How to Grow an Electrical Business
Are you looking into how to grow your electrician business? Well, you’re at the right place. In this guide, you’ll learn the top considerations — everything from coming up with a business plan to financing options.
Here are the steps you should be taking to ensure your electrical business is set up for the growth that you envision.
Devise an Electrical Business Plan
Just like any business, an electrical business needs a solid plan. Going through the planning process allows you to focus on specific steps to get your ideas off the ground. It also provides an opportunity for you to outline short- and long-term growth objectives.
As you devise your electrical business plan, you’ll need to address and evaluate market needs, capital, overhead, competition and pricing. This information will come in handy when it’s time to set specific benchmarks. A business plan will also make managing risks easier because you’ll have a better understanding of revenue and expense projections, logistics and operational plans, and the competitive market landscape. All of this can lead to improved decision-making and provide a more realistic view of where you expect your electrical company to be in the future.
A business plan for growing an electrical business generally consists of the following components:
- Executive summary
- Market opportunity
- Marketing and sales strategy
- Operations plan
- Personnel strategy
- Financial projections
The overall purpose of this plan is to formulate an effective strategy for growth, determine your future financial needs and attract lenders and investors.
Before you get started on this important step, you should first find a mentor who’s doing what you want to accomplish and is willing to share everything you need to know about growing an electrical business. By shadowing your mentor on the job, you’ll have the opportunity to ask questions and get electrical business ideas — everything from how to finance electrical equipment to professional liability insurance.
And industry business owners agree. Tommy Mello, The Homer Service Expert, for instance, says it would have been helpful to find a mentor before starting his own garage-door business 15 years ago. Instead of spending time figuring things out on his own, he could have more quickly emulated best business practices.
“You’ve got to act like the business you want to become, and I didn’t know that back then,” says Mello, owner of A1 Garage Door Service, which reached $30 million in revenue last year.
“If I would have listened to a mentor tell me, ‘This is why you shouldn’t do this,’ or ‘This is why you should,’ it would have definitely fast-forwarded the business.”
Before creating your electrical business plan, you may also want to listen to electrician podcasts for tips and ideas, as well as read books on how to grow your electrical business.
Create a Marketing Plan
Once you determine that there’s a marketing opportunity for growing your electrical business, it’s time to develop a marketing plan or strategy. Start by creating an outline of specific marketing tactics that could help expand your customer base and build sustainable long-term growth.
Some examples of marketing tactics for an electrical business are as follows:
- Content marketing, such as search engine optimization (SEO) services for electricians to get your business visible in multiple cities
- An optimized website to showcase your brand
- Pay per click (PPC) advertising
- Google local services ads for lead generation
- Networking with other large and small businesses, especially home services businesses
- Networking with other local electricians
- Social media, video and email marketing
- Customer testimonials
- Offer free annual electrical “health” services
Decide an estimated budget for each marketing tactic that you choose to utilize, and be sure to test each strategy and measure the results. Your marketing plan should also detail how you will sell to customers, key marketing partnerships, a pricing strategy and your market positioning. Keep in mind, as your electrical business grows, you’re marketing mix will likely change. Therefore, your marketing tactics, strategy and financial ability will continue to evolve along with your business needs and goals.
Develop an Operations Plan
Your operation’s plan will explain all the specifics about how your electrical business will run. It should include actionable details on your company goals, procedures and timelines, as well as keep everyone involved accountable for meeting deadlines and on track with growing your electrical business.
Your operations plan should have the following:
- Long-term goals, key milestones and timelines
- Strategy and processes for inventory sourcing, suppliers, equipment, technology, people, capital, financing, sales, marketing and in some instances, R&D, logistics and supply chains.
- Departmental budgets, as well as employee roles and responsibilities
- Strategy for support processes, such as human resources, payroll and accounting
- Process for monitoring progress
Overall, you’ll need to think about what your electrical business will look like as it grows. Start by looking at where it is today and where you would like it to be in the future. A communication strategy along with your operations plan is also critical to ensure your team is working towards your stated goals.
Recruit and Train Competent Employees
Electrical contracting businesses belong to a sector of skilled trades that often find it difficult to attract and retain qualified employees due to high demand. However, although employee turnover risks may be greater in the electrician construction and maintenance sector than others, you should not skimp on investing time and money in training while growing your electrical business. By having a properly trained workforce, your workers will be able to learn necessary skills that allow them to improve productivity, reduce costly mistakes and build confidence. In turn, adequate training can lead to the engagement needed to increase workforce morale and reduce employee turnover.
For electrical businesses, safety training is typically a priority. From using electrical equipment to installing electrical wiring, training will help eliminate mishaps on the job that could hinder your business from growing.
Technology training is also key, especially from a competitive standpoint. Keep technology in the forefront by developing a comprehensive skills training program to help foster new technologies and innovations, which can in turn improve crew management, project handling and safety strategies.
Keep in mind, your employees will be working and interacting with your clients on a daily basis, so your electrical contracting business will only be as good as the people you hire and train. A well-trained staff can see where improvements could be made and develop client relationships to propel your business forward.
