Small Business Loans

Don’t Just Shop Rates: 3 Other Important Considerations for Choosing a Business Loan

When you need money for your business, it can be extremely tempting to seek out the lowest loan interest rates on the block and look no further. But low interest rates don’t guarantee that a particular loan is the right one for your business. The ideal loan will be the one that meets your company’s financial and strategic requirements, as well as your timeline.

So next time you’re tempted by that low percentage, make sure you ask yourself these three questions before you sign on the dotted line:

What Type of Loan Fits My Needs?

You’ll find several different categories of business loans in the marketplace, each offering pros and cons depending on how you plan to use the funds. For example, an installment loan, which is repaid in regular payments covering the principal and interest, is best suited to purchase assets that will benefit your business over many years. Think heavy equipment or real estate, for instance.

A line of credit loan might be the solution if you need cash on hand to keep inventory up to date or loosen the occasional clog in your cash flow. With a line of credit, the lender transfers cash to a checking account, and you pay interest on the amount you draw from the account.

Taking decisions for the future man standing with many direction arrow choices, left, right or move forward

How Fast Do I Need the Money?

Some business loans fit into a long-range plan for business growth. But when you need cash to respond to an unexpected event, you need it now.

Maybe you’re hiring extra staff because your top client has pushed up a project deadline. Or the money might be to replace a delivery truck that just broke down.

It can take months to get a conventional bank business loan approved and the funds into your account. When your company is facing a financial emergency, the solution might be an alternative loan. Alternative lenders use an online application and financial technology to speed up the evaluation process. As a result, many qualified applicants can have loan funds in their accounts in as little as 24 hours.

Which Loan Terms Are Best for My Situation?

The length of the repayment period can have just as important an impact on the cost of borrowing as the loan interest rates. The general rule is that the longer the term, the smaller the monthly payments and the larger the overall cost, because the interest is compounded over a longer time.

To make sure you’re choosing the most cost-efficient loan for your business, consider how you plan to use the funds, as this SCORE article suggests.

A short-term business loan of six to 12 months might be ideal for meeting seasonal inventory demands or recovering from a natural disaster or equipment breakdown. Longer-term loans of four to 10 years work best for things like buying a new warehouse or renovating your business.

Life is full of temptations. Some are worth giving in to; others can be as unsatisfying as a stale cookie. The next time you’re shopping for a loan, don’t blindly chase the lowest interest rate, however tempting it may be. By asking a few additional questions, you can help ensure you find the loan that’s right for your business — and that’s pretty sweet!

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.


Paying Bills and Covering Small Business Expenses

Managing business expenses isn’t easy. Taxes, utility payments, supplier invoices, store or facility maintenance, employee salaries and benefits are just some of the costs that small business owners need to stay on top of. Over time, it becomes easier to fall behind on payments or mismanage business expenses.

To help small business owners more manage their payments more effectively, here are a few essential pointers:

Avoid using cash

There are situations where it makes sense to pay bills in cash. For instance, Houston Chronicle contributor Al Bondigas advised that cash payments can make sense for smaller purchases, or if there is a sudden or urgent need for money. As a general rule, however, it’s in a small business owner’s best interest to make the majority of payments directly through a checking account, or even with credit. This helps to build a paper trail, which is important for later payment verification and future tax write-offs. Using credit and then making on-time payments is also a great way for small businesses to improve their FICO scores.

Keep business and play separate

In cases where there is a sole proprietor to a business, there’s a bit of wiggle room when it comes to keeping personal and company expenses separate. However, Entrepretunity contributor Eric J. Nisall highly recommended that wherever possible, small business owners draw a very clear line between personal and business expenses. In any event that there is overlap, Nisall suggested “Writing a check to yourself in the form of a distribution.” Muddling the line between person and business expenses can result in income tax liability shifts down the road, which can be a real headache – or if times are tough, much worse.

Consider automating your payment schedules

The topic of automation is somewhat dicey. The immediate benefit of signing for automatic bill pay is that you essentially eliminate the risk that you might miss a payment out of sheer oversight. This helps you to avoid late fees, simplifies management of overhead expenses and creates an opportunity to improve your company’s credit. However, it’s important that if you do this, you manage your company checking account more closely. Nerdwallet contributor Erin el Issa noted that automatic bill pay introduces the risk of account overdrafts or bounced payments, which will do much more harm than good in the end. Not only will you have to pay late fees, you may also be met with overdraft fees and other headaches.

Take out a small business loan

At some point, every business has needed – or will need – to tap into an immediate source of capital with the help of an alternative lender. Whether this need arises in response to difficult times, or as a way to manage future expenses in response to a growth opportunity, there are are plenty of lenders that can supply the quick injection of capital that your business needs.

