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3 Reasons Why Applications For Business Loan Get Declined

3 Reasons Why Business Loan Applications Get Declined By Traditional Lenders and Alternative Financing Solutions

Almost all business owners apply for some sort of financing to grow their company at one point or another. When it comes to applying for for this financing through a traditional bank or lender, the process can be a tough one, and many business owners walk away with a big fat decline. While this may be disheartening, there are many reasons why business loan applications get declined and lenders are so strict, and there are still other options out there. Let’s take a look at the three main reasons why business loan applications get declined by traditional banks and lenders, and then take a look at the great alternatives that are available!

Why Traditional Lenders Decline Business Loan Applications:

  • Low Cash Flow: If a traditional lender decides to give your business a loan, they will want to see the ability to make payments back on the loan amount in addition to covering all other business expenses. Unfortunately, tough times do occur where businesses don’t generate enough revenue at certain times of the year – maybe they are a seasonal business. Some business owners, such as contractors, aren’t paid until jobs are completed or they must pay inventory suppliers upfront before they get paid. Tight margins typically do not sit well with traditional lenders and you could get your business loan declined.
  • Poor Credit, Bad Credit, or No Credit: Like NorthShore Advisory Inc. Credit Expert Tracy Becker told us in our exclusive interview, “in today’s fast-paced business world, more partners, lenders, and potential accounts need to make quick decisions as to which suppliers, borrowers, and partners they want to work with; decision-makers use a variety of business credit scores, indexes, and reports to discard unqualified candidates from being considered for a partnership or a loan.” A business’ credit score is a major factor when a traditional lender considers approving them for financing. Poor credit, bad credit, or simply no credit can almost always guarantee a decline. To learn more about how businesses can improve their credit score, visit: http://www.northshoreadvisory.com/
  • No Collateral: Traditional banks and lenders almost always require some sort of collateral to secure a loan. Collateral can come in the form of a vehicle, personal or business property, equipment, and/or other assets. If a business owner defaults on the loan, this collateral will then be seized for nonpayment. Unfortunately, many business owners (especially young business owners or startups) do not have collateral to put up when it comes to acquiring a loan, or the lender may not deem anything the business owner has as anything of value.

Your Business Loan Application Got Declined By A Traditional Lender – What Are The Alternatives?

Despite the fact that traditional lenders can take weeks to process your loan application and also require a lot of paperwork, there are alternative financing solutions available if you got your business loan declined. Unlike big banks, alternative lenders typically only require you to submit a simple, one-page application, 4 months of recent bank statements, and 4 months of recent credit card processing statements in order to get an offer and approval in a matter of days! Let’s take a closer look at the alternative funding solutions available to your business so even if your business loan was declined your options are open!

Merchant Cash Advance: Short-term financing transactions that are collected through a set percentage of your visa and MasterCard sales that are accepted at your place of business. Probably the most common term used in the industry. These do not have a set repayment schedule and are based on the volume of your business’s credit card processing sales. These are usually only guaranteed by the future sales of your business.

ACH Advance: A form of a merchant cash advance that is repaid on a daily basis by direct ACH debits rather than a merchant account.   These are still a purchase of receivables and the amount debited via ach are determined by the amount of credit card processing sales that are batched out the previous day.

ACH Loan Products: These are a bit different than cash advances as they are considered loans and may have personal guarantees. They have a fixed repayment schedule that is paid either daily, weekly or monthly. These products are catered to industries that do not accept credit cards and need a fixed payment.

Accounts Receivables Financing: This is one of the oldest forms of funding in history. This is used mainly when a business is due some sort of capital for work complete and is billed on a net 30, 60 or 90. for example, ABC Trucking delivered goods for xyz logistics but only receives payment from xyz logistics in 60 days. ABC can then factor the money due from XYZ at discount to receive the capital due in 60 days today.

Invoice Factoring: The purchase of accounts receivable for immediate cash.

Equipment Financing: A type of loan or extension of credit to a business, with the purpose of helping the business acquire new equipment. Equipment Financing Extends only the capital needed to purchase a specific piece of equipment and is most commonly written as a lease.

Business Lines of Credit: A rotating loan that gives business owners access to a fixed amount of money, which they can use day-to-day according to their need for cash. Interest is only paid on the amount of the advance actually used.

