Why Have So Few “Small” Businesses Gotten Relief from the SBA?

The first round of SBA PPP small business financing has come and gone and the thousands of small businesses that make up the Kapitus client base have largely been left out in the cold.  While we eagerly await Congress’s approval of additional funds, we used this time to survey our customers to understand who was able to obtain funds from the first $349 billion in forgivable loans, who was not, and which financial institutions were most helpful in supporting small businesses.

What we found was a troubling dependency by small businesses on the largest financial institutions in the country (national and regional banks).  These large banks, as well as the SBA itself, seem to be leveraging a definition of small business that allows large companies to fit their subsidiaries into qualifying entities while independent business owners are overlooked.  The national banks appear to have systematically prioritized these large clients over their smaller constituents and in doing so, exhausted the first round of SBA funding faster than many anticipated.

Our survey was conducted between April 17th and 20th and targeted 26,536 small businesses that we have provided capital to over our 14-year history.  As of Monday morning, we had received 2,076 responses, 80% of which told us they had applied for SBA PPP funding before the money ran out.

Of those respondents, 1,206 answered the question “have you received funding from your PPP application” and 1,116 or 92.5% told us that unfortunately, they have not.  The 90 customers that have received funding provided tantalizing clues as to how small businesses are getting money from the SBA.  The most successful channel to date appears to be through community banks, where 18.8% of applicants have been successful and where customers are more likely to have a personal relationship with a decision-maker inside the bank.

Kapitus PPP Survey

Credit unions have also been moderately successful with 11.8% of applicants receiving funding but have a much lower penetration rate than other banking channels.  Regional banks follow at a 7.2%, followed by the SBA itself (2.7%) and non-bank lenders (1.4%).  Sadly, national banks (such as Wells Fargo, JP Morgan, Bank of America and Citigroup) which have the greatest penetration into the US small business community, have to date done the least to help small businesses in their time of need.  National banks only produced three successful loans in our survey out of 320 applications, a dismal 0.9% success rate.

Why is it that national banks have done so poorly serving the small business community?  Banks are economic animals with scarce resources just like any other company.  When a large number of clients request a scarce resource at the same time, they prioritize their largest, most profitable and riskiest clients first.  In our survey, community banks supplied small businesses with more lending products than any other bank segment.  This indicates that community banks have deeper ties and greater exposure to the plight of small businesses and as a result, during a crisis they work more diligently to ensure that their needs are met.  As seen in the table below, our clients utilize community banks and non-bank lenders more heavily than other types of credit institutions.

Kapitus PPP Survey

Another part of the answer lies in what the SBA, and in turn the nation’s largest banks, consider “small” when it comes to business.  On April 16th the SBA announced that they had distributed nearly 1.7 million loans representing $342 billion, indicating an average loan size of $206,022.  Assuming the average American worker was making $49,764 annually (or $4,147 per month) just before the crisis (Bureau of Labor Statistics) and considering that PPP loans are sized based on 2.5 times monthly payroll, this implies that the average company getting a PPP loan as of April 13th had 20 employees.  There are nearly 6 million companies with between 1 and 500 employees and the average company in this group has 10 employees (US Census Bureau).  This means that fewer than 28% of eligible small businesses were served in the first round of SBA funding, and those that were served were the largest companies in the range. This argument is supported anecdotally by the fact that companies like Ruth’s Chris, Potbelly and Fiesta Restaurant Group each received between $10 million and $20 million in PPP loans through JP Morgan.  Kapitus PPP Survey

This sequence of facts has been very frustrating to non-bank lenders such as Kapitus who are the only consistent source of financing available to most businesses with 10 or fewer employees.  We have been petitioning the SBA for a temporary license to allow us to lend the PPP product to our core client base (our average customer has 8 employees) since the program was announced.  Nearly two weeks into the program the SBA released an application for non-bank lenders, and we submitted our application within 12 hours of its being published.  Eleven days later we have heard nothing, although some of our larger competitors did receive temporary licenses just as the money in the first tranche was exhausted.

Undeterred, we are working with our clients to secure PPP loans in any way we can.  We have partnered with several community banks and non-bank lenders with SBA licenses to fund our clients and we are lining up additional capital to fund these loans ourselves when and if we are awarded a license.  In the meantime, we counsel or clients on their financing options and continue to provide innovative lending products as small businesses struggle to navigate the most challenging business environment any of us have ever seen.  America’s small businesses owners are some of the most creative and resilient leaders our country has.  We look forward to partnering with the SBA to offer small business owners the solutions they need to survive, rehire, rebuild and reopen as soon as it is safe to do so.

To receive the most recent updates on Paycheck Protection Program and other federal, state and local relief initiatives aimed at helping small businesses visit our COVID-19 Resource Center.


About the Author

About Kapitus - Ben Johnston

Ben joined Kapitus in 2014 as Chief Strategy Officer and became Chief Operating Officer in January 2017.  Prior to joining Kapitus, he was a Principal of Pine Brook Partners, a New York-based private equity firm where he invested in banks, insurance companies, asset managers and specialty finance companies.

Best Books for Small Business Owners Series: The Innovator’s Dilemma

As a small business owner, do you consider how exploring new ideas can lead to future success? If making time for continuous learning isn’t at the top of your priorities, you’re not alone. And we want to help. Reading or listening to business books can offer new perspectives and help you understand classic business lessons. So, follow our Monthly Must-Reads series! In this series, we share the best books for small business owners. We’ll save you time by helping you determine whether each book is worth your attention. For each featured book we:

  • Identify exactly which types of business owners will benefit from reading it
  • Summarize the main points
  • Share key take-aways and reader reviews

This month, we cover The Innovator’s Dilemma by Clayton M. Christensen. Check out the end of this article for our past must-reads.

Business Book:

The Innovator’s Dilemma, by Clayton M. Christensen


To uncover two innovation types and to understand the purpose of and necessity for each of them.

Main Idea:

When companies disregard opportunities for disruptive innovation, they risk going into the shadows of more inventive start-ups.

Great for Small Business Owners Who:

Develop innovative solutions for niche markets, or have long-standing businesses and want to protect themselves from dissipating.


The Innovator’s Dilemma identifies and explains two types of innovation: sustaining innovation and disruptive innovation. Sustaining innovation is the ongoing effort of listening to and improving from customer feedback. In this way, it satisfies customer’s current needs. Disruptive innovation helps companies evolve, to meet customers’ needs–often in an underserved market. Examples include the transition from digital to smartphone cameras, GPSs to navigation apps.