When building your recruiting program, it’s suggested to develop a comprehensive organizational chart that includes clear job descriptions and expectations for every position. Incentive pay for recruiting efforts is also recommended.
“Some people say, ‘always be closing.’ I say, ‘always be recruiting,’” says Mello, who gives employees $1,500 for referring a new hire.
“I think a lot of us, we just don’t start the business right,” he adds. “Give it such a strong foundation, there’s nowhere to grow but up.”
Set Financial Projections and Secure Financing
Growing your electrical contracting business can put a strain on your cash flow. Therefore, you’ll likely need to secure additional financing. Before shopping for loans, determine how much financing you’ll need based on your overall growth plans for each investment.
Some common options to finance your electrical business expansion are:
Bank Term Loans
Start your loan shopping by looking for bank term loans from traditional lenders, especially if you have good credit and established profitability. Bank term loans can cover most of your electrician financing needs and have the most favorable rates and terms.
SBA Loans
SBA business loans have similar rates and terms as traditional loans because they are actually provided by traditional lenders. SBA loans are partially backed by the federal government, which means some of the lender’s losses will be taken care of if you default on the loan.
Online Lenders
For quick financing, you can also look into online business lenders. Online loans are typically under $250,000 and come with shorter terms and higher interest rates than traditional bank loans. However, online loans have lower credit and cash-flow requirements, a faster funding process and give electrician companies another option to finance their business expansion when a bank loan is not available or can not get you the working capital you need quickly enough.
Equipment Leasing
Obtaining machinery or equipment is common when expanding an electrical business. A good alternative to traditional equipment loans is equipment leasing, as equipment leases are conducted relatively fast and are easier to qualify for. Terms can also be more flexible, and lease payments lower, when compared to equipment loans. The option to purchase the equipment at the completion of the lease is another benefit.
Overall, there is a loan out there for any kind of electrical business expansion need, including working capital, advertising, recruiting, payroll expenses and more. It’s just a matter of determining what type of loan will be the best fit for your particular situation.
Know Why You Want to Grow Your Electrical Business
Growing an electrical business is an important endeavor that requires quite a bit of thought. Identify your personal strengths to find out where you’re going to need help and to see if expanding your business is right for you. Determine how well you understand other areas of business, for instance, financial and management topics in electrical contracting. Then, seek the assistance of mentors in the industry to fill in the knowledge gaps.
More importantly, though, set forth a compelling case for growing your electrical business in the first place. Or as Mello says, “You’ve got to choose what’s important to you and decide what’s your ‘Why?’”
Latest Riot-Related Small Business Loans and Grants
Small businesses that have already struggled with the pandemic are now experiencing the fallout of rioting and looting that has taken place across the nation. The good news is, there’s help. Here are some of the latest riot-related small business loans and grants.
And some small business encouragement to pull you through.
$2M Loans Available for Illinois Small Businesses
Illinois suffered greatly following George Floyd’s May 25th death while in Minneapolis police custody — $32 million in losses due to rioting have been recorded across the state. Everything from high-end shops to smaller, family-run businesses have been affected.
To provide relief, the SBA has stepped in with low-interest, Economic Injury Disaster Loans. Qualifying Illinois businesses and private non-profits who suffered riot-related losses between May 26th and July 30th are eligible for up to $2 million in emergency loans for operational costs, payroll, PPE and more. The loan amount will be based on the actual economic injury of the business and its financial needs, regardless of whether the business endured any property damage. The deadline to return economic injury applications is July 13, 2021.
Kenosha Small Business Grants and COVID-19 Relief
Downtown Kenosha Inc. is offering $250,000 in grants to help Kenosha businesses recover from damages caused by rioting during protests in late August. Grant funds are geared toward bridging insurance coverage gaps and providing short-term rental assistance as well as covering clean-up costs associated with damages.
“This is one step in helping people who have lost their very livelihood,” Kenosha Downtown Inc. executive director Alexandria Binanti said in a statement. “More than repairing buildings, we’re helping families who have committed to building their lives in Kenosha’s small business community. We owe all our Kenosha business families a chance to rebuild stronger.”
And for those Kenosha small businesses that are struggling with reduced revenue due to the COVID-19 pandemic, The Wisconsin Economic Development Corporation has launched a second round of “We’re All In” grants to help. The latest round of the grant program will provide $5,000 grants to 10,000 additional Wisconsin-based, for-profit businesses. Applications will open at 8 a.m. Oct. 19th and close at 11:59 p.m. Nov. 2nd.
The St. Paul Midway Fund
The St. Paul Midway Fund will benefit the community around the Allianz Field soccer stadium in St. Paul, Minneapolis for riot-related small business relief, rebuilding and relocation. Two forms of “Small Business Economic Justice grants” are available at MidwayUnited.org.
A total of more than $340,000 will be available to 21 small businesses in need of damage relief. Eligible businesses can apply for up to $15,000 to assist with paying for smoke and water cleanup, glass replacement, replacement of stolen goods, lost inventory and any other damages caused by riots, looting and unrest.