Start-Up Funding/Loan: A type of loan that provides a new business/company with sufficient upfront capital to get off the ground.

Asset Based Loans: A business loan secured by collateral.

SBA LOANs 504 Loans: The US Small Business Administration 504 Loan or Certified Development Company program is designed to provide financing for the purchase of fixed assets, which usually means real estate, buildings and machinery, at below market rates.

Term Loans: A loan that is backed by a bank for an exact amount that has a specified repayment timetable and  interest rate that are adjusted accordingly. Terms mature between 1 and 10 years.

It’s pretty clear to see why an alternative lender may be the way to go when it comes to applying for financing for your business. No complicated application process, no lengthy paperwork and documents, and an approval in as little as 3 business days! For more information on alternative financing solutions and what Excel Capital Management can offer your business, visit: https://www.excelcapmanagement.com/loan-form/

Funding: Venture Capital vs. Working Capital

Funding: Venture Capital vs. Working Capital

Most business owners will apply for some sort of capital at least once over the business’ lifetime. This capital can be used for various reasons at various stages of the business life cycle: business start-up, expansion, equipment, purchases, hiring, etc.. When it comes to the growth of any business, money is essential.  What the capital is being used for determines just what type of capital it is – venture or working – and how one goes about acquiring it. No matter what though, as a business owner it is important to do your homework and know what type of funding you are applying for and how it can affect your bottom line in the long run. Let’s take a look at the difference between venture and working capital funding and the funding process for each.

VENTURE CAPITAL FUNDING

Venture Capital is normally sought after by up and coming business owners that are early in the life cycle of their endeavors  – startups and seed stage – but can also be used by business owners who are later in the business cycle but are looking to fund new ideas. If these types of business owners can’t get the money from a friend or family member who believes in their idea (business means big bucks, and a lot of times close acquaintances just can’t help out) they are usually able to do so through a Venture Capital investor who strongly backs their business plan. What complicates this process is the fact that most investors will want to see revenue generated for the long-term. They are now part owner and in it for the long haul just like the main business owner themselves, generally looking for a return of at least 5x their initial investment amount.  

Venture Capital investors or companies will analyze to see if there is a market for a business owner’s idea. If they feel that your business won’t be success, they most likely won’t take the risk of investing any money into it at all. Their goal is to see a big profit and have a hand in many major business decisions. It’s usually not simply a labor of love. Expect for investors to ask for a C-Level title and/or seat on your board of directors if you have one. At the very least, they will usually ask to be an “owner.” This results in relinquishing full control, ownership and an agreed upon percentage of future earning until you have enough capital to buy them out.

When it comes to qualifications, Venture Capital investors or companies typically only fund businesses in the amount of $1M or more, and also only fund specific industries which puts limitations on many business owners. They tend to look for big industry-specific companies with big, commercial ideas, a strong team, and some existing momentum and paying customers. This can be great, however, if you are just starting out, run a company on your own, or don’t necessarily have the plan to back up such a large sum of money, this can prove to be extremely overwhelming. Garage Technology Ventures, an early-stage venture capital funding company highlights the specifics of these qualifications in their article Critical Factors for Obtaining Venture Funding. Aside from all of  this, finding a reputable investor in itself can be a tough task. You should always do extensive research to ensure the investor has you and your business’ best interests at heart. Vivek Wadhwa’s article, Venture Capital: The Good, The Bad, and Ugly on Bloomberg.com highlights some other important factors when it comes to considering Venture Capital. Check it out.

WORKING CAPITAL FUNDING

Working capital is sought after by business owners for any number of reasons during any stage of the business’ lifetime – including the startup stage (normally lenders require a business must be operating for at least 3 months, but this can still be considered the startup stage). The capital is usually used for equipment purchases, new hires, expansion, inventory, and more. While lenders generally do care about the product or service the business offers, what business owners do with the capital (within reason) is their business. They are no way, shape or form now an owner after funding a company and don’t require that you list them as an owner, sponsor, or member of your board of directors. You make all of the business decision and once the funding is paid back their is no further obligations.