Christensen goes on to explain which types of companies typically focus on disruptive innovation and which ones lag behind—and why. He offers strategies for how both long-standing companies and new start-ups can successfully explore and benefit from disruptive innovation.

Key Take-Aways:

Large, well-resourced companies are more likely to ignore disruptive innovation and suffer because of it. They may not even notice niche markets. They might think that these markets aren’t offering enough rewards to compensate for the lack of credibility. These companies should continue their sustainable innovation efforts. They should also start paying attention to how niche markets want to use their products.

For start-ups and small businesses, disruptive innovation offers huge opportunities. They’re often first to market. Targeting small niche markets offers a more forgiving, cooperative and engaged customer base. Disruptive innovators don’t directly compete with larger, better-funded market leaders for customers. This means they have a higher chance of growing surprisingly quickly and unchecked.

Pursuing disruptive innovation can help companies take–or keep–their place as market leaders of the future.

Reviewers Say:

“Clayton Christensen’s The Innovator’s Dilemma…remains one of the most important business leadership books on the market… The pace of technological innovation has increased drastically… [but] the foundational principles remain the same—when companies are doing everything right, they can still lose their position of leadership in the market. Companies are incentivized to act in accordance with what their customers want, and if they are not careful, that mentality can preclude them from taking advantage of disruptive opportunities that their current customers are not yet interested in. Christensen’s warnings should be heeded by leaders and managers at all levels of the organization…. I look forward to reading about how the Innovator’s Dilemma can be addressed in this age of near-constant innovation and rapid technological advancement.”

“I’ve been involved in innovation most of my career, and now wish I’d read this book much earlier. The simple but powerful thesis of the book is backed up by data and case studies from disparate industries. Like many business books it is a bit repetitive at the end… But the ideas and usefulness are five stars.”

Monthly Best Books for Small Business Owners:

August, 2019 – Blitzscaling

September, 2019 – The E-Myth Revisited

October, 2019 – Influence: The Psychology of Persuasion

November, 2019 – Built to Last

December, 2019 – Multipliers

January, 2020 – Start with Why

February, 2020 – The Five Dysfunctions of a Team

[skyword_tracking /]

The Simple Credit Score Fix You’re Not Taking Advantage of

An error or inaccuracy on your personal and/or business credit reports can drag your credit scores down. That’s the last thing you need if you’re planning to apply for business financing. A lower credit score could potentially result in a steeper rate when you borrow, or lead to being denied for credit altogether.

Fortunately, you don’t have to be stuck with credit score damage because of an error. Here’s how to identify and fix credit report mistakes.

What Counts as an Error?

Credit reporting errors are items that are mistakenly attributed to your credit file. These may include:

  • A paid account that still shows a balance due
  • Accounts that don’t belong to you
  • Accounts with a positive payment history that are inaccurately reported as delinquent

Payment history makes up the largest share of your personal FICO credit score. A late payment reported in error may shave serious points off your score.

Business credit scores, such as the Dun & Bradstreet PAYDEX Score, also consider payment activity. If a vendor isn’t reporting a line of credit properly, that also could result in a lower business credit score.

It’s important to understand the difference between a credit reporting error and a derogatory mark. Derogatory marks include late or missed payments and collection accounts; as long as they’re factually correct, they can’t be disputed.

Reviewing your personal and business credit reports regularly — once per quarter, for example — can ensure that errors don’t go unnoticed.

How to Dispute a Credit Reporting Error

The Fair Credit Reporting Act outlines a specific process for disputing credit report errors on personal reports. The first step is identifying which credit reporting bureau (Equifax, Experian or TransUnion) is reporting the error. The second is filing a dispute.

All three credit bureaus allow you to initiate disputes online, but you can also mail in a dispute letter. If you’re mailing a letter, be sure to include the following:

  • Your name and address
  • The nature of the error you’re disputing
  • A copy of your credit report with the disputed information highlighted or circled
  • Any supporting documentation you have to show that the item you’re disputing is incorrect

The dispute process for business credit reporting errors is similar, with the key difference being that disputes must be initiated with business credit reporting agencies.

Once you submit a dispute request, the credit reporting agency has 30 days to investigate and verify your claim. It must notify you of the results of their investigation in writing once it’s completed. If it’s determined that an error does exist, the error must be corrected or removed from your credit file.

What to Do If an Error Isn’t Removed

In the event that a credit bureau incorrectly determines the information you’re disputing is valid, there’s one more thing you can try: reaching out to the creditor or vendor that’s reporting the information and dispute it directly.

You’ll need to provide the same background details about the error and what you’re disputing. If the creditor realizes that an error has occurred, they have to update your credit file with accurate information. Taking this extra step could help you get the error corrected or removed, giving your credit score a boost in the process.

Best Books for Small Business Owners Series: The Five Dysfunctions of a Team

Continuous learning is essential to business and career success. As a small business owner, do you make time to continue developing yourself, considering new ideas and how you might apply them to your business? This is likely a challenge. But, one way to fit learning into your schedule is by reading or listening to great business books; and we’d like to help. With our Monthly Must-Reads series, we share the best books for small business owners.

Not only do we find books helpful for small business owners, but we also aim to save you time. For each book, we share who will benefit from reading it, the book’s key take-aways, and even reader reviews, so you can quickly determine whether it’s worth your valuable time.

This month, we’ll cover The Five Dysfunctions of a Team by Patrick Lencioni. For a list of past Monthly Must-Reads, like January’s Start with Why, check out the bottom of this article.

Business Book:

The Five Dysfunctions of a Team, by Patrick Lencioni


How leaders can uncover and address issues that prevent their teams from collaborating and performing successfully.

Main Idea:

Fostering and leading a strong team takes more than a charismatic leader. It takes a leader who’s willing to do the hard work of uncovering and working through conflict, and a team that’s able to honestly identify and work through any issues that stand in the way of success.

Great for Small Business Owners Who:

Struggle with leadership, specifically creating cohesive, trusting teams


InThe Five Dysfunctions of a Team, Lencioni takes readers through a novel-style fable illustrating five common issues keeping teams from functioning at their highest potential. In his story, Kathryn is a fictional CEO hired to lead a team of rockstar executive leaders, who excel in their individual roles, but have trouble working together. The reader follows along as she guides the characters to overcome their political and interpersonal drama, all while discussing and addressing each type of dysfunction they exhibit.

After concluding the story, Lencioni outlines the concepts of each dysfunction with an pyramid illustration. He dives into each type of dysfunction, explaining how to recognize and address them. At the end, Lencioni offers a quiz that you and members of your team can take to understand your strengths and weaknesses within the pyramid.