An additional $500,000 will aid at least 10 businesses through a “Rebuild and Relocation” program. Qualifying businesses can apply for up to $50,000 to assist in rebuilding efforts, ranging from total fire loss to help with relocation costs due to loss of lease or eviction. Applications will be accepted through Dec. 20th, or until funds run out.
And There’s Hope…
Despite everything that’s been happening, small business owners are finding resilience. Daniel Johnson, a small business owner in Minneapolis, is a good example of this. Johnson’s flagship clothing store, House of Hoodies, burned to the ground during the riots following George Floyd’s death. However, instead of feeling sad for the business loss, he decided to rebuild by opening a new store in Rochester.
“It just lit a fire in me to just keep pushing and we have the younger generation that just watches us. We just wanted to be an inspiration to everyone and let them know and show resilience and if you fall down you have to get back up.” Johnson said.
This is just one of the many small businesses finding strength during this time, and it starts with having a positive outlook to move forward.
If you’re not in one of the mentioned areas, be sure to check within your community for any local riot-related small business loans and grants that can help you start to recover.
Forget the Feds! Take advantage of Regional Support for Your Business
If your business is looking for financing, especially during these times, there are various places you can turn. While many small business owners applied for Federal grants and loans, in the form of the Paycheck Protection Program (PPP) and the EIDL, some of these financing opportunities have come and gone. But have you considered regional support for your business?
Today, many localities across the country have all sorts of support mechanisms and are ready to help small business owners looking for COVID-19 relief. All you need to do is know where to look to take advantage of them.
Here’s where you can start looking.
Small Business Administration Regional Offices
The SBA doesn’t just operate out of Washington, D.C., all across the country, you’ll find SBA District and Regional Offices set up to help local small businesses in that area.
Within these local offices, the SBA offers programs such as SCORE for free and low cost mentoring and counseling, Women’s and Veteran’s Business Centers to help small business owners create business plans, networking, and marketing help.
This summer, the SBA also introduced the Community Advantage Recovery Loan (CARL) Program, which provides funding for small business owners in underserved markets.
U.S. Chamber of Commerce
Virtually every community around the country has a branch of the Chamber of Commerce (CoC). It can be an excellent source for small business owners to network and get in touch with local funding programs.
Many local Chambers of Commerce are also offering free help and guidance during this time. Search your state or local CoC website. There, you might find a list of local member brands providing grants, training and other free services to small business owners in the region.
State, County and City Government
Many states and county governments are also offering small business loans and grants for COVID-19 relief. To find these, search for your local city, county and state’s economic development offices and small business programs, which tend to administer these programs.
Statewide programs vary in size and scale. However, many offer smaller grants and funding to businesses serving in front line work or operating culturally essential institution. These new options are in addition to more traditional options. Many of these loans focus on keeping struggling small businesses afloat, offering funding to keep employees on the payroll to prevent staff reductions and cover the costs of sick workers.
Rents are also a continuing concern for small business owners. So, check your state, local, and city governments to see if they have enacted rent moratoriums or offer rent assistance.
Several state and county governments are also facilitating personal protective equipment (PPE) to small business owners for employees at no additional cost.
Business Improvement District Programs
Business Improvement Districts (BID) are geographical areas that are overseen by a non-profit organization that helps maintain, improve and promote the area.
An essential part of the growth and improvement of any BID is through its small local businesses. Many BIDs have economic development programs that offer loan and grant programs to qualifying small business owners, especially those who might be underserved in the community, such as women and people of color.
Private Local Groups and Entrepreneurs
Don’t forget to look to local groups and entrepreneurs as well. Many of these groups and individuals offer grants, loans and even microloans to qualifying local business owners in the area.
There are already thousands of groups and non-profit organizations that work regionally providing small business and SBA loans during so-called “normal” times. They are working to continue their efforts during COVID-19 by expanding current loan options and offering new loans and grants.
You Have Options
Even though your business might be struggling under the weight of everything happening in the world right now, know that there are funding options out there for you.
Once you’ve gone through your opportunities at the Federal level, look look a little closer to home and consider taking advantage of regional support for your business. More often than not, you’ll find people and other businesses who want to help you get through this tough time.
Life-Saving Measures for Small Businesses on the Brink of Closure
No matter what part of the country you’re in, you have small business-owning neighbors struggling to keep the lights on. With erratic reopening plans, caseloads that still won’t decline, and the need for social distancing until there’s a widely-available vaccine, countless businesses have been hit hard. But what can be done? Are there any life-saving measures for small businesses on the brink of closure?
If you’re a business owner in this situation, you could find enough relief to keep your doors open and critical staff employed using one (or all) of the options below.
Review Your Expenses
While you might have already done this back in March, it might be time to review your expenses again.