Typically, to qualify for working capital funding by a lender, a business owner must provide 4 months of recent bank and credit card statements (if applicable) to show their ability to pay back the advanced money. This capital acquired is generally structured as either a loan with fixed payback terms and fees or a purchase of future receivables at a discount rather than an investment expected to generate 5x the initial amount. Most business owners sleep a little better knowing this much and even reach out for additional capital numerous times over the course of their business’ lifetime. Lenders tend to develop genuine and trusting working relationships with many business owners and offer various financing solutions to work harmoniously with a business.

At Excel Capital Management, we offer many different financing products to help you obtain the Working Capital your business needs to grow! Our funding specialists will work diligently to ensure that you receive the best products available to achieve business success!
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Exclusive Interview with North Shore Advisory Inc. Credit Expert, Tracy Becker

New York based national Credit Restoration & Education Company, North Shore Advisory, Inc. has helped thousands of individuals and companies throughout the United States for over 25 years. Founder and President, Tracy Becker, a Certified Expert Credit Witness, Certified Fico Professional, and established author (check out her latest book, Credit Score Power), has lead her team to improve the overall financial condition of thousands of companies over the years, improving their credit, saving them millions of dollars, and providing seminars and counseling to educate them on building and maintaining excellent credit scores. Tracy has educated the likes of Coldwell Bankers, Halstead, Citi Habitats, and developed partnerships with many loan professionals from banks like Chase, M&T, HSBC, TD Bank, amongst others. She  has also often been quoted in publications such as the NY Times, American Banker, Investment News, Daily News, and many more. Excel Capital Management recently had the pleasure of interviewing Tracy in hopes of providing small business owners with insight on achieving a healthy credit scores and how it affects the overall growth of their business. Enjoy!

Excel Capital Management: Thanks for taking the time to chat with us Tracy. To start off, can you tell us a bit about how you got into your industry?

Tracy Becker: My husband was a real estate investor back in the 80’s and when the market crashed he was forced to claim bankruptcy. I was in the financial planning industry at the time.  After the bankruptcy was completed, we started researching how he could improve his credit.  After a lot of hard work and energy, we were able to better understand the industry and substantially improve his credit score. Together, we decided it would be a great business idea since so many people had credit issues and there was little information about how to improve credit at the time.

ECM: With the help of experts such as yourself and the North Shore Advisory team, credit repair has been made easier for individuals and business owners alike. Can you tell our readers a little bit about what your company does?

TB: There are many credit repair firms that have popped up in the last 5-7 years.  Most of them do what we call “generic letter writing campaigns” which require minimal work effort and almost no strategy. These firms put very little thought into creating the right system to improve credit, which keeps the cost down, but ultimately produces poor results.  At NSA, we review each credit profile by analyzing all of the information on the accounts and listen to our client’s story so we can learn about the circumstances surrounding the delinquency. We prioritize our client’s goals and consider the time frame that the client has to reach a certain score.  After we gather all the facts, one of our FICO Certified Negotiators does a forensic analysis and puts together a personalized strategy that will create the greatest chance of success. If we feel that we will not have success, we do not offer our services. Our program includes access to our credit education site where clients can learn tricks and tips through proper credit management.  This site helps clients increase scores while we are working on credit improvement through removing or changing delinquencies. Our FICO Certified Negotiators keep clients up to date on changes to credit  scores and the status of their file. Our unique credit repair programs have delivered great success to our clients.

We provide excellent programs for improving and monitoring business credit as well. In today’s fast paced business world more partners, lenders, and potential accounts need to make quick decisions as to which suppliers, borrowers, and partners they want to work with; decision-makers use a variety of business credit scores, indexes, and reports to discard unqualified candidates from being considered for a partnership or a loan. Because the business credit industry is highly unregulated, most firms do not even know their business credit scores and indexes are being reviewed. What do I mean by this? Unlike personal credit, when a business’s credit profile is pulled, the business owner is typically not notified. Our business credit repair process places firms in the most attractive thresholds, so that they are prepared for an unexpected review. Our monitoring program monitors business credit levels regularly so that owners may rest easy knowing that they will always have their best foot forward.

ECM: For someone starting out or someone trying to bounce back, aside from a credit repair program, what are others ways for individuals and business owners to build up their credit?

TB: The best thing to do is to order your business and personal credit reports; once you have your reports, you can reach out to our Credit Experts and they will give you feedback on the options available to you. In many cases, those that have no need for our services will still receive excellent advice about what their next steps should be.