Key Take-Aways:

Managing and working as a team not only takes discipline and communication, but also courage to overcome obstacles that can seem personal. The five dysfunctions teams often experience are:

  1. Absence of trust
  2. Fear of conflict
  3. Lack of commitment
  4. Avoidance of accountability
  5. Inattention to results

Reviewers Say:

“Lencioni shares simple truths about teams that should be more intuitively obvious to everyone. Yet, these things are very easy to grasp while being very difficult to actually practice … without practice. This book focuses on what prevents a good team from forming and describes what’s needed. His companion book [Overcoming the Five Dysfunctions of a Team: A Field Guide for Leaders, Managers, and Facilitators] focuses on the implementation of these ideas but does not stand alone. If you only get one, get this one. The biggest problem I see is that both books are framed about C-level and top-level executive teams. Very few mid-managers would have the leverage and ability to implement all of these principles at lower levels of the organization. It’s definitely possible in some cases, but it would significantly more challenging. His principles are universally true, but his coaching is directed at executives.”

“A must-have in any manager’s toolkit. I have loved this book for awhile and regularly give it on loan. A perfect way to understand the people aspect of team and support managers through what is a common situation. Very cleverly written and full of tools to help get dysfunctional teams moving in a shared direction. Also good for some self-analysis as everyone will identify their own character.”

Monthly Must-Read Business Books:

August, 2019 – Blitzscaling

September, 2019 – The E-Myth Revisited

October, 2019 – Influence: The Psychology of Persuasion

November, 2019 – Built to Last

December, 2019 – Multipliers

January, 2020 – Start with Why

[skyword_tracking /]

Joseph Hoelscher: Using Creative Marketing To Help Customers Avoid Your Services

If your marketing helps people avoid needing your products/services, it seems like you might be going in the wrong direction. After all, isn’t the whole point to land more customers? In the right situation, though, this counterintuitive approach can lead to terrific results. Joseph Hoelscher, a DWI lawyer and partner at Hoelscher Gebbia Cepeda, built his marketing campaign on one key concept. They want to stop people from driving drunk so they don’t need services in the first place.

Finding a Legal Specialty

Hoelscher has been practicing law for about 14 years and specialized in DWI for several reasons. “I was good at it, it pays well and unfortunately it happens a lot. Anyone can accidentally have too much to drink.”

After working in this field, Hoelscher has seen plenty of the horrible results from DWI. “I’ve had vehicle manslaughter cases where the outcomes have been just horrific. Clients with serious injuries, losing their kids to CPS, and of course seeing the harm done to victims.”

Even though Hoelscher makes his living from DWI law, he longs to see the day when this is no longer an issue. If it meant him practicing another form of law, he’d do it.

Taking a Different Marketing Approach

Hoelscher felt uncomfortable with how the typical DWI firm handles marketing. “I’d see a lot of ads where the behavior seemed almost encouraged: hire us and you won’t get in-trouble.”

He wanted to try something different while potentially helping with this troubling issue. Hoelscher and his representatives attend events where people are partying and drinking, like San Antonio’s version of Mardi Gras, the Fiesta Festival.

At the event, they’d hand people cards with a code for a free Uber ride. “We’d put our info on the back along with a slogan, “we’d much rather you pay for an Uber than our retainer.” Hoelscher would also give these cards to parents at college events so they could pass along to their children.

Building Loyalty

Hoelscher said the response was overwhelmingly positive. “People would get a laugh and make sure to hold onto our cards.” He noted that humor was a good way to bring up the topic. “At these events, people are out to have a good time. We weren’t trying to judge them.”

Even though Hoelscher tried to cut down on DWI with the free rides, he’d still end up getting clients. “People would call, “ah I should have used your free ride.” Or they’d refer a friend, a family member who got in-trouble.”

Ultimately, Joseph Hoelscher finds clients by showing he cares and it shows how you can drive business by leveraging community engagement.

Seeing Cost-Effective Results

“We’ve also run radio, print, TV, and social media ads. The ROI was better on this targeted, personal outreach.” Hoelscher said they pick events where people are going to be drinking, their target audience, and that definitely helps their ROI versus print, radio and TV where they’re hitting a broader audience.

He also commented that his contrarian approach remains affordable. “We’ve had good success with social media, but the cost per lead had quadrupled over the past few years whereas the cost per lead is still the same for our rideshare campaign.” That’s another benefit of trying something unique, you aren’t fighting for resources with the competition.

Finally, he points out that the rideshare campaign helps get more out of his other marketing. “People take pictures of themselves getting into rideshares and link to our social media. When people see our other ads, they remember ‘oh that’s the guy who helped me avoid drinking and driving.'”

joseph hoelscher

Advice for Other Business Owners

If you’d like to try a similar campaign, Joseph Hoelscher says put yourself in the customer’s shoes. “Where are your customers coming from and what’s getting them in trouble?” In his case, he finds that people often drink and drive not on purpose, but because they didn’t plan on how to get home. His firm gives them that ride home they need.

When customers create problems for themselves, he recommends pointing out the issue, but doing so with humor. “If you engage in nonjudgmental outreach, people appreciate it. You aren’t trying to sell on fear.”

Above all, this style of marketing works. It shows customers you care about them. “I’ve had so many clients say they hired me because I was looking out before they had a problem, not like everyone else who only came knocking after they needed a lawyer.”


[skyword_tracking /]

The Most Interesting Women-Owned Businesses

Here is your list of women-owned businesses that have caught our eye.

Women in business are changing the game. With innovative companies across the board, today’s women are tackling problems and finding new and unique solutions that better the world around us. From media companies to energy corporations, these women in business are updating the way our world works and challenging us all to improve in the process. Read on to learn about a few of the most interesting and fastest-growing women-owned businesses!


S’well was founded by Sarah Kauss in 2010. It aimed to help rid the world of plastic water bottles that clog up landfills and waterways. With the goal of creating an attractive, eco-friendly water bottle, Sarah and her team set out to make their fashionable, trendy, and functional water bottle. The BPA-free, high-quality stainless steel, vacuum-sealed water bottles reduce single-use plastic all around the world.

What also makes her a part of the most interesting women in business is that she runs one of the fastest growing companies in the United States. S’well has built its fan base through word-of-mouth promotion. The company also partners with UNICEF, (RED), American Forests, and BCEF to give back to communities in need, building infrastructure and providing education on the importance of clean water around the world.

Xtreme Solutions

Founded by Phyllis Newhouse, Xtreme Solutions is an IT services & solutions provider. The company’s primary goals are to analyze business processes and to design and apply secure, integrated information management systems and services. Xtreme Solutions wants to help distribute next-generation IT & cybersecurity services & solutions to businesses of all sizes in commercial, government, and academic sectors.