Again, managing business expenses isn’t easy, but with a little bit of help from the right alternative lender, it can be easier for your small business to find a way forward.

What You Need To Know About Inventory Loans for Small Businesses

If you’re running a business which brings in most of its income through sales of physical products you know that keeping the shelves stocked is an important aspect of keeping your operation healthy.

That’s not always easy, though. Every business model has on- and off-seasons. A florist might see a large part of its revenue come in during the summer, while a toy company will probably see increased sales closer to the holidays.

What is an inventory loan?

When inventory is sparse, but orders are coming in, business owners need a solution. Many turn to inventory loans for help.

Inventory loans are short-term loans or lines of credit meant specifically for you to stock up on your most important products now, so you won’t have bottlenecks or delayed sales later.

Who gets inventory loans?

There are some businesses that are better served by inventory loans than others. These particular forms of financing, according to Fit Small Business, are usually best for:

  • Seasonal businesses, when they need to get ready for an influx of orders.
  • Retailers, when their cash is tied up in existing inventory, so they can’t expand their selection.
  • Wholesalers, when they need to accommodate large orders.

Do I qualify for an inventory loan?

Alternative lenders will want to know a little bit about your business to ensure issuing you a loan is a safe investment for them, and a good decision for you. If you’re ultimately not able to pay off the inventory loan because sales didn’t rise to your expectations, it’s a lose-lose for both of you.

To that end, Entrepreneur noted that creditors typically are most confident lending to businesses that have:

  • A proven track record.
  • A year or more in business.
  • A product that’s easy to sell.
  • A high inventory turnover rate.
  • Little to no outstanding debt.
  • High inventory level needs.

Not all lenders will require all of these aspects, but being able to claim several will certainly go a long way in securing an inventory loan. To find out what your business may qualify for, reach out to National Funding.

Small business funding

3 Alternative Lending Situations That Benefit Small Businesses

Businesses strive to be different from one another. Whether its your products, your customer service or your convenience, you have at least one feature that’s your differentiator. But no matter how hard you try, there’ll always be one thing every business has in common: A need for money.

Cash is the lifeblood that powers your company. However, there are times when funds seem to be just out of reach. During those periods, you know you need to find a solution, but what that might be isn’t always clear. The answer to your financial frustrations might be closer than you think.

An alternative lender can provide funds when you need them most to help you keep your company moving forward.

Here are three situations many businesses face that an alternative lender can help manage.

1. Reluctant accounts receivable

It’s an easy assumption that success comes from making sales. As anyone who’s struggled to collect on an account knows, though, this is only one step on the path to profit. According to a survey from Wasp Barcode Technologies, 51 percent of small business respondents said accounts receivable and collections are the biggest accounting issues they face.

Failing to receive funds is frustrating. Not only is the relationship with your debtor damaged, but those funds were likely necessary for another function in your business. While you hunt down that payment, your progress might be on hold.

An alternative lender can help with this headache by granting a short-term loan, enabling you to proceed with business as usual without holdups.

2. Expensive expansions

Much like a child will outgrow his or her clothes sooner or later, a growing business will eventually need to move into a bigger space or market. Whether you’re trying to move to a bigger building, offer your products to a bigger audience or hire a bigger staff, you’ll need capital to make the expansion happen.

Vinny Antonio, the president of Florida-based Victory Marketing Agency, told Forbes that cash flow management can be one of the biggest challenges when growing a business.

“Cash flow management for a rapidly growing, bootstrapped company can be harder than the world’s most difficult Sudoku puzzle,” Antonia said. “It’s almost a full-time job staying on top of who owes you what and who you owe, and then prioritizing those payments. All the while, you’re pushing for more growth, but with that comes additional expenses — most notably, your executive team. Good talent doesn’t come cheap, and you often have to find creative ways to lure the right personnel to your team.”

What’s really frustrating about cash flow issues during high growth is the fact that you know you’ll be making more money soon – but you need that cash now. An alternative lender is the perfect solution to this problem. Since you can show your plans for growth, an alternative lender will likely be happy to help out.

3. Stocking up for the season

As a business owner, you know what your sales cycle looks like. Florists know their busy season is in the summer when brides-to-be are getting ready for their big days. Toy retailers know that, come November, they had better have all the latest gadgets on their shelves so parents can load up on holiday gifts early.

Whenever your business’s busy season is, you know you need to invest in your inventory ahead of time. But, following a slow-selling month or two, you may lack the funds to accomplish that. Lack of cash on hand shouldn’t keep you from getting ready for your most profitable season.

An alternative lender can step in so you can make sure you’re all stocked up. A short-term loan to fill your shelves or warehouse with soon-to-be high demand items can give you a jumpstart to your busy season.