ECM: Do you see a significant difference in credit score amongst different age sets? For instance, what patterns do you see amongst people in their early twenties, thirties to forties, and fifties and up? What about credit scores based on a person’s background and location?

TB: Honestly, it is hard to make an assumption about that since we typically service people who need credit improvement; we are not usually exposed to individuals with good credit or individuals that are not interested in their credit profile because that isn’t our line of work. I can say that older generations usually have more credit since they have had more time to develop it; and many studies suggest that millennials are the generation with the least amount of credit education, which often leads to unintentional poor credit habits; the most important advice for anyone at any age is to get educated and take care of your very important credit profiles since they are a great asset.

ECM: With the economic downturn in recent years, there seems to have been a shift in what makes a good to excellent credit score? For example, a few years ago, a credit score in the mid 600s and low 700s was considered “great” credit. That’s not always the case now. Would you agree that things have changed? How has this impacted your industry?

TB: Things changed dramatically. Banks have become more restrictive when it comes to personal and business lending alike, therefore, they require individuals to have a higher credit score threshold to receive the best pricing.  From an outside perspective, it makes sense since there was such great financial loss as a result of lender flexibility with credit score thresholds.  

The economic downturn really influenced our industry; it brought in a substantial amount of firms that tried to cash in on the credit score downturn. These fly-by night-firms attracted and continue to attract credit challenged individuals with their low pricing but they deliver minimal success and take money from those that should probably not be using a credit repair firm.  In my opinion, it is immoral to take money from someone who can barely pay their bills when you know they will have a new late payment dropping the scores yet again. Consumers should be wary of companies that will work on credit without asking them any questions about their current financial situation and goals. For businesses, the lending industry has changed as well. There is greater emphasis on business credit scores/indexes; however, many business owners do not understand the indexes and are not aware that a lender or a potential partner can view their scores at any time without notifying them. All business owners should have full knowledge of their Dun & Bradstreet, Experian, and Equifax business credit reports/scores and indexes. If they are not in excellent standing, they should reach out to us for a full credit analysis to see if we can help.  

ECM:  In the past few years, a person’s credit worthiness has also been investigated via social media sites and other avenues (read more on that here via NPR), rather than just based on a credit score alone from the top three bureaus. Can you elaborate on this? Do you believe a social media footprint should affect a person’s credit report?

TB: There has been much talk about social media scores, but social media outlets have backed away from the idea of using social media scores to determine creditworthiness because they would have to abide by the same regulations as the credit bureaus. The concept opens up a lot of risk and possible litigation; I do not believe we will see much of this in the near future since it can be viewed as discriminatory. I do believe decisions can be made using credit scores and gathering information about a firm’s presence on social media to decide if they are a vibrant and active entity.

ECM: At Excel, we focus on providing small to mid-sized businesses with financing solutions such as Merchant Cash Advances, Asset Based Loans, Unsecured Business Loans, and more. A lof of business owners choose these solutions due to minimal requirements. For instance, there’s no minimum FICO score requirement. What is your take on this?

TB: There is a place for all of these financial vehicles if used correctly. I think it is great to have as many choices as possible. The ideal position for any firm is to have excellent credit for both the business and the principal(s). This will provide more opportunity to choose which financial vehicles are best for them with the help of professionals at Excel.

ECM: Lastly, Tracy, what advice would you give to business owners, such as millennials, who may have little to no personal and/or business credit?

TB: It is very important to start building credit. With limited or no credit getting a secured credit card would be the first step. Make sure the card will be reported to the credit bureaus. After using the card for 3-6 months, I would suggest that you apply for a non-secured card and use that as well. Following these steps can slowly help build excellent credit; as long as all accounts are paid on time, scores will increase. If you would like to learn more about credit visit our site to read many related articles www.northsoreadvisory.com. As far as building business credit that is a bit more complicated since not every vendor, lender, or creditor reports to the credit bureaus.  The best step is to reach out to us to discuss the best strategy for your unique business.