Newhouse doubled her company’s revenue in just two years. A disabled veteran, she doesn’t let any obstacle or fear hold her back, in life or in business. The success of Xtreme Solutions is due, in part, to her refusal to stay stuck in the past. She promotes rebranding every so often – vital especially for a technology company – and encourages communication, discipline, and energetic motivation in her workers and her clients. Making her a unique part of the most interesting women in business group.


Catherine Downey founded CATMEDIA under the name CATVIDEO in 1997, using her experience in television production, media, and project management. Her goal was to use creative ways to solve her clients’ problems while producing quality products and services. CATMEDIA prides itself on exceptional customer service, innovation, and integrity.

In 2011 the name of the company changed to include the expanding services the company offers. They specialize in creative services and media production, program management, training, and human resource management. Downey built her company while caring for her young family, and now works extra hard to bring double the care CATMEDIA gives to its clients. The fast pace of change in today’s world keeps CATMEDIA workers on their toes, and it has paid off: CATMEDIA is a leader among government services contractors, and it’s been on the Inc. 500 list of the fastest-growing private companies in America twice.


A group of students at Louisiana State University started the renewable energy company Renogy to sell solar products online in 2010. In the beginning, they sold their limited range of products on Amazon, eBay, and other similar suppliers. Today, they sell solar panels for homes, businesses, recreational vehicles, and more! Their products are manufactured with the highest quality standards and sold at the lowest possible price. They are also crafted for the individual needs of each customer. Offered as well are wiring diagrams and tech support so every customer is educated and well taken care of when using Renogy solar panels.

Now a recognized brand, Renogy has won many awards, including Best Entrepreneur or Founder (Woman) of the Year in 2016. Founder and CEO Yi Li leads her team in promoting their solar equipment to solar installers, developers and homeowners.

Also, make sure you check out one woman who bucked the publishing trend and built a new media brand in just 6 years!

7 Reasons Asset Based Financing Might Make Sense for Your Fast-growing Company

Fast-growing businesses may face a problem financing an expansion. But asset based financing may offer advantages over more traditional methods of borrowing money. Here’s what you need to know.

How asset based financing works.

Imagine that you are running a retail apparel company and need cash to grow your business. Instead of applying for a loan based on the company’s credit history, you might instead ask for financing secured by the inventory you hold. Clothing retailers usually hold significant levels of inventory (dresses, jeans, etc.) which may be used as loan collateral.

Many retailers also operate as wholesalers to smaller firms and so usually have unpaid invoices outstanding. Companies may also be able to use those invoices to help finance their own operations by contracting with an intermediary known as a factor. The factor buys the invoices at a discount in exchange for providing immediate cash.

Here are seven reasons consider asset-based financing.

What are the benefits of asset based financing?

When compared to traditional forms of lending, asset based financing can can offer a wide array of benefits – from fewer restriction, to cost savings, to less paper work. While it is not the best fit for every business, it does make sense to include it as part of your due diligence when selecting the best financing product for your business.

Here are seven reasons to consider asset-based financing.

1. Potentially lower costs

Asset based loans are secured loans. And, therefore, may be far cheaper than traditional loans which are usually based on the company’s financial history. If a loan is based solely on the credit history of a firm, it is considered an unsecured loan. As such, the borrower will get charged a higher interest rate. That’s because the bank may be assuming more risk when they make an unsecured loan.

The secured versus unsecured loan structures are similar to consumer loans, in that home loans may be cheaper than credit card debts. With a home loan, if you don’t pay your mortgage the bank may repossess your home; however, with credit card debt there’s typically no security deposit backing up the loan.

2. Less paperwork

While obtaining a traditional business loan might require you to document the financial history of your company’s operations, an asset-based loan likely would not. In other words, borrowing against the value of your inventory might be an easier way for a newer company to get financing than trying to get a traditional loan.

3. Fewer restrictions than traditional loans

Many loans have restrictions on how the money from the loan gets used. For instance, a bank may ask why you need a conventional loan (also known as a term-loan because it is given for a specified period) and how you intend to repay it. If you take out a term-loan and tell the bank you want to use it to remodel your retail stores, then that is how the bank expects you to use the proceeds. The good news is that asset based loans typically may have fewer use restrictions.

4. More flexible repayment terms

You must eventually pay back any loan to the lender. However, not all loans are created equally. Asset based loans often don’t require the entire loan amount to be paid off according to a fixed timetable, often known as an amortization schedule. Term loan payments (including a pay-down of the principal balance) must be paid each month. Asset-based loans often have more flexible payment terms, allowing businesses to pay off the debt at a time that is most suitable given their cash flow. The result is potentially more flexibility for companies using asset based financing.

5. Streamlined balance sheets

If you take out a traditional loan, then the balance due appears on your balance sheet. Some asset based financing does not get recorded that way. For instance, if you sold your outstanding invoices to a factor in exchange for immediate cash, there would be no balance to show on your firm’s balance sheet. All you’d need to do is to note how you managed this financial transaction in a footnote on the financial statements. This is known as off-balance sheet financing.

6. A good way to finance working capital.

Companies experiencing fast growth may find it hard to get additional working capital via revolving lines of credit. On the same end, as the need for working capital increases your firm may have higher levels of inventory and larger invoices due from customers. You may use inventory and larger invoices as collateral to finance increased working capital needs.

Feeling more confident about your business to go shopping for a loan? Before you start looking you should understand what factors impact terms of your loans.

5 Key Reasons to Forecast Your Cash Flow

Projecting your cash flow can help you plan for the future, avoid unexpected shortfalls and even qualify for a small business loan.

Many overextended small business owners are weary of cash flow analysis. “Analysis” of any kind sounds difficult, and who has the time or energy to make future projections? More importantly, why bother to forecast your cash flow?

Consider that poor cash flow is the number one reason small businesses fail. An alarming 82% of companies fail due to cash flow issues. Convinced you don’t need to worry because your business is profitable? Think again. Profitable companies fail all the time for the simple reason that they run out of cash.

Beyond keeping your doors open, forecasting your cash flow can take the guesswork out of where you’re going. Having a good idea of your direction can help you make smarter business decisions. A little planning goes a long way, and it doesn’t have to be difficult.

These days, intuitive online tools can do the hard work for you, automatically generating cash flow projections based on your past transactions and financial history. No spreadsheets required.

There are myriad benefits to forecasting your cash flow, from avoiding dips into the negative to planning for growth. Consider these five ways that cash flow projections can improve your business.

