Business Loan Kart

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Fintech has become the latest industry buzzword. Today, Fintech is helping lenders to access and use the most robust and real-time financial data of their customers/borrowers.

Source: https://cashflowconsultant.wordpress.com/2021/06/29/how-fintech-and-data-can-improve-your-loan-origination-process/

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As a bank, credit union, or non-banking financial institution, you’re probably gathering an unprecedented amount of data about your borrowers or customers. After all, data has the ability to identify and analyze your most deserving customers to make better lending decisions.

Reference: https://peterthiel.livejournal.com/468.html

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Artificial intelligence (AI) is transforming the lending industry - changing the way financial institutions determine credit-worthiness, provide funding and make lending decisions.

Reference: https://yarabook.com/read-blog/311787_how-ai-helps-in-making-loan-origination-process-easier-and-more-lucrative.html

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A New and Innovative Credit Scoring Model for Non-Traditional Business Lenders

  Applying old-school credit scoring methods and using out-of-date data where new market conditions prevail could restrict lending and hinder economic growth. For such lenders of this type, being shy away from technology and resistant to change could jeopardize opportunities to grow loan portfolios and boost profit.

Lenders traditionally rely on credit scoring based on historical financial data that don’t reveal a business’s ability to repay its loan amount. In this approach, lenders request a mile-long list of personal and business documents from potential borrowers. The financial data includes credit history, annual revenue, balance sheet, income tax returns, profit & loss statement, collateral, and other historical financial statements of the borrowers. 

In this credit scoring model, financial data has more weight in determining how stable and efficient the borrower is when it comes to funding their business. Lenders start by determining the ability of a borrower to repay its debt obligations with interest in a given period. For the most part, this typical credit scoring relies on the tenure of the existing loan, the amount and loan type a borrower already has, and current interest rates on the loan. 

Lenders use these reports to evaluate the risk profile of the borrower, which helps lenders determine whether to approve a loan or not. Obviously, a borrower with an excellent credit score tends to get a low-interest loan than those with a poor credit score, though the final decision is made by the lender, with FICO inputs used as guardrails. 

No doubt, the pandemic has eroded the credit scoring of many businesses who have closed or shut down or lost their biggest clients/customers, entailing innovative ways to assess borrower creditworthiness.

Low-Quality Data and The Unbanked

For example, an excellent credit score does not guarantee that a business will generate the same revenue and will be consistent for its payments in the future. Moreover, it won’t tell if a business has shut down or is struggling with cash flow issues. A new and innovative solution to this increasingly widespread problem is leveraging forward-looking data for determining creditworthiness. 

One of the most robust, accurate, and real-time data sources of information is cash flow predictive data. The perfect blend of accounting, banking, financial, and cash flow data help lenders see the past, present, and future financial health of a business and make data-informed intelligent decisions. 

Today, some futuristic financial technology companies empower non-traditional business lenders to examine borrowers’ banking, financial, accounting, and predictive cash flow data to take note of spending habits and monitor future income and expenses. 

Some advanced lending-tech firms enable lenders to access and analyze these data sets from the click of a button. With the help of artificial intelligence and machine learning, these FinTech firms are creating a single financial data APIs for lenders to collect, review and analyze the most accurate and efficient data of their borrowers. 

By leveraging this valuable data, lenders can accurately predict the future financial health of a business, and ultimately reduce loan bias, provide customized solutions, enhance customer experience, lessen credit risk, determine creditworthiness, and take their business forward. 

In the current lending scenario, non-traditional lenders must adopt new and innovative credit scoring methods for businesses that are unbanked or underbanked. 

Both Forward-Looking and Historical Data are Vital

New credit scoring is an augmentation and not a replacement of traditional credit scoring. Forward-looking data are more numerous and less organized than the data used in traditional credit scores. 

Fortunately, besides historical data, real-time financial data is now available for lenders, and state-of-the-art technologies are helping lenders to access, analyze and normalize this financial data. Using this data, lenders can understand their customers better, create new and innovative financial products, and build better-performing loan portfolios. 

Today, FinTechs can see a business’ past, present, and future data, enhanced by AI and ML, which means benefits for both customers and lenders. So, if you’re a non-traditional business lender who is struggling to determine the creditworthiness of your borrowers, this new credit scoring technology is your perfect solution. By utilizing a financial data API and using it for credit scoring, you can position yourself as an industry leader and become the financial expert of the future.

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Online Small Business Loan Options After Bankruptcy

Bankruptcy - there are certain financial, social, and emotional stigmas attached to this word. Though it can be a complex, confusing and unpleasant process for business owners to go through, it’s not the end of the road.

