Navigating Financial Products: A Guide for Entrepreneurial Success
Stepping into the world of business financing can be a minefield if the proper research hasn’t been completed before embarking. It can be a complex subject for first-time borrowers but it doesn’t have to be, as several organizations and businesses exist to make the process as easy as possible. Let’s look at some of the existing financial resources to help make finding the right funding option for your business easy as well as look at some of the products and services that you can find in the marketplace.
SBA Loans
Sometimes it really is best to get your information directly from the source. Founded in 1953, the SBA is an independent agency of the federal government to help aid, counsel, assist and protect the interests of small business concerns and preserve free competitive enterprise while maintaining and strengthening the overall economy.
The SBA doesn’t provide its own loans: instead, the SBA backs loans through lending partners to make those loans accessible to small businesses. But which lender do you go to for an SBA loan? Well, the SBA offers a lender match to help match you to potential lenders that offer SBA-backed funding. After describing your needs the SBA will match you with lenders within two days, allowing you the chance to discuss rates, terms, and fees before jumping into the application process.
The SBA also offers a learning platform directly into its website to help empower and educate small business owners on every step of their funding journey.
Short-Term Working Capital
Short-term working capital refers to the capital required to fund a company's day-to-day operations, such as inventory and accounts receivable. It is the amount of cash, cash equivalents, and other liquid assets that a company has available to meet its short-term obligations, including payables, salaries and wages, taxes, and other expenses. The primary objective of managing short-term working capital is to ensure that a company has enough liquidity to meet its ongoing obligations, without tying up too much capital in non-liquid assets.
When comparing short-term working capital you will want to be sure that you know the variance in the loan amount that you can apply for, the length of the terms as well as the requirements that are needed so that you can rule out which loans are actually applicable to you. Let’s take a look at Backd’s short-term working capital in comparison to some of the other leading lenders.
Lender | Amount | Terms | Requirements |
Backd | $25K - $2M | 4 - 16 months | Minimum of 1 year in business, a minimum $50K monthly revenue, a business bank account, and a personal credit score of 625 |
OnDeck | $5K - $250K | 3 - 24 months | Minimum of 1 year in business, a minimum $100k in annual revenue, business bank account, personal FICO Score of 625 |
Kabbage | $5K - $2M | 6, 12, or 24 months | Minimum of 2 years in business, a minimum $50K in annual revenue, $12K in annual credit and debit card sales, no credit score minimum
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Lendio | $2.5K - $500K | 1 - 3 years | Minimum of 2 years in business, may have to provide collateral and a “strong” credit score. |
Fora Financial | Up to $1.4M | Varies based on your credit card transaction volume. | Minimum of 6 months in business, a minimum $60K in credit card sales or $144K minimum among all transactions, and a minimum credit score of 500. |
At Backd, we offer a considerable range of working capital going as high as $2M to cover any needs your business may have. Our term lengths of 4 - 16 months also allow great flexibility to ensure that you can select a payment plan that doesn’t stifle the growth of your business.
Business Line of Credit
A business line of credit is a type of financing that allows a company to borrow money up to a certain limit as needed, rather than in one lump sum. The business is only charged interest on the funds that it actually draws, and, if you have a revolving line of credit, then you can reuse the credit line as it pays off the borrowed funds. It is similar to a credit card in that it gives the borrower the flexibility to borrow as much or as little as they need, up to the credit limit.
Let’s again take a look at how Backd’s Business Line of Credit option compares to other lending leaders in the market:
Lender | Amount | Terms | Requirements |
Backd | $50K - $750K | 6 or 12 months | Minimum of 2 years in business, minimum monthly revenue of $50k, business bank account and a minimum credit score of 625. |
PNC Bank | $100K (max.) | Monthly repayments with no set terms | Minimum of 3 years in business, minimum annual revenue of $100K, a minimum credit score of 720, and must have a personal guarantee. |
Bluevine | $250K (max.) | 6 - 12 months | Minimum time of 6 months in business, minimum annual revenue of $120K, and a minimum credit score of 625. |
Kabbage | $2K - $250K | 6, 12, or 18 months | Minimum time of 1 year in business, minimum monthly revenue of $3K, and a minimum credit score of 640 |
Fundbox | $150K (max.) | 12 or 24 weeks | Minimum time of 6 months in business, minimum annual revenue of $100K, and a minimum credit score of 600. |
With a max loan amount of $750K, Backd offers the highest option for a business line of credit with favorable terms, competitive rates, and a revolving line of credit that reloads as you pay the balance.
Additional Educational Resources
Investopedia
Launched in 1999, Investopedia is a financial media website that provides investment dictionaries, advice, reviews, and comparisons of financial products.
Founded on the core mission of simplifying financial decisions and empowering its readers with the confidence to manage every aspect of their financial life, Investopedia is a core tool when exploring funding options for the first time. Each article on their site is reviewed and then fact-checked so that you know you are always getting the most accurate information when researching terms or financial products that you are unfamiliar with.
Consumer Financial Protection Bureau (CFBP)
A US government agency, the CFPB works to ensure that banks, lenders, and other financial companies treat you fairly. They aim to make consumer financial markets work for consumers, responsible providers, and the economy as a whole.
By enforcing federal consumer laws, they also work to create educational content to help small business owners from the start of their business to provide them with resources and advice on gaining funding support. Their site includes a launch page that shines a light on small business lending to help owners make informed decisions in regard to financing.
Fund Your Business Today
The decision of who to request funding from is never an easy one, with so many options available it can be overwhelming for business owners who are new to the world of lending.
Backd is here to make it easier, with tons of resources available to arm business owners with the knowledge to make informed decisions. We also offer competitive business lines of credit and working capital with an application process that can be completed in as little as 3 minutes. Do you still have questions about your funding options? Get answers today by talking to our team at (737) 256-7458.