Avoid Shortfalls

Unexpected shortfalls can be crippling, and it may take months (if not longer) to recover. Negative cash flow can creep up on you if you don’t consistently track the cash coming in and going out. Fortunately, shortfalls are often avoidable with a bit of foresight.

Projecting your cash flow will help you identify — and plan for — market swings, seasonal fluctuations and other business patterns that can lead to unpredictable cash flow. Forecasting can even help you visualize cash flow trends with the help of automatically generated charts and graphs.

Optimize the Timing of Accounts Payable and Receivable

On a more granular level, many avoidable cash flow issues are often a simple matter of timing. Significant lag time between invoicing your customers, or shipping out products, and getting paid can cause unnecessary strain on your cash flow.

Cash flow projections that are based on your financial history can help you anticipate when you’ll be paid by customers. This allows you to stagger or otherwise adjust outgoing payments to your vendors accordingly. In turn, this can keep you from dipping into the red.  And keeps you out of the uncomfortable position of not being able to pay your suppliers, or worse, your employees.

Prove You Can Pay Back the Loan You Requested

 When you apply for a small business loan, lenders will scrutinize your cash flow history in an attempt to answer one primary question: Can this borrower pay back the loan they’re requesting?

Asking for a loan of any amount without showing your plan for paying it back is a good way to land in the rejection pile. This is especially true if your current cash flow won’t clearly cover all of your regular operating expenses — plus your loan payment.

If you find yourself in this situation, cash flow projections can help strengthen your case by showing the lender exactly how you plan to use their funds to get to a place where you can easily make loan payments. This type of forecasting allows you to hand over a road map that can instill a lender with the confidence they need to approve your loan.

Anticipate the Impact of Upcoming Changes

Does your business plan to purchase new equipment? Launch a new product? Cash flow projections allow you to gain a complete picture of the ripple effect that these types of changes will have on your cash flow.

When your finances are synced up with FINSYNC, cash flow projections are automatically generated based on future invoices, bills due and payroll. You can then create “what if” scenarios, such as buying new equipment. Forecasting shows you how the cost will affect your bottom line.  It can also show the potential increase of revenue generated by the new machine.

Plan for Future Growth

In the same manner, cash flow projections can help you plan for future growth and expansion. Whether you’re expanding your team with new employees and need to factor in increased payroll costs, or ramping up production to keep up with increased sales, future projections help you see exactly where you’re going — and how you’ll get there.

Forecasting is also an excellent goal-setting tool to help you plan out the financial steps your business needs to take to achieve targets. There’s power in cash flow projections and the insight they can provide your business. Fortunately, this competitive advantage comes with little effort when you leave the analysis to today’s sophisticated online tools.


Guest post by FINSYNC

Shift Financial Insights: Using Unconventional Humor to Stand Out

It’s tempting to play it safe when it comes to small business marketing. After all, you could risk upsetting potential customers if you try something a little silly or different. But then, every ad starts to look similar to the last, and people will continue to ignore them. That’s why Spencer Sheinin, CEO of Shift Financial Insights, uses a different approach. His accounting firm sees fantastic results from using unconventional humor in their marketing strategy.

Coming in with a different perspective

Sheinin wasn’t an accountant in the beginning. First, he was a serial entrepreneur. Over the years, he ran a contract manufacturer of skin cream products, a construction business and a cold storage business. During this time, he realized accountants and business owners look at the same information, just from very different perspectives.

“Accountants and entrepreneurs are basically speaking two different languages. That’s one of the reasons the typical entrepreneur hates dealing with their books.” It’s no wonder 23% of small business owners feel anxious about their accounting, according to Intuit.

Sheinin launched his firm to help entrepreneurs with their bookkeeping and accounting. But he also wanted to present financial insights in understandable and digestible ways.

Using humor to stand out

Sheinin’s entrepreneurial experience adds extra insight into his target customer persona. He felt that his target audience would appreciate a different style of marketing. Rather than sending out traditionally dry accounting brochures, he weaves in his sense of humor and sarcasm, whenever he can.

In a recent campaign, they sent marketing agency owners a Shift-branded metal straw along with their business card saying, “Some things have to suck. Accounting isn’t one of them.” Sheinin found that a humorous approach works for several reasons.

“The straw-shaped package created a mysterious surprise arriving in the mail. Who could resist opening? Second, it’s designed to make prospects laugh and there’s an immediate connection.”

Creating fun and unique campaigns

Sheinin explains a few of his other ideas that show off his humor. To create buzz for his upcoming book, Entreprenumbers, Sheinin sent copies to influencers along with a pair of socks saying, “For when your socks get blown off.” He’s also sent out yoga mats to prospects with the catchphrase, “We’ll bend over backwards for you.”

In the end, Shift Financial Insights gets more attention when they go against the grain. “Every business sends out Christmas cards and they all get ignored. We don’t and instead send a Valentine card telling our clients how much we love working with them.” Rather than reaching out during traditional holidays, your business may get more attention embracing non-holidays like Festivus, or the Summer Solstice.

Seeing results versus traditional marketing

Sheinin told us that the results from his humorous campaigns have been overwhelmingly positive. “We’ve sent out about 100 straws so far. The conversion rate is around 3-5%, with more still coming in. Even agencies that didn’t need our services called back to say how much they enjoyed the laugh.”

We asked if there were any complaints or negative results, and he said not at all. “Worst case is we just never heard back from a prospect. I’m sure a few packages ended up in the garbage, but no one ever got angry.”

In the past, Sheinin tried traditional marketing, but the results weren’t impressive. “We tried sending out a typical cold message to business owners through LinkedIn asking whether they wanted to talk. We ended up with zero results.”

Shift Financial Insights prefers humor and it seems as though so does their target market. “Assuming that the quality of the work is the same, people would rather deal with a company they can have a laugh with.”

Advice for your own marketing

When it comes to humorous marketing, Sheinin says it’s all about practice. “Every week I try to come up with 10 marketing ideas. I once read if you can’t come up with one good idea, come up with 10 bad ones. You’re searching for the one piece of gold amongst the rubble.” Keep experimenting with humorous ideas and you’ll eventually find one that works.

He also reminds readers that you’re just trying to make the experience more enjoyable for people on the other end. “It’s easy to get too stiff, traditional and wooden, especially with B2B outreach. Don’t forget your ads are being read by people who work at the business.”

Above all, he says don’t be scared to get creative. “If you can approach marketing from a surprise and delight perspective, especially for something that is kind of boring, you can really stand out.” By adding some humor to your marketing, you can improve your results while having some fun at the same time.