Bankruptcy can stick to your credit report for at least 7 years. Depending on the type of bankruptcy, the level of risk, and current lending scenario, you may or may not the funding for your small business.

Whether you’re an aspiring entrepreneur or a veteran small business owner who has filed for bankruptcy and is trying to recover the situation, you can do it with a small business loan.

Types of Bankruptcy Small Business Loans

Asset-Based Loans

Lenders see bankrupt businesses as very high-risk. To help reduce this risk, lenders require some personal or business assets as collateral for funding from business owners. The assets you can use to secure the funds are invoices, inventory, equipment, machinery, or commercial property.

With an asset-based loan, you can finance up to 75%-85% of AR value or 50% of inventory/ equipment value with repayment terms 1-3 years and factor rates ranging from 7%-17%. You can use an asset-based loan to purchase equipment, hire staff, pay wages, buy supplies, market your brand, and more.

Invoice Financing

Invoice financing is another great option for small business owners that are in bankruptcy or had recently been in bankruptcy. You can use your outstanding invoices to obtain capital from an online lender or an invoice financing company. This small business financing helps businesses to improve cash flow and working capital when having long invoice cycles.

Since the invoice itself serves as collateral, you don’t need to worry about submitting your real estate, inventory, or other assets to obtain the loan. You can finance up to 80% to 90% of the invoice value upfront based on the risk profile of your business. Whether you’re launching new products, hiring new employees, buying supplies, paying bills, or moving to a new location, invoice financing has got you covered.

Merchant Cash Advance

This type of small business financing is an advance payment against a bankrupt business’s future income. With an MCA, the lender provides a lump sum of cash to a bankrupt company which is then repaid automatically using a percentage of their daily credit or debit card receipts along with an additional fee.

You can use a merchant cash advance for a variety of purposes in your small business, from buying new inventory, bridging cash flow gaps. Paying off debt, marketing your products or services, opening a new location, and a lot more. You can finance up to $200K with an interest rate as low as 18% and loan terms up to 2 years.

So, these are some sought-after funding options for small business owners that are in bankruptcy or have complete bankruptcy. Before choosing a financing option, find and compare these loans using an online lending marketplace. These marketplaces help you compare a variety of small business loan offers from multiple lenders so you can choose one that best fits your current financial needs and budget.

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If you said, it will really be helped that it is still possible to apply for an online business loan even after bankruptcy. My brother was worried that he might not be able to own his dream shop someday if he were to choose bankruptcy now to get rid of his card debts. Now I will share this information to my brother.

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3 Financial Tips for Young and Aspiring Small Business Entrepreneurs

Becoming your own boss and starting your dream business can be intimidating, especially when you’re a novice and just entering the industry. Young and aspiring entrepreneurs face a lot of challenges like creating a business plan, managing time, hiring employees, delegating tasks, finding markets, marketing products, and more.

Besides these hurdles, it’s critical that you build a robust financial life and establish your financial goals so you can take control of your financial life as a young business owner. Here are seven of the best financial tips that entrepreneurs can apply to their journey. 

Plan for Raising Capital

If you’re planning to start your new venture, you may need extra working capital to cover various business costs to successfully run and grow your startup. If you don’t have sufficient funds to start your business, you need to find out where you can raise money from. 

Today there are a plethora of options available for aspiring entrepreneurs to obtain capital, from traditional banks to credit unions, online alternative lenders, and other non-banking financial institutions. You can also use an online lending marketplace to find and compare a variety of startup loan offers from multiple lenders and choose one that best fits your current financial needs and budget. 

Determine how much money you need, how you’ll use it, and what are your plans to repay the borrowed funds. When determining how much capital you need, it’s always a great idea to take twice as long as you originally think. 

Develop Your Financial Goals

When you are a novice entrepreneur, it is easy to waste time daydreaming about your idea instead of setting clear financial and business goals. You need to set strong financial goals that drive your young business forward. Your mission and vision should have a clearly stated purpose when developing your business plan as well as your business goals and objectives.

Read Also:  5 Financial Resolutions for Small Businesses in 2021

Here are some valuable tips to develop financial goals for your new venture.

Make a realistic budget to know your financial limits

Save an emergency fund to cover differential costs during an unexpected time

Spend your money wisely

Stay focused on your business goals to make smarter financial decisions

Pay off your debt on time

Set smaller financial goals to achieve bigger financial goals 

Manage Your Business Cash Flow

For startups, running out of money can be catastrophic. Poor cash flow is one of the most common reasons for startup failure. If you fail to manage cash flow within the first year, you will most likely not survive past the second year, so it’s extremely important for all businesses. 

