While the economy has rebounded from the Great Recession, Biz2Credit found big banks still only approve about a quarter of the small-business-loan applications. Many companies are experiencing increased opportunities and funding. Yet, small businesses aren’t enjoying the same spoils. That may make it seem like the future of finance in small business may be more challenging.
Biz2Credit noted small-business-loan approval rates remain stagnant among institutional lenders. Small businesses can always entertain the possibility of earning funds through traditional banks. However, it’s smart to investigate other financing avenues as part of the future of finance in small business.
Many of these newer avenues to financing are poised to disrupt the industry. This is much like the small businesses they support. As financial outlets develop, they are addressing the challenges facing small businesses. However, there are other issues related to the future of finance in small business.
The challenges with the future of finance in small business
Traditional banks and financial institutions are built to service large businesses. This means their systems and processes are designed to assess risk in terms of big businesses with varied resources.
Some of the problems originate from simple data-gathering issues. The data isn’t consistent because three main credit bureaus are deciphering and delivering information about a candidate’s creditworthiness. Underwriting asks for endless reams of data about a business’s revenue. They also want to know about lines of credit and borrowing history. The time spent reconciling that information can also feel endless.
Worst of all, many lenders will use a small-business owner’s personal credit risk as a symbol of the business’s risk. Because these lenders use scoring models designed for either big businesses or individual consumers, they’re forced to try to apply their template for individuals to a small business. This results in the need for lots of judgment calls and system overrides. The more hoops a business owner has to jump through, the more likely he is to get caught in one of them.
That’s the process a small business endures with just one lender. Multiply that by five if an owner is shopping rates, and they are juggling several lengthy processes. Also, they are unearthing different sets of information for each. Because each asks for unique information, it’s difficult for many business owners to understand how they can improve their chances of accessing credit. Thus, they may find themselves in a loop of credit madness, using the same techniques to generate different outcomes and never knowing why.
The options shaping the future of finance in small business
Traditional lenders could be great options for small businesses. However, they would need to develop systems to evaluate small businesses by standards specific to their size and resources. Updating their scoring models, automating data collection, and streamlining their funding processes would benefit both. This would better indicate the degree of success a business could achieve with a lender’s help. Alternative finance, however, offers a window into what traditional lenders might hope to become.
Online lenders offer loans similar to bank loans. Yet, they offer a more streamlined product. These loans typically have less stringent qualifying requirements in terms of revenue, tenure and credit rating. Their processes are built on online platforms that allow for application and funding in the same space. Therefore, they demand fewer reviews and offer enhanced accessibility. These lenders eliminate lengthy wait times for qualification. Additionally, they assess more than credit history. Therefore, small businesses do not have to offer extensive collateral.
Kabbage, an online lender, streamlined its application process. They focus on live data connections to analyze a company’s real-time business performance over credit scores. A candidate must have been in business for a minimum of one year and achieved $50,000 in revenue in the past year or $4,200 per month over the past three months. This allows businesses to access lines of credit up to $250,000 with a free application that only takes 10 minutes.
Kabbage renders its decisions in real time. This means small businesses can use their lines of credit upon approval. It also highlights the benefits for users. Owners can maintain equity and control of their business. They keep their personal finances separate. Also, they avoid alienating those closest to them by accessing funds through a third party instead.
Crowdfunding platforms are another alternative financing outlet. This online pitching asks small-business owners to convince others that their companies are worth investing in. Crowdfunding asks people to invest in a given business, product or campaign. But the funds often don’t need to be repaid directly. Small businesses may issue lenders a free version of the item they supported or a percentage of future revenue.
Fundable is a crowdfunding platform dedicated solely to businesses. The site educates users on the fundraising process. They have built guides on crowdfunding, business operations and investing. It prohibits certain types of businesses and charges a monthly rate in lieu of taking a cut of the money earned. Also, Fundable allows users to determine whether they want to give rewards or equity to investors.
Invoice factoring is an alternative funding method. It relies on outstanding invoices rather than a business’s credit history. In this model, an invoice factoring company purchases a small business’s unpaid invoices at a discounted rate. This puts the focus on customers’ ability to pay rather than on the small business.
BlueVine is a company offering invoice factoring. It has built a streamlined dashboard that allows small businesses to attach the invoices they want funded. Small-business owners can see the rebates the same day. These are advanced at rates of 85 percent to 90 percent of the invoices selected. BlueVine does not require much paperwork.