[skyword_tracking /]

Do You Want to Boost Your Revenue? Try Working on Your Elevator Pitch

A good elevator pitch, either on your website or in person, can help convert customers. A bad pitch can lose them. And it isn’t easy. Just ask James Lawrence, whose company makes advance software system that ensures drone operators stay in compliance with the ever-changing rules and regulations for their airborne devices. “The question was how to winnow that down to a big idea I could present in two minutes that would resonate with people who know nothing about my product,” he says in an interview with Inc. magazine.

Conveying your life dream to a stranger — who might have only a fleeting interest in what you’re saying – in a couple of minutes, or a few words online, can be a pressure-filled challenge. Here are five steps to creating an elevator pitch that keeps people’s attention and may win over clients and investors.

Open Strong.

Your opening line or headline should grab the listener’s attention and leave them wanting more. Small business expert Alyssa Gregory gives this example: Have you ever felt held back by lack of time and wished you could clone yourself so you could get everything done, when you want to get it done, the way you want it done?” If you’re reaction is, tell me more, it’s a winning pitch.

Change Your POV. 

Understandably, a lot of people begin their elevator pitch with “I.” But, a better beginning starts with: “You.” Explain the problem you’re addressing and the benefit you offer from the listener’s POV. As Fast Company puts it: Instead of blandly stating, “I’m an accountant,” say: “You know how everybody is interested in maximizing the amount of money that they keep when it comes time to talk to Uncle Sam in April? That’s what I help my clients do. My name’s Peter Smith, I’m an accountant.”

Create a Few Versions. 

Rather than robotically saying the identical elevator pitch to everyone, have a few versions at the ready for different situations. “Keep that opening sentence the same, but use five different stories of success to illustrate five different reasons customers pay you money,” says the American Management Association.

Spell Out the Next Step. 

An elevator pitch shouldn’t end between floors. Let the person you’re talking with know what you want next – be it a sale or other objective.

Test Yourself. 

Even the most skilled actors rehearse and listen to their director. Practice your pitch in front of friends and ask their opinion. “What may seem clear in your mind might come across as convoluted, long-winded, or fragmented to an outside observer,” says consultant Lauren Katen. Online, try different language and measure the results.


An elevator pitch is a powerful tool – but half of small business owners don’t have one at the ready. And that can keep a business stuck on the ground floor rather than racing to the penthouse.

Leveraging Community Engagement to Drive Business

Your business development and marketing strategy depends on what type of firm you along with your firm’s specific objectives. It’s true that community engagement drives business. For firms in certain industries, aiming to further differentiate themselves by building connections in the community in a variety of ways is crucial. Why? Because interacting with the community can ensure a sizable market for your business offerings. It will help you position your business to stand out.

Identify the need.

Roxann Smithers, Esq. of Smithers + Ume-Nwagbo, LLC co-founded her law firm in 2012. After 10 years of working as an attorney for both large and mid-sized firms, she wanted to go out on her own. “The economy was down and a lot of people were taking buyouts and taking opportunities to start businesses and asking for advice about that process,” Said Roxann. “I thought it would be very interesting to focus on that market. There were a lot of firms that were trying to all fight for business from the big companies.” She noticed there were “many mid-size and small companies that provide services to those big firms, either as suppliers or as subcontractors”. As a result, she asked, “where are they going for quality legal services?”

Similarly, other service providers and retail entities have significant competition. Therefore, focusing your target will help you narrow your client base and better target your marketing efforts.

Align your strategic skillset with your target market’s needs.

Smithers states, “I had some experience as an outside general counsel for a small business. I liked the variety of work.” Instead of working with one firm, however, she wanted to serve multiple clients. She thought that if she could get one or more attorneys from complementary disciplines to join her, the new firm could provide these services. “We would serve as their outside general counsel and hit the main topics: dispute resolution, traditional corporate work as well as employment law and employee benefits.”

“I knew two attorneys who could work in those areas. I thought, if we could come together and focus our attention that way, we could bring our big law firm experience and in-house counsel experience and provide that for this middle market.”

Roxanne realized that, despite her expertise, to serve as outside general counsel, she needed a broader range of skills. In her case, she achieved this through courting co-founders. Other existing businesses could identify service or product partners to round out offerings.

Your website connects you with the community.

Smithers knew they had to focus on establishing credibility. As an African-American, female-owned firm, she wanted to establish “credibility and establish how the quality of the services were comparative to going to traditional brick and mortar firms with a bunch of people” who did not look like them. As a result, their first website was very traditional. It was on par with the large firms they had worked for. “That was our experience, and that’s what we thought would resonate”, she says. “As we’ve grown more comfortable, and as we have established our name and our reputation, our second version of our site,” Smithers continues, “is far more conversational. It’s far more relatable. I think it represents our personality even more.”

The website now clearly reflects the firm’s Atlanta metro area connection. The photos are from a field trip she and her partner took in different parts of their beloved city. The website is typically the first place that people go to research the firm before contacting them. Displaying the firm’s personality and their connection to the Atlanta area makes them more appealing to prospective clients.

Group of women holding banner.

Community engagement drives business… and is an effective marketing tool.

Smithers says that Smithers + Ume-Nwagbo’s community outreach first began because “we just noticed that so often people don’t necessarily have a base foundation of understanding the legal impact to their business, what it means to have a business attorney and what a business attorney does beyond solving a problem”. They decided that educating prospective clients would help increase the amount of clients that use them as outside general council.

Since they didn’t want to spend all their time seeking education opportunities, a key “marketing tool was to partner with entities that service business owners”, Smithers says. They sought out entities with similar missions. For nonprofits focused on helping entrepreneurs, Smithers and her partner provide legal and business coaching and mentoring.

In addition to coaching and mentoring, they speak and present panels at events, too. According to Smithers, “They’re going to have an audience. They need content to showcase their value to their membership,” whether paid or free of cost.

“If we can come and provide content for them, we get in front of an audience that we would otherwise have to track down or identify… We get a bit of that seal of approval because they already trust that organization,” she says. This leads to trust from that organization with their firm by the clients or customers in attendance. They’ve presented or spoken on panels for business incubators, small business conferences, womens’ business associations and more.

Further leverage your engagement.

Furthermore, educational presentations support a content strategy. “Once you have presentations on different topics, you can then cut those up into an article… or use those topics with another group,” Smithers adds. The articles help convey their understanding of small business concerns.

The firm continues to extend connections and identify partners and prospects. They do this by participating in select business networking groups, professional associations and chambers of commerce. Also, they obtain referrals from other lawyers and professionals by frequently making referrals to them for other endeavors.

Roxann Smithers participate on panel

Education is now a service.