Instead of eyeing luxury expenses this time around, put an eye toward ways to discontinue some low-margin services and supplies until traffic gets back to pre-pandemic levels again. This could mean paring-down your menu, hiring a delivery person instead of subcontracting to meal delivery services, liquidating inventory at a deep discount to reduce warehouse space, or even limiting workdays to the most profitable days and hours.
When evaluating expenses to cut, don’t think of these expenses as permanently on the chopping block. Instead, you can bring them back and build back up when life and revenue pick up speed once again.
Get Creative With Payment Arrangements
If you’re strapped for cash, your vendors may be as well. Reach out to your accounts payable and start a conversation about mutually-beneficial payment arrangements.
For example, if you can promise $X toward your invoice every two weeks, that’s better for your vendor than zero dollars. Your vendor gets a predictable cash flow, and you get a reasonable payment arrangement.
If you and a vendor do mutual business (they invoice you and you invoice them), set up a call for an invoice review. Explore creative options like applying their invoice for $1000 to your invoice for $800. You’ll still owe them $200, but it’s a lot better than $1000. This is a simple solution that often slips through the cracks because your AP and AR systems might not communicate with one another.
Explore SBA Loan Options
While the Paycheck Protection Program is no longer offered, there are three other SBA loan options you can explore for a much-needed cash infusion:
- Economic Injury Disaster Loan (EIDL): If you’re experiencing a loss of revenue due to COVID-19, you could be eligible. Terms are 3.75% interest (fixed) for up to 30 years with no pre-payment penalty. You can even defer payments for up to one year (but interest will still accrue).
- SBA Express Bridge Loan: If you have an existing relationship with an SBA lender, you may qualify for a loan up to $25,000. These loans can be regular term loans or bridge the gap between today and approval for your EIDL Loan. You just need to reach out to your existing SBA lender to inquire.
- SBA Debt Relief: If you have an existing SBA loan and have trouble making payments due to COVID-related financial hardship, this program can bring you relief. Eligible loans include “7(a), 504, and Microloans in regular servicing status as well as new 7(a), 504, and Microloans disbursed prior to September 27, 2020” per the SBA. If you qualify, the SBA will pay any principal, interest, and fees on your loan for six months.
Have a Candid Conversation with Your Bank
Finally, it could pay to sit down and have a candid conversation with your bank. Your bank doesn’t want to lose your business or see you default on lines of credit or other loans. You could find they’re willing to work with you if they know your full financial picture.
There aren’t any guarantees that your bank could come through with funds or reprieves from payments due. But, if you don’t start the conversation, you’ll never know what’s possible.
Have any other tips or advice on life-saving measures for small businesses? Let us know.
Find Free Money: Coronavirus Relief Funds and Grants for Small Businesses
Having difficulty finding COVID-19 relief aid to keep your business afloat during and after the pandemic? To jumpstart your search, here’s a list of some available coronavirus relief funds and grants for small businesses.
Hello Alice: Business for All Grant
Small business owners affected by the COVID-19 pandemic can now submit applications for Hello Alice’s Business for All program. This program, with the support of Verizon, Silicon Valley Bank, Ebay Foundation, UBS, Visible and Stacy’s Rise Project, offers exclusive mentorship opportunities and grants of up to $50,000 to support long-term business growth. Applications are open through September 25th.
MDCalc Ad Grant
For organizations that support clinicians or treat COVID-19 patients, the MDCalc Ad Grant may be of interest. MDCalc is currently donating $1 million in advertising grants to businesses that are contributing to COVID-19 response efforts. Applications are reviewed and accepted on a rolling basis.
National Association for the Self-Employed (NASE) Growth Grant
NASE members have the opportunity to secure NASE Growth Grants, worth up to $4,000 each, to help finance their small business needs. Small business owners can use their growth grants to help cover COVID-19 related activities, such as buying equipment, hiring part-time help, purchasing marketing materials and more. Annual members are allowed to apply immediately, and monthly members can apply ninety days after joining the NASE.
Urban Excellence Community Grant
The Caleb Brown Venture Capital and Consulting Project provides start-up, for-profit businesses and early staged businesses with grants of up to $1,000 to help rebuild local blocks, neighborhoods and communities. This can be especially beneficial for small business communities hit the hardest by COVID-19. The grant comes with 500 hours of complimentary business consulting for one year. For consideration, applications must be submitted by the 15th of every month.
Amber Grant
The Amber Grant program gives away $4,000 every month in grant money to female small business owners. The organization also expanded its grant-giving to include a year-end grant of $25,000. This is a great opportunity for female small business owners that are in need of extra funding during the pandemic. Applications are accepted at any time and award recipients are announced the first week of every month.
Local Initiatives Support Corporation (LISC) Grant
In response to the pandemic, LISC provides grants to support for-profit, small businesses. Priority will be given to business owners of color, women- and veteran-owned businesses and other businesses in historically under-served communities without access to affordable capital. The next round opening is August 31st. Prospective applicants are encouraged to register.
The Small Business Relief Fund
The Small Business Relief Fund will issue $500 matching grants to qualifying small businesses that raise at least $500 on GoFundMe. The purpose of this fund is to alleviate small business financial strain during these challenging times. Businesses will need to verify that they have been negatively impacted by a government mandate due to the COVID-19 pandemic to qualify.
