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
Business At Its Peak With The Cash Discount Program
First, you must understand customers are compared as goddess Lakshmi for businessmen as they bring prosperity, now to benefit the business a customer’s goodwill comes first in priority. Credit card processing reseller program is a process in which customers or retailers paying via cash enjoy a privilege of discount, unlike the ones who use the card payment options.
How merchants can provide benefits
Merchants can incentivize cash payments by offering a discount on the posted credit or debit card prices for customers that pay by cash or check. By including a service fee in the posted price, cash payments offset the payment processing charges that come with card transactions. Today there is a multitude of ways to pay – cash, check, credit card, debit card, mobile and online, which is convenient for the younger, tech-savvy generations.
Adjust, don’t compromise!
This credit card processing reseller program provokes the customers and retailers to choose the option of cash or check payment over card payment. Added services are automatically and randomly generated as soon as you opt to pay via card. Being a merchant you never have to change your pricing.
Better for Business, Better for Customers
When you realize how efficient and useful the cash discount program serves you, you will undoubtedly support this program and opt for it every single time. The benefits are beyond measure and they are stated below for your convenience
Simplicity to its best
Any program that is new must be according to the user interface, it must be capable of easy interpretation by every retailer and customer and merchants. Always know that each product you choose has an added service charge to it, but as soon as you opt for cash payment it is deducted while billing, when the customers skip the extra charge it also benefits the retailers and indirectly benefiting the merchants to a higher scale.
The credit card charges are the fees that cut into the merchant’s profit margin. Using this cash discount program the merchants can reduce the credit card interest rates and also benefit himself.
Merchants are capable of holding their profit margin intact and also reducing the offs on credit card charges.
How does the cash discount program work?
As part of our unbeatable merchant services, the cash discount program is the perfect solution for a plethora of businesses, including retail, restaurants, convenience stores, and more. To understand exactly how it works, take a look at the sequence below:
Price of Goods
Businesses using our cash discount program price their goods at the price customers would pay using a credit card.
Cash Discount Offer
Once your customer gathers their goods and is ready to pay, they notice the signage near your register which informs them that all prices posted in the store are credit card prices.
At this point, the customer can choose to pay the listed price using their credit card or pay the discounted price with cash.
With so many types of payment options, credit card processing reseller program can be a challenge for businesses with smaller budgets. Nevertheless, a new technique can overall affect a businessman’s capability to keep a stable business because of the complex payment technology that she or he has to opt for.
Marking or engraving? This is the dilemma: Three criteria to avoid making the wrong decision
In the previous article, we explained the fundamental differences between laser marking and laser engraving, which are often wrongly confused. In marking, the laser melts the material through heat and modifies its shape to imprint a permanent code or mark.
Laser engraving, on the other hand, vaporizes the material. The laser beam penetrates deeper into the surface and removes the upper layers by sublimating them, or rather through a direct transition from solid to a gaseous state. This is because the laser hits localized areas with a high intensity of energy and therefore heat.
But how do I choose whether to mark or to engrave?
Now that we understand the difference between the two processes, let’s now define what are the main parameters that lead us to choose one over the other:
1 Marking resistance
Laser engraving penetrates the surface more deeply and is recommended for all those components that are at risk of wear due to the environmental conditions in which they will be set, or that are subjected to post-marking process surface treatments such as sandblasting, shot peening, e-coating or heat treatments
Marking is a process that takes less time than engraving, precisely because it penetrates the surface of the material less deeply. If the component is not subjected to a particular stress, such as with home appliances, electronic, promotional, and jewelry components, marking also guarantees speed mixed with the permanence of the result.
3 The material and its compatibility
As already explained, while marking dissolves the material by modifying its roughness, engraving sublimates the material by creating grooves. To do this, the laser must be powerful enough to vaporize the material in a few milliseconds and the material to be marked must have an adequate sublimation temperature, so deep engraving is not always possible.
When laser engraving occurs, it is important that the laser marker is equipped with a suitable exhaust system. LASIT has designed its exhaust fan, specifically designed to maximize the level of protection of both the environment and the laser itself.
Now that we have a more precise picture of the parameters that lead us to recommend one rather than the other process, it is time to find out about the 10 guidelines for choosing a good laser marker.