Last year, Smithers realized she enjoys speaking and educating. As a result, her firm added education as a service. She says, “I would love to be in a position where 20-25% of our revenue comes from legal education and speaking opportunities. And what I’d really like to see is that be a combination of speaking on traditional legal business topics” and on their “experience as business owners and as entrepreneurs.” She continues, “I think we are two incredibly compelling and dynamic women who are, while practicing law, experiencing all of the things that you face as a business owner, as an entrepreneur, and as women of color.”

To market this service, they prepared a one-page summary and are launching a YouTube channel. They want to build up credibility and trust with “the business owner that’s looking for that relationship…with a business attorney.” Smithers says, they also want to showcase their “ability to speak and to translate complex issues in a relatable fashion.” They intend to create a sizzle reel for pitching at conferences and different engagements.

Community engagement drives business for Smithers and her firm on all levels, and has done so since the beginning. Although the type and scope of engagement changes as her firm grows, it continues to deepen.

[skyword_tracking /]

How to Get Funding That is Best Fit for Your Small Business

Small businesses (SMBs) are at the core of the US economy. They are the largest employer in almost every sector.  Despite this, it has been proven to be extremely difficult for business owners to find favorable financing to sustain and grow their business.  In fact, many have found that it is far more difficult to finance their operation than it is to run it.

How to choose the right funding option

Recently, a business owner asked me about which type of financing was best for him.  The obvious answer is: the type of financing for which you will qualify.  This will set the tone for your capital search. Obviously, the primary goal is to find the type of financing that offers you the most money for the lowest cost and the longest repayment terms – with the fewest downsides. The reality is that this set of terms will vary wildly depending upon the credit quality of the applicant.  A problem for many SMB owners is that they develop a preconceived notion of what their financing SHOULD look like as opposed to what it will REALLY look like based on the credit quality of the borrower.

The first thing you should do when embarking on your search for financing is ask yourself one question – Am I bankable? This is a broad term that indicates if you can go to your bank and obtain a loan or equipment financing under traditional terms or with the benefit of an SBA Guarantee.  In my years of experience in business finance and as a SMB owner, I can say that the vast majority of SMBs are NOT bankable, even when they have heard their banker say that they could obtain a loan.  Terms for traditional financing are rarely presented realistically during the application process and most applications are rejected because the borrower cannot meet the requirements of the lending institution.

Be objective

The second thing you need to do is to remember to be objective and determine exactly where your chances lie for approval on various products and with the different types of lenders. You must accept that there is a risk pricing differential with different types of financing and with different lenders. The easier the credit terms and the quicker the origination usually spell out more expensive financing. In many cases, it is worth the cost – as other lenders wouldn’t fund you at any cost.

The third thing you need to do is obtain as many offers as possible –  don’t be insulted by an offer to finance even if it is onerous and seems outrageous.  You can always pass.  In evaluating the offers, you must remember the Golden Rule of lending applies – “He who has the gold – rules!”

Obtaining small business funding that’s best for you

The basic understanding for this guide is that you are already an operating business. Start-ups are an entirely different discussion. So, if you have been in business for at least 1 year, read on!

SMB financing options cover a wide spectrum – from traditional banks, credit unions and non-bank institutional lenders to non-traditional lenders, alternative finance companies, crowdfunding platforms and friends and family.

Banks, Credit Unions and the SBA may offer lower rates and longer terms, but the obstacles to obtaining one of these loans are considerable. On the other end of the spectrum are alternative finance companies, equipment leasing firms and even your personal credit cards, which all share the same features.  They are far more expensive than traditional bank financing – but they are readily available and far easier to get approvals.  The true value of money is in its availability.  What good is a 6% loan from your bank if you can’t get approved for it? On the other hand, if you are a high credit quality business – why should you short cut yourself for high cost financing?

Let’s see if we can help you manage your expectations and give you some insight into the lenders perspective.

What do the banks and the SBA want, so I can get funding?

I have spent many years around bankers and have asked a number of them what qualifications are needed for them to consider lending to an SMB owner.  They always offer the obvious response: everyone has their own unique circumstances underwritten at application. But almost every banker I have spoken with talks about the “Five C’s of Credit”.  This is a basic set of criteria that they all use when evaluating a company for a loan:


Lenders want to see that you have skin in the game. How much hard capital have you put into the business? They don’t care about sweat equity – they want to see the cash.  Most lenders want to see between 10 – 40% of the total capital in the business coming from the owners. They want to see that there are hard and soft assets from machinery, equipment, real estate and some will even consider proprietary IT technology. They want to share the risk with you, and your investment insures you will suffer too if the business fails.


These lenders are “risk averse”. They want to know that if, for some reason, your business fails to pay back the loan that they can attach assets and liquidate them to offset the debt. This is one of the reasons that they want to see meaningful assets in your company before lending to you. Not all loans require collateral, but if you want favorable terms, you should expect it.  In the case of SBA Guarantees, you will be required to pledge not only the business assets, but all owners holding 20% or more of the business must pledge their personal assets as well.  Homes, cars, cash, jewelry – everything. If you can’t pay back the loan, you could lose everything.


A lender must have a realistic expectation that the borrower does indeed have the capability to repay. Lenders rely on numerous metrics and factors in determining your “capacity”. First among these is your personal credit score. Even though this would be a business loan, the main driver of an SMBs success is the owner. If you don’t pay your creditors for personal debt, it is a reasonable conclusion that you won’t pay your business debt. To get to the next step with a bank you will need a strong FICO of over 700 with no liens or judgments. The bank will also look to your current vendors for your payment history. Most lenders look for 1.25x or higher, which relates to the big driver of cash flow of the business. If you have cash, then they know you can pay back.


This looks at the reason for the loan and if the bank feels that you will be successful in reaching your goals. The bankers will look at everything from the economic conditions in general to those in your local area. The industry you are in is also a strong indicator of success. The “SIC code” of your business provides risk assessments for your business – and it can work with you or against you. Most importantly, the bank wants to understand the purpose of the loan and if the proceeds will help you grow the business as opposed to adding to your debt load. You will need to provide an explanation for the amount you need, why you needed it, details on how you plan to spend it and the benefits you expect to gain from the loan.


This is a difficult factor to evaluate, but the bank is basically trying to determine if you are of good character and can be trusted to perform. This can be very subjective and often determined by the bankers that you speak with in preparing your application.  They want to know as much as possible about the person behind the business. Are you a novice or a seasoned professional in your field? What is your background? Did you have prior achievements they should know about? Do you have strong professional references from vendors, customers or credit providers? Do you have any blemishes that would influence the decision-making process like arrests, DWI or old tax problems?