To learn more about the business financing solutions, Excel Capital Management offers, check out our Solutions Page. To learn more about the Credit Repair and Restoration solutions Tracy Becker and North Shore Advisory offers, visit: http://www.northshoreadvisory.com/

North Shore Advisory Inc. Credit Expert, Tracy Becker
North Shore Advisory Inc. Credit Expert, Tracy Becker

How A Business Loan Helped a General Contractor in a Crunch

How A Business Loan Helped a General Contract in a Crunch

While the construction business is one of the oldest, most flourishing, and most competitive industries around, there comes a time when many of its business owners need access to working capital. The cost of equipment, materials, payroll, and slow turn-around rates trump the cash flow coming in, and many construction company owners find themselves weighed down by bills and overhead costs. Since the great recession of 2008, a traditional bank loan is no longer the go-to solution when it comes to acquiring capital. That old-school way of doing things sometimes ends in heartbreak due to waiting weeks just to receive an answer. That’s where the alternative financing industry comes into play!

With financing solutions such as the ever-popular Merchant Cash Advance, ACH Loan, Asset Based Loans, Equipment Financing, and more, access to working capital is easier than ever! There is no longer a stigma with taking a loan or any type of financing. Working capital is essential when it comes to growing a company of any kind, especially a construction company. Due to the cost of machines and equipment sometimes reaching well into hundreds of thousands of dollars, or the burden imposed by having contractors absorb the upfront costs when starting a job – such as the cost of construction materials like granite and wood – and not to mention, insurance costs and payroll for workers and employees, construction company owners should expect to reach out for capital at some point in their business’s lifetime. Some companies choose to do this more than once, and why not? If working capital is increasing your cash flow and allowing you to take on more jobs, it only makes sense to ask for more. Afterall, the goal most of us strive for is to ensure steady work flow and income for years to come.  

Recently, Marty, a construction company owner from Georgia reached out to my company, Excel Capital Management. Marty was in a crunch and in need of funds, and he needed them fast! With a handful of projects on his plate, along with receivables due to a form on a large ongoing project  not being paid on schedule, Marty asked us for working capital to be used towards the purchase of materials, construction equipment, licensing for projects to be completed, and payroll.  As you know, only a small fraction of projects pay upfront and most only payout in tranches after certain milestones are hit at. When workers and office employees expect to be paid, and materials need to be purchased, waiting for these payouts is not an option. In order to get things back on track, as well as to generate new growth, Marty asked our sales rep, Jordan Lindenbaum, for help in securing an ACH Loan Product – a short term funding product  paid on a daily or weekly basis by direct Automated Clearing House debits.

Marty’s situation was a tough one! He was owed close to $200,000 which was tied up and not coming in for at least thirty days, plus around $150,000 in retainage for completed contracts,  however, that was going to be payed out over six months. He also had both a  $2 million and a $1.5 million contract on the table respectively (both carrying a 20% gross profit), but those were not set in stone. Marty’s company had no time to wait with other projects lined up and needing to be completed by early 2016, however, they couldn’t be completed unless he had the means to hire more workers and purchase a few machines to keep up with the timelines in place. Obviously, without the aforementioned payouts, he was in a bind. To the Average Joe, these type of accounts receivable amounts seem amazing, but in the construction business, we know this revenue doesn’t always reflect the tangible finances. Most, if of not all, of the money is put back into the company to complete ongoing projects. Whether Marty could wait until his pay day or not – he needed some additional working capital, now.

After supplying us with a few bank statements, a business lease, his driver’s license, and a few other minimal stipulations, we were able to get Marty $80,000 in working capital in a matter of only two days! The daily repayment amount was only $400 per day – an ACH automatically debited (so Marty wouldn’t have to worry about making any large monthly payments – he could focus on his projects at hand) which would happen over the course of 12 months. It was as simple as that! No hassles or phone calls from banks, just a solid relationship with an alternative financing company, such as Excel Capital Management, and peace of mind.

Everyone needs a little help here and there, and there is no shame in asking for it. There’s more hope than ever for small to mid-sized businesses when it comes to acquiring working capital. Whether you need $5,000 or $5,000,000, there are options. Most of today’s top CEOs have taken loans or received working capital in order to grow their companies into multi million dollar corporations. You know the old saying. “It takes money to make money!”