Keep in mind that small business grants are also available through certain state and local programs and some nonprofit organizations. For federal assistance in response to COVID-19 pandemic, visit the Small Business Administration.
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.
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.
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.
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
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.
Business Loans in NC: Your Ultimate Guide
As a small business owner in the Tar Heel state, you focus on the future with your hands on the present. You have plans to take your business to the next level. Luckily as a North Carolina resident, there are many types of loans from a variety of organizations and institutions to support your business specifically. Depending on your needs and plans, you’re sure to find business loans in NC that fits the bill.
You want to expand your staff; increase your product offerings; ramp up your credit; grow your inventory; invest in an exciting new opportunity. But to realize those plans, you need some financial support from a lender who understands you and your business on a near-personal level. You want a small business loan made just for you. Today, we’ll explore the offerings available to North Carolina residents and businesses so you can make your next move expediently.
Carolina Small Business Development Fund Loans
If you’re looking for business loans in NC, a great place to start is the Carolina Small Business Development Fund–a nonprofit and Community Development Financial Institution that “lend[s] to start-ups and existing businesses across the state, with emphasis on businesses that have difficulty accessing financing through traditional loan sources.”
Carolina Small Business offers a variety of core loan products specific to businesses in the state. For example, if you live in Mecklenburg County, have an annual revenue of less than $1,000,000,000 and don’t have any unpaid judgments, open tax liens, or principal and business bankruptcy in the past five years, you may qualify for the Mecklenburg County Small Business Loan Program. This program offers up to $75,000.
Are you rebuilding your business in the wake of a natural disaster? Consider the Small Business Recovery Fund. It’s designed to “provide gap financing as a complement to Small Business Administration [SBA] and other disaster recovery programs.” This loan grants a minimum of $1,000 to small businesses with no maximum amount. Other disaster-based loan programs offered by Carolina Small Business include the Hurricane Florence Recovery Loan Program.
Carolina Small Business also offers Veterans Direct loans if they’re in-state veterans and/or their spouses are, and Healthy Carolina loans to established businesses and new entrepreneurs involved in the “production, processing, wholesale, distribution, and retail of healthy food products.” This is only possible as long as they’re located and selling healthy foods and food products in food deserts. In addition, Carolina Small Business’s African-American Loan Fund assists African-American entrepreneurs as they develop and expand their businesses.
Mountain BizWorks Loans
Live in Western North Carolina? If so, you may qualify for a loan with Mountain BizWorks. Mountain BizWorks offers loans as low as $1,000 to as high as $250,000 for small businesses in your area. Their model is unique. This means that they “consider non-traditional collateral, offer flexibility in the loan structure, and loan decisions and relationships are managed locally.” What’s more is, they’re willing to work with you to discuss out-of-the-ordinary circumstances that might have hurt a once-strong score. Interest rates vary based on your individual circumstance. However, they promise an answer within two to three weeks of your loan application.
Carolina Farm Credit
Carolina Farm Credit specifically applies to North Carolina’s farmers and rural residents. They offer farm and land loans for agribusinesses. As a farmer, you can seek support in funding for farm improvements, equipment, livestock and operations. Carolina Farm Credit offers farm land and acreage financial options. This is a good option if you’re hoping to expand physically or just get off the ground.
Local Banks and Credit Unions
When it comes to finding the right loan for your business, banks and credit unions can be particularly helpful. Local banks may provide additional tools and resources and leverage connections to help you get a loan that suits your needs and credit that a nationally recognized bank might not be able to do. In North Carolina, there are many banks that value small businesses and their contribution to the economic well-being of the state.
BB&T
With 285 branches in nearly 200 cities, BB&T is one of the biggest banks in the state. Its options for small business loans in NC are vast. Borrowing options include loans through BB&T, and benefits for members who utilize the SBA.
Self-Help Credit Union
Self-Help Credit Union, another major bank in North Carolina, offers small-business and commercial loans, as well as:
- Specialty Loan Programs designed to promote local economic development and support “distressed and rural communities” across the state
- Neighborhood Stabilization Loans aimed at developers of affordable multifamily housing in specific places such as North Carolina
- United States Department of Agriculture Rural Development Loans
- And many more
Truliant Federal Credit Union
Truliant Federal Credit Union has branches throughout the state. They offer tools to help you assess your business’s finances and secure the right loan for your needs. Loan options include SBA loans, USDA business and industry programs, construction and auto loans, equipment financing and others.
First Bank
First Bank, located throughout the Carolinas, is another fantastic option for business loans in NC. As a local bank, First Bank is intimately familiar with the markets your business touches. They can use that knowledge to support you in making financial decisions. First Bank’s small business loan offerings range from SBA loans to credit cards to lines of credit and beyond. They suit solopreneurs, entrepreneurs, and business owners with dreams to expand their business, to reconfigure financial structures, finance major investments, and beyond.