What types of lenders do I have to choose from for funding?

Large Commercial Banks

These are the big guys. You know them – JP Morgan Chase, Citibank, Wells Fargo, Bank of America. These banks all have assets greater than $10 Billion and are large bureaucratic machines. While the largest banks account for about 40% of SMB loans, they do very little lending to Mom and Pop businesses or those that fall within the agriculture industry. Community banks are far more active in those sectors. Large banks are better for bigger, more established companies who seek over $250k in loans. This is their true minimum lending floor – it’s simply not worth their time processing smaller loans.

Mid-Tier Regional Banks

These multi-branch banks have a great deal of local power and are more receptive to the needs of their SMB customers. They have strong asset bases but practice the same strict underwriting practices as the larger banks. Their local knowledge makes it much easier to communicate with them and many are strong SBA partners which can be immensely helpful.

Small Community Banks and Credit Unions 

These are the grassroots institutions for true SMBs to work with. They still believe in the value of knowing their customers and their community, and work hard to build strength in all. This is where most of the US agriculture loans are originated. However,, smaller community banks are finding it hard to compete and are closing at a regular pace. This requires them to be more conservative, which can influence the outcome of your loan request. Only 40-45% of their loan applications are approved.

Non-Bank Financial Institutions

Access to these lenders is usually limited to higher growth specialty finance. These groups rarely, if ever, consider Main Street businesses. Large firms like CIT or Apollo will provide multi-unit franchise financing for restaurant or hotel chains, but not loans to single unit operators. These groups include private equity firms, hedge funds, family offices and high net worth individuals. You must be well prepared with strong documentation and the ability to pitch your deal and defend your representations with facts. This is not for financial amateurs or novices.

Alternative Funding Companies 

Over the past 15 years, this has been the fastest growing sector for SMBs to access capital. Factoring companies, merchant cash advance, FinTech online lenders and equipment leasing firms all fall into this category. Most of these companies lend from banks and take on the credit risk for the performance of their clients in return for higher fees.  The main attractions are speed, less documentation and higher approval rates. They will often look for a blanket UCC security agreement over the assets of the company, but do not require the hard-collateral pledges that banks and SBA require to provide loans. Their cost of capital is high because they take considerably more risk to provide financing than banks do.


Crowdfunding appears to have key advantages of being quick and easy to raise funding, but it really isn’t as easy as it appears. First, you need to determine the type of crowdfunding you wish to pursue. Rewards based platforms solicit donations for worthy projects or companies in return for “rewards” that you provide. Debt and equity crowdfunding involves high levels of transparency and reporting as well as time consumption and expense. Many Crowdfunding platforms have specific rules governing time limits and funding goals. If you don’t reach your goal after a specified time, you lose. Or you may encounter an “all or nothing” funding policy, precluding you from accessing capital raised beneath your goal. Some users have been disappointed to realize that often the success of the campaign revolves around their social network. This means that you are really doing a “friends and family” round – but incurring fees.

Independent Brokers 

There has been a dramatic explosion in the number of independent brokers/“finance advisors” who are marketing loans, lines of credit, invoice factoring, receivables financing, cash advances, equipment leasing and other funding products to the SMB community. Some brokers are reputable and can be extremely beneficial in expediting the process of finding financing. They can look at the overall parameters and know where to place the application for fastest approval. On the other hand, there are bad players who are only interested in their own enrichment. Some ask for retainers up front and fail to deliver. Buyer beware. Know who you are dealing with. Look for complaints and ask a lot of questions before trusting your financial information to an unknown outsider.

Friends and Family 

This is one of the most common places where SMB owners seek seed money or general working capital. While this can offer few obstacles to funding since this is a supportive and familiar lender, failure to perform can negatively impact your relationship with these people for the rest of your life.

Personal Savings, Home Equity and Credit Cards 

Before draining your savings, your business plan should reflect cash reserves for funding to carry both you and your business through hard times. Most businesses have ups and downs. The failure to plan for this can be catastrophic. The use of funds from a Home Equity loan or Line of Credit can be a very useful tool. Interest rates are relatively low and the money is not being lent on the qualifications of your business. It is being given to you against the equity value of your home. The downside is that if your business fails, you could lose your home as well. Also, some SMB owners feel it is reasonable to finance their business with their personal credit cards. This can cost upwards of 29% compounded, which is a formula for disaster.

Landlords and Real Estate Developers 

If you have a brick and mortar business and you need to make improvements to the space you are occupying, landlords and developers often provide “tenant improvement allowances” or TIAs for businesses to enhance the overall building. This is usually paid back in the form of additional rent or larger escalations in annual increases. This can be a good way to access capital for betterment and improvements. But sometimes, the escalations exceed the business’s ability to pay.

Wholesalers, Suppliers, Purveyors 

Every time a Wholesaler/Supplier extends you terms to pay for your supplies, you are receiving a de facto loan. This allows you to pay for goods after you have had the opportunity to sell them at a marked-up rate. There have also been instances where primary suppliers have made direct loans or investments in SMBs that are material to their business.

Government Business Development Agencies 

Many state and local economic development agencies offer loan programs and grants. These opportunities are often very specific in their requirements, including formal financial statements and reporting. Most have extremely favorable rates.

Running the Process

The search for financing should be run as an organized process. Your first decision should be to target the groups to which you should be submitting applications for financing.  In this process of elimination, the lenders will decide to approve or decline your application. You then must decide to accept an approved offer or continue to shop – or if declined, where to apply next.

Reasons for funding rejection

While each lender or equity investor assesses applications differently, there are numerous reasons why an application for funding is rejected. Below are a few key reasons:

  • Poor Credit Quality of the Owners and/or Business
  • Poorly Prepared or Inaccurate Financial Statements
  • Industry is a Poor Credit Risk
  • Geography / Region has Economic Challenges
  • Insufficient or Inconsistent Documentation
  • Negative Cash Flow / Insufficient Sales
  • Tax Liens and Judgments
  • Undisclosed Negative Information about the Business or the Principals
  • Seasonality of Business / Sales Instability

 It can best to aim high and hope for approval, then work your way down the waterfall. It may be labor intensive, but could provide you with lower cost, longer term and more favorable options. Your goal is to find the best deal you can, but be realistic and objective

Combining a number of approved options into a blended structure can give you a better cost structure. Smaller but lower cost personal or commercial loans can be supplemented with higher cost cash advances and equipment leases. This can give a blended rate that is much lower than the more expensive products.

Do your homework and be realistic in your expectations. Take the application process seriously and be as meticulous as you can, so you can get the best funding for your small business.

es_ES en_US