Here are some of the many important tips to manage cash flow for startups

Use cash flow forecasting and management software to get a real-time picture of your past, present, and future cash flow

Smartly manage your accounts receivables - encourage customers to pay up faster so you can control and close the gap between invoicing and payment

Keep your books accurate and up to date

Keep your personal and business expenses separate

Build a cash reserve

Consider adequate small business financing to solve cash flow issues in your startup 

Final Thoughts

Though becoming an entrepreneur can be difficult, following these tips will help you get your business off the ground. By planning, organizing, tracking your purchases, spending money wisely, working with a professional, and learning new things, you’ll be ahead of the game as a new and aspiring entrepreneur.

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Best Small Business Loans for Moving Companies in 2021

Do you run a moving company in the USA? Don’t have sufficient funds to successfully run and grow your business? A moving company business loan can help you. You may need a loan in your moving business for several reasons.

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4 Tips to Reduce Cost and Save Your Small Business in a Crisis - Smansha Blog

If your small business is struggling to survive the COVID-19’s economic impact, consider these 4 tips to cut costs and save your small business in a crisis.

Decreased sales, lost clients, closed companies, declined consumer confidence, this unprecedented time has threatened businesses throughout the world, but small businesses can be particularly vulnerable. Coronavirus pandemic has moved from a health crisis to an economic crisis and many small businesses have altered their operations drastically.

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Merchant Cash Advances and Loans - What’s the Difference?

Both merchant cash advances and loans provide capital to entrepreneurs to successfully run and grow their businesses.Whether you’re struggling to bridge the cash-flow gap and pay off debt, or you need instant cash to purchase equipment and inventory, or make payroll and hire employees, these both financing products can help you overcome the above financial challenges in their own way.

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Tips to Form an LLC in Texas, USA

Introduction

From a limited liability to flexible membership, pass-through taxation, heightened credibility, and more, there are plenty of reasons to form an LLC in Taxes, USA. You may be also interested in forming an LLC in Taxes and have no clue where to start. 

Well, you no need to worry about it. In this blog post, we’ll explain all the requirements you need to follow to create an LLC in Texas.

Follow These Steps to Form an LLC in Texas, USA

 Register your Taxes LLC

If you want to start a limited liability corporation in Taxes, you must file a Certification of Formation (form 205) with the secretary of state. You may register online from the Secretary of State Website, or by mail or fax.

You’ll need to put the following information in the form:

Your company’s name     and physical location

The name and address     of the resident agent

Details of the     governing members

The purpose of which     the LLC was formed and the dissolution date, if applicable 

Details of the     organizers

 Get an EIN

The next step is to get an Employer Identification Number from the IRS. Similar to your Social Security Number, your LLC also need an identification number for federal and state tax purposes, and to hire employees, or open a business bank account. The best way to obtain an EIN is to apply through the IRS website. You’ll have to complete a simple online EIN application to get the EIN.

 Prepare an Operating Agreement 

Although an operating agreement for Texas, LLCs is not mandatory, but it’s highly advisable. An operating agreement is a legal document defining the ownership and work procedures of an LLC. It outlines how your LLC will be run and managed by the members and managers. This agreement should include the members’ percentage interests in the LLC, voting powers, rights, and responsibilities. Besides, it includes how profit and losses will be allocated, and rules for votes and meetings.

 Open a Business Account

Whether it’s a corporation, sole proprietorship, partnership, or even LLC, you should open a separate business account to run a successful company. Opening a business bank account for your LLC will help you separate your personal assets from your business’s assets and make accounting and tax filing easier.

 Register with the Texas Workforce Commission

If you’re hiring talents to run and grow your business, you’ll first need to create an account with the Texas Workforce Commission. With this Texas governing authority, you can register a new unemployment tax account, file and pay unemployment taxes, and learn about employment law

Complete Your Registration

The final step in creating your LLC in Texas is to complete your online tax registration Application. It’s essential to get a sales tax permit to do business with your LLC without a glitch. The online application covers sales and use tax, sales tax surcharge on diesel equipment, and 911 surcharge and fees

  So, these are some of the many important steps to take when forming an LLC in Texas, USA. Besides, you may have need financing to take your Texas LLC ahead. You can use an online funding marketplace to compare a variety of loan offers from multiple lenders to choose a loan for your LLC that best fits your current financial needs and budget.

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5 Benefits of Alternative Lending For Small Business

Alternative lending for small businesses refers to the practice of providing funding to business owners outside of a traditional bank loan. Most entrepreneurs use this financing option when they can’t obtain a traditional bank loan for any reason.

Generally, alternative lenders are more flexible than many of its funding counterparts when it comes to loan approval and repayment terms, and often provide the amount much faster. This is a well-established and growing industry and the process of this small business financing takes place online and over the phone.