SBA Lenders
There’s a host of SBA lenders dedicated to supporting North Carolina small businesses in securing loans. According to the SBA North Carolina District Office, these include “SBA 7(a) Lenders, 504 Certified Development Companies, and SBA Microlenders.” For specific details and contact information, see the SBA North Carolina District Office’s official list.
As a small business owner based in North Carolina, you have lots of location-specific borrowing options. While this list contains some of the best and most diverse options for NC business loans, it certainly isn’t every single available option. In fact, depending on the nature of your business, your location and your needs, you might even be surprised to find a loan that’s “tailor-made” just for you.
Funding your next business endeavor can feel daunting, time-consuming, and confusing. If you find yourself feeling overwhelmed by choice and unsure where to start, utilize the resources offered by local banks (or local branches of major banks), the small business administration, or the Carolina Small Business Development Fund. Or, for fast, personalized service, unique expertise, and an answer guaranteed in as little as hours after you apply, consider finding your best financing solution through Kapitus. Once you’re approved, you can hit the ground running and make those pivotal moves that take your small business to the next level in 2020 and beyond.
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What is a PEO? And How to Choose the Right One for Your Business
You probably started your business because you enjoyed the work. Maybe you opened your ideal restaurant or started an electrical contracting business. That part was fun, but other responsibilities surfaced. Now, you have to deal with employees’ human resource issues, find ways to offer benefits and make sure all payroll taxes were filed and paid. Fortunately, small business owners don’t have to cope with these responsibilities by themselves. Professional employer organizations can lift those chores off of the owners’ shoulders. This helps business owners focus more on managerial tasks and growing their businesses. Now, what is a PEO, exactly?
What is a PEO?
A professional employer organization and a business enter into a shared relationship known as “co-employment.” Co-employment means that the PEO is the employer on record. They provide human resource support and handle payroll functions – while you, as the owner, keep the authority and responsibility. You’ll still manage your employees’ day-to-day activities.
Through the co-employment model, PEOs:
- Are responsible for paying wages, managing employee compensation claims and overseeing other wage-related requirements
- Assist with regulatory paperwork and compliance issues
- Manage human resource issues and risk management functions
- Provide employee benefits. Benefits include- but aren’t limited to – health insurance, unemployment insurance, Section 125 plans and other voluntary insurance products.
What are the Client’s Responsibilities?
The business owner is responsible for:
- Managing employees’ daily activities
- Maintaining a safe work environment
- Keeping track of hours worked and reporting these figure to the PEO
- Making sure payroll funds are paid in advance to the PEO
Advantages of a PEO
PEOs can take time-consuming HR tasks and responsibilities off your plate. A PEO:
- Handles all human resource activities so you can focus on managing and growing your business
- Provides competitive benefits and health insurance. A PEO has the purchasing power to negotiate better health insurance rates and more affordable benefits, such as a 401(k)plan, dental and vision coverage. Using the lower-cost benefits from a PEO enables small- and medium-size companies to compete with and attract employees from larger companies.
- Stays up-to-date on regulations. As a business owner, you don’t have the time to read the latest regulations. A PEO does this for your and makes sure that you remain compliant.
- Provides attorneys and HR professionals to handle employee-related issues. PEOs give advice on proper employee termination and disciplinary procedures.
Disadvantages of a PEO
Method of pricing
Sometimes, it can be difficult to determine how much you’re really paying. Many PEOs price their programs as a percentage of wage payroll, but this figure can vary monthly. So, sometimes it’s hard to figure out how much you’re actually paying. The other pricing method is the per-employee-per-month. This approach has add-ons for setup fees, administrative fees and costs for running some payroll reports.
Inflexible health plans
PEOs partner with certain insurance companies, and you don’t have a choice. If you like UnitedHealthCare, but the PEO promotes Aetna, you have to accept Aetna.
Customer service
PEOs handle large numbers of clients and employee issues. Customer service responses can sometimes seem rushed and indifferent.
How to Choose a PEO
Choosing the best PEO for your company requires doing your homework. Here’s a list of questions to help you get started.
- Assess your company’s needs. What do you need help with -Payroll processing, HR issues, employee benefits? Define what you need before approaching a PEO.
- Is the PEO a member of the National Association of Professional Employer Organizations? Membership in the industry’s trade organization indicates professionalism and respect.
- Does the PEO have experience in your industry? You want a PEO that understands the daily lives of your employees and the risks they take on their jobs. How many employees do they represent in your industry?
- Conduct a background check; ask for references to check; get first-hand feedback directly from the PEO’s clients.
- Are the financial statements independently audited by a CPA? You want assurance that the PEO is legitimate.
- Are their risk management practices certified by the Certification Institute?
- Have their ethical practices been accredited by the Employer Services Assurances Corporation? ESAC audits PEOs annually to make certain each PEO has at least a $1 million surety bond.
- Does the PEO have certification from the IRS? Check for accreditation such as the Certification Program for Professional Employer Organizations from the Internal Revenue Service.