The Excel Interview With deBanked’s, Sean Murray

Debanked

Merchant Cash Advance industry veteran, founder of deBanked, Sean Murray has been an influential part in funding over $100 million to small businesses through sales and underwriting efforts. As a Senior Account Executive at Bizfi (part of the Merchant Cash and Capital family), he grew one of the largest residual portfolios in the history of the company and become a well-respected expert in the industry. After his time at Bizfi, Murray founded Raharney Capital, providing advertising and consulting within the alternative lending industry, and also deBanked – the most popular magazine and resource in the industry where Murray also serves as the Editor-in-Chief. Excel Capital Management recently sat down with Mr. Murray to explore his vast knowledge of the Merchant Cash Advance and alternative finance industry and discuss the future of the business.

deBanked sean murray

Excel: Tell us a little more about your background and what made you get into the alternative finance industry.

Sean: I got into this industry almost immediately after college. That was 10 years ago. A friend of mine told me there was an opportunity to work at a fun financial startup. The job description entailed evaluating small businesses for working capital, ones that had mainly been declined already for a bank loan. Given that I double-majored in Accounting and Finance, I was definitely intrigued and took the job.


Excel:
You’ve been in this niche industry for quite some time. Over the years, how have you seen the industry change and grow?

Sean: In the beginning, the worst part for the small business owners I spoke to was that approval terms were tied entirely to their average monthly credit card processing volume. That meant if cash sales were 90% of their business, we couldn’t consider that, even if that cash was showing up in their bank statements and being declared on their tax return. Over time, funding providers became more creative and flexible. They found ways to better service clients without making it impossibly hard to qualify.

Excel: Did you ever expect the industry to become as popular and as competitive as it is?

Sean: Yes and no. Given that I started before the Great Recession, there was already a big need for non-bank alternatives. The industry already existed and was growing. It wasn’t a byproduct of an economic downturn, it just became more visible during one. People think that when the economy fully heals, that banks will start lending again and the non-bank alternatives will disappear. The truth is that banks never serviced this segment of small businesses. It was and remains to be too expensive, risky, and time consuming for them to underwrite a $20,000 business loan. Sure, they’ll issue you a business credit card, but that’s based on your personal credit, is personally guaranteed, and more often than not the limit is too low. So no, I am not surprised that the industry has become so popular but I am surprised the product mix available to business owners has diversified as much as it has. It’s truly incredible.

sean murray interview
Excel:
In the latest issue of your publication, deBanked, you provide a few predictions on the future of the industry. You specifically mention the fact that it is an election year and touch base on the current state of the stock market. Can you elaborate on these topics and how they relate to the industry?  Also, speaking of the election, Democratic candidate Bernie Sanders has stated that he will impose nationwide interest rate caps that would, in the long run, hurt marketplace lenders. What are your thoughts on this?

Sean: I think what I was trying to say was that a new President sets the regulatory and legislative “tone.” This year we have a colorful group of candidates, many of whom have big ideas on how to grow the economy. Bernie Sanders in particular has made some pretty controversial statements, one being that he is in favor of a 15% federal interest rate cap on consumer loans. I think many people when they hear that, assume that would mean that a lender that normally offered a borrower a 28% interest rate loan would instead offer a 15% interest rate loan to comply with the cap. That’s not what would happen at all. Instead the lender would just decline the application. In effect, a huge portion of the population would not be able to get a loan from anywhere, not even non-bank alternatives. You know the saying, “it takes money to make money?” That goes hand in hand  with the “rich get richer while the poor get poorer.” Borrowing can be used as leverage to grow and in essence become richer. It takes money to make money. If you’re locked out from borrowing, supposedly for your own good, how do you become richer if your risk profile makes it legally impossible to take money and make money? That’s obviously a larger debate but it all feeds back into the upcoming election and who will be running the country. What will their economic views be? And will that “tone” positively or negatively affect small businesses? Nobody likes the uncertainty in the meantime.

As for the stock market, the connections are easy. Declining stocks increases the allure of investing on peer-to-peer platforms where the returns are perceived as both steady and rather lucrative. It can be hard to stomach a 10% loss in your investment portfolio in a matter of weeks like the stock market did in the beginning of this year. Investors, even small retail investors are going to consider alternatives like this industry. A declining stock market also chips away at wealth and this can affect consumer buying behavior which would impact small businesses. It’s all related at the end of the day.

Excel: Along the same lines, what are your the thoughts on the alternative finance industry being regulated? Do you see this happening anytime soon? If so, how will these regulations affect business?

