this isn’t a major issue for small business owners. When a time-sensitive project or a major, unexpected repair bill pops up, however, it can be difficult or impossible to wait that long to receive a loan.

National Funding offers shorter timelines that generally take days, not weeks or months, to provide both a decision on the loan application and the money tied to it. Depending on underwriting guidelines, receipt of required documentation and your bank’s processing time, we can provide approval and funding in as little as 24 hours for qualified applicants.

What can I use this small business loan for?

Some lenders require the money go toward a specific purpose. Others, such as National Funding, allow funds to go toward any legitimate business expense. This is useful when repairs cost less than expected or a project comes in under budget and money from the loan remains. In these situations, business owners can put the rest of the money to work in other ways without worrying about violating the loan agreement.

Nevertheless, it’s important to have a specific use in mind when applying for a small business loan, even when the loan is limited to a single project or need. You should have a clear plan for using a significant majority of the money and understand how you will pay it back over the term of the loan.

Choosing the right small business lending partner is an important decision for small business owners just like you. Consider working with National Funding to benefit from nearly two decades of dedicated small business lending experience.

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