- Review the fine print in the contract. What guarantees does it provide? How can you terminate the contract if the relationship goes bad?
According to NAPEO, the U.S. has over 900 PEOs. While you have plenty of choices and setting up a co-employment agreement with a professional employer organization will relieve you of a ton of administrative tasks, you must thoroughly investigate each PEO candidate before signing on the dotted line. You don’t want any surprises.
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The Best Business Loans for Franchise Purchases and Improvements
Are you exploring business loans for franchise purposes? You’re likely bringing some of your own money to the table to finance your dream. However, that doesn’t mean that you won’t need help with other startup costs, future expansion or ongoing funds. You might be surprised at how many options there are in the marketplace. This guide will help get you up to speed on the most popular franchise financing options according to two main objectives: buying a first/additional/multiple franchises and funding existing franchise operations.
Get ready to feel better about your financing options for the next chapter in your entrepreneurial careers. Your franchise ownership goals are within reach.
Buying Your First/Additional/Multiple Franchise Locations
Whether you’ve got your eye on owning your part of a franchise or ready to expand your franchise footprint, you’ll need one of the many flexible-use business loans for franchises.
The three most popular types of franchise financing are:
- Traditional loans
- Small Administration (SBA) loans
- Franchisor financing
Look at how each of these financing options can fit the needs specific to someone purchasing an initial franchise.
Traditional loans
When considering the different business loans for franchises, traditional business loans top the list. Proceeds can help purchase or expand franchise holdings.
Traditional loans are smart financing options for small business owners confident that they have the financials and good credit to qualify. With generous loan limits, highly competitive interest rates, and flexible terms, these loans will likely offer some of the best rates in the market. You’ll need to come to the table equipped with solid financials. The rigorous underwriting process is one of the reasons these loans typically offer the most competitive terms. Traditional loans might be an attractive option. Show three years of tax returns, a strong personal financial history and a good credit score. The lender will verify fund source you’re using for your down payment.
With traditional loans, your franchise choice could play a significant role in the approvals process. Lenders like to see big brand names with proven track records in the market. Franchises with few locations might hurt your application. These franchises haven’t worked in multiple markets and various economies. Yet, if you’re a new franchise owner, a traditional loan can use your personal credit and financial history to launch your new venture.
SBA 7(a) loans
The SBA 7(a) loan program is hands-down the most popular loan program. It’s a reliable option for financing franchise startup and expansion costs. When you use these types of business loans for franchises, you’ll find competitive rates and virtually unlimited use of funds. Loan Limits are generous, and flexible terms are perfect for a franchise on the rise.
The first step to qualify for an SBA (7a) loan is to make sure your franchise is listed in the SBA Franchise Directory. If they don’t list your franchise type, you can apply for participation in the directory (note: the SBA will require additional documentation).
Loan limits are up to $5 million and terms range from 10 to 25 years. Interest rates are generally in the single digits (7% to 9.5% is a good range to consider). Prospective borrowers will usually have to be in business for at least two years. This makes the SBA 7(a) loan a better match for existing franchise owners, or those purchasing a franchise in an industry where they have a proven careers track record. Lenders will use your credit score and business financials for qualification. While the approvals process isn’t speedy, you’re rewarded with some of the best rates and terms, aside from traditional loans.
The only limit to an SBA 7(a) loan is borrowers can’t use the funds to finance franchise or royalty fees. If you choose to go the SBA 7(a) route, make sure you earmark other funds for these startup costs.
Franchisor financing
Many of the nation’s leading franchises offer direct financing to entrepreneurs. Of course, they want to make it simple for owners to get up and running. This one-stop-shop approach is potentially perfect for those looking to open their first location, adding a location, or purchasing multiple locations at once.
While the rates might not be as competitive as traditional loans or the SBA 7(a) loan, there’s something to be said for a streamlined process. As you consider all the options for business loans for franchises, it’s worth it to speak to the franchise and see what options are available. Be sure to have your attorney or accountant review any financing options offered by the franchise. Then you can compare the terms between a traditional loan, SBA 7(a) loan and the franchise’s direct financing side-by-side.
Funding Ongoing Franchise Operations
You may find times where you need a cash infusion to help fuel operations and growth. The best business loans for franchise needs in these cases is the one that matches:
- The reason you need the funds
- How long you need to repay the funds
- How much you need to borrow
Here are three financing options franchises can use to keep operations running smoothly and make specific improvements.
Traditional business loans
If you know you need a fixed amount of cash for an upcoming franchise improvement or expansion expense, a traditional business loan can help. With fixed terms and rates, small business owners can fund franchise expenses with a predictable impact on their monthly budget.
Repayment terms are often flexible, including payment frequencies based on your current cash flow. Traditional loans have stringent qualification guidelines, and not all businesses can qualify with ease. You’ll need to have existing operations with a proven balance sheet, a plan, and your financials in order.
Lines of credit
If you’re looking for a more flexible way to access the cash your franchise needs, a line of credit might be the ideal tool.