Online banking also defines the future of finance in small business. It simplifies previous processes while enhancing the services of its brick-and-mortar sisters. Banking apps make it easy for small-business owners to keep tabs on their finances with one click. They can handle everything from transfers to deposits without visiting a branch. Many online banking platforms offer services geared specifically toward small businesses. They integrate with QuickBooks and other SMB financing software. Also, these online banks allow in-platform invoicing and payment collection. All these automated services save small businesses time and streamline the tools used.
Chime is an online bank account built to help users save money. Its Automated Savings program empowers entrepreneurs to automatically set aside money or round up their purchases, putting the “extra” into savings. Chime offers real-time transaction alerts and daily balance updates to keep them on top of their finances. And, they can seamlessly transfer funds between accounts, pay bills and issue checks. Unlike many big banks, it doesn’t charge monthly fees, overdraft fees or transfer fees. Also, users don’t have to maintain a minimum balance.
Small businesses aren’t earning funding attention at the same rate as their bigger competitors. To avoid the roadblocks of trying to compete with big businesses that have vast resources, small businesses should consider alternative financing.
Source Article: www.entrepreneur.com
Storage Unit Services Makes Your Life Easier by Taking Your Load Off
No one has extra space in their houses these days. Nowadays houses are small and there is so little room that you could hardly store essentials and roam freely. There are so many things that are important but as you don’t have enough space so they are lying as junk in the house. You can’t throw them away as they are important and expensive but they are making your house feels congested. Well, no worries as we have one life-saving solution. If you are living in Victoria then storage units in Victoria are the best for you.
What is the storage unit service?
A storage units service is offered by several companies. Think of a storage unit as a big locker room up to the size of a room. They offer different storage lockers for a specific period. Depending on your need, there are all kinds of storage units available like mobile, portable, self-storage, and mini storage units.
Why you need a storage unit service?
There could be several reasons for wanting a storage unit. Now the reasons could be:
ShiftingYou are shifting from one house to another. Or you got a transfer and you have to move to another city for the time being. There is so much you can’t take with you at the current moment. You need some time to manage everything. Now you also have to leave the previous house. Here a storage unit comes in very handy. You can store your stuff for as long as you want without any hassle.
- New Car or Motorbike
You have a fondness for automobiles whether it is a car or bike. But you don’t have space in your area especially when you already have an old automobile. You need space. The storage units easily have the capacity to store a car.
You are remodeling your house. There are expensive furniture and lots of crockery. Now everyone knows that during remodeling your stuff got ruined. Remodeling takes weeks and sometimes months to complete and for such a long time, you can’t afford to lose your expensive stuff. There are designer clothes, handbags, china crockery, kitchen, and other household electronics. You can’t let them get wasted in the name of remodeling. Again, the best solution is to rent a storage unit for as much capacity as you need.
- Opening a New Business
You are starting a new business or you are thinking of expanding the existing one. For this, you need to buy inventory but the only thing that you lack is space. Getting a storage unit for inventory space could save you a lot of money as you can rent on the daily basis as well. There is no need to get so much space permanently if you need it for as long as your stock is last.
There could be many more reasons to get a storage unit but I think you need only one!
Major Benefits Of Security Guard Services
Security guards are required in various places. From office buildings to shopping malls to schools, you need a security guard for everyone’s protection. They are people who are trained to secure a person or an area and to prevent crimes.
When it comes to hiring a security guard service, you need to choose the best agency in the city. A reputable security guard agency will provide you with highly skilled people at work. There are many instances where security guards have saved people’s lives and even stopped robberies and other crimes from happening. In this post, we will take a brief look at the benefits of hiring a security guard.
Benefits Of Hiring A Security Guard Service
Security guards are needed for various reasons. They can prove to be helpful in various things and situations. Some of the main benefits of hiring a security guard agency include:
Provides physical security
Having a security guard around you gives you a feeling of safety. They are hired by schools, hospitals, offices, and others. Some organisations hire more than one security guard to secure the building and area. The presence of a security guard at the workplace assures people that they are in a safe environment. A security guard while on his duty can alert people in case of a security situation.
Security guards are trained people. It’s their job to protect others. They are trained in crime prevention and situation awareness. This helps them to sense danger even before it takes place. In case of any crime or conflict, they are there to help people out.
Has the expertise
Security guards are well-acquainted with the workplace and everyone who visits the place regularly. They also keep a close check on the people who enter and exit the building. Their knowledge about the premises helps them to act immediately in case of an emergency.
Prevents crime from happening
This is one of the main responsibilities of a security guard. When you have more than one security guard at the workplace, it gives the impression that your office is safe. In this case, criminals will think twice before trying to attack the premises. In short, they act as deterrents to criminals.
Whether it is an office building or hospital or school, having a security guard on the premises is important. They can help make the area secure and provide a sense of safety to people present on the premises.