Benefits of Alternative Lending for Small Business

Less Paperwork and Faster Response Time than Banks

Alternative Lenders use advanced tools, data, and technology to quickly your business’ credit risk with endless documentation and complicated application process. With alternative lenders, you can get funds into your bank account in as little as 24-48 hours.

The more technically advanced alternative lenders typically require only a few documents when processing your loan application. They consider various other factors than a credit score to approve your small business loan.

Variety of Funding Options

Your bank may refuse to provide you with some specific loan that you’re looking for your business. The good thing about alternative lending for small businesses is that it gives you the flexibility to find a variety of funding options so that you can get your desired loan for your small business.

Whether you’re experiencing cash flow issues and need a working capital loan, looking to update or buy new equipment and need equipment financing, or you need a big amount to purchase real estate and need an SBA loan for that, the variety of small business funding options from alternative lenders have got you covered.

Higher Likelihood of Approval

Another great benefit of alternative lending is that you have higher chances of getting your loan approved. With this small business funding, the application process depends on prerequisites that are significantly less strict.

Business owners who may have no collateral or good credit history or a positive proven track record can still apply. Since alternative lenders also look beyond your creditworthiness such as your business’ current financial position and cash flow forecasting, it becomes easy for you to obtain the loan.

Flexible Loan Repayment Terms

Because the requirements for alternative lenders are more relax than large-scale banks and credit unions, you can get more flexibility when repaying your loan for alternative lenders. Even you’ve got a small amount - you can sign up for a long repayment term. Furthermore, you can repay bit by bit over the long run instead of focusing on a credit they will resist to repay.

Find and Compare Loan Offers

Last but not least – applying through an online lending marketplace for alternative lending can help you find and compare a variety of small business loan offers. These innovative and intuitive platforms help you connect with multiple alternative lenders that later help you choose the right lender and loan offer. You can compare interest rates, costs, fees, and other factors and choose the loan that best fits your current financial needs and budget.

So, if you’re planning to secure alternative lending for small businesses, you may get these above benefits. Before finalizing an alternative lender, it would be great if you research your options well and compare a variety of loan offers to choose the best financing for your needs.

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Nice post on lending for small business, do you provide you service in India?

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How to Apply For a Business Credit Card without a Social Security Number

Not having a social security number can be a big hurdle when you’re applying for a business credit card because most lenders require your SSN during the application process. But there are ways to get a business credit card without SSN; all you need another form of identification as a substitute. In fact, there are several business card issuers that don’t require SSN.

So, if you’re an undocumented immigrant, a U.S resident who hasn’t applied for SSN or unwilling to provide your SSN, this can be a huge benefit to you. In this post, we’ll share what to know about your options, where to look, and how to apply.

Find Other Lenders that Don’t Require a Social Security Number

Fortunately, some lenders allow you to use ITIN instead of an SSN on your business credit card application. A few card issuers also let you get a business credit card without SSN by accepting your passport online or at a branch. So, it’s a great idea to apply for a passport from the U.S Department of State. You need to pay a fee and provide some supporting documents and a photo ID to apply for one. The passport application process may take a few weeks.

Apply For an Individual Taxpayer Identification Number (ITIN)

The second step to get a business credit card without SSN should be applying for an ITIN that is available regardless of your immigration status. Similar to Social Security Number, it has also 9 digit numbers and can be used in place of one on your business credit card applications. You can apply for an ITIN with the International Revenue Service by filing a Form W-7. Make sure you have the original documents of your identity and foreign status.

Once you are done with creating ITIN, you can apply for an Employer Identification Number (EIN) which is similar to an ITNI or SSN but is specific to businesses only. Applying for EIN may take a few weeks but you can receive it immediately once approve. Once you have both, it becomes easy for you to apply for a business credit card.

Gather Other Important Documentation

Depending on your business credit card lender, you may need to submit additional documentation besides a Passport, ITIN, and EIN. For instance, you may need to submit your business’ income proof, recent bank statements, and other financial documents. Gathering all important documentation before applying for your application will help you get your business credit card seamlessly.

Submit Your Application

Once you assembled all your necessary applications to apply for a business credit card, it’s time to submit your application. You can apply online, through the mail, over call, or at a bank in person. Depending on your lender and the method you use, your business credit card approval may take from a few days to several weeks.

Bottom Line

Getting a business credit card without SSN is such a challenging and time-consuming endeavor. These above alternatives and steps can help you solve your problem if you don’t have Social Security Number. If you’re looking to apply for a business credit card, an online lending marketplace can be the best place to find lenders that can provide you a business credit without Social Security Number.