Sean: I think regulation, if any, will focus on disclosure and transparency. If this is indeed where it goes, I just hope the outcome is intelligent, well thought out and logical. It’s early days right now though so it’s hard to speculate. In business-to-business transactions such as the kind your company engages in, I’m a big believer in the invisible hand. It’s commercial finance, not consumer finance. Some of these businesses might be really small, but we’re still for the most part talking about corporations entering into contracts with other corporations. I think regulations should focus on consumer lending, where there is a much lower presumption of sophistication.

Excel: Moving forward, what impact do you believe the collaboration between OnDeck and Chase will have on the industry as whole?

Sean: From what I know about the partnership and from what I know about banks, I believe Chase is probably using this as an opportunity to fast track their online loan underwriting process while they figure out a longer term technological strategy. You have to remember, it’s not uncommon for banks to be using really old systems. I believe some are still using or have just moved away from Windows XP recently. That’s a 15 year old operating system. Between that, constant bank mergers where the acquired banks are using completely different systems, regulations, and the sheer size from a human resources perspective, all make it nearly impossible to catch up, let alone implement a modern underwriting platform that measures 10,000 data points with connections through all sorts of APIs. The easy solution for now is to use a company that can reliably provide that capability and I think it’s great that OnDeck’s platform instills a level of confidence that a famous bank like Chase would attach their brand to. I think OnDeck and others will score more of these partnerships and there is potentially a play for one to be ultimately acquired by a bank just for the technology.

Excel: As this industry continues to grow and more people are entering the market, what is one piece of advice you can share about the do’s and dont’s of our marketplace?

Sean: Do be responsible and act with integrity at all times. Don’t think you are too small or insignificant to make a difference. If you only help fund one small business and they hire new people as a result, there’s a chain reaction that occurs that affects the entire local economy. It’s a beautiful thing to play a role in that.

Tax Filing Guide for Restaurant Owners

Tax Filing Tips for Restaurant Owners

It’s that time of year again! Time to prepare for tax filing, or get a head start and file now.  This time around, we will take a look at tax filing for restaurant owners. Just like any other business, restaurants are required to pay certain taxes on income, property, payroll, and more. Let’s take a look at some of the different types of taxes restaurant owners pay, along with some tips for doing so.

Types of Taxes Restaurant Owners Must Pay

Tips: Cash and tips charged by credit cards that restaurant owners receive from customers are subject to being taxed. Employees should report all tips to their employers, which should then also be reported on a Form 4070 as tip income. This form is usually filed to the IRS on every tenth day of the month once the tips are received.

Payroll: Like any other business, payroll taxes are a percentage of employee income paid to social security and Medicare. Restaurant owners must collect these taxes from all employees, full-time and part-time.

Property: Property taxes are imposed by the city in which the restaurant is located. Restaurant owners and those who lease are responsible for these taxes.

Sales: Sales taxes must be collected by restaurant owners on all food and beverages they sell. Whether the tax is included into the price of the item or added to the subtotal of the bill, sales taxes must collect even if the state in which the restaurant operates doesn’t charge taxes on food.

Liquor License: If restaurants hold a liquor license, owners are responsible for paying taxes on all alcoholic beverages sold.

Franchise: Some states charge franchise taxes. If a restaurant is part of a franchise, they are responsible for this payment. Franchise taxes are based on the net worth of the entity.

How To Prepare For Filing:

Organize All Of Your Files & Receipts: Restaurant owners can make their lives easier by having all of their files already organized. Organize receipts by date and category (ex: travel expenses, food, supplies, etc.), print copies of previous state and federal tax returns, have any necessary tax records and employee records available, and provide all important corporate and ownership documents. The more information you have the better, and the more organized you are, the easier the process will be.

Get statements for your restaurant business loans  Let your accountant know about any restaurant business loans you have taken out this year since you can deduct the fee’s and interest from these to help reduce your tax obligation. Call the funding company and ask for an account statement and ship that over to your accountant. This can save you a lot of money if done properly.

Decide How You Are Going To File Your Taxes:  Different methods work for different people. Decide whether you’d like to do your taxes on your own via e-filing software, file them manually on your own, or hire a tax preparer or CPA. All methods are sufficient; however, be sure that you are confident in whichever you choose. It is, however, recommended that restaurants with a significant staff or larger company as a whole incorporate the help of a CPA or tax preparer.