Every business owner will encounter tricky situations when managing their company. Sometimes, extra cash is enough to help you safely navigate these obstacles. Alternative lenders can grant businesses the financing they need, so they can carry on with their entrepreneurial endeavors without being held up by lack of funds.

Working Capital Loans for Small Businesses

National Funding knows that small businesses are the fabric of America. That’s why we’ve made your business, our business by providing thousands of working capital loans to small and midsize companies in every state in the country.

Every business owner knows that working capital is the lifeblood of a business. It’s money for inventory, bill consolidation, advertising, expansion, taxes and a host of other reasons

How you use the money is up to you. Getting you the money is what we do. And we do it better – and faster – than anyone else.

National Funding has eliminated 90% of the tedious paperwork and 100% of the hassle you’ll find at the brick and mortar banks. We would rather spend our time customizing a small business loan to your specific requirements. All we need is a 1-page application and 6 months of your bank statements.

What does that mean for you? How about same day approval, no pre-payment penalties, no invoices and never a check to write.

We can get you approved fast—usually less than 24 hours and often the same day. And we can get you cash up to $500,000 in as few as 24 hours.

If a working capital loan would benefit your business then call us or apply online and we’ll get started on yours today.

4 Tips for Growing Your Construction Business

Responsible for building nearly $1 trillion worth of structures each year, the construction industry is an extremely competitive sector, with more than 650,000 employers overseeing more than 6 million employees, the Associated General Contractors of America reported. Further, between April 2015 and 2016, spending in the construction sector rose 4.5 percent, an increase that is no doubt cutting into profit margins and making it more difficult for firms in this industry to grow, according to the AGC.

Successfully growing a construction firm involves a multifaceted approach that includes techniques like upgrading technology, boosting working capital, hiring better workers or leasing equipment. Unfortunately, there can also be numerous obstacles to expanding a construction firm, from a lack of skilled labor to an inability to quickly scale operations. However, by implementing some of the tried-and-true tips and techniques listed, you can potentially expedite your construction company’s expansion.

By following these four tips, builder-owners and managers in the construction industry can potentially grow their companies in the coming months and years:


  1. Embrace technology

While many builder-owners and managers at construction firms keep their ears to the ground and their fingers to the pulse of their industry, there are still those in the sector who remain committed to antiquated methods of conducting business.

Cloud-based enterprise platforms can boost interdepartmental communications and break down the silos that would otherwise inhibit collaboration and data sharing. By moving all your processes to a cloud-based solution, you can also turn any work site into a mobile office, effectively eliminating unnecessary travel times and costs. Further, cloud-based networks reduce the amount of data entry needed to share this information, since all the records are kept in a single repository that’s accessible to every team member in real time.

When combined with the growing ubiquity of the Internet of Things – the sensors, transmitters and other data receivers connecting static devices – constructions firms that are unwilling or unable to make these technological upgrades will ultimately see their market share and profits take a hit.

With a small investment in new technologies, construction firms can see big savings.


  1. Attract the right talent

For any construction company to grow, additional staff members are needed to handle the increased workloads. According to the most recent data from Accordant Co and the AGC of America, 71 percent of construction firms surveyed anticipate adding more workers to their company in 2016. Six percent of respondents said they planned on cutting positions during the year.

In addition to nearly three-quarters of construction firms making plans to hire new individuals, the mass exodus of baby boomers from the workforce into retirement has created a dearth of experienced laborers. Without the best possible talent on the job, construction firms can easily see projects extend past deadlines and beyond budgets. Worse, hiring unskilled laborers to fill the gap can lead to the building of subpar structures.

Respondents to the Accordant survey suggested increasing base pay rates, offering bonuses and boosting contributions to employee benefits to recruit the most qualified team members. However, Accordant noted how these responses were nearly identical to what respondents said for the 2015. This means even after 12 months of raising pay rates, attracting the best talent will continue to be a major problem for the construction industry.

Thankfully, a working capital loan acts as a quick and easy way to get the money you need to entice the best possible employees.


  1. Utilize equipment leasing

Running a business is expensive. There are a host of costs and expenses that must be paid for regardless of whether any revenue is coming in. A good way to continue delivering high-quality construction offerings while simultaneously reducing overhead is taking advantage of the many benefits of construction equipment leasing.

Leasing equipment for the construction industry provides a wide range of ways for firms in this field to ensure they remain competitive and profitable. Leasing equipment eliminates the total upfront cost of the machinery needed to complete any construction job, thereby freeing up capital that can be invested elsewhere.

Best of all, most equipment leasing contracts let construction firms upgrade the machinery every year. This ensures your company has access to all the latest and greatest construction equipment available, letting you remain competitive in an increasingly crowded field.