Lines of credit can be used for nearly every purpose imaginable. You can draw as much or as little as needed–and only pay interest on the funds drawn. Once you pay it back, your credit line is once again fully available for use. There’s no need to go through the qualification process again.
For businesses that may not qualify for a traditional loan, lines of credit can fill that financing gap. Credit scores aren’t weighed as heavily in the approval process for most lines of credit, either. These features combined make lines of credit ideal to fund everything from cash flow gaps to seasonal inventory ramp-ups. The sky’s the limit.
SBA 504/CDC loans
While the SBA 7(a) loan is an ideal fit for initial or additional franchise purchases, you’ll need a different SBA loan type for funding ongoing business concerns.
The SBA 504/CDC loan has a narrow scope of use. Funds must be used for acquiring, renovating, or improving real estate or equipment. A borrower’s franchise location must also be U.S.-based. This type of loan can help fund making improvements to franchise real estate, buying real estate, or even upgrading heavy equipment to speed operations.
As with the SBA 7(a) loan, your franchise needs to be listed in the SBA Franchise Directory to be eligible. While these loans are slower to fund than traditional bank loans and lines of credit, you’ll likely be rewarded with some of the best interest rates. With all of the options for business loans for franchises, there’s one out there that makes perfect sense for your financials, credit and goals. And, if you’re still trying to determine the next steps in your franchise financing plans, you can always reach out to a loan officer to discuss.
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What is in a Business Credit Report?
Credit bureaus track business credit activity through your EIN (employee identification number); or, if you have one, your D.U.N.S. number. Business credit reporting agency, Dun & Bradstreet, issues this identification number, and it’s free for businesses that have to register with the federal government to receive contracts or grants.1
This information helps build your credit report, which contains details on reported past and current borrowing arrangements. These include loans, credit lines, credit cards, and mortgages. The report may also include information on judgments, liens, and any accounts that may have gone to collections agencies. Your business credit report will also include a credit score, which generally represents how the issuing agency views your business’ ability to make payments on time and in full.2
How Lenders Use a Business Credit Report
Lenders use the information in your business credit report to help inform financing decisions for credit applications from businesses. They may take into account your business credit score, payment history, length of credit history, and any derogatory or negative information.
Why You Should Request Yours
It’s important to see the information on your business credit report to ensure that it is accurate. If you find that it is not, contact the reporting companies to have it corrected. Incorrect information could negatively impact your next loan application.
Seeing what lenders will see on your report can also give you the opportunity to prepare to explain any unusual or less-than-desirable information on your business credit report. And it also gives you an idea of areas for improvement, such as paying bills on time or keeping credit card balances within limit.
7 Business Credit Report Providers
If you’re curious about what’s in your business credit report, check out these seven providers. We’ve included five that offer reports for free.
#1. Experian
One of the better known personal credit bureaus in North America, Experian, also offers paid business credit reporting services. Experian offers a one-time business report which includes a credit summary report, credit score, and business summary for one business. Or, you can choose a monthly or annual service with the ability to check your own business credit reporting and business information. Through the service, you can also check details on other businesses (such as your existing or potential customers).
#2. Equifax
Operating across the globe, Equifax offers an entire suite of business credit reporting services for businesses large and small. While they don’t currently offer a free report checking service, their Business Risk Monitor for Small Business Service provides Public Record, Credit, and Risk Score email alerts to notify customers of activities and inquiries impacting their business credit in these areas.
#3. Dun & Bradstreet
The CreditSignal site operated by business credit bureau giant, Dun & Bradstreet, lets you monitor changes to your Dun & Bradstreet business scores and ratings — for free. It also notifies you either through email notifications, or via an app, when someone else requests access to your business score. However, take note — to get your actual business credit score you’ll need a paid subscription.
#4. Nav
Credit monitoring system, Nav, gives both individuals and businesses access to free credit summaries. Check your business report summaries from Experian and Dun & Bradstreet — you don’t even need to provide a credit card number to do so. Yet, bear in mind that these are only summaries. If you want access to more detailed business credit information, you’ll need the paid service.
#5. Credit.net
Although free access to your report through the Credit.net website is limited to a seven-day free trial, it’s a good place to start if you want to get a look at your current business credit situation, plus check credit summaries on others. During this time you’ll have access to seven reports. With the extra reports, you may want to consider checking credit reports on customers looking for credit terms with your own business.
#6. CreditSafe
Here’s another online option that lets you access a free report before committing to a longer-term paid arrangement. With a customized CreditSafe free trial, you’ll have access to credit scores and limits, company financials, adverse credit insights and more for not only your own business, but other businesses as well.
#7. Tillful
Tillful is on a mission to help small businesses reach their full potential by giving them free access to their credit score so owners know where they stand when it’s time to get business financing. With the Tillfull business credit reporting ecosystem, you can access your credit score and learn how it’s measured. You can also connect as many bank and business credit accounts that you want to get a holistic view of business credit. You can access this system as often as you’d like and you can even sign up for email monitoring alerts to let you know in real-time when a change has been made.