Fill Out The Proper Forms:  Just like choosing a filing method, filling out the proper forms is extremely important. If you are unsure, consult with a tax preparer or CPA. The types of tax forms you fill out will be determined by how you run your business.  For example, if you run an LLC, you would need to fill out Form 1020. If you run a sole proprietorship, you may file a Schedule C.  As mentioned earlier, to file taxes on tips received by employees, you would fill out a Form 4070. Do your research ahead of time to avoid any confusion.

Save Your Records:  After your taxes have been completed and filed, it is best practice to keep your records for at least 7 years in case audits were to occur. Having all the necessary documents will keep you safe and save you from a huge headache.


Consequences of Not Filing:

Liens on Your Business and Personal Assets: Tax liens are imposed by the law on personal and business assets, such as property, as a result of failing to pay your taxes.

Levy and Garnishments  on Accounts:  A levy allows the IRS to garnish your wages or take money from your accounts and seize personal property such as vehicles or real estate.

Negative Impact on Credit Scores:  Depending on how much you fail to pay in taxes, the IRS can file a lien which can negatively impact your credit score by as much as 100 points.

Prevents Institutions From Extending Credit: Failure to pay your taxes can result in financial institutions being unable to either extend or provide you with lines of credit.

Penalties and Interest: Late filing or failing to pay taxes can cause you to accumulate penalty fees and interest on top of the initial amount owed.

 

For a full tax filing tip guide check out our Guide below

Small Business Taxes: Last Minute Tips Before Filing Your Business Tax Returns


Don’t let a heavy tax bill affect your business! Excel Capital Management can provide you with the capital you need to pay your taxes and avoid the severe consequences of not filing.
All of our funding products are tax deductible!

Easy Financing for Bar and Nightclub Businesses

Financing for Bars and Nightclubs

Owning and operating a small or a medium sized nightclub or bar is cool and trendy. But the fact of the matter is, when it comes to nightclub financing, traditional means can often become overly complicated. The business prospects of a nightclub or bar are considered by many owners as tough.

Moreover, it is obvious that bars and nightclubs are cyclical, which means they are open 2 or maybe 3 days in a week, mostly on weekends. Pumping cash into a cyclical business can be hard when you know that you only operate the business for a few days a week, this can make finding the necessary investment hard.

If you want to find a proper source of bar or nightclub financing, the best thing you can do is look up the packages offered by Excel Capital Management, who offer flexible financing packages for small and independent businesses, like nightclubs or bars.

The Unique Cash Flow Requirement for Nightclubs

Nightclubs, as mentioned above, are open only a few days a week and on special events, for example, a private party or a bachelor party. Nightclubs can also cater to a particular age bracket. Moreover, when you talk about employment in this industry, it is safe to say that people looking to make easy money might find working in a nightclub interesting. But this can also turn out to become problematic when you add in the cash flow factor.

Because of the fact that the employees in this area of the industry tend to constantly switch jobs, looking for one that pays better than the last, it leaves the owner in a predicament. Because of the fact that he has to retrain, rehire and reorganize the entire employee framework, it can cost him valuable time and resources, resources which he needs to run the place successfully to earn more money in two days to cover the expenses for the following week.

Liquidity Options for Nightclubs

Excel Capital Management offers small businesses which have been operating for a minimum of three months, a chance to grow their business by flexibly and strategically granting them working capital and merchant financing loans. They are no restrictions on what you can or cannot do once the loan is debited into your account and you can use it as you please.  Here are some of the benefits of acquiring a working capital loan from Excel Capital Management:

  • Little or No Collateral Required
  • Minimum Paperwork Required
  • Does not matter if you have a bad credit score
  • Repayment Terms are Flexible
  • No Industry Plan Required
  • Fast Processing
  • No Personal Guarantee
  • No Application Fee, No Upfront Fee
  • Building Business Credit

Excel Capital Management understands the hard work that you put in when running a small business and the need for proper funding on rainy days, and that is exactly why they have designed flexible and at the same time, convenient funding options. that include bad credit business loans and business lines of credit.

So, visit www.excelcapmanagement.com to learn more about working capital loans.