  1. Obtain a working capital loan

Sometimes cutting overhead expenses can only take your construction firm so far, and additional funds are needed to help the company reach the next business milestone. If operational efficiencies are optimized, it can be time to obtain a working capital loan. Construction firms that partner with an alternative lender to tap into a working capital loan can immediately and easily gain access to a crucial influx of money. These funds can then be reinvested into the company for marketing, technology purchases or whatever immediate or long-term expenses are necessary for growing your construction business.

Accurately forecasting annual budgets in the construction industry

Due to the cyclical “feast-and-famine” nature of the construction industry, making accurate budget forecasts is crucial to guaranteeing long-term success for firms of all sizes. Without a well-calculated and reasonable prediction of expected revenues and overhead rates, builder-owners and managers at construction firms may find their enterprises with a cash shortfall, leaving the company unable to pay workers, purchase new materials or even keep the lights on.

But what does accurately forecasting annual budgets in the construction industry involve? Consider the following tips for making informed decisions and more precise financial predictions:


Review forecasts regularly

Most construction companies routinely draft an annual budget forecast that includes overhead rates, likely expenses and receipts. Unfortunately, once the forecast has been established, these predictions often end up stuffed in the bottom of a drawer and ignored. Without regularly revisiting the forecast, it’s tough to determine whether the construction firm is on track and it’s nearly impossible to make meaningful updates or revisions to the original prediction.

Failing to periodically review forecasts leaves construction firms vulnerable to under- or overstating rates on future proposals, ultimately impacting a project’s profitability or affecting the company’s competitiveness. Underbidding leaves a business at risk of potentially losing money on a particular job, while overbidding might cause the firm to lose out on the award.


Include direct and indirect costs

It’s imperative that both the direct and indirect costs associated with operating a construction firm are included in the annual budget forecast. While indirect costs can be difficult to determine and even trickier to calculate, their impact on a budget is very real.

For instance, according to CLA, a professional services firm, direct labor costs include payroll taxes, union benefits, workers’ compensation, general liability insurance and other related employee benefits. However, indirect labor costs include office administration, payroll supervising, safety programs and equipment and maintenance charges. While not directly associated with an individual employee the same way a health insurance fee might be, these indirect costs add to the overall overhead expenses necessary to employee workers.


Lean on historical budget comparisons

“Past is prologue” and “History repeats itself” are common, cliche phrases for a reason: They’re based in truth. This is especially true in constructing budget forecasts. By sifting through the company’s and industry’s historical data, those tasked with creating an budget forecast can see how past trends are likely to

For example, if past budgets show that the company has either consistently fallen short or exceeded the allotted fiscal constraints, managers can use this data to either pull back on a more aggressive mentality or be more liberal in their resourcing. As noted by BKD, a national CPA and advisory firm, construction firms can use this historical data to quantify sensitive assumptions about the budget forecast, including, among others:

  • Incremental volumes
  • Proposed reimbursement changes
  • Charge inflation
  • Payor mix
  • Staffing levels
  • Expense inflation

It can be tempting to take last year’s budget and simply plug in a factor for inflation to draft a forecast. However, this sort of incremental budgeting fails to account for other influences, whether internal company changes or external macro-economic shifts. Taking the time to build a new budget from the ground up every year avoids the mistake of assuming these changes won’t impact the overall budget.


Consider alternative financing

Accurately forecasting annual budgets allows builder-owners and managers the opportunity to gain insight on how capital in- and outflows will affect the construction company throughout the year. When times are good and new orders are increasing, an executive can be more optimistic in their estimates.

On the other hand, however, an accurate forecast should also provide advanced warning of potential shortfalls, budget gaps or other financial problems that will need to be addressed. Instead of waiting until a firm’s resources are dried up, advanced, accurate forecasting methods will ultimately shine a light on the potential for having to scale back operations, trim overhead costs or find another way to stretch a dollar.

While every owner or manager wants to remain optimistic about their business’s prospects, an accurate budget forecast can be the canary in the coal mine that alerts the appropriate person of impending trouble. With this information at hand, construction executives can then determine when is the best time to consider alternative financing options.

Traditional banks require construction firm executives fill out extensive paperwork and navigate a labyrinth of red tape before approving a small business loan. Once this is all completed, it can still take weeks or months before the application is approved – if it’s even approved at all. This can be disastrous for a construction firm that’s short on cash.

Thankfully, alternative financing sources provide construction firms with the crucial capital they need, when they need it most. With an easy, no-obligation online application and funding possible within 24 hours, construction firms can find the funding necessary to pay workers or vendors and ensure